▶ 0:06:25Heat. Heat.
▶ 0:08:08The subcommittee will come to order. Uh we really want to get to you guys testimony. So with that being said, I ask that my statement be entered into the record. This is so important that we talk about our ship building industrial base and getting holes in the water. So, with that, I'm going to yield to my good friend, Ranking Member Courtney, for any statement he may have.
▶ 0:08:29Thank you, uh, Chairman Kelly. Actually, the the crowd that's here speaks volumes more powerfully in some ways than any remarks that we can make. So I mean this is actually really special for us who have been working on these issues for the years to see um the fact that you know this this topic now has become suddenly you know a hot topic. So anyway with that I I also will enter my statement for the record and thank the witnesses for being here.
▶ 0:08:55I now recognize the chairman of the Coast Guard and Maritime Transportation Subcommittee Mr. Eel from my home state of Mississippi for any opening remarks he may have.
▶ 0:09:03Thank you Mr. Chairman. I want to submit my uh opening statement for the record.
▶ 0:09:09Thank you, Mr. Eel. I now recognize the Coast Guard and Maritime Transportation Subcommittee Ranking Member Mr. Carbajal, who is a close friend, for any opening remarks that he might have.
▶ 0:09:20Thank you, Chairman Kelly. I too will uh submit my opening statement for the record, and I appreciate everybody who's here. I think there's a lot to discuss, so looking forward to it.
▶ 0:09:30And all you people in the back, I suggest you read our statements. We put a lot of thought and time in this, but we want to hear from the people in the industry who matter. But our statements do matter, and it shows how passionate each of the four sitting up here are on that subject. With that, I now recognize our witnesses for any opening statements they would like to make. Their testimony has been submitted for the record. So, we ask that you stick to five minutes for your mark. We have Mr. Jason Potter is performing the duties of assistant secretary of the Navy for research, development, and acquisition. Mr.
▶ 0:09:59Potter, you are recognized for five Thank you, Chairman Kelly, Ranking Member Courtney, Chairman Eel, Ranking Member Carbajal, and distinguished members of the committees. Good afternoon. Thank you for the opportunity to appear before you today to report on the state of our nation's Navy ship building enterprise. It's an honor to represent the Department of the Navy and the hundreds of thousands of dedicated service members and civilians who constitute our nation's naval strength.
▶ 0:10:26The United States Navy remains the world's pre-minent naval force. The skill and dedication of our sailors and marines are unmatched and the capabilities of our warships are second to none. However, we must be candid about the challenges we face. We are operating in the most complex security environment in generations. An era of persistent competition where threats rapidly evolve and rivals test our resolve daily. Our adversaries are subsidizing ship building and delivering hulls at an everinccreasing pace.
▶ 0:10:57Meanwhile, America's ship building industrial base has contracted through a lack of strategic focus and investment strangled by both poor corporate management and problematic government acquisition processes. The administration's golden fleet initiative is the strategic approach to address these issues and deliver the fleet of the future. It consists of three tenants. First, maintain and enhance maritime dominance.
▶ 0:11:22We are expanding the ways the naval service will ensure victory over any en enemy any time and any place. The Navy is preparing to meet any foe up and down the spectrum of competition and conflict with a high low mix of capabilities. That requires us to invest in current and new classes of combat ships and new capabilities such as unmanned systems and to recapitalize our auxiliary fleet. Second, revitalize the industrial base.
▶ 0:11:49We're revitalizing shipyards across America with tens of billions of dollars and stable, predictable, long-term investments to get more ships in the water, bolstering high-skll, highwage American jobs. We're improving production of established ship classes through distributed ship building. By prioritizing auxiliary ships, we will both meet the needs of the fleet and regenerate capacity for commercially viable ship building. Third, change how we do business.
▶ 0:12:17We are moving Navy ship building from a compliance-based bureaucracy to an outcome focused warfighting enterprise. Restoring accountability, rewarding performance, and embracing advanced technology to deliver capability at speed by enforcing discipline, leveraging distributed production, and enabling stable, repeatable workload. This budget requests $65.8 8 billion in ship building funding for 18 battle force ships and 16 non-B battle force ships.
▶ 0:12:48As waters around the world become increasingly contested, it is imperative that the United States efficiently deliver the naval vessels it requires to enable maritime domain awareness and deterrence. The budget request enables the Golden Fleet Initiative, including initial funding for next generation battleships and frigots, as well as increases the capacity of public shipyards, and improves overall ship readiness.
▶ 0:13:13The budget will maintain or increase the procurement of most existing battle force platforms, including amphibious vessels and Colombia class and Virginia class submarines. The budget also begins the long overdue recapitalization of strategic seal lift vessels, hospital vessels, consolidated cargo replenishment tankers, submarine tenders, and other vessels vital for This administration is committed to building a more lethal and ready naval force, and the Secretary of the
▶ 0:13:43Navy is taking decisive action. We are supporting distributed ship building efforts around the country and deploying innovative contract structures to better balance the downside risk and upside opportunity for the government. We're holding ourselves and our contractors accountable, cancelling or restructuring programs that were not delivering too expensive or too slow. We're initiating programs that will better meet warf fighting and operational requirements faster.
▶ 0:14:12We've implemented the Congress's direction for portfolio acquisition executives, including maritime and robotic and autonomous systems to streamline acquisition and more rapidly deliver capability to the fleet. The challenges ahead are real, but so are the opportunities. This budget request sets us on a path to rebuild our industrial capacity, a long-term effort that requires a sustained whole of nation commitment. The Department of the Navy is fully committed to this mission.
▶ 0:14:42We ask for your continued support, including the stable, predictable authorities and funding that will deliver the fleet our nation needs. Thank you. I look forward to your
▶ 0:14:53Thank you, Mr. Potter. The Honorable Steven Carmemell is the administrator of the US Maritime Administration. Administrator Carmel, you are now recognized for five minutes.
▶ 0:15:03Thank you, sir. Good afternoon, Chairman Kelly, Ranking Member Courtney, Chairman Isel, Ranking Member Carbajal, and members of the subcommittees. The challenges our maritime industry have are often reduced to one of cost. But that is a gross oversimplification. The United States does not simply have a maritime cost problem. We have a maritime capability problem.
▶ 0:15:25And that capability problem is a product of system design, but not one of strategic intent, but rather designed by neglect, reaction, repeat the process until now. For too long, we have treated maritime policy as a man as the management of separate assets and separate programs, a ship here, a yard there, workforce initiative somewhere else. But maritime power does not work that way. It is not built from ships outward. It is built from cargo inward. The logic is simple.
▶ 0:15:54Cargo determines trade flows. Trade flows determine fleets. Fleets determine ship building. This is the identity that underpins all successful maritime systems. Any proposed program that starts with building ships unless intended for pure government use violates this identity and will fail. If we want ships, we need cargo. If we want shipyards, we need fleets. And if we want enduring maritime capability, we need a system that produces all three. And that's where we've gone wrong.
▶ 0:16:24For decades, we have focused on preserving pieces of the maritime base while leaving the underlying structure of demand largely untouched. We have tried to sustain fleets without enough cargo, shipyards without predictable throughput, and readiness without a system designed to generate it. The result is not a coherent maritime system. It is a collection of individual stove pipes operating in a common environment, lacking any coordinating strategy, often operating at war with each other.
▶ 0:16:51One part of the system is optimized for lowest cost transportation. Another is trying to preserve surge readiness. Official policy is cargo preference supplies. But agency practice does not follow policy and enforcement mechanisms with real teeth are absent. There is constant tension between the imperative for a robust and resilient maritime sector and the motivation for lowest cost transportation and individual agencies.
▶ 0:17:16Each is making rational local decisions but taken together they do not produce national capability they undermine it. While our competitors have treated maritime as a system. They understood that if you structure cargo fleets follow. If fleets follow, ship building follows. That is how maritime power is built. In looking for a sustainable maritime policy the impression is the maritime industry is asking for something new.
▶ 0:17:41But in effect, we already use public policy to sustain critical industries when market outcomes alone do not protect national interests. We do it in agriculture. We do it in energy. We do it in steel. And we do it in autos, for example. We do it because strategic sectors do not always survive hostile international competition on uneven or biased commercial terms alone. Maritime is no different. A maritime policy that mirrored the outcomes produced by current agricultural policy, for example, could go a long way towards solving our dilemma.
▶ 0:18:10Maritime is a critical industry. It underpins trade, supply chain resilience, industrial capacity, and national defense. And it operates in an international environment that is often hostile to American interests. We are not reinventing the wheel. It already exists and it is in use. We just start putting it on a different axle. That is why the maritime action plan matters. It gets the diagnosis right. It recognizing recognizes that ship building, workforce, industrial resilience, and national security are not separate issues.
▶ 0:18:39They are parts of a single strategic problem and must be addressed as parts of a single strategic system and must receive support as a system. But a plan alone is not enough. We cannot continue operating inside a structure designed to reward short-term cheapness while expecting it to produce long-term capability. If we want a different outcome, we have to change the structure both internally and in the international environment. We cannot out China the Chinese competing in a system they have bent to their advantage.
▶ 0:19:08We need to alter the terms of competition and that means beginning where maritime strength begins cargo. It means using public policy to create the conditions for predictable demand, fleet formation, shipyard investment and workforce continuity. It means recognizing China is not a monolithic entity destined for for dominance. There are real disadvantages in the Chinese system that our advantages can exploit. It means recognizing giving maritime the kind of structural support we already provided other industries is not extraordinary.
▶ 0:19:38It is necessary and it means treating maritime not as a residual sector to be managed in decline but as a strategic capability that must be intentionally built. The question before us is not whether we can afford to act. It is whether we can afford to continue with a system that produces diligence uh dependence, fragility and erosion while calling it efficiency. Thank you.
▶ 0:19:58Thank you administrator. I now recognize Rear Admiral Mike E. Campbell and he's director of systems integration and chief chief acquisitions officer for the United States Coast Guard, Admiral Campbell. You are now recognized for 5
▶ 0:20:13Good afternoon, Chairman Kelly, Chairman Ael, Ranking Member Courtney, Ranking Member Carbajal, and distinguished members of the subcommittees. My written testimony has been provided to the committee, and I request to have it entered into the official hearing Thank you for the opportunity to testify before you today to discuss the Coast Guard's role in restoring American ship building. Demand for the Coast Guard has never been higher and we are moving at speed to meet national priorities and address emerging mission requirements.
▶ 0:20:44Under the leadership of President Trump and Secretary Mullen, with the support of Congress and the historic investments made by the Working Families Tax Cut Act, the Coast Guard is focused on building and acquiring the right assets, the right systems, and the right infrastructure to support our people and meet mission demands in this era of Our service is in the midst of the largest ship building effort in our history.
▶ 0:21:11We are leveraging the collective capability of the maritime industrial base and select partners to design and deliver polar security cutters, Arctic security cutters, offshore patrol cutters, fast response cutters, waterways commerce cutters, homeland security cutter, domestic ice breakers, and several boat classes to provide modern capabilities to meet the demands of our varied operating Ship building is complex and
▶ 0:21:41requires substantial investment. Together with the Navy and the Maritime Administration, we are pursuing the vision set forth in America's maritime action plan and executing on Congress's historic investment in our fleet. I will also note our long history of cooperation with the Government Accountability Office and its review of our acquisition programs. And while at times we may disagree on some of the finer points, we appreciate and benefit from the oversight that GAO provides.
