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Navy renames Hawaii Superferries “USNS Guam” and “USNS Puerto Rico”

May 9, 2012 

Recently, we reported that the two repossessed Hawaii Superferry ships will be deployed to Okinawa as part of the Navy sea lift fleet.  But now it gets wierder.  The Navy just announced that the ships will be renamed the USNS Guam and USNS Puerto Rico!  So after two fast ferry naval ships are pushed out of one occupied island (Hawai’i) by protesters and renamed after two other U.S. colonies (Guam and Puerto Rico), they are reassigned to another military colony (Okinawa).   Is it some cruel joke on four colonies?  Or just an ignorant gesture of inclusion? The Pacific Business News reported “Navy renames former Hawaii Superferry vessels” (May 8, 2012):

The two high-speed ferries built for the shuttered Hawaii Superferry were renamed Tuesday by the vessels’ new owner — the U.S. Navy.

Navy Secretary Ray Mabus announced Tuesday that the Alakai, which sailed between Oahu and Maui from August 2007 until it was shut down in March 2009, and its sister ship, the Huakai, were renamed the USNS Guam and the USNS Puerto Rico.

“High-speed ferries will be used for peacetime operations such as troop transport training, exercise missions and humanitarian and disaster relief,” Mabus said in a statement.

Hawaii Superferries moving to Okinawa

May 1, 2012 

The Hawaii Free Press (a right wing blog that I generally detest) published a press release from Seaward Services “Hawaii Superferry Heading to Okinawa” (March 19, 2012):

Seaward Services (SSI), a HMS Global Maritime (HMSGM) company based in New Albany, Indiana, is pleased to announce that it has been awarded a contract through Military Sealift Command (MSC) to operate and convert the former Hawaii Superferry vessels HSV Alakai and Huakai for MSC.

As anti-Superferry activists predicted, the ships were primarily built to meet military specifications, much larger than could have been supported by Hawaiʻi’s tiny inter-island ferry market.   And while we breathed a collective sigh of relief when Hawaii Superferry went bankrupt, we must now apologize to Okinawans as the ships, retrofitted for military service, will go to Okinawa:

The contract is anticipated to extend to last for one year and will end with the delivery of the vessel to Naha, Okinawa, Japan, where it will provide services to the 3rd Marine Expeditionary Force. Future plans for the HSV Alakai are uncertain, but it is possible the Navy will refit the vessel for military service given its availability.

Perhaps, this was a consolation prize for the Marines, who will be forced to remove up to 9000 troops from Okinawa, with 4600 going to Guam, 2700 to Hawaiʻi and 2500 to Australia.

Navy wants the two Hawaii Superferries

November 21, 2011 

When the community rallied to oppose the fast-track of the Hawaii Superferry back in 2007, we began to raise concerns about the military interests driving the venture.  Corporate and public officials dismissed the concerns as paranoid rantings.   But diligent research by Lance Holter and others surfaced many connections between the Hawaii Superferry prototype and the Joint High Speed Vessel that is now in production.  Now the Virginian Pilot reports that the Navy is bidding on the two Hawaii Superferry vessels that were repossessed by the Maritime Administration:

The Navy wants the two Hawaiian superferries docked at Lamberts Point in Norfolk.

The Navy “is working with the U.S. Maritime Administration to permit the transfer of the two high-speed vessels, formerly Hawaii superferries, into the naval service of the United States,” Lt. Cmdr. Alana Garas, a Navy spokeswoman, said Friday.

One of the ferries, the Huakai, was used in the military’s relief efforts after the Haiti earthquake in January 2010. The Navy first expressed interest in the ferries after the Maritime Administration took possession of them in 2009.

The Maritime Administration said Friday that a deal had yet to be reached.

“We continue to work with interested parties, including the U.S. Navy, in evaluating all options, with a goal of maximizing the government’s return from these vessels,” Kim Riddle, an administration spokeswoman, said in an email. “We anticipate announcing a winning bidder soon.”

Taxpayers Stuck With Unsold Ferries in Default

August 10, 2011 

Bloomberg published an article about the wasteful Maritime Administration (MARAD) loan guarantee program, which became the reluctant owner of two high-speed ferry ships after the Hawaii Superferry went bankrupt in 2009:

Two passenger ferries sit at a dock in Norfolk, Virginia, waiting for someone to take them off the government’s hands.

The U.S. Maritime Administration has taken bids for them in an attempt to recover some of the $138 million in taxpayer money paid to cover defaults on loans it guaranteed for the owners, Hawaii Superferry Inc. The company sought bankruptcy protection and defaulted in 2009.

The unwanted ferries are reminders of the defaults and oversight problems reported as recently as December in the so- called Title XI program as vessel owners have won $798 million in new loan guarantees this year, the most since 2001. As it considers two applications for an additional $712 million in guarantees, the maritime agency is trying to recover what it can on $311 million paid out to cover six defaults since 2008.

After protests and legal challenges disrupted Hawaii Superferry operations, the Hawai’i Supreme Court finally ruled that the special legislation retroactively exempting the Superferry from the state’s environmental review laws was illegal.  However, it was the company’s arrogance and collusion with state officials to circumvent the environmental review process that doomed the venture from the start. As the article points out, even down to the rationale for the MARAD loan guarantee program, the Superferry project was driven by politics and military and special interests:

The program’s bipartisan supporters, such as former Senator Trent Lott, a Mississippi Republican, and Democratic Senator Daniel Inouye of Hawaii, credit Title XI with creating jobs and supporting national defense and the U.S. commercial fleet. The U.S. fleet shrank from 17 percent of the world’s oceangoing merchant ships in 1960 to less than 1 percent in 2008, according to the Bureau of Transportation Statistics.

Five guarantees approved since President Barack Obama took office in 2009 will create 8,000 jobs, maritime agency Administrator David Matsuda said in an e-mail.

The program has survived elimination attempts because supporters in Congress “logroll” to keep funding it, said Chris Edwards, director of tax policy studies at the Cato Institute. “Some of these ships are built in their districts, and they’ll fight to the death for it,” Edwards said in an interview. His Washington-based group advocates reducing government spending and lower taxes.

[...]

Politics drove decisions to give guarantees to some companies that eventually defaulted, Clayton Cook, the maritime agency’s general counsel from 1970 through 1973, said in an interview.

He cited American Classic Voyages Co., chaired by billionaire real-estate investor Sam Zell, which received a $1.1 billion guarantee for two cruise ships under the banner of Project America. Five subsidiaries of the company accounted for $330