Revitalizing Shipbuilding and the Maritime Industrial Base

The subcommittee will come to order. Uh, we really wanna 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 shipbuilding industrial base and getting holes in the water. So with that, I'm gonna yield to my good friend, Ranking Member Courtney, for any statement he may have.

Sure. Thank you, uh, Chairman Kelly. Actually, the c- the crowd that's here, volumes uh 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 a a hot topic. So anyway, with that I I also will uh enter my statement for the record and thank the witnesses for being here.

I now recognize the Chairman of the Coast Guard and Maritime Transportation Subcommittee, Mister Ezell from my home state of Mississippi for any opening

Thank you, Mister Chairman, I wanna submit my uh opening statement for the record.

Thank you, Mister Ezell. I now recognize the Coast Guard and Maritime Transportation Subcommittee ranking member, Mister Carbajal, who is a close friend, for any opening remarks that he might have.

Thank 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.

And all you people in the back, I suggest you read our statements. We put a lot of thought and time in this, but we wanna 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 Mister Jason Potter, is performing the duties of Assistant Secretary of the Navy for Research, Development and Acquisition. Mister Potter, you are recognized for five minutes.

Thank you, Chairman Kelly, Ranking Member Courtney, Chairman Iselle, 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 shipbuilding 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. The United States Navy remains the world's preeminent 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 shipbuilding and delivering hulls at an ever-increasing pace. Meanwhile, America's shipbuilding 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 tenets. First, maintain and enhance maritime dominance. We are expanding the ways the naval service will ensure victory over any an- enemy any time in 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. We're revitalizing shipyards across America with tens of billions of dollars in stable, predictable, long-term investments to get more ships in the water, bolstering high skill, high-wage 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. We are moving Navy ship building from a compliance-based bureaucracy to an outcome-focused, war-fighting 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 sixty-five point eight billion dollars in shipbuilding funding for eighteen battle force ships and sixteen non-battle force ships as 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 frigates, as well as increases the capacity of public shipyards and improves overall ship readiness. The budget will maintain or increase the procurement of most existing battle force platforms including amphibious vessels and Columbia class and Virginia class submarines. The budget also begins the long overdue recapitalization of strategic sea lift vessels, hospital, consolidated cargo replenishment tankers, submarine tenders, and other vessels vital for logistics. This administration is committed to building a more lethal and ready naval force, and the Secretary of the Navy is taking decisive action. We are supporting distributed shipbuilding efforts around the country and deploying innovative contract structures to better balance the downside risk and upside opportunity for the government. We are holding ourselves and our contractors accountable. Cancelling or restructuring programs that we're not delivering, too expensive or too slow. We're initiating programs that will better meet warfighting and operational requirements faster. We'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. We 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 questions.

Thank you, Mr. Potter. The Honorable Stephen Carmel is the Administrator of the US Maritime Administration Administrator of Carmelita. Good afternoon.

Thank you, sir. Good afternoon, Chairman Kelly. Uh, Ranking Member Courtney, Chairman Ezell, 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. United States does not simply have a maritime cost problem, we have a maritime capability problem, and that capability problem is a product of system design, but not one of but rather designed by neglect, reaction, repeat the process until now. For too long we have treated maritime policy as a mani- as the management of separate assets and separate programs, a ship here, a yard there, workforce initiative somewhere else. The maritime power does not work that way. It is not built from ships outward, it is built from cargo inward. The logic is simple. Cargo 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 a identity and will fail. If we want ships, we need cargo. If we want shipyards, we need feats. And if we want enduring maritime capability, we need a system that produces all three. And that's where we've gone wrong. For decades we have focused on preserving pieces of the maritime base while leaving the underlying structure of demand. and 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. One part of the system is optimized for lowest cost transportation, another is trying to preserve surge readiness. Official is cargo preference applies, 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 in individual agencies each 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, shipbuilding follows, that is how maritime power is built. In looking for a sustainable maritime policy, the pr- impression is the maritime industry is asking for something new. But in fact, 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, 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. Maritime 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. And the maritime action plan matters. It gets the diagnosis right. It recognising recognises that shipbuilding, workforce, industrial resilience and national security are not separate issues. They are parts of a single strategic problem and must be addressed as parts of a single strategic system and must s receive support as a system. But a plan alone is not enough. We cannot continue operating inside a structure designed to reward short short-term cheapness while expecting it to produce long-term capability. If we want a different outcome, we have to change. both internally and in the international environment. We cannot out China, the Chinese, competing in a system they have bent to their advantage. We 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 are advantageous It means recognizing giving maritime the kind of structural support we already provide to the critical industries is not extraordinary, it 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.

Thank you, Administrator.

Good afternoon, Chairman Kelly, Chairman Nizel, 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 record. Thank you for the opportunity to testify before you today.

Thank you.

to discuss the Coast Guard's role in restoring American shipbuilding. Demand for the Coast Guard has never been higher, and we are moving at speed to meet national priorities and address emerging mission requirements. Under 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. structure to support our people and meet mission demands in this era of competition. Our service is in the midst of the largest shipbuilding effort in our history. We 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 cutters, domestic icebreakers and several boat classes to provide modern capabilities to meet the demands of our varied operating environment. Ship building is complex and requires 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, and 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 gover- governing processes and consolidating decision points. Additionally, 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. The Coast Guard Yard is a critical piece of the nation's overall ship repair capacity and one of its more cost-effective and agile resources. Our shipyard will only grow more important with the construction of new piers 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. We 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 have.

With that, we'll get to questions. 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 Mister Garamendi, Mister Norcross, for being here also. Uh, Chairman Whitman and Chairman Bergman. They are, you see by the number of chairman, subcommittee chairmen, and from each of these committees how important this topic is. And I thank uh, but I wanna start by a quote from my friend Chairman Whitman, who says, " Quantity is a quality all of itself." Now, s- you may have stole that, but I'm giving you credit. Administrator Carmel, how is the Maritime Administration currently emis- uh implementing the Maritime Action Plan, and what changes are needed through the ship's act to bring about growth in both commercial fleets and assured access stipend-supported fleets?