▶ 0:22:11And those benefits are passed on to the people that we serve. The Coast Guard recognizes the need for some change to improve our acquisitions. Over the last year, in coordination with the Department of Homeland Security, we reorganized our acquisition approach by streamlining government governing processes and consolidating decision points.
▶ 0:22:33Additionally, the Working Families Tax Cut Act provides the service with flexibility to tailor acquisition requirements for individual programs across our diverse portfolio and execute strategies that deliver the highest return on investment. This allows the Coast Guard to engage industry faster as we modernize our fleet at speed and scale. The Coast Guard is also investing in our organic sustainment capabilities at the Coast Guard yard in Baltimore, Maryland.
▶ 0:23:02The Coast Guard yard is a critical piece of the nation's overall ship repair capacity and one of its more costeffective and agile resources. Our shipyard will only grow more important with the construction of new peers and the addition of a floating dry dock capable of lifting our national security cutters and offshore patrol cutters. Every day, the men and women of the Coast Guard answer the call for service to the American people. We save lives.
▶ 0:23:32We control, secure, and defend US borders and maritime approaches. We facilitate the safe flow of commerce. And we respond to crises and contingencies. We offer tremendous value for the American people and are determined to maintain this outstanding return on investment. Thank you for the opportunity to testify before you today. I look forward to any questions you may
▶ 0:23:58With that, we'll get to question. I ask unanimous consent to enter into the record statements of support from the industry and maritime stakeholders. Without objection, so ordered. I now limit myself to five minutes. Uh I first want to thank Mr. Gary, Mr. Norcross for being here. Also, uh Chairman Wittman and Chairman Bergman, they are you see by the number of chairman, subcommittee chairman and from each of these committees how important this topic is.
▶ 0:24:28And I think uh but I want to start by a quote from my friend Chairman Wittmann who says quantity is a quality all of itself. Now you may have stole that but I'm giving you credit.
▶ 0:24:42Administrator Carmel, how is the maritime administration currently im uh implementing the maritime action plan and what changes are needed through the ships act to bring about growth in both commercial fleets and assured access stipen supported fleets?
▶ 0:24:59Uh thank you sir. Um there are of course two prongs here. one is uh developing the legislative proposals that are required to implement the various portions of the map. Uh we have done that and um hopefully um we'll be sending those up to you in the in the near future. So we have that part but we're not waiting for that. We have undertaken uh a bunch of things that we can do on our own.
▶ 0:25:29Uh we don't need legislative action for uh in workforce development. Uh, for instance, we are working with the unions um uh on on dealing with the uh high school level kids. I was just up in Alaska and did a tour of a great uh training facility up there. Uh they could use some help in terms of innovation and you know implementing the map requires uh new ideas to begin with.
▶ 0:25:56So we are working diligently on new ideas uh that will that will hopefully give us advantage as I mentioned in my statement. We're not going to out China the Chinese and so we need to reset the terms of competition. Um things like iceclass uh cable layers for instance are something I'm paying particular attention to. I think the first transpolar route that will open is actually a uh subsurface one. Um then we have uh new propulsion technologies.
▶ 0:26:26We are looking seriously at things like small nuclear uh reactors and changing the way um we we go about marine propulsion in a way that advantages the United States. Regulatory reform is a big one. We are looking internally at things we can do on our own to streamline the PA PIDP application process, the title 11 process to make it easier and more user friendly. Um those are both right at the moment extraordinarily ownorous processes.
▶ 0:26:57Uh we are meeting with uh representatives of the finance industry to look for new and innovative ways to provide for ship ship financing. Uh so we are uh basically already stepping out on things that we can do without legislative intent and you have a whole slug of proposals coming your way.
▶ 0:27:15Thank you administrator Mr. Potter. We often focus on building new ships, but getting ships through maintenance and back into service on time is just as critical to readiness, especially given today's maritime operational tempo. To what extent is repair capacity, dry dock, skilled labor, and yard availability a limiting factor today, and how can policies like those proposed in the ships act help expand that capacity as part of the strengthening the maritime industrial base?
▶ 0:27:44Yeah, chairman, there's no question uh the maintenance of our ships and keeping our ships at sea uh is a critical element of naval power and something we watch very closely. We like to keep all the dry docks full and even then, you know, there's not enough to go around for the our maintenance needs. So, absolutely vital uh having a uh vibrant commercial ship building and ship repair industry will support the Navy in our needs and vice versa.
▶ 0:28:12And so uh it's something we work closely with Meridon and and there's cases where uh when a dry dock is empty you know we're coordinating between the agencies with the hill often you may hear about it first uh and we will swarm uh to do what we can there
▶ 0:28:26thank you and in the interest of time I now recognize my friend and ranking member Joe Courtney
▶ 0:28:32thank you uh Mr. K Mr. Kelly um so Mr. Potter. Um, you know, we had a good conversation actually over the many months about um revitalizing the uh ship building industrial base.
▶ 0:28:45Um your colleague uh Michael Duffy the under secretary for acquisition and sustainment was before the full committee uh has committee u a few weeks ago and you know the one message that he conveyed was that if we really want to stimulate um you know investment hiring um and you know strong production cadence multi-year procurement is really the key sort of incentive um for again stimulating the industry and would you agree with that assessment? Yes. Yes,
▶ 0:29:16So, in 2023, um you know, we passed the um NDAA, the FY24 NDAA, which provided a multi-year procurement for the Virginia class program, which you referred to in your um opening remarks, again, which will authorize up to 13 uh Virginia class submarines, which again, subject to negotiation. Um again, we're now u you know, well into the third year since the the authorities were granted. We're still waiting um to get that.
▶ 0:29:45And again uh being pretty close to that industrial base, there's no question that in terms of supply chain companies. Um you know, that really is kind of the Da Vinci code in terms of you know, how you really stimulate uh people to sort of jump into the game when they see a long horizon of a multi-year uh contract. Can you uh tell us where that uh process stands?
▶ 0:30:07Yeah, Congressman Yan, the multi-year contracts, um, for sure they're typically for ship building, five-year contracts, uh, 10 ships if it's two per year, sometimes more, sometimes less. And that provides a binding commitment from the government uh, to a contractor on that we will commit to those ships and if we don't, there's termination liability penalties.
▶ 0:30:31And so it's a extraordinary multi-year commitment that subject to appropriations were able to enter into that does allow these companies to then enter into subcontracts for multiple ship sets of components 10 you know engines and so forth. And there's economies of scale that come the government typically gets at 8 to 10% uh savings over annual procurements as you know.
▶ 0:30:55So in this case, the the next Virginia class contract block six has been coupled with the next Colombia class contract build two as you're well aware and total that's 15 submarines. And so there's been a little bit uh of a longer term negotiation as the complexity of that negotiation has increased. Uh but there's no question it's important. There's no question it's a priority for this administration to get that contract awarded soon.
▶ 0:31:22And I think um it's in the final stages of that happening.
▶ 0:31:27Well, again, we're actually, you know, rooting you on and we want to see it get across the finish line. And again, W is right. I mean, that's really going to um you know, be a huge gamecher. Um Mr. Carmel. Um, back in about 2017, we passed the vessel contract manager authority for the multi-m missission training vessel, which u again has been a smashing success at the Philly shipyard. I think they're on the fifth, if not the sixth, uh, vessel for the merit.
▶ 0:31:56Can you give us again a quick description of why the vessel contract manager is the right model? And when we're talking about stimulating growth through the ships act, that that really should be, you know, at least the foundation of how contracting proceeds.
▶ 0:32:10Yes. Thank you, Congressman. Uh it has been an outstanding success and the reason is fundamentally it injects uh commercial uh common sense into what otherwise can be a pretty uncoordinated way of doing business. uh the the ship manager that we used for that to is an extremely good um extremely good uh company. They know how to build ships.
▶ 0:32:38They've done it for themselves and experience matters in something like this. As you know, that contract has been extended for uh to MDA ships. So, it's been great. But fundamentally, it's commercial common sense rather than complicated government rules. And looking back at it, I mean really it's just striking how you know on time within contract price. I mean it's you can't ask for better than that.
▶ 0:33:02You know one of the uh when we spoke you know your sort of me message and you mentioned it in your opening remarks is about cargo preference as a way of really driving growth as well. I mean, at some point, you know, people who operate these ships have to have um, you know, an oper a cargo to to carry to make it um, sustainable over time. You know, I would just note, and I know there's a number of people who agree with me, the Jones Act is a cargo preference law that's been for a long time and I think is fundamental to that.
▶ 0:33:31We have a waiver that's what that we're in the middle of. And I would just ask, Mr. chairman to enter uh um an article from oilpric.com which is an oil industry um media outlet that Trump's waiver of Jones Act fails to cool oil oil prices. The Witchah State University has studied this problem since the waiver went into effect. It's saved approximately 3 cents a gallon in Northeast at best. Uh but again at the price of sacrificing that that cargo
▶ 0:34:00without objection Mr. I now recognize the gentleman from Mississippi, Chairman Eel.
▶ 0:34:06Thank you, Mr. Chairman. Admiral Campbell, despite receiving nearly 25 billion to recapitalize cutters, aircraft, and offshore facilities representing nearly 15 years of procurement funding, uh, the service has failed to produce statutoily required acquisition reports and briefings. The Coast Guard is required to produce an annual 5-year capital investment plan no m later than 60 days after the president submits his budget to Congress.
▶ 0:34:34The last plan we received covers fiscal year That plan was three years late and incomplete. When do you expect to produce the fiscal year 2027 capital investment plan?
▶ 0:34:48Thank you for the question, Mr. Chairman. Uh I appreciate uh the the the intent and the coast guard I can assure you that we are working very aggressively at putting together not only that capital investment plan but all of the other reports that we know that we owe to to Congress. So we are working very very difficult are very uh very hard on that.
▶ 0:35:07Uh one of the challenges obviously with with the uh reconciliation and the massive influx of investment that that brought with us and the changes in our programs uh we're still fine-tuning what that what that does for the f you know following five years and beyond. So we'll be uh we'll be working on that sir.
▶ 0:35:25Thank you. The service is required to submit a bianial report to the committee on the status of the Coast Guard's major acquisition programs. This report was last produced 12 years ago. Uh, when do you plan to produce an up major acquisition plan?
▶ 0:35:42Chairman, as I stated before, we are working very hard on all of our overdue reports, sir. We will get them as soon as we can. Do you believe uh the undertaking these planning requirements benefits the Coast Guard's procurement ship building process? If so, why can't the Coast Guard produce these documents? Chairman, I I I do believe that the planning uh documents do assist.
▶ 0:36:10I will also say that first and foremost, we are very grateful for the relief that has been offered with the uh reconciliation for a lot of those pre-acquisition phase planning documents that are typic required that were were not required. that actually has allowed us to move at speed and has allowed us to actually uh get contracts on the books for particularly the Arctic security cutter name being one.
▶ 0:36:36Uh so to from to go from appropriation to awarding contracts within a matter of six to seven months uh is truly impressive and that that is is is due to the the relief that's been afforded that. So, we we look forward to continuing working with you and your committee to try to get some of those uh processes uh relieved more permanently.
▶ 0:36:54Thank you. Force Design 2028 calls for the overall improvement to the Coast Guard's acquisition and contracting processes. Can you detail the specific changes that force design 2028 envisions to ensure the Coast Guard can deliver on its major acquisition plan?
