September 1, 1970
Page 30690
AMENDMENT NO. 811
The PRESIDING OFFICER (Mr. EAGLETON). Under the previous order, the Chair wishes to lay before the Senate the pending amendment, amendment No. 811, offered by the Senator from Maine (Mr. MUSKIE). There are 2½ hours of controlled time on the amendment, divided equally between the Senator from Maine (Mr. MUSKIE) and the Senator from Mississippi (Mr. STENNIS).
Amendment No. 811, as modified August 31, 1970, is as follows:
On page 7, line 6, strike out the period and insert in lieu thereof a colon and the following: "Provided, That none of the funds authorized by this Act may be expended for the procurement of DD 963 class destroyers unless (1) the prime contractor with whom the United States contracts for the construction of such destroyers is required under the terms of such contract to subcontract to another United States shipyard and (2) the total number of such destroyers set forth under the terms of the prime contract is divided substantially equally between the prime contractor and subcontractor."
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. Mr. President, I ask for the yeas and nays.
The yeas and nays were ordered.
Mr. MUSKIE. Mr. President, I yield myself 10 minutes.
As the debate reopens today on my amendment to divide the 30-ship, multibillion dollar DD-963 procurement, between two American shipbuilders, let me make clear the real issue at stake, and the main thrusts of my proposal.
First, it must be clearly understood that this is not a Bath amendment, as it has been described in the press this morning, but, rather, the amendment would give every qualified destroyer builder a fair shake, in open competitive bidding, at half the ships in the program. It is expected that bidders will compete from Washington State, California, Louisiana, Virginia, Massachusetts, and Maine, as they did in the course of the competition up to this point.
Second, that this is an economy amendment, whose objective it is to reduce the long-term costs of constructing destroyers in the DD-963 program and other combatant ship programs.
Third, that even the short-term cost increase which might result from a division of the contract will fall far short of the figures suggested by the Navy and my distinguished colleague from Mississippi, Senator STENNIS.
Fourth, that it would be a dangerous precedent to award the entire class of complex destroyers to one shipbuilder under a high risk "cradle to the grave" concept which is at present completely untested in the procurement of combat Navy ships. The cost of such a policy could well be a concentration of all our destroyer building capability in one yard and the destruction of potential competition.
Fifth, that the well-publicized problems associated with over concentration of defense contracts under one corporate entity must be avoided in the DD-963 program to minimize the possibility of overruns and slipped schedules.
Sixth, that this amendment comes as no surprise to the Navy or Litton Industries.
Seventh, that the House of Representatives military procurement bill, which was passed before the award of the contract, included language similar to my amendment, and indeed Litton's contract with the Navy includes language designed specifically to implement my amendment without delay or disruption to the program.
Eighth, that the weight of evidence since the DD-963 program was first planned, in 1966, has swung to such a degree that it is no longer prudent to award a single contract for 30 ships as it may have appeared 3 or 4 years ago.
Ninth, that acts of God, labor difficulties or mismanagement can disrupt any single facility and could endanger our entire destroyer program for the 1970's unless the contract is divided.
And finally, that the overwhelming evidence clearly indicates that the national interests can be best served by dividing this huge multibillion dollar procurement, which will span the next 10 years.
Mr. President, let me just repeat that my amendment would support:
The concept of a single design for all 30 ships, which the Navy desires;
The utilization of a central procurement group to purchase 30 ship sets of machinery and equipment, which the Navy desires
The standardization of ships within a class, which the Navy desires;
The economies of series production of a large number of ships, which the Navy desires;
The transfer of a reasonable degree of responsibility from the Navy to the contractor, which the Navy desires.
And the modernization of more than one shipyard, which the Navy desires.
Mr. President, my amendment does not stop there. It also supports:
A broader and less risky distribution of defense contracts;
The maintenance of a competitive shipbuilding environment;
And the lowest long-range ship procurement cost to the Government.
My amendment is workable and it is cost effective.
Mr. President, after World War II throughout the mid-1960's the Navy came to Congress annually with requests for funds to purchase destroyers in lots of one, two, or three. This policy was fraught with problems, but virtually every representative of the Department of Defense argued that this was necessary in order to maintain our mobilization base and spread economic benefits. In 1970, with changing threats, we may be justified in changing the character of that mobilization base and unquestionably we should encourage new procurement techniques which will result in better ships at lower costs. But a reduction from 10 or 11 destroyer builders to one, when the Navy talks of replacing a large percentage of our entire destroyers, makes no sense at all.
It is my opinion that in attempting to correct the deficiencies of earlier procurement policies the Navy has overreacted and gone too far in the other direction. It is certainly a far cry from contracting for one, two, or three destroyers worth perhaps $50 million, to a contract for all 30 destroyers worth over $2 billion. And these are not small ships. In World War II they would probably have been called light cruisers.
It has been argued that dividing the DD-963 contract will increase the cost in the 30 ships at issue over $225 million and some have even suggested $600 million. These have been described as scare figures and in my judgment that is an apt description. The fact is that any increase would result primarily from two 15-ship learning curves rather than one 30-ship learning curve.
While no firm estimates have been made, my sources indicate the increased costs from two learning curves rather than one would be $91 million, if my amendment is implemented as intended. In addition, there may be other startup costs and management costs to the Navy from having a second shipbuilder in the program. However, there are mitigating factors, and a reasonable range of possible increased cost by a division of this program might be in the order of $80 to $120 million which would be funded over 5 years. To put this in perspective let me note that under the Litton contract costs could increase $387 million while still providing a profit of $107 million.
This is a relatively small investment to make on a 30-ship program now projected to cost the Navy many millions of dollars. And the cost benefits from healthy competition would accrue to the Government's advantage on 20 planned follow-on ships and other Navy programs for years to come.
Before concluding my opening remarks there is one aspect of my amendment which should be clarified. There may be a false impression that the dollar value of the contract would be divided equally between the prime and the subcontracting shipyard simply because each would be building 15 ships.
In actuality the prime contractor would be responsible for the entire ship design, the procurement of essentially all material, and the construction of half the ships. This package would include approximately 75 to 80 percent of the dollars spent in the entire program. The subcontracting shipyard would be paid primarily for the labor expended on the construction of 15 ships, which would equal approximately 20 to 25 percent of the total contract price.
My fellow Senators, experts such as those on the Fitzhugh blue ribbon defense panel appointed by the President, as well as the General Accounting Office, cite the risks of over concentration and the need to maintain competition. Even the Senate-House conferee's report on this bill last year stated in part:
The conferees strongly point out the necessity of developing and maintaining the shipbuilding capability for all kinds of combatant and support ships on the east coast, the west coast and the gulf coast.
These, Mr. President, are my arguments in behalf of the amendment. And I repeat, in closing this opening statement, that this is not a "Bath amendment." It is designed to open up 15 ships in this procurement to competitive bidding, because of the national interest involved.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. Mr. President, I yield 10 minutes to the distinguished Senator from New Hampshire.
Mr. McINTYRE. Mr. President, I congratulate my neighbor from the State of Maine upon this amendment. As he knows, I serve on the Armed Services Committee, and one of our procurement problems today is in the area of the CVAN. That is one of our giant carriers. We are currently producing two, I believe, of the Nimitz class. All of us on the Armed Services Committee have been staggered by the tremendous costs of these carriers – $500 million to $550 million to $600 million to $625 million.
I know that the Senator from Maine has suffered with me through the agonizing period when New York Shipyard and Portsmouth were brought under the gun. But today, to build a CVAN carrier, we really have only one shipyard, Newport News, that has the capability and the expertise to build this giant, sophisticated carrier.
Some years ago, there was a possible competition from New York Shipyard. Today there is no competition. The one supplier is Newport News.
I would want to amend my remarks by saying that in the event of an emergency, we would beef up some of the other yards in the country, public and private, to take on this gigantic task. But it is a one provider; it is a one supplier; and the costs have gone up and up, almost out of sight.
So that this year, the third carrier planned, the CVAN No. 3 – Nimitz No. 3 – is not in the bill that is being debated today.
So, as the concept of the one manufacturer, the one provider, goes on and competition drops by the wayside, we do not affect in the long run what we had hoped to do.
Mr. MUSKIE. The Senator has brought out the point that I think is the key element of this amendment – the importance of maintaining competition. When we contemplate the award of a total destroyer program over a time period that would span most of the next decade, thus depriving any other destroyer builder yard of the opportunity to maintain its expertise and capability and manpower for this purpose, what we are doing is considering the question of concentrating our entire destroyer building capability in one yard, with all the consequences for cost and competition that that implies.
Mr. McINTYRE. Mr. President, I am a cosponsor of the pending amendment, which was submitted by the distinguished junior Senator from Maine (Mr. MUSKIE), and also cosponsored by the distinguished senior Senator from Maine (Mrs. SMITH), the distinguished Senator from Vermont (Mr. AIKEN), the distinguished Senator from Rhode Island (Mr. PELL), the distinguished Senator from Michigan (Mr. HART), the distinguished Senator from New Jersey (Mr. WILLIAMS), the distinguished Senator from Wisconsin (Mr. PROXMIRE), and the distinguished Senator from Ohio (Mr. YOUNG). The amendment asks that two shipyards be used for construction of 30 new DD-963 class destroyers instead of the one shipyard called for in the Navy contract for the recent award.
I believe we may have gone too far in one direction in our procurement policy of recent years. Earlier we had the policy of spreading awards to many suppliers so that our shipbuilding potential and expertise could be developed in many places. This procedure brought about some more competition between yards and kept costs relatively low. The procurement costs for some ships were somewhat reduced over the years while the cost of most military procurement was rising.
This same procedure, however, caused many problems:
Awards were spread among so many shipyards that no single yard felt it could fully justify the costs of building the most modern facilities. Shipbuilding facilities did not keep up with the state of the art.
Moreover, it was necessary for the Navy to develop and fund a number of expensive monitoring staffs to follow the building of the ships in several yards.
And it was difficult to fully utilize standardization procedures when several shipyards were engaged in production.
Because of these problems, the Navy changed course and began to use fewer and fewer shipyards for construction. This reaction, I believe, has gone too far in the recent award of the 30 DD-963 program to a single shipbuilder.
I am supporting the pending amendment, offered by my good friend, the Senator from Maine (Mr. MUSKIE), because I believe the single supplier concept raises problems which can better be met by dividing the shipbuilding between two yards.
Specifically, the problems I see are: First. When a contract is placed solely with one shipyard the area surrounding the installation experiences a period of boom to be followed, when the contract is completed, by serious economic and job problems. I can speak personally about this phenomenon for I have seen what cutbacks have meant in the seacoast area of New Hampshire as phase-out has taken place at the Portsmouth Naval Shipyard during recent years. But if large contracts are split between two areas, the impact of completing them will fall less heavily on any single locality.
Second. Splitting the workload also lessens the chance that an act of God, mismanagement at one yard, a strike or other problem might seriously delay completion of the work in question. The devastation recently caused by Hurricane Celia on the Gulf Coast and by other hurricanes in recent years in the same area clearly illustrate what might happen if this total contract were placed in one basket.
Third. Under the single supplier award for the building of these destroyers we would, in effect, be placing all of our expertise in the building of destroyers in one location. If, at some time in the future, we have a sudden need for the construction of destroyers or a requirement for a rapid expansion of destroyer building we may find that this one yard is incapable of fulfilling our demands. We should not place our defense structure in this kind of possible jeopardy. It might take years to restructure the skilled teams necessary to staff the additional facilities in case of need. Having staffs at two installations to fulfill this destroyer contract would be a hedge against such future difficulties.