Thank you, sir. Um, there are, uh, 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, uh, 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, uh, 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 uh uh high school level kids. I was just up in Alaska and did a tour of a great uh uh training facility up there. Uh they could use some help in terms of innovation in, you know, implementing the map requires uh new ideas to begin with, so 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 gonna out China the Chinese, and so we need to reset the terms of competition. Um uh things like ice class uh cable layers for instance are something I'm paying p- particular attention to. I think the first trans-polar route that will open is actually a a uh subsurface one. Um then we have uh new propulsion technologies. We are looking seriously at things like uh 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 PIDP uh application process the title eleven process to make it easier and more user-friendly um uh those are both at right at the moment extraordinarily onerous processes. Uh we are meeting with uh representative of the

Thank you, Administrator. Mister 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

Hey, 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. So, absolutely vital, uh, having a vi- a vibrant commercial, uh, ship building and ship repair industry to, will support the Navy in our needs and vice versa. And so, uh, it's something we work closely with Marathon 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.

Thank you, and in the interest of time I now recognize. My

Uh thank you uh Mister Kel Mister Kelly. Um so Mister Potter um you know we had a good conversation actually over the many months about um revitalizing the uh shipbuilding industrial base um Your colleague uh Michael Duffy, the Undersecretary for Acquisition and Sustainment was before the full committee, uh our past committee um a few weeks ago and you know the one message that he conveyed was that if we really wanna 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 and would you agree with that assessment?

Yes. Yes, Congressman.

So in twenty twenty three, um, you know, we passed the, um, NDA A, the FY twenty four NDA A, which, uh, provided a multi-year procurement for the Virginia class program, which you referred to in your, um, opening. Again, which will authorize up to thirteen uh Virginia class summaries, which again, subject to negotiation. Um again, we're now um, you know, well into the third year since the the authorities were granted. We're still waiting um to get that and 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

Yeah. Congressman, yeah, and the multi-year uh contracts, um, for sure they're typically for shipbuilding five-year contracts, uh, ten 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 and so it's a extraordinary multi-year commitment that subject to appropriations we're able to enter into. That does allow these companies to then enter into sub-contracts for multiple ship sets of components ten you know engines and so forth. And there's economies of scale that come. The government typically gets it eight to ten percent uh uh savings over annual procurement as you know. So in this case the the next Virginia class contract, block six, has been coupled with the next Columbia class contract, billed too as you're well aware, and total that's fifteen 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. And I think um it's in the final stages of that happening.

Okay. Well, again we're actually, you know, um, Rooten Yon, and we wanna see it get across the finish line, and again, W is right. I mean, that's really gonna, um, you know, be a, a huge game changer. Um, Mr. Carmel, um, back in about twenty seventeen, we passed the Vessel Contract Manager Authority for the Multi-Mission Training Vessel, which, um, 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. Can you give us, again, a quick description of why the vessel contract

Yes, thank you, Congressman. Uh, it has been an outstanding success, and the reason is fundamentally it injects uh commercial

Mm.

uh common sense into what otherwise can be a pretty uncoordinated way of doing business. Uh, the the the uh shipbuilding ship manager that we used for that an extremely good um uh extremely good uh uh uh uh company, they know how to build ships, they've done it for themselves and experience matters in something like this. As you know that contract has been extended for uh two MDA ships so it's been great, but that fundamentally it's commercial common sense rather than complicated government rules.

Right. And looking back at it, I mean really it's just it's striking how, you know, on time, within contract price. you can't ask for better um than that. You know, one of the uh, when we spoke, you know, your sort of the mes message, and you s- 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 a a cargo to to carry to make it um sustainable over time. You know, I would just note, 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. We have a waiver that's what that we're in the middle of and I would just ask Mister Chairman to enter uh um our article from oilprice.com which is an oil industry um media outlet that Trump's waiver of Jones Act fails to cool oil oil prices. The Wichita State University has studied this problem since the the waiver went into effect, it's saved approximately three cents a gallon in Northeast at best uh but again, at the price of SACRIFICE.

Without objection, Mr. Gordon.

Uh, Yeltsin.

I now recognize the gentleman from Mississippi, Chairman Ezell.

Thank you, Mr. Chairman. Admiral Campbell, despite receiving nearly twenty-five billion to recapitalize cutters, aircraft and offshore facilities, representing nearly fifteen years of procurement funding, uh the service has failed to produce statutorily required acquisition reports and briefings. The Coast Guard is required to produce an annual five-year capital

Thank 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

Oh.

Thank you. The service is required to submit a by email The service is required to submit a by email. report to the committee on the status of the Coast Guard's major acquisition programs. This report was last produced twelve years ago. Uh, when do you plan to produce an upcoming major acquisition plan?

Chairman, uh, uh, as I stated before, we are working very hard on all of our overdue reports there and we will get them as soon as we can.

Yes. Uh. Mm-kay. You believe, uh, the undertaking these planning requirements benefits to Coast Guard's procurement

Chairman, I I I do believe that the planning uh documents do assist. I 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 typically 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 uh name being one. Uh 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 continue working with you and your committee to try to get some of those uh processes uh relieved more permanently.

Thank you. Forced design, twenty twenty eight, Carl.

Chairman, yes. Uh,

Mm.

forced design twenty twenty eight,

Mm.

uh, um among many things has, uh, implemented a change, particularly on the material or system 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, that was the position I held previously, that oversaw all of our acquisition programs, whether they were aircraft, ships, C five I 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 acts that the Navy has taken with program acquisition executives. we created program executive officers and divided by those domains, so we now have a designated flag officer or SES in charge of each of the five domains, the surface domain, the air domain, the C five I 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, uh the team to be able to make prudent decisions, trade-off decisions on buying new and sustaining old. And I think you're gonna see, we're gonna see significant enhancements in our abilities in the future, sir.

Thank you, Admiral. Mr. Chairman, I yield back and I have a few other questions that I'll submit for the record.

Thank you. I now wanna r- uh recognize that ranking member, Larson of the Full Transportation and Infrastructure Committee, he has a statement that will uh have unanimous consent to enter that into the record.

I ask for your name's consent.

This entered into the record. I now recognize my friend, the ranking member on the TNS subcommittee, Mister Carbajal.

