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SCA Weekly Report | November 11 - 15, 2019

Shipbuilders Council of America

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SCA Weekly Report | November 11 - 15, 2019




Industry Partners Committee Now Accepting Applications


The Industry Partners Committee is seeking additional Partner Members for service on the committee. This cycle, three current members of the committee will roll-off and be replaced.


Term of membership on the committee is a 3-year term and the expectations for serving on the committee are provided below.  If you are interested in participating on the Industry Partners Committee please carefully review the committee member expectations below and reply to Davis Gaddy (davis.gaddy@arlaw.com) stating your interest with a professional biography attached.


The Committee will review all responses to serve on the committee and announce the selection of the three new members at the 2020 SCA Annual Winter Meeting in Coral Gables, FL.


Industry Partners Committee - membership expectations: 


  1. Members of the committee must be active in the SCA, routinely attending General Membership meetings and have a strong desire to contribute to the overall effectiveness of the committee and its function within the SCA. 
  2. Committee members are expected to attend the three "in-person" meetings of the committee, which correspond with the three SCA General Membership meetings that take place throughout the year. 
  3. Committee members are expected to participate in committee conference calls that are called by the committee Chair as warranted.  
  4. Committee members will be responsible for interfacing with other Industry Partner Members in order to provide feedback to the committee about any issues or ways to improve the organization.
  5. Committee members will remain in good standing with the SCA for membership dues and meeting fees.
  6. Committee members will be expected to participate in the various initiatives of the SCA and encourage participation of the Industry Partners members. 


The deadline to submit an email with your professional biography is December 1st, 2019. 




Second Stopgap Funding Bill to Run Through December 20

Lawmakers will consider a stopgap to fund the government from Nov. 22 through Dec. 20, moving the fiscal 2020 spending deadline for a second time. House Appropriations Chairwoman Nita Lowey (D-NY) told reporters after a meeting with Senate Appropriations Chairman Richard Shelby (R-AL) that a continuing resolution to Dec. 20 was likely, based on input from congressional leaders. The measure would put off the threat of a shutdown for another month, as lawmakers have made little progress on full fiscal 2020 spending bills. The time frame means a vote to fund the government could come around the same time the House votes on articles of impeachment. Shelby has said impeachment is an issue that could complicate spending talks. The timing of a potential House vote isn’t yet clear.


Pelosi, Mnuchin Huddle to Discuss Budget Agreement

House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin huddled on Thursday and seemed to make progress on setting federal spending levels that could lead to passing a budget and avoid a government shutdown. "We're very close," added a Democratic aide familiar with the negotiations. On the possibility of a deal, the person added: "If we can get everyone to sign off, it could be [today] or Monday." The major sticking point is Trump's insistence on getting $5 billion to pay for his border wall. Negotiators are trying to find ways to put that off for as long as possible. Read more HERE.


Disagreements Over NDAA Continue to Delay Bill

Talks between the House and Senate on the defense policy legislation have entered their eighth week, with Armed Services leaders still divided over a slew of issues, including funding for President Donald Trump's signature border wall with Mexico. House Armed Services Chairman Adam Smith (D-WA) dinged his Republican Senate counterpart, Senator Jim Inhofe (R-OK) this week for not yet responding to a written counteroffer on the annual National Defense Authorization Act.


New House Armed Services Member Assigned to Committee

Following the resignation of Rep. Katie Hill (D-CA), House Democrats are naming Rep. Anthony Brindisi (D-NY) to the House Armed Services Committee (HASC). Brindisi, who represents a congressional district won by Trump in 2016 and voted against Nancy Pelosi for speaker, was blocked from a seat on Armed Services in January.




DOD to Launch New Contract Financing Review

The Defense Department is preparing to review its decades-old policy for paying contractors, including a look at how potential changes might impact the profits of defense companies. Pentagon spokesman Lt. Col. Mike Andrews said the upcoming review is “in the final planning stages.” The assessment follows a DOD proposal in 2018 to reduce the progress payment rate of 80% to 50%, while establishing performance-based metrics that could increase the payment rate. The defense industry mobilized to block the rule, which was later withdrawn. In June 2019, the Government Accountability Office recommended DOD conduct a “comprehensive assessment of the effect that its contract financing and profit policies have on the defense industry.” Andrews said the review does not yet have a set schedule and DOD has not selected an outside group to manage it.





Pentagon Issues Draft Cyber Certification Plan, Delays Input on Controls for ‘Advanced’ Threats

The Defense Department's acquisition office has released its much-anticipated latest draft of a cybersecurity certification program for contractors, focusing on the most basic security controls while work continues on requirements for securing the most critical data and systems from "advanced persistent threats."  DOD plans to issue a subsequent draft on the more advanced levels of the program, which appear to have proven more controversial based on past industry comments.


The revised CMMC plan, issued by the office of the under secretary of defense for acquisition and sustainment, is the second version of the landmark certification program that seeks to audit and certify several hundred defense contractors beginning next year. This latest draft, after the first plan was issued in August, focuses on the lower-level certification requirements -- levels one through three -- while DOD continues to sort through industry and other comments on the more advanced controls represented in levels four and five.