Four. The argument can be made that placing the award with a single company would effect some savings. However, it can also be argued that the lack of competition, particularly in future years when new ships are built in this and similar classes, may well lead to higher and higher costs.
I hope, Mr. President, that the amendment will have strong support. My concern is not with the ability of the present recipient of the award. My concern is helping, if I can, to keep our defense structure strong. I believe the Muskie amendment will help to do just that, and I urge its support.
I thank the distinguished Senator for yielding to me so that I might bolster his arguments.
Mr. MUSKIE. I thank the distinguished Senator from New Hampshire.
The PRESIDING OFFICER. Who yields time?
Mr. STENNIS. I yield 5 minutes to the Senator from South Carolina.
Mr. THURMOND. Mr. President, I strongly believe that it would be a very serious mistake for the Senate to adopt the Muskie amendment which calls for the Navy DD-963 contract to be divided among contractors other than the bid winner. This amendment, should it become law, would set an extremely bad precedent and throw the entire military contracting procedures into chaos. It would make a mockery of our defense contract machinery. More important, however, it would introduce politics and political considerations directly into defense procurement. For that and other reasons, it is a dangerous amendment which should not be seriously considered.
Let me remind the Senate of the amendment we recently had before us by the distinguished Senator from Delaware (Mr. WILLIAMS). The purpose of that amendment was to preclude the making of announcements of defense contract awards by Members of the Congress. The primary reason advanced in support of the amendment was that it raised the suggestion of political influence if Members of the Congress were permitted to make such announcements. We all agreed that this was a bad practice, and the amendment was unanimously adopted.
Mr. President, we have before us an amendment which would disrupt the award of the DD-963 destroyer contract which has been made on its merits by the Navy. While I can understand that the author of the amendment wants some of the business to go to his State, the procedure which he would have us follow does far more than "suggest" political interference in defense contracting. His amendment, if adopted, would be political interference of the most direct and blatant type because the Senate, or a majority of it, rather than the Defense Department, would have passed final judgment on a military contract award.
I hope my colleagues will look to the future and realize that if we establish the precedent that we are going to interfere with and set aside contract awards in such cases, we are inviting more trouble than can possibly be imagined. If this precedent is set, defense contracts will no longer be awarded on the merits of the proposals and on the basis of the lowest and best bid. If such a policy is set, contracts will finally be determined by who has the most votes or most political influence in the Congress of the United States. This will inevitably result in political logrolling of the worst type and would open the door for all types of undesirable practices.
If we adopt this amendment, Mr. President, we might as well add another amendment to the bill to the effect that no contract award by the Defense Department or any other Government agency shall be final or binding until it has been submitted to and approved by the Congress. If we interfere with one Government contract award, certainly we are taking upon ourselves the responsibility to look at others. There is certainly no reason to single out this contract. So far as debate here shows, its handling has been free of wrongdoing or irregularity.
Mr. President, I think that we should all realize the trouble that we are inviting if we should adopt this amendment. I do not believe that we want to disrupt the established procurement and contract selection processes. Congress should not get into the contract award process and I trust that the amendment will be rejected.
Mr. MUSKIE. Mr. President, will the Senator from South Carolina yield?
Mr. THURMOND. I am pleased to yield to the Senator from Maine.
Mr. MUSKIE. I should like to remind the Senator from South Carolina that the issue raised by him was first raised in the House and was included in the House version of the present bill before the contract was awarded.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. I yield myself 2 minutes.
The PRESIDING OFFICER. The Senator from Maine is recognized for 2 minutes.
Mr. MUSKIE. It was incorporated in the bill before the award was granted. As I argued yesterday, the consequences to the national interest of implementing Department of Defense procurement policy of awarding 30 ships to a single yard are so important to the country that the Navy should have withheld the award so that the contract negotiations at issue could be raised.
Since the Navy did not, I do not think the point made by the Senator from South Carolina is relevant or applicable. I did not press the Navy to make the award prior to full consideration by Congress or raise the policy involved in the amendment. The award was made after it was raised. I think the Senate has every right to consider the issue on the merits, and by merits I mean the consequences to the Nation of the award of a destroyer program of 30 ships to a single shipyard. Obviously, on any award of this magnitude, everyone in this Chamber whose State may be involved is interested in the result.
I concur in the principle incorporated in the Williams amendment, cited by the Senator from South Carolina that to the extent possible political influence should be divorced from the awarding of contracts, but here we have a mixed bag. The question was raised and, I repeat, it was incorporated by the House in the form of an amendment to the bill before the contract was awarded. I think that dilutes the force of the Senator's argument considerably.
The PRESIDING OFFICER (Mr. HOLLINGS). Who yields time?
Mr. THURMOND. Mr. President–
Mr. STENNIS. Mr. President, I yield 2 minutes to the Senator from South Carolina.
The PRESIDING OFFICER. The Senator from South Carolina is recognized for 2 minutes.
Mr. THURMOND. Mr. President, in response to the distinguished Senator from Maine, the Senator from South Carolina would say that the ground rules for the competition provided that the contract would be awarded to a single successful contractor. No changes in the ground rules were made at any time during the competition. The Litton Co. submitted the lowest bid, a bid of $9 million per ship lower than the competitor, or an aggregate of $270 million lower. The competitor had a chance to bid. Both had the opportunity to bid. Both studied this matter for a long period of time. Litton was the lowest bidder. Now, would not this destroy companies from coming in and bidding, if you will, Mr. President, letting them bid, and then saying to the loser, after the bid is over, "Although you are not the lowest bidder, we will let you share in the contract anyway." Where would we get companies to come in and submit a bona fide bid – the best bid, the lowest bid, the final bid, if they know they will have a chance later on to share in the contract anyway?
To me, it is perfect nonsense. To me, the Navy has followed the only logical procedure; namely, they have let a contract to a company that is $270 million lower than the competitor. I would say that there is no merit in the position of the Senator from Maine.
Mr. MUSKIE. Mr. President, will the Senator from South Carolina yield?
Mr. THURMOND. I am pleased to yield to the Senator from Maine.
Mr. MUSKIE. Mr. President, I yield myself 2 minutes for the purpose of responding to the Senator from South Carolina.
The PRESIDING OFFICER (Mr. HOLLINGS). The Senator from Maine is recognized for 2 minutes.
Mr. MUSKIE. Mr. President, first of all, this procurement competition has proceeded over a period of 4 years. Throughout that time there has been widespread speculation, well known throughout the industry, that although it was directed to the objective of a single yard, the award conceivably would have to be split, not so much because of its magnitude but because of the national interest. I am sure that speculation was as well known to Litton Industries as to Bath and the other four shipyards involved in the competition at one point or another.
Second, the blue ribbon panel that was appointed by President Nixon about a year ago recommended that contracts for shipbuilding of this magnitude should be split. Indeed, the McNeil subcommittee on that panel recommended that no contract of this type involve more than 10 ships. That was known within a week after the award. That raises the national interest issue which I am seeking to raise here today.
Finally, I repeat that the House spelled out this issue before the contract was awarded. I can therefore say to the Senator from South Carolina that the Senate is a perfectly appropriate forum to consider national security policy which has such consequences for the Nation. I believe that it deserves to be considered on its merits. The Muskie amendment does not propose to divide the contract between Litton or Bath. The Muskie proposal is that 15 ships remain with Litton and that the other 15 ships be subject to open competitive bidding which, presumably would elicit bids from the other five shipyards involved in the competition at one point or another and conceivably others. Bath may not be the winner. Other shipyards are well aware now of the economic bases of the two bids submitted and are in a position to bid competitively for the other 15 ships.
The PRESIDING OFFICER. Who yields time?
Mr. STENNIS. I yield 2 additional minutes to the Senator from South Carolina.
The PRESIDING OFFICER. The Senator from South Carolina is recognized for 2 minutes.
Mr. THURMOND. Mr. President, in response to the Senator from Maine, I would say that the Wyman amendment has not been adopted, and is not law; that the recommendations of the blue panel commission have not been put into operation and they are not the law; that the Navy followed the law, in that it called for bids, and the Navy let the contract to the low bidder. That was the law. That was the law then and it is the law now. Everyone had a right to come in and bid. Litton came in and submitted the lowest bid.
Now the Senator from Maine would come in and say, "Let us open it up and give it to others," after Litton was the lowest bidder, $9 million per ship lower than the other competitor, with a saving on the 30 ships of $270 million.
I say that this would be the most dangerous precedent Congress could establish. I would say further, when any company is dissatisfied, if they can run to Congress and say, "We did not get the bid but we want it anyway and therefore we want you to pass an amendment or a law to let us share in the contract," if we ever establish that kind of precedent in Congress, we are treading on dangerous ground.
Mr. STENNIS. Mr. President, I yield 5 minutes to the Senator from Arizona.
The PRESIDING OFFICER (Mr. HOLLINGS). The Senator from Arizona is recognized for 5 minutes.
Mr. GOLDWATER. Mr. President, without casting any aspersions, or making a remark in a facetious way, I believe that I can participate in this debate freely because we do not make destroyers in Arizona.
Mr. President, having spent a good part of my life in business, and having spent a part of my life in this body watching procurement procedures, I can certainly understand the concern of the distinguished Senators from Maine – both of them. I can understand the concern of others, too, who might see in this award something damaging to the shipbuilding companies who have not been successful. Even though I can understand this concern, I believe it is an unwise procedure.
We have a similar situation developing, I must say, in the aircraft industry. Mr. President, I spent last Saturday in the portion of southern California that has been dominant in space manufacture. There is very heavy unemployment out there now. Very few things are being manufactured in the space field at this time.
I would be the last one to suggest that because of this and because of the efforts to keep companies going and spread the business around that we should take the bid away from a successful bidder and divide it up and say to him, "You can keep 50 percent of the bid. But the other 50 percent must go out for further bidding."
I must say that I know of nothing in the contract that would prohibit Litton from saying to any other ship company, "Look, we have the contract for all of these ships. If you build them at our bid price, we would be glad to do business with you." I see nothing wrong with that. I do not think that ought to come out of any legislative decision of the Congress.
We have shipyards in the far west, in the southern part of the United States, in the northeast, and in the eastern part of the United States. They all need business.
I must say that this Senator from a desert State is most concerned about the state of the merchant marine. I think it is deplorable. I think the fact that we are way down on the list of the world's shipbuilders is deplorable. But we have to recognize the fact. And if we want to do something about it, we should do it. But this is not the way to do it.
As I mentioned earlier, we have aircraft companies in our country that have no business. We have that giant company, Boeing, making the C-47 and, hopefully, the SST. However, a large block of the Members of Congress are opposed to that.
Would it be proper for us to say to North American, the successful bidder on the B-1 contract, "Look, your friend Boeing has a high unemployment rate. We are going to reopen the bids on the B-1. You can keep half of them. But we will allow other companies to bid on the remainder, even though the bids might be higher than your successful bid."
Litton made a bid that was substantially lower than those of other companies.
We have a similar situation developing with trucks. The military is buying trucks, and we find fewer and fewer suppliers. We used to have dozens of firms that would bid on trucks. Today, there is a relatively small number.
Speaking again from the standpoint of a Senator who has been in business and has engaged in bidding and has sat in the committee and on the floor and watched our procurement proceed, although I have to agree with the Senator from Wisconsin that we have practiced procurement in a very unwise manner, I do not think that this is unwise.
