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House Authorizes the Procurement of 8 Ships
On May 17th, the House of Representatives passed its version of H.R. 1585, the FY 2008 National Defense Authorization Act. The bill provides $15.1 billion for the procurement of eight ships. The House bill was the first of four FY 2008 defense spending bills to be passed this year.
The House bill fully funds the six ships contained in the Administration’s budget request, which includes one aircraft carrier, one Virginia class attack submarine, one amphibious transport dock ship, two littoral combat ships, and one combat force logistics ship in addition to funding for the completion of the first two multi-mission land attack destroyers. The Administration had initially requested funding for seven ships, but submitted an amended request to Congress asking that one of the three littoral combat ships be removed. In addition to the six ships requested, the House authorized the addition of one LPD-17 amphibious transport dock ship and one T-AKE combat force logistics ship to the budget. Renewing alarm that the U.S. attack submarine fleet will drop below the established minimum force structure of forty-eight submarines in 2020, the House Armed Services Committee added $588 million for the advance purchase of major components for a second Virginia class submarine in order to accelerate the procurement to two submarines per year prior to the Navy’s current plan to do so in FY 2012.
The report accompanying the House
bill expressed the Committee’s concern that further disruption in the littoral
combat ship (LCS) procurement plan may be counterproductive to efforts by the
Navy and industry to control cost in the program. The Navy was directed by Congress to submit a
report analyzing the cost overruns on LCS and explain future procurement plans
for the program
Congress Supports Domestic
Manufacturer
The
report accompanying H.R. 1585 expresses the need for this country to maintain a
healthy
U.S. shipbuilding industrial
base, and the unease of Members of Congress regarding the increasing use of
foreign-manufactured components on
U.S. naval ships. The report language urges the Navy to
“consider the domestic industrial base for all significant components of ship construction
when formulating shipbuilding programs and its long-term shipbuilding plan.”
Shipyard Capital
Investment Supported
The House
included legislation in the FY 2008 Defense Authorization Bill authorizing the
Secretary of the Navy to provide capital expenditure incentives in shipbuilding
contracts to encourage greater process and facility investments that will
reduce the cost of shipbuilding programs. In March of this year, the House Seapower and Expeditionary Forces
Subcommittee held a hearing examining ways to modernize
U.S. shipyards and improve cost savings on naval ships. Philip Teel, President of Northrop
Grumman Ship Systems; Mike Toner, Executive Vice President of General
Dynamics Marine Systems; and Cynthia L. Brown, President of the American
Shipbuilding Association testified that while the shipbuilding industry is
investing in facilities and improving efficiencies, industry is often limited
from doing more because of low rates of naval ship production which fail to
provide a return on corporate investments.
To achieve greater facility investment, the House passed
legislation encouraging the Navy to budget within each shipbuilding contract
incentive fees for investment in facilities, processes, or training that will
result in cost savings to the government. Annual reports are required to be submitted to Congress detailing any
capital investment projects awarded and the anticipated cost savings to the
government.
House Works to End
Dependence on Foreign-Built Ship
Included in H.R. 1585 is legislation sponsored by Reps. Gene
Taylor (D-MS) and Jo Ann Davis (R-VA) to stop the Department of
Defense (DOD) from outsourcing America’s military sealift missions to foreign
countries. The provision would prohibit
DOD from leasing a foreign-built ship for a period longer than two years.
DOD has been engaged in a practice
of leasing foreign-built ships for one month shy of five-years. These leases circumvent
U.S. defense acquisition laws requiring that
vessels for the Armed Forces be built in the
U.S. and the Budget Enforcement Act
of 1990, which limits the leases of capital assets. There are presently six ships under leases of
five years, minus one month. Five of
these vessels are on their second five-year lease contract. Leases of almost ten consecutive years are
evidence of a long-term, dedicated military requirement, which should dictate
the construction and purchase of American-built ships. By leasing foreign-built vessels rather than
buying American-built ships, DOD is harming the
U.S. defense shipbuilding industry,
increasing the cost of combatant ships, and creating an unnecessary national
security risk to Americans.
Under the House passed legislation, DOD would retain the
power to lease foreign-built ships in an emergency or to satisfy short to
medium term sealift requirements, but would be barred from entering into lease
contracts that exceed two years in duration.
Senate Urged to Support
Limit Leasing Legislation
Senator Susan Collins (R-ME) is leading the effort in the Senate to stop the de
facto purchase of foreign-built ships through long-term leases. Senator Collins and fourteen of her
colleagues have asked the Senate Armed Services Committee and Defense
Appropriations Subcommittee to include the same limitation as that passed by
the House of Representatives.