Thank you, Chairman Kelly. Miss Carmel, I introduced a bill that would raise the cargo preference requirement to one hundred percent for all DOT cargoes. We know that one way to boost the US flight fleet is to make sure they have the work. How would this cargo preference requirement

Thank 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, Ma- Marad, uh, certainly it helps. Uh, we need uh, government cargo, preference cargo to sustain the programs we have now. Um, uh, we can't rebuild the fleet on government

Thank you. Given that merit is

Thank you. Yes.

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 in government agencies. Um, uh, some agencies are better than others, but cargo preference avoidance is in general uh a problem. And it, it comes back to my opening statement. We 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 uh robust robustness, and those two things are in conflict, and they need to be de-conflicted.

Since the map calls for increased compliance across the whole of government, does DLT plan to voluntarily voluntarily start mandating a hundred percent preference?

Uh, we cannot voluntarily a hundred percent 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 a hundred percent compliance.

Thank you. Admiral Campbell, the Coast Guard has consistently run into issues with procurement of the cutters, most notably the OPCs and the PSC's. The service has suffered

Thank you for the question, Congressman. Uh so first I would like to say that we,

Thank you.

one of the changes, one of the many changes we put in place is to uh in taking the of the Government Accountability Office, we put into place policy that dictates uh the r- design requirements before we go to production to ensure that we have a solid design, uh and we know what it is that shipyard's building. But I would like to to focus on the fact that uh although the OPC and the PSC programs have had a a 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 twenty of the eighty-five modules uh for that ship and that's the equivalent weight uh just to put it into perspective each module weighs about as much as one of our fast response cutters, so we have the equivalent weight of about twenty-six 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 Bollinger Shipyards and uh Bollinger Mississippi and uh are in the process of negotiating ships two and three as well. Um and thanks to the uh reconciliation bill, we have received enough funding to cover the cost for both of the first two ships, and m- a lot of the uh uh ship number three, so we are well on the way 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 thirty-six percent complete, uh and the second one that just started construction

Thank you, Mister Chair. I'm out of time. I yield back.

I now recogni- I'm gonna recognize Mister Whitman and Mister Norcross and then where our votes have been called so just to give everybody advice I now recognize Chairman Whitman.

Thank you, Mister Chairman. I appreciate our witnesses joining me today. Mister Potter, I wanna begin with you. I wanna talk about the concept of distributed ship building. I think you and Secretary Phelan would agree that having more capability out there and being able to bring that to our build yards is key. Yeah. 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 you know I think there's 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. Uh, give me your perspective too on are there other ways that we can leverage that capacity there? Cuz 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 and are there specific classes of ships that this is more suited for than others can we use it 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 in what we need to improve in ship building.

Uh Congressman, thank you for the question, it's absolutely a centerpiece of this budget request and how uh we're able to procure thirty-four vessels eighteen battle force sixteen 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, if you think about electric boat with Groton and Quonset 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 and it's really the shipbuilders themselves making business decisions and recognizing you know the business cases there to do more of this distributed shipbuilding and do it in a methodical way where in the best cases we've 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 sub-assemblies and and then they're kind of taking over more of the ship and I think in the case of destroyers um in the Gulf Coast, we're going from less than five outsourced modules of the seventy um seventy seven or so to over thirty right and that so that's a significant uh you know change in how we're gonna do business so I think that will accelerate delivery. deliveries because as as more of that work is moving out, that'll allow the build yards to relieve that pressure, p- focus the workforce more on the final assembly and delivery, test and trials. And 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,

That's great. Mister Potter, thank you. Mr. Potter, thank you. Uh, Administrator Carmel, 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 are 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, you 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 shipbuilding industry to make sure we have that that underpinning that framework that foundation that protects the investments that shipbuilders need to make in addition to some of the capex that's available to them. Uh, 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 n- 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 shipbuilding and continue to have it on upward project tr- trajectory.

Uh, thank you, sir, for the question. Actually, uh, and and that's true, we have done a lot of structural support I uh as it happens I have white papers on everything and I did one on the agricultural model versus um you know the maritime action plan, and there is uh a lot we can learn from that uh um as you m- as you mentioned income and revenue safety nets uh federal risk sharing programs domestic engineering demand um engineering domestic demand scalable credit and um uh but I think uh mostly, an enduring institutional um champion I 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 eighties, same thing,

Thank you, Mr. Chairman. I'll give you back.

Gentlemen, his time's expired. Now I'll recognize Mr. Norcross.

Thank you, Chairman, certainly the witnesses, for being here today. Ironic, we started this morning over at the Navy League with Mr. Whitman and Mr. Courtney talking about the conditions of our shipbuilding uh we're gonna end today on this important issue uh first and foremost about the distributed shipbuilding uh we look at the the old philadelphia navy yard which is now the new philadelphia navy yard roads industry it was building a an incredibly important role of the columbia class and they are using a rather unique way of building their They have their core group of workers. The vast majority of them are certified nuclear welders. But when there is additional work, they go to the hiring hall, the millwrights, and hire off the bench those 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. It's doing quite well over there and I think it can be replicated in many other places. But the uh main item I wanna talk about today is we know why we've lost shipyards. Certainly the demand was down years ago somewhat, but nowhere near the amount as we wanted to save money, and we offshored it. The 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

Mm.

a year or so ago with the last uh NDAI, I had a Buy 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. It'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. But the premise behind it is to build our workforce, our supply chain and 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 for the Admiral is in the Arctic security kind of program, that's been done a little bit differently, the US, Canada, Finland. But still the idea of building a uh supply chain with our friends and not our enemies. Uh there has been much discussion, 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?

Congressman, I I know nothing about a propulsion system coming from China.

I found it rather remarkable, but there's not that many suppliers in the US that can do this. And his suggestion was not in the time frame that we needed it. So, given the conditions we are in with China, they wanna be friends one minute, they wanna chop our head off the next, I would find that disturbing, and I think most people Can you uh just take a moment that I have left and talk about the difference between when we purchase things through the Coast Guard, what systems are Buy American provisions that you are adhered to versus the Navy?