The bid was open to all companies. One company, Litton – a relatively small shipyard – was successful in underbidding the other companies.
I do not know how we can do this. We cannot do it legally.
The question pops into my mind, having made a contract for the ships with Litton, how can we, in essence, break that contract by law?
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. GOLDWATER. I will yield in a minute.
We can do it. There is no question of that. But is it right? Would we not be subject to suit?
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. GOLDWATER. I yield.
Mr. MUSKIE. Mr. President, as I have indicated in the record, the contract was written to provide for a split in the event of a legislative mandate, anticipating the possibility that the House amendment might become law.
There is a provision in the contract to implement such legislative provision, if adopted.
Congress, through adopting my amendment, would be moving in the direction anticipated by the contract and would be implementing the terms of the contract. We would not be breaking the contract.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. STENNIS. Mr. President, I yield 1 additional minute to the Senator from Arizona.
The PRESIDING OFFICER. The Senator from Arizona is recognized for 1 minute.
Mr. GOLDWATER. Mr. President, as I said before, there is certainly nothing to prevent us from doing this in a legislative way. But I think of the consequences for Litton if they had already proceeded with construction under their contract. This might cause them losses for which they could sue.
This is something that has concerned me about the C-5A program. We have never gone into it. How much would we be liable for?
I am not speaking as a lawyer, because I am not one. Let us say that they had made provisions for starting construction. We could not say to them, "We will divide the contract up among other companies, even though their price might be higher than the bid Litton submitted.”
I do not see how we can do this from an ethical standpoint. Certainly we can do anything we want. But I think we would be paying more than if we had stuck to the contract.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. GOLDWATER. I have no more time.
Mr. MUSKIE. Mr. President, I yield myself 1 minute.
The PRESIDING OFFICER. The Senator from Maine is recognized for 1 minute.
Mr. MUSKIE. Mr. President, I want the record to be clear. The following is from the contract signed by Litton: The government shall have the right to require the contractor to subcontract the construction of a quantity of complete vessels as may be necessary to comply with the legislation referred to in the premises hereof. The contracting officer may require a contractor to solicit all shipbuilders of naval ships systems . . . a possible list for destroyers of one or more subcontractors.
That is from the contract itself. My amendment is directed to implement the bidding procedures anticipated in the contract itself for a quantity of complete vessels, using the contract language, as indicated by Congress. If Congress acts favorably on my amendment, it will do what the contract anticipates.
Mr. GOLDWATER. Mr. President, will the Senator from Mississippi yield me 1 minute?
Mr. STENNIS. Mr. President, I yield 1 minute to the Senator from Arizona.
The PRESIDING OFFICER. The Senator from Arizona is recognized for 1 minute.
Mr. GOLDWATER. Mr. President, if what the Senator says is true, then I see no need for legislative action on this matter. I question whether it is wise and whether it can be done in view of the low bid we have had on this destroyer and whether it is ethical, even though it is written into the contract.
Mr. MUSKIE. Mr. President, may I say in response that what the Senator is saying is that even though there is a provision in the contract that anticipates possible legislative decision on the contract and even though this award to a single shipyard for the entire destroyer building program for the seventies is obviously of the first magnitude in the national security field, it is inappropriate for the Senate to consider this policy and make a judgment on it.
I do not agree with the Senator.
Mr. GOLDWATER. Mr. President, I must say that I do not agree with the Senator from Maine. I think we would open up a real Pandora's box.
We do not make destroyers in Arizona, but we do make other things.
While I do not accuse the Senator of being interested in the matter because of one shipyard located in Maine, I can understand his concern, as I can understand the concern of any Member of Congress over high unemployment in his State occasioned by the loss of a contract or by decreased prices.
I feel that the amendment is unwise. That is the reason I oppose it.
Mr. MUSKIE. Mr. President, I yield myself 1 minute.
The PRESIDING OFFICER. The Senator from Maine is recognized for 1 minute.
Mr. MUSKIE. Mr. President, first of all may I say to the Senator that when this procurement competition began over 4 years ago, I indicated to Secretary McNamara, who was responsible for the concept, my very real reservations about the wisdom of a single shipyard procurement for a contract of such magnitude in the national security field. My record on that is clear.
Speaking of a Pandora's box, if the Litton contract is completed in accordance with the single shipyard award, I will be interested in seeing what kind of a Pandora's box we have when the 21 ships are open to competitive bidding and there is only one shipyard available.
Then, we can decide which was the Pandora's box.
Mr. GOLDWATER. The Senator and I agree on one point. We both agree Secretary McNamara was unwise.
Mr. MUSKIE. I think the Senator is unwise in agreeing with Mr. McNamara.
The PRESIDING OFFICER. Who yields time?
Mr. STENNIS. Mr. President, I yield myself 10 minutes.
The PRESIDING OFFICER. The Senator from Mississippi is recognized for 10 minutes.
Mr. STENNIS. Mr. President, I think the facts have been fairly well developed here in the debate and in matters that have been placed in the RECORD. One thing is outstanding and incontrovertible about this matter and I think it largely decides this issue. From the very beginning the Navy had made up its mind, and so announced, that it wanted to award a contract for these destroyers, and that the winning bidder would get the entire contract. The idea was that they could get more ships for their money. That was put into writing in the very beginning in the invitations that went out to shipyards to compete. It has been reiterated over and over again. They first had six; they reduced that to three; then they eliminated the third, and the two remaining bidders ran head and head for a year – Bath and Litton-Ingalls.
Of course, they knew and expected that the winner was going to get the full amount, and the bids were based on that fact. Their bids were bottomed on it and that was the basis on which they were bidding.
It has been stated that it was understood or talked about in the trade that there was going to be a division. I do not see how that could be classified as true. Both of them were figuring their heads off trying to get the contract for the 30 destroyers, should Congress authorize the full 30 destroyers. That was the only issue with those bidders. The figures were based on that understanding. They knew what they were doing, of course, with all their competence. They knew exactly what they were doing. They were operating under the law and the Navy was, too. There is no proof here that there is any fraud or that the Navy or the bidders failed to follow the procurement law Congress has laid down.
Along the way, just before it was over, and just before their bids did become final, this amendment was filed in the House of Representatives. It would make some kind of uncertain change about it. There is no debate on that amendment or explanation such as we are having here. If there was a vote it was formal; the chairman said he would take the amendment.
But the bid dates were running out and the day was approaching when the Navy had to act or those bids would not be valid or binding any more. That was the idea months and months before this was to become final. That was the reason for having a clause in there that if Congress should pass legislation on the subject then the Navy could ask the successful contractor, whoever it was, whether it was Bath or Litton – both of them were in the running then – to open it up, whatever the conditions might be, but that it might increase the cost. Everybody knew that and the Navy understood it. That is why there is an estimate placed on the amendment from the House of Representatives that it would cost a minimum of $225 million extra.
But at any rate, the only matter before us now is the Senate amendment. The Senator from Maine (Mr. MUSKIE), the author of this amendment, and his cosponsors knew that Litton was going to be the prime contractor. They got the bid and got it on 30 ships but now it is asked, "Would we let them have one-half, just one-half?"
But when he asked for one-half, he agrees that the company is all right, that they have the capability, that the contractor is all right, that there is no fraud, and that the law was followed. Otherwise, he would not have agreed to do that. But he said that they want one-half. They do not say one-half at the bid Litton put in or that the price would be the same as Litton put in. No, they do not say that.
That is the first question many Senators ask me when I tell them the facts.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. STENNIS. I shall yield in a moment. I wish to finish my thought. They would open it up and ask for one-half of the ships. When the Senator is asked whether that would be at the same price as it was to the low bidder, we are told that the answer is no.
When the question is asked at what price it would be, we are told, "We do not know."
That is why I say the best estimate on this matter is that it would cost from $225 million to $300 million. It could cost as high as $600 million. That would be the price if we went back and said that we were going to start over and have two designs, 15 ships under one design and 15 ships under another design. Frankly, the form of the Senator's amendment now does not propose that, but in the original form it did.
I am glad to yield to the Senator from Maine.
Mr. MUSKIE. I want to be sure I understand one of the Senator's points. I understand the Senator objects to the fact that my amendment provides for open competitive bidding to decide the number that would be released from the contract.
Mr. STENNIS. I make the point there is no shipyard, Bath or any other shipyard, that states, "Yes, we will take 15 at the price the Government already has for those 15."
Mr. MUSKIE. Mr. President, will the Senator yield again?
Mr. STENNIS. I yield.
Mr. MUSKIE. What would be the Senator's comment on the provision in the contract between Litton and the Navy which provides if such a division is directed by Congress that there should be open competitive bidding to decide the distribution of the 15 ships?
It seems to me that contract provision reflect that that way of dealing with the problem is the best way in the judgment of both Litton and the Navy. Does the Senator disagree?
Mr. STENNIS. I know that that is the method adopted, but as a practical matter, the Senator is asking that this matter be disemboweled and torn up so that some other shipbuilder could build some of the ships but when the question is asked at what price it would be we are told, "We do not know. It is going to be competitive. We do not know if it will be as low as this or not."
I judge that Litton would be left out of the competition. I hear reports that many shipyards think they will get in on that. I do not know that; nobody knows. But it will cost more money. We have spent 5 weeks trying to reduce the amount of money to be spent for these military articles and now we are going to put in a provision and the only evidence is that it would cost nearly one quarter of a million dollars for the same number of ships.
Mr. MUSKIE. Mr. President, will the Senator yield further?
Mr. STENNIS. I yield.
Mr. MUSKIE. I assume the Senator is not saying that this provision in the Litton-Navy contract is impractical. The Senator applied that adjective to my amendment; because it would open up 15 ships to competitive bidding. If it is impracticable as contained in my amendment, then I take it it is impracticable in this provision of the contract.
The second point I make is that any estimates of the increased cost, when what is involved is the price that would be set as a result of open, competitive bidding, is an attempt to look into the future as a result of the competition and what the result of the competition will be. I must say I do not have that kind of vision, and I doubt if the Senator has.
Mr. STENNIS. That is exactly what we had – open competition on the bids, looking for the best deal for the Federal Government. This competition was between six, to start with, three later, finally two. The award went to the one that was low. Now the Senator's amendment proposes to tear that up and say that we are going to have competitive bids for the second 15.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. STENNIS. I will not yield just now.
I do not think we are going to find that the bids for the second 15 are as good as the bids we have for the 30.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. STENNIS. Yes, I yield.
The PRESIDING OFFICER. Who yields time?
Mr. STENNIS. Mr. President, I yield myself 5 minutes.
Mr. President, with all deference to the Senator, I must get along to other points. I want to show him courtesy–
Mr. MUSKIE. Mr. President, will the Senator yield? I am sure the Senator does not want it to appear that he is making the point in this way, as I understand it; but the Senator is saying that the competition up to this point has resulted in the lowest possible bid, but that if we use the same process to get the lowest possible price for the Government on the 15 ships, it would not result in the lowest possible bid. How going through the same process would result in two diametrically opposite results is beyond me.
Mr. STENNIS. As I know my eighth grade arithmetic and with what commonsense I have, if we stand right here now, the Navy has the lowest bid it will ever get on the 30 ships. Call it what you will, it calls for less money in the contract the Navy already has than any others. No one has shown anyone will even take that contract at the price Litton proposes to get on the second 15.
