CONGRESSIONAL RECORD -- SENATE

August 25, 1965

Page 21715

Mr. McINTYRE. Mr. President, will the Senator from Mississippi yield?

Mr. STENNIS. I am glad to yield to the Senator from New Hampshire. I know that he has a great interest in this matter.

Mr. McINTYRE. Mr. President, as usual, the Subcommittee on Defense Appropriations has done an outstanding job in its consideration of this year's appropriations for the Department of Defense. As a member of the Committee on Armed Services, I would like to express my admiration of the careful, meticulous job done by the Senator from Mississippi and his colleagues in shaping the bill now before the Senate.

I was quite concerned, however, to learn of the inclusion in this bill of section 639, which has attempted to restore a modified version of the often discredited 65-35 formula.

As Senators will know, the Secretary of Defense testified before the Committees on Armed Services of both the Senate and the House that retention of the 65-35 formula for the distribution of work between public and private shipyards would result in increased costs to the taxpayers for ship repair, alteration, and conversion. Both Chambers of the Congress concurred by striking the 65-35 formula from the defense authorization bill. This action was taken with the full and enthusiastic support of the Department of Defense.

After the Congress had thus expressed itself on this subject, the House enacted H.R. 9221, the bill before us, without any attempt to restore the 65-35 provision. I was disappointed to learn that the Senate Committee on Appropriations had thus acted on its own to insert this give away of the taxpayers' dollars which section 639 represents.

I am hopeful that the conferees on H.R. 9221 will see the wisdom of deleting section 639. I express this hope free from any regional interest, and base it solely on the fact that, to the best of my knowledge, every knowledgeable expert in the field has recommended that the 65-35 formula be abolished. Among these experts I would list the Secretary of Defense, the Secretary of the Navy and the Chief of the Bureau of Ships.

The issue here is not whether or not U.S. naval vessels will be repaired, overhauled, or converted. The issue is simply whether the U.S. Navy will be permitted to do this work with a maximum of efficiency and a minimum of expense to the taxpayers.

Mr. President, section 639 is bad medicine for the ills of our domestic shipbuilding industry. Its anticompetitive effect is simple; it simply guarantees to the commercial yards that, no matter how slipshod their work, the Navy will continue to send work to them. Its impact upon quality control, overall competitiveness, and the ability of management is easy to foresee. The retention of section 639 will represent another victory for the private shipbuilding interests of this Nation at the taxpayers' expense.

Mr. President, I am appreciative of the remarks of the Senator from Massachusetts [Mr. SALTONSTALL], and the remarks of the Senator from Mississippi, indicating that there will be a considerable amount of flexibility in this provision as it is administered by the Secretary of Defense.

I, for one, thinking in terms of the Vietnam situation, thinking in the terms the Senator has shown to the American people through his analysis of defense matters, believe that next year, with strikes up and down the west coast in private yards, as well as up and down the east coast, the Secretary of Defense should not have this limitation placed upon him. I urge the Senator and the other conferees on the part of the Senate, when they go to conference with the House, to give serious thought to the complete deletion of section 639.

Mr. STENNIS. I thank the Senator. He has stated his thoughts on this subject very well. I appreciate his remarks. I believe I should now describe the committee action and the reasons therefor.

LIMITATION ON SHIP REPAIR FUNDS

The Department of Defense Appropriation Acts for fiscal years 1963, 1964, and 1965 included the so-called 65-35 formula with respect to the allocation of Navy ship conversion, alteration, and repair work between the Navy shipyards and the privately owned shipyards. This provision includes an escape clause that allows such work to be allocated without regard to the formula when the Secretary of Defense determines that it is in the national interest to do so. The Secretary did make use of this provision during fiscal year 1965.

The budget proposed that this provision not be included in the bill for or fiscal year 1966, and it was not included in the House bill. However, the committee recommends the inclusion of the provision. In recommending this provision, the committee considered section 303 of the Department of Defense Procurement and Research Act-Public Law 89-37-which provides:

The assignment of naval ship conversion, alteration, and repair projects shall be made on the basis of economic and military considerations and shall not be restricted by the requirements that certain portions of such naval shipwork be assigned to particular types of shipyards or to particular geographical areas by similar requirements.

Mr. President, when I presented the conference report on the procurement authorization bill to the Senate, I made it clear that this provision did not restrict the right of the Committee on Appropriations to recommend, and the Senate to adopt the 65-35 provision, so long as that provision is tied to the funds appropriated in the bill containing the provision.

In recommending the inclusion of this provision, the committee has taken into consideration several factors, such as

First. The fact that the United States has an excess of shipyard capacity.

Second. The fact that it is in our national interest to maintain as much of this capacity as possible.

Third. The fact that during the past 3 years the provision has not resulted in any serious problems for the Navy ship yards.

Mr. President, there is one other point that should be stressed. This bill includes $843,173,000 for conversion, alteration, and repair work. Under the Navy's preliminary plan the private shipyards would be allocated $221,865,000 of this total, which is about $3 million more than they were allocated during fiscal year 1965. However, this allocation represents only 26.3 percent of the total. This allocation is similar to the allocation to private yards during fiscal year 1962, which was the year before the 65-35 provision was introduced and when the private yards were allocated only 21.6 percent of such work.

In addition, it is generally known that the Department of Defense is seriously considering a proposal whereby shipyards in the United Kingdom will be allowed to compete on an equal basis with American shipyards for the construction of a limited number of Navy noncombatant ships. These ships are of the type that would ordinarily be built in the privately owned shipyards in this country. For these reasons, the committee urges the adoption of the current provision contained in section 639.

Mr. MUSKIE. Mr. President, first, I would like to add my compliments to those of Senators who have expressed their appreciation to the Senator from Mississippi for the outstanding work he has done on the bill. We have come to expect such fine work from him. I appreciate also his remarks on the Vietnam situation, which I believe are most helpful.

Mr. STENNIS. I thank the Senator.

Mr. MUSKIE. Mr. President, I wish to make a brief comment to supplement the remarks that have already been made about section 639, to indicate my reservations with respect to it.

The Department of Defense has constantly stressed its dedication to the principle of the strongest possible Defense Establishment, combined with emphasis on cost effectiveness. I know that the Senator from Mississippi has the same objective.

Congress could take no action more effectively designed to accomplish this purpose than to repeal the 65-35 provision for conversion, alteration, and repair of naval vessels. The Secretary of the Navy has pointed out that an increase in the overhaul of nuclear submarines accomplished at naval shipyards, as opposed to private shipyards, would constitute a substantial savings to the U.S. Treasury.

With a defense budget running over $50 billion a year, we must look for areas where savings can be made, especially when these savings will serve to sharpen the skills of craftsmen who will be among those first called in the event of a national emergency.

If it is the objective of Congress to insist upon the most effective expenditure of Federal funds, repeal of this provision, it seems to me, would be in the public interest. When the Joint Senate-House Conference Committee meets to consider the defense appropriations bill, I hope that the Senate conferees will seriously consider supporting this suggestion.

I am reassured, as also are the Senator from New Hampshire and other Senators, by the statement made by the distinguished Senator from Mississippi that the language of section 639, as it is now included in the bill, is designed to insure flexibility in the exercise of discretion by the Secretary of Defense. For that assurance I am very grateful to the Senator.

Mr. STENNIS I thank the Senator very much f or his fine remarks and presentation. I know that he has a great interest in this subject.