July 20, 1977
Page 24023
DEFENSE APPROPRIATIONS, 1978 —THE NAVY "BUILD AND CHARTER" PROGRAM
Mr. MUSKIE. Mr. President, the bill now pending contains $6.1 billion for Navy ship construction so that the Navy may procure vessels consistent with its missions and in accord with the carefully considered approval of the Congress. A primary aspect of the approval by Congress is that the shipbuilding program is subject to both, and I repeat both, the authorization and appropriation legislative processes.
Mr. President, there has been in existence within the Department of Defense a "build and charter" program which operated in the following manner. The military sealift command, within the Department of the Navy, contracted with groups of private investors to secure the construction of certain ships. The investors in turn contracted with a shipbuilder for the actual construction of the ship. Although the investors owned the ship and financed the construction, the Navy made a commitment to charter the vessel, upon completion, for a period of time equivalent to the economic life of the ship. By leasing or chartering ships, instead of making a purchase, the Navy could apply operation and maintenance funds to the charter payments. This particular use of O. & M. funds, unlike procurement funds in the shipbuilding construction account, did not require specific authorization by the Congress.
Mr. President, as chairman of the Senate Budget Committee, I am concerned that this method of obligation of U.S. funds has serious implications for the integrity of the budget process.
First, Mr. President, the "build and charter" program that I just described is removed from the effective control of the Congress. Because operation and maintenance funds are used to charter, and not purchase vessels, the normal authorization and appropriation process is circumvented.
Nor can the budget process effectively control the obligation of these funds for two reasons: First because the budget process is not a line item control mechanism and second, the amount of any 1 year obligation in relationship to the budget totals is too small to permit effective congressional review. Thus, these programs are uncontrollable and unresponsive to current year decisions.
In addition, Mr. President, when spending obligations are not reflected in the budget documents that we consider, the effectiveness of the budget process is undercut. If the numbers upon which we base our budget decisions are inaccurate, the process itself is weakened as a tool with which the Federal resource is directed. The Budget Committee has a duty to strengthen the process. A "build and charter" program's method of obligating U.S. funds without an authorization review weakens the congressional budget process. When the Congress makes a decision to spend x amount of dollars for a particular mission, we have every right to expect that our decision is based on an understanding of the total Federal outlays that result from our decision.
This is not the case with a "build and charter" program that avoids authorization for a specific number of ships. Only a small fraction of the ultimate costs show up; if at all, in the budget for the year in which a commitment is made to huge future year costs.
Any funding program that is put forward should conform to sound, honest, and above board accounting practices. I understand that the Navy has circulated within DOD a proposal to modify the "build and charter" program that they have operated in the past. I welcome such a proposal and I understand any new "build and charter" proposal will subject such a policy to both the authorization and appropriation process.
Mr. President, the "build and charter" program must undergo the scrutiny that the budget process requires if we are to insure that constitutional checks and balances and the integrity of the Congress are upheld.