The Trump administration and congressional leaders have “reached an agreement“ on overall spending levels in a two-year deal to raise the budget caps, in addition to settling on a two-year debt limit increase, Treasury Secretary Steven Mnuchin said Thursday morning. But a final deal remained elusive and a senior Trump administration official cautioned later Thursday that significant hurdles remain. The administration wants a guarantee that Democrats won’t insert "poison pills" in individual spending bills, like provisions barring the use of federal funds to build Trump’s border wall. Democrats said Friday there are "nonstarters" in a new White House offer that includes $1.1 trillion in options to offset spending increases in a two-year agreement that would raise the budget caps and hike the debt limit. Democrats say they are reviewing the White House bid, however. Meanwhile, President Donald Trump accused Democrats of using the debt ceiling as a "negotiating wedge" to secure their priorities in a sweeping budget deal. A senior Trump administration official confirmed that the White House on Thursday night proposed $574 billion in ways to counteract spending increases, in addition to $516 billion in savings that would be achieved by freezing fiscal 2021 spending levels for fiscal years 2022 and 2023.

CONGRESSIONAL UPDATE

Esper Confirmation Teed Up for Vote Next Week

The Senate Armed Services Committee on Thursday advanced to the floor the nominations for Mark Esper to be Defense secretary and Army Gen. Mark A. Milley to be chairman of the Joint Chiefs of Staff. Esper, who currently serves as Army secretary, was on the Hill on Thursday but declined to comment on his pending nomination. Esper is expected to be confirmed next week.

NAVY NEWS

Surface Warfare Directorate Still Considering Large Unmanned Combatant Requirement

The new director of surface warfare is still considering what the Navy needs from upcoming manned and unmanned surface ship programs and how to get the best capability for the dollar. Rear Adm. Gene Black (OPNAV N96), who recently took over the portfolio after serving as the commander of the Harry S. Truman Carrier Strike Group, said his staff “haven’t closed the book” on requirements for the upcoming Large Surface Combatant program as it works through what the Navy needs and how to acquire it.

Medium Unmanned Surface Vehicle (MUSV) RFP Issued

On Tuesday, NAVSEA issued the notice of RFP for the Medium Unmanned Surface Vehicle (MUSV). The link to the RFP and additional information can be found HERE.

Navy Curtails LCAC SLEP, Scraps Plans for 2019 Craft Upgrade

The Navy is curtailing the Landing Craft Air Cushion service life extension project, scrapping plans to proceed with awarding a contract this summer to modernize the combat hovercraft in the inventory slated for improvements on account of its poor material shape and is instead offering up $23 million previously slated for the project for other service priorities. The Pentagon's comptroller on June 25 asked congressional permission to shift funds appropriated in the Navy's fiscal year 2019 shipbuilding accounts for the LCAC SLEP for high-priority needs as part of an annual reallocation of funds from low- to high-priority projects. The Navy now plans to conclude the LCAC SLEP program with the three upgrades awarded last September for LCAC SLEP 86, LCAC SLEP 87 and LCAC SLEP 77. Chesapeake, VA-based Tecnico Corp. was awarded a potential $48 million contract for these upgrades last fall and was slated to receive the contract for the final SLEP this summer.

McCain Further Delayed from Returning to Fleet

A Japan-based destroyer sidelined by a deadly collision in 2017 will not return to the fleet because of a new issue that arose in testing after it returned to the water from dry dock, Naval Sea Systems Command confirmed this week. The port shaft on the U.S. Navy destroyer John S. McCain — which runs through the hull and turns one of the ship’s twin screws — is out of alignment, something workers discovered when waterborne tests caused high vibrations, according to sources who spoke to Defense News. Read more HERE.

Navy Cyber Group Seeks Defensive Tech from Industry

A cyber warfare group focused on naval aviation is raising the alarm about the vulnerability of the service's platforms and calling on industry to propose a wide range of defensive technology research efforts that could be incorporated as early as the concept development phase for new platforms. The Cyber Warfare Detachment was established in 2014 to coordinate cyber activities across Naval Air Systems Command and its subordinate commands. "Most business systems information technology cybersecurity measures are misapplied and ill-designed for weapon systems, especially given air vehicle size, weight and power restrictions, and their operational environments," the document continues. The research efforts, it notes, could be applied to both Navy and Marine Corps programs.

