"Current budget rules do not reflect the realities of ship construction," said Senator Collins in introducing the legislation. "Currently, a ship must be entirely appropriated within one year. This severely distorts the shipbuilding accounts, and does not allow the Navy to budget in the most efficient way possible. The key to controlling the price of ships is to minimize fluctuations in the shipbuilding account. Smoothing out the workload would allow our shipyards, in cooperation with the Navy, to plan and budget in the most efficient way possible."
Senator Collins pointed out that ship procurement presents unique budget challenges. Defense ships take years to produce and can cost billions of dollars. And because of the current practice of appropriating the entire cost of a ship at the beginning of a project, if a large ship is scheduled to be funded in a particular year, it is nearly impossible for the Navy to allocate funding for the other ships that it requires.
"It's not that the requirement for other ships doesn't exist – it's that we don't give ourselves the tools to better manage the ship construction budget," said Senator Collins. "This amendment helps to lay the foundation for creating a more realistic, rational, way of procuring ships. It will help the Navy and our nation's shipbuilders to better plan, and thus minimize the unnecessary costs that come from the erratic fluctuations in our ship procurement rate. In doing so, it will also let us maximize the number of ships that we can procure."
Senator Collins has spoken with a number of Navy officials about this issue, and they have agreed with her that the current manner of funding ships is flawed. Secretary of the Navy Gordon England recently told Senator Collins during a hearing that the use of alternative funding mechanisms, like advance appropriations, for shipbuilding would "allow us to buy them better and on a better schedule and better for the industrial phase."
Senator Collins stressed that it is crucial for the Navy not only to have the most capable ships, but also the sufficient numbers of ships to meet national security requirements. The 2001 Quadrennial Defense Review, prepared by the Department of Defense, stated that the Navy required a surface fleet of at least 310 ships to meet our national security requirements. Today, the fleet is below 300 ships. She has also pointed out that the Navy has admitted that it needs more DD(X) destroyers than what is currently included in the Administration's current budget request.