American Shipbuilding Association

Fiscal Year 2001 Budget For National Security

President Clinton’s fiscal year 2001 budget calls for spending $1.8 trillion, up 2.5 percent from fiscal year 2000.  The president’s recommendations for total Pentagon spending increased by one percent from last year to a total of $291.1 billion.

  Within the Navy’s $92 billion FY01 budget, shipbuilding and conversion (SCN) is $12.2 billion, an increase of $5.2 billion over last year.  The SCN account includes $4.4 billion to fund the last Nimitz-class aircraft carrier.  The remaining new ships include; $2 billion for one new attack submarine, $3.4 billion for three DD-51 Aegis destroyers, $1.5 billion for two LPD-17 amphibious transport dock ships, and $340 million for one T-ADC (X) ship.  A total of 8 new construction ships -- still well below the steady build rate of 10 to 12 ships needed to maintain the bare bones minimal 300-ship fleet.

  Secretary of Defense Cohen and Secretary of the Navy Danzig, both testified before Congress that the Pentagon needs more procurement resources than the $60 million requested in the fiscal year 2001 budget.  In regards to the Navy’s shipbuilding, Secretary Cohen told the House Armed Services Committee, “We are at the eight mark per year [for shipbuilding], one of the challenges for the future is that we have to get up to 10 per year to sustain our shipbuilding programs.”   Agreeing with Secretary Cohen, Secretary Danzig stated before the Senate Armed Services Committee, “I think all of us feel that raising the procurement amount would be very desirable.”   Responding, Senator Olympia Snowe expressed her concerns with the president’s budget in the clearest terms, “The point is, we’ve got a huge gap here in terms of sustaining a 300-ship Navy.”

 Additionally, the budget request shrinks the Navy’s shipbuilding plan from 41 ships in last years future year defense plan (FYDP) to 39 ships for FY01 through FY05.  Part of the shift is a result of the decision to stretch out the DDG-51 program and delay construction of DD-21 by one year (from FY04 to FY05).   The Navy acknowledges that the new FYDP creates a large spending problem for FY05 through FY07, when another new aircraft carrier CVN (X), and a new LHD amphibious assault ship will be required, as well as the DD-21 program coming on line with three ships a year and the aging attack submarine fleet needing to be replaced with a production rate of more that one submarine per year.

  National Security Support Programs Overlooked in FY01 Budget

Two critical national security support programs have been ignored in the president’s budget request, specifically the National Defense Features program within the National Defense Sea Lift Fund and the Maritime Administration’s Title XI Ship Loan Guarantee program.

  Disappointedly, the Department of Defense budget does not take advantage of the opportunity to acquire the services of four, newly constructed commercial ships with a speed of 40 knots in Sea State 7, and a carrying capacity of up to 10,750 tons through the National Defense Features (NDF) program of the National Defense Sealift Fund (NDSF).  For these ships to be designed and built with defense features to maximize their utility for the Department of Defense in a national emergency, $160 million needs to be authorized and appropriated in FY01, to fund the NDF program.

  In another disappointment, the Title XI Ship Loan Guarantee program is budgeted at only $2 million.  A $48 million shortfall from the $50 million that is required to guarantee $1 billion in ship construction contracts in the pipeline.  Commercial ship owners depend on this guarantee from the government to secure commercial bank loans for construction of commercial ships in the United States.  Title XI funding needs to be increased to support our vital national security shipbuilding infrastructure.

  Coast Guard Funding Needs Congressional Support

The Coast Guard’s acquisition, construction and improvements (AC&I) budget requests $520 million, a 34 percent increase (or 133 million) above FY00.  In the AC&I account $110 million is requested for a new Great Lakes icebreaker to replace the Mackinaw. Additionally, $42 million is provided for the deepwater program’s functional design.  This funding is inadequate given that an independent government analysis determined that each industry team would require $45 million to perform the proper and necessary functional design over a two year period, FY00 and FY01.  Last year and this years budgets combined would provide roughly only $15 million per team.   Unless more funding is appropriated, the Coast Guard’s efforts of ensuring the most capable and cost-efficient fleet of systems will be placed at risk. 

