Home » Budget Industry » Document: Report to Congress on Next Generation Oiler Program


Document: Report to Congress on Next Generation Oiler Program

The following is the Jan. 8, 2016 Congressional Research Service report, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program. The program was formerly known as TAO(X).

  • publius_maximus_III

    “It was also reported that the Navy wants to limit bidding in this combined solicitation to two bidders—Ingalls Shipbuilding of Huntington Ingalls Industries (HII/Ingalls) and National Steel and Shipbuilding Company of General Dynamics (GD/NASSCO)—on the grounds that these are the only two shipbuilders that have the capability to build both TAO-205s and LHA-8.”

    Say what? Why would we want to limit the number of bidders for such a ridiculous reason? I always thought the reason for competitive bidding was to help lower costs, and the more competitors the better. Maybe the Navy likes to work with these two shipyard giants instead of some of the other ankle biters, but that bias shouldn’t interfere with the bidding process.

    That said, the Oilers are the life blood of the fleet. If it weren’t for them, the fleet would be back in port every week or so. Even for our all-nuclear carrier fleet, they are still required to replenish the aviation fuel stocks. The Navy will get their funding from Congress, they can be assured of that. But they may not get their “preferred suppliers” delivered to them on a silver platter.

    • Curtis Conway

      MIC at work ?! . . . so much for maintaining and expanding the nations manufacturing (ship building) infrastructure.

    • GJohnson

      They should make this an open bidding process. There are yards on the East Coast (Acker Philadelphia), and Northwest (Vigor Shipyards), that could participate, and even allow foreign bidders for the purpose of pressuring US yards on pricing. I’m sure the Dutch, South Koreans, or even Spanish would love to get the opportunity to bid on these non-combatants, and even suggest some affordable improvements.

    • El_Sid

      The underlying problem is that there’s barely enough work to maintain the shipbuilding infrastructure, let alone expand it. Heck, if strategic considerations play no part then just follow the British and outsource most of the build to Korea – they are getting four Tide class tankers for little more than the price of one (pretty similar) TAO-205.
      TAO may be a relatively easy build, but it’s just the consolation prize – what is really at stake here is maintaining two shipyards that are capable of competing for LX(R). Gators are significantly more complicated than commercial ships, as Swan Hunter found out with the RN’s Bay class – despite starting with an existing Schelde design, they ended up towing a half-completed hull to a proper warship yard for completion. The only “ridiculous” decision would be to award LHA-8 or LX(R) to a shipyard that doesn’t have the capability to build it.

      Don’t get me wrong – if I was designing a shipyard, it wouldn’t look like NASSCO, they only exist today through a combination of Jones Act protectionism and outright corporate welfare (AFSB/MLP). However, from a strategic point of view, they’re in the right place at the right time, if the USN is undergoing a Pacific pivot then major shipyards on the West Coast are useful for major repairs etc.
      Also it’s clear that the USN are uncomfortable with the current monopoly on gator production, particularly with its location in hurricane alley, whilst NASSCO is limping along on a mixture of Jones Act tankers and low-end vessels for the USN. That status quo is undesirable for all sorts of reasons – and they’d love to have a future where gators have the same sort of competitive duopoly that has worked so well for the Virginias in particular but also the Burkes to a lesser degree.
      So it becomes a question of how to get from here to there. At the moment NASSCO would not be a credible contender for LX(R), they don’t have the skills to do it and the risk of them “doing a Swan Hunter” would be too great. I’m sure the USN would love to see them do a credible bid for LHA-8, there’s some redesign work needed without starting from scratch and it would lift up the shipyard skills needed for more complex warships – two LPD’s would be more useful in that regard than one LHA, but them’s the breaks.
      Whatever yards compete for LX(R), both of them will need some work to bridge the gap until LX(R) in 2020, and this competition of LHA-8 versus 6xTAO seems the least worst way of doing it.

      • publius_maximus_III

        I can see why your namesake is “the Lord” — I believe you could explain Creation much more clearly than Genesis, by Jove.

