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had, together with production delays and manpower problems dating from the early seventies, produced a virtually-I will not say virtually-an extraordinarily serious situation for us with the three yards that do the lion's share of our business in the Navy' in constructing combatants.

Those-all three sets of-claims, after very lengthy and difficult negotiations, were settled, the latest one last fall. I believe that it is fair to say that Secterary Claytor's primary focus on improving the situation, in at least those three shipyards, was related to, or has been to this point, related to the claim settlements, the management changes and contracting-type changes that went along with those settlements, and trying to insure that sort of thing does not happen again.

Mr. McCLOSKEY. Now, let me sum up that answer. I asked you what steps and programs have been considered to revitalize the shipyards. I asked because of the testimony on page 1, that you viewed with misgiving, the stagnant condition of your shipyards.

And your answer has been that for 2 years, the Secretary's primary concern has been with settling claims.

Now, settling claims scarely contributes to end the stagnant condition of the shipyards. I would like to ask again, what programs or steps is the Navy considering to revitalize these stagnant shipyards which you view with alarm?

Mr. WOOLSEY. I disagree. I think the management changes and the contract type changes that we instituted along with them were an important feature, with respect to those three yards, of trying to do away with at least some of the construction stagnation that had occurred.

Mr. McCLOSKEY. All right.

What are the number of shipyards engaged in the construction or repair of U.S. ships?

(Short pause.]

Mr. MCCLOSKEY. I would hate to think this silence indicates that the Secretary of the Navy does not know how many shipyards we have.

Mr. WOOLSEY. I wanted to ask, Congressman, whether the nominal figure that we usually use, around 26 or 27, includes the Navy shipyards or not. It does not. So I would say 32 or 33.

Mr. McCLOSKEY. Mr. Secretary, in addition to the claims in the three yards that do the lion's share of the work, what steps or programs is the Navy considering to revitalize the other yards?

Mr. WOOLSEY. Are you including the Navy yards in that, Congressman?

Mr. McCLOSKEY. Whatever yards you were referring to in your testimony.

Mr. WOOLSEY. All right.

We are trying, and with respect to the yards with which we have direct responsibility for investment-

Mr. MCCLOSKEY. How many is that?
Mr. WOOLSEY. It is the six yards, the six Navy yards.
Mr. McCLOSKEY. Six Navy yards?

Mr. WOOLSEY. To improve the capital, the working capital in the sense of machine tooling and utilities at those yards, as best we can, in the current budgetary situation. With respect to the pri

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vately owned yards, you are aware, as well as I am, that primary responsibility for improving such matters as capital investment is going to lie with the owners, and that they are going to make those investments based upon the business they perceive being able to get.

From our point of view, the healthiest thing for them, and for the yards that they own, is a vigorous shipbuilding program, for both Navy and the merchant marine.

Mr. MCCLOSKEY. How many privately owned shipyards are presently receiving Navy construction business?

Mr. WOOLSEY. I said the majority is the three yards I described. There are at least another six or seven and overhaul work is done in a larger number, of course. I would have to supply the precise number that is now doing construction work, for the record.

[The following was received for the record.]

NAVY CONSTRUCTION IN PRIVATE YARDS Nine major privately owned shipyards are presently receiving Navy construction business. These are Avondale; Bath Iron Works Corporation; General Dynamics, Electric Boat Division; Ingalls Shipbuilding; Lockheed Shipbuilding and Construction Company; National Steel and Shipbuilding Company; Newport News Shipbuilding and Drydock Company; Todd Pacific Shipyards Corporation (Los Angeles and Seattle Divisions).

Mr. McCLOSKEY. So six or seven private yards do major repair and overhaul work?


Mr. McCLOSKEY. And you are not familiar with the number that are presently engaged in new construction?

Mr. WOOLSEY. No, I said in addition to the three largest yards, another six or seven are also certainly engaged in construction for us. I do not know the precise number. It may well be a few more than that, because some small auxiliaries, for example, are constructed at a number of places. That is the reason, if I might say so, Congressman, that I have had difficulty from the beginning, knowing exactly what you want, because I do not know whether you are referring, for example, to small boat construction or not.

Ms. MIKULSKI. All of it.

