SCA Weekly Report | July 6-10, 2020

Shipbuilders Council of America

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SCA Weekly Report | July 6-10, 2020

ANNOUNCEMENTS

SCA NDAA Webinar

Be sure to register for the SCA FY21 webinar. The webinar will offer full breakdowns of the House and Senate versions of the FY21 NDAA and the key provisions, bill text and funding for various shipbuilding and ship repair programs.

This event is open to SCA members only.

WEDNESDAY, JULY 15, 1:00 EST

CONGRESSIONAL UPDATE

House Tees Up NDAA For Floor Consideration

On Wednesday, July 1, the House Armed Services Committee (HASC) advanced its version of the FY21 National Defense Authorization Act (NDAA).

The committee authorized just under $22 billion, $2.1 billion above the request, for the purchase of eight battle force ships — a Columbia-class ballistic missile submarine, two Virginia-class attack submarines, two Arleigh Burke destroyers, a new frigate and two towing and salvage ships.

The proposal would wall off 75 percent of the defense secretary's operations and maintenance budget until the Pentagon delivers a 30-year shipbuilding budget to Congress. Defense Secretary Mark Esper has been at odds with top House lawmakers who have called for the Pentagon to produce a long-term shipbuilding blueprint, which the law requires to be submitted alongside the annual defense budget request.

The legislation also would block the retirement of any Navy ship in fiscal 2021 until the Pentagon submits the Navy's integrated force structure assessment to Congress.

The SCA Summary can be viewed HERE.

The bill text can be found HERE and the Committee report can be found HERE.

House Appropriations Subcommittees Advance FY21 Funding Bills  

The House Appropriations Subcommittees 12 FY21 spending bills this week, setting the legislation up for full committee consideration next week. The committee also released its funding breakdown, known as 302(b)s for the FY21 bills as follows:

Agriculture-FDA: $24 billion

Commerce-Justice-Science: $71.5 billion

Defense: $626.2 billion

Energy-Water: $49.6 billion

Financial Services: $24.6 billion

Homeland Security: $50.7 billion

Interior-EPA: $36.8 billion

Labor-HHS-Education: $182.9 billion

Legislative Branch: $5.3 billion

Military Construction-VA: $102.6 billion

State-Foreign Operations: $47.9 billion

Transportation-HUD: $75.9 billion

Democratic leaders in the House are expected to bring the majority of those bills to the floor for passage by month’s end. However, the Senate has yet to release any of their 12 spending bills or announce plans for marking up those measures. Therefore, lawmakers are likely to resort to a short-term stopgap spending bill (known as a continuing resolution) this fall that continues funding at current levels beyond the Oct. 1 start of the new fiscal year.

RELATED: House Appropriators to Debate Defense Spending Bill Tuesday

The House Appropriations defense subcommittee is poised to consider a fiscal year 2021 defense spending bill that funds Pentagon modernization to the tune of $244.7 billion, but also sets the stage for confrontation with the White House over the border wall and the names of military bases.

The Defense subcommittee advanced its version of the bill on Tuesday during a closed-door markup. The bill includes a total of $694.6 billion in new Defense Department spending -- $3.7 billion below DOD's budget request, but $1.3 billion more than the level enacted in FY-20.

NAVY NEWS

Defense CEO's Warn of 'Significant' Risk Without Supplemental Funding

The top executives of eight major defense contractors are warning the White House and Pentagon of dire consequences for the defense industrial base — and efforts to modernize the military — without extra funding to cover pandemic-related costs.

In separate letters on Tuesday to acting White House budget chief Russ Vought and Pentagon acquisition chief Ellen Lord, the CEOs warned that, without more funding, the costs imposed by a program aimed at buoying the defense industry could force the Pentagon to dip into procurement and research and development accounts needed for military modernization. The group warned that "the financial risk to the defense industry could be significant," including job losses, supply chain instability and significant cuts in current and future modernization efforts.

Section 3610 of the coronavirus relief bill enacted in March, known as the CARES Act, H.R. 748 (116), requires the Pentagon to reimburse contractors for sick or paid leave that they’ve offered employees who can not access the federal facilities where they need to work during the pandemic.

But lawmakers didn't allocate extra money to cover the added costs, and now Pentagon and industry officials are concerned it will eat into the Defense Department's long-term priorities.

Lord warned the House Armed Services Committee in June that the Pentagon would be forced to dip into modernization and readiness funds to pay for the pandemic relief provision. She has called for supplemental funding to cover increased costs to the Pentagon during the slowdown caused by the coronavirus. The Trump administration has not yet formally requested supplemental defense funding for a new round of economic stimulus.

Navy Removes Ford Carrier Program Manager, Citing Performance Over Time

The Navy removed its program manager for the first-in-class USS Gerald R. Ford (CVN-78), as Navy acquisition chief James Geurts looks to boost performance in the new carrier program. Capt. Ron Rutan has been moved from the program office to the Naval Sea Systems (NAVSEA) staff, and Capt. Brian Metcalf has taken over the program office. Metcalf previously served as the San Antonio-class amphibious transport dock (LPD-17) program manager and was working as the executive assistant to the commander of NAVSEA prior to his reassignment to the CVN-78 program office (PMS 378).