        But seriously, thank you for all the detailed information about the American shipyard situation. I had no idea things could be so complicated when trying to “Buy American” for a Naval vessel. Are USN ships really built that much better than commercial vessels, or is it because of all the red tape and government paperwork? I would think burning out plates and making welds would be the same regardless of the customer.

        • El_Sid

          You’re getting at two different points, I think.

          Yes, US shipyards seem to be uniquely expensive, even compared to eg BAE in the UK which is hardly a low-cost producer. The US enjoys massive economies of scale when it comes to buying things like missiles, but shipyards seem to go the other way in general.

          Yes, government red tape doesn’t help – although it would be better to say that their procurement process is the problem – changing their mind all the time, being reluctant to commit to big runs of things, the need for security clearance, that kind of stuff.

          But it’s not so much a question of being built “better”, it’s a question of complexity. You’ll be aware that whilst historically the military had access to better electronics than consumers, in many ways the latest iPhone is better than the kit given to the average soldier. There’s an element of that in ships as well – for instance, double hulls are pretty much standard in civilian tankers, but most USN tankers are single hulled.

          What’s different is complexity. Most tankers or cargo ships are big, but empty. Filling them with “stuff” in the shipyard makes the build more complicated, even if it’s just seating for a ferry and maybe a bar or two. Once you start adding things that are flammable or explosive or pushing out electromagnetic radiation, you’re not just setting yourself an immediate problem of containing the bad stuff, there’s the possibility it could interfere with everything else if it gets out. Things get even more complicated if it has to go underwater or has nuclear power.

          So a container ship or tanker is pretty simple to build – it’s just the kind of metalbashing you describe. But it gets complicated once you start to fill that space with stuff. Gators aren’t so bad as they still have big open spaces – the French demonstrated this quite neatly by effectively making the Mistral two ships joined together in the middle. The bow was a complicated “warship” that had to be built in a naval yard, the aft end was a relatively simple box that could be built by commercial yards – or Russians. Then they just joined the two together. Proper warships are even more complicated, less than a third of the value is in the “burning out plates and making welds” bit. And you need sustain a network of ever-more specialist trades to work on them. Imagine you have a radar specialist – he gets a month of work and then nothing to do until the next ship is built a year later. OK, it’s not quite that bad, but you get the idea. The UK has managed to get itself into the opposite problem – the two carriers are now structurally complete but there’s huge amounts of fitting out to do, and no basic metalbashing to do until the Type 26. For historical contract reasons the wage bill for those guys falls to the government, so they’re building three OPV’s just to give the metalbashers something to do.
          It’s not just a military problem – cruise ships come into that “bit more complicated” category, and oil rigs are comparable to warships in complexity. But that low-end stuff has big economies of scale, which means that a Korean yard knocking out dozens of freighters a year can do basic ships far cheaper than a NASSCO which is doing just 1 or 2 a year.

          • publius_maximus_III

            I see, said the blind man. Maybe there is some way to get the Koreans and Japanese, both staunch allies of the US, involved in the Naval ship bidding process. They must have Naval-grade shipyard capabilities, too. Why heck, Hyundai Heavy Industries makes LPG tankers and those must be pretty difficult to build.

            As for those two “cancelled order” Russian Mistrals, Vive la France!!! Just what da Poot needed, a couple of offensive warships — no way they could be considered neutral or defensive in nature, unless of course they were filled up with marines and sent on a “mercy” mission to say, Georgia, the Crimea, or Ukraine…

          • El_Sid

            Thing is, there is a strategic argument for keeping shipbuilding in the US – as long as you accept that it will cost your more than listening to Adam Smith and outsourcing it. You’d also have to get Congress to overturn the Jones Act, which might not be straightforward no matter how it offends anyone who believes in capitalism. The USN (or at least Sean Stackley) has done a lot of the hard miles down that “strategic” track already, and they are possibly close to getting the pay-off, having two yards that are capable of competing for LX(R).
            So in some ways it would be a bad time to have second thoughts about keeping it all in house, no matter what the short-term cost savings. Now it could be that NASSCO can’t manage a sensible bid for LHA-8 and the long-term plan for LX(R) falls to pieces, but you can’t blame them for trying.