Mr. MUSKIE. Has anyone made that offer?
Mr. STENNIS. Everybody wants to get in on it, but no one makes the proposal.
Mr. MUSKIE. Are such proposals being invited?
Mr. STENNIS. Not officially, and not even in argument. No one has said it believes we could get a better bid for the second 15 than the Navy has.
Mr. MUSKIE. Has anybody been solicited?
Mr. STENNIS. That is academic.
Mr. MUSKIE. I think not. Can the Senator expect anyone to come forward with bids with any idea that the 15 ships would be open to such bids?
Mr. STENNIS. What the Senator from Maine means and what I mean are so clear that I think; if we may, we should pass on to some other points.
I shall not be contradicted in saying flatly that if this award goes some other way, it is expected to cost more money. The original contract, in talking about this opening up, said the parties recognized – who were the parties recognized? The parties to the contract, Ingalls and Bath Co. – will require equitable adjustments in the terms and conditions of the contract.
That is a nice way of saying it will cost more money. That is what the letter I put in the RECORD the other day said, that the Muskie amendment in its present form is going to cost more. I will read the paragraph:
The actual impact of the proposed amendment will not be known until the government negotiates with the prime contractor, but it is clear that the cost could be substantially higher than even the $225 million increase which has been estimated for up to a 20-10 split of the program. Without a significant increase in program funding, the use of a second ship builder will substantially decrease the number of ships the Navy will be able to procure.
All Senators are put on notice, then, that if we get into this matter, we are going to have to increase the money substantially higher than the $225 increase which is estimated for the 20-10 split – either that or we will get fewer ships for the same money. That is plain commonsense. One does not have to go to the Naval Academy or anywhere else to arrive at that conclusion. That applies whether one goes to the grocery counter or anywhere else.
Mr. President, I want to move on, if I may. The most serious matter I think Senators have before them, in addition to the extra money, is that we would be converting ourselves into a kind of supreme committee to pass on the change or altering or modifying and the awarding of contracts. That is what it is. This has all been done according to law, and the award went to this group because it had the lowest bid.
Call it what you will, the proposal here is that we want a part of that contract set aside, when the Government has done the best it can, even if it costs more. We do not want this contract.
Here is a list of contracts coming on: Take the B-1. Major contracts are coming up on ongoing bombers. It is in research and development now. That is so unless it is stopped along the way by the Congress. That has now gone to North American Rockwell, in California.
The F-14 aircraft, Grumman in New York State. That is one that was let a year ago, or a little more.
We find ourselves just sucked into a vortex by every disappointed contractor who finds one reason or another to get his Senator to offer an amendment to have the contract reviewed in the congressional halls because he failed to get the contract.
There are always some pros and cons, arguments back and forth, some points being good and strong, and some others being weak.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. STENNIS. Mr. President, I yield myself 5 additional minutes.
We are plowing right into that particular situation without warning.
F-15 aircraft. McDonnell Douglas, Missouri.
A WACS aircraft. Boeing, Washington.
The MBT-70, main battle tank. General Motors.
There will be others on ships.
Our function, as I see it, in the absence of fraud, is to lay down the law and, under the law, the Navy, the executive branch, and the Defense Department operate and carry out the law and make those awards.
We really adopted, by unanimous vote on a roll call, an amendment offered by the Senator from Delaware, in which Congress said:
We are going to prohibit you from even telling us where that award is going until you announce it to the general public.
Now we come right back around here, and say we are going to get in here and review these contracts, and change them.
On this 2-yard proposition, I am certainly not blind to the proposition that we want sources for our production. I know in this case I had no idea who would get this contract, but the Navy, in its judgment, decided to try out this 1-yard concept for some ship, and they tried it out on one that was not awfully difficult, and got this good price, and everyone knew what they were doing. Congress knew it, and had passed on it, in a way, time after time, and they saved this money.
There are modern methods of building ships involved here, and the Navy got the benefit of them in this contract. I think the Federal Treasury is entitled to the benefit of what looked like a mighty good figure. We have spent all these days here, Mr. President, arguing over the money in this bill. The committee spent months and months, and we reduced this bill by $1.3 billion. Senators have almost endlessly offered amendments from the floor to reduce it more. One Senator, in particular, proposed a $5.2 billion reduction, I believe it was. After a fine, vigorous debate, my good friend from Maine – I say friend, and I mean it – jumped in and voted for that reduction. That was last Friday, less than a week ago.
Now, the substance of this amendment is, "Well, we are going to put about a quarter of a billion dollars more into this contract, for just one type of vessel."
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. STENNIS. In just a moment. "And let it be carried on off, with good luck to everyone."
I do not criticize the Senator for what he has done. The very opposite. But where are we going? What do we mean by these things, anyway?
I think the die is already cast. The measurements have been taken. The law has been followed. Bath and Litton had their day in court when they made their bids, and under the rules, they knew they could not both win. They went into that situation as free American citizens. They are bound by the result.
We do not change the rules in the middle of a ball game. That is an old American principle of fairness. This amendment does not even seek to change the rules in the middle of the game, but after the ball game is over and the score has been announced. Then, this proposal says: Well, we are going to get up different rules; we are not going to let that go through. I yield to the Senator from Maine.
Mr. MUSKIE. I should like to make one or two points. Would the Senator like to yield on my time?
Mr. STENNIS. Yes. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator from Mississippi has 37 minutes remaining.
Mr. MUSKIE. All right; I yield myself 2 minutes on my time, to respond.
First, we are concerned about savings in the military defense field. We are concerned not only with savings in this year's budget, but in the long term; and I think a great deal of the debate that has taken place last summer and this summer in the area of military spending has focused on the long-term cost implications of national defense to a greater extent than ever before. What my amendment focuses on is the long-term cost consequences of this award.
The second point I would make, and very briefly, is this: The Navy Department reserved its option, right up until the award, to award it either to one source or to two or more. It was clear that this was a possibility. If the Navy reserved the right to decide the question at the moment of the award, certainly the Senate and Congress had a right to consider the policy at the same time, and that is what the amendment on the House side did. It raised the issue just about the time that the Department of Defense was resolving the issue in its own councils.
The Senator is saying that although Congress raised the issue before the award was made, the Navy, by its unilateral act, could foreclose Congress from any further consideration of that policy by awarding the contract before Congress could determine the issue. That is the issue here; not the question of "changing the rules in the middle of the game." The issue I am talking about was in process and should have been considered fully, not only in the Department of Defense, but in Congress, before the contract was awarded; and I do not think Congress should be foreclosed at this point.
Mr. President, I yield 10 minutes to the distinguished Senator from Wisconsin.
Mr. PROXMIRE. Mr. President, the distinguished Senator from South Carolina spoke about how this amendment would involve logrolling and political pressure. If he means that this amendment represents a congressional challenge to military procurement, I say it is about time that, on the basis of our disastrous experience with the military handling of procurement, Congress took some interest in procurement. I do not think we have taken enough. The Under Secretary of Defense said the other day in a speech that was heard throughout the country that our procurement is in a mess, that we overspend and underperform, and that we need a drastic shakeup, in effect.
Mr. President, I would not be in favor of the Muskie-Smith amendment if it would not save money, in my view. I think it will save money. The reason I say that is because, in my opinion, that amendment will help to prevent another C-5A situation from arising.
We know about the $2 billion overrun – the two thousand million dollar overrun – on that one weapons system. Anyone who has followed the C-5A affair must be dismayed at the manner in which the DD-963 destroyer program has been handled so far. It is as if one were witnessing a modern variation of a Greek tragedy. The details of this procurement may differ somewhat from other major weapons systems, but the disastrous outcome is quite predictable. At the very least there will be massive cost overruns, all or most of which will be absorbed by the Federal Government and paid for by the American taxpayer. In all likelihood, there will be significant delivery delays. In addition, we can expect degradation of the original contract performance specifications, or performance failures, or both. These problems are the hallmarks of the modern major weapons system, especially evident in the procurement of ships.
In the first place, we already find the same pattern of cost growth or cost overruns in the planning and contract definition stages of the DD-963 that is so typical of military procurement. In 1967, the Navy estimated the cost per ship at $35 million. In 1969, the unit cost had increased to $68 million. The most recent official cost estimate is $83 million per ship. Even this estimate seriously understates the known program costs for the DD-963. Components such as the LAMPS helicopter, scheduled to be installed on these ships, have been entirely omitted from the official cost estimates. Moreover, the most serious cost overruns in weapons programs have occurred during the production phase, and production of the DD-963 has not yet begun. In my judgment, a cost estimate of $110 million per ship would not be unreasonable.
Second, the award of the DD-963 and the events leading up to the award bear striking similarities to the award of the C-5A contract. It will be recalled that there were three major contenders for the C-5A contract and that in the early rounds of the bidding, Lockheed proposed neither the lowest bid nor the best proposal from a technical standpoint. Yet, in the last round, Lockheed's bid was sharply reduced below its two rivals. In retrospect, in light of the enormous overruns in the C-5A, Lockheed's low bid can only be categorized as a buy-in. In other words, it appears from the evidence that Lockheed deliberately underpriced its proposal, knowing that actual costs would greatly exceed its bid. In the vernacular of the defense industry, Lockheed "took a dive" or "bought in" in order to get the C-5A contract.
The facts that have emerged in the DD-963 program suggest another buy-in. Up until the last round of bidding, Litton's proposal was almost identical to its rival. In the last round, however, Litton's bid suddenly nosedived. An examination of the breakdown of Litton's price proposals indicates, as Senator MUSKIE pointed out yesterday, serious inconsistencies that can be reconciled only by assuming that the eventual final costs will be far higher than Litton's proposal.
The type of the contract used in the DD-963 program is also strongly reminiscent of the C-5A. Once again, we have a fixed-price incentive contract with firm price commitments on the part of the contractor. At the same time, we have a provision in the contract entitled "Incentive Price Revision – Successive Targets" which permits future repricing of the contract. A similar clause, called the repricing formula, was incorporated in the C-5A contract. It was the repricing formula which completely undermined the so-called fixed-price aspects of the C-5A contract and which permitted much of the C-5A cost overruns. The successive targets feature of the DD-963 program, in my opinion, is the Navy's version of the repricing formula which came to be known as the golden handshake.
In these and other respects, the DD-963 contract bears all of the significant attributes of a total package procurement. Of course, since the revelations of the C-5A contract, total packaging has been roundly condemned by the administration, high officials in the Defense Department, and the defense industry, and the Navy would be the first to deny that the DD-963 is a total package procurement. Nevertheless, the essential elements of total packaging exist in this case.
But what is most disturbing about the program is the fact that it has been concentrated into the hands of a single contractor. Although it would be unfair of me to criticize Litton's capability, or its performance thus far in this program, it should be pointed out that Litton is primarily an aerospace conglomerate, that it purchased the firm that is to perform this program only a few years ago, and that it has therefore only limited experience in the shipbuilding field. Yesterday, Senator MUSKIE went into the serious backlog that exists in Litton's shipyard, a backlog totaling over $1.5 billion. According to Senator MUSKIE, Litton is already stretched beyond its ability to perform. The question that we must ask ourselves today is whether Litton will, in the next few years, do to the Federal Government and the taxpayer what Lockheed has done to the Federal Government and the taxpayer. Having become the sole source producer of the DD-963, as well as other weapons programs, will Litton one day inform the Government that unless Litton is bailed out of a multi-hundred million dollar cost overrun, it will halt production of its weapons programs? Will Congress be faced with yet another ultimatum to bail out a defense contractor or risk the loss of programs deemed necessary to the national security?
