National Defense Authorization Act for Fiscal Year 2012--Continued

Floor Speech

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Mr. ELLISON. Madam Chair, I rise to offer an amendment that will cut $150 million in unnecessary defense funding.

Congress must reassess our budgetary priorities. We should not be in the business of needlessly increasing defense spending while simultaneously cutting spending for critical services that Americans depend upon. Without my amendment, Congress will needlessly approve $150 million for the LHA 7 amphibious warship program. Now, let me be clear. I'm not against such a program in its own right, but I am against authorizing this funding for FY12 because the Government Accountability Office and the Armed Services Subcommittee on Seapower said we shouldn't do it. And they have very good reasons for coming to that conclusion.

First of all, according to the Government Accountability Office report, which I have in my hand and I intend to submit into the Record, these funds won't even be used in fiscal year 2012. The report states that contractor delays and labor shortages ``will likely have implications on the ability of the shipbuilder to start construction of LHA 7 as currently planned.''

If we do not authorize these funds, our national security will not be harmed. The GAO reports that FY11 funds already appropriated will be sufficient to cover the costs of the program and expenses for LHA 7 in FY12. As the report makes clear, and I quote again, Madam Chair, ``most of the construction costs for LHA 7 will not be incurred until fiscal year 2013.''

Given the GAO's recommendation, the Armed Services Subcommittee on Seapower did the right thing. They cut funding for the LHA 7. However, that funding was reinstated in the full committee. Given that the funds will not even be able to be used in FY12 due to contractor delays, why was $150 million reinstated in the full committee? Well, I can tell you that a Republican gentleman from Mississippi sits on the Armed Services Committee, and he represents a district on the coast with a very large shipbuilder in it.

Let's review momentarily. At a time when Congress is cutting critical heating assistance programs, education, and health care, why should it authorize defense spending for work that military contractors aren't even prepared to do?

Without my amendment, Congress is set to increase funding for the LHA 7 warship at a time when we are slashing critical domestic spending programs that Americans count on.

This is a commonsense amendment, Madam Chair, and it follows that the GAO and the Armed Services Subcommittee on Seapower said we should do. We should cut $150 million for the LHA 7 warship program. I'll leave it to you and your imagination as to why the funding was reinstated at the full committee.

I urge my colleagues to reassess our budgetary priorities and authorize funds for when they can actually be used. Spending should not be authorized prematurely, especially when Congress is cutting other critical programs.

LHA Replacement, Shipbuilding and Conversion (SCN), Fiscal Year 2012--Line 3041

PROGRAM OVERVIEW

The LHA program will provide the functional replacement for the LHA 1 Class ships which are reaching the end of their extended service lives. The program is to ensure that the amphibious fleet remains capable of Expeditionary Warfare well into the 21st century and provide for an affordable and sustainable amphibious ship development program. LHA 6, the lead ship, was authorized in fiscal year 2007. Fabrication of LHA 6 started in January 2008 and it is currently scheduled for delivery in October 2013. The Navy requested funding for the first follow-on ship, LHA 7, in its fiscal year 2011 budget request and requested an additional $2018.7 million in fiscal year 2012 to fully fund the ship. The Navy awarded an advance procurement contract for LHA 7 in June 2010, and planned to award the construction contract in November 2010.

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REASON FOR REDUCTION

The Navy's fiscal year 2012 shipbuilding and conversion budget request for LHA 7 could be reduced by $2018.7 million because the funds are premature to program needs. The Navy expected to award a contract for construction of LHA 7 in November 2010--at the start of fiscal year 2011--but the contract award has been delayed and is unlikely to occur until fiscal year 2012. While the Navy currently plans to begin construction of LHA 7 in May 2012, it is likely that construction will be delayed. Ongoing shipyard labor shortages have resulted in schedule delays on LHA 6 and will likely have implications on the ability of the shipbuilder to start construction of LHA 7 as currently planned. Given the delay in contract award and the likelihood that the start of construction may slip, the program will not need the majority of funding until fiscal year 2013. Fiscal year 2011 funding will be available in fiscal year 2012 to ensure that the shipbuilder can purchase materials necessary to meet its build schedule--activities originally scheduled to take place in fiscal year 2011. The National Defense Authorization Act for Fiscal Year 2011 authorized the Navy to split funding for LHA 7 construction over fiscal years 2011 and 2012. Should Congress choose to take the suggested action, LHA may need multiyear contracting authority that includes fiscal year 2013.