▶ 0:37:14Chairman, yes. uh force design 2028 uh among many things has uh implemented a change particularly on the material or systems side of the coast guard. And so we have reorganized our entire uh systems side of the uh the organization and we have created we used to have one acquisition officer and one program executive officer.
▶ 0:37:39That was the position I held previously that oversaw all of our acquisition programs whether they were aircraft, ships, C5I systems, uh shore infrastructure. And so what we have done is we've created program we've aligned it's it's similar to the uh the actions that the Navy has taken with program acquisition executives. We've created program executive officers and divided by those domains. So we now have a designated flag officer or SCES in charge of each of the five domains.
▶ 0:38:08the surface domain, the air domain, the C5I domain, the shore infrastructure domain, and the robotics and autonomous systems. So that provides one point of accountability, one person who and one team responsible for all of the acquisitions within that domain, but also the s life cycle sustainment of those systems, which affords uh the team to be able to make prudent decisions, trade-off decisions on buying new and sustaining old.
▶ 0:38:34And I think you're going to see we're going to see significant enhancements in our abilities in the future. Sir,
▶ 0:38:39thank you, Admiral. Mr. Chairman, I yield back and I have a few other questions that I'll submit for the
▶ 0:38:44Thank you. I now want to uh recognize that ranking member Larson of the full transportation and infrastructure committee. He has a statement that will I have unanimous consent to enter that into the record.
▶ 0:38:55Ask unanimous consent. It's entered into the record. I now recognize my friend, the ranking member on the TN subcommittee, Mr. Carbajal.
▶ 0:39:06Thank you, Chairman Kelly. Mr. Carmel, I introduced a bill that would raise the cargo preference requirement to 100% for all DOT cargos. We know that one way to boost the US flag fleet is to make sure they have the work. How would this cargo preference requirement impact the US fleet going forward?
▶ 0:39:31Thank you, sir. Uh it depends on how you I guess define DOT cargo. If you mean cargo that uh ships that are subject to to DOT MARAD, uh certainly it helps. Uh we need uh government cargo, preference cargo to sustain the programs we have now. Um we can't rebuild the fleet on government preference cargo.
▶ 0:39:57uh we actually need access to our our nation's commerce to do that. But uh government cargo preference cargo is essential to keeping what we have now. And so uh that will be extraordinarily helpful and uh paired with uh you know significant um enforcement and oversight that would be uh very important.
▶ 0:40:23Thank you. Given that merit is tasked by statute to enforce cargo preference laws among other agencies, how would you rate their compliance? Uh, cargo preference avoidance is a problem across the spectrum and government agencies. Um, some agencies are better than others, but cargo preference avoidance is in general a problem. And it it comes back to my opening statement.
▶ 0:40:51We have a system that is designed to fight itself. We have some parts of the system that reward uh cheap and we have other parts of the system that demand resilience and robust robustness and those two things are in conflict and they need to be Since the map calls for increased compliance across the whole of government, does DOT plan to voluntarily voluntarily start mandating 100%
▶ 0:41:22Uh, we cannot voluntarily mandate 100% cargo preference, but we certainly can push for it. In our conversations with shippers, we remind them, and I think in the proposals that are becoming your way, we we address those those issues. So yes, we are advocating that we have 100% compliance.
▶ 0:41:43Thank you. Enroll Campbell. The Coast Guard has consistently run into issues with procurement of the cutters, most notably the OPC's and the PSC's. The service has suffered countless delays and is often the position in the position of needing further supplemental appropriations to complete these fleet recapization projects. What processes have you put in place that will ensure the Coast Guard's investments deliver vessels on time and on budget?
▶ 0:42:16Thank you for the question, Congressman. Uh so first I would like to say that we one of the changes one of the many changes we put in place is to uh and taking the advice of the government accountability office we put into place policy that dictates uh the design requirements before we go to production to ensure that we have a solid design uh and we know what it is that the shipyard's building.
▶ 0:42:37But I would like to to focus on the fact that uh although the OPC and the PSC programs have had a a rough start, they are they are uh operating on on all cylinders right now. Our polar security cutter program uh has been moving ahead very rapidly and they have already produced 26 of the 85 modules uh for that ship. And that's the equivalent weight just to put it into perspective. Each module weighs about as much as one of our fast response cutters.
▶ 0:43:06So we have the equivalent weight of about 26 of those built to date. Um and we have uh working with our integrated program office with our Navy partners. Uh we have re uh reworked the contract with um Ballinger shipyards and our Ballinger Mississippi and are in the process of negotiating ships two and three as well.
▶ 0:43:29Um and thanks to the uh reconciliation bill, we have received enough funding to cover the cost for both of the first two ships and a lot of the ship number three. So we are well and away uh with our polar security cutter program. Our offshore patrol cutter program stage two is also moving ahead at speed. We have two ships that are under construction. The first one is already 36% complete. Uh and the second one that just started construction this past summer is 4% and moving along rapidly at Austin.
▶ 0:43:59So we do believe that we've made changes to uh ensure the future productivity of our ship building programs and think we're going to see positive results. Sir,
▶ 0:44:07thank you, Mr. Chair. I'm out of time. I yield back.
▶ 0:44:09I now recogni I'm going to recognize Mr. Whitman and Mr. Norcross and then we're our votes have been called. So just to give everybody advice, I now recognize Chairman Whitman.
▶ 0:44:20Thank you, Mr. Chairman. I appreciate our witnesses joining me today. Mr. Potter, I want to begin with you. I want to talk about the concept of distributed ship building. I think you and Secretary Felen would agree that having more capability out there and being able to bring that to our build yards is key. We know there's underutilized capacity in the repair industry where we go through cycles where there's lots of ships in the yard and then none and they have to let go workforce.
▶ 0:44:41You know, I think there is a leaning in by the ship building industry to say, let's do more with the workforce and the capability we have in building things like parts and smaller manufacturers, but also modules. You know, we have to be able to do more within that realm. Give me your perspective too on are there other ways that we can leverage that capacity there because I don't think we fully leverage the manpower capacity and the production capacity in these various elements of the ship building supply industrial base.
▶ 0:45:09And are there specific classes of ships that this is more suited for than others? Can we use it ACLA across all sectors of ships? And and what can we do with this to help in both speed that is timelines and in cost which are both drivers and what we need to improve in ship building.
▶ 0:45:27Congressman, thank you for the question. It's absolutely a centerpiece of this budget request and how we're able to procure 34 vessels, 18 battle force, 16 not. And so the idea of distributed ship building is something that has been with the Navy and its prime contractors for a long time. So you know many of our large shipyards already do it.
▶ 0:45:47If you think about Electric Boat with Graten and Conet Point, now Newport News with their Charleston facility and I could go on and so we're already in building things in various locations and then bringing them to a final uh assembly yard, you know, and kind of focusing on what our largest shipyards can only do and kind of the highest and best use of their workforce. And that is increasingly where we're going to.
▶ 0:46:12And it's really the ship builders themselves making business decisions and recognizing, you know, the business case is there to do more of this distributed ship building and do it in a methodical way where in the best cases we've seen um you know, you start with a few relatively simple modules and then they kind of graduate up to more and more complex uh components and subasssemblies and and then they're kind of taking over more of the ship.
▶ 0:46:37And I think in the case of um in the Gulf Coast, we're going from less than five outsourced modules of the 70 um 77 or so to over 30, right? And that so that's a significant, you know, change in how we're going to do business. So, I think that will accelerate deliveries because as as more of that work is moving out, that'll allow the buildards to relieve that pressure, put focus the workforce more on the final assembly and delivery test and trials.
▶ 0:47:06And it's really focusing on those choke points and we have great uh industry partners to work with and it's filling up, you know, small businesses, small yards, small manufacturing sites across the country and that's another goal here. Uh and so we're there is the uplift across our industrial base. It's going to have knock-on effects with commercial ship building and we think the demand signal coming in this budget with $65 billion in Navy ship building uh is the thing to really uh bring distributed ship building mainstream.
▶ 0:47:36That's great. Mr. Potter, thank you. Uh Administrator Carmemell, great to see you again. Listen, I appreciate all that you're doing. uh we look at the maritime action plan and looking at how do we how do we get the most out of ship building capacity both on the commercial and on the military ship building side. I would argue there's some other aspects of what happens within government especially on the agricultural side that provide kind of an underpinning of guarantees to make sure that the investments can take place. Uh you see things like crop insurance.
▶ 0:48:04You see things like loan guarantees and rural development funds that go into trying to to make sure that we underpin the agriculture industry. The same sort of concepts I think could be used in the ship building industry to make sure we have that that underpinning that framework that foundation that protects the investments that ship builders need to make in addition to some of the capex that's available to them.
▶ 0:48:26uh give me your perspective too and give me some uh ideas on the things that you've done and the and the study elements that compares some of the policies that have occurred in other sectors and the support in the maritime industry that we need to make sure that there is a a long-term viewpoint about how we sustain ship building and continue to have it on upward pro Uh thank you sir for the question actually uh and that's true we have done a lot of
▶ 0:48:56structural support I as it happens I have white papers on everything and I did one on the agricultural model versus um the maritime action plan and there is uh a lot we can learn from that uh as you as you mentioned income and revenue safety nets uh federal risk sharing programs domestic engineering demand engineering domestic demand scalable credit and um uh but I think uh mostly an enduring um champion
▶ 0:49:26I guess would be the best way uh to put it uh for the oil industry. We have in the past uh implemented emergency import restrictions directly to create price supports in other words drive up the cost of oil for consumers. Um so we have done things like that in the past for oil. We all remember the activities that were undertaken to support the auto industry in the 80s.
▶ 0:49:54Same thing, voluntary import constraints and uh at that time we also mandated uh imports on US flag ships. So all critical sectors at one time or another have have received support and and we should do the same thing.
▶ 0:50:09Thank you, Mr. Chairman. I yield back. Gentleman's time's expired. Now recognize Mr. Norcross.
▶ 0:50:14Thank you, chairman. Certainly the witnesses for being here today. Ironic, we started this morning over at the Navy League with Mr. Whitman and Mr. Courtourtney talking about the conditions of our ship building. We're going to end today on this important issue. Uh first and foremost about the distributive ship building.
▶ 0:50:36Uh we look at the the old Philadelphia Navyyard which is now the new Philadelphia Navyyard roads industry who is building an incredibly important role of the Colombia class and they are using a rather unique way of building their workforce. They have their core group of workers, the vast majority of them are certified nuclear welders.
▶ 0:51:02But when there is additional work, they go to the hiring hall, the certified. So when that increase of work comes along, they have a workforce waiting and working other jobs. And when it comes back down, they get laid off. This is a normal course of event of hiring halls across this nation and I encourage you to take a look at it.
▶ 0:51:28It's doing quite well over there and I think it can be replicated in many other places. But the main item I want to talk about today is we know why we've lost shipyards. Certainly the demand was down years ago somewhat but nowhere near the amount is we wanted to save money and we offshored it.
▶ 0:51:48The idea of looking at how important that reliable workforce and suppliers in our country has now reared its ugly head. We're finding out the hard way. And a year or so ago with the last NDAA, I had a bi-American provision uh which talks about domestic content. And it's not because hey, I want it in my state or we need to do this.