In my judgment, the present DD-963 contract has already taken us far down the road toward a Lockheed C-5A situation. The only way to avoid this situation at this late date is to follow the procedures set forth in the Muskie-Smith amendment. The way to prevent the further concentration of ship construction in the hands of one contractor is by opening up this program to further competition.
In conclusion, I want to express my complete dissatisfaction with the handling of the DD-963 program. As I have indicated, the contract used is very much like the C-5A contract and will undoubtedly result in problems similar to those encountered in the C-5A. A more serious shortcoming, however, has been the failure on the part of the Navy and other proponents of the DD-963 to demonstrate a military requirement for this program. For example, the interrogation of Admiral Sonnenshein, commander, Naval Ship Systems Command, with respace to this program consisted of less than three pages in the hearings of the Senate Armed Services Committee. The committee's report discusses this program in five lines in which it states only that the new class of destroyers will be heavier than the present destroyer and will be fast enough to escort attack carriers. It seems incredible to me that a program which will cost over $2½ billion can be ushered through the Congress with so little discussion and consideration. Any civilian program of even a fraction of the size of the DD-963, intended to result in social benefits to the American people, would receive much more careful scrutiny, and possibly a Presidential threat of a veto in this period of cost cutting and budget trimming.
Mr. MUSKIE. Mr. President, I should like to express my appreciation for the contribution the Senator has made this morning.
I think the entire country is aware of the public service which the Senator has rendered in his extensive inquiry, extending over many months now, into the cost implications of our procurement policies in the national defense field. I want to take this opportunity to pay my tribute to him, because I think that as a result of that experience, the Senator's views on this amendment are most important to the Senate and to the country.
Mr. PROXMIRE. I thank the Senator. I think this is an excellent amendment, and I am very happy to support it.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. Mr. President, I wonder whether my distinguished colleague from Maine wishes to speak at this time.
May I, at the outset, express my appreciation to my colleague for the tremendous amount of work and effort she has provided in connection with this matter from the very beginning. I think she has raised questions and answers which are useful not only to the people of our State but also to the Senate and country in connection with this procurement. I should like to take this opportunity to express my public appreciation for that work.
Mrs. SMITH of Maine. Mr. President, I shall be very brief. Perhaps 2 minutes will be all the time I shall require, for the information of my distinguished colleague. I am deeply grateful for his generous and kind words.
Mr. President, I have on five previous occasions set forth in detail my reasons for urging that this destroyer procurement be divided. On June 29, 1970, when I discussed the aspects in detail; on August 18, 1970, when I disclosed for the first time the McNeil staff study report to the Blue Ribbon Defense Panel condemning ship procurement of more than 10 units in one yard; on August 20, 1970, exposing the lack of credibility in Navy Department contradicting estimates of extra cost stemming from split procurement; on August 26, 1970, revealing the shocking and incredible refusal of the Attorney General's Office to investigate indicated violation of the law in this procurement; and on August 27, 1970, reporting on the GAO report and its joining me and the McNeil staff study report in condemning the procurement policy of placing the award of so many ships in one yard at considerable risk to national security interests.
I will not repeat today the details of my contentions on these occasions as they have been before the Senate for a sufficient length of time for full consideration. But I do want to make final comment on the lack of credibility in Litton's price.
In the first place, on the "best and final offer" Litton amazingly and without explanation reversed its prior economic assumptions in order to make the drastic reduction in its price. In the second place, detailed audits were not made on the final prices prior to the award. These two factors will retain a cloud over the credibility of the Litton price for many years to come, especialy since under the contract the Navy let, Litton can recover for any economic forecasting error it has made with little loss of profit and can overrun its target costs by $387 million and still realize a profit of $107 million.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. Mr. President, I suggest the absence of a quorum, the time to be taken out of my time.
Mr. STENNIS. Mr. President, I will share that time.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HANSEN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. CRANSTON). Without objection, it is so ordered.
Mr. STENNIS. Mr. President, I yield 5 minutes to the Senator from Wyoming.
The PRESIDING OFFICER. The Senator from Wyoming is recognized for 5 minutes.
Mr. HANSEN. Mr. President, I rise to express my very strong opposition to the amendment offered by the distinguished Senator from Maine (Mr. MUSKIE). This amendment asks us to repudiate the contract which the Navy has awarded for the new DD-963 class destroyer program to Litton-Ingalls and require that one-half of the 30 ships involved be subcontracted to another shipbuilder. I certainly hope the amendment will be defeated. Aside from the very adverse effect which its adoption would have on the DD-963 program by increasing costs and delaying delivery of ships, I am almost appalled at the thought that Congress should step in and require a subcontract in a procurement matter which has been legally and regularly conducted by the Navy and which has resulted in the award of a contract after more than 2 years of intense industry competition.
I strongly believe, Mr. President, that it would be most improper and would set a very dangerous precedent indeed for the Congress to intervene in a procurement matter such as this, particularly since the fact that Ingalls Shipbuilding Division of Litton Systems, Inc., had both the best technical design and the lowest bid by far is not questioned. As a matter of fact, about the only criticism which the Senator from Maine has been able to make of this contract award is that all of the 30 destroyers are to be constructed by a single shipyard and that he feels that it would be dangerous to contract such a large portion of the shipbuilding program to one contractor.
It is my understanding, Mr. President, that the DD-963 program was deliberately intended by the Navy and the Defense Department to be a major departure from prior ship procurement programs. This procedure was followed in recognition of the rising costs of ships and as a result of a determined effort to reduce ship operating costs by having them as nearly identical as possible. Since the Navy realized early in its consideration of the DD-963 program that significant savings would result by designing the destroyer for low production costs and building the ship in large production lots, the basic ground rule was established that the production responsibility – that is, the entire contract award – would be limited to a single contractor. The Ingalls shipyard was selected as the contractor after a very careful analysis of its proposal and all aspects of its capability to do the job, including its detailed management plans, production plans, schedules, and labor force. The Navy concluded – and correctly so, I believe – that Ingalls was fully capable of doing this job.
The Navy estimates that if the Muskie amendment is adopted the actual cost of the program will be increased by a minimum of $225 million, depending on a number of factors. It is a fact that Litton was more than $270 million lower than Bath for the 30-ship program. Those of us who so strongly advocate economy in Government and in defense procurement certainly should not vote for an amendment which could increase the procurement costs by a quarter of a billion dollars or more. The use of a second shipbuilder would substantially decrease the number of ships the Navy will be able to procure unless we provide a significant amount of added funding for the program. This is directly contrary to the expressed desire for a reduction in military spending which has been repeated and reiterated so many times during the last several weeks.
In addition, if I understand the Muskie amendment, it would contemplate that all ships would be constructed under a single design, presumably Litton's. It also contemplates that there would be
competitive bids from shipyards approved by the Department of Defense. If only one design is to be used – and this, of course, would be desirable from the standpoint of bringing about standardization – it would entail delaying procurement of ships from the second source until a bid package is available from Litton. This would involve about a 2-year delay in the contract award for the second 15 ships. The Navy needs these new destroyers just as quickly as possible in view of the ever-increasing submarine threat by the Soviet Union, and we should not impede their construction and delivery.
Mr. President, while Litton-Ingalls was lower than Bath on the final bid by about $9.2 million a ship, I understand that the award was not based on price alone, although, of course, price was a significant consideration. I understand that there were five separate categories and that the award was based on full consideration of all of these categories. The Navy has advised, and I think this is very significant and should be emphasized, that in all five categories Litton's proposal was judged superior. The degree of superiority varied depending on the category but at no point was there a reversal of the relative position. These categories were known to all contractors from the day they entered the competition. The evaluation within these categories was based on a comparison with predetermined standards which were established prior to receipt of the proposals and prior to the start of the evaluation. No reversal of position has occurred as a result of the extensive reviews of the source selection conducted by the Secretary of the Navy and the Secretary of Defense prior to receipt of approval to proceed with the award of the production contract.
The clear fact is that not only were the ground rules not changed to the detriment of Bath or any other bidder, but there was no change whatsoever after February 15, 1968, when the request for proposals were issued.
In summary, Mr. President, the DD-963 destroyer program originated in December 1966. From its inception the Navy intended to award the entire contract to a single shipyard. This was well known and well recognized, both by the Department of Defense, the Congress and by the competitors. Not until this year has the Senate been asked to legislate or mandate a subcontract of the prime contract. I think this proposal is entirely too late. The award has been made to the shipyard which won the competition because it had the lowest and best bid. If subcontracting half of the ships is so meritorious and necessary, I fail to understand why the Senator did not attempt to mandate this prior to the selection of the winning contractor. Until this year – until the award was made – the Senator apparently was entirely content to proceed on the Navy's prescribed "winner take all" basis. Repudiation of these procurement processes and source selection procedures would, in my judgment, establish a very dangerous precedent that could have very serious repercussions indeed.
In conclusion, Mr. President, I am convinced that this amendment is without merit. As I have said, I believe it will set a very dangerous precedent in the procurement field and would mean that no contract award by the Defense Department would have finality until Congress has passed upon it. This would mean that none of the military departments could be sure as to how to proceed or whether their findings as to the best and lowest bidder would be final, even in cases where the procurement procedures were entirely legal and regular. Since I think we would live to regret the adoption of this amendment, and that it would destroy the integrity of the established procurement processes, I urge that it be defeated.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. HANSEN. I have just a few minutes.
Mr. MUSKIE. Mr. President, I yield myself 1 minute on my own time.
The PRESIDING OFFICER. The Senator from Maine is recognized for 1 minute.
Mr. MUSKIE. Mr. President, this is a question which I have asked other Senators on the Senator's side of this issue. Does the Senator know of any basis in terms of figures submitted by the two final bidders upon which such estimates of increased costs could be put? I know of none. I have searched for it. I have asked for it. I thought that since the Senator made the point over again, that he might have it.
Mr. HANSEN. Mr. President, as nearly as I can respond to the Senator from Maine, let me say that if the bid proposals that have been submitted by Litton Ingalls are compared with those submitted by the other contractors, I think it is not unreasonable, based upon the fact that each ship would cost $2.9 million extra, that $225 additional will be spent.
Mr. MUSKIE. Mr. President, was the Senator aware that my amendment provides that 15 ships go, not to Bath, but to open competitive bidding? Was the Senator concluding what the results of that bidding would be?
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. STENNIS. Mr. President, I yield the Senator from Wyoming 2 additional minutes for additional colloquy if he needs it.
The PRESIDING OFFICER. The Senator from Wyoming is recognized for 2 additional minutes.
Mr. HANSEN. Mr. President, let me say that one thing that disturbs me most about this matter is that this contract has been entered into legally, in complete conformity with regulations and with the procedures set forth by the Department of Defense. I think that now to step in and say, "We will vitiate the contract and take half of the ships which have been awarded to Litton Industries and have rebidding on them," would do great violence to the whole bidding system.
It is well documented that once a final bid proposal has been made, to then throw it out to new bidding and to ask for a rebidding does violence to the system. It would not only result in bad faith on the part of the Government but would also be a gross injustice to the original bidder.
Such a procedure, if it were to be followed repeatedly, I should think, would most certainly result in a diminishing interest on the part of bidders. It would result in rising costs to the Government in the procurement of all of the materials which it may require from time to time.
