Page images
PDF
EPUB
[blocks in formation]

Mr. THOMAS. Gentlemen, the committee will please come to order. We have with us representatives of the Navy Department this morning. Gentlemen, it is a privilege and a pleasure to see all of

you.

(The estimate before us, contained in House Document No. 210, is in the amount of $41,600,000 for "Shipbuilding and conversion, Navy" to cover the fire damage on the aircraft carrier Constellation which occurred in the New York Naval Shipyard.

JUSTIFICATION OF THE ESTIMATE

The justification of the estimate will be inserted in the record at this point.

(The justification follows:)

SHIPBUILDING AND CONVERSION, NAVY

"For an additional amount for 'Shipbuilding and conversion, Navy, $41,600,000, to remain available until expended."

1962 original estimate, as amended_. 1962 revised estimate‒‒‒‒

1962 increase_.

Budget activity 1: Fiscal year 1957 and prior programs

Thousands $2,915, 000 2, 956, 600 +41, 600

On December 19, 1960, fire broke out aboard the attack aircraft carrier Constellation (CVA 64), which is being constructed at the New York Naval Shipyard, Brooklyn, N.Y. The fire started when a fork lift truck pushed a trash disposal container into a plate resting on a steel pallet which in turn dislodged a valve connection on the bottom of a tank containing about 600 gallons of

JP-5 fuel. This spread on the hanger deck and thence through holes in the hanger deck to the second deck level where it was probably ignited by heat from a welding torch.

The damage to the ship seriously affected the forward portion of the flight deck, combat information center, main deck, forward escalator and bomb elevators, numbers 1 and 2 catapults, and all wiring and cable in the forward areas above the main deck.

Funds in the amount of $41,600,000 are requested to repair the damage to the ship. This estimate is based on a detailed analysis of the work to be done and equipment to be replaced. Repair of the damage will delay the ship approximately 7 months. It is now scheduled to complete the fitting out period in December 1961 and join the fleet immediately thereafter.

GENERAL STATEMENT

Mr. THOMAS. Please insert in the record at this point the prepared general statement submitted in justification for this item. (The statement follows:)

STATEMENT OF REAR ADM. FLOYD B. SCHULTZ

Mr. Chairman and members of the committee, I am Rear Adm. Floyd B. Schultz, Assistant Chief of the Bureau of Ships for Design, Shipbuilding, and Fleet Maintenance. I appear before you today to discuss the request for supplemental funds in the amount of $41,600,000 which are required to pay for the cost of repair of fire damage to attack aircraft carrier Constellation, CVA-64. On December 19, 1960, a serious fire broke out aboard the attack aircraft carrier, Constellation, CVA-64, which is being constructed at the New York Naval Shipyard, Brooklyn, N.Y. The fire started when a fork lift truck pushed a trash disposal container into a plate resting on a steel pallet which in turn dislodged a valve connection on the bottom of a tank containing about 600 gallons of JP-5 fuel. This fuel spread on the hangar deck and thence through holes in the hangar deck to the second deck level where it was probably ignited by heat from a welding torch.

The fire seriously affected the forward portion of the flight deck, combat information center, main deck, forward escalator and bomb elevators, No. 1 and 2 catapults, and all wiring and cable above the main deck in the forward two-thirds of the ship.

The task of cleaning the ship and repairing the damage started immediately after the fire. On February 1, 1961, the Secretary of Defense formally ap proved the Navy's request to use funds available for other purposes to repair the fire damage, pending resolution of the means to restore these funds. The repair job has proceeded satisfactorily to date and it is expected that the revised target date for completion will be met.

The estimate of $41,600,000 to repair the damage is based upon a detailed analysis of the work which has been done and which remains to be done and upon a comprehensive survey of the equipment which needs replacement.

At the time of the fire, this ship was about 85 percent complete. The estimated completion date prior to the fire was May 12, 1961. The fire has delayed the ship's completion by approximately 7 months to December 19, 1961.

This concludes my statement. I am available to answer such questions as the committee may wish to pose.

