« Back to Article

SCA Weekly Report | October 28 - November 1, 2019

Shipbuilders Council of America

20 F Street NW, Suite 500

Washington, DC 20001



SCA Weekly Report | October 28 - November 1, 2019




Congressional Leaders Make Push on Spending Deal

Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Mitch McConnell (R-KY) want to get all 12 spending bills passed by the end of this year, but a standoff over President Donald Trump’s border wall remains the biggest obstacle in bipartisan talks to avoid another government shutdown.


Pelosi and McConnell spoke on the phone Monday and agreed that “the goal” was to finish all appropriations bills by Dec. 31, according to multiple people familiar with the conversation. House Majority Leader Steny Hoyer (D-MD) also told Democratic committee chairmen that any short-term funding measure to keep the government open shouldn’t extend past year’s end, and that he understood that to be McConnell's position as well after a recent conversation with the Senate GOP leader. President Trump signed into law a two-year budget agreement in August that was supposed to end the threat of another shutdown. But despite that deal — which was hammered out by Pelosi and Treasury Secretary Steve Mnuchin — there has been almost no progress on the individual appropriations bills that must be passed for fiscal year 2020.




Senate Passes Domestic Spending Minibus; Defense Funding Stalls

The Senate passed its first fiscal 2020 appropriations package Thursday, though lawmakers say they’ve made little progress toward a funding deal that can become law. Senators voted 84-9 to pass a noncontroversial, four-bill measure (H.R. 3055) that includes Agriculture-FDA, Commerce-Justice-Science, Interior-Environment and Transportation-HUD funds. The House has passed its own versions of the legislation, but before the two chambers can agree on the same exact set of bills, negotiators will likely need to agree on a set of top-line allocations for all 12 spending measures. Democrats have accused Republicans of slow-walking those negotiations, and Senate Appropriations Chairman Richard Shelby (R-AL) said he hoped to turn his attention to the allocations talks after the Senate passed its first bill.


On Thursday, the Senate failed to advance a different spending package that included funding for the Departments of Defense, Education, Health and Human Services, State, Energy and Labor. The procedural vote to advance those bills, which requires 60 votes, failed 51-41. Senate Democrats overwhelmingly objected to starting debate on the second bundle, protesting that Republican leaders have not engaged the chamber's minority party in negotiating bipartisan spending levels on the Senate's versions of the funding bills.


House Passes Bill to Allow More Harbor Maintenance Spending

This week, the House voted 296-109 to pass H.R. 2440 that would allow the government to spend Harbor Maintenance Trust Fund money without it counting against statutory limits on discretionary spending. Republicans in the House and Senate objected to the measure because they said it undermines the budget cap deal struck in July. The fund covers port operation and maintenance costs, including dredging. It’s funded by a tax on the value of imports and domestic cargo arriving at U.S. ports.


To comply with discretionary budget caps, Congress has appropriated less from the fund than the revenue it receives. Its balance was about $9.5 billion at the end of fiscal 2019, according to a report on the bill from the House Transportation and Infrastructure Committee. The bill would make it easier for Congress to spend the fund’s balance on dredging and maintenance that the Army Corps of Engineers estimated in 2016 would cost $20.5 billion over a decade, according to the committee report.


Inhofe Introduces “Skinny” National Defense Authorization Act

National defense programs at the Pentagon, Energy Department, and other agencies would be authorized in fiscal 2020 under S. 2731, which was introduced by Senate Armed Services Chairman Jim Inhofe (R-OK). The “skinny” National Defense Authorization Act omits nearly all of the policy provisions, reporting requirements, and other language typically associated with the annual measure.


The measure “supports a total of $738 billion in fiscal year 2020 funding for national defense,” according to a news release from Inhofe, though the legislative text he introduced omits tables that would specify authorizations for defense agencies, weapon systems, and programs. That proposed top-line authorization would comply with the fiscal 2020 cap on defense spending under Public Law 116-37, as well as the adjustment for overseas contingency operations (OCO) funding. The bill would authorize permanent funding authority for sustaining operational readiness of Littoral Combat Ships (LCS) on extended deployment and would direct the Navy to ensure that the U.S.S. Shiloh (CG-67) is assigned a U.S. port by Sept. 30, 2023.

Inhofe introduced the “Essential National Security Authorities Act for Fiscal Year 2020" as a last resort as negotiations between the House and Senate on a full NDAA measure (S. 1790) have stalled amid disagreements over the president’s border wall and related transfer authority. House Armed Services Chairman Adam Smith (D-WA) said this week that he’s still “pretty firmly opposed” to the smaller measure.


House Committee Approves $400B Higher Education Overhaul Legislation

Democrats on the House Education and Labor Committee on Thursday advanced their roughly $400 billion plan to revamp federal higher education policy after a markup that stretched over three days. The committee voted 28-22, along party lines, to approve the Democrats’ bill, H.R. 4674, to reauthorize the Higher Education Act. Chairman Bobby Scott (D-VA) has said he wants to see it passed out of the House by the end of the year.


The sweeping legislation calls for implementing tuition-free community college, increasing Pell Grants and other forms of student aid, expanding public service loan forgiveness and allowing existing federal student borrowers to lower their interest rate. Republicans opposed the measure, criticizing the overall increase in federal spending on higher education in the bill as well as what they said was too much emphasis on four-year degrees at the expense of career and technical training. GOP lawmakers also took issue with provisions of the legislation that targeted for-profit colleges.


