Prefabrication of the financing of the federal shipbuilding project

Initial appropriation discussions are underway for fiscal 2022, with continued focus on federal shipbuilding programs. Things have been tough for the Navy as Congress raised questions about the president’s commitment to the Navy’s long-term shipbuilding program. Meanwhile, House owners are apparently focused on the continued successes of shipbuilding within the Maritime Administration and Coast Guard. With billions of dollars at stake, the US shipbuilding industry should be watching closely the development of next year’s finance bills.

Congress relies on Navy budget proposal
On June 17, 2021, the Navy released its report to Congress on the annual long-range plan for the construction of warships for Exercise (FY) 2022. The report, which is required by law to contain a detailed program for the construction of Navy combatant, support and auxiliary ships over the next 30 fiscal years, focusing instead on the President’s immediate budgetary request for fiscal year 2022. This approach, focused on immediate demand instead of a long-term plan, is typical of a new presidential administration in its first year. The Navy’s proposed budget for fiscal year 2022 called for total funding of $ 18.1 billion for the construction of eight new ships, including two Virginia-class attack submarines (SSNs); an Arleigh Burke-class destroyer (DDG-51); a Constellation-class frigate (FFG-62); a John Lewis class lubricator (TAO-205); two TATS tow, rescue and rescue vessels; and a TAGOS ocean surveillance vessel (X). The report contained limited details of the Navy’s long-term shipbuilding plan, simply indicating a long-term fleet ranging from 321 to 372 crewed combat forces ships, as well as 77 to 140 unmanned ships with no timeline. precise for the development of the fleet foreseen in the report.

Subsequent discussions apparently rejected the report’s fleet projections and instead remained focused on the 355-vessel fleet in the Navy’s force structure assessment in 2016. Indeed, the budget request and report to long term have been the subject of significant criticism in Congress, with the House Appropriations Committee ultimately seeking to add funds for a second Arleigh Burke-class destroyer in the Department of Defense appropriations bill for fiscal year 2022. The Committee has been extremely critical of the President’s budget request and its impact on the shipbuilding industry. The committee report accompanying the supply bill stated, “The committee is appalled by the Navy’s decision to remove a DDG-51 Flight III destroyer from the budget request for fiscal year 2022. For the second consecutive fiscal year, the Navy chose to remove a major vessel from the budget request rather than make difficult funding decisions in a budget constrained environment. This represents a troubling tendency to underfund vessel acquisition programs and then demand that the withdrawn vessel be the highest priority on the unfunded priority list. In addition, the ship’s withdrawal from the budget request breaks the program’s multi-year supply contract, which has a negative impact on the already fragile national shipbuilding industrial base. The Senate Armed Services Committee apparently shares the view of House owners, adding $ 1.7 billion to its National Defense Authorization Act increase for fiscal year 2022 (fiscal year 2022 NDAA) to clear the second Arleigh Burke class destroyer.

NSMV and Coast Guard funding continues
While the Navy’s shipbuilding program comes under scrutiny by Congress, the reception has been much more positive for the Maritime Administration (MARAD). Building on MARAD’s initial success in the ongoing construction of the first four National Security Multi-Mission Vessels (NSMV) under the supervision of Vessel Construction Manager (VCM) TOTE Services at the Philly Shipyard, the House Appropriations Committee is seeking funding the fifth NSMV for Cal Maritime. The Committee’s Markup of the Transportation, Housing and Urban Development Appropriation Bill, released on July 20, would provide $ 315 million to fund the entire NSMV V, as well as $ 5 million for the NSMV program. aimed at assisting State Maritime Academies in making necessary lateral infrastructure improvements for the delivery of NSMVs.

Beyond the NSMV themselves, it’s clear that many federal leaders see the value of the NSMV design and the VCM approach. In its NDAA markup for FY2022, released on July 28, the House Armed Service Committee’s Subcommittee on Maritime Power and Projection Forces specifically identified the NSMV as the base to replace hospital ships in the House Armed Service Committee. Marine (T-AH). The subcommittee’s markup read: “The committee believes that as an alternative to maintaining the converted supertankers that were purchased in the mid-1970s, the Navy could take advantage of the National Security Multi-Mission Vessel (NSMV) that the Maritime Administration is currently procuring for the State Maritime Academies. By using the hull form and the NSMV production line, the Navy could minimize the design costs and schedule of the T-AH (X) which is slated to replace the current T-AHs. This strategy would also allow the Navy to carry over future costly maintenance availabilities onto existing T-AHs and provide replacement capability earlier than the current plan.

As a result, the subcommittee requested a briefing from the Secretary of the Navy on the feasibility of using the NSMV hull form to meet the needs of replacement vessels for Navy hospital ships.

The House Appropriations Committee markup of the Homeland Security Appropriations Bill also focuses on continuing the U.S. Coast Guard’s (USCG) shipbuilding programs. The bill would provide an additional $ 597 million to fund the construction of the fourth offshore patrol vessel (OPC) at Eastern Shipbuilding and long-lead materials for the fifth OPC. The USCG would also receive $ 170 million for a portion of the long lead time materials for a third polar safety cutter at VT Halter Marine to keep the procurement program on schedule.

While these fundraising bills are in their early stages, it is certainly a positive sign that the House Appropriations Committee has not only supported, but increased, the president’s budget requests for construction projects. naval. If this trend continues, fiscal 2022 could be a positive year for new federal shipbuilding projects.

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