ENERGY NEWS

Offshore Wind Developers, Designers Size Up First U.S. SOVs

With Dominion Energy’s completion of the first two offshore wind turbines on a federal lease, the Virginia-based power company and its partner Ørsted are looking to have the first U.S.-built wind turbine installation vessel – essential to building offshore wind turbine projects – designed and built for a planned 2.6 gigawatt array off Virginia. In building the three-phase Virginia project to be complete in 2026, Dominion will be using the next generation of Siemens Gamesa turbines generating up to 14 megawatts and potentially 15 MW each.

Coast Guard Challenged on Offshore Wind Traffic Study

A Coast Guard study that recommends against designated vessel transit lanes through New England offshore wind turbine arrays “contains serious foundational and analytical errors that merit correction,” commercial fishing advocates say in a formal objection to the findings. Among other shortcomings, the Coast Guard analysis relied heavily on Automatic Identification System (AIS) vessel tracks to assess maritime traffic around the Vineyard Wind site – despite cautions from the fishing industry and other sources that commercial fishing vessels rarely use AIS, the RODA paper says.

Japan to Develop Offshore Wind Farms at 30 Sites in 10 Years

Japan will craft new rules and support infrastructure in a drive that aims to build offshore wind farms at 30 sites during the next decade, the Nikkei business daily said on Thursday. Industry Minister Hiroshi Kajiyama is expected to announce policy measures soon to target the goal, the paper said, without identifying sources. The new policy aims for three or four projects each year with total generation capacity of 1 gigawatt (GW), from the financial year starting in April 2021 until fiscal 2030/2031, for an accumulated total of 10 GW.

JONES ACT UPDATE

End the Jones Act? Ask Alexander Hamilton

By Timothy Walton & Bryan Clark

The Jones Act celebrates its 100^th birthday this year. Don’t worry if you forgot to send a gift–you're not alone. The law requires that ships engaged in commerce between American ports be U.S.-built and crewed by American citizens or permanent residents. That makes the Jones Act unpopular with groups who seek to reduce business and consumer costs by outsourcing these jobs abroad, and it is regularly threatened with repeal. However, such a move would jeopardize U.S. national security and harm the U.S. maritime industry and its workers. Instead, the U.S. government should implement innovative policies to improve the Jones Act's support for national security. Read more HERE.

The Merchant Marine and America’s Founding  

By James Tobin

Even before there was the American Navy we know today, another maritime force helped America defeat King George III’s navy and give birth to a new nation. That force was what we now call the U.S. Merchant Marine. History has overlooked the role of civilian mariners in our nation's many wars. Still, as we celebrate America's 244^th birthday, it is worth remembering that we might well have lost our fight for independence without these brave men who stared down the world’s most dominant navy. Read more HERE.

Strengthening Maritime Capability for A Stronger and More Resilient America

By Mike Stevens

Now is the time to enhance and improve America’s maritime industrial base to meet the challenges today and into the foreseeable future. With Russia and China building their sea power in search of a new world order, American shipbuilding cannot afford to lag behind. The administration and Congress must take immediate action to counter the threats to America’s role in the world and to ensure our prosperity. This action starts in the shipyards (public and private) and in the sea services. Read more HERE.

IN THE NEWS

Heavy Lift Crane Prepares to Lift Capsized Golden Ray

The team working on the removal of the capsized car carrier, Golden Ray, is preparing for the final stage of the operation to remove the vessel that has been lying on its side in St. Simons Sound since September 2019. The twin-hull heavy lift vessel VB-10,000 arrived at the Port of Fernandina in Florida on July 3 for final modifications and function checks before heading to St. Simons Sound. The lift vessel is currently scheduled to arrive at the wreck site by mid-July.

Carnival Delays New LNG Cruise Ship While P&O Sells Older Cruise Ship

Citing the impact of COVID-19, Carnival Cruise Line announced that it is delaying the introduction of its much-anticipated new cruise ship, Mardi Gras, by three months. The largest cruise ship in Carnival Cruise Line’s history, the 180,000 gross ton ship, which will also be the first LNG-powered cruise ship operating in North America, is now expected to enter service on February 6, 2021. Additionally, P&O Cruises, another Carnival Corporation brand, confirmed reports that it has sold one of its cruise ships--the 77,000 gross ton, Oceana.

Second Matson ‘Con-Ro’ Christened at NASSCO

The second of two Kanalao-class “con-ro” ships for Honolulu-based, Matson, was launched last week at General Dynamics NASSCO shipyard in San Diego, California. The new vessel was christened ‘Matsonia,’ an iconic name in Matson’s long history dating to the construction of Matson’s first ship of that name in 1912.

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