17 March 2005

Shipbuilders demonstrate [again] that they don't like competition.

The Congressional Shipbuilding Caucus, co-chaired by U.S. Congressman Gene Taylor of Mississippi and Congresswoman Jo Ann Davis of Virginia, sent a letter to the President of the United States expressing the Caucus' concern over a Navy proposal to reopen the construction bidding for next generation destroyer DD(X) to a winner-take-all competition.
The overall cost to the taxpayer will be substantially lower if a shipyard can use the larger economies of scale from a winner-take-all completition.
In the letter, the Caucus spells out the long-term negative effects that the Navy's revised construction strategy could have on shipyards and Navy force structure. The Caucus also urges the President to execute the DD(X) program as outlined in his FY2006 budget request, with Northrop Grumman and Bath Iron Works splitting work in design and ship construction.
This is called a government enforced duopoly. The White House is rocking the boat.
Chief among the Caucus members' misgivings is the threat to the U.S. industrial shipbuilding capacity, which has already suffered major reductions in employment from the anemic shipbuilding budgets of recent years. Citing the potential negative impact on U.S. national security, the Caucus warns the President that the Navy proposal will lead to a single shipyard building our nation's surface combatants, which will forever limit the ability of the U.S to construct destroyers and cruisers at any significant rate. The letter also outlines the unintended consequences of pursuing the re-bidding strategy, mentioning delays in the program and increased costs.
The major shipyards have a good life by dividing the pork-pie among them. Forcing them to get into a free-for-all, dog-eat-dog competitive world would be a lot less fun.
Under the President's FY2006 budget request, Northrop Grumman was scheduled to build the first three DD(X) destroyers at its shipyard in Pascagoula, with Maine's Bath Iron Works shipyard building two additional ships. However, changes to the shipbuilding budget have triggered the Navy to explore a revised bidding process that will create a winner-take-all competition between Northrop Grumman and Bath Iron Works.
There follows a couple of paragraphs and a list of the caucus patting itself on the back.

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