American Shipbuilding Association

FY 2003 Defense Appropriations Bill Signed by the President

The President signed into law HR 5010, the FY 2003 Defense Appropriations Bill on October 23rd.  The conference version of the bill provides the military with $37.5 billion more than last year’s appropriations bill, but is $1.6 billion less than the President’s FY 2003 request.  

House and Senate conferees agreed on a bill that would provide $9 billion for naval shipbuilding and conversion, which is an increase of $842 million over the President’s request.  The Act funds   two DDG-51 Aegis destroyers, one Virginia-class attack submarine, one T-AKE, and increases long lead funding for the CVN(X) aircraft carrier to restore the ship to a 2006 construction start. 

While the bill does not increase the number of new ships from the five requested by the Administration, it adds $636 million to pay down prior year bills that have accrued, in large part, because of low and unstable production rates. 

The message from Congress is clear:  “Increase naval ship procurement and get on with CVN(X) in 2006”, says Cynthia Brown, President of the American Shipbuilding Association.  The shipbuilding industry is heartened by the fact that Congress recognizes that investment in naval shipbuilding has been neglected for far too long - neglect that increases the risks to our national security. 

Federal Funding to Continue at FY 2002 Levels

Prior to adjournment, the House and Senate passed a continuing resolution (CR) to keep the federal government operating through November 22nd.  Under the terms of the CR, federal agencies will continue to be funded at the FY 2002 level.  The CR also includes the changes and alterations made by the emergency supplemental appropriations bill signed into law earlier this year. 

The Title XI Ship Loan Guarantee Program and the Coast Guard Deepwater Program are among the programs covered by the CR.  Title XI will be funded at $32 million, which consists of $4 million for administrative costs and $28 million in new loan guarantees.  The Deepwater Program will be funded at $329 million.

Congress will reconvene after the November elections to try to complete the eleven remaining appropriation bills in a lame duck session. 

House Panel Considers Military Sealift Requirements 

On October 8, General John Handy, Commander-in-Chief of United States Transportation Command (TRANSCOM), testified before the House Merchant Marine Panel regarding the military’s commercial sealift requirements under a reauthorized Maritime Security Program (MSP).  The hearing was the third in a series of hearings being held on MSP, which is set to expire in 2005. 

MSP is one of the main sources of sustainment sealift to carry military equipment, spare parts and food to support America’s forward deployed armed forces.  Under the program, the Government contracts with U.S. operators of commercial ships for services when needed for national emergencies or war. 

In his prepared testimony, General Handy recognized the vital role MSP plays in the U.S. military’s strategic sealift and global response capability.  Currently, only 47 ships are enrolled in MSP.  During his testimony, the General asserted the need for 50-60 ships.   He emphasized that the U.S. must have access to U.S. ships that are crewed by U.S. Merchant Mariners.  However, General Handy admitted that a totally U.S. owned shipping industry does not exist today.  This places the U.S. in the dangerous position of having to contract with foreign owned companies, whose international policies may run counter to our own, for the sealift of U.S. supplies and equipment to American soldiers. 

Chairman Duncan Hunter (R-CA) emphasized the need for reliability and control, noting the danger involved in “…having a ship 75 percent, 80 percent, 100 percent owned by the citizens of another country, which may have a major conflict with your foreign policy…”  General Handy agreed that he would be more comfortable with a totally U.S. - owned company operating the ships.   

In regards to the construction of these ships, Chairman Hunter questioned the General if there should be a shipbuilding component to MSP.  General Handy responded that “…we need a shipbuilding capability in this nation…we [TRANSCOM] support…strong, viable shipbuilding and a strong and viable MSP.”  He hoped Congress would be able to link the two together. 

Chairman Hunter expressed optimism at such a legislative solution and advocated working closely with the military to ensure that its commercial sealift needs were satisfied by an American Merchant Marine -- ships built, operated, and crewed by Americans.   

INDUSTRY NEWS

Hopeman Brothers Names New President

David Kunkel has been named President and CEO of Hopeman Brothers Marine Interiors headquartered in Waynesboro, VA.  Mr. Kunkel succeeds David Rathburn, who is now working as an independent consultant for Hopeman.   Mr. Kunkel has 30 years of business and construction industry experience.  Formerly serving as outside counsel to Hopeman Brothers and Hopeman companies, he has dealt with all aspects of major marine construction projects.

ASA wishes Mr. Rathburn the best of luck, and welcomes Mr. Kunkel on board.

Newport News Receives OSHA Awards

In September, Newport News Shipbuilding of Newport News, VA received two awards from the Occupational Safety and Health Administration (OSHA).  Newport News was recognized as the largest Voluntary Protection Program (VPP) STAR site.  An individual achievement award was also bestowed upon an employee with the Welding Services group for outstanding health and safety activities.     

The VPP, administered by OSHA and the Department of Energy, is a cooperative effort among labor, management, and government.  OSHA awards the STAR only to those companies with comprehensive, successful safety and health programs that are in the forefront of employee protection and demonstrate continuous improvement.

Electric Boat to Design SSGN's

On September 26th, Electric Boat of Groton, CT was awarded a $443 million, five-year U.S. Navy contract to convert four Ohio class submarines to the SSGN configuration.  According to the Navy, the submarine conversion program is a central part of the service’s transformation efforts.  

Electric Boat is the builder of all 18 Ohio class subs.  The company will begin the detailed design of the SSGN’s, which will be capable of launching up to 154 land attack missiles and deploying up to 102 Special Operations Forces personnel.  The first of the reconfigured subs is expected to rejoin the operation fleet in 2007. 

Navy Awards Electric Boat Virginia Class R&D

In late September, the U.S. Navy awarded Electric Boat a $48.2 million modification to an existing contract for research and development work on the Virginia class submarine program.   The contract was originally awarded in September 2000.

Under the terms of the modification, Electric Boat will perform development studies for Virginia class design improvements and will continue to evaluate new technologies for insertion into succeeding Virginia class subs. 

Electric Boat and its construction partner, Newport News, are currently building the first four ships of the class under a $4.2 billion contract.  Electric Boat will deliver the lead ship, USS Virginia in 2004.  Thirty submarines are planned for the class. 

NASSCO Receives Contract Extension

National Steel and Shipbuilding Company (NASSCO) of San Diego, CA, announced in mid-October that it had been awarded a two year extension on a contract for the phased maintenance of the five San Diego based LHA and LHD class ships for the U.S. Navy.  A seven-year contract with an option for an additional two years was originally awarded in December 1997.

According to NASSCO, the advantages of a long term maintenance contract include continuity in staffing for the shipyards, more orderly planning and purchasing, and the transfer of lessons   learned between ships, all leading to production efficiencies and lower costs for the Navy.  While the extension does not carry a dollar amount, work on the contract to date has averaged approximately $100 million a year. 

Well Said!

“Invariably, we [the United States military] end up trying to get the biggest bang for the buck on the mode of transportation that gets stuff there.  And it’s sealift.  Sealift is by far the greatest contributor to our force projection capability over the long term.”

General John Handy
Commander-in-Chief

United States Transportation Command
October 8, 2002