DOD To Host Public Meetings on Technical Data Rights

The Defense Department will host a pair of meetings in September to discuss statutory changes to the way DOD acquires technical data rights, according to a notice posted in the Federal Register. The first meeting will be held Sept. 6, while the second is scheduled for Sept. 16. Both will be hosted at the Mark Center Auditorium in Alexandria, VA. The meetings will focus on two amendments to the DFARS. One amendment, "Validation of Proprietary and Technical Data," implements Section 865 of the Fiscal Year 2019 National Defense Authorization Act, according to the notice. DOD plans on publishing advanced notices of proposed rulemaking, including initial drafts of the proposed DFARS amendments, prior to the September meetings, the notice states.

INTERNATIONAL NEWS

Canada Announces $1.5 Billion for Shipbuilding

The federal government of Canada announced $1.5 billion in contracts to keep a dozen warships running for another 20 years as part of Canada’s decades-long, multi-billion-dollar national shipbuilding strategy. The National Shipbuilding Strategy is a long-term project to renew Canada's federal fleet of combat and non-combat vessels.

The Diplomat: What We Know About the Future of China’s Amphibious Assault Fleet

One of the more long-awaited People’s Liberation Army Navy (PLAN) projects over the last decade is the 075 landing helicopter dock (LHD). It has been known for many years that 075s would be constructed at Hudong Zhonghua shipyard, where the PLAN’s 071 landing platform dock (LPD) ships were built. However until the last year or so there was no clear confidence as to when the first 075 could be expected to be observed, or how many may be built. In the last few months a number of very informative new pictures and rumors have emerged, allowing us to create a more detailed timeline for the near term. The piece by The Diplomat reviews overall composition of the PLAN amphibious assault fleet today and in the near future, as well as overall PLA sealift capability. Particular attention was paid to vessels that may be relevant for a Taiwan invasion contingency, given that news and defense media appear to be particularly fixated on such a scenario. Read the report HERE.

Trump Says U.S. Navy Ship ‘Destroyed’ An Iranian Drone

President Donald Trump said Thursday that the USS Boxer downed an Iranian drone that came within 1,000 yards of the Navy ship and ignored "multiple calls to stand down" -- marking yet another escalation in the already tense situation playing out between Washington and Tehran. The drone was destroyed using electronic jamming, according to a US defense official. The crew of the Boxer took defensive action after the drone came within a threatening distance of the US ship, the official said. A US Navy official told CNN that there were several other interactions between the US warship and Iranian military forces prior to the downing of the drone.

ENERGY NEWS

Offshore Wind Activity on US East Coast to Drive Newbuild Vessel Demand

As offshore wind activity increases along the US East Coast, a big ramp-up in port activity is expected; there is already evidence of this at ports in Massachusetts and Rhode Island. With this will come a demand for newbuild heavy lift vessels installation vessels specifically for the wind energy trades.

New York Greenlights Two Huge Offshore Wind Projects

New York State has awarded two offshore wind contracts with a combined capacity of almost 1,700 megawatts (MW) in waters off Long Island. The contracts were awarded to Norwegian firm Equinor and a joint venture between Danish company Orsted and U.S. business Eversource. The Empire Wind and Sunrise Wind developments were announced as the winners of New York’s first “comprehensive offshore wind solicitation” on Thursday. The companies will now commence negotiations for long-term contracts with the New York State Energy Research and Development Authority for offshore wind renewable energy certificates. Both projects are expected to commence operations in 2024.

Capacity Issues Loom for East Coast Wind Developers

In U.S. waters, offshore wind developers face hurdles of finding enough heavy-lift construction vessels, and even physical space in U.S. ports to accommodate the coming generation of giant wind turbines. With its Block Island project, Deepwater Wind built local political support by buying and hiring locally. Other wind developers are following that playbook, saying they plan to have vessels built near where they hold federal offshore leases. With the accelerating growth of projects worldwide, some in the industry say the tight supply combined with the Jones Act will be a roadblock for U.S. developers.

