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SCA Weekly Report | June 22 - 26, 2020

Shipbuilders Council of America

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SCA Weekly Report | June 22 - 26, 2020





*In observance of the Independence Day holiday, there will not be a Weekly Newsletter next Friday, July 3, 2020*




SASC Releases FY21 NDAA Mark; Senate To Consider Amendments and Full Legislation on Senate Floor Next Week

On June 11, the Senate Armed Services Committee (SASC), voted 25-2 to advance the FY21 National Defense Authorization Act (NDAA). The committee provided a 20-page summary of the legislation. 




The bill would provide $740.5 billion in total, including $636.4 billion under the measure as part of its regular Pentagon budget and $69 billion for overseas contingency operations, or war funding.


Overall, the bill would authorize $21.3 billion for shipbuilding, $1.4 billion above the request. The legislation would also authorize seven new ships, one fewer than requested due to the LPD-31 previously authorized by Congress. Additionally, the measure would boost Virginia-class submarine advance procurement by $472 million to preserve the option to procure 10 Virginia-class ships and would provide multi-ship contract authority for up to two Columbia-class submarines. The bill would also establish a new Pacific Deterrence Initiative to beef up the U.S. military posture to deter China. It would earmark $1.4 billion in fiscal 2021 and another $5.5 billion for fiscal 2022.


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


The Senate is expected to consider the legislation and additional amendments on the floor next week.


House Armed Services Committee Releases Subcommittee Marks – Full Committee Marks Scheduled for Next Week

This week, the House Armed Services held subcommittee markups for the FY21 National Defense Authorization Act (NDAA). The subcommittee marks cumulatively represent the Chairman’s proposal, which will be considered by the full committee beginning Wednesday, July 1st. The Chairman’s summary of the bill can be found HERE.


The subcommittee 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 Seapower subcommittee also adopted an amendment that would alter the Jones Act waiver statute to clarify the requirements of a national defense waiver, limits the duration of a national defense waiver, and requires public disclosure of information about foreign vessel users of the waiver.


An SCA Summary of the full NDAA markup will be available next week. 




USNI News: Pentagon Leaders Have Taken Lead in Crafting Future Fleet from Navy  

The Navy has lost much of its power on deciding what its future fleet will look like, with a Pentagon-led effort set to produce secretary of defense directives to the service by the end of the summer on what the fleet’s future plans should include. This Future Navy Force Study is replacing the Navy and Marine Corps’ own plan that was rejected by Secretary of Defense Mark Esper earlier this year. The study brings in the Office of the Secretary of Defense, the Joint Staff and a think tank into the process of deciding what the future fleet will look like in the coming decades. Read more HERE.


Navy Awards Electric Boat $9.5B Contract for Columbia Subs

The Navy on Monday awarded General Dynamics Electric Boat a $9.5 billion option for the first two Columbia-class submarines, subject to approval from Congress.

Monday’s announcement includes a $9.5 billion option for the two lead ships, a price that has been negotiated between the Navy and General Dynamics Electric Boat, but has not yet been funded by Capitol Hill. It also includes $869 million in modifications to an existing contract that will be awarded immediately to continue procurement, design and engineering work. The Columbia-class submarines, which will replace the Ohio-class ballistic missile subs, are the Navy’s top acquisition priority and are funded by the National Sea-Based Deterrence Fund, a separate source from the broader shipbuilding budget. The class of 12 ships will be built by both General Dynamics Electric Boat and Huntington Ingalls Industries. The first submarine in the class is expected to be operational in 2031.


Program Office Maturing USVs, UUV’s With Help From Industry, International Partners

The Navy’s transition from prototype to program of record for its portfolio of unmanned surface and undersea systems is being aided by industry, international partners and developmental squadrons, even as the program office seeks to ease concerns that the transition is happening too fast, the program executive officer for unmanned and small combatants said this week. Rear Adm. Casey Moton said he’s aware of concerns regarding how unmanned systems – particularly the Large Unmanned Surface Vessel – will be developed and used by the fleet, but he’s confident in his team’s path forward.


Among the hurdles the LUSV faces is pushback from Congress. Lawmakers were first concerned about an unmanned vessel that would carry missiles – and whether the Navy was ready to protect the craft from being sunk, sabotaged, stolen or hacked. Concern then turned to the pace at which the Navy wants to move, with Pentagon-level prototyping tests taking place now, the Navy taking over the testing in Fiscal Year 2021 and then competing a contract for the first program-of-record LUSV in FY 2023.





First Offshore Wind Turbine goes up on Federal Lease

Dominion Energy and offshore wind developer, Ørsted, have installed the first two wind turbines off the coast of Virginia. The project is a significant step as the first turbine installations in federal waters. BOEM experts worked alongside crews on the project to observe construction. How the Virginia turbines handle environmental and weather conditions will be another test. The site off the Virginia capes historically has seen category 2 hurricanes, and the developers’ analysis indicate they would be able to survive category 5 conditions for a brief period. 




Barge Operators are Still Moving Cargo during the Pandemic

The 2020 outlook for the towboat industry is uncertain at best. The economy and river conditions remain a big question mark. Nevertheless, operators have been keeping the supply chain moving throughout the coronavirus pandemic, and several companies have been expanding their fleets. Companies have set strict cleaning and safety standards, crews have been diligent, and there have been few cases of COVID-19 on towboats.


Construction Begins on First U.S. Great Lakes Bulk Carrier in 35 Years

A keel laying ceremony marked the beginning of assembly of the first new U.S.-flagged Great Lakes bulk carrier to be built in more than 35 years. The vessel will be named the Mark W. Baker, in honor of the son of the chairman of The Interlake Steamship Company. Being built at Fincantieri Bay Shipbuilding in Sturgeon Bay, Wisconsin, the new River-Class, self-unloading bulk carrier is believed to be the first ship built on the Great Lakes for U.S. Great Lakes service since 1983.


Cruise Industry Downsizing Begins With First Sale of a Ship for Scrap

The cruise industry is beginning a downsizing the likes of which have never been seen in the modern cruise business. While other segments of the shipping industry have experienced significant downturns prompting the wholesale scrapping of vessels, cruise shipping up until now has been on a continuous growth path. Faced with no definitive timeline for a return to service and uncertainty over the rate at which travelers will return to cruising, the cruise lines are struggling to improve their liquidity and reduce their monthly cash burn. 



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