Mr. THOMAS. How many people do you have in the New York Naval Shipyard now?

Admiral SCHULTZ. Approximately 12,700 in the New York Naval Shipyard.

Mr. THOMAS. Yes. Who is commanding officer there?

Admiral SCHULTZ. Rear Adm. Ernest Holtszworth. He recently took command, having come from the Pearl Harbor Naval Shipyard. Mr. THOMAS. Are the yards pretty well loaded down now?

Admiral SCHULTZ. Yes, sir.

Mr. THOMAS. We have Pearl Harbor

[blocks in formation]

Admiral SCHULTZ. We have 11 naval shipyards. We have Pearl Harbor; Bremerton, Wash.; San Francisco, Calif.; Long Beach, Calif.

Mr. THOMAS. Which is the next one to Bremerton? I have been there a dozen times.

Admiral SCHULTZ. Not in the Washington area. Mare Island, Calif.

Mr. THOMAS. There is another one before you come to Mare Island. You have the big dry dock.

Admiral SCHULTZ. You are thinking of Hunter's Point in San Francisco.

Mг. THOMAS. That is right, and then Mare Island. Come on up the

east coast.

Admiral SCHULTZ. Charleston, S.C.; Norfolk, Va.; Philadelphia, Pa.; New York, N.Y.; and then Boston, Mass., and Portsmouth, N.H. Mr. THOMAS. What are we building at the Portsmouth yard, sub

marines?

Admiral SCHULTZ. We are building submarines. Both ballistic missile submarines and nuclear attack submarines.

STATUS OF FUNDS AVAILABLE FOR 1962 CONSTRUCTION PROGRAM

Mr. THOMAS. Admiral, in looking over your justification, sir, it looks like you have more money-I have never seen so much money here. These are all lead time items. Let us see how much money we have.

Prior year programs: 1957, $127 million. Is that correct?

In 1958, $58.2 million.

The 1959 program, $108 million.

In 1960, $64 million.

In 1961, $269 million.

Already this year you have got $1.8 billion and in the supplemental, how much do we have in that?

Admiral SCHULTZ. No funds are requested for new construction

Mr. THOMAS. There is nothing in there for new construction. That comes in later, does it not?

Admiral SCHULTZ. Well, only in the regular appropriation.

Mr. THOMAS. $1.8 billion.

Admiral SCHULTZ. Yes, sir.

Mr. THOMAS. And we have a supplemental coming in for some construction too, haven't we?

Admiral SCHULTZ. Not ship construction.

Mr. THOMAS. You do not think so?

Admiral SCHULTZ. It could generate later in the year. I do not know of one in the immediate future. Are you familiar with the endcosting concept which we have applied, sir?

ADEQUACY OF CURRENT FUNDS AVAILABLE

your

Mr. THOMAS. You have a little over $41 million here. What is unexpended and unobligated balance out of the available funds for obligation in 1962 in the amount of $2.55 billion? Cannot you get along without this money right now? You do not know what you are going to do with your $1.8 billion. You do not know what your cost figures are going to be?

Admiral SCHULTZ. Well, yes, we do. We have our best estimate of what a ship can be built for.

Mr. THOMAS. You put your finger on it right off the bat. It is your "best estimate." Out of $2.5 billion, can you do your reprograming and never miss this figure?

Admiral SCHULTZ. No, sir, because the Congress has already imposed a 3-percent cut for improved procurement practices which we haven't yet been able to liquidate in our 1961 funds.

Mr. THOMAS. Was it 3 percent or 2 percent?

Admiral SCHULTZ. It was 3 percent in the 1961 program and 2 percent in the 1962 program.

Mr. THOMAS. Is that a firm estimate?

Admiral SCHULTZ. This is a firm estimate, sir.

Mr. THOMAS. How can it be firm when it is being done in our own shipyards? It is not a contract.

Admiral SCHULTZ. Well, it is as firm an estimate as anyone can make, sir. We know the material costs going into this.

