Friday, October 31, 2008

Act. 2 D-day, December 18, 2008

Not showing up in the media nor Google Alerts today.

News from Dick Mayer:

Oral Arguments before the Supreme Court have been set for 9:00 a.m. on Thursday, December 18th.

Supreme Court--Appeal of the Special Session's Act 2.
(Act 2 overrides the August-2007 Supreme Court decision and gives an HRS 343 pass to 'large capacity ferry vessels.')"

Aloha, Brad

Wednesday, October 29, 2008

HSF Postpones Introducing Hull A616 to Hawaii

Three good articles on this are at:
Second Superferry ship postponed; Inter-island service to Kaua‘i still on hold
By Michael Levine The Garden Island Oct 29, 2008

Superferry holds off on Big Island service; Tuesday sailings to Maui also cut because of economic concerns
By Christie Wilson Honolulu Advertiser Oct 29, 2008

Superferry delays Big Isle service; Economic slump sidelines ferry to Big Isle
By Kristen Consillio Honolulu Star-Bulletin Oct 29, 2008

A video report on this is at:
Superferry Delays Second Ship Due to Economy (KGMB9 News/Local News)
The delivery of the second Superferry to Hawaii is being delayed more than a year. Originally scheduled to enter service this February, its new launch date is now set for the Summer of 2010. October 28, 2008

Thanks to Mina, Ian, Greg, and Camera for making sure I didn't miss it.

Here is the original press release forwarded to me on it:

Sent: Tuesday, October 28, 2008 12:45 PM
To: Lori Abe
Subject: Hawaii Superferry Postpones Introduction of Second Ship News Release

For Immediate Release
October 28, 2008
Contact: Lori Abe

Hawaii Superferry Postpones Introduction of Second Ship

Uncertain economic climate delays second ship

HONOLULU --­ Hawaii Superferry today announced that it is postponing the introduction of its second ship and the start of service to the Big Island for approximately one year when the company anticipates the financial and economic climate will be more conducive to starting the new route. The company will continue its current schedule of service between the islands of Oahu and Maui with its first ship, the Alakai.

Hawaii Superferry remains committed to serving the people and businesses of Hawai'i. "We're encouraged by the increased ridership we experienced this summer and by the very positive feedback we've been receiving about ourservice," said Hawaii Superferry President and CEO Tom Fargo. "Postponing the introduction of our second ship will defer over $10 million in start-up costs and enable us to maintain our sound financial position. Given today's economic uncertainties, this decision is both prudent and provides us with additional time to develop this market, while continuing to grow our successful Oahu and Maui service."

"We believe that our business plan is solid for the long run. Serving the islands, including the Big Island and Kaua'i, remains our goal and is very important to us. In the meantime, we will continue our focus of providing a reliable and responsible service between Maui and Oahu and preparations for the arrival of our second ship to ensure its successful launch."

Hawaii Superferry is anticipating delivery of the second ship in Mobile, Alabama from shipbuilder Austal USA in late February 2009. The company will look at short-term opportunities for use of the ship prior to its induction into service in the islands.

Hawaii Superferry's first ship, the Alakai, seats up to 800 passengers and carries approximately 200 vehicles...

# # #

After this press release, there was also coverage of it in the Honolulu Advertiser, MarineLog, and and number of blogs. My comments are as follows:

I think there were a number of reasons why this happened in addition to the ones the company gave. In no particular order, they include:

1) JFL's resources has probably been cut by at least a third by the recent market. The amount of money that he had last year to keep throwing at this, he may feel he doesn't have to waste anymore. Austal has spoken recently about other commercial ferry operators running into difficulties recently with financing, an industry trend.

2) The State Supreme Court agreeing recently to take the appeal on Act. 2 is a strong indicator that Act. 2 may be found to be unconstitutional. I would guess they take oral arguments on that after the election and rule on it possibly by the end of the year. This could block the use of HSF2 Hull A616 and A615 for that matter until a real Chapter 343 EIS is done, which could take another year or two, and the company would have to pay for that. Better to plan something else for Hull A616 now, like a government lease.

3) I think this also signaled something about recent infighting and lack of optimism in the McCain campaign. I would say this is also a signal from inside the camp that they know they are not going to win and therefore JFL cannot count on the benefit of connections with McCain.

4) Ridership has probably been low recently and this only further points out the problem of running an even more cost-ineffective 4+ hour route between Oahu and the B.I.

5) Recently the State mentioned at one of the OTF meetings that they are planning on passing off all of the cost of tug services to HSF to deal with the barges. That is a lot of money and makes this even more of a money loser to the company.

6) The Army/Navy have a HSV lease ending and funding for a new lease that could begin soon. Hull A616 needs to be tested before more construction contracts could be responsibly awarded for it's design under JHSV. A military lease would be a relatively fixed amount to at least cover all costs, something HSF has not been able to do with the Alakai. Lastly, there has been a dramatic increase in piracy activity on the East African Coast over the past year. HSV's have been used to deal with that. That is where Hull A616 might be more useful under lease if not between Oahu and Pohakuloa.

Aloha, Brad

P.S. Joan Conrow mentioned today on the KauaiEclectic blog the following that Dick Mayer found and e-mailed out about a week ago: "Dick Mayer of Maui noted that Tuesday travel will no longer be offered after Nov. 4, and that no reservations are being accepted at all after March 15."

Saturday, October 25, 2008

NYT: McCain's Chief Of Staff?
"Building a White House Team Before the Election Is Decided"
By PETER BAKER and JACKIE CALMES New York Times October 24, 2008

"WASHINGTON — With the economy in tatters at home and two wars still raging abroad, Senator Barack Obama’s team is preparing for a fast start, should he win the election, to what could be the most challenging and volatile transition between presidents in 75 years.

Mr. Obama’s advisers are sifting résumés, compiling policy options and discussing where to hold his first news conference as president-elect. Democrats say Mr. Obama hopes to name key members of his White House, economic and security teams soon after the election. His transition chief has even drafted a sample Inaugural Address.

Presidential nominees typically start preparing for transitions before the election, but Mr. Obama’s plans appear more extensive than in the past and more advanced than those of Senator John McCain, his Republican opponent. Mr. McCain has also assigned confidants to prepare for a transition but instructed them to limit their activities as he tries to rescue his foundering campaign, Republicans said.

Already the capital is buzzing with discussion about who would fill top positions. Obama advisers mention Tom Daschle, the former Senate majority leader, as a possible White House chief of staff, and Timothy F. Geithner, president of the Federal Reserve Bank of New York, as Treasury secretary. To demonstrate bipartisanship, advisers said Mr. Obama might ask two members of President Bush’s cabinet to stay, including Defense Secretary Robert M. Gates.

Mr. McCain might also want Mr. Gates to stay, according to Republicans close to the campaign, or he might reach beyond the party by tapping Senator Joseph I. Lieberman, the Connecticut Democrat turned independent, to head the Pentagon or the State Department. Republicans said possible Treasury secretaries include John A. Thain, the chief executive of Merrill Lynch, and Robert B. Zoellick, the president of the World Bank. And some see former Navy Secretary John F. Lehman as chief of staff..."