Congressman, 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 Buy America as well as buying ships. Uh, our our law is under title fourteen whereas the navy is under title ten uh but it basically reads the same way um in the 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 so the first few ships are gonna be built in shipyards in finland the

Well that's exactly what we wanna 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 us 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.

i feel like i'm at a place where there's no one to talk to me right now so yeah i feel like i'm at a place where there's no one to help me right now so i feel like i'm at a place where there's no one to look after me right now so well i think i'm at a place where there's no one to help me right you don't have to worry about it i'm here i was looking for a place where there's no one to help me right now so i was looking for a place where there's no one to help me i didn't feel like i was on the road today i was just hanging out with a friend and then i went to a restaurant and i was like yeah i'm gonna go to a restaurant and i was like yeah

hmm hmm

yeah and i was like i didn't know what to do so i was like oh yeah i was like oh yeah i was like oh yeah i thought that was the thing so i went to a restaurant and i already knew a little bit about the place so i was like oh yeah oh i didn't know what to do yeah and i was like oh yeah i'm so fun yeah yeah yeah you know it's very different for like a regular like a regular like a regular class oh yeah yeah yeah oh very cool right oh nice yeah so like a regular day it's like a regular day it's like a regular day yeah but like a regular day it's like a regular day yeah oh yeah uh-huh that's right um oh i remember that yeah i have a friend who likes uh hmm uh-huh so i was just trying to figure out like what kind of a job you guys are doing yeah i think like it's so i was just thinking like you know yeah i'm doing well on my project but i'm not really good at it uh do you have a product that's like a product that you guys are working on and then you guys are just doing that for a living yeah so i was just thinking like you you know like i have a friend that he likes yeah food and he likes uh so i thought maybe like a kind of like a barbecue or something that like he might share a meal or something like that hopefully he's not like into that kind of

uh you got what i said this we reconvene

yeah we reconvene yeah we're good exactly and then we're good

and then we got yup

yup

you ready

yes

the hearing is reconvened

good bye guys

I now recognize Mister McDowell for five minutes.

Well, thank you to the witnesses for being here today and thank you for the uh, the grace in letting us take a little break to go and vote. We appreciate it. Um, Mister Carmel, it 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

Uh, 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.

Who who is building a majority of the new ships that are ordered globally between the United States and China?

Uh, China is by far building. Most of them in some cases, like, uh, ROROs and MPPs, are

So, the the Chinese commercial fleet is more than five thousand vessels. Ours is less than a hundred. And so it seems to me like we have a big problem on our hands. But thankfully, you did offer us a glimmer of hope, uh, in your testimony. And you said that in maritime system, deterrence,

Uh, 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 marshal um resources and direct activity as they've done. However, the weaknesses there are they don't deal with change very well, they, the uh creative destruction that is a hallmark of the US economy and we've kind of lost uh, 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 uh that sort of thing, cuz they do not deal with that very well, We can, and uh that's how we can beat them. This is not a lost cause. We can do this.

So 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 regul- the regulatory challenges are two-fold. So I'll start with um uh shipyards. Uh, in order to compete in international shipbuilding at scale on the way we need to, we need to build new ships. We cannot build new shipyards. cannot build ships if we if we don't have the shipyards so we need to build shipyards first that is an imperative so 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 flagged 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, the rest of the world just has IMO soulless kind of thing, we have IMO soulless and then we have coast guard on top of it. Um uh on the other hand uh that extra layer of of regulation produces nothing in terms of of uh safety and things like that, I I use as a proxy for that things like the Paris MOU where the Chinese uh are I believe twelve or fourteen and we are twenty seconds, so they s- 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, has is is a very expensive, time-consuming process that uh uh if we wanted to reflag on our own, we would not do. Um so lots of things that can can change to help us.

Rear Admiral Campbell, um, the Coast Guard has had challenges carrying out major acquisitions in the past, and HR one included fourteen billion dollars, as you know, in in funding for new Coast Guard cutters. What steps are you taking to put the Coast Guard in a position to spend that money efficiently?

Thank you for the question, Congressman. Uh, a as I stated earlier, I believe we are off to a great start, um, with uh our shipbuilding program, execute the program's a record that we already had in place. So with that fourteen billion dollars towards our shipbuilding programs, we have been able to fund, we will be able to fund, uh as I mentioned earlier, both the f- the first and second polar security cutter in full, as well as a a a big chunk of the third polar security cutter. We uh, I I failed to mention earlier, but our OPC stage two 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 eleven ships from that stage uh and and having the opportunity to buy those uh in buy out all those options at once uh should uh 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 knowing that they have those on contract uh additionally the uh arctic security cutters uh ships are already on contract as well and I talked

I now recognize the gentlemen from California and my partner on the ship side, Mister Gierimendi.

Mm. Mm. Mm.

And as you went through uh I think I finally punched it hard enough. Um when you started the hearing you uh opened up an important part of this uh and maybe has trouble building all the ships we need, on time and on cost. The domestic ship building industry is essentially the um Jones Act. Uh, 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 re-emerge as a full-on maritime country. Uh, we will have with the Ships Act the opportunity to meet the issues that Mister Carmel has put forward and Admiral and Mister Potter, 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, Mister Chairman, I thank you for your leadership on this. I would ask uh um unanimous consent to enter into the record the text of the Ships Act.

Without objection.

And also enter into the record uh a um section-by-section review and ex- explanation of each of the sections of the Ships Act.

Mm.

Uh and of course my brilliant opening remarks, uh also to be entered into the record and I'll uh cut them short for um time's sake. I'm waiting to

Without objection. I wanted to object though, John.

I hope one of the Yeah, I know what you're up to. Uh and thank you for your uh uh statement at the um press conference today. We must move this legislation. The Navy will not be able to uh meet its requirements on naval vessels without a strong commercial sector to work side by side with it. Uh the legislation that we've 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 uh so and it'll bring into it the unions and others that are gonna be absolutely essential. Uh, Mr. Carmel, you spoke earlier about the need for, um, cargo. None of this works without cargo. In 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, a- along with the sailors and personnel. All 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.

Thank you, Mr. Giermindi. Thank you, Mr. Giermindi. I now recognize Mister Webster. I know recognize Mister Webster.

Thank 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? Uh what do you what kind of factors do you say this made it happen um to turn around, to do the turn around?