Offshore Oil Seen Peaking in 2020 Before Joining Shale in Market Drop

Offshore oil production is expected to hit a peak in 2020 before joining the shale industry in a slowdown that could dramatically rewrite market supply predictions. A report by analysts at Sanford C. Bernstein & Co. sees projects in the Gulf of Mexico and off of South America significantly boosting output next year. After that, though, the odds drop for any further growth gains, the report found. Meanwhile, two well-known shale pioneers last month forecast a downturn ahead for their sector. Together, the warnings could signal a new era for a commodity that’s selling for about half the price reached just five years ago.




Trump promises biggest naval expansion since Cold War — with an enormous price tag

Valliant News – Robert Smith – 14 November 2019

“The president has made it evident that American jobs and national security are two significant priorities for his administration,” Matthew Paxton, president of the Shipbuilders Council of America, told McClatchy in a statement after Trump’s speech on Thursday, expressing hope for the “hundreds of thousands of good-paying American jobs” that would boost the shipyard industry.


Jones Act debate continues after 100 years

WorkBoat – Dale DuPont – 12 November 2019

“People who understand the law, understand its value,” said Matt Paxton, president of the Shipbuilders Council of America (SCA), and a board member of the American Maritime Partnership (AMP), the industry’s Jones Act advocacy group. “If you didn’t have the Jones Act, you’d have to invent it — to police our waterways, to police our coastline.”


Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security

Cato – Colin Grabow – 12 November 2019

This paper examines the national security justification. Contrasting the Jones Act's stated objectives with observable results, the law is revealed to be a national security failure. With dwindling numbers of ships, mariners, and shipyards, the U.S. military's ability to leverage these civilian assets during times of war has been deeply compromised. This paper finds this maritime decline to be the predictable result of the Jones Act's misguided protectionism, whose theoretical underpinnings are deeply at odds with both sound economics and modern maritime realities.


Is It Time to Repeal the Jones Act?

The Federalist Society – 12 November 2019

Video: The Merchant Marine Act of 1920, also known as the Jones Act, has governed the United States shipping industry for almost 100 years. Is it a boon or a burden for the US economy? Is it crucial for national security? Dan Ikenson of the CATO Institute and Professor Sal Mercogliano of Campbell University outline the history of the Jones Act and debate its ramifications.


Frontiers of Freedom Policy Alert: The Truth About the Jones Act

Frontiers of Freedom – 12 November 2019

The Jones Act is a necessary and vital part of not just the United States maritime sector, but the economy itself. According to the Transportation Institute, the Jones Act contributes more than $150 billion and more than 650,000 jobs annually to the American economy. These numbers should only increase as we continue to invest in the growing Liquefied Natural Gas (LNG) market. Currently, our domestic shipyards have built, and are in the process of building, assets capable of moving and delivering LNG. Conrad Shipyard delivered the first LNG bunker barge built in North America at its Orange, Texas shipyard. VT Halter has recently launched their LNG Articulated Tug & Barge, which should be eligible for work in early 2020. Building Jones Act compliant LNG vessels comes with the added advantage of having the option to custom build them for the exact market they will be serving.


Cato Institute aims another salvo at Jones Act

American Shipper – Chris Dupin – 12 November 2019

The Cato Institute, a Washington-based policy group that has been campaigning against the Jones Act, has released a policy analysis paper claiming the law, widely seen as a keystone of U.S. maritime policy, actually “undermines U.S. shipbuilding and national security.” The Jones Act requires vessels engaged in cabotage — the domestic transport of goods between points in the U.S. — be built in the United States, be crewed and owned by U.S. citizens, and be registered in the U.S.


Jones Act Protects Shipping for Future War

The Wall Street Journal – John D. McCown – 11 November 2019

Regarding your editorial “‘America First’? Kill the Jones Act” (Nov. 4): We would surrender global trade to foreign control if America ended the Jones Act. Foreign subsidies suppress American shipbuilding and distort shipping costs. China, in particular, wants to dominate the 90% of world trade that goes by ship; shipbuilding is a key element of its Belt and Road Initiative. Free enterprise would require policies opposing foreign subsidies, thus encouraging more American vessels, adding competition on price and service for carrying domestic cargo and maintaining the shipbuilding industry vital to U.S. security. But globalists recommend we surrender to unfair competition and let foreign vessels take over purely domestic routes (which the Jones Act limits to U.S. ships) because foreigners’ subsidized rates are cheaper—at least for now.




Bollinger Awarded Contract to Build Ocean Transport Barge

Bollinger Shipyards has been awarded a contract to build an ocean transport barge for General Dynamics Electric Boat. The concept and contract design for the new barge is from Bristol Harbor Group. The detail design engineering will be performed at the Bollinger Lockport facility in Lockport, LA, and the construction will take place at Bollinger Marine Fabrication in Amelia, LA. Delivery is scheduled for 2021.


Austal USA Christens another Navy Fast Transport Vessel

Austal USA christened the Navy’s future expeditionary fast transport vessel (EPF 12) Newport Saturday in Mobile, AL. The Spearhead-class EPF is currently providing high-speed, high-payload transport capability to combatant commanders. The EPF is designed to transport 600 short tons of military cargo 1,200 nautical miles at an average speed of 35 knots in sea state 3. The ships are capable of operating in shallow-draft ports and waterways, interfacing with roll-on/roll-off discharge facilities and on/off-loading a combat-loaded Abrams main battle tank.



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