See related links at:

Behind the Scenes, Teams for Both Candidates Plan for a Presidential Transition
By ROBERT PEAR New York Times September 20, 2008

Fall from Glory By Gregory L. Vistica

Silent Knights By Alan E. Diehl, John J. Nance

Aloha, Brad

Friday, October 24, 2008

Ferry Operators Finding it Harder to get Financing

"Over 100 Austal workers made 'redundant'"
23-October-08 by Rebecca Lawson

"Austal Ltd managing director Bob Browning said there are no plans for further staff cuts after the company laid off over 100 workers at its Henderson, Australia shipbuilding facility...

Mr Browning said the global economic turmoil had delayed the decision making process for its customers, mainly ferry operators, which were finding it harder to get access to finance.

...Meanwhile, Mr Browning said the company's US arm, which focuses on the country's military, was going well.

He added the US division should hear from a couple of large contracts over the next few months."

Aloha, Brad

Thursday, October 23, 2008

On The Intelligence and Receptivity of Humpback Whales

A couple of things in my mailbox recently:

Humpback Whale Rescued by Divers
Netlore Archive: Forwarded email recounts the true story of the rescue of a female humpback whale trapped in a web of crab lines in the Pacific Ocean near the Farallon Islands
Description: Email flier
Circulating since: May 2006
Status: True

Email example contributed by Lisa S., 15 May 2006:

The Whale

If you read the front page story of the SF Chronicle, you would have read about a female humpback whale who had become entangled in a spider web of crab traps and lines.

She was weighted down by hundreds of pounds of traps that caused her to struggle to stay afloat. She also had hundreds of yards of line rope wrapped around her body, her tail, her torso, a line tugging in her mouth.

A fisherman spotted her just east of the Farralone Islands (outside the Golden Gate) and radioed an environmental group for help.

Within a few hours, the rescue team arrived and determined that she was so bad off, the only way to save her was to dive in and untangle her...

A very dangerous proposition.

One slap of the tail could kill a rescuer.

They worked for hours with curved knives and eventually freed her.

When she was free, the divers say she swam in what seemed like joyous circles.

She then came back to each and every diver, one at a time, and nudged them, pushed gently around-she thanked them. Some said it was the most incredibly beautiful experience of their lives.

The guy who cut the rope out of her mouth says her eye was following him the whole time, and he will never be the same.

Comments: True story.

According to local news coverage, it all began on Sunday, December 11, 2005, when a fisherman spotted a 50-ton humpback whale tangled up in crab trap lines off the Marin County coast in northern California. His call for help was answered by the Marin Marine Mammal Center, which dispatched a group of Coast Guard divers and whale experts to the site near the Farallon Islands to free the animal.

The rescue operation was both difficult and dangerous. Crew members found the whale entwined in some 20 ropes, each 240 feet long and wrapped so tight they were slicing into its flesh. The lines had to be cut by hand, which required diving perilously close to the whale and its powerful tail. It took about an hour, and no one was injured.

In interviews with reporters, some of the divers remarked on the whale's "affectionate" behavior. One said the creature watched and seemed to wink at him as he was cutting a line that went through its mouth. Once freed, the whale began circling and approached the divers one by one to "nuzzle" them. "You hate to anthropomorphize too much," Mick Menigoz told the San Francisco Chronicle, "but the whale was doing little dives and the guys were rubbing shoulders with it. I don't know for sure what it was thinking, but it's something that I will always remember. It was just too cool."

Another report on this at:

Aloha, Brad

Tuesday, October 21, 2008

Ohhohohoo, this is a doozy...

I just learned about this via Larry Geller's Disappeared News blog.

You can also go straight to the source, Mother Jones.

I think Mother Jones may have some of the details only slightly incorrect. Check out these links, don't miss the first and last ones, they get right to the point:

Behind the Scenes, Teams for Both Candidates Plan for a Presidential Transition
By ROBERT PEAR New York Times September 20, 2008

Fall from Glory By Gregory L. Vistica

Silent Knights By Alan E. Diehl, John J. Nance

The Tailhook Association By Randy W. Baumgardner


Meager Eagar by Anthony Pignataro

Damn, those Google billionaires are amazing with whole books online now-a-days.
Aloha, Brad

Interesting Video in Hawaii on U.S.-China Relations

Very interesting news video report today filmed here in Hawaii. Covers some topics mentioned here like the recent disagreement over the aid to Taiwan. Most interesting for the interviews and news organization doing the reporting:

Aloha, Brad

Excellent Kauai Letter to the Editor 10/20/08

Excellently written letter by Eduardo Valenciana of Lihue, Kauai:

"Ferry impact irreversible"

"Candidate Lani Kawahara’s letter explaining her stand regarding the ferry is very sincere.

I admire her honesty but it lacks reflection of the real consequences should the day come when that boat docks at Nawiliwili.

The respected candidate states that she would use her authority to “maximize the benefits and minimize the negative impacts.” Unfortunately the ferry is a Pandora’s Box.

Once on Kaua‘i, the negatives can never again be removed. Every so-called benefit of this issue is rooted in seducing us to believe there are great riches to be had with the ferry’s arrival. Exportation of local goods is but one small part of the total impact.

What concerns me is who and what will be arriving. Yes, visitors arrive daily at Lihu‘e Airport but that system greatly controls the who and what. The ferry is an invitation for the madness that currently is escalating throughout our world to begin to poison our envied tranquility.

Steinbeck’s famous book “The Pearl” describes the turmoil of a simple family who obtains sudden riches in the form of a magnificent pearl and the awful evil that beset them in the form of a greedy, compassionless world which is only focussed on stealing the unique and beautiful pearl by any means possible.

Kaua‘i is that pearl and that ferry and some who will arrive on it desire her riches at any cost and no authority whatsoever would be able to contain the hurt and pain of our loss."

Eduardo Valenciana, Lihu‘e

An observation: At the Hanalei council candidates debate, Lani was the only candidate who complained not once, but 3 or 4 times about the questions she got from the moderator. None of the other candidates complained about their questions, they just answered them. This calls into question necessary level of maturity. Could say more about the issue at hand, but will leave it at that.

Aloha, Brad

Monday, October 20, 2008

Wind Cancels Fast Ferry in UK & Whale of a Nightmare

"Holyhead to Dun Laoghaire ferry cancelled in strong winds"
by David Powell, UK Daily Post Oct 20 2008

"STENA Line bosses have cancelled a Holyhead to Dun Laoghaire fast ferry today as strong winds batter the region...Passengers will be switched to the super ferry service at 1.50pm or the next high speed sailing, which departs at 3pm. Gale force winds yesterday battered the North Wales coast. HM coastguards at Holyhead reported gusts of up to 54mph. A spokesman said there were gale force eight winds increasing to severe gale force nine coming from the Irish Sea. The Met Office said there was also persistent and occasionally heavy rain yesterday and strong, local, southwesterly winds."

That's Beaufort Force 8 and Force 9 mentioned above, Force 8 is when fast ferries get cancelled here too by Coast Guard regs. Force 8 and Force 9 are also gale conditions here. See BOM.

Also, in response to the two articles in yesterday's Honolulu Advertiser, a little bit of prognosticative satire about a dream:

"Brief Literary Satire: A Whale of a Nightmare"

"Penguin Banks, HI (Sometime in the Winter of 2008-2009) -- A large humpback whale gains speed 50 meters below the surface to do a full body breach. As it gains speed, it hears an unusual noise that it began hearing only last year, but never did understand, so it continues on its course to breach the water.