Thank you. 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 Bollinger, Mississippi uh acquiring VT Halter and taking over that contract, and while initially uh it w- it was a little rough to figure out exactly what what they they got their hands around um working through that, figuring out exactly uh what was needed to finish that design uh and get it to a 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 EQ forty seven it'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 institute a lot of innovation uh to be able to to work with that metal. We'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 l- 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 twenty-six modules that are under construction right now if you get a chance to come down and visit i highly recommend it sir it's truly impressive. and uh we are looking forward to the first psc being delivered by twenty thirty.

well um the there was the the coast guard has entered into some uh i think eleven uh purchasing eleven arctic security cutters um four of those vessels are gonna be done uh by the Finns and under the presidential waiver I guess I get to kinda skip the the domestic construction requirements for Coast Guard how will this unique partnership uh with that country benefit the United States in domestic shipbuilding

Congressman I I I believe our partnership with uh finland and canada through the ice pack has been uh 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 ice breaker in the united states in over fifty 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 they're very familiar with building ice breakers that's an essential piece of their Uh so I had the opportunity to go to go visit some of their shipyards and uh learn from some of their experiences over there uh and I think that the US ship building uh industry does have some a a lot to learn and the Arctic Security Cutter provides the first partnership uh that I believe uh 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 the United States to enhance our ship building base.

What missions uh 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 a program a record uh our identified need is to get up to a total of I believe eighteen uh Arctic security cutters. These first eleven will be the first step in that direction. but they will allow us to uh to operate uh 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 uh shorelines of of Alaska, uh and also to counter the Chinese and and Russian fleet that have been operating in that area un- un- unin- uh encumbered for some time now and so uh we look forward to being able to match with them and uh have our ships side by side when they come into our seas. Awesome. You're back.

Gentlemen, you're all s back. I just wanna 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 gentlelady from Maryland, my friend, Miss Elfred.

Thank you, Mister Chair, and I wanna thank you and the ranking members for having this important critical uh hearing. You know, it it's one of those challenges I think every buddy in this room including uh everybody in the audience agrees, this is a a crisis. point uh after decades and 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 wanna start though um Mister Potter with some we just had Indo Paycom in front of us, uh General Poparo and we t- t- 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 So I wanna just focus in on in twenty twenty five the DOD's inspector general's analysis of spare parts for navy ships found that the parts uh inventory accuracy was between eighty three percent and ninety five percent, which is below the minimum inventory accuracy of ninety eight percent, so I don't think it's like uh horseshoes and hand grenades, I think we gotta 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. uh 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 be able to solve these things in real time, and we're gonna have ships sitting in dry docks much longer than they absolutely should because we just didn't get the problem right from the beginning. So 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 six months, eighteen 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?

Congresswoman, yes, it's absolutely uh imperative that the spare parts in our inventory management that goes with that are um you know on time and ordered with a lead time necessary. to support these maintenance availabilities. And it is actually a key component of the Navy's audit uh readiness and the inventory of materiel. And um we're making huge strides there and I know you it will set, I can take for the record kind of our audit spare part initiative in using data to ensure we have the fidelity on what our inventory is in in our stock systems.

So we're at eighty th- between eighty three and ninety five percent for twenty twenty five. You'd choose your own adventure.

Yeah, so uh ninety-five percent or higher, right? We need to get better, no doubt about it.

Okay.

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. And that was a pilot program Congress gave us, uh, probably five to ten years ago that we've continued to expand, recognizing, uh, one year O and M money is often, uh, not a long enough period of time to get the parts early enough to support availabilities.

Especially if they're not made anymore.

And we're Correct. 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

I appreciate that.

Yes, ma'am.

I do have to move on. Thank you though for that, and I look forward to working with you. Admiral Campbell, um, you mentioned Coast Guard here in Baltimore, which is actually in my district, and I had the opportunity to visit and solve the critical need for that first investment, tranche of money. We're talking about facilities that were built for World War Two and have not gotten a whole lot of love since then. So I appreciate your focus there. Um, and I do wanna again congratulate you on on the partnership with Finland and Canada, and really urge you to get that co-production shoreside, stateside as quickly as possible. Can you just give me a

Thank you, Congressman. We're gonna quee appreciate the uh 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. So Uh we also appreciate the financial support that we've received and we do have plans in underway to acquire a a uh an actual dry dock that does has a have the capacity to lift our OPCs and our national 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 as you saw it is it is dated, there is a

Thank the gentlewoman. I now recognize Mister Moreland from Guam.

Thank you,

Thank you.

Mister Chairman, uh thank you to our witnesses today, uh Rear Admiral Campbell, we as we evaluate the Coast Guard's uh shipbuilding strategy, do you foresee uh this capacity supporting additional FRC becoming available for home porting in Guam.

Congressman, uh, absolutely, the uh, 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 sixty-two of the seventy-seven that are funded on our program right now and uh two more are programmed um to be fun included in the FY twenty-six budget if when that comes.

If you can just briefly say the importancy of of that area, what it is to Indo-Pacom and why the Coast Guard needs it, please.

Yes, sir. We we recognize the importance of that entire theater, and we've been taking efforts to move more ships in 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 ex- as well as working with as a member of the joint force with the US Navy and uh and our Indopaycom partners.

Thank you. Godspeed, sir. Um, Administrator Kamel, uh, so with today's focus on the ship building industry base, uh, that's important, but equally important role is Murad 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

Thank you, sir.

Thank you.

As as you know, MARAD has the uh 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.

So we we uh the Port Authority has has initiated that process. Um, do you see the importance 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? Yeah.

Yeah.

Uh well, 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 uh um acknowledgement there, but also that the importance of these things, I'm I'm surprised it lasted the last su- last typhoon we had just a couple of weeks And it, the process of building a crane uh takes I I don't know, you have an idea, I I I think it's two two years or more.

Yes.

So just uh to get it going we gotta get it going quickly. Um I really pr- uh appreciate if you put priority on uh for Guam because of our Indo-Pacific 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 MIRAC.

Sir.

Thank you very much. Thank you, Chairman.

I now recognize Miss Gillen, and I hope I pronounced that right.

You did. Thank you. Thank you, Chairman. Um, Mister 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 service academies for more than For more than eighty 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 academy'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, Mister Chairman, I'd like to offer I'd like to offer something into the record.

Good answer.