That is the thrust of my argument. The Senator from Maine misunderstands me completely if he thinks that my concern may be quibbling over whether it would be $225 million, $235 million, or $250 million.
The point I am trying to make is that this is a very serious proposition to say that we will vitiate the contractual procedure that has been agreed upon.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. HANSEN. I have no further time.
Mr. MUSKIE. Mr. President, I yield myself 2 minutes to direct a question to the Senator.
The PRESIDING OFFICER. The Senator from Maine is recognized for 2 minutes.
Mr. MUSKIE. Mr. President, the Senator is making the point, but he did not answer the question.
The argument of the Senator from Mississippi has very clearly pointed out as the key element of his opposition a possible price increase that might result.
The Navy has given us no basis to have a firm figure of projected increased or decreased cost.
The only figures submitted by the two bidders were on 30 ships. The figures the Senator submits show an increased figure of $225 million.
My amendment provides that the building of these 15 ships will be open to open competitive bidding.
If what the Senator is telling me is that the result of that bidding is foregone and foreclosed and that it will result in a price increase of $225 million, I then have a question as to whether the bidding which resulted in this award might not have resulted in a higher price than we ought to pay.
My amendment provides for open, competitive bidding and the throwing around of figures like $225 million up to $600 million, which has been used by the Navy, is not responsive to the substance of the amendment.
Mr. HANSEN. Mr. President, if the Senator would yield, I am not certain whether the Senator was asking me a question or making a statement.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MUSKIE. Mr. President, I yield myself 1 minute.
The PRESIDING OFFICER. The Senator from Maine is recognized for 1 minute.
Mr. MUSKIE. Mr. President, I took 2 minutes time to respond to the Senator and to invite any comment he might wish to make. I would have asked a question if I had been speaking on his time. Since I was speaking on my time, I made a response to him and invited any response that he might wish to make. Mr. President, I yield 4 minutes to the Senator from Massachusetts.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized for 4 minutes.
Mr. KENNEDY. Mr. President, I am a supporter of the amendment.
I commend my friend and colleague from the State of Maine for bringing this matter to the attention of the Senate this afternoon.
I think this matter is of great significance, not just in terms of this particular contract, but more generally with respect to the kinds of procedures we will follow over the period of the next several years as we continue to develop these various new weapons systems.
Mr. President, I heard the splendid statement of the Senator from Maine earlier. I think it was most convincing and most compelling.
I think that over the period of the last couple of years, the Senate has been made increasingly aware of the problems many large defense contractors have in fulfilling their responsibilities under contractual arrangements with the Department of Defense.
This matter has been, I think, best demonstrated by the distinguished Senator from Wisconsin (Mr. PROXMIRE) who has reviewed in considerable detail the fact that single source contracts have in many instances had enormous cost overruns and have not met the criteria demanded by the Defense Department.
I think the alternative which is presented here by the distinguished Senator from Maine is in the national interest no only with respect to this contract, but as a procedure to follow in the future.
In terms of the cost factor, the Senator from Maine, I think, effectively rebutted the argument that the purchase of all 30 destroyers from a single source would necessarily be less expensive. But the point I find to be very compelling is that we have to think in terms of the long range cost of contracts for destroyers and other ships. What will this award mean in the future? What will it mean that 5 or 7 years from now when the requirements of our defense posture may mandate that we purchase additional destroyers or ships, we will find out this Mississippi yard is the only yard in our country prepared to do the required work, the only yard that has the technique, skill, and manpower to do the job. We will then be in a bind. I think it is appropriate for us to think about the future in our consideration of costs.
So, Mr. President, I rise this afternoon to say that I share the sentiments which have been expressed so well by my colleague from Maine. I think the case for his amendment has been substantiated and is very strong.
I find that the report of the blue ribbon Fitzhugh Commission appears to endorse the sentiments which have been so eloquently stated on the floor of the Senate this afternoon by the Senator from Maine. I would urge Senators to consider favorably this amendment for the reasons stated, because it does protect the national interest and it does strengthen the whole system of contracting arrangements between contractors and the Department of Defense.
I ask unanimous consent that my brief prepared statement be placed in the RECORD at this point.
There being no objection, the statement by Senator KENNEDY was ordered to be printed in the RECORD, as follows:
STATEMENT OF SENATOR KENNEDY
Mr. President, I strongly support the amendment of the Senator from Maine. In my view we can most efficiently meet our national security needs by building the DD 963 destroyers at more than one shipyard.
In recent years we have seen that even the largest defense contractors can woefully mismanage an important weapons contract. Such mismanagement can cost the American taxpayer billions of dollars. It can delay production of weapons systems for years.
The possibility of mismanagement is greatly increased when only one contractor has the capability of producing the plane or the ship that the Pentagon needs. The contractor has no fear of competition. It knows that if expenses soar, the Pentagon will have little choice but to bail it out.
The DD 963 contract places the production of thirty new destroyers in the hands of only one company. In addition, it forecloses competition for future contracts since it deprives shipbuilding facilities in Maine, Massachusetts and elsewhere of the opportunity to modernize and gain valuable technical knowhow. From now on the Pentagon will have to rely on a single contractor to meet the nation's needs for destroyers.
This is as unnecessary as it is unwise. There are several shipyards which are able to build the destroyers the Pentagon requires. In Maine there is the Bath Iron Works. In Massachusetts there is General Dynamic's Quincy Shipyard. This Yard has demonstrated its capabilities by building destroyers, carriers, submarines; every class of naval vessel. With Yards such as these there is simply no need for the Pentagon to turn over all production of destroyers, now and in the future, to just one company.
The current situation is an invitation to mismanagement. The amendment introduced by Senator Muskie, on the other hand would insure that additional shipbuilding facilities participate in the production of the DD 963 and retain the capability to compete for future contracts. I therefore urge my colleagues to adopt this amendment.
Mr. KENNEDY. Mr. President, will the Senator yield further so that I might ask several questions?
Mr. MUSKIE. Mr. President, I yield 2 minutes to the Senator from Massachusetts for that purpose.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized for 2 additional minutes.
Mr. KENNEDY. One of the questions which has been brought up by the Senator from Wyoming and the Senator from South Carolina is whether this is an appropriate time for the consideration of this amendment. Is it too late to raise these issues after the contract has been awarded? Could the Senator amplify briefly his earlier arguments on this point?
Mr. MUSKIE. Mr. President, the point made by the Senator from Mississippi and his colleagues is that the awards having been made, Congress should not move in to upset them lest the precedent invite political influence in the future to achieve similar results.
Well, this is not that case because here, at a time when the contract had not been awarded, the House of Representatives attached a similar amendment to the bill and it is still there. The Navy at that time had still preserved to itself the option of awarding the contract to one yard or more than one yard. Since the Navy itself had that under consideration, it was timely that Congress at the same time have it under consideration; but before Congress could resolve the issue here, the Navy moved in and awarded the contract. That is different than the situation the Senator from Mississippi and other Senators have been arguing.
I say that since the issue was raised in Congress before the award was made, it is appropriate for Congress to resolve it, and that is what the amendment would permit.
Mr. KENNEDY. As I understand it, one of the most important facets of the amendment is that it would permit competitive bidding for the building of these last 15 destroyers by a number of different yards around the country. I think all of us are aware of the great work done by Bath in Maine. They obviously would be one of the contenders.
The thrust of the amendment is to open up the opportunity for bidding from a variety of different private companies and to get the lowest possible cost for these additional 15 destroyers. Is that correct?
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MUSKIE. Mr. President, I yield 3 additional minutes.
The PRESIDING OFFICER. The Senator is recognized for 3 additional minutes.
Mr. MUSKIE. Bath would undoubtedly be one of the bidders. There might be up to four others that were involved in the earlier stages.
First, on the basis of actual cost, independent of economic factors, Bath's costs were actually lower than Litton's on the final round.
On the economic factors, when the procurement was completed and the ships built and paid for, they are likely to even off between yards because the economic payments are related to national indices on labor and material. This suggests that Bath is one of the companies in a position to bid in at least as low as Litton has.
The second point is this: All potential bidders are now aware of the outcome of the bidding and the economic basis upon which the two yards submitted their bids. In other words, other yards know what Litton is going to get. With that situation, it seems to me that the opportunity for competitive bidding is more likely to produce a lower figure than a higher figure on the balance of the ships.
Mr. KENNEDY. The thrust of the argument is that with this kind of competitive bidding for the remaining 15 ships, we might be able to save money, that if this award were to go to Bath, or General Dynamics in Massachusetts, or any other shipyard, it could very well mean that these next 15 ships could be built at a lesser cost and the savings would inure to the taxpayer.
Mr. MUSKIE. That is conceivable. The one offsetting factor is that a shorter learning period would be involved for Litton and the other yards. That would tend to increase the cost per ship. But I think that could be offset completely and may be more so by the competitive factor we discussed; at least that is speculative.
Mr. KENNEDY. Finally, I wonder if the Senator would comment on the long term impact of this contract award. We have heard so much during the course of this debate that we are really saving over $200 million because Litton had the lowest bid, and that we should be grateful for those savings.
However, does not the Senator share my concern that at some time in the future, when the Navy will need additional destroyers, the situation might be quite different. Does not the Senator agree that there will then be one yard that will be able to say to the Federal Government, "Either you are going to pay this amount or you will not have the ships you want, at least you will not have them in the time that you want."
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MUSKIE. Mr. President, I yield myself 2 additional minutes.
The PRESIDING OFFICER. The Senator from Maine is recognized for 2 additional minutes.
Mr. MUSKIE. Mr. President, I think the Senator is correct. Let us consider Bath as one potential bidder. It has been almost completely a destroyer building yard. They have built 160 destroyer types. They have a reputation beyond that of any other company in the history of the Navy.
If this award to Litton sticks, it means that for 8 years, at least, no other destroyers will be available for bid by that or any other yard. It is highly unlikely to me that the destroyer building capability of Bath could be sustained for the 8-year period, because what are involved are skilled workmen who have been working on destroyers for decades, expertise, use of the organizational structure which has been erected to build a destroyer. If in that 8-year period Bath must shift to other types of ships in order to maintain its existence, then its destroyer building capability will be reduced. That is a capability which the Navy has always valued, and which will be in jeopardy as a result of this policy.
That may or may not be in the national interest. I have a parochial interest, but I think there is a national interest in sustaining that capability in this as well as other yards. If we destroy that capability, then, 8 years from now, or any such time as 20 destroyers – the target was 50 originally – are submitted for bid, it may well be that Litton can name its own price, and that is not likely to be in the national interest.
Mr. KENNEDY. I thank my colleague.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MUSKIE. I yield myself 30 seconds.
Mr. KENNEDY. I feel that Senator MUSKIE's case is convincing. I think it has been stated extremely effectively. I would urge my colleagues to support the amendment.
I thank the Senator from Maine.
Mr. MUSKIE. I thank the Senator from Massachusetts.
Mr. STENNIS. Mr. President, I yield myself 2 minutes for the time being. As I understand the situation now, so far as the Senator from Maine and I know, we have no other speakers except the two of us.
Mr. MUSKIE. The Senator is correct.
Mr. STENNIS. We have discussed this matter, and after I make a few remarks with reference to some of the comments that have been made, the Senator from Maine suggested, and I agreed, that we could have a quorum call and have it announced through the speakers that we are going to yield back all of our time except for 5 minutes to each of us to complete our statements.
Mr. MUSKIE. Yes, Mr. President, that procedure has been discussed, and it is perfectly agreeable with me.
