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SCA Weekly Report | April 25 - 29, 2022

Shipbuilders Council of America

20 F Street NW, Suite 500

Washington, DC 20001




SCA Weekly Report | April 25-29, 2022





Registration Still Open: 2022 SCA Spring Meeting


May 11-12, 2022

Adams & Reese, LLP

20 F St. NW

Washington, D.C.


The 2022 SCA Spring General Membership Meeting will be held in-person on May 11-12, 2022. The cost to attend the meeting is $550.


The meeting will be held in the downstairs conference rooms at our office building at 20 F St. NW, Washington D.C. 20001.


SCA Board and Committee Meetings will be held on Wednesday, May 11, 2022 and SCA Staff Reports, the Government Speaker Sessions, and membership dinner will be held on Thursday, May 12, 2022.


Confirmed speakers include:

  • Ron O'Rourke, Specialist in Naval Affairs, CRS
  • Eric Labs, Senior Analyst for Naval Forces and Weapons, CBO
  • Senator Lisa Murkowski
  • Rep. Jerry Carl
  • Rep. Elaine Luria
  • Rep. Rob Wittman



Please note SCA did not put together a room block for this meeting, therefore all meeting attendees will need to secure their own hotel reservations in D.C.



SCA Industry Impacts Survey


At the SCA 2022 Winter Meeting, the Industry Partners Committee recommended, and the SCA Board of Directors approved, a survey to solicit input from SCA members on the various impacts on the shipyard industrial base including resulting lingering COVID issues, supply chain disruptions, inflationary costs and federal budget uncertainty, among other industry concerns. 


Member participation in this survey is critical to conveying these adverse impacts on shipbuilding, ship repairing, and the businesses that support and supply the shipyard industry. The results of the survey will be aggregated industry data points to assist SCA's efforts to advocate for the shipyard industrial base to the Pentagon, Administration, and Congress.


The survey should not take any longer than 5-10 minutes to complete, and all results will be blinded and aggregated. This means that all company information will remain anonymous and only viewed by the SCA team.





House Armed Services Committee to Hold NDAA Markup on June 22

The House Armed Services Committee will consider its annual defense policy bill on June 22, the panel's chair declared Thursday. The aim, Rep. Adam Smith (D-WA) said, is to bring the fiscal 2023 National Defense Authorization Act up for debate on the House floor in July before Congress breaks for its long summer recess.


"We do plan to mark up June 22 in committee, get it off the floor in July," Smith said during a hearing. "So that's our timeline."


Ahead of a full committee markup, the seven Armed Services subcommittees will debate and approve their portions of the NDAA during the week of June 6, according to reports.


Lawmakers Suggest Navy’s Ship Budget Will See Cash Infusion

During an event hosted by the Hudson Institute on Friday, Reps. Joe Courtney (D-CT) and Rob Wittman (R-VA), the chair and top Republican on the Armed Services Seapower Subcommittee, criticized the Navy's long-term fleet blueprint and said they'll challenge Pentagon plans to retire two dozen ships. "If you look at the last three years, four years, the fact is that Congress has in fact plussed-up the shipbuilding account regardless of Republican or Democratic administrations," Courtney said. "And if I was a betting man, I would say that we're probably going to do that again this cycle." 


The fiscal 2023 budget proposes $28 billion to purchase nine warships. Unlike previous years, the service requested more money for the coming fiscal year than Congress allocated for the current year after significant increases. Still, many shipbuilding advocates on Capitol Hill want to procure more ships and are concerned about decommissioning existing ones.


Lawmakers are taking a skeptical eye toward the proposed retirements, arguing the Navy is shrinking the fleet and shedding capabilities with no plans to replace them.

"I understand wanting to retire legacy ships and building new ships," Wittman said. "But if you're going to create that deficit, I don't care how reduced the capability of older ships are, you can't fight something with nothing."

Courtney noted the large proposed shipbuilding budget means lawmakers aren't "starting in a hole" for the first time in five years.


But he said his panel would examine again blocking retirements of some ships that still have use in the fleet, overturning the Navy's push to end production of the San Antonio-class amphibious ships and pursuing life extensions for Los Angeles-class attack subs.


They also dinged the Navy's latest long-term shipbuilding plan, which proposes fleet size ranges of 316 to 367 ships, as "multiple choice."


RELATED: Navy’s New Shipbuilding Plan Offers Three Paths to Congress


Stefany: Double Counting of LHA-9 Ship Was Not ‘Purposeful’

The Navy, after weeks of questions, has provided insight into why it double counted the LHA-9 amphibious assault ship in its fiscal year 2023 budget request, explaining it happened because of poor communication and the “change in administration.”