Thank you. So I'm grateful to Chairman Graves and Ranking Member Larson and Secretary Duffy for heeding my call and organizing a c- 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 midshipmen. I'm proud also to lead a c- 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. I'm glad Secretary Duffy and the Trump administration have made it a priority to help secure these much-needed 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 U. S. Merchant Marine Academy is critical to our defense readiness and a strong commercial maritime industry? And specifically how the funding provided in our

Uh, thank you Congresswoman, uh the graduates of Kings Point, of which I proudly am one, uh so I'm an alumni, um occupy uh um critical uh positions in industry and then of course uh provide uh most importantly officers for the ships and the strategic sea lift officers, uh uh that are necessary in times of conflict so As a source of man power 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, All all the children. 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. We should never forget that the primary output of King's Point is what's between the ears of the kids that walk through the gate, and so uh 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 it's 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 King's Point back on track.

Thank 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. One 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 shipbuilding acquisition and design? And 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 proc- procurement and design process?

Thank you for the question, Congresswoman. I would say we're probably at the uh the early stages of finding how we're gonna integrate AI into our shipbuilding 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. I would say, you know, in the early stages, what the ways that we've demonstrated use already are are are somewhat, you know, maybe s- on the smaller end, but in preparing a lot of the planning documentation and uh and pap- 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 uh 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 shipyard

thank you so much uh my time has expired and i yield back

thank you i now recognize the gentleman from michigan mr bergman

thank you mr. chairman good to see all of you Um, Administrator Carmel, the Jones Act is the fundamental law of the U. S. Great Lakes maritime industry, which runs directly through and around my district from the mines of Michigan and Minnesota and 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. This is the most American of America's industries, moving U S 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 necessary, and keep any Jones Act waiver as narrow and short and as limited as possible. I am I am hopeful that this waiver will not be 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 to balance that. We know it'll be a balancing act, based on times. Um, 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 the proceeds being held in accounts controlled by the US Treasury. Do you, uh, Mister Carmel, uh, consider Venezuelan crude oil moved under these arrangements to be, quote, government impelled, end quote, cargo, and therefore subject to the Cargo Preference Act of nineteen fifty-four?

Uh, thank you, sir, for the question. The situation

OK. Well, Well, then we will, then we will, if you have any names or phone numbers, if you have any names or phone numbers, contact to get a legal answer to that i would be most appreciative of that because we do need an answer

yes sir

ok uh mister potter a current and future naval platforms need an operating system modeled for the commercial automotive uh industry that can integrate weapons sensors and hull mechanical and engineering hmne uh those systems and rapidly provide software updates how is the navy looking to integrate such a commercially proven operating system into warships.

Yeah. Congressman, on um our most advanced destroyers, y- you know, we're already moving in that direction, where uh we have agile software development and as we're seeing new threats, you were now able to update the libraries and the the software and the combat system in, you know, hours or days instead of weeks or months. And so that is tactically relevant and it's very important to us that we have that kind of ability to agilely update software. But as you can appreciate, um, you know, those are very complex combat systems with l- with - with a lot of code, and it's very specific to military purposes that is not resident in the commercial industry. Um, but s- we do have HMNE, um, systems, and, uh, best practice is using our land-based test site in Philadelphia to update all the software there before we send it to our ships. And we're trying to have, And by using the government as the integrator for many, many different types of software and original equipment manufacturers in our engineering plants, we're able to relatively quickly update software and integrate new systems by having the configuration control within the Navy. Um, and commercial ships, there's more opportunity there to leverage commercial technology and just buy off the shelf. And 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 sixty

Thank you very much. And with that, I yield back.

Gentlemen, it goes back now recognize the gentleman from Florida, Mister Petronas.

Thank you, Mister 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 can't turn loose of. And um, I know there's um, where where it boils down to me as 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 ninety percent, hole two is fifty percent, hole three is thirty percent, hole four is fifteen percent, complete. Um, there's discrepancies, there's finger pointing, I 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, I get, at one point I get very sympathetic with the eastern, and I think the analogy I used with you the last time we visited on this was um the coast guard's a sixteen year old looking out 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. And so the anxiety of of the fight that's gone on between the contractor who has had it's shortcomings and I looked at just a little back in the math napkin here work. There's four different presidential administrations, sixty eight. four commandants, three sat in your spot, and still, and we don't have a vote that's operational. Um, I just, I, you know, and I know Austell 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 I'm, and I'm, 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. I 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. And 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 you, 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? Um, I don't wanna 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 we're 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 um and I'm and I'm I'll stand ready for whatever you have to respond to.

Congressman, well, first and foremost I wanna 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 to,

Twenty four seven.

yes 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 a hundred percent certain that that ship is gonna be a fantastic uh addition to the Coast Guard fleet when when they get operational and and hit, and hit the uh hit the fleet. Uh unfortunately with Eastern and stage one contract uh we are at a standstill, and we are negotiating uh in the process of

Okay, I just um I I I again, I I was in the restaurant business for thirty years of my life, I know how hard people work to provide taxpayers' dollars that we get to be trustees over and like someone I see that type of investment over some, some boats that are pretty cool. Um, I I'd like to see them be utilized, um but again, a first in class ship, largest contract in the history of the Coast Guard,

Gentlemen, yo, it's back. Gentlemen. Gentlemen. We're now I'm gonna 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 gonna recess briefly to reset the table with our next panel of witnesses, and we'll start back as soon as the table's set. With that, uh, this, this, we're in recess. yeah

yeah i get a lot of job yeah yeah yeah yeah i was just gonna say yeah that's a good one i got a lot of job yeah yeah a movie that's a good one yeah that's a good one yeah yeah yeah that's a good one shandryn yeah

yeah

yeah yeah i'm sure you guys are all over the world you know like uh like the the uh like the uh like the like i mean like the like the like the like the like the like the like the like the uh like the uh like the right so this is this is like a yeah a a a you you you you you you you you you you you you you you you know yeah wow i'm excited for that day yeah i really like eating chicken i'm gonna eat chicken for dinner i ate that chicken for the first time today i think yeah hmmm it's like you're starting from the beginning of the day and then you're just sitting there oh i feel like you really need to eat chicken and i'm not eating that much yeah but once you're done you're just sitting there eating chicken and then you're just like eating and then you're just like eating and then you're just like eating

yeah

uh-huh

yeah

hmm then it's just about yourself and your own personal life

yeah yeah

yeah what about like wow uh-huh probably um really cool yeah yeah i got two oh wow ones is the one with the word first and then the other one is like uh-huh like i think i got two oh wow yeah yeah oh yeah i think it's um oh i'm so sorry it's very easy to get a ticket i'm so sorry i'm so sorry but i'm not sure how much it would cost right yeah i think i have to look at the the the rules there like how much it would cost um hmm

hmm

no no it's really yeah yeah um yeah that's that's that yeah i didn't know about that sure

Thank the witnesses for being so patient, and uh we we wanted to have you all on one panel but we couldn't do that. I thank you all for waiting patiently. We had votes and everything else in between, but I thank you all. And with that uh Doctor Ert Labs is a Senior Analyst for Naval Forces and Weapons to Congressional Budget Office. Doctor Labs, you are recognized for five minutes.