In a split second, just as its full body breaches the water, a huge unnatural object, unidentified by the whale, slams into the whale at 25 knots, destroying the whale. The unidentified object shudders, sending its controllers flying across the deck. At that moment, the object, surprising thin skinned and soft, sustains huge dents from the direct impact with the large whale. [To be continued...]

I don't think the operator nor passengers of a 100 meter vessel would even necessarily know if they hit a whale unless it was large, on the surface or breaching water, and directly T-boned."

Aloha, Brad

Sunday, October 19, 2008

Articles: Night Vision, East Coast limits, and LCS/JHSV

Some interesting articles over the past couple days.

First, Christie Wilson has a couple of good articles in the Honolulu Advertiser today:
"Hawaii ferry adds whale-watch tech;
Thermal imaging gear intended to help spot humpbacks and avoid colliding with them"
By Christie Wilson Advertiser Maui Bureau Oct 19, 2008

"Hawaii Superferry is installing a high-tech thermal imaging system that could detect whale spouts more than a mile away and reduce the risk of collisions with humpback whales.

Two of the devices, which cost $125,000 each, will be installed on the company's Alakai high-speed ferry next month, in time for the winter humpback whale season. The Night Navigator 3 units, manufactured by Current Corp. of Vancouver, B.C., also will be used on a sister ferry scheduled to start interisland service next year..."
Read More]

My comments:

"Wow, good article. Maybe the best article Christie has written yet on the subject.

I would be curious to see such night vision in operation. I find it hard to believe that this will be able to distinguish all whales in its path, esp. at night when more whales linger stationary at the surface. Further, on transits south of Molokai right through the Sanctuary last year, the vessel was sighting 16 - 62 whales on each transit. The likelihood is that even if the vessel takes evasive action for a sighted whale, the change in course often would just be putting it on a course into another whale or pod. Whales will be here in large numbers within a month. In the middle of the whale season it's like "whale soup" out there.

Regarding the 7 "close encounters," how can anything within 50 yards be seen from on-deck and definitively avoided; what did HSF say in court? Further, it remains to be known here what happens to large whales and to an aluminium hull upon contact at high speed."
"Other large ships also cross through sanctuary"
By Christie Wilson Advertiser Maui Bureau October 19, 2008

"Vessel-whale collisions are a concern for other large, fast ships operating in Hawai'i waters.
NCL America said its 921-foot Pride of America cruise ship follows NOAA and Pacific Whale Foundation guidelines. Passenger liners generally cruise at 20 knots, about 23 mph, but while crossing the Hawaiian Islands Humpback Whale National Marine Sanctuary, the NCL ship does not exceed 12 knots, the company said..."
Read More]

My comments:

"Another good article. Interesting to read the speeds and courses that NCL, Matson, and others take in the area. Based upon the quote from the operator of the much smaller Expedition ferry, I don't think the operator nor passengers of a 100 meter vessel would even necessarily know if they hit a whale unless it was large, on the surface or breaching water, and directly T-boned. It will be interesting to see if that can be avoided operating all winter and spring this year. In the Canary Islands over the past few years on average a whale is taken out by a high speed vessel 6 - 9 times a year or every couple months. I'll be the first to congratulate them if they can go the whole whale season without a known whale strike this year, that's assuming the Hawaii State Supreme Court lets them operate the whole season before being shut down."

The following industry report was forwarded to me from the Federal Register of October 10, 2008:

"East Coast Vessel Speed Limits Imposed to Protect Endangered Whales"

"Vessels of 65 feet or more in length, including ferries and whalewatching boats, will have to adhere to 10-knot speed limits in specific geographic areas along the U.S. East Coast at certain times of the year. The purpose of the new requirement is
to protect endangered North Atlantic right whales from ship strikes.

The speed limits will
go into effect on December 9, 2008. The National Oceanic and Atmospheric Administration (NOAA) published the final rule in the Federal Register on October 10, 2008.

NOAA removed from the final rule a controversial proposal for mandatory vessel speed limits in temporary Dynamic Management Areas (DMAs). Were a two-week DMA with a mandatory vessel speed limit to be imposed across an established ferry route during the height of the business season, the economic viability of the operator would have been threatened.

In the end, NOAA chose a final rule without DMAs with mandatory speed limits. Instead, if an aggregation of right whales shows up unexpectedly out of range and out of season, NOAA will announce the establishment of a time-limited DMA and simply encourage (but not require) a vessel to avoid the area or adhere voluntarily to a speed of 10 knots.

Mandatory speed limits of 10 knots will be in effect in various geographic areas at different times of the year. These locations and times correspond to the customary presence of right whales and are known as Seasonal Management Areas (SMAs).

In the Northeast, there will be a seasonal speed limit zone designated in Massachusetts' Cape Cod Bay from January 1 to May 15.
It will be lifted prior to beginning of the operating season of ferries that traverse the bay going to Provincetown. Another speed limit zone will be imposed in an area north and east of the tip of Cape Cod (off Race Point) from March 1 to April 30. Its timing is such that it will not conflict with the business season for commercial whalewatching boats going to the Stellwagen National Marine Sanctuary.

Finally, there will be a 10-knot speed limit in the Great South Channel approach to the port of Boston from April 1 through July 31; this will affect deep-draft oceangoing cargo ships."

Greg Kaufman's comments on the above:

"Note the size of vessels affected OVER 65', which is the point I made repeatedly in court: ships vs boats. It is all about mass and the effect the mass has on the whale at collision. Over 10 knots is the breaking point for a 50-50 chance for the whales. To my knowledge all ww boats on Maui are 65' or less. - Greg"

Also, an interesting article from the Alabama Press-Register:
"Navy's LCS plans: Three more ships;
Austal hopes to win work on shallow-water warships"
By KAIJA WILKINSON Business Reporter October 17, 2008

"The U.S. Navy said Thursday that it plans to buy 3 littoral combat ships in fiscal 2010, in addition to the 2 it plans to buy next year, though it wants contractors to amend their bids to reflect cost savings that come with building multiple ships.

Lt. Cmdr. Victor Chen said the Navy intends to award 1 boat in 2009 to each of 2 teams competing to build as many as 55 of the high-speed, shore-hugging warships...

Pfister said the company expects word on the fast-ferry contract by the first week of November. Austal is competing with two other teams for a contract that could reach $1.3 billion."

My comments to that on another blog:

"It's only 1 JHSV that is budgeted by Congress for 2009. Whoever gets it, it won't mean much until the rest of the contract is budgeted by Congress for 2010 and beyond. At lot is going to happen between now and 2010.

Even for the LCS, only 2 more are budgeted for 2009. The Navy spokesman in that Alabama article says they will submit a budget request for 3 more in 2010, but again, a lot is going to happen between now and then..."

Reuters had the first MSM report on this the day before on Oct. 16th:
"UPDATE 1-US Navy to add 3 LCS ships in fiscal 2010" Oct 16, 2008
By Andrea Shalal-Esa

WASHINGTON, Oct 16 (Reuters) - "The U.S. Navy on Thursday said it would amend an ongoing competition between Lockheed Martin Corp and General Dynamics Corp to add three shore-hugging littoral combat ships in fiscal year 2010.

...Navy spokesman Lt. Cmdr. Victor Chen said the service still planned to award a contract to each of the companies for a second LCS ship in 2009.

"The Navy intends to award one ship to each industry team in FY09 and hold a concurrent competition for three additional ships in FY10," Chen said in a statement...

It was not immediately clear when the Navy would make the contract awards for the two littoral combat ships (LCS) in fiscal 2009, that began Oct. 1.