Mr. STENNIS. So, unless something intervenes that we do not know about now, we can follow that procedure.
Mr. President, I yield myself 5 minutes.
Some points have been made by Senators.
I just want to reply. I say in all fun here that I have thoroughly enjoyed our two friends here who are really versed in shipcraft and who have ascertained that the second 15 ships could probably be built at a lower price than Litton has bid. Litton's price, though, is $9 million under the price of Bath Iron Works, as they stand now.
I say that in half fun, because the very thing we are talking about, competitive bidding, is the thing that has been going on all this time, furiously, on these identical ships. These bids were firm bids and represented hard money.
I do not see any fault with the fact that the Navy made some kind of estimate, in response to official requests, to give us some kind of picture as to what it probably would cost to split the contract up. Neither one of those bidders has given an estimate. They have not been called on to give estimates, as I understand. So the only word we have is the word of the Navy here.
May I refer to the remarks of the Senator from Wisconsin just briefly? He said that he studied the contracts and he said that he did not want another C-5A contract. I am sorry the Senator was called away from the Chamber. The contract has been through the mill of the General Accounting Office. They were familiar with the C-5A. There is not a word of their analysis that makes any similarity in any way with the C-5A. The Senator said this was the Navy version of the golden handshake. With all due deference, I have to judge that to mean that was an attempt to "smear" the contract.
No one has found anything like that, including the General Accounting Office people.
We had the C-5A matter up. It was debated on its merits. The $200 million in controversy was in the bill. The Senator from Wisconsin did not offer an amendment to strike it out. I think we should move on from there .
I regret that the Senator's remarks could not have been based on a further analysis. He talks about massive overruns and the way the DD has been handled so far. Almost everyone will agree that the Government received a rather good contract, lower than Bath expected it to get by $9 million a ship, and they have not had a chance to proceed with any kind of start on construction.
Mr. President, it is easy to get up here and cut loose and start charging people with things.
Someone quotes Mr. Packard about how terrible things were in the Pentagon. Mr. President, do you know who had the final say on that contract? Mr. Packard, the same man who is quoted here about the iniquities and inequities and gross abuse and everything else wrong. This is the same man who passed on this contract. It had to come across his desk and he had to exercise surveillance over it as the effective, strong right arm in these matters for the Secretary of Defense.
This matter has gone through the regimes of some of our best officers. Take Admiral Moorer.
The Senate unanimously confirmed his nomination after President Nixon named him as Chairman of the Joint Chiefs of Staff. Admiral Moorer was Chief of Naval Operations, the highest office in the Navy. Two Secretaries of the Navy have sat on this problem, the last one being a very fine Secretary and former Governor of Rhode Island. So these charges that are just thrown around here do not have the force of proof. They are just talk.
I pass on to more important matters.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. STENNIS. If we are going to hold ourselves to 5 minutes, I cannot yield. Well, I will yield to the Senator.
Mr. MUSKIE. I am not aware that I made any charges against anybody. I focused my argument on national interest questions as I see them. I am not interested in inpugning the motives of anyone, including the Senator from Mississippi.
Mr. STENNIS. No. I thank the Senator. I think I said the Senator from Wisconsin had quoted Mr. Packard and talked about all the things wrong with the Pentagon. He happened to be the very man who exercised surveillance over this very contract, and to that extent it is his product and has his approval.
This is no new kind of contract. This contract has been in use for years. It is under this type of contract that the Navy received bids on the A-7, the tactical air fighter. We are calling them up now as fast as we can; the UAG weapons control system, under which Pratt & Whitney supplies engines for the F-14 and the F-15.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. STENNIS. I yield myself 2 minutes.
These are the most modern aircraft we have. The Air Force used this type of contract for years.
This is no golden handshake contract. This type is old, and worn, and used, and tried, and tested, and has proved to be reliable.
Mr. President, let us talk about this single builder approach being an unsound approach
A basic aim of this plan was to provide shipyards with programs of sufficient size and stability to permit the most economical ship procurement, and to provide incentive to the shipbuilders to undertake modernization of their facilities.
That is exactly what it is doing. In the final analysis, with the Navy falling behind in keeping up its requirements for new construction, the Government would be better off to apply the dollars which would be required to split the DD-963 program toward procurement of additional ships, and so forth. I shall not go any farther into the details.
I say the Navy made a judgment o this matter, and the way the bids came in proves the soundness of that judgment.
Mr. President, if we are able to reach this agreement, I would have 5 minutes under it, and for the time being I would yield.
The PRESIDING OFFICER. Does the Senator ask unanimous consent?
Mr. STENNIS. Let us see what the Senator from Maine says.
Mr. MUSKIE. Mr. President, I yield myself 1 minute to respond.
The Senator has, of course, again raised points that I would like to cover, but I think I can do so in the 5 minutes we each have agreed to allot ourselves after the quorum call.
May I suggest to the Senator that the quorum call be a live quorum, so that Senators will have time to get here? We are advancing the time by an hour.
Mr. STENNIS. If the Senator,will yield, let us say it will be a rather slow quorum call, but not make it live. It might take an unusual amount of time.
Mr. President, with that understanding, with the time to be charged to both sides, I suggest the absence of a quorum.
The PRESIDING OFFICER. Does the Senator ask that there then be 5 minutes for each side, after the quorum call is concluded?
Mr. STENNIS. We have agreed to that.
The PRESIDING OFFICER. That would require unanimous consent.
Mr. MUSKIE. Yes, we have agreed to yield all our time except 5 minutes.
The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. CRANSTON). Without objection, it is so ordered.
Mr. STENNIS. Mr. President, do I correctly understand that we are now in the process of closing the debate on this amendment with 5 minutes for each side, all of the time remaining thereafter to be yielded back?
The PRESIDING OFFICER. That is the order.
Mr. STENNIS. Mr. President, I yield myself 5 minutes.
We have had a great deal of discussion about the single award to a single shipyard, and about the value of having more than one mobilization base.
Let me point out clearly now that the materiel, the subcontracting, the work, and all the other things that go to make up this order are scattered through 45 States of the Union – 45 States. The labor and the products that will come under the subcontracts will take 60 percent of the money.
So it is no longer true that the mobilization base is the shipyard alone.
America's great mobilization base is the one that produces these products all over the Nation. The shipyard at Pascagoula, Miss., under the present contract, is the assembly point where some of the work will be done, of course. But the making of a destroyer, which is not a complicated ship, does not require a great deal of time, under present, modern conditions, in any shipyard.
I have before me a letter that I wish to refer to briefly. I shall read a part of it. It relates to the solemn obligation of the Acting Secretary of the Navy to give us an estimate – and it is the only estimate we have – about what the impact will be if the present contract is divided. The entire letter was placed in the RECORD the other day, but I shall read a few lines from it. After a review of the matter, here is the significant paragraph:
The actual cost impact of the proposed amendment-
That is the Muskie amendment--
would not be known until the government negotiates with the prime contractor – but it is clear that the costs could be substantially higher than even the $225 million increase which has been estimated for up to a 20/10.
Mr. President, that is the big point here. More than $225 million – considerably more – higher – is almost certain to be the added cost if this amendment should be adopted.
The Government already has a contract for the production of the ships. To sum up the matter, the Bath bid was something like $275 million over and above the Litton bid. Had it not been for the Litton bid or someone else's bid, under Bath's, Bath could have walked off with the $275 million, based on a 30 ship program.
Because the Bath bid was that much higher – and I say that with all respect – Bath prompts an amendment here in the Senate and asks it, by its vote, to set aside the contract and let Bath have a full chance at it – let Bath and others – let Bath or someone – Bath and others, I would say, take another chance to get to the bidding again and maybe walk off with even a higher bid than it did on the original 30 ships – I mean higher than the Bath bid.
We have no assurance of what would happen, but they want to get another shot at it. I do not blame them for that. My point is, they have had their day in court. They have had their chance.
Is it right for the successful bidder to be penalized in order to help Bath or anyone else?
Mr. President, last year the Congress authorized and appropriated funds for the first increment of a new class of destroyer, known as the DD-963 class. The fiscal year 1971 defense authorization bill now before us contains a request for the second increment of six of these ships. This program is considered one of the most urgent within the Department of Defense. The multiyear contract for 30 of these ships has recently been awarded to Litton Systems, Inc., Ingalls Shipbuilding Division, after 3 years of planning and over 2 years of intense industry competition. Mr. President, I would like to expand for a few minutes on why we need these ships, what they are like, and what they are intended to accomplish.
Most of the Navy's destroyer force consists of ships whose basic design stems from the late 1930's and whose construction was completed in the early 1940's. All of these older ships have been modernized to the extreme limit permitted by their basic hull and machinery. They are now incapable of being updated with today's weapons and electronics. This means that, unless replaced, substantial numbers of our destroyers will find themselves inadequate if they should have to deal with the modern submarines, warships, and missiles being deployed by the Soviet Union.
As of August 1 of this year there were 112 World War II destroyers in the fleet – almost two-thirds of the current general purpose destroyer force. These old destroyers were modernized in the late 1950's and early 1960's. This program was designed to extend their useful life for 8 years against the expected threat. A large number of these ships have now exceeded their extended life period.
Though modernized, these ships do not have the basic electrical power and space to accommodate the new weapons and electronics capable of countering the Soviet threat of the 1970's and 1980's. Further modernization of these ships is not feasible. These World War II destroyers, even those that have not exceeded their extended life period, are only marginally effective with respect to the rapidly increasing Soviet threat.
I have a table, Mr. President, showing the age comparison of United States and Soviet destroyer-type ships and I ask unanimous consent to have it printed in the RECORD.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[TABLE OMITTED]
Mr. STENNIS. Mr. President, this new class of ships, the DD-963 destroyer, will be the first major warship in the history of the Navy to use marine gas turbines for propulsion. This system will enable the ship to react more quickly in emergencies and will drive the ship faster than any destroyer we now have at sea. It is expected that the DD-963 will have a speed in excess of 30 knots. They will have sufficient speed and endurance to escort attack carriers.
This program is considered to be one of the most urgent within the Defense Department. Its urgency stems directly from our country's need for a Navy second to none. Let me expand for a few minutes on why this need is so pressing at this time.
Today Soviet units can be found deployed in all the world's oceans. Their submarine force alone numbers about 375 highly capable ships, many of them nuclear powered. When we remember that in late 1942 the Germans, with only about 69 submarines at sea in the Atlantic, succeeded in almost severing our vital sea lines communications, we can begin to grasp the scope and magnitude of the threat confronting our Navy. It could be fatal to underestimate this threat.
Sea lanes can be maintained only by a dedicated modern Navy with adequate resources in terms of modern ships and aircraft. This submarine threat generates an urgent requirement that the United States must have capable, up-to-date antisubmarine warfare units. The backbone of any antisubmarine warfare force is the destroyer. It is the ship which has the speed and sea-keeping qualities to keep up with our fast task forces and high speed, high value military convoys. It is the ship which must be able to carry out its antisubmarine warfare mission at high speeds in all sea conditions anywhere in the world. The destroyer force has always been and will continue to be known as the "work horse" of the Navy. A modern, capable destroyer force composed of adequate numbers of ships is more essential to our country's defense today than ever before.
