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Navy Plans To Spend Up To $11 Billion On Sealift Alone Over Next Six Years Major New Business Opportunity For Yards, Equipment Manufacturers And Marine Suppliers By James R. McCaul, President IMA Associates, Inc. The Army has been pressing since the early 1980s for additional sealift capability. However, warnings that sealift capability was inadequate had largely fallen on deaf ears— until Iraq kick-started defense plan- ners' interest in sealift by invading Kuwait. Now sealift has become the "in thing" among Pentagon plan- ners. Current Inventory Of Sealift Ships There are currently 34 ships in the Navy sealift core inventory. They include 8 SL-7 fast sealift ships, 13 prepositioning ships, two hospital ships, two aviation support ships and nine crane ships. Details are shown in Exhibit 1. In addition to this core inventory, the Navy has at The PFC Obregon, built by NASSCO, one of the Navy's prepositioning ships. its disposal almost 100 ships which are maintained in Ready Reserve status for sealift contingencies. Many of the Ready Reserve Force (RRF) ships were broken out and used in Operations Desert Shield and Desert Storm. Past Funding For Sealift Ship Construction During the defense buildup of the 1980s, the Department of Defense (DOD) earmarked slightly more than $4.5 billion for construction or con- version of sealift ships. These funds were used to acquire the 34 ships now comprising the core sealift in- ventory. Details showing the level of spending for sealift ships over the past 10 years are provided in Ex- hibit 2. The $600 million that Congress appropriated in FY 1990 to build additional sealift ships had been fro- zen by DOD—who had little inter- est in spending money for this pur- pose. Part of the funds were actu- ally reallocated to other uses. Then Iraq invaded Kuwait—and a groundswell of support for sealift build-up took place. Currently, the Navy has $1,275 billion available for sealift ship con- struction. Of this total, $375 million is left over from FY 1990 funds, and the remaining $900 million was in- cluded in the FY 1991 budget. Sealift Plans: Up To $11 Billion Over Next 6 Years DOD has projected a serious defi- ciency in the number of U.S. mer- chant ships available for meeting future sealift requirements. By the year 2000, defense planners see only 47 merchant ships available for sealift use—vs. a requirement of 99 to 119 ships. Reflecting the concern about sealift deficiency, DOD has devel- oped a long term plan to acquire an additional 28 to 49 ships. Ultimate capital expenditures of $7 billion to $11 billion are being discussed. The Navy's plan is to earmark an additional $2,495 billion for sealift ship construction over the next six years. Of this, $1,275 billion are funds already appropriated, but not yet spent. Exhibit 3 provides fund- ing details for the next six years. Design Competition For Near Term Ship Construction Contract The Navy has divided its efforts into design of near term, medium term and long term sealift ships. The near term ship is one which uses readily available technology— and is essentially a take-off of the prepositioning ships built in the 1980s. December, 1991 25