▶ 0:52:16It's because we need a secure supply chain that is made in our country. So, it builds up over the years any major defense acquisition. So, we're waiting for the first report out of the Department of Defense and haven't received that yet. It's a little bit late, which I guess is not a surprise, the premise behind it is to build our workforce, our supply chain.
▶ 0:52:44And yet the Coast Guard gets a little bit different of a twist. They are not under the same constraints as the US Navy. So uh the question uh for the admiral is in the Arctic security cutter program that's being done a little bit differently. The US, Canada, Finland, but still the idea of building a supply chain with our friends and not our enemies. Uh there has been much discussion.
▶ 0:53:12in my office has received several phone calls of the propulsion system that might be coming from China. Can you uh confirm that or say it's not coming from China?
▶ 0:53:26Congressman, I I know nothing about a propulsion system coming from China.
▶ 0:53:30I found it rather remarkable, but there's not that many suppliers in the US that can do this. And the suggestion was not in the time frame that we needed it. So given the conditions we are in with China, they want to be friends one minute and they want to chop her head off the next. I would find that disturbing and I think most people in this room.
▶ 0:53:56Can you uh just take a moment that I have left and talk about the difference between when purchase things through the Coast Guard, what systems of by American provisions that you are adhere to versus the Navy?
▶ 0:54:13Congressman, thank you for the question. I I I would say that the Coast Guard actually has pretty much the same requirements that the Navy has for by America as well as buying ships. uh our our law is under title 14 whereas the Navy is under title 10 but it basically reads the same way.
▶ 0:54:31Um in this situation that we're in with the Arctic security cutters the the president uh made a decision and signed an agreement with Finland that it it was in the national security interest of the nation to partner with Finland to build the first few ships with the intent of onshoring that capability to the United States. So that's that's exactly what we're doing.
▶ 0:54:52So the first few ships are going to be built in shipyards in Finland, the first few Arctic security cutters, but the intent and the plan is to onshore that capability and build the remaining ships in the United States at two different
▶ 0:55:03Well, that's exactly what we want to do and that's why the Jones Act is so important that has just kept us on life support in the system that actually buys and and certainly runs this. With that, I yield back. Votes have been called. So we will recess the hearing until after votes have finished. We have uh we will notify member offices when to return and we reconvene. We'll reconvene immediately after votes. Thank you.
▶ 1:53:54You got what I say? This we reconvene.
▶ 1:54:04And then we got Y.
▶ 1:54:11You ready? The hearing is reconvened.
▶ 1:54:23I now recognize Mr. McDow for 5 minutes.
▶ 1:54:29Well, thank you to the witnesses for being here today and thank you for the uh the grace and letting us take a little break to go and vote. We appreciate it. Um Mr. Carmel, it's not hard to look at the state of our maritime industrial base and not draw comparisons with the capabilities and the output that we're seeing from China. Um, between the United States and China, who has more
▶ 1:54:56Uh, thank you, sir. Uh, China has more and uh, more importantly, they have shipyards that are bigger. uh we compared to the Chinese don't have what could be considered a large yard.
▶ 1:55:10Who who is building a majority of the new ships that are ordered globally between the United States and China.
▶ 1:55:17Uh China is by far building most of them in some cases like railroads and MPPPs are building virtually all of them. Uh the United States produces about.1% of global ship building but none of our ships are built for export. They're all domestic. So the the Chinese commercial fleet is more than 5,000 vessels. Ours is less than 100. And so it seems to me like we have a big problem on our hands.
▶ 1:55:46But thankfully you did offer us a glimmer of hope uh in your testimony. And you said that in maritime system determined by reliability, access, and stability, our advantages are decisive. And so what gives us an advantage by those metrics and how can we capitalize on those advantages?
▶ 1:56:04Uh thank you sir. The the Chinese economy you know the Chinese process is very state centric and very command driven and that gives them a lot of ability to marshall um resources and direct activity as they've done. However, the weaknesses there are they don't deal with change very well.
▶ 1:56:27They the sharian uh creative destruction that is a hallmark of the US economy and we've kind of lost the lost touch with are things that Chinese simply can't deal with. So what we need to do is change the terms of competition with China to one that favors us which is dynamis dynamism innovation um uh that sort of thing because they do not deal with that very well. We can and that's how we can beat them. This is not a lost cause. We can do this.
▶ 1:56:58So what do you see as the biggest regulatory barriers affecting our maritime industrial base and what progress has the administration made in removing those barriers? The reg the regulatory challenges are twofold. So I'll start with um uh shipyards. Uh in order to compete in international ship building at scale on the way we need to we need to build new ships. We cannot new shipyards. We cannot build ships if we if we don't have the shipyards. So we need to build shipyards first. that is an imperative.
▶ 1:57:28So things like permitting reform uh that sort of stuff uh has to be done. We need to restructure the way we do uh marine financing which we're working on those things. In terms of the US flag fleet we still uh suffer from uh uh a regulatory uh burden that needs to be uh changed. Um we we unlike the rest of the world we have two systems of governance rather than one.
▶ 1:57:58The rest of the world just has IMO solless kind of thing. We have IMO solless and then we have Coast Guard on top of it. Um on the other hand that extra layer of of regulation produces nothing in terms of of safety and things like that. I I use as a proxy for that things like the Parisou where the Chinese uh are I believe 12 or 14 and we are 22nd.
▶ 1:58:23So they they perform substantially better than we do even with this extra regulatory burden. So we need to to deal with that and that process is is uh is starting. The reflag process is way too cumbersome. Gap analysis for instance is is is a very expensive time consuming process that uh uh if we wanted to refl. Um so lots of things that can can change to help us.
▶ 1:58:53Rear Admiral Campbell um the Coast Guard has had challenges carrying out major acquisitions in the past and HR1 included 14 billion dollars as you know in funding for new Coastg Guard cutters. What steps are you taking to put the Coast Guard in a position to spend that money efficiently?
▶ 1:59:14Thank you for the question, Congressman. Uh, as I stated earlier, I believe we are off to a great start. Um, with uh our ship building program, executing the programs, a record that we already had in place. So with that $14 billion towards our ship building programs, we have been able to fund, we will be able to fund, as I mentioned earlier, both the the first and second polar security cutter in full, as well as a big chunk of the third polar security cutter.
▶ 1:59:42We uh I I failed to mention earlier, but our OPC stage 2 program, we've already started construction on the first two ships, but there's enough funding in that bill to allow us to basically buy out the remaining options for the completion of stage two, which will get us a total of 11 ships from that stage.
▶ 2:00:00uh and and having the opportunity to buy those uh in buy out all those options at once uh should help us to be and the shipyard to be a lot more efficient uh as we move forward um being able to forecast demand signal and knowing that they have those on contract. Uh additionally, the Arctic security cutter uh ships are already on contract as well and I talked about those. We're distributing those through uh three different actually four different shipyards.
▶ 2:00:28Uh, as I mentioned earlier, two of them initially will be built in Finland, but then we're going to onshore that to enhance our ship building, icebreaking ship building capacity in the United States. So, I think we're uh we're using those dollars wisely and really appreciate this award, sir.
▶ 2:00:42Thank you, Mr. Chairman. Yel back.
▶ 2:00:43I now recognize a gentleman from California and my partner on the ships, Mr. Gar. And as you went through uh I think I finally punched it hard
▶ 2:01:15Um when you started the hearing, you uh opened up an important part of this. Uh the Navy uh has trouble building all the ships we need on time and on cost. The domestic ship building industry is essentially the um Jones Act.
▶ 2:01:34Uh the ships for America act and the maritime security program that was put out by the administration addresses a fundamental national security problem and positions the United States to once again reemerge as a fullon maritime country. Uh we will have with the ships act the opportunity to meet the issues that Mr. Carmemell has put forward and Admiral and Mr.
▶ 2:02:01Pardon you put forward uh by providing a strong domestic base for the manufacturing the and the and more and just as important for the operations of the ship. So the full ships act addresses the totality of issues that we need to put in place and address to rebuild our maritime industry. And Mr.
▶ 2:02:30Chairman, I thank you for your leadership on this. I would ask um unanimous consent to enter into the record the text of the ships act
▶ 2:02:41without objection.
▶ 2:02:42And also enter into the record uh a section bysection review and explanation of each of the sections of the ships
▶ 2:02:52Without objection.
▶ 2:02:54Uh and of course my brilliant opening remarks uh also to be entered into the record. and I'll uh cut them short for time sake. I'm waiting.
▶ 2:03:06Without objection. I wanted to object though, John.
▶ 2:03:10I hope one of the
▶ 2:03:12Yeah, I know what you're up to. Uh and thank you for your uh statement at the um press conference today. We must move this legislation. The Navy will not be able to meet its requirements on naval vessels without a strong commercial sector to work side by side with it.
▶ 2:03:36The legislation that we put forward with the ships act provides for the men and women that will build commercial ships for the maritime industry but also for the navy ships. So, and it'll bring into it the unions and others that are going to be absolutely essential. Uh, Mr. Carmemell, you spoke earlier about the need for um cargo. None of this works without cargo.
▶ 2:04:01In the ships act, there is what is known as the energizing section which will bring to the maritime industry and the commercial petroleum products. a percentage of what we export and we're the biggest exporting nation in the world will be on American ships uh built to provide them along with the sailors and personnel that are necessary.
▶ 2:04:24all of the elements that we know have to be available in order to totally rebuild our industrial base and uh the ships manufacturing as well as the personnel for those ships are in the ships act. It would be foolish of me to say it is complete. It is robust. It covers most of the issues that we know of today. I'm sure others will be found. We must get this done this year.
▶ 2:04:54Mr. Chairman, I know you and uh our Senate colleagues who are who are the lead on this together with the almost 160 members of Congress that have signed on are dedicated to get this done. With that, um let's move it forward. I thank you very much, Mr. Chairman, and for uh the ranking members and Mr. Enzel for your help on this. Thank you.
▶ 2:05:19Thank you, Mr. Gear Mindy. I now recognize Mr. Webster.
▶ 2:05:25Thank you, Chairman. Um, Admiral Campbell, uh, after years of delays, um, the polar security program is appears to be on track. So, what do you what what do you attribute to that? What what kind of factors do you say this made it happen? um to turn around to do the turnaround.
▶ 2:05:52Thank you for that question. Uh Congressman, I I I think uh it's a host of things. One, um our partnership with the Navy as an integrated program management office has uh gotten stronger over the years. But I would also say more importantly is that Ballinger, Mississippi, uh acquiring VT Halter and taking over that contract.
▶ 2:06:13And while initially uh it it was a little rough to figure out exactly what what they they got their hands around um working through that and figuring out exactly uh what was needed to finish that design uh and get it to a a level that we could actually start production. They have taken a lot of very innovative approaches at um particularly with working with the type of steel that the polar security cutter is designed with EQ47.
▶ 2:06:42It's a very uh high strength steel but very difficult to work with in the ship building industry has to be preheated. Uh and they have taken a lot of initiatives to uh institute a lot of innovation uh to be able to to work with that metal.
▶ 2:06:57We've also invested in some capital uh expenditures to help uh the shipyard uh with some automated welding robotic welding equipment uh as well as uh cutting tables which have drastically reduced the labor hours required to build such a a large ship. Um but I think it's it was a team effort and I I think they are moving in the right direction. As I mentioned earlier, there's already 26 modules that are under construction right now. If you get a chance to come down and visit, I highly recommend it, sir.