Lease Sale Set for Gulf of Mexico in August

Earlier this week, the Interior Department announced that the Bureau of Ocean Energy Management (BOEM) will offer 77.8 million acres in a regionwide lease sale scheduled for August 21, 2019. The lease sale would include all available unleased areas in federal waters of the Gulf of Mexico. This will mark the fifth offshore sale under the 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Program. Under this program, a total of 10 regionwide lease sales are scheduled for the Gulf, where resource potential and industry interest are high, and oil and gas infrastructure is well established.

JONES ACT NEWS

The Jones Act Is About Protecting America

The Resurgent – Former Congressman Ernest Istook (OK-5) – 16 July 2019

In recent weeks, opinion writers in a number of leading agriculture industry publications have been encouraging American farmers to ship their products in foreign vessels, arguing that it’s cheaper. They have also been urging repeal of the American law that is the last thin lifeline of the once-robust shipbuilding industry in the United States. Unfortunately, this line of thinking reflects the blindly globalist agenda that has been the bane of America’s economy for the last 50-years.

Group Reviews Jones Act’s Many Positive Effects on Puerto Rico

Seafarers International Union – 17 July 2019

The group spearheading the effort to return a Port Maritime Council on Puerto Rico held a meeting July 15 with local union leaders and maritime officials in Santurce to review the benefits of the Jones Act on the commonwealth’s economy. “My goal is to get everyone involved and to get their support for the Jones Act for the island,” stated Seafarers Union Port Agent Amancio Crespo.

From the debt crisis to Hurricane Maria to a massive texting scandal: Puerto Rico's troubles explained

CNN – Holy Yan – 18 July 2019

You may think the protests erupting in Puerto Rico are all about the government's texting scandal. But the problems run much deeper. And unless big reforms come soon, protesters say they're ready to "make a revolution." Part of the problem stems from a US law back in 1920. The Jones Act requires all goods ferried between US ports to be carried on ships built, owned and operated by Americans. Those ships are much more expensive to buy and operate than ships from other countries. And that makes just about everything on the island more expensive.

Video: Will Hawaii be the next Puerto Rico?

Hawaii Free Press – 18 July 2019

We’d like to thank everyone who turned out last week for our two luncheons at which New York-based economic researcher John Dunham spoke about how reforming the 99-year-old federal maritime law known as the Jones Act could benefit Puerto Rico, Hawaii and, indeed, the whole nation. The well-attended event presented ground-breaking information about the protectionist shipping law, including about its history, its economic impact, and how it came to be so entrenched in the political swamp of Washington, D.C.

IN THE NEWS

LCS Commissioning Scheduled for Indiana Port

The Port of Indiana-Burns Harbor will host Indiana’s first U.S. Navy vessel commissioning ceremony when it commissions the USS Indianapolis littoral combat ship on Saturday, Oct. 26 at its facility on Lake Michigan. Several dignitaries will be present to witness the occasion, including Jill Donnelly, wife of former Senator Joe Donnelly, who serves as the ship’s sponsor.

U.S. Oil Makes it to Ukraine, Blow to Moscow

U.S. crude exports are gaining traction in Europe as even Ukraine turns into a significant consumer of American barrels at the expense of Russian supplies amid heightened U.S. political pressure on Moscow and problems over contaminated Russian oil. U.S. oil has yet to become a common feedstock for European buyers, who complain about volumes and varying quality, but recent market changes have shown American barrels can be a reliable alternative.

NASSCO Lays Keel for Matson’s 2nd New ConRo Ship

California-based shipbuilder General Dynamics NASSCO has celebrated the keel laying of Matsonia, Matson’s second Kanaloa-class combination container ConRo vessel. The keel laying ceremony for the hull took place in San Diego on July 17, 2019, only a few weeks after launching Matsonia’s sister ship, Lurline. Construction of the 3,500 TEU Matsonia began with a first cut of steel in April 2018 and the ship is expected to be delivered in the second quarter of 2020.

If you have any questions, please do not hesitate to contact Paula Zorensky on the SCA staff.

SCA Weekly Report | July 15-19, 2019

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