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Congressional Shipbuilding Caucus

Remarks for

Congressional Shipbuilding Caucus

28 Sep 2018

Good morning and thank you for asking me to be here this morning, especially with all that is going on up here on the hill today.  Anytime I’m asked to speak about ships and sailors – I’m  there.

I also want to thank the members of the shipbuilding caucus for bringing critical focus onto the importance of the national shipbuilding and repair infrastructure – an absolutely critical part of our industrial base.

So, let me just give you my bottom line up front, and if you’ve gotten enough bacon and have to leave before I finish, at least you got my message.

The U.S. Merchant Marine and our maritime industrial base are absolutely vital to the national security and economic success of our nation.

I can say that with a great deal of confidence as someone who has served in both parts of Alfred Thayer Mahan’s National Seapower Equation: that being the Navy combatant fleet in the first part of my career, and now the us flag commercial fleet while at military sealift command and now at MARAD.

I can’t emphasize enough the criticality of having both of these elements strong and available to our national decision makers in peacetime and in times of national emergency.

One part without the other is not good enough.  It’s an “incomplete” at best and a “fail” at worst.
Today, I would suggest to you that we are significantly out of balance in those two elements for those times of national emergency.

It’s true that our naval forces are the most formidable in the world, but they are stretched thin here in peacetime and will be fully tasked in any major dustup with a peer competitor.

We’ve set a goal of 355 ships, and I applaud the congress and this subcommittee and Its leadership in particular for supporting that goal.  The Navy league and the Shipbuilding Council of America has also been an unwavering voice in calling for a more capable naval force.   Thank you.

The Navy in me loves you.  But the Merchant Marine in me is worried.

We can’t forget the other pieces – sealift and sustainment – and I know this caucus and the Navy league and the SCA won’t.  But we as a nation have, and it isn’t the first time.

My good friend rear admiral Chris McMahon just published a fabulous article in the naval war college review that vividly illustrates the perils of getting out of sustainment balance.

In it, he recounts president Theodore Roosevelt’s desire to send America’s new steel Navy on a round the world cruise to demonstrate our new presence on the world stage.  The Great White Fleet assembled in Hampton Roads, VA in December 1907 and included 16 battleships, 8 armored cruisers, and 6 torpedo boats.  They were about to embark upon a two-year, 43,000-mile voyage to 20 ports on 6 continents to show the flag.    And they were all coal burners.

Now ships of that day consumed the contents of their coal bunkers within a week.  It became quickly apparent as the planners did the math that hundreds of thousands of tons of coal – not to mention food and other supplies – would be needed to keep the fleet underway.

Available to answer the call were 3 Navy supply ships, and just a handful of suitable U.S.-flag Merchant Ships – woefully short of the requirement.   In the end, the Navy was forced to charter 41 foreign merchant ships, mostly British, to support the fleet.   And several times during the voyage, those ships didn’t show up, or refused to honor their contract due to political squabbles – and this was with an ally!  It harkens back to the First Gulf War when we were forced to charter foreign flag ships and had 17 that delayed their voyages or turned around.

The point of the story is that the capability of our naval and ground fighting forces is absolutely linked to a capable and responsive commercial merchant marine manned by civilian mariners.

When we buy an aircraft carrier and destroyers and an air wing and ordnance, but not the means to sustain it – you only bought a piece of that capability.

When you outfit and equip and army brigade, but don’t provide sufficient lift to get it from our shores to where It’s needed – you didn’t buy all the pieces.

My message this morning is that I have some real concerns about our ability today to move and sustain our forces if we got into a maximum effort.

MARAD’s broader mandate begins and ends with a single, distinct objective — which is to help ensure that our nation has the capacity to deploy combat equipment and supplies anywhere in the world on short notice… to surge and sustain our armed forces while they are in theater… and re-deploy safely when their mission is done

So, what to do?

Well, the simple answer is get more ships under U.S.-flag, and do so by ensuring that they are competitive to carry the peacetime cargo that’s available out there.