▶ 2:07:27It's truly impressive and uh we are looking forward to the first PSC being delivered by Well, um the there was the the Coast Guard has entered into some I think 11 purchasing 11 Arctic security cutters.
▶ 2:07:53four of those vessels are going to be uh by the fins and under the presidential waiver. I guess they get to kind of skip the the domestic construction requirements for Coast Guard. How will this unique partnership uh with that country benefit the United States in domestic ship building?
▶ 2:08:20Congressman, I I I believe our partnership with uh Finland and Canada through the ice pack has been already beneficial with uh enhancing our overall knowledge and understanding particularly of building uh ice breakers. As you well know, we have not built a a heavy icebreaker in the United States in over 50 years. So, uh we're kind of getting back on the horse there. Uh but um the the the Fins have uh obviously built quite a few ice breakers.
▶ 2:08:48They're very familiar with building ice breakers. That's an essential piece of their economy. Uh so I had the opportunity to go to go visit some of their shipyards and uh learned from some of their experiences over there. uh and I think that the US ship building uh industry does have some a lot to learn and the Arctic security cutter provides the first partnership uh that I believe between Finland uh and the United States in that regard to uh start building them in Finland and then move that capacity more importantly into
▶ 2:09:18the United States to enhance our ship building base.
▶ 2:09:21What missions uh will these vessels support and are they capable of doing all polar missions? Congressman, the Arctic security cutter is uh is going to enable the Coast Guard to establish the long overdue and much needed presence in the Arctic region. Uh and eventually we're we're our program of record uh our identified need is to get up to a total of I believe 18 uh Arctic security cutters.
▶ 2:09:49These first 11 will be the first step in that direction. But they will allow us to uh to operate uh get to a point where we can provide continuous presence um in the Arctic to assert our sovereignty uh particularly on the northern northern Arctic shorelines of of Alaska. Uh and also to counter the Chinese and and Russian fleet that have been operating in that area un unin enumbered for some time now. on.
▶ 2:10:16So, uh, we look forward to being able to match with them and have our ships side by side when they come into our seas.
▶ 2:10:24I yield back.
▶ 2:10:27Gentleman yields back. I just want to remind everyone, we're a maritime nation and we're an Arctic nation, but if we don't act like it, we aren't. So, we need to act like that. And with that, I recognize the gentle lady from Maryland, my friend Miss.
▶ 2:10:39Thank you, Mr. Chair. And I want to thank you and the ranking members for having this important critical uh hearing. You it's one of those challenges I think everybody in this room including everybody in the audience agrees this is at a a crisis level point uh after decades and generations of of just lack of focus here. So I think I hope this is the Congress that can get it right. I do want to start though um Mr.
▶ 2:11:04Potter with some we just had Indopcom in front of us uh General Paparo and we spoke a little bit about data and and AI uh and making sure we have the right information, the facts and then to help us get through some of the the critical maintenance backlog issues, parts and pieces issues.
▶ 2:11:23So, I want to just focus in on in 2025, the DoD's inspector general's analysis of spare parts for Navy ships found that the parts uh inventory accuracy was between 83% and 95% which is below the minimum inventory accuracy of 98%. So, I don't think it's like uh horseshoes and hand grenades. I think we got to get it right. Uh that are needed for ship readiness. This example highlights the IT and data integrity challenges I think that are a huge part of ship maintenance.
▶ 2:11:53uh as as a challenge here. When we talk about leveraging AI, that's one thing, but if we don't have the the raw data correct, then we're not going to actually able to solve these things in real time, and we're going to have ships sitting in dry docks much longer than they absolutely should because we just didn't get the problem right from the beginning.
▶ 2:12:11So, can you talk to me about the steps that are being taken to fix the outdated systems and and ensure more reliable data goes in so we can plan better before a ship even gets to dock and know exactly what's broken and have those pieces some of which take 6 months, 18 months to order, if those parts even exist, if the manufacturers are even in business anymore because we've let this erode so badly. Can you talk to me about what we are doing to fix that essential piece of this puzzle?
▶ 2:12:41Congressw woman, yes, it's absolutely uh imperative that the spare parts and our inventory management that goes with that are um you know on time and ordered with the lead time necessary to support these maintenance availabilities. And it is actually a key component of Navy's audit uh readiness and kind the inventory of material. And um we're making huge strides there.
▶ 2:13:04And I know you we'll set I can take for the record kind of our audit spare part initiative and using data to ensure we have the fidelity on what our inventory is and in our stock
▶ 2:13:17So we're at 8 between 83 and 95% for 2025. You choose your own adventure this time next year when you're in front of this joint committee. Where would you like to be with that number?
▶ 2:13:28Yeah. So uh 95% or higher. Right. We need to get better. No doubt about it. I think we've got the tools and we're getting better with our tools at that. Uh recognizing the importance of um the digital tools as well as the inventory that's kind of real-time raw data that we're tapped into. Beyond that, we're using uh procurement funding, which is three-year funding to pay for maintenance availabilities more and more.
▶ 2:13:54And that was a pilot program Congress gave us uh probably 5 to 10 years ago that we've continued to expand recognizing uh one-year ON&M money is often uh not a long enough period of time to get the parts early enough to support
▶ 2:14:09especially if they're not made anymore.
▶ 2:14:10Correct. And we're moving up uh the planning time um to more like four or five months, if not longer, before the availability starts to lock in the package to be able to order the parts sooner. So,
▶ 2:14:20I appreciate that.
▶ 2:14:21Yes, ma'am.
▶ 2:14:21I do have to move on. Thank you though for that and I look forward to working with you. Admiral Campbell. Um you mentioned Coastg Guardyard Baltimore which is actually in my district and I had the opportunity to visit and saw the critical need for that first investment trancha money. We're talking about facilities that were built for World War II and have not gotten a whole lot of love since then. So I appreciate your focus there. Um and I do want to again congratulate you on on the partnership with Finland and Canada and really urge you to get that co-production shore side state side as quickly as possible.
▶ 2:14:51Can you just give me a brief update on the plans to actually spend down that money at Coastg Guard Yard Baltimore? When can we expect if you have a timeline on the dry dock or when when are we going to get shovels in the ground there?
▶ 2:15:03Thank you, Congresswoman. We appreciate the question, but more importantly, appreciate the support of our Coast Guard yard. As I mentioned in my opening statement, the Coast Guard yard is a critical part of uh the public maritime industrial base. It's one of the public yards and it does an enormous amount of work to keep all of our ships uh underway and doing the critical missions that we need to do.
▶ 2:15:21So, uh we also appreciate the financial support that we've received and we do have plans underway to acquire a a uh an actual dry dock that does has the capacity to lift our OPC's international security cutters which we don't have that capacity right now with the existing lift. Uh we also have uh plans that we're working with the Army Corps of Engineer to conduct dredging so that those ships can actually get into that area as well as critical infrastructure uh upgrades uh in that whole facility.
▶ 2:15:49As you saw it is it is a dated there is a lot of work that needs to be done there but we are getting started on that right away and I can get back to you on specific details on on when we plan.
▶ 2:15:58Thank you. Please keep us posted. Absolutely. I yield back. Thank you, Mr.
▶ 2:16:02Thank the gentleoman. I now recognize Mr. Morland from Guam.
▶ 2:16:08Thank you, Mr. Chairman. Uh thank you to our witnesses today. Rear Admiral Campbell, we as we evaluate the Coast Guard's ship building strategy, do you foresee uh this capacity supporting additional FRC's becoming available for home porting in
▶ 2:16:28Congressman, uh absolutely. The fast response cutter uh has been a huge success story and it's an enormous capability enhancement for our service. Um to date we have uh already uh delivered 62 of the 77 that are funded on our program right now and uh two more are programmed um to be fun included in the FY26 budget if when that gets approved.
▶ 2:16:52And so some of those ships are definitely uh going to be we're looking to push them out into the Guam uh operational area. Sir,
▶ 2:17:00if you can just briefly say the importancy of of that area, what it is to Indoaccom and why the Coast Guard needs it, please.
▶ 2:17:07Yes, sir. We we recognize the importance of that entire theater and we've been taking efforts to move more ships and more capacity out there. We understand uh the importance of having presence and to continue to build our relationships with our partner nations out there where the Coast Guard plays a key role uh as well as as well as working with as a member of the joint force with the US Navy and uh and our Indopaccom partners. Thank you. Godspeed, sir. Uh, administrator Camil.
▶ 2:17:33Uh, so with today's focus on the ship building industry base, uh, that's important, but equally important role is MAD and DoD that they play on Guam for Guam's port. Uh, our only port and the port of Guam is the only place for commercial ships to dock. Uh, playing a vital role for civilian and military flow of goods, food, and supplies. Uh, but it's at a crossroad. The port's cranes are aging and nearing the end of its lifespan.
▶ 2:18:01Now, for years, we've advocated for federal funding to be used to purchase nuke gantry train cranes for the port, which would support both military and civilian community. Can you please tell us how Murad is working to address the issue of the aging port infrastructure in Guam and in the region, sir?
▶ 2:18:21Thank you, sir. As you know, MARAD has the PIDP program and that is the principal mechanism we use uh for that and so uh that that's how we that's how we deal with it.
▶ 2:18:35So we we uh the port authority has has initiated that process. Um do you see the importancy or uh will that be uh funding available? Are we looking at this happening and how soon? Well, the PIDP process uh uh no question uh happens. We have uh grants that might were they released today?
▶ 2:18:59Uh well, as in fact, while I was here, the the last round was was announced. So, I don't know what they are because I was here, but uh and the next round uh the submissions are due in June. So, that's that's an ongoing process. I appreciate the uh um acknowledgement there, but also that the importancy these things I'm surprised it lasted. The last last typhoon we had just a couple of weeks ago. So, and it the process of building a crane uh takes I don't know. You have an idea.
▶ 2:19:28I I I think it's two two years or more.
▶ 2:19:31So, just uh to get going, we got to get it going quickly. Um I really uh appreciate if you put priority on uh for Guam because of our Indopacon mission. It'd be most appreciated and we'll be sure to follow the regulations on making sure this gets through correctly uh with the approval of Mirat. Sir, thank you very much. Thank you, Chairman.
▶ 2:19:53I now recognize Miss Gillan and I hope I pronounced that right.
▶ 2:19:56You did. Thank you. Thank you, chairman. Um Mr. Chairman, I'm proud to represent the men and women of Coast Guard Station Jones Beach in my district, the fourth congressional district of New York. I support increased funding for the Coast Guard and all of our maritime services, including the US Merchant Marines. Nassau County is home to the US Merchant Marine Academy at Kings Point, New York, one of our nation's five servicemies.
▶ 2:20:21For more than 80 years, the Merchant Marine Academy has been the pride of Long Island, preparing generations of Americans to serve our country and strengthen our maritime and national security. As you may know, the academyy's campus is in dire need of investment and upgrades. Last December, I wrote a letter to the chairman and ranking member of the transportation and infrastructure committee asking them to organize a visit for members to come to the campus and to evaluate this need for updates and modernization. Uh, Mr.
▶ 2:20:50Chairman, I'd like to offer this letter into the record. I'd like to offer something into the
▶ 2:20:59Thank you. So, I'm grateful to Chairman Graves and Ranking Member Larson and Secretary Duffy for heeding my call and organizing a trip to Kings Point. Tomorrow, my colleagues and I will have the chance to tour the campus and speak with the academy leadership to see firsthand what we can do to support our midshipman. I'm proud also to lead a a bipartisan legislation introduced by my colleague from Long Island, Representative Andrew Garbarino to authorize more than one billion dollars for full-scale campus modernization of the academy.