Briefly, our Navy requires destroyer types to support several elements of our seapower. Included as one of the more important requirements is operating with and as a part of the combatant task forces, including the attack carrier forces, amphibious forces, and hunterkiller forces which constitute the spearhead of the Navy's offensive power. All of these ships and forces must be protected against submarine, surface and air attack so that they can carry out their missions. Coupled to the major protective functions are several other requirements for destroyers, such as naval gunfire support during amphibious operations, offensive action against surface ships, blockades, and search and rescue work.
The most pressing need is for replacements for the large bloc of World War II multipurpose destroyers still active in our fleet. These ships were built well before most of the men manning them were born. Our last new destroyer was a 1953 design and it is in this type that the Navy is most deficient. Most of us are aware of the serious obsolescence problem we have in the fleet, but few seem to realize just how acute this situation is with respect to the Navy's destroyers.
Let me say that I have personally been on some of these old destroyers and I know that the living conditions on them are almost a disgrace. Efficient galley and messing arrangements, modern berthing, air conditioning, reading areas, toilet and shower facilities are a must if we expect to retain highly trained officers and skilled technicians.
Unless replaced, substantial numbers of our destroyers will be inadequate if they should have to fight the modern submarines, warships and missiles being deployed by the Soviet Union. That is why we so urgently need the DD-963 class destroyers. While a one-for-one replacement of the old ships is not contemplated, the Navy has consistently reported to Congress the requirement for a minimum of 50 new multipurpose destroyers. This is less than half of the World War II ships which must be retired. The contract signed in June was for 30 ships which is about as many as the Navy desires to commit to a single design. A new or modified design is contemplated for the balance of the ships required.
The DD-963 is going to be a very impressive, forward-looking ship. First of all, it will incorporate outstanding seakeeping and endurance characteristics. As I have already stated, Mr. President, this new class of ships will be the first major warship in the history of the Navy to use marine gas turbines for propulsion. This will give it many advantages over other types of propulsion systems and will drive the DD-963 faster than any destroyers we now have at sea. The gas turbine propulsion system is not unproven. All components, turbines and propellers, are at sea now.
The DD-963 is a multipurpose ship with a primary mission of antisubmarine warfare. The weapon systems planned for the ship are the most modern equipment available in this country.. today. This equipment, including the long range sonar, antisubmarine warfare weapons and gun and missile batteries, have already been tested at sea and demonstrated their capability and readiness for use in the DD-963. The DD-963 is not a research and development program – it is a ship production program. Only equipment already tested will be installed. At the same time the ship is being designed with sufficient electrical power, weight and space reservations and other features to insure that as new weaponry is developed in the years ahead, they can be installed without ripping the ship apart with costly conversions.
For antisubmarine warfare, the ship will have a long-range sonar and the most favorable noise characteristics at high speeds – 25 knots and higher – ever projected for a surface warship. This ship will carry about twice the antisubmarine warfare weapon load of that in our most recent class of destroyers. The DD-963 will also have a helicopter facility for manned helicopters. The facility will include a hangar, and is expected to operate two helicopters under normal conditions. These helicopters will extend the ship's antisubmarine warfare attack capability well beyond the horizon.
For defense against air and missile threats the ship will have a long-range air search radar, a new gunfire control system of great accuracy and quick reaction capability, Sparrow missiles, and 5-inch projectiles.
The ship will have a full shore bombardment capability, including two 5-inch lightweight guns – the first new major shipboard gun system produced by our Navy in 18 years. A comparison of DD-963 gun range capability and the gun capability of various Soviet cruisers and destroyers indicates that the DD-963, with its new rocket-assisted projectiles, will outrange all except the Sverdlov cruiser.
Of importance to the young men who will man these ships, the living conditions in the DD-963 class will surpass those of any previous destroyer. Noteworthy also is the fact that the ships incorporate equipment to overcome air and water pollution.
From the beginning, the basic aim of the DD-963 program has been to procure, through series production, a large number of identical destroyers which meet the Navy's operational requirements at minimum life cycle cost. The plan always has been to award a multiyear contract to a single shipbuilder. This will minimize the cost growth, delays, claims and inefficiencies. The currently approved procurement plan beginning in fiscal year 1970 avoids peak funding, insures proper ship construction economies, and delivers the ships at least cost to the Government.
Mr. President, I stress that the expanding Soviet threat to our sea lines of communications requires our Navy to be equipped with modern antisubmarine warfare forces of which destroyers are the backbone. The Soviet submarine force each year, in its pattern of operations, is extending its patrols for longer periods, in greater numbers, and at greater distances than ever before. It is apparent to me, Mr. President, that to maintain our sea lanes of communication, in light of this growing Soviet capability, requires a modern Navy with up-to-date ships and equipment. The DD-963 destroyer program will provide a significant step in this direction. We need it and we need it just as soon as possible. I hope that the Senate will not impede this program in any manner.
In conclusion, Mr. President, and as evidence of the problem which we face, I call attention to an article which appeared in the Washington Post on August 28, 1970, stating that the authoritative Jane's Fighting Ships said that the United States and British fleets are being reduced below danger levels while the Soviet Navy undergoes "spectacular" growth. In particular, I would like to call attention of the Senate to one statement made in Jane's Fighting Ships:
The problem the U.S. Navy faces is still the encroaching obsolescence of much of the fleet. The replacement of these worn out ships and aircraft is expensive under present market conditions, but cannot be further delayed if the Navy is to have the combat capabilities which the United States can rely on in the future.
Mr. President, I ask unanimous consent to have the entire article printed in the RECORD.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
[From the Washington Post, Aug. 28, 1970]
JANE'S CALLS SOVIET FLEET'S GROWTH "SPECTACULAR"
LONDON, Aug. 27. – The U.S. and British fleets are being reduced below danger levels while the Soviet navy undergoes "spectacular" growth, the authoritative Jane's Fighting Ships said today in its 1970-71 edition.
"There is no hiding place from the hammer and sickle," Editor Raymond Blackman said in a foreword.
The U.S. Atlantic Fleet is stretched thinly to maintain a Mediterranean presence and is unable to maintain the desired capability, he said.
Blackman argued that Soviet naval activity throughout the world – pursued with technical confidence and operational competence, imagination, ingenuity and flexibility – adds up to a Soviet drive to attain supreme sea power.
Meanwhile, Britain's naval planners have had the dual tasks of reducing the British fleet to its lowest peacetime level and creating from what remains a fleet adequate for the envisaged needs of the late 1970s and the 1980s, Blackman wrote.
He said of the American navy:
"Those of responsible opinion in the United States are worried about the military posture and budget of the U.S. Navy, which is considered to be inadequate to meet world-wide national and international commitments, or even to compensate for the natural wastage of an aging fleet, an alarming proportion of which was built during the 1939-45 war emergency . . .
"The problem the U.S. Navy faces is still the encroaching obsolescence of much of the fleet. The replacement of these worn out ships and aircraft is expensive under present market conditions, but cannot be further delayed if the Navy is to have the combat capabilities which the United States can rely on in the future."
Blackman asserted that "in the Atlantic, U.S. Navy resources are stretched thinly to maintain the 6th Fleet in the Mediterranean as well as a modest force in the Middle East . The Navy has been unable to maintain the modernity, readiness and capability of the Atlantic Fleet at the desired level."
The PRESIDING OFFICER (Mr. CASE). The time of the Senator from Mississippi has expired.
Mr. DODD. Mr. President, will the Senator from Maine yield for a question?
Mr. MUSKIE. I yield.
Mr. DODD. I should like to say to the Senator from Maine that I come from a shipbuilding State, too. We have a long history in the construction of ships. I have read as carefully as I could what the Senator has said. He makes sense. There is one thing that bothers me about the situation. Litton is the designer, am I right about that?
Mr. MUSKIE. The Senator is correct.
Mr. DODD. Does the Senator think that the designer of a vessel should be given special or extra consideration? Under the Senator's amendment, as I read it, he would not get anything for having designed the ship, which I take it is a good design.
Mr. MUSKIE. Let me say to the Senator that under the amendment, Litton would remain the prime contractor. Litton would be responsible for the entire ship design and for the procurement of essentially all the materiel and construction of half the ships. Litton's share under my amendment would involve something like 75 percent to 80 percent of the dollars. Bath's share of the subcontract, or whatever other yard it might be under my amendment, would have a share of 20 percent to 25 percent of the dollars.
In the rest of my argument I can pinpoint the significant points.
There is just one issue in this debate, whether it is in the national interest over the next 10 years to concentrate all our destroyer building program in one shipyard.
The points raised in the course of this debate by the Senator from Mississippi and others are these:
One, he raises the point, is it fair for the Senate and Congress to consider this issue at this time:
May I say to the Senator that this issue was raised by a House amendment adopted by the House to the bill, before an award was made, and at the time when the Navy itself was considering the options of awarding a contract to one shipyard or more than one shipyard. It is appropriate in a decision of such serious consequences to national security that not only the Navy but also Congress would, as a whole, share in setting a policy which will determine who will build the destroyers for the next decade and, in effect, determine where the destroyer building capability of the country will be concentrated.
The second question which has been raised in this debate is the question of cost, whether a division of the contract would increase the costs.
May I say to my colleague that under the amendment, the 15 ships which would be taken from under the Litton contract would be awarded on the basis of open, competitive bidding.
On this point, may I say to the Senate that Bath, as one of the bidders, submitted a bid which, on the basis of all the factors except the projection of the economic increases, presented costs lower than Litton's. The entire $276 million difference was represented not in terms of the final cost to the Government, but in the difference of the two shipyards in projected increases relating to economic factors. Over the period of the contract, those differences would disappear because they are related to the national indices of material and labor costs that would apply to both shipyards.
Mr. SCOTT. Mr. President, on June 24, 1970, the majority leader on nationwide television made some statistics available regarding the amount of money being spent by the present administration on human needs.
On August 20 in Los Angeles, the Vice President spoke about the emphasis this administration is placing on adequately funding programs designed to aid all our people.
A few days after the Vice President's speech, I indicated on the floor of the Senate to the majority leader that for each thousand dollars of expenditures a certain amount was being channeled into the fields of health, education, urban renewal, the environment, and education for the handicapped. I said at that time that I believed this administration had allocated for each thousand dollars more moneys for these programs than for the previous 4 fiscal years.
Under a previous order, I ask unanimous consent to insert in the RECORD at this time a series of tables which, with but one exception, indicate that this administration is devoting a greater share of each thousand dollars spent than the previous administration did in the past 4 fiscal years.
There being no objection, the tables were ordered to be printed in the RECORD, as follows:
[TABLES OMITTED]
The PRESIDING OFFICER. All time has now expired.
Mr. STENNIS. Mr. President, a parliamentary inquiry.
The PRESIDING OFFICER. The Senator from Mississippi will state it.
Mr. STENNIS. What is the parliamentary situation? What is the pending matter?
The PRESIDING OFFICER (Mr. CASE). The question is on adoption of amendment No. 811, as modified August 31, 1970, by the Senator from Maine.
Mr. STENNIS. In other words, a straight vote of "yea" for the amendment and "nay" against the amendment; is that correct?
The PRESIDING OFFICER. That is the customary procedure.
Mr. STENNIS. I thank the Chair.
The PRESIDING OFFICER. All time on the amendment has now been yielded back.
The question is on agreeing to the amendment of the Senator from Maine (Mr. MUSKIE), No. 811, as modified by him on August 31.
On this question the yeas and nays have been ordered, and the clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
The result was announced – yeas 29, nays 62, as follows:
[ROLL CALL VOTE LISTING OMITTED]