The service counted LHA-9 as one of nine new vessels procured in FY-23, even though it had already been authorized in FY-20. Jay Stefany, who is performing the duties of Navy assistant secretary for research, development and acquisition, said this week that the double counting was due to miscommunication within the service.


“I don't think there was anything purposeful here. I think it was really just different parts of the Department not communicating well on providing you the budget exhibits that showed . . . the 2023 ship in what was provided,” Stefany said today during a Senate Armed Services seapower subcommittee hearing.


The 2021 National Defense Authorization Act removed the amphibious ship to avoid double counting and clarified in the language that any ship added by Congress may not be specified as a new procurement in future budget submissions, Sen. Kevin Cramer (R-ND) said during the hearing.


“Those who put together the budget exhibits had the best intentions of showing when we are going to award the contract for the ship and I believe with the change in administration, not all were aware of the NDAA language that actually told us to do something different,” Stefany said.


The Navy, he added, would like to discuss with Congress what the right approach is when counting ships over multiple years.




Marines Couldn’t Meet Request to Surge to Europe Due to Strain on Amphibious Fleet

As Russia prepared to invade Ukraine, the head of U.S. European Command asked for a Marine Expeditionary Unit and Amphibious Ready Group to deploy early to Europe as a hedge against the conflict expanding.


But the Marine Corps couldn’t meet the request, Lt. Gen. Karsten Heckl, the deputy commandant for combat development and integration, told the Senate Armed Services seapower subcommittee this week.


Asked how important it is for the Marine Corps to receive advanced procurement funding for an amphibious warship the service recently billed as its top unfunded priority for the upcoming fiscal year, Heckl pointed to the recent scenario.


“Within force design is our ongoing requirement as a Marine Corps and by law to be the crisis response force for the nation. Without those LPDs, sir, and the other amphibious traditional L-class amphibious warships, we cannot be there. And we’re already struggling now. And the case and point was the 22nd Marine Expeditionary unit off the East Coast,” Heckl told Sen. Kevin Cramer (R-N.D.), the ranking member of the subcommittee.


The Navy currently has 31 active amphibious ships – which is the Marine Corps’ current requirement – in the fleet, according to the Naval Vessel Register. The total number of amphibious warships is set to drop to 24 by FY 2024, according to the long-range shipbuilding plan the Navy released last week.


Franchetti Tapped for VCNO

A career surface warfare officer has been tapped to serve as the second highest-ranking officer in the Navy and the second female four-star in the service’s history, the Pentagon announced on Tuesday.


Vice Adm. Lisa Franchetti, if confirmed by the Senate, will succeed current Vice Chief of Naval Operations Adm. William Lescher, who is expected to retire following his current tour. Franchetti, currently the head of the J5 Strategic Plans and Policy on the Joint Staff, is expected to eventually succeed current CNO Adm. Mike Gilday as the service’s top officer when Gilday retires in 2023, several defense officials have told news sources over the last several months.


Prior to her current role, Franchetti was briefly the head of the Navy’s warfighting development office on the chief of naval operations staff, led U.S. 6th Fleet in Europe and Africa, commanded U.S. Naval Forces Korea, Carrier Strike Groups 9 and 15, Destroyer Squadron (DESRON) 21 and guided-missile destroyer USS Ross (DDG-71).


Navy Puts forth 9 Ship Multi-Year Deal for Arleigh Burke Destroyers

The Navy is pursuing a nine-ship multi-year procurement plan for its next batch of Arleigh Burke Flight III destroyers, according to service budget documents.


While the current proposal is to buy nine destroyers, the Navy has the option to purchase an additional ship to make it a 10-ship buy across the five-year spending plan. The service’s Future Years Defense Program (FYDP) shows the Navy buying two destroyers per year from FY 2023 through FY 2027, amounting to 10 ships.


But Republican lawmakers may push for a third destroyer in the FY 2023 defense policy bill, a legislative source told news outlets. Should that plan move forward, lawmakers would want the Navy to buy 11 ships in the multi-year procurement.


Rear Adm. Paul Schlise, the Navy’s top surface warfare requirements office (OPNAV N96), has said he is committed to buying two large surface combatants per year to help the service move from the Flight III Arleigh Burkes to its next-generation destroyer, or DDG(X).


