Page 23: of Maritime Reporter Magazine (December 1992)

NAVY SEALIFT PROGRAM

COMPETITION INTENSIFIES TO CAPTURE

PIECE OF $2.5 BILLION IN CONTRACTS

By

James R. McCaul, president

IMA Associates, Inc.

Tihe sealift program has moved " to the final stage of competi-tion, and Congress has added more money to an already bur- geoning account. Construction and conversion of sealift ships is by far the most significant near-term op- portunity available to U.S. shipbuild- ers and equipment manufacturers for substantial business. 1993 Defense Budget

The 1993 defense appropriations and authorization bills provided ad- ditional funding for sealift and cre- ated the National Defense Sealift

Fund.

Congress provided an additional $613.4 million for sealift funding in the 1993 defense appropriations bill.

Combined with the $1,875 billion carried forward from prior years, the Department of Defense (DOD) now has available almost $2.5 bil- lion to implement the sealift ship construction program.

In providing defense funds for 1993, Congress agreed to establish a

National Defense Sealift Fund. Cre- ation of this fund was proposed by the Administration in the 1993 bud- get request.

Prior year funding had been pro- vided in the Navy's shipbuilding and conversion budget. The new fund is placed under the control of the Sec- retary of Defense and is to be "the mechanism for channeling resources to meet strategic sealift require- ments."

Under the previous budget, $1,875 billion had been earmarked just for sealift ship construction and conver- sion.

While the amount available for the sealift program has now been increased to $2.5 billion, the avail- able funds are to be used for four purposes: — For construction, purchase, al- teration and conversion; — For operations, maintenance, lease and charter; — For installation and mainte- nance of national defense features on privately-owned and operated vessels; — For research and development.

The extent to which the fund will be used for purposes other than ship construction and conversion remains to be determined.

DOD is directed to specify in fu- ture budget requests how it will allo- cate the funding. Conceivably, the amount available for ship construc- tion could actually be less than the earlier figure.

Congress attached the restriction that no more than five foreign-built vessels may be purchased using sealift funds. Congress also ex- tended restrictions on domestic sourcing which applied to prior year sealift funding, reiterating that ves- sels constructed under the program must: ~ Incorporate propulsion systems whose main components, such as engines, reduction gears and pro- pellers, are manufactured in the

U.S. — Machinery control systems and interior communications equipment manufactured in the U.S. and "have more than half of their value, in terms of cost, added in the U.S.," unless "the costs of compliance would be unreasonable compared to the costs of purchase from a foreign manufacturer."

The difference in language is worth noting. In the case of propul- sion systems, no cost reasonable- ness criterion is specified. How- ever, such a criterion is applied to control systems and communica- tions equipment.

Construction And Conversion

Competition

After a long delay, the Navy has issued solicitations to construct new ships, buy and convert existing ships and procure long lead items for the

DECKHOUSE

HELICOPTER

DRIVE THROUGH AREA

STERN SLEWING

RAMP

CARGO HOLD 4

BDECK

MAIN MACHINERY SPACE

STERN HAMP FLAT

HATCHWAY

SINGLE PEDESTAL TWIN

CRANE TYPICAL

CARGO HOLD 2

CARGO HOLD 3

SIDEPORT TYPICAL

December, 1992 25