You’ve got to have business to justify ships – which means there has to be cargo.  We’ve got to provide a level playing field.  The Jones Act does that for our domestic trade, and furthermore, it ensures that we retain an industrial base capability to build commercially and for the government.  It is the fundamental bedrock piece of legislation for the maritime industry.  And oh, by the way, it provides employment for the majority of the unlimited tonnage and horsepower licensed mariners serving in the 100 large Jones Act ships in the fleet.

For our internationally trading fleet – all 82 of them – we rely on the maritime security program to augment our government RRF fleet as a low cost – $5m per year – alternative to the government having to own 60 more ships-worth of sealift plus the logistics networks and supply chain know how that come with them – all for 1/3 the cost of an Arleigh Burke class destroyer.

We are looking at some excursions of the existing MSP program to gain some additional special capabilities.  And we also need to acknowledge that the cost differential is only getting larger between us and foreign flag ships – now averaging $6.7 m per year according to a study I was just briefed on.

The last piece of the fleet that now needs attention is our government RRF fleet.  The need to recapitalize this aging fleet is well-appreciated by this caucus, and it was our pleasure to host Chairman Wittman aboard one of our crane ships – Gopher State – in the spring so he could see the situation first hand.  The cost of maintaining this antique fleet is skyrocketing.  We had to make the difficult decision a month or two back to take one of Gopher’s sister ships out of class because I could not afford to dock her for the repairs she needed.  I’m going to be short again next year and will likely have to take 1 or 2 more ships out.  Dee Mewbourne at MSC is facing similar challenges with his 15 sealift ships.

This concerns me because part of the recapitalization plan for the RRF includes extending the service life of some of these ships out to 60 years – and the other two pieces being bringing in newer used tonnage, and then eventually building new sealift ships.

Problem is that I’m having to spend most of that service life extension money that the Navy is providing me on repairs and new steel just to keep those ships operational today.

It just so happens that this morning we are in the midst of a turbo activation readiness test on 13 of our ships simultaneously in ports on all three coasts.  They got the “go” order on Tuesday afternoon and the clock is ticking – 96 hrs. to be u/w.   This will be a very telling litmus test of reliability of our fleet’s ability to answer the bell.  And that includes the manning piece.   The first ships should be getting u/w tomorrow.  We shall see.

So, all that said, that’s why I’m a bit concerned that we’re out of balance, and why I sure could use your help – the collective “you” – to help push for a reasonably sized and ready sealift force to ensure our nation’s strength in peace and war.

Let me tack over real quickly and finish up by saying a bit about our new training ship – the NSMV program.

This week we held our second industry day up at the Maritime Institute in Baltimore.  Two substantive days of interaction with industry to better acquaint them with the design of the ship and our proposed acquisition strategy, and to hear back from them of their concerns and suggestions.   A really great exchange.  Over 80 in attendance, including the likely bidders to be the Vessel Construction Manager – the commercial entity who will actually procure the vessel for the government.  The VCM – not MARAD – will actually contract with a U.S. shipbuilder to construct the vessels.

That VCM will be an American firm that has recent experience in contracting for large Jones Act ships.

There is funding in the FY 18 budget to build the first ship, and we are eagerly awaiting to see the FY19 budget to know how many additional ships we may see.   The house has already laid a second ship on the table, plus language authorizing Secretary Chao to enter into multi-ship, multi-year contracts, so we’ll see.

Our next major program milestone is to get the formal request for proposals for the vessel construction manager on the street – hopefully within the next two weeks.  We are very excited about this program and the far-reaching impacts it will have across the waterfront.  Stay tuned!

Let me stop there and let you ask some questions.  I’m sure there is interest in some things I didn’t touch on like our small shipyard grant program, what we’re doing about the mariner shortfall, status of short sea shipping, and plenty of other things.  So, let’s take this where you want to go.  Questions?

Updated: Monday, November 19, 2018