The Navy is seeking $49.7 million in research and development money for DDG(X) concept development in FY 2023, according to the budget documents. The service is also asking for another $176.6 million to create an Integrated Power and Energy System Test Facility at Naval Surface Warfare Center Philadelphia Division so the Navy can use a land-based testing site for the DDG(X) propulsion system as it works on the ship design.


Navy’s Approach to Cybersecurity is ‘Wrong’, Top Info Officer Says

he way the Navy currently approaches cybersecurity is “wrong,” and the service needs to move from viewing it as a compliance problem toward a model rooted in readiness, according to the service’s chief information officer.


“Today, I would argue that the way that we do cybersecurity at the Department of Navy — and at the Department of Defense but that’s above my paygrade — … is wrong,” Aaron Weis, Navy CIO, said at the Cloudera Government Forum. “We view cybersecurity as a compliance problem. And it is most definitely not a compliance problem.”


Instead, the service needs to move toward a readiness model that is measured holistically, he said.


“And when I talk about readiness, I’m not saying it’s fleet readiness … I’m saying it’s a model inspired by how we approach readiness. Readiness is something that is a dynamic model … It is measured very holistically, “ said Weis.


The Navy has been working towards its new, holistic model since last November and to that end created a program called Cyber Ready. With the program, the service wants to shift cybersecurity away from rote compliance bureaucracy and towards a “cyber ready” state that enables acquisition speed and better defends the service’s information.




U.S. Advances Offshore Wind Energy Leasing on Atlantic and Pacific Coasts

The U.S. Department of the Interior has announced that the Bureau of Ocean Energy Management (BOEM) will publish two separate Calls for Information and Nominations for possible offshore wind leasing in areas that are determined to be suitable off the coast of Oregon and in the Central Atlantic. BOEM Director Amanda Lefton made the announcement at the International Offshore Wind Partnering Forum, where she outlined the Biden-Harris Administration’s efforts to deploy 30 gigawatts of offshore wind energy by 2030.


Over the past year, the Interior Department has approved of the nation’s first two commercial-scale offshore wind projects in federal waters, as well as held a record-breaking New York Bight offshore wind auction, and announced plans to potentially hold up to seven new offshore lease sales by 2025.




FMC Completes Meetings with Ocean Carriers Regarding Export Services

In the latest report from the Federal Maritime Commission, they indicate that the staff is moving forward “expeditiously” with the efforts to examine how key ocean carriers are serving U.S. export shippers.


Repeated complaints from the export community are driving the FMC’s actions along with new initiatives working their way through the U.S. Congress. The concerns of exporters are a key part of the pending legislative reform to the Ocean Shipping Act. After passing both the U.S. House of Representatives and Senate, the bill is currently awaiting a conference committee to address differences between the two versions of the bill. However, having gained broad bipartisan support, the bill is expected to move forward into a final form and reach President Biden for his signature.


The FMC, however, has not been waiting for the new authorities it will be granted when the bill becomes law. In March, at the direction of FMC Chairman Daniel Maffei, the commission staff began a sweeping review of exports and the actions of the ocean carriers. "Helping U.S. export shippers is my top priority as Chairman and I will ask my fellow Commissioners and Commission staff to utilize the full extent of our authority to ensure American agricultural producers and manufacturers reach overseas markets,” says Maffei.


More Containerships are Deployed on Asia to US East Coast Routes

Changes in consumer spending patterns and the surge in Asian imports to the U.S. are continuing to reshape the container shipping industry. New data from logistics and supply chain analytics firm, Alphaliner, highlights the shifting patterns in Asian trade that are impacting the industry and operations at major U.S. ports. Alphaliner highlights the dramatic growth on the trans-Pacific routes. They report in the past year the container capacity on routes between Asia and North America increased by 24% with most of the major carriers deploying additional capacity to capture a portion of the lucrative market. Many carriers highlighted the use of extra loaders beyond their normal schedules as well as introducing new routes and services to capture a share of the market.


Three Jones Act-Compliant Offshore Vessels Joining U.S. Operator’s Fleet

U.S.-based offshore vessel operator and maritime transport specialist, Guice Offshore, has expanded its fleet to ten vessels following the acquisition of three Jones Act-qualified vessels, which can be used in several sectors, including offshore wind, renewable energy, and oil and gas. The company reported that two of these vessels – GO Explorer and GO Crusader – recently completed special survey dry docks and upgrades, and were immediately deployed to charters in the specialty marketplace. Both vessels now incorporate next-generation dynamic positioning software, communications gear, and camera systems. 




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