Thank you. Uh, Chairman Hesel, 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 shipbuilding and the maritime industrial base. I would like to submit my statement for the record and emphasize a few key points. For more than twenty years, the Navy has endeavored to build a larger fleet. In that time, the Navy's goals have ranged from three hundred and six to most recently, three hundred and eighty-one ships. As a result, every Navy thirty year shipbuilding plan since at least two thousand eleven, has proposed building a larger fleet by purchasing more ships and sometimes by expending the life of existing ships. Yet the Navy has not increased the fleet nearly as much as it h- it has hoped, and the ships it buys are getting more expensive. The reasons for that are varied. Twenty 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. More 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 headwind, of COVID and the decline of interest in manufacturing jobs, the Navy progressively increased the demand for naval tonnage. Between two thousand fourteen and two thousand twenty four, the amount of naval tonnage under construction rose by eighty percent. That growth required a substantial increase in shipyard labor, and the shipbuilders were not able to keep up. Ships now take a lot longer to build. Destroyers and amphibious ships used to take five years to build. Yesterday's two thousand twenty seven budget materials now show eleven years for destroyers and ten years for amphibious assault ships. not the nine years I show in the written statement. In the two thousands, the tax submarines took six years to build, now they take ten, 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, a tax submarine production has averaged one point one boats per year for the past two years. The result is a fleet that is much smaller than it otherwise would have been. Between two thousand nineteen and twenty forty, the Navy lost, and will lose, two hundred and thirty-four ship service years from ships that should have been commissioned but were not. In the critical period from two thousand twenty-six to twenty-thirty, the fleet will be smaller by an average of twenty ships, mostly a loss of attack submarines and destroyers. Under the Navy's two thousand twenty-five shipbuilding plan, the growth for the demand for naval uh tonnage will would continue. Between now and two thousand thirty-four, the average amount of tonnage under construction would increase by another forty-five percent. The Trump administration has not released its long-term shipbuilding plan yet, but the FY two thousand twenty-seven budget requests and FIDEP 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 frigate and the inauguration of the FFX program could be beneficial to the industrial base over the long term. Conversely, the new battleship program, regardless of its programmatic merits, would represent a substantial additional burden to the submarine and to the, excuse me, to the industrial base. When I testified last spring before Chairman Kelly's subcommittee, I stated then that in my view, nothing is more important than addressing the critical labor shortages that afflict all of the shipbuilding 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. Ingels has signed a new five-year labor agreement that will increase pay between forty and forty-five percent over five years. Ingels's voluntary attrition has fallen to around fifteen percent before those pay increases had taken effect. Although overall attrition still Payee increases at bath and electric boat have seen voluntary attrition fall below ten percent such that its workforce is now gaining experience. As 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 shipbuilding 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 perturbations to the workforce's to the barest minimum. That is a critical lesson learned from the last twenty years of naval shipbuilding challenges. Continuing 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 exempt exemption to shipyard workers that would be, that would be a way to effectively increase wages without disrupting shipbuilding contracts or contract negotiations. In this modern economy, where manufacturing only ten percent of the gross domestic product, which is down from twenty percent in nineteen eighty. 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. And 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.

Uh, thank you, Doctor 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.

Thank 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 Working closely with both services gives me a broad perspective on the shipbuilding challenges that are facing our nation. Investment and focus on the maritime industrial base are at levels we haven't seen in decades. The Navy and the Coast Guard have received historic funding increases, and the proposed Ship Da- Ships Act and Ameri- Administrations and Maritime Action Plan both underscore a renewed national focus on shipbuilding capacity. That creates a real opportunity. But it also raises the stakes. Many of the same issues that have affected ship shipbuilding programs for nearly two decades haven't gone away and in some cases have gotten worse. Increased funding alone won't deliver better outcomes if those aren't addressed. Over the past ten years, we've made a hundred and thirty-seven recommendations to help address these challenges. Since I testified before Hask last year and highlighted fifty-two open navy shipbuilding recommendations, I have been encouraged to see the We're also seeing progress at the Coast Guard. For example, efforts to reduce design construction ri risk in the waterways cutter program have been commendable. That said, significant challenges remain. Let me focus on just two areas where change is needed. Ship design practices and industrial base investments. First, ship design. Improving ship design practices is one step that could help drive different outcomes on ship 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. Cost overruns, schedule delays, and performance issues. The frigate 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 ship sack encourages the use of commercial best practices for design. If the services want different outcomes, design practices must change. That 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. Investments 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. Trade's workforce shortages, supplier constraints, and shipyard capacity all remain significant barriers. The Navy has already received more than ten 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 doubt so- some promising examples from these investments, what's missing is a fully strategic and coordinated approach. Our recent work on the submarine industrial base investments found that the Navy hasn't defined the scope of what's needed. How 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 base 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. This becomes even more important now, as the Coast Coast Guard has moved out quickly to get ships on contract to guide its investments. 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. If that opportunity isn't matched with disciplined execution and strategic 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 critical to ensure we are on the right course for the long journey toward revitalizing US shipbuilding. Thank you for the time and I look forward to your questions.

Thank you 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 gonna submit my questions for the record and would ask that y'all reply to them. And with that, I'm gonna yield to Mister Courtney for five minutes for questions.