▶ 2:21:27I'm glad Secretary Duffy and the Trump administration have made it a priority to help secure these muchneeded upgrades. I'm also glad that the text and funding provided by our bill has been included in the Ships for America Act. So, getting to my question, Administrator Carmel, can you explain how the US Merchant Marine Academy is critical to our defense readiness and a strong commercial maritime industry and specifically how the funding provided in our bill will help Merrad and the academy implement their modernization Uh
▶ 2:21:57thank you, Congresswoman. The the graduates of Kings Point, of which I proudly am one. Uh so I'm an alumni. Um occupy uh um critical positions in industry and then of course uh provide uh most importantly officers for the ships and the strategic seal lift officers uh that are necessary in times of conflict.
▶ 2:22:21So, as a source of manpower, both ashore and afloat, Kings Point is a is a critical uh source of of um labor for them. Kings Point itself uh in order to attract the right level of talent, we certainly need the right level of infrastructure. You can't attract decent kids to a school that is in disarray. You also can't uh attract decent faculty to a school that's in disarray.
▶ 2:22:48We should never forget that the primary output of Kings Point is what's between the ears of the kids that walk through the gate. And so faculty is is important in this. And so the necessary funding uh it goes a long way to rectifying uh the the poor material condition of the school which is hard to study. It's hard to attract the right kids and it's hard to attract the right faculty. So uh those are essential things to getting Kings Point back on track.
▶ 2:23:18Thank you so much and I hope we can work together to make sure that we see the modernization realized at the school. Um, so in February, the administration released its maritime action plan detailing the administration's actions and recommendations for rebuilding ship building capacity, reforming the workforce, protecting the maritime industrial base, and strengthening national security.
▶ 2:23:39One recommendation that caught my attention was for the use of artificial intelligence and other engineer emerging technologies to expand domestic ship building capacity. Uh, Rear Admiral Campbell, how is the Coast Guard currently integrating AI and other technologies into their ship building acquisition and design?
▶ 2:23:59and what additional resources or guidance from Congress would help the Coast Guard to fully leverage AI in a safe and responsible way uh in its pro procurement and design process.
▶ 2:24:12Thank you for the question, Congresswoman. I would say we're probably at the uh the early stages of finding how we're going to integrate AI into our ship building process. Um it is definitely a priority for the service to uh lean forward with all kinds of technology. uh AI being one of them.
▶ 2:24:30I would say you know in the early stages with ways that we've demonstrated use already are are somewhat you know maybe on the smaller end but in preparing a lot of the planning documentation and uh and pay kind of the administrative work that goes with that using AI to help uh you know formulate that and finalize that uh does reduce staff time and has helped already.
▶ 2:24:50uh but we do need to press further into the actual design phase and and working with our uh our naval architects and and firms and shipyards uh around the nation to integrate AI into the design as well as into helping to optimize production and how the ships are actually built in the
▶ 2:25:10Thank you so much. Uh my time has expired and I yield back.
▶ 2:25:14Thank you. I now recognize the gentleman from Michigan, Mr. Bergman.
▶ 2:25:19Thank you, Mr. Chairman, good to see all of you again. Um, Administrator Carmemell, the Jones Act is the fundamental law of the US Great Lakes maritime industry, which runs directly through and around my district from the mines of Michigan and Minnesota on Lake Superior to the steel mills to the south on the Great Lakes. It is also the fundamental law for transportation of stone and other commodities on Great Lakes Lakers.
▶ 2:25:49This is the most American of American industries, moving US raw materials on American ships with American crews to American domestic manufacturing and other facilities. I strongly encourage the administration to use Jones Act waivers only when and keep any Jones Act waiver as narrow and short and as limited as possible.
▶ 2:26:18I am I am hopeful that this waiver will not be extended as we have talked about and everybody here who has asked questions the need for more trained mariners here in our country. It's time for us to balance that. We know it'll be a balancing act based on times.
▶ 2:26:39Um, and in light of the recent uh US actions affecting Venezuelan crude exports, including the US Coast Guard's physical control over the cargo aboard seized tankers, the State Department's role in arranging the sale of that cargo, and proceeds being held in accounts controlled by the US Treasury. Do you u Mr.
▶ 2:27:03GRL consider Venezuelan crude oil moved under these arrangements to be quote government impelled and quote cargo and therefore subject to the cargo preference act of 1954. Uh thank you sir for the question. The situation around Venezuela um is relatively unique.
▶ 2:27:26uh I can't recall a time when we've had to deal with this and from an international law perspective extraordinarily uh complex and that is a question related to international law and I am not qualified to answer it. I can only say that if the determination is made that it is we'll execute appropriately.
▶ 2:27:47Okay. Well, then we will if you have any names or phone numbers that we can contact to get a legal answer to that, I would be most appreciative of that because we do need an answer.
▶ 2:27:58Yes, sir.
▶ 2:27:58Okay. Uh Mr. Potter. Current and future naval platforms need an operating system modeled after the commercial automotive uh industry that can integrate weapons sensors and hull mechanical and engineering HME uh those systems and rapidly provide software updates. How is the Navy looking to integrate such a commercially proven operating system into warships?
▶ 2:28:29Yeah, Congressman, [clears throat] on um our most advanced destroyers, you know, we're already moving in that direction where uh we have agile software development and as we're seeing new threats, we're now able to update the libraries and the the software and the combat system in, you know, hours or days instead of [clears throat] weeks or months. And so that is tactically relevant and it's very important to us that we have that kind of ability to agile update software.
▶ 2:28:57But as you can appreciate um you know those are very complex combat systems with with with a lot of code and it's very specific to military purposes that is not resident in the commercial industry. Um but we do have HME um systems and uh best practice is using our landbased test site in Philadelphia to update all the software there before we send it to our ships.
▶ 2:29:20And we're trying to have and by using the government as the integrator for many many different types of software and original equipment manufacturers and our engineering plants, we're able to relatively quickly update software and integrate new systems by having the configuration control within the Navy. Um on commercial ships, there's more opportunity there to leverage commercial technology and just buy off the shelf.
▶ 2:29:43And so we are going with a commercial design for our new landing ship uh medium and we are going to the extent possible on the 16 non battle force ships we're buying with commercial designs uh that will fully leverage the commercial digital tools uh and design products that come with them and we'd look to use those to update um the ships throughout their life.
▶ 2:30:05Thank you very much and with that I yield back.
▶ 2:30:08Gentlemen yields back now recognize a gentleman from Florida Mr. Petronis. Thank you, Mr. Chairman. Admiral, great to see you. Um, I think you know me well enough. I get pretty emotional. Um, and uh, I appreciate your service of what you've done so far with the Coast Guard. Um, but OPC is something that I just I I can't turn loose of.
▶ 2:30:30And um I know there's um where where it boils down to me is I look at there's hundreds of millions of dollars being sitting in a yard in Northwest Florida when a president wants a golden fleet of ships. And and hole one is 90%, hole two is 50%, hole three is 30%, hole four is 15% complete. there's discrepancies, there's fingerpointing.
▶ 2:30:57I think the trust has been burnt between the ship builder and the Coast Guard. Um, and I I really I just I'm I'm getting spun up because I think there's taxpayers money that is not being utilized. I I at one point was was very sympathetic to the Coast Guard.
▶ 2:31:15I get one point I get very sympathetic with Eastern and I think the analogy I used with you the last time we visited on this was um the Coast Guard's a 16-year-old looking out in the front yard and there's a Corvette sitting on blocks and you're ready for that car. You want your car. You deserve that car, but it's not finished.
▶ 2:31:35And so the anxiety of of the fight that's gone on between the contractor who has had its and I looked at just did a little back of the math napkin here work. There's four different presidential administrations, six DHS secretaries, four comedants, three sat in your spot has still and we don't have a boat that's operational.
▶ 2:31:58Um I just I you know and I know Austel is is doing a fine job and um but they're in the single digits I guess in completion based on what you said earlier. Um and and I I don't necessarily see this going in reverse. But I definitely don't like seeing hundreds of millions of dollars in taxpayers money not being utilized for the good of protecting our our coastlines.
▶ 2:32:22I think the Coast Guard is is one of the greatest uh acquirers of human intelligence we have. I the the trip that we got spent together created a love that I have for your service and I had no idea what you did, what you entailed, what y'all did around the world.
▶ 2:32:43And I don't think members in this process realize the type of commitment you make to what we get to be proud about having the safety and security of our nation. And I think you deserve these boats and I want you to have these boats. But how do we get back and get those investments back underway? How do we go back and fix the the trust that we've gotten from the taxpayers to spend that money and those vessels are just sitting there rusting?
▶ 2:33:10Um, I don't want to blindside you, but I know it's something you've been thinking about and uh, and I think this project has probably been a little bit of a tar baby, you know. Um, you know, we get excited about what's over at Austin, but we're not thinking about what's still sitting in a Florida yard that wants to build ships. And I don't talk to Eastern on a regular basis. Um, but I just do care about the investment that's there. and I'm and I'm stand ready for whatever you have to respond to.
▶ 2:33:40Congressman, well, first and foremost, I want to thank you for your comments and your your uh your praise of the Coast Guard and the mission many missions that we do as you stated around the world and it was a pleasure
▶ 2:33:50Yes, sir. It was a pleasure to travel with you and have the opportunity to talk and I know we have had conversations about uh the the situation with Eastern. I guess I will first start off by saying as far as wanting that car, the OPC, uh I am 100% certain that that ship is going to be a fantastic addition to the Coast Guard fleet when when they get operational and and hit and hit the uh hit the fleet.
▶ 2:34:13Uh unfortunately with Eastern and Stage One contract, uh we are at a standstill and we are negotiating uh in the process of negotiating with them. So that's about all I can share as far as where we're going. We hope to come to a resolution,
▶ 2:34:26Okay. I just um I again I was in the restaurant business for 30 years of my life. I know how hard people work to provide taxpayers dollars that we get to be trustees over and like I said when I see that type of investment over some some boats that are pretty cool. Um I'd like to see them be utilized. Um but again firstass ship largest contract in the history of the Coast Guard. Um you know that many different people having oversight and development of it.
▶ 2:34:55I I really uh I guess almost feel like you know the hell with the change orders. This isn't the first time we have had a struggles as a country getting ships built as of challenges with meeting the specifications that change from time to time. You know, get the things finished and then we'll dry dock them at a later date to get the things done that you want to get done. Thank you for your
▶ 2:35:19Gentlemen, yields back. We're now going to reset. I thank the witnesses. Uh you guys did a phenomenal job. Thank you for being here and highlighting something that is so important. I thank you for your time. I thank you for your hard work for this great nation. Uh we're going to recess briefly to reset the table with our next panel of witnesses and we'll start back as soon as the table set. With that, uh this this we're in recess.
▶ 2:38:28Thank the witnesses for being so patient And uh we we wanted to have y'all all on one panel, but we couldn't do that. I thank y'all for waiting patiently. We had votes and everything else in between. But I thank y'all. And with that, uh Dr. Eric Labs is a senior analyst for Naval Forces and weapons, the Congressional Budget Office. Dr.