Congress last month passed an appropriations bill that deleted 2008 funding for one LCS ship, and said the Navy could use that money to pay for anticipated cost overruns on the two ships in the budget for 2009.

Lawmakers also agreed to postpone implementation of a $460 million cost cap on each LCS ship until 2010, after Navy officials explained that neither company would be able to meet the cost cap without removing significant equipment from the ships..." [Read More]

Here was my post on this the day before that on October 15th, which still stands as logical:
Wednesday, October 15, 2008
Budget for 2009: Includes 2 LCS and 1 JHSV

"Logical Reasoning"

"The 2 LCS and 1 JHSV budgeted for 2009, Lockheed Martin should get the contract to build the 1st of those 2 new LCS. Based on how Austal-USA's LCS-2 performs in it's trials when it is finally under it's own power, the second of the 2 new LCS may go to either Austal-USA or to Lockheed Martin if LCS-2 does not perform adequately.

As for the 1 JHSV, it is expected that the Navy will award that to Bath Iron Works/Rolls-Royce or to Bollinger-Incat, which the Army has had successful experience testing, and that the Army will try to begin testing, either under individual transport contracts or with a full lease, a recently completed Austal-USA HSV similar to Austal-USA's expected JHSV design proposal.

LCS-2's actual performance should determine if Austal-USA is contracted to build any more for the U.S. -- Austal-USA's HSV Hull 616's performance under contract or lease should determine whether Austal-USA is contracted to build any more JHSV's for the U.S."

Aloha, Brad

Friday, October 17, 2008

Excellent Article in The Maui News on 10/16/08

Quotes from:
"State Supreme Court to hear Superferry appeal;
Legality of state’s environmental exemption key issue"
By EDWIN TANJI, City Editor October 16, 2008

WAILUKU - "Maui leaders who questioned allowing the Hawaii Superferry to operate before an environmental impact statement is completed said Wednesday they are pleased that the Hawaii Supreme Court has agreed to review the issue...

Three Maui state senators who voted against the exemption for the Superferry said they are particularly interested to see how the Supreme Court will rule on the constitutionality of the law approved in a special legislative session in October 2007.

"Shan, Kalani and I felt that the whole process was wrong," said Sen. Roz Baker, who represents the South Maui and West Maui district. "We knew there was great sentiment on Maui that all of the law should have been followed and we felt the Department of Transportation erred in doing it the way it did."

She was joined by Sens. J. Kalani English and Shan Tsutsui in saying that the law approved in a special session after a Maui circuit judge blocked the ferry service appeared to be an exemption for a special interest that violated the constitution.

But when legislators were briefed by the state attorney general last year, Baker said they were told it did not.

The fact that the Supreme Court agreed to hear the case "is a sign that it's a more significant issue that needs to be addressed," English said.

"They are saying it's a major issue that the Supreme Court must decide. It's the right court to give finality to these issues," he said.

Wailuku attorney Isaac Hall, who is representing Maui Tomorrow, the Sierra Club and the Kahului Harbor Coalition in the appeal, said the key issue is whether the special legislation granting an exemption from environmental laws is constitutional.

He noted that the order signed by Chief Justice Ronald Moon grants the transfer to the Supreme Court from the state Intermediate Court of Appeals both on the grounds that the case raises a question of fundamental public importance and because there is a novel legal issue to be addressed.

Hawaii Superferry officials and the state attorney general's office did not respond to requests for comment Wednesday...

"It's interesting, " Hall said. "The order to accept the appeal is signed by him (Chief Justice Moon), but is joined by all of the justices."

The case is to be scheduled for oral arguments, but the timing is not yet known, he said.

For Hall, there is another factor that has strong personal interest. In ruling in favor of the injunction based on the original Supreme Court decision, Cardoza granted attorney's fees and costs to Hall. The state and Hawaii Superferry appealed that order, which is part of the new case going to the Supreme Court...

English said he objected to the legislation for what he sees as a special interest and he appreciates the court's decision to consider the issue.

"Our constitution does prohibit special interest legislation and I think that's going to be one of the main issues," he said.

English said if the Supreme Court were to allow the environmental exemption for a business, "I have a number of programs and projects that I can call by their generic names and ask for approval."

...Bowie was hopeful that the Supreme Court would invalidate the exemption law, which should result in reinstating the injunction until an environmental impact statement is accepted...

One of the factors will be that the Superferry has been operating, which will provide data on issues such as whether passengers are transporting prohibited products and substances. Bowie said a task force required by the exemption law has been conducting risk assessments that she said "show a lot of weaknesses in the inspection system."

...Until the Supreme Court takes up the appeal, the Superferry will also continue to operate, Bowie noted, which will provide more information on the safety of the vessel. When the ferry first began regular operations in December 2007, there were severe difficulties with the docking system in Kahului Harbor from the heavy winter swells and the ferry itself incurred damage that put it into dry dock for two months.

'It's October. The whales are back and the swells are back. It's going to be an interesting time,' she said."

Aloha, Brad

Oil Price Changing Short-term Outlook for Hawaii

This post also relates to here, so I am cross posting it here. From:

"...Oil was at it's all time high price per barrel this past July 11, 2008, at $147/barrel, when gas prices in much of Hawaii were about $5/gallon. The state was in real trouble at that point. Now with presumed deflationary events in the wider economy and credit markets, most consumable commodities have come down 30 to 50% in the past 3 months. Oil is at $71/barrel as of today, Oct. 17, 2008, and gasoline in Hawaii is below $4.00/gallon even on the outer islands.

Also of interest and importance, jet fuel is down 48% from its high in July 2008, now equal to the price that it was at in early Sept. 2007, when things started to go south. Marine diesel fuel (MDO) is down 30% from its high in July 2008. Other noteable commodities, such as steel and aluminium, are also off their highs."

See rest of the above post here, and related link here.
Aloha, Brad

Wednesday, October 15, 2008

Budget for 2009: Includes 2 LCS and 1 JHSV

Logical Reasoning

The 2 LCS and 1 JHSV budgeted for 2009, Lockheed Martin should get the contract to build the 1st of those 2 new LCS. Based on how Austal-USA's LCS-2 performs in it's trials when it is finally under it's own power, the second of the 2 new LCS may go to either Austal-USA or to Lockheed Martin if LCS-2 does not perform adequately.

As for the 1 JHSV, it is expected that the Navy will award that to Bath Iron Works/Rolls-Royce or to Bollinger-Incat, which the Army has had successful experience testing, and that the Army will try to begin testing, either under individual transport contracts or with a full lease, a recently completed Austal-USA HSV similar to Austal-USA's expected JHSV design proposal.

LCS-2's actual performance should determine if Austal-USA is contracted to build any more for the U.S. -- Austal-USA's HSV Hull 616's performance under contract or lease should determine whether Austal-USA is contracted to build any more JHSV's for the U.S.
Wednesday, October 15, 2008
FY 2009 Shipbuilding

"The President signed the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (PDF) today. The following is the shipbuilding section:

'...Additionally, the budget request contained $920.0 million for two Littoral Combat Ships (LCS) ...The agreement would authorize the budget request of $920.0 million for two LCS vessels...While these are significant milestones, we remain concerned that the Navy has not taken sufficient actions to control costs for LCS follow on vessels...'