DELAY IN COMPLETION OF "CONSTELLATION”

Mr. THOMAS. (reading):

The damage to the ship seriously affected the forward portion of the flight deck, combat information center, main deck, forward escalator and bomb elevators, Nos. 1 and 2 catapults, and all wiring and cable in the forward areas above the main deck.

Funds in the amount of $41.6 million are requested to repair the damage to the ship. This estimate is based on a detailed analysis of the work to be done and equipment to be replaced. Repair of the damage will delay the ship approximately 7 months. It is now scheduled to complete the fitting out period in December 1961 and join the fleet immediately thereafter.

So you are going to have to add 7 months to December of 1961, is that right. That is this year. So you will do well to have it ready around July 1 of next year. Admiral SCHULTZ. No, sir.

The 7 months have been added to the previous completion date of May and it will be out in December of 1961.

Mr. THOMAS. How large is it?

Admiral SCHULTZ. It is about a 70,000-ton ship.

Mr. THOMAS. In the Forrestal class?

Admiral SCHULTZ. It is an improved Forrestal class with the TERRIER missile on it.

COMPLETION COST OF THE "CONSTELLATION"

Mr. THOMAS. What is the total completion cost of the ship? Admiral SCHULTZ. It will be $313 million, including the fire damage. Mr. THOMAS. What was your original estimate?

Admiral SCHULTZ. $271,451,000.

QUESTION AS TO NEED FOR ADDITIONAL FUNDS

Mr. THOMAS. In view of the fact that you have these tremendous funds, do you think you need the $41.6 million now?

Admiral SCHULTZ. Yes, sir.

Mr. THOMAS. That is hard for me to fathom in view of the fact that with the many ships you are building, you are changing orders, you have cancellations and everything else. When you go to fooling around with $2.5 billion, and here is a little $41 million item, it becomes almost inconsequential, doesn't it?

Admiral SCHULTZ. I wouldn't say it becomes inconsequential, sir,

because

Mr. THOMAS. With your total overall of $2.5 billion?

A billion dollars is something that I can hardly conceive of; it is so tremendous, but yet you have two of them and a half more.

Admiral SCHULTZ. Well, we prepared estimates for all of the ships which we are building, sir, in which we take into account all of the foreseeable costs and under the end-costing concept, which was established about a year ago, we are required to come to Congress with a prediction of the ultimate cost of each ship.

Do

Mr. THOMAS. Do you ever have any overruns? Do you underestimate it or overestimate it sometimes, some of the ships? You have had both, haven't you?

Admiral SCHULTZ. Yes, sir. On some you may be a little under and some may be over but they average out in the end. This is one of the theories of estimating.

Mr. THOMAS. Well, you used a good word when you said "theories." Admiral HIRSCH. I think generally we have to fight to keep within the dollars that we have because the estimates are very, very carefully made and basically they are on the low side of what generally happens as far as escalation is concerned.

Mr. THOMAS. Now, Admiral, what part of your construction work are we doing in the yard as compared to what we are doing in private contracting in private yards?

Admiral SCHULTZ. I would say that our general average is about somewhere between 65 and 70 percent in private shipyards and the remainder in naval shipyards.

SHIPBUILDING COSTS IN NAVAL AND PRIVATE SHIPYARDS

Mr. THOMAS. How do your cost estimates stack up in your private yards, with our naval yards?

Admiral SCHULTZ. I would say generally the private yards produce a ship for less than the naval yards.

Mr. THOMAS. How much? Five or ten percent? Twelve percent? Admiral SCHULTZ. Five percent, I would say.

Mr. THOMAS. Are there any questions, gentlemen?

Mr. JENSEN. Five percent; that is one-twentieth of a couple billion dollars. That must be about $100 million. If all the contracts were given to private shipbuilders, that would be a pretty nice piece of money to save for the taxpayers, would it not?

Admiral SCHULTZ. These differences, of course, come from various reasons. There are many costs in our shipyards which are higher than private shipyards by reason of benefits which our employees

have.

Mr. THOMAS. You have a very good answer and you better give it to Mr. Jensen, there. We have the old story of feast and famine, emergency, war, and everything. You have to keep your yards going

« PreviousContinue »