▶ 2:38:47Labs, you are recognized for five Thank you, uh Chairman Hezel, uh Chairman Kelly, Representative Carbajal, and Representative Courtney, members of the subcommittees. Uh, thank you for inviting me to discuss the state of the state of ship building and the maritime industrial base. I would like to submit my statement for the record and emphasize a few key points. For more than 20 years, the Navy has endeavored to build a larger fleet. In that time, the Navy's goals have ranged from 306 to most recently 381 ships.
▶ 2:39:18As a result, every Navy 30-year ship building plan since at least 2011 has proposed building a larger fleet by purchasing more ships and sometimes by extending the life of existing ships. Yet, the Navy has not increased the fleet nearly as much as it it has hoped, and the ships it buys are getting more expensive. The reasons for that are varied. 20 years ago, during the global war on terror, the Navy did not receive as much funding as it needed to build a much larger fleet.
▶ 2:39:42More recently, the challenge lies more with the services and the industry's inability to build ships in a timely manner. In the face of the headwinds of COVID and decline of interest in manufacturing jobs, the Navy progressively increased the demand for naval tonnage. Between 2014 and 2024, the amount of naval tonnage under construction rose by 80%. That growth required a substantial increase in shipyard labor, and the ship builders were not able to keep up. Ships now take a lot longer to build.
▶ 2:40:10Destroyers and amphibious ships used to take 5 years to build. Yesterday's 2027 budget materials now show 11 years for destroyers and 10 years for amphibious assault ships, not the nine years I show in the written statement. In the 2000s, attack submarines took six years to build. Now they take 10, which is also an increase from last year. The services and industry are working hard on this, but we have not turned the corner yet. As of this past November, submarine production, attack submarine production has averaged 1.1 boats per year for the past two years.
▶ 2:40:42The result is a fleet that is much smaller than it otherwise would have been. Between 2019 and 2040, the Navy lost and will lose 234 ship service years from ships that should have been commissioned but were not. In the critical period from 2026 to 2030, the fleet will be smaller by an average of 20 ships, mostly a loss of attack submarines and destroyers. Under the Navy's 2025 ship building plan, the growth for the demand for naval tonnage will would continue.
▶ 2:41:12Between now and 2034, the average amount of tonnage under construction would increase by another 45%. The Trump administration has not released its long-term ship building plan yet, but the FY2027 budget requests and FIDIP indicates an aggressive effort to build up the fleet and promises even more tonnage. Based on what we know so far, the cancellation of the constellation class frigot and the inauguration of the FFX program could be beneficial to the industrial base over the long term.
▶ 2:41:38Conversely, the new battleship program, regardless of its programmatic merits, would represent a substantial additional burden to the submarine to the excuse me, to the industrial base. When I testified last spring before Chairman Kelly subcommittee, I stated then that in my view, nothing is more important than addressing the critical labor shortages that afflict all of the ship building and public maintenance yards. For years, recruitment and retention at all the major shipyards has been difficult. However, efforts to increase pay and improve working conditions are having some positive effects.
▶ 2:42:07Engles has signed a new 5-year labor agreement that will increase pay between 40 and 45% over 5 years. Engles's voluntary attrition has fallen to around 15% before those pay increases had taken effect. Although overall attrition still remains stubbornly high. Pay increases at Bath and Electric Boat have seen voluntary attrition fall below 10% such that its workforce is now gaining experience.
▶ 2:42:30As the services think about their future fleet, the need for highly skilled labor in the industrial base should be a paramount consideration in the services long-term ship building plans. The Navy would be smart to structure those plans in ways that preserve the labor forces in the industrial base. It should feather in new ship designs or larger quantities so as to keep pertabbations to the workforces to the barest minimum. That is a critical lesson learned from the last 20 years of naval ship building challenges.
▶ 2:42:55Continuing a theme I discussed last year, any policy that improves the labor situation is worth considering, including raising wages, improving benefits and quality of life, automation, and even tax benefits. For example, if the federal government were to give a large tax exemp exemption to shipyard workers, that would be that would be a way to effectively increase wages without disrupting ship building contracts or contract negotiations.
▶ 2:43:18In this modern economy where manufacturing represents only 10% of the gross domestic product, which is down from 20% in 1980, skillful management of labor in the maritime and industrial base will be a central and ongoing challenge. I would like to close by repeating what I said last year. It has taken us a long time to get into this situation and it's going to take a long time to get out of it. It will take a lot of hard work, time, and money to solve. One year later, while there are a few encouraging indicators of improvement, that still remains true.
▶ 2:43:46and right now I fear we are adding more challenges faster than we are fixing them. Thank you and I would be happy to respond to any questions the subcommittee might have. I thank you Dr. Labs. Uh I now recognize Miss Shelby Oakley. Uh she is the director of contracting and national security acquisitions for the government accountability office. Miss Oakley, you are now recognized for five minutes.
▶ 2:44:09Thank you Chairman Kelly, ranking members Courtney and Carbajal and Miss Elfreth. Thank you for having me here today to speak with you. I look forward to discussing our work on Navy and Coast Guard ship building. Working closely with both services gives me a broad perspective on the ship building challenges that are facing our nation. Investment and focus on the maritime industrial base are at levels we haven't seen in decades.
▶ 2:44:34The Navy and the Coast Guard have received historic funding increases and the proposed ship ships act and administration's maritime action plan both underscore a renewed national focus on ship building capacity that creates a real opportunity. But it also raises the stakes. Many of the same issues that have affected ship ship building programs for nearly two decades haven't gone away and in some cases have gotten worse.
▶ 2:45:02Increased funding alone won't deliver better outcomes if those aren't addressed. Over the past 10 years, we've made 137 recommendations to help address these challenges. Since I testified before HAK last year and highlighted 52 open Navy ship building recommendations, I have been encouraged to see the Navy taking steps to implement more of them. We're also seeing progress at the Coast Guard. For example, efforts to reduce design construction r risk in the waterways cutter program have been commendable.
▶ 2:45:33That said, significant challenges remain. Let me focus on just two areas where change is needed. Ship design practices and industrialbased investments. First, ship design. Improving ship design practices is one step that could help drive different outcomes on ship building programs. As I have testified in the past, both Navy and Coast Guard continue to move into construction before designs are sufficiently mature. That's a consistent pattern and it leads to predictable results.
▶ 2:46:03Cost overruns, schedule delays, and performance issues. The Frigot and OPC programs provide just the latest examples of these outcomes. The maritime action plan also emphasizes the risks of starting construction too early and the proposed ships act encourages the use of commercial best practices for design. If the services want different outcomes, design practices must change.
▶ 2:46:29That means aligning key decisions with design maturity and adopting more modern approaches. Globally, commercial ship builders are delivering ships on shorter, more predictable timelines. They're doing that in part by using advanced digital tools and integrated design processes. We see similar opportunities for the Navy and the Coast Guard.
▶ 2:46:51Investments in technologies like digital twins, which are virtual models which mirror the condition and performance of ships could improve not just the design process, but testing, production, and sustainment as well. Second, the industrial base. There's broad agreement that without a stronger industrial base, ship building goals simply won't be achievable. Trades workforce shortages, supplier constraints, and shipyard capacity all remain significant barriers.
▶ 2:47:19The Navy has already received more than 10 billion dollars to address some of these issues. I recently visited electric boat and saw some of these investments at work and my team spoke with workers about some of the efforts to improve their working conditions. While there are no doubts so some promising examples from these investments, what's missing is a fully strategic and coordinated approach. Our recent work on the submarine industrial-based investments found that the Navy hasn't define the scope of what's needed.
▶ 2:47:48How much investment it will take, how long it will take, and what a healthy industrial base actually looks like to meet our needs. Without that, decision makers don't have a clear picture of how long we will need to keep investing billions in our industrial-based concerns or when we can expect to see results. We're making a related recommendation as a part of this testimony today. We have also previously reported that the Coast Guard lacks a long-term strategic plan to meet its fleet modernization goals.
▶ 2:48:18This becomes even more important now as the Coast Guard has moved out quickly to get ships on contract to guide its Let me close with this. While our recommendations offer some fixes, there is no one panacea for our ship building woes. The scale of change required is significant and it will take sustained coordinated effort across the government. The current moment with historic funding and focus offers a real chance for meaningful progress.
▶ 2:48:46If that opportunity isn't matched with disciplined, execution, and strategic alignment, we could fall short of our goals and waste billions. Your actions to work together as committees to elevate these issues is a really positive step. Increased coordination across the agencies you oversee will be just as crit critical to ensure we on the right course for the long journey toward revitalizing US ship building. Thank you for the time and I look forward to your questions.
▶ 2:49:14Thank y'all so much for being here and uh I can't be three places at once and I'm supposed to be. So, uh but this is the priority for me. So, with that, I'm going to submit my questions for the record and would ask that y'all reply to them. And with that, I'm going to yield to Mr. Courtney for five minutes for
▶ 2:49:33Uh thank you, Trent. So, um again, it's um you know, something that this committee really looks forward to in terms of uh your presence here today. Both offices are so important. uh in terms of giving us, you know, a fresh uh look at um an issue that, as we've heard over and over today, um you know, has really just risen really to the top of um you know, priority for the Armed Services Committee, uh as well as the Appropriations Committee. I I appreciate the fact that Mr.
▶ 2:50:02Labs, you know, you did acknowledge the tonnage increase, which is, I think, actually a pretty steep increase in terms of, you know, what the output is. I mean if you look at cold war era levels I mean we really are basically on par uh you know in terms of at least tonnage the wage improvement money uh resulted in uh two big labor contracts for the metal trades council up in Grten again about a 40% increase uh over time really creating separation with the rest of the labor market and you're they're definitely seeing um
▶ 2:50:32you know a lot more um response a week ago Saturday they had a hiring fear where they were expecting about 400 people to show up. 1,800 showed up. They actually made 900 offers for people who are actually skilled up and ready to start work. I mean, they're attracting people uh who are already, you know, um certified in the trades now to to come in the door. And again, it's connected to the wage improvement. Um there's no question uh about that.
▶ 2:50:59the um Colombia program again you mentioned you know the uh build rate going back to November uh in February Admiral Weekes announced that the delivery of District of Columbia is now being moved from 2029 to 2028 uh they've had an acceleration plan now where all modulars are in the building finally uh the bow module came up from uh Huntington Engles 60% complete they just made a decision just get it in the building and workers
▶ 2:51:29from Huntington Engles came up with it and they've actually now uh are really moving towards pressure hole complete uh this calendar year hopefully getting it in the water. Uh they need to get it into the water in 2027 to to hit that 28 um delivery date. Three shifts are now uh working. Uh the the third shift was actually just kind of a skeletal crew and now again it's around the clock 24 hours a day, seven days a week.
▶ 2:51:56So again, a lot of this is anecdotal and and I completely agree with Miss Oakley that, you know, given the amount of money that's being invested into the industrial base, we we need to see a better dashboard in terms of just how it it's all sort of unfolding. But there's in in my opinion and you know, pretty close to this place. Admiral Codle and I were walked through the Colombia uh site uh about 10 days ago.
▶ 2:52:22you know there's just a different sort of approach urgency you know that really didn't exist and and as I said I I've been around long enough to to sort of uh see that so one question I wanted to ask uh at least you know issue to to explore is the question of design before building which I think is something that you know hopefully people have gotten through their heads the battleship uh that's been proposed in terms of what's showing up in the skinny budget in both year one and the fit shows
▶ 2:52:52a lot of money going into that um project where there is no design that exists as of today. So, we're hearing that there's going to be AI enabled, you know, digital twins to help accelerate the design process. But, uh, again, just, you know, if there's AI can help, let's go for it.
▶ 2:53:12But the bottom line is is that that we really need to have, I think, some more, um, guard rails about the fact that we do not start cutting steel until we have a design that is, I mean, hopefully well over 50% complete. And maybe you can just comment on that. Yeah, absolutely. So, I think um there's this mistaken notion that um getting started fast is going to get you a ship any faster.
▶ 2:53:40Um, and while there are there are things to be said about being able to get things on the books and get things underway, I think what gets lost in that mix is the work necessary to be able to understand what it is that you're building and whether if it's executable within the resources that you have and to meet the requirements that you have, right?
▶ 2:54:00And so I think that early design work that we would like to see um is key to being able to understand what even the art of the possible is for something like battleship for example. So uh the companies that we go and we out go out and meet with commercial ship building companies and other companies um they have a mantra that is a little different of go slow at first to go fast in the end right and so that important early design work helps you kind of sus out what it
▶ 2:54:30is you can and can't do so while AI and digital tools and I talk a lot about them because I see them as vital um tools to be able to progress and speed through some iteration itions of design. They're just a tool, right? They can't help you fix a business case that does not close. Um, and so that work needs to be done upfront to be able to understand what it is we're going to do before we start letting contracts for construction and authorizing construction to begin in bending steel.
▶ 2:55:00So I think it's really important just to to you know sometimes the things that we say at GAO get taken in a very siloed and narrow manner and we don't mean to imply that you know uh one tool is the the solution to everything. It's just an option to help builders more quickly once they understand the design and once they move through that process.
▶ 2:55:25I appreciate that Eric. You commented on it but I know I'm over my time. We'll submit a question for the record or
▶ 2:55:31Thank you, Mr. Foron.
▶ 2:55:33I now recognize Mr. Carbajal.
▶ 2:55:36Thank you, Mr. Chairman. Miss Oakley, uh, strengthening the US ship building industrial base requires sustained demand across both commercial and government sectors, which is why the ships act is so critical. How would enactment of the ships act help generate the kind of consistent commercial demand needed to stabilize and grow the industrial base that government ship building relies on?
▶ 2:56:02Yeah, I think there's no doubt that having a pro a thriving commercial ship building industry in the United States would be beneficial to our military ship building um endeavors. Absolutely. I think the thing about it is that ca that we can't kind of ignore is trying to create that from basically nothing at this point at the same time that we're trying to revitalize our military ship building industrial base um is not an easy feat. Um it's going to cost a lot of money and it's going to require sustained commitment.
▶ 2:56:32Um and so you might imagine that anything that um happens that you all are able to pass and and move through needs to be committed to for the long term because it's a long-term u problem to be solved.
▶ 2:56:45In that regard, how do you see the ships act complementing the administration's maritime action plan in achieving a more sustainable whole of industry approach to rebuilding US ship building?
▶ 2:56:57Yeah, absolutely. I mean obviously they're very complimentary. um we haven't done a complete analysis um but on you know uh they complement each other significantly and I will also mention that they do align in a number of ways with recommendations that my team has made on military ship building but also our colleagues that cover commercial ship building have made similar recommendations related to cargo preference and mariner training and and facilities in that regard and so there's a number of things that are that we've pointed out as well that are very important
▶ 2:57:28um I think the thing that I mentioned mentioned in my opening statement about having like a coordinated strategic approach is super important in this regard because we don't want to get in the business um of robbing Peter to pay Paul in any you know way shape or form um and right now we have the Navy making the bulk of the investments into the industrial base at this point for its purposes obviously but we won't don't want that to disadvantage um the other ship building industrial base including the Coast Guard
▶ 2:57:59and um the commercial ship building industrial base that we're trying to build up. That's why it's so important for those efforts to be highly coordinated across those entities.
▶ 2:58:08Thank you. Dr. Labs, you discuss in your testimony the potential effects that the administration's golden fleet project uh for the Navy could have on the industry. In some it would ease the burden in some sectors but increase it in others. Even though the Navy's project significantly outpace the Coast Guards by sheer number of vessels, can the Coast Guard ship projects have a net positive impact on the industry?
▶ 2:58:37And if so, what is the path for the service to make that a Um, I I would say yes, the Coast Guard's project can have a positive effect on the industry because a lot of the Coast Guard vessels when they have purchased them would tend to go to yards that do not build Navy ships. That isn't 100% true, but that has been largely true, you know, over the past, you know, 20 20 to 30 years or so or so.
▶ 2:59:01um to the extent that the Coast Guard can sort of have a positive effect on industry, they should continue to do things like what they have been doing most recently, which is sort of they have outsourced some of their work to the the Fins in terms of the uh Arctic Security Cutter, but also then distributing their work amongst shipyards that are currently not doing a lot of Navy work.
▶ 2:59:23And then but also following the practices and recommendations that the GAO has identified by also making sure their designs are set that they are engaging in sort of the best practices for the commercial ship building industry engaging in uh as much of the new technology and modernization for the shipyards that they place their business with as much as possible.
▶ 2:59:43Thank you. Dr. Labs, you noted in your testimony, the long-term contracts can help provide stability in the work to bolster shipyards in general is either block by authority or multi-year procurement authority better.
▶ 2:59:57I would say that either have uh positive benefits in the sense that they provide the long-term stability that uh ship builders are looking for. One of the things when I go out to visit shipyards is that they stress over and over again that what they want is a consistent steady demand signal which allows them to sort of plan to uh then tool up uh size their workforce correctly and really sort of get get things humming get that those learning curves down and getting ships out faster uh than they do you know when they when they first start out.
▶ 3:00:27Blockby has the advantages of being something that can be done relatively easily compared to multi-year procurement, but multi-year procurement has sort of has more uh legislative authorities into it that allows um uh that has more, if you will, sort of more rigor behind it. Sort of it's a more it's a stronger enforcement mechanism and discipline upon the part of the services and the government to to provide that steady demand signal. But both do that that that job.
▶ 3:00:52Thank you. I'm out of time, Mr. Chairman. I have one more question. and I'll just submit it for the record.
▶ 3:00:57Thank you, Mr. Carbajal. I now recognize uh Miss Alfred.
▶ 3:01:01Thank you, Mr. Chair. I will I'm the new kid here, so I'll I'll be brief. I promise. Miss Oakley, my my fiance is a GSA GAO alum, and so I I'm particularly partial to your incredible work and I I too am so grateful for your objective feedback here, especially as we we move into markup.
▶ 3:01:17Um, I want to follow up on the question I had asked the previous panel around, you know, trying our best to get to 95% of predictability for spare parts, but I'm going to quote uh Mark Twain here and say there's lies, damn lies, and statistics because if the 5% we get wrong happen to be that one part that takes six to 18 months to produce, even if we still produce it in this country, we are so
▶ 3:01:39can you give me a little more perspective from GAO on how to solve that spare parts problem? Yeah, I think that the the spare parts issue are a real challenge both in the build side and in the maintenance and repair side. Um, and in the maintenance and repair side, I think we're seeing a little bit more of a move toward using technology to be able to address some of those challenges.
▶ 3:02:01So some of the things that for example um the submarine industrial base investments have have made happen are through advanced manufacturing techniques that can focus on some of those parts for example that um are the long lead ones um that we need that are the bottlenecks and I know they've been doing a lot of work to try and identify what those parts are but there's a long way to go to get to um qualified um certified parts that u you know sailors and builders are comfortable
▶ 3:02:32incorporating. But again, like you were asking, ensuring that you have the right data and the right parts information is key to being able to even use those types of technologies. And I think that the Navy does have some work to do in that regard. Thoughts on like a most wanted list of the the parts that are most frequently broken and the hardest to track down eventually or or how are we getting a little creative with tack this can't be an impossible challenge.
▶ 3:03:00Yeah, I mean I I think what they've been relying on frankly in the additive manufacturing space is you know hearing from the builders for example or from the repair yards like what are those things that are the holds holdups and if they can't obtain the intellectual property reverse engineering those parts to be able to then additively manufacture and print them and I think that there is um push especially on the part of um you know the maritime industrial base office which is now the submarine industrial base office um
▶ 3:03:30to uh really get to a point where they can have those things on demand, those key critical parts. But it really takes a strong understanding of your supply chain, which has been a challenge for the Navy.
▶ 3:03:42Absolutely. And Dr. Labs, I I'll I'll open this next question to both of you. Appreciating there is no magic wand. There is no silver silver bullet here. We talk a lot about what's wrong with industrial base. I'd like to talk about what other countries are doing far better. If there if you were in our shoes and you were heading into markup next month, what is something you would submit for the committee to consider that other countries are doing better than us and we can we should dig dig
▶ 3:04:12That's a great question and I'm trying to think of what what some appropriate answers would be. the to the ex one of the things that the United States did when it was building the Spruins class destroyer program. It built an entirely new shipyard for that and it did so with the most modern technology you could with you know it was what they for what was 1970s a digital shipyard. What the Japanese and the Koreans and obviously the Chinese have done as well is they have built very modern shipyards with as much automation as they possibly can.
▶ 3:04:40For us to go down that path though of course would be a very expensive process and require a lot of government backing to do that. And even so, for naval ship building, it's going to have its limitations because one of the things that automation does for you is that it when you're building sort of large kind of open boxes, you can do a lot of automated welding and so forth. And our current yards are working on that. But to do that sort of kind of a gle, you know, a green field startup um that can incorporate the most modern techniques would be certainly something that we can learn from the Japanese and the Koreans.
▶ 3:05:10Um the um one of the other things that that I think we need to do is uh you know focus on the labor issue in the United States and we've we've made a lot of progress I think over the last couple years but um the skilled labor forces that we that we need in the United States to be able to execute these programs and introducing the whole commercial sector into that the one of the things that I most concerned about that is that it's going to increase the demand for for that skilled labor and that's going to make it you know more competitive um you know for those yards
▶ 3:05:40to be able to to do that kind of work. So that's not a very good answer for you, but at least it's sort of the answer that I've got at the moment.
▶ 3:05:48Um I would say a couple of things. First off, I agree with the workforce. I mean, valuing the trades workforce in this country is something that we need to figure out how to show essentially um and the investments that we're making through the um Navy's funds to be able to invest in workforce um programs and wage increases and that kind of thing I think are are beginning to show that. But it's certainly something that we could think about.
▶ 3:06:11Um the other thing that I would think about is just our approach in general to ship building um is a little bit different in terms of we try to design these ships that are the beall and endall to everything um versus designing ships that meet kind of like that minimum viable capability that we need that then can be iterated on and capability can be added to.
▶ 3:06:33And that then provides not just a consistent and continual demand signal for build yards because they know that you're going to keep iterating on those ships, but it also gets you out of the habit of designing a new ship class every time you need a new capability. And so I think that's one area that we could focus on.
▶ 3:06:51Thank you for your indulgence, Mr. Cherry. Yield.
▶ 3:06:53Well, I I thank all the members for coming. I thank all the guests for being interested enough to hear this. Miss Oakley, you almost sound like me up there. I'm not that smart. a much smarter version of me. I really thank you witnesses for being here and what you do. So with that, the hearing is