          • publius_maximus_III

            Something tells that me whenever “Mr. Smith goes to Washington” and there are bids from only two suppliers in hand, the intersection of his supply & demand curves will be much higher up the vertical axis. I suppose a duopoly is better than a monopoly, as long as the two parties don’t decide to divvy up the pie with alternating high/low bids.

          • El_Sid

            It’s not just about price though, the military have to worry about all sorts of other factors – like the enemy knocking out ports, and the need to surge production in the event of war.
            Say you have enough work in peacetime to keep two yards ticking over. You may try to get short-term advantage by competing the work among four yards, but the result may be that you have four yards working half-time, and they all go bust – or more likely the best-capitalised one buys up all the rest. Then you end up with the worst of all worlds, a monopoly that is running flat-out in peacetime and has no spare capacity for exports or wartime production. Which is pretty much what has happened in the UK in the last 20 years.

  • John B. Morgen

    Aside from the bidding issues, it is surprising though that the TAO(X) are NOT being designed with hangars.

    • publius_maximus_III

      Leave the choppers to the Man-o-Wars (or is that a non-PC term now…).

      JMO

      • John B. Morgen

        The major supply ships are just entitled to have helicopters assigned to them as do the major warships. Besides we are talking about utility helicopters such as the CH-46, which helps supply the major warships with the required supplies in order for the warships to make war. If these supply ships have hangars, thereby these ships will have a very high probability of providing a continuous air lift transport service around the clock. Hangars provides the helicopters with shelter from the elements, maintenance, fuel and repairs. In sum, I disagreed with your position for these reasons that I just stated.

        • publius_maximus_III

          John,

          You raise some very good points. But my thoughts about Oilers, tenders, supply, and other support type ships in general is that they have more frequent access to ports than ships-of-the-line. Therefore, the need for such services is not as pronounced.

          A nice idea, but if we’ve gotten by without this sort of thing on this class of ship ever since it has been around, why start now? The added cost does not seem justifiable.

          Regards,
          publius

          • John B. Morgen

            That maybe so, but there is really no assurances that the United States Navy will always have foreign bases available to it; and that is, overseas bases from afar. Therefore, it is best to be prepared for such possible situations.

        • El_Sid

          It comes down to needs and wants – aviation adds significantly to the operating costs, and you have to weigh up what your payback is given that they will be operating in the presence of other ships with helicopters, and they are primarily delivering liquids rather than solid stores.
          The British Tide class will have hangars, but that’s because the RN are so short of ships that they have had to use tankers as patrol ships in the past – and they actually make quite useful HADR ships given their capacity for drinking water, which is often in short supply in the aftermath of Caribbean hurricanes etc. Plus the shortage of solid stores ships means that even RN tankers have a limited role providing solid stores.
          Horses for courses.

          • John B. Morgen

            The United States Navy should follow the Royal Navy as an example, regardless if the latter has a shortage of supply ships.

          • El_Sid

            The USN should spend its budget in whatever way is needed to be as effective as possible. Period.
            Since the budget is finite, that means making trade-offs. Maybe the USN would be more effective with extra missile inventory, or new tugboats, or upgrades to its sonar software, or hangars on its new tankers.
            I don’t know the answer – but I do know they can’t have everything on that list, so they have to prioritise. As an outsider, it feels like hangars on the tankers is more of a want than a need – and when the state of the budget means you are gapping carriers in the Gulf, then only needs are going to get funded.

          • John B. Morgen

            The United States Navy lacks the due prudence and discipline; plus, the foresight of building the correct if not the prudent warships that the nation-state is going to need, for confronting both the PLAN and Russian navies—-period! For example, already the USS Gerald R. Ford (CVN-78) is costing the nation-state over $12 billion USDs per a unit; by which three Nimitz class carriers could have been built; or one Nimitz class carrier, and several smaller warships, excluding the LCS type warships, supply ships could have been built and deployed. The Navy is going to bankrupt itself and will be defeated without ever firing a shot, just like how the Soviet Union was defeated—by going bankrupt. In sum, I disagree El_Sid. The Navy needs a much greater oversight in how it builds and maintains the Fleet. Both the Congress and the Navy are [NOT] doing their jobs, and because of their follies we will lose the next Pacific War—period!