Uh, thank you, Trent. So, um, again, it's, um, w- 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, a fresh, uh, look at, um, an issue that, as we've heard over and over today, um, you know, has really just risen uh 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, Mister Labs, 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 and gotten again about a forty percent increase uh over time really creating separation with the rest of the labor market and you're they're they're definitely seeing um you know a lot more um response a week ago Saturday they had a hiring fair where they were expecting about four hundred people to show up eighteen hundred showed up they actually made nine hundred offers for people who were 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 uh about that the um Columbia program uh again you mentioned you know the uh build rate going back to November uh in February I'm a weeks announced that the delivery of district of Columbia is now being moved from twenty twenty nine to twenty twenty eight uh they've had an acceleration planned now where all the modulars are in the building, finally. Uh the bow module came up from uh Huntington Ingalls sixty percent complete. They just made a decision, just get it in the building and workers from Huntington Ingalls 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 twenty twenty seven to to hit that twenty eight 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, twenty four hours a day, seven days a week. So again, a lot of this is anecdotal and and I completely agree with Ms. Oakley that, you know, given the amount of money that's being invested into the industrial base, we'd 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 I and, you know, I pretty close to this place, Adam Ocadill and I were uh walked through the Columbia uh site uh about ten days ago. Uh you know there's just a different sort of approach urgency, you know that really uh 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 up shows a lot of money going into that um project where there is no design that exists uh as of today so we're hearing that there's gonna be ai enabled uh you know digital twins to help accelerate the design process, but uh again just you know if there's ai can help but go for it but the bottom line is is that that we really need to have i think some more um guardrails about the fact that we do not start cutting steel until we have a design that is I mean hopefully well over fifty percent 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 gonna get you a ship any faster um 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? And 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 um they have a mantra and it 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 suss out what it is you can and can't do. So while AI and digital tools, and I talk a lot about them, cuz I see them as vital um tools to be able to progress and speed through some iterations 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 up front to be able to understand what it is we're gonna do before we start letting contracts for construction and authorizing construction to begin and bending steel. So 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 move more quickly once they understand the design and once they move through that process.

I appreciate that. Eric, you commented on it, but I know I'm over my time. We'll submit a question for the record. Or

Thank you, Mister Courtney.

just

I now recognize Mister Korbehal.

Thank you, Mister Chairman. Miss Oakley, uh strengthening the US shipbuilding industrial base requires sustained demand across both commercial and government sectors, which is why the 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?

Yeah, 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 we can't kind of ignore is trying create that from basically nothing at this point at the same time that we're trying to revitalize our military shipbuilding industrial base um is not an easy feat um it's gonna cost a lot of money and it's gonna require sustained commitment um 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 uh problem to be solved

in that regard how do you see the ships that complement

Yeah, absolutely.

Mm.

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. 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. Um, I think the thing that I mentioned in my opening statement about having like a coordinated strategic approach is super important in this regard because we don't wanna 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 investment into the Industrial Base at this point for its purposes, obviously, but we won't don't want that to disadvantage um the other shipbuilding Industrial Base including the Coast Guard and um the commercial shipbuilding 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.

Thank you. Doctor Labs, you discussed 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 outpaced the Coast Guard's by sheer numbers of vessels, can the Coast Guard ship building projects have a net positive impact on the industry? And if so, what is the path for the service to make that a reality?

Um, I I would say yes, the Coast Guard's project can have a positive effect on the industry, cuz a lot of the vessels when they have purchased them would tend to go to yards that do not build navy ships that isn't a hundred percent true but that has been largely true you know over the past you know twenty twenty to thirty years or so uh or so um the extent that the coast guard can sort of have a 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 uh 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, and then but also following the practices and recommendations that the GAO has identified by also making sure their designs are set, that they are are engaging in sort of the best practices for the commercial shipbuilding 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.

Thank you. Doctor Labs, you noted in your testimony the long-term contracts can help

I would say that either have uh positive benefits in the sense that they provide the long-term stability that uh shipbuilders 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 chips out faster uh than they do, you know, when they when they first start out. Block-by 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 on discipline upon the part of the services in the government to to provide that steady demand signal, but both do that that that job.

Thank you. I'm out of time, Mister Chairman, I have one more question, I'll just submit it for the record.

Thank you, Mister Carbajal. I now recognize uh Miss Alfred.

Thank you, Mister 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 uh GAO alum and so I I'm uh particularly partial to your incredible work, and I I too am so grateful for your objective feedback here, especially as we move we move into mark-up. Um, So I wanna follow up on the question I had asked the previous panel around, you know, trying our best to get to ninety-five percent of predictability for spare parts, but I'm gonna quote

Mm-hmm.

uh Mark Twain here and say there's lies, damn lies in statistics, because if the five percent we get wrong happen to be that one part that takes six to eighteen months to produce even if we still produce it in this country,

Mm-hmm.

we are SOL.

Mm-hmm.

So can 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. So 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 um, you know, sailors and builders are comfortable incorporating. 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.

W- w- thoughts on like a most 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 tackle this can't be an impossible challenge

yeah i mean i'd i think what they're 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 the holdups and if they can't obtain the intellectual property reverse engineering

yeah

those parts to be able to then and 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, to 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.

Absolutely. It, Doctor Labs, I'll I'll I'll open this next question to both of you, uh, you know, appreciating there is no magic wand.

That's a great question and I'm trying to think of what what some what are some appropriate answers would be the

Mm.

One of the things that the United States did when it was building the Spruance class destroyer program is it built an entirely new shipyard for that. And it did so with the most modern technology it could with, you know, it was what they for what was nineteen seventies 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. For 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 shipbuilding, it's gonna 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 you know, a green field start-up um that can incorporate the most modern techniques would be certainly something that we can learn from the Japanese and the Koreans. Um the um one of the other things that that I think we need to do is uh, you know, focus on the labor issue. 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 a- and introducing the whole commercial sector into that, the one of the things that I most concerned about that is that it's gonna 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 to 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.

Um, 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. Um the other thing that I would think about is just our um approach in general to ship building um is a little bit different in in terms of we try to design these ships that are the be all and end all 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. And that then provides not just a consistent and continual demand signal for building yards because they know that you're gonna keep iterating on their ships, but it also gets you out of the habit of designing a new ship class every time you need a new capability. So I think that's one area that we could focus on. Thank you for your indulgence, Mr. Sherry. You'll

Well, 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. You're a much smarter version of me. I really thank you witnesses for being here and what you do. So with that, the hearing is adjourned.

Mm.