Mr. McCLOSKEY. Let us consider shipyards capable of construction of a Navy ship, destroyer or larger. How many such shipyards, in the Navy's opinion, does this Nation need in order to have an adequate shipbuilding base for the Navy alone?

(Short pause.)

Mr. WOOLSEY. Congressman, I am going to have to“if you want the specific number

Mr. McCLOSKEY. Yes, I did want a specific number. I would expect that would be an absolute golden cornerstone of the Navy's program.

Mr. WOOLSEY. I would have to say that what we have now is only marginally adequate

Mr. MCCLOSKEY. That is not the question. What is the number of working shipyards necessary, in your opinion, to maintain the national security, shipyards capable of building ships the size of a destroyer or larger?

Mr. WOOLSEY. I will have to make it for the record, Congressman. I will have to make it for the record.

[The following was received for the record.]

NECESSARY WORKING SHIPYARDS It is not just the number of yards that is significant but also the number of working shipbuilding ways. The answer to this question is contained in the Navy! MARAĎ study of the U.S. mobilization base for shipbuilding promulgated in April 1978. We understand that this Committee has been furnished a copy of this study. The answer to this question contains classified information which we can supply if required.

Mr. McCLOSKEY. Thank you, Mr. Chairman.

I hope, Mr. Secretary, you understand these questions are not directed to embarrass you. They are directed to try to bring out the facts that this committee has been disturbed about for years about the lack of coordination between the Navy and the merchant marine on the matter of the number of ships and the number of shipyards. It is disturbing, after the President has vetoed a bill that asked for greater cooperation between the Navy and the merchant marine, not to get immediate answers to these questions.

But if I may go to the final page of your testimony, "we believe that the merchant marine should be provided parity of treatment in competing with foreign flag shipping." What do you mean when you say the merchant marine should be provided parity of treatment?

Mr. WOOLSEY. That was intended as a general endorsement of the operating subsidy program

Mr. McCLOSKEY. But you do not know how that program operates, do you?

Mr. WOOLSEY. In what particular

Mr. McCLOSKEY. In any particular. Do you know how the operating subsidy program operates?

Mr. WOOLSEY. I am not familiar with it in detail.
Mr. McCLOSKEY. Then why do you indicate your support of it?

Mr. WOOLSEY. As a general proposition, the Navy is in favor of a strong American merchant marine, serving a number of trade routes around the world, so that ships will be available to us in different parts of the world, at different times, for different contingencies, if that should be necessary.

The CHAIRMAN. Would the gentleman yield?
Mr. McCLOSKEY. I would be glad to yield.

The CHAIRMAN. Mr. Secretary, this committee has gotten the strong impression over the years that it was Navy policy to suppress funding for the American merchant marine, not to talk to the Maritime Administration, but to keep the maximum dollar for construction or capital ships and that was the predicate of the Navy's policy position vis-a-vis the merchant marine.

Now, we have gotten nothing but lip service when this committee, both majority and minority, has attempted to draw out just where we stand today on the Nation's seas. Where we have fallen into 10th place, where the Navy comes up here, and they know that they cannot support a logistical movement. We have an interagency task force and maritime policy group on the executive level, and yet the Defense Department, who is a part of this policymaking group, still does not come out with any strong support for American flag merchant marine when it counts.

I did not mean to take the gentleman's time.

Mr. McCLOSKEY. Thank you, Mr. Chairman.

I just want to express the hope, Mr. Secretary, that the followup answers to these questions can be precise and comprehensive. I think the number of shipyards that this Nation should have to meet its security is probably the number one question that we address.

Let me move back to your testimony on page two, where you state that, “Our own tanker fleet is not, however, expanding, and our ships carry only approximately 4 percent of our vital oil imports. This situation, too, needs improvement whenever it can be accomplished.'

It is true, is it not, that although U. S.-flag ships carry 4 percent of our oil imports, about 55 percent of our oil imports are carried by U.S.-owned ships under foreign flag, is that correct, sir?

Mr. WOOLSEY. I believe that is approximately correct.

Mr. McCLOSKEY. What is the Navy's program, in the event of national emergency, to reduce the U.S.-owned ships to our possession, to continue our ability to import oil for the United States?