Joining Sen. Collins in support of ending DOD’s reliance on
foreign-built ships are Senators Sherrod Brown (D-OH), Maria Cantwell
(D-WA), Robert Casey (D-PA), Thad CochranChris Dodd (D-CT),
John Kerry (D-MA), Herb Kohl (D-WI), Mary Landrieu (D-LA),
Joe Lieberman (I-CT), Trent
Lott (R-MS), Jack Reed (D-RI), Olympia Snowe (R-ME), David
VitterSheldon Whitehouse (D-RI). .
House Authorizes $30
Million for Title XI
The House
of Representatives has authorized an appropriation of $30 million for the Title
XI Ship Loan Guarantee Program. The
Authorization is the last in a series of multi-year authorizations first
contained in the fiscal year 2004 Defense Authorization Bill. That legislation provided $30 million each
year from fiscal years 2004-2008. In the
report accompanying H.R. 1585, the House Armed Services Committee cited an
excerpt from the Merchant Marine Act of 1936 regarding the importance to
America’s
national security and economy to maintain a fleet of U.S.-built commercial
ships. The Committee reiterated the
importance of Title XI Ship Loan Guarantees to satisfy this national
objective. Title XI provides small and
medium sized ship owners with a federal guarantee of their commercial shipbuilding
loans. Funding for new loan guarantees
is required to reverse the decline in
U.S.
ship construction and rebuild the commercial fleet to serve
America’s
waterborne commerce.
The $30 million authorization by the House is a positive
step given that the program has not received an appropriation since FY
2003. There are presently no
un-obligated funds remaining in the Title XI account to satisfy the growing
demand for commercial ships. An
appropriation is needed this year to ensure
America’s energy and commercial
transportation needs can be met by providing for the replacement and expansion
of the aging Jones Act fleet of ships.
Senators Pledge Their
Support for
Commercial Shipbuilding
Senators Mary
Landrieu (D-LA) and Trent Lott (R-MS) are rallying their colleagues
in the Senate to support an appropriation of $60 million in new loan guarantees
for the Title XI Ship Loan Guarantee Program. Last year the Senate included $30 million for new Title XI loan guarantees. Unfortunately, no monies were ultimately
appropriated in conference with the House
In a letter to Senate
Transportation Appropriation Subcommittee Chairwoman Patty MurrayChristopher Bond (R-MO), Senators Landrieu and Lott,
joined by fifteen of their colleagues, are urging the Senate to appropriate $60
million in the FY 2008 Transportation Appropriations Bill. Joining Senators Landrieu and Lott in support
of Title XI include: Senators Daniel
Akaka (D-HI), Barbara Boxer (D-CA), Maria Cantwell (D-WA), Susan
Collins (R-ME), Christopher Dodd (D-CT), John Kerry (D-MA), Herb
Kohl (D-WI), Joe Lieberman (I-CT), Barbara Mikulski (D-MD), Jack
Reed (D-RI), Olympia Snowe (R-ME), David Vitter (R-LA), Jim
Webb (D-VA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR) .
Industry News
Senator Collins to Receive
Shipbuilding
Industry’s Highest Honor
The American Shipbuilding Association will award Senator Susan
Collins (R-ME) with the Herbert H. Bateman Award on June 6th. Established in 2000, and named for the late
Congressman Herbert H. Bateman (R-VA), the award is presented to
individuals who demonstrate “continued, outstanding, and inspirational
leadership in support of a strong American shipbuilding industrial base.”
Partners Excel in Sea
Power Ambassador Recruitment
The American Shipbuilding Association recognizes five
Partners for their active recruitment of Sea Power Ambassadors. The Sea Power Ambassador Program is a
grassroots initiative to educate the American public and elected officials on
the need to make rebuilding
America’s
Navy and Coast Guard fleets a national priority.
The following companies are recognized for their 2007
recruitment efforts: AMSEC, LLC
located in Virginia Beach, VA and San Diego, CA; Dresser Rand, with
operations in Olean, Painted Post, and Wellsville, NY, and Houston, TX; Henschel
located in Newburyport, MA; SPD Electrical Systems of Philadelphia, PA;
and Marotta Controls headquartered in Montville, NJ.
Do You Support a Strong
Navy of U.S.-Built Ships?
Become a Sea Power
Ambassador
Sea Power Ambassadors are a coalition of individuals from
across the country working to raise awareness that
America needs a larger naval fleet,
and to maintain its sovereign ability to design and build the ships for our
security. Show your support by
registering today at www.seapowerambassador.org.
Well Said!
“The U.S. Navy is the only branch of our government that
routinely employs all the elements of national power – diplomatic,
informational, military, and economic.”
Captain Michael P.
McMahon
U.S. Navy
“World Disorder and the Decline of Pax Americana”
Proceedings
May 2007
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