Wittman to Enter Race for House Armed Services Committee Ranking Member

Rep. Rob Wittman (R-VA) said this week he will enter the race to become the next ranking member of the House Armed Services Committee following the announcement that Rep. Mac Thornberry (R-TX) will not seek reelection. Wittman, who hails from Virginia's 1st congressional district, currently serves as the ranking member of the House Armed Services seapower and projection forces subcommittee and previously was that panel's chairman. Wittman commended two of his potential competitors for the top Republican spot on the committee: Rep. Mike Turner (R-OH), who is the ranking member of the strategic forces subcommittee, and Rep. Mike Rogers (R-AL). Should Wittman become the committee's ranking member, or chairman if Republicans take control of the House, he floated Reps. Mike Gallagher (R-WI) and Bradley Byrne (R-AL) as possible contenders for the top GOP position on the seapower subcommittee.




NDIA Report Emphasizes Importance of Insurance in DOD Cybersecurity Certification

The National Defense Industrial Association has issued a report that emphasizes the important role that insurance companies can play in helping smaller businesses get certified -- and stave off potential supply shortages -- under an emerging Defense Department program that would establish baseline cybersecurity requirements for vendors and service providers. The RightExposure paper, dated Oct. 15, comes as DOD is pushing forward on an aggressive schedule to have a final CMMC plan completed by December and to begin implementation of the landmark contractor certification program next year, which some industry officials and policy specialists have said could cause supply shortages, particularly if smaller companies are unable to meet the strict requirements.





Bernhard Schulte, MidOcean Form U.S. Offshore Wind Joint Venture

U.S-based MidOcean Wind has teamed up with offshore wind veteran Bernhard Schulte Offshore to build and operate support vessels for the U.S. offshore wind industry. The joint venture combines the expertises of Bernhard Schulte Offshore, Buss Offshore Solutions, and EMS Maritime Offshore. The joint venture’s fleet currently consists of crew transfer vessels, standby safety vessels, helicopters, and two modern Service Operation Vessels (SOV) owned by Bernhard Schulte Offshore and registered in Germany. A third SOV is also planned. 




CBP Jones Act proposals could have big impact on U.S. offshore

Marine Log – 30 October 2019

On October 23, 2019, U.S. Customs and Border Protection proposed substantial changes to its interpretations of the Jones Act that will affect both the offshore oil and gas and offshore wind industries. The Jones Act is a key driver in how offshore structures are constructed and dismantled and so its interpretation is critical to both operational planning and cost analyses. Public comments are due on the proposed changes by November 22, 2019.


The Jones Act: Foundation of the towing industry

WorkBoat – Tom Allegretti – 29 October 2019

The American Waterways Operators is privileged to advocate on behalf of the U.S. tugboat, towboat and barge industry. With 5,500 tugboats and towboats and over 31,000 barges, our industry stands as the largest segment of the U.S. Jones Act fleet. Each year the marine towing industry moves over 760 million tons of commodities that drive the American economy and help sustain its people and way of life; supports over 300,000 jobs nationwide; and partners with the U.S. Coast Guard to elevate safety on the waterways and serve as “eyes and ears” on our nation’s coastal waters and inland rivers to detect and report potential threats.

The marine towing industry is critical to the prosperity and security of the United States, and the Jones Act is foundational to the existence of this industry.




China Approves Shipbuilding Mega-Merger

China has approved the long-rumored merger of its two largest shipbuilding conglomerates, China Shipbuilding Industry Corporation (CSIC) and China State Shipbuilding Corporation (CSSC). Approval by China’s State Council was announced in a statement posted to the China’s State-Owned Assets Supervision and Administration Commission website. The combined enterprise, named China Shipbuilding Group, will have annual revenues of approximately $141.5 billion, according to Chinese media reports, a figure that would dwarf that of its South Korean rivals and rank the new group as the world’s top shipbuilder.




US Navy Awards Study Contract to Vard Marine and Philly Shipyard

Vard Marine (VARD) and Philly Shipyard have been awarded a contract to lead a study for the US Navy Common Hull Auxiliary Multi-Mission Platform (CHAMP) program. The CHAMP program is a multi-phase effort that involves design studies, preliminary and detail design, as well as construction (DD&C) to ultimately replace the Military Sealift Command (MSC) fleet of ageing ships that provide transport for supplies and critical support to the US forces abroad. CHAMP would upgrade the current fleet with significant decreases in cost both in ship construction and life cycle maintenance. More than 60 vessels would benefit from the CHAMP program. Philly Shipyard president and CEO Steinar Nerbovik said: “We are excited and grateful to team with VARD Marine and explore the design for this important program.”


Fincantieri Awarded $9.6 Million Coast Guard Maintenance Contract

Fincantieri Marine Systems North America was recently awarded a $9.6 million contract to perform maintenance and repairs to the Coast Guard’s fleet of inland buoy tenders. The multiyear contract was awarded by the Coast Guard’s Surface Force Logistics Center in Virginia.


Nichols Brothers Parent Adds Ship Repair Facility

Everett Ship Repair LLC was established earlier this month by Ice Cap, the parent company of Nichols Brothers Boat Builders. Everett Ship Repair will focus on vessel repair, maintenance and conversion with key customers including commercial operators, government agencies and military vessels. The new ESR location in Everett is strategically located within Puget Sound, offering drydock and pier side services for vessels under 430 feet.


Washington State gets new funding for Hybrid Ferry Conversion

Earlier this week, Washington state, which runs the largest ferry service in North America, announced a second initiative to make its ferries greener and cleaner. Using $35 million from the nationwide Volkswagen federal emissions settlement, Washington State Ferries will begin converting three of its Jumbo Mark II ferries from diesel to hybrid electric propulsion. This initiative follows the September launch of a contract with Seattle-based Vigor to build five new 144-car Olympic-class hybrid electric ferries for the state. The first of the new ferries has an anticipated delivery date of late 2022.



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