Mr. WOOLSEY. In the event of a national emergency there has always been grave concern that non-American flag, although U.S.owned, ships would not be able to be used promptly, because the crews of those ships are normally not American citizens, again

Mr. McCLOSKEY. Again, Mr. Secretary, I understand your concern, but do you understand my question? What program does the Navy have to assure that the tanker fleet owned by U.S. citizens or corporations will be available in times of national emergency? What is the program?

Mr. WOOLSEY. There is no Navy Department program in that area, Congressman.

Mr. McCLOSKEY. There is none?
Mr. WOOLSEY. Not that I am aware of.

Mr. McCLOSKEY. You are in charge of the national security, what do you do to make sure that the tanker fleet that is owned by U.S. citizens will be available?

Mr. WOOLSEY. Congressman, that is a MARAD program, and the draw which we have, through the various ties which we have on U.S.-flag ships, we feel would probably be the first place we would go. After relying on U.S.-flag, and the Ready Reserve Fleet, National Defense Reserve Fleet, and so forth, we would go on beyond that to go to the U.S.-owned, but non-U.S.-flag, ships in the event of a contingency or national emergency-I am afraid you will have to address the question to MA.

Mr McCLOSKEY. Last year, Mr. Secretary, the Navy included in its budget the construction of both oilers and tugboats. Are you including in your requested budget funds for the construction of oilers and tugboats this year?

Mr. WOOLSEY. For fleet tugs, no, Congressman. The only auxiliaries in the 1980 through 1984, five year shipbuilding program are oilers.

Mr. McCLOSKEY. How many oilers are in this year's budget?

Mr. WOOLSEY. I do not believe there are any in this year. I believe there is one in each of the out years.

Mr. McCLOSKEY. I am referring to a GAO report dated August 30, 1978, entitled "The Navy Should Reconsider Plans to Acquire New Fleet Oilers and Ocean Tugs."

Are you following the recommendations of the GAO in that report?

Mr. WOOLSEY. We are probably going to be buying very few fleet tugs in the future, Congressman. That capability, unlike the salvage capability, is available commercially. But fleet oilers are a very different capability from commercially available tankers, and in our judgment, both are required.

There are certainly similarities between the two kinds of ships, and some oiler functions, particularly in the shuttle ship role, can be performed by tankers. We are looking hard at the substitutability now of tankers for oilers, particularly small tankers, of course, but I cannot tell you now that we are going to get out of the business of building oilers.

If I might add one further point. I think one option we are going to have to very seriously consider is service life extension programs for our existing oilers, because funds from our point of view are very limited, and whether or not we are going to be able to afford to buy, or otherwise have new ships, and exactly the kind of ships that we would like to have, is very questionable.

Mr. McCLOSKEY. Mr. Secretary, I do not think the committee questioned at all the Navy's need for a certain number of fast fleet Oilers but let me read you the specific recommendation of this GAO report, because I would like to ask you specifically if you are following it.

Recommendations: In coordination with MA and commercial operators, identify areas in merchant marine tanker fleets that could improve national defense value and enhance overall readiness. Specific attention should be given to national defense features, the tankers' role in fleet support, methods effecting responsive and timely availability, and construction alternatives that optimize commercial and defense value.

The origin of that recommendation was our concern, that if commercial tankers exist, that did not have pumps, or hose, or connection compatibility with Navy ships, that we were missing the boat, is that recommendation, being complied with?

Mr. WOOLSEY. As that recommendation is stated, the answer is yes. Because it asks us to pay specific attention. We are doing that vigorously in the study, and otherwise. We are looking at the whole spectrum of service life extension programs on existing oilers of construction of oilers, using commercial specs, of utilization of specially constructed tankers, and national defense features on new tankers, national defense features being retrofitted on existing tankers.

But, as you are aware, Congressman, frequently the problem with the oiler/tanker issue for the Navy is that the type of tanker it is normally desirable to construct, from the Navy's point of view, is the handy size, 30,000 tons or so, or 70,000 tons, maximum. That is not the size tanker that is normally most attractive from the commercial point of view, and therefore there is frequently a mismatch.

Mr. McCLOSKEY. Mr. Secretary, I wonder if you could supply for the record, subsequent to this hearing, a precise statement of the

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