  H.R. 3392, The All American Cruise Act of 1999

In the final days of the First Session of 106th Congress, Representative Duncan Hunter (R-CA) introduced H.R. 3392, the “All American Cruise Act of 1999,” to promote the construction of cruise ships in U.S. shipyards, and facilitate the development of a United States-owned and registered cruise industry.   Currently, Representatives Randy “Duke” Cunningham (R-CA), Marcy Kaptur (D-OH), James Maloney (D-CT), and James A. Traficant, Jr. (D-OH) are cosponsors of the bill.

With more Americans than ever vacationing on cruise ships, it is unfortunate that all of the large ocean going cruise ships serving the American market are foreign-built ships, flagged in foreign countries to avoid U.S. tax law.  U.S. companies should be encouraged to build, register, and crew their ships in the United States, but if U.S. companies are to compete on a level playing field with their foreign competition, U.S. tax laws must be changed to provide tax parity to American companies wishing to serve the U.S. market. The “All American Cruise Act of 1999” will level the playing field to enable and empower American entry into this growing industry.

Additionally, with the current historic lows in Naval shipbuilding orders, Representative Hunter’s bill will aid our national security by ensuring a robust domestic shipbuilding industry, while creating hundreds of thousands of high technology, high skilled manufacturing and seagoing jobs for Americans. Furthermore, American tourists would be assured that they would be vacationing on the safest constructed and operated ships in the world.

Industry News

Newport News Shipbuilding Announces Selection of CVN 77
Warfare Systems Integrator

On January 31, 2000, NNS announced Lockheed Martin Corporation as the Warfare Systems Integrator for the CVN 77 nuclear-powered aircraft carrier scheduled to enter the fleet in 2008.  The selection decision is a result of a nine-month competition conducted by NNS under its CVN 77 Advance Planning contract for the U.S. Navy.  Warfare System Integration includes improving the interaction between sensors, communication systems, aircraft control systems, armaments and other electronic components on a ship.

Under previous carrier programs, the Navy provided the warfare system integrator as government furnished equipment.  Selection of the Warfare System Integrator is one of many Advance Planning contract tasks NNS is performing.  Other tasks include long-lead material procurement, advanced construction of selected hull modules and engineering and program management.  CVN 77 is the first step for the Navy’s three-ship evolutionary strategy for developing the next class of aircraft carriers.

NASSCO Delivers the USNS RED CLOUD  

On January 18, 2000, NASSCO delivered the USNS RED CLOUD (T-AKR 313) to the U.S. Navy under target cost and three months ahead of schedule.  The RED CLOUD is the fourth new construction ship built by NASSCO under the U.S. Navy's Strategic Sealift Program and utilized NASSCO's single Integrated Trial concept, a process that helped reduce costs and accelerate delivery.

A total of seven new construction ships and three ship conversions have been awarded to NASSCO under the Strategic Sealift Program. All ships are being named for U.S. Army Medal of Honor recipients. The RED CLOUD is named after U.S. Army Corporal Mitchell Red Cloud, Jr., a posthumous recipient of the Medal of Honor for his heroic actions in Korea in 1950.

The USNS RED CLOUD is a large, medium-speed, roll-on, roll-off (RO/RO) ship (LMSRs), with 390,000 square feet of cargo carrying space and is assigned to the U.S. Navy's Military Sealift Command.  The RED CLOUD will carry prepositioned U.S. Army equipment, vehicles and supplies near potential areas of conflict around the world. The ship will also provide stores for surge sealift support of remote military actions.

Well Said!

“The percentage of our gross domestic product that we currently invest for the national security pillar upon which our superpower status maintains itself is about three percent, roughly three cents on the dollar.  Over the last 60 years, the average has been 8 percent.  Three cents on the dollar for global responsibilities and global leadership.  My opinion is that if we do not sustain this turnaround that we will not sustain our role as a superpower…”

General James Jones, Commandant of the Marine Corps
February 10, 2000