The Navy anticipated awarding a contract for LHA 7 construction in November 2010--at the start of fiscal year 2011. To date, the Navy has not yet awarded a contract--a delay of at least rive months. According to the Navy, it received the shipbuilder's proposal in April 2011. The program office reported that they would like to award the contract by the end of fiscal year 2011--5 months or less after receiving the shipbuilder's proposal--but acknowledged that they would most likely award a contract in fiscal year 2012. By comparison, the construction contract for LHA 6 was not awarded until over 14 months after receiving the contractor's proposal. Program officials believe that the construction contract for LHA 7 will take less time to negotiate than the lead ship. However, even if the Navy reduced the time to award to 7 months, half the time required to negotiate the LHA 6 contract, the award would still occur in November 2011--in fiscal year 2012 and a full year later than planned.

Further, it is likely that the start of construction for LHA 7 will be delayed past its current estimated date of May 2012 due to ongoing shipyard labor shortages. Delivery of LHA 6 has been delayed twice primarily as a result of labor issues. The most recent delay, announced in the fiscal year 2012 budget, pushed delivery of the ship from April to October 2013. Program officials reported that the shipyard is currently drawing down labor, but will have to increase labor resources to meet the increased shipyard demand starting in fiscal year 2013. However, the shipbuilder may have difficulty effectively increasing labor resources to meet the needs of Navy programs. In addition to the LHA class, construction of LPD 26 and LPD 27 is expected to begin in late 2011 and 2012. The program office acknowledged that the construction start date for LHA 7 may slip past its current estimate, and some Navy estimates put construction start in early 2013. The actual construction start date will be negotiated as part of the LHA contract award.

Since activities originally planned to take place in 2011 will most likely occur in 2012, 2011 funding should be sufficient for the program through 2012.

PROGRAM OFFICE COMMENTS

The Navy indicated that it strongly disagrees with GAO's assessment of the LHA(R) program and the proposed reduction of fiscal year 2012 funding. The Navy believes it can award the contract by the end of this fiscal year, in August or September 2011. According to the Navy, construction will start as currently planned in May 2012, as it has worked with the contractor to mitigate construction schedule risk by using the advance procurement funds to buy long lead time materials. According to the Navy, a reduction to fiscal year 2012 funding would impact the program's ability to procure required Contractor Furnished Equipment, disrupt the ship's engineering and production schedule and cause significant disruption in the industrial base. The Navy believes there is significant risk that fiscal year 2011 funds would not cover required expenditures if the second increment of funds were not appropriated until fiscal year 2013. According to the Navy, failure to procure government furnished equipment systems as planned will negatively affect the unit cost of these systems for LHA 7 and other platforms. The Navy also states that the entire shipbuilding plan for fiscal year 2013 and later years would be impacted by a delay of LHA 7 funding.

GAO RESPONSE

Although the Navy believes it can award a construction contract for LHA 7 within four to five months, past experiences negotiating contracts with the shipbuilder have taken considerably longer. As we stated previously, the LHA 6 contract was awarded 14 months after the Navy received the initial proposal from the shipbuilder. While the Navy indicates that it has mitigated construction schedule risk by procuring long lead time materials, there is still significant risk of construction delays associated with ongoing labor shortages and a projected increase in shipyard demand starting in fiscal year 2013 due to construction on multiple ship programs. The shipbuilder has been unable to effectively manage labor resources on LHA 6. Ongoing labor shortages increase the risk that the shipbuilder will remain unable to meet increased shipyard demand in fiscal year 2013, which increases the likelihood that construction start of LHA 7 will also be delayed.

In its comments, the Navy indicated concerns about having enough funding to acquire equipment and materials for LHA 7. However, program officials previously reported to GAO that fiscal year 2011 funding will cover materials and that the program was waiting for the construction contract award before placing some orders for materials. The program has already received $169.5 million in advance procurement money to acquire long lead time materials, and received $942.8 million in fiscal year 2011.

The program can use this money to purchase materials as planned. Most of the construction costs for LHA 7 will not be incurred until fiscal year 2013. Accordingly, the fiscal year 2012 budget request could be reduced by $2018.7 million.

At this time, I would yield 1 minute to the ranking member on the Armed Services Committee, Mr. Adam Smith.

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