...the Bush administration ends up building 47 ships for an average of 5.875 ships per year. By comparison, the Clinton administration averaged 5.0 per year. The really scary part looking forward, during the Bush administration the Navy has spent twice as much money for only 7 more ships. Over the last 16 years of Clinton and Bush, the Navy has build only 87 ships. Do the math, if ships last on average 30 years, we are on pace to build a fleet of between 150-177 ships. The life of the LCS is expected to only be 25 years. The reality of the last 16 years loom large the challenge of the next four. As budget resources tighten, the necessity to reach the floor of 313 ships becomes a difficult task for leadership." Posted by Galrahn of Information Dissemination

Aloha, Brad

State Supreme Court to Hear Act. 2 Appeal

Good photoshop pic at:
"State Supreme Court to hear Superferry law challenge"
By Christie Wilson October 14, 2008

"The Hawaii Supreme Court today agreed to hear an appeal seeking to invalidate a state law that allowed Hawaii Superferry to begin operation last year without an environmental impact statement.

The court said it was transferring the case from the lower Intermediate Court of Appeals and would schedule oral arguments because it involves a matter "of imperative or fundamental public importance." A date for arguments was not announced.

The Sierra Club, Maui Tomorrow and the Kahului Harbor Coalition requested the transfer...

...The three groups appealed, and today's action by the Hawai'i Supreme Court means they will get another chance to argue that Act 2 is unlawful."

Aloha, Brad

Monday, October 13, 2008

Revenge of the Barf-O-Meter..."Know Before you Blow"

Oh man, I hear the big surf pounding outside tonight about a mile away. Almost forgot, this is the first big surf of the winter season. Waves tonight and well into Monday are suppose to be 12 feet with intermittent wave faces at 15 feet and wind at 10 to 14 knots. That's right there at the edge between BOM Levels 3 and 4. Anyway, here are some neat links on Surfline:

Another blog reporting on the conditions firsthand:

Aloha, Brad

Saturday, October 11, 2008

New Ship Sulfur Emission Standards and Nawiliwili-Niamalu

Update on Ship Sulfur Emission Standards, Bunker Fuel, and Nawiliwili-Niamalu

First, some links on the recent local history:

Second, a report on one of the leading scientific studies done on this a number of years ago:
"Ship Sulfur Emissions Found To Strongly Impact Worldwide Ocean And Coastal Pollution"

"ScienceDaily (Aug. 20, 1999) — PITTSBURGH -- Ship emissions are a dominant contributor to atmospheric sulfur dioxide concentrations over much of the world's oceans and in several coastal regions, researchers from Carnegie Mellon University and Duke University report in a Nature article today..."

Lastly, a few days ago, new international standards on this began to be established:
"International body slashes ship air pollution by clamping down on dirty fuel"
By Dina Cappiello, Associated Press Writer October 9, 2008

"WASHINGTON (AP) -- Ships traversing the world's oceans will have to clean up the air under new international regulations adopted Thursday.

The International Maritime Organization set a global cap for the amount of sulfur in marine fuels to reduce the air pollution plaguing ports and coastal communities in the U.S. and worldwide.
Ships will have to burn diesel fuel containing 0.5 percent sulfur by 2020, down from an average of 2.7 percent now.

Countries wanting to accelerate the cleanup can also establish local or regional emission control areas off their coasts. Ships operating in these zones would have to meet a 0.1 percent sulfur content in fuel by 2015, and all new ships would have to have engines that reduce nitrogen oxides by 80 percent.

The Environmental Protection Agency, which took part in the negotiations in London, said Thursday it will apply next year to make U.S. coastal waters emission control areas. The agency is under a federal court order to issue regulations to reduce emissions from oceangoing ships by December 2009..."

One more good article on it at:

Aloha, Brad

The China Connection Revisited

Related links:
"U.S.-Taiwan arms deal upsets China" Oct 10, 2008

"TOKYO (AP) — China has cut some military exchanges following Washington's approval of a multibillion-dollar arms package for Taiwan, the commander of the U.S. forces in the Pacific said yesterday.

Adm. Timothy Keating said China canceled or postponed several military-to-military exchanges following the Bush administration's approval of a $6.5 billion package of weapons for the island. They are intended to help the island defend itself should China ever make good on its vow to invade if Taiwan should formalize its de facto independence..."

Complete article on all of the items in the $6.5 billion package sold to Taiwan:

"U.S. approves $6.5 billion in Taiwan arms sales"
By Andrea Shalal-Esa Oct 4, 2008

"WASHINGTON (Reuters) - The U.S. government on Friday announced plans to sell around $6.5 billion in arms to Taiwan, including 30 Boeing Co Apache attack helicopters and 330 Patriot missiles, in a move that could anger China.

The Pentagon's Defense Security Cooperation Agency told lawmakers that the sale -- which also includes 32 Harpoon submarine-launched missiles -- would support Taiwan's continuing efforts to modernize its military...

The sales include 30 AH-64D Apache Longbow attack helicopters built by Boeing, along with night vision sensors, radar, air-to-air missiles and Hellfire missiles. That deal alone is worth $2.5 billion, if all options are exercised...

The Pentagon also approved the sale of Patriot advanced capability PAC-3 missiles, radar sets, ground stations and other equipment valued at up to $3.1 billion. Raytheon would be the main contractor, along with Lockheed.

The deals also include up to $250 million in Northrop Grumman upgrades to four E-2T aircraft; up to $200 million in Harpoon Block II missiles built by Boeing and $334 million in spare parts for various aircraft.

Omitted from the arms deal package were two items Taiwan had originally sought, diesel-powered submarines and 60 UH-60 Black Hawk helicopters built by Sikorsky Aircraft, a unit of United Technologies Corp..."

No fast patrol boats were in the order. Israel has sold fast patrol boats to Taiwan in the past, but apparently Australian and American companies have not, yet. Would say that given the economic environment that fast patrol boats rather than LCS are much more realistic for this region, Southeast Asia, and East Africa.

Aloha, Brad

First Public Report on OTF Meeting of 10/9/08

Here is a brief summary of a few key points by a person attending:

"They said again yesterday that the draft EIS should be out at the end of Oct. Also said the state has shifted the tug assist costs to HSF as of Oct. 1st.

DoA said they’ve had their budget cut by 24% so won’t be able to staff at harbor. Laura Thielen/DLNR said they are committed to DOCARE inspections through the end of the year but, due to budget cuts, they will continue with only random monitoring in 2009. She said they will also work on standardized reports for HSF inspections; review the EO and refine it, especially in regards to fish allowed on vessel; work with HSF to improve education efforts on prohibited items and continue training HSF staff.

It was mentioned that Act 2 states that there are reports due each quarter from Governor (I believe) to Legislature and they questioned whether this has been happening? Supposedly they’ll look into this and report back."

Here was one of the testimonies submitted:

Public Testimony
Gregory D. Kaufman, President
Oversight Task Force meeting, Honolulu, HI, October, 9, 2008

In my written and oral testimony presented to the September 19, 2008 Oversight Task force meeting in Kahului, Maui I
detailed a new ‘Proposed Route’ (see attached) for the Hawaii Superferry (HSF) during the peak whale months of December – May. The new ‘Proposed Route’ would:

a. Avoid the whale dense area of Penguin Bank;
b. Reduce transit time in Hawaiian Islands Humpback Whale National Marine Sanctuary; and
c. Minimize the amount of time HSF spends in waters 100 fathoms or less.

Following my presentation to the OTF, and the recommendation to use the ‘Proposed Route” exclusively during the winter whale months, I was made aware that my ‘Proposed Route’ may not be a new and novel idea. During a June 19, 2006 Department of Transportation public meeting (detailing the HSF project), HSF representatives presented the attached slide entitled “We Change Routes During Whale Season to Avoid Whale-Dense Areas.”

The slide promises HSF will use “routes (that) go around Penguin Banks….” However, during the 2008 whale season it appears HSF used only the “non-whale season” route (now known as the ‘Alternate Route’) – traversing across Penguin Bank and south of Molokai. Had HSF utilized the route depicted in their slide (around the west end of Penguin Bank), they would have nearly duplicated our “Proposed Route” and thereby minimized potential impacts to wintering humpback whales.

We reiterate our recommendation that during the months of December to May, HSF be prohibited from using both their “Regular Route” (north of Molokai) and their “Alternate Route (or ‘non-whale season route’) across Penguin Bank and through the near-shore waters south of Molokai, and be required to use only our “Proposed Route.”

Further Recommendations (from December to May):

• We continue to insist that HSF abide by special federal and state regulations in Hawai'i which prohibit approaching humpback whales (by any means) closer than 100 yards (90 m). We further believe HSF should come to a complete stop when within 100 yards or less of a humpback whale.

• Given the sophisticated technology available to a very large, high-speed vessel such as HSF, it is imperative that they be required to collect GPS sightings data of all whale sightings and near misses, and that this data be made available for independent study and review.

• Develop a strike predictability model for all routes.

• Nighttime operations: HSF must curtail all nighttime operations with operations limited from 30 minutes prior to sunrise to 30 minutes after sunset.

• Mitigation of Blind Spot: To help reduce the likelihood of the HSF hitting whales found inside its 100 yard blind spot, HSF must comply with Condition A-5 of the Executive Order 07-10 and install a series of cameras on its bow. The video from these cameras to be routed to the pilothouse whereby a dedicated observer can monitor them during operation.

• Observers: Three full-time observers required. Two observers would be dedicated to forward/lateral detection, with the third observer monitoring the bow camera.

• Double blind tests run to ensure independent verification of observer efficacy -- to be measured randomly throughout the whale season.

• HSF must maintained a minimum of 500 meters distance from sighted whales whenever possible, as required by E.O. 07-10 condition A.4.

• HSF be limited to speeds of 12 knots or less in all waters of 100 fathoms or less, and while in Sanctuary designated waters.

Finally we would like a full accounting of the Operating Agreement between the State DOT and HSF. During the DOT meeting of June 19, 2006, HSF represented that it would pay the following fees for use of harbor facilities upon start of service:

• $2 for every passenger;
• $4 for every private vehicle;
• $20 for every commercial vehicle;
• 1% of gross receipts; and
• a minimum annual guarantee of $2.3 million through year three, with $16.5 million paid over the first four years to the “DOT-Harbors Fund.”

What is the status of the foregoing payments and obligations to the State DOT by HSF?

I thank you for your time and consideration of this matter.

Gregory D. Kaufman
President & Founder

Aloha, Brad

Fuel Costs Affecting Fast Ferries in Europe
"Fuel cost sees cuts to winter ferries"
Oct 11 2008 by Owen R Hughes, Daily Post

"IRISH Ferries is slashing its fast craft sailings from Holyhead, and Stena Line is also reviewing its operation over the winter season – because of the cost of fuel.

Irish Ferries will reduce the sailings of the Jonathan Swift boat from two round trips daily to one from November 3.

They will withdraw the 8.45am from Dublin to Holyhead and the return trip at 12noon.

Stena has also told the Daily Post it is assessing the situation with the HHS Explorer fast ferry as they approach the quieter winter period.

The company said no decision had been made and that two sailings were currently continuing.

An Irish Ferries spokesman said: “As indicated in the late summer, Irish Ferries has been actively reviewing the schedule of its fast craft service for the less busy winter season as a result of the continued high level of fuel costs.”

“With effect from 3rd November 2008, the Irish Ferries Dublin Swift service between Dublin and Holyhead will reduce from two round trips per day to one round trip daily. The revised fast craft schedule will be kept under ongoing review and will depend on prevailing conditions, including fuel costs.”

The reduced timetable will remain in place until April 2 although there will be two daily sailings over the Christmas holiday period from December 19 and January 5.

Services of the superferry Ulysses will continue as normal.

A spokesman added: 'All existing bookings on the withdrawn sailings will be transferred to alternative sailings and customers will be notified accordingly.'"

Fuel costs should be coming down some here in Hawaii. But, destruction of demand in the local economy is becoming more apparent, along with a likely changing political environment. The days of political influence are numbered.

Aloha, Brad

Thursday, October 9, 2008

Report on OTF Meeting of 9/19/08 (pt.5 of 5)

Here is the link to the official OTF Report for 9/19/08:

Here are the pictures I took there, including of the Hana High students:

Good letter to the editor in the Kauai paper yesterday:

Today, 10/9/08, is the next OTF meeting on Oahu. Last night someone sent to me their testimony for today. I'll get it posted up in a day or so. There was a goofy article in a Seattle paper yesterday; I decided not to blog it.

Aloha, Brad

Wednesday, October 8, 2008

How many households could HSF power?

Saw the following comparison and it looked interesting:

"The MTU diesel engines (8000 series) used on the HSF and LCS-2 are the most powerful special purpose marine diesel engines on the market, equaled only by the MAN 20V 28/33D diesel engines, used in Incat HSV's. Both engine types put out per engine about 9,000 kW per hour at maximum output, or 9 MW per hour. These engines are meant to run continuously for a few hours, but for as much as a little more than a day, at a time. This compares to stationary powerplant diesel engines, made by the same companies that put out much lower kW per hour, burn less fuel per hour, but can operate continuously for longer periods of time.

HSF actually operates at speeds of about 60 to 70% of maximum engine output. So, 60% times 9 MW per hour is 5.4 MW per hour per engine, time 4 engines is 21.6 MW per hour. One megawatt hour (MWh) powers average energy use of 750 to 800 households per hour. So, when HSF is in transit, HSF's 4 diesel engines put out enough energy equal to what it would take on average to power at least 16,500 households during that time, equal to 76% of Kauai's households; that's how much energy this vessel uses."

Pretty interesting quote.

One other thing of interest. The Dutch bank ABN Amro use to be the bondholder of HSF's bond financing, guaranteed by MARAD. ABN Amro has not escaped the dramatic changes in the European banking system. Here is some history on ABN Amro just in the past year:

"ABN AMRO was acquired by the consortium of Fortis, RBS and Santander in October 2007. On 3 October 2008, the Dutch state
announced that it has bought Fortis's remaining interests in ABN AMRO, replacing Fortis as a stakeholder in RFS Holdings, which continues to manage ABN AMRO. RBS-bound businesses are not affected by this change."

And from:
"EU clears Deutsche Bank purchase of ABN Amro assets from Fortis" Oct. 2, 2008

BRUSSELS (AP) — "The European Commission approved on Wednesday Deutsche Bank's purchase of some ABN Amro assets from rival banking and insurance group Fortis. "The commission concluded that the operation would not significantly impede effective competition," Europe's top antitrust watchdog said in a statement. Fortis said in July it would sell some of ABN Amro's commercial banking activities in the Netherlands to Germany's Deutsche Bank for 709 million euros (996 billion dollars) in cash. Fortis had to sell those assets in order to get EU regulatory approval for the takeover of ABN Amro last year as part of a consortium with Britain's RBS and Santander of Spain. The purchase of those assets has since proved to be a bane for Fortis as questions about the financing for the operation in part forced the group into a liquidity crisis over the weekend. In order to keep it afloat, the Belgian, Dutch and Luxembourg governments hastily arranged a 11.2 billion euro bailout of Fortis on Sunday through its part-nationalisation."

Not clear who holds HSF's bonds anymore,
Aloha, Brad

Friday, October 3, 2008

McCain's Misdirection on LCS in the Debate

"John McCain is not about actually saving money on the LCS and JHSV programs, he's about using misdirection to try and direct government contracts to those lowballing it on the backs of underpaid skilled workers. Welders making $8 to $15 an hour on high-tech DoD contracts is not proper fixed-price budgeting."

Multiple people, including anti-HSF McCain supporters, have asked about his comments regarding LCS from the debate with Obama on September 26 2008. Here is the quote:

Full-text of debate from:

"MCCAIN: ...I think that we have to return — particularly in defense spending, which is the largest part of our appropriations — we have to do away with cost-plus contracts. We now have defense systems that the costs are completely out of control. We tried to build a little ship called the Littoral Combat Ship that was supposed to cost $140 million, ended up costing $400 million, and we still haven’t done it. So we need to have fixed-cost contracts. We need very badly to understand that defense spending is very important and vital, particularly in the new challenges we face in the world, but we have to get a lot of the cost overruns under control. I know how to do that."

McCain is not saying he is against the LCS. He is saying he thinks that DoD contracts like the LCS should be awarded to those contractors/builders who are set up to compete on a potentially lower fixed-cost basis rather than cost-plus. That position would pretty much dictate who gets the LCS and JHSV contracts because one bidder on both of those contracts pays by far the lowest wages to their welders/workers regardless of quality control issues.

Since people are asking questions about this, it is worth a little review of related information:
"Candidates for Sale" By MATT TAIBBI Aug 21, 2008

Excerpted from the above article: "...McCain has also received monstrous sums from hedge-fund managers, attracted by his pledge to keep the tax rate on their earnings at only 15 percent...Then there's the predictable influx of cash from would-be military contractors. John Lehman, a former secretary of the Navy whose firm runs the Superferry transport vessel, not only donated $28,500 of his own money, but bundled at least $250,000 for McCain from other donors. Donald Bollinger, who is a contractor on the controversial Littoral Combat Ship, gave $27,300 and bundled a whopping $500,000. Anyone want to bet on a decrease in Naval appropriations in a McCain presidency?"

Well not just that there won't be a decrease in those appropriations, but that those contracts under McCain might be awarded based on a favored narrow standard of preference under the guise of "cost-cutting and spending cuts."

To understand how information is being misused in this campaign, the following links might help:

Here are a couple of recent articles commenting on the inconsistencies of McCain's statements on LCS:
"McCain: LCS shows spending out of control"
By Philip Ewing - Navy Times Wednesday Oct 1, 2008

"The Littoral Combat Ship program got some high-profile attention in the presidential campaign on Friday, but probably not the kind the Navy wants. GOP presidential hopeful Sen. John McCain cited it as an example of government waste.

“I think that we have to return — particularly in defense spending, which is the largest part of our appropriations — we have to do away with cost-plus contracts. We now have defense systems that the costs are completely out of control,” McCain said during his debate with the Democratic nominee, Sen. Barack Obama. “We tried to build a little ship called the littoral combat ship that was supposed to cost $140 million, ended up costing $400 million, and we still haven’t done it.”

In reality, cost for each ship began around $220 million, and experts estimate that figure to balloon to as much as $700 million. The first ship, Freedom, was delivered to the Navy on Sept. 18, and the second ship, Independence, is slated for delivery some time next year.

McCain’s solution to problems such as LCS is to require the government to issue only “fixed-cost” contracts, which, in his view, would keep projects such as LCS from running over-budget. It’s not clear, however, whether McCain’s proposal would have kept down costs for the two ships, which were being built before their designs were complete and for which there’s already a congressionally imposed cost cap on future ships..." [Continued]
"McCain pushes for fixed-price contracts"

"John McCain is promising to slash government spending if elected president, and one of the few targets he’s named is a combat ship program designed to fend off mines and small craft favored by terrorists.

But a closer examination of the Littoral Combat Ship program and McCain’s pledge raises questions about whether the Republican senator from Arizona could install the changes he seeks and whether they’d produce the economic dividends he promises.

In just about any election, candidates promise to save money by cutting waste. It’s a pledge line in a speech that draws cheers from conservatives, but can become white noise to voters who’ve seen too many elected officials pledge fiscal responsibility, only to fail to deliver. Indeed, the path is so strewn with broken promises, there is little risk for candidates making the pledge because expectations are so low that they’ll make good on it.

But the stakes could be higher for McCain this cycle. He has undercut his own credibility on economic issues by admitting that it’s not his strong suit.

Then he released an economic policy plan that included both a pledge to balance the budget and push through huge tax cuts — as well as protecting President Bush's tax breaks.

The only way to accomplish those goals would be to cut hundreds of billions of dollars in government spending. Democrat Barack Obama already is attacking the plan as unworkable. Now the pressure is on McCain to convince voters fraught with anxiety over the condition of today’s economy that he can and will deliver on his promise.

Many hurdles stand in his way, not the least of which is the Byzantine nature of the federal government itself.

McCain isn’t promising to cut Pentagon funding, per se, but he cites the oversized defense budget as prime hunting ground for savings.

In a speech about government reform last year, McCain charged that “too often, contractors underbid to 'buy into' a market with little expectation of delivering on schedule and within budget. At the same time, the government's cost estimates are often unrealistic.”

The Littoral Combat Ship “was supposed to be a model program,” he said. “In the end, it cost twice its projected price, and the Navy had to cancel purchase of third ship because of the cost overruns.”

The ship, originally projected to cost $220 million apiece, now costs $460 million. It’s designed to patrol the waters near shore to ward off swarming small boats, submarines and mines.

McCain argues that such cost overruns could be avoided if the Pentagon issued “fixed-price contracts” that would prohibit a company from raising its bid price unless it could prove that cost overruns were caused by the government or other unforeseen circumstances.

“Our defense industries make the finest weapons in the world but are not incentivized enough to keep costs down. That must change,” McCain told Oklahoma lawmakers in May 2007. “When a company delivers the promised products and controls costs, it should be rewarded. When it doesn't, it must pay the price in its bottom line.”

“We must set clear expectations and requirements at the outset of an acquisition program,” he added, “and stick to the plan throughout the life of the program.”

It’s a system that worked well during development of F-18 naval fighter jets in the 1980s, which experts say saved the government billions of dollars. But it has significant downsides, too.

For instance, fixed-cost contracts work best when the government knows exactly what it wants. Under those circumstances, the blueprints are drawn, the systems are proven effective and the unknowns consist largely of the cost of parts and labor.

The combat ship program may be close to that point, but it’s not there yet.

John Lehman, a Navy secretary in the Reagan administration and a McCain campaign adviser, was a big proponent of fixed-price contracting and used the technique successfully on the F-18 fighter jet and shipbuilding programs.

But even he says it’s probably not a good match for this combat ship program today, because there are still too many design changes, which he said “have been coming in at the rate of 75 per week from many directions.” [Blogger note: What about later LCS ships?]

Another problem with fixed-price contracting is that it has a history of provoking expensive lawsuits that undercut savings to the taxpayers.

One of the most notorious cases involved the A-12 Navy stealth fighter jet, started in the mid-1980s on Lehman’s watch.

Contractors McDonnell Douglas and General Dynamics were accused of hiding enormous cost overruns from the government until then-Defense Secretary Dick Cheney canceled the program in 1991.

From Lehman’s perspective, the contract type was working, and the contract was only $2 billion over cost when Cheney canceled it.

Lehman disagreed with the decision, arguing that the $2 billion cost overrun wasn’t excessive, especially compared to the F-22 program, which started around the same time and was supposed to cost about the same amount of money. The F-22 Air Force fighter jet isn’t on a fixed-price contract and is now more than $30 billion over budget, Lehman said.

When the A-12 contract was canceled, the firms fought back in court in a case that dragged on for more than a decade, costing taxpayers more than $5 billion and prompting Congress to outlaw fixed-price contracting for research and development efforts, said Ralph C. Nash, professor emeritus of law at George Washington University and an author of textbooks on government contracting.

Nash argued that improving Pentagon weapons programs in the future will require more fundamental changes, such as stronger program management and the use of competitive prototyping — where two contractors build early versions of their product for side-by-side comparisons.

The fundamental problem, he says, is not wasteful spending by contractors. Rather, it’s the system itself, one that carries inherent risks and requires companies to speculate on how much it would cost to develop new systems and weapons.

The result often is that firms promise to develop technologies they can’t deliver for prices they can’t meet.

That system has been a frustration for years and is unlikely to change even with a new president, Nash said. “We’ve had a lot of new presidents over the last 50 years, new congressmen, new secretaries of defense,” who all vowed to fix the problem, Nash said.

McCain’s campaign, though, is confident that the senator’s insistence on high-quality contracts will alleviate the problem. “Low-quality, ambiguous contracts are the source of legal disputes, whether they are fixed price or any other type,” said campaign spokesman Brian Rogers.

In the case of the Littoral Combat Ship, time may be the real solution.

The first ship in a series is typically the most difficult and expensive to produce, with the cost of subsequent ships leveling off.

Now that General Dynamics and Lockheed Martin are nearly finished with their first competing versions of the ship, additional price increases should not be as dramatic as those that have already been seen. The Navy is forging ahead with negotiations on fixed-price contracts for follow-on ships — potentially with both contractors.

But supporters of the ship contend that regardless of the overruns, the Littoral Combat Ship remains affordable.

Rep. Rob Wittman (R-Va.) was on hand earlier this month to watch a Pentagon demonstration of a gun for the combat ship firing into the Potomac River near the Dahlgren Surface Warfare Center in his rural Virginia congressional district.

“When you roll out a new class of ships, it’s a learning process,” he said. “This littoral component of our fleet is absolutely necessary.”

Beneath the hum of fluorescent lights inside the warfare center, Vice Adm. Paul E. Sullivan, the commander of Naval Sea Systems Command, clenched his chiseled jaw and chalked up the ship’s price increase to an overly ambitious schedule.

'We took a lot of risk in schedule and cost on the two lead ships,' Sullivan told reporters after the gun shoot. 'When you take risk, then sometimes those risk equations don’t turn out the way you want them.'"

Lastly, was surprised to see this reference in an LCS article:
McClatchy Newspapers August 14, 2006
"Charting a new course: The Navy is set to christen the first of its next generation of warships"
By Dave Montgomery

"WASHINGTON - The name may not exactly roll off the tongue, but when the Navy christens its first littoral ship next month...

John Pike, director of in Alexandria, Va., says the ship will be "fiendishly fast." But yet to be tested, he said, is how its unusual design will handle in rough waters. 'The crews aren't going to do you much good if they're all barfing,' he said."

John McCain is not about actually saving money on the LCS and JHSV programs, he's about using misdirection to try and direct government contracts to those lowballing it on the backs of underpaid skilled workers. Welders making $8 to $15 an hour on high-tech DoD contracts is not proper fixed-price budgeting.

Aloha, Brad

Thursday, October 2, 2008

Quick Case Study on Ferries in Japan

Got the following question on the prior post:

fastshipfan said... October 2, 2008 6:32 PM
"Hey Brad, I'm interested to know what's behind your assertion that Incat ships are better than those from Austal (and others). The last two ships built by Incat were for a Japanese company and delivered after Alakai. Yet the fact is those two 112m vessels have already proven not to be successful - the operator is premanently withdrawing them from service at the end of this month: Suggests to me that they are no better."

Good question. The answer is interesting and relates to the situation here. In summary, I'll just restate a calculation point that has been repeated many times before on this blog and was based in sensitivity analysis done last Fall of proforma income statements of these types of ferry companies:

Large fast ferries with 4 or more diesel engines traveling on routes of significantly more than 2 hours duration with the same revenue generating load are not cost effective nor long-term viable from a commercial standpoint only, due to diesel fuel costs. This applies to anywhere in the world, including most of the routes in question in Japan and here in Hawaii, whereas routes in places like the Canary Islands and Trinidad and Tobago are short enough to have the potential to be cost effective and profitable with these types of fast ferries. This is so regardless of whether the fast ferry is an Austal, Incat, etc.

The fuel consumption constraint, though, is not the primary nor determining comparison that will be made between Austal and Incat for the JHSV. I believe the reason Incat's is a better design is because it's M-hull provides a smoother ride with less underside hull "deck slamming" than Austal's straight catamaran hull.

Your question about Japan is interesting and so I provide some more information on it:

First the quote that was referred to:
"HIGASHI NIHON FERRY The new Incat fast ferries "Natchan Rera" and "Natchan World" will be withdrawn from service on the Aomori – Hakodate route from 1st November because of increased fuel prices which have rendered the service uneconomic."

That pretty much speaks for itself, but we can take a look at the ferries and their routes:


Hull #064, Model 112m WPC, Name Natchan Rera, Co Operating Higashi Nihon Ferry Co.
Hull #065, Model 112m WPC, Name Natchan World, Co Operating Higashi Nihon Ferry Co.

Natchan Rera - Credit:

Natchan World - Credit:

About the powerplants in these two ferries, the following quote is useful:
"...The Natchan Rera is powered by four MAN 20V 28/33D diesel engines, each rated at 9,000 kW at 1,000 rev/min. ...In 1998, Incat conceived that a larger wave piercing catamaran was required to fill a market niche for a larger high speed ferry. After several years of research, the 112 m design emerged. The Natchan Rera is a result of that research and it is a vessel that the worldwide high speed craft community will be watching with interest."

These diesel engines burn about the same amount of fuel as those used on recent Austal ships. The useful differences would be for how long they are burned per revenue generating load or whether less than 4 of these types of engines can be used to accomplish the task.

Lastly, I found a neat webpage that shows all of the domestic ferry routes in Japan with their durations and links to the companies operating on each route...including the Higashi Nihon Ferry Company. Most of the long Japanese routes are not serviced with fast ferries, and those can be viable, although even they would be experiencing fuel cost difficulties.

Thanks to "fastshipfan," my prior recommendations would not help Incat in Japan. Clearly fast ferries can have business difficulties even on shorter routes if the demand is not there for high-end, luxury ferry travel.

Aloha, Brad