Shipping, shipbuilding, offshore news

May 4, 2007

House Seapower increases Navy shipbuilding spending

The House Seapower and Expeditionary Forces Subcommittee today completed its markup of H.R. 1585,The National Defense Authorization Act for FY08.

The subcommittee has jurisdiction over the Navy and Marine Corps procurement and research and development programs.

Subcommittee Chairman Gene Taylor noted that "For the first time this subcommittee [also] has jurisdiction over programs of the Maritime Administration of the Department of Transportation. This mark authorizes the budget request for the Maritime Administration and reaffirms the authorization of the Maritime Security Program and the Maritime Guaranteed Loan Program which have multiple year authorizations contained in the Maritime Security Act of 2003."

The subcommittee's version of the bill substantially increases spending oin some important shipbuilding programs. It:

Adds $1.7 billion in Navy procurement for a second San Antonio class LPD in fiscal year 2008.
Adds $456 million for a second T-AKE dry cargo ship in fiscal year 2008. This funding is carried in Title III of the bill under the National Defense Sealift fund.
Adds $588 million in Navy advance procurement for an additional ship-set of reactor plant heavy components and main propulsion components for the Virginia class submarine program. This additional ship-set of equipment will give the committee flexibility to increase production of the Virginia class submarine program to two per year prior to the Navy's current goal of 2012.

The mark authorizes the Department's budget request for the following major ship programs:

$2.724 billion for authorization and the first increment of funding for the next generation aircraft carrier, USS Gerald R. Ford CVN 78.
Funding, including advance procurement, of a Virginia Class submarine. $2.65 billion and $702.7 million respectively.
$1.4 billion for a San Antonio class LPD.
$2.8 billion for the second and final increment of two DDG-1000 class destroyers
$456 million for a T-AKE dry cargo vessel.
$210 million for the first Joint High Speed Vessel.
$710.5 million for two Littoral Combat Ships, a change to the original budget request based upon recommendation by the Secretary of the Navy.

Chairman Taylor also noted that the panel's version of the bill contains a number of legislative provisions, including:

A requirement that new classes of major surface combatants are designed and constructed with integrated nuclear power systems.
An initiative to allow the Secretary of the Navy to use procurement funding for capital investment in shipyards or shipyard contractor facilities, if the investment can be shown to result in overall cost savings to the government.
Authority for the Secretary of the Navy to enter into a multiyear procurement contract for Virginia class submarines beginning with fiscal year 2009.
Authority for the Secretary of Defense to transfer up to $20 million for emergent repairs or maintenance identified during aircraft carrier complex refueling overhauls and submarine engineered refueling overhauls.
Authority to transfer up to three vessels of the nonretention fleet maintained by the Maritime Administration to the Secretary of the Navy for disposal.

The former Chairman of the panel, Ranking Republican Roscoe Bartlett, (R-MD). said that "where we were forced to make funding cuts, these were made primarily on the basis of under-performance of an acquisition program," citing the Littoral Combat Ship as one example.

He said that "tough choices" on funding cuts had enabled the subcommittee to strengthen the shipbuilding program.

"By strengthening the shipbuilding program," said Rep. Bartlett, "not only do we take an additional step to delivering the Chief of Naval Operation's 313-ship Navy, but we also address the Navy's number one and number two unfunded priorities."

"Mr. Chairman, as we discussed earlier this week, I would ask that as we move forward, we continue to refine funding for T-AKE. I understand that while the mark in Title III fully funds the procurement cost for an additional T-AKE in Fiscal Year 2008, the actual cost of an additional T-AKE in 2008, may be $122 million - $145 million greater than the amount provided in the mark. This is due to additional post delivery and outfitting costs, which are separate from procurement costs, and also due to material cost escalations, not reflected in the baseline budget request for the Fiscal Year 2008 ship. I would simply ask that we ensure, if we're adding money to the budget for an extra ship, that we're giving the Navy the total amount they would need to add a new T-AKE to the fleet.

Bartlett described the provision requiring that future major combatant vessels have integrated nuclear propulsion as "simply the right thing to do." He noted the finding of a DoD study that risks associated with the cost and supply of oil will make the US military's ability to rapidly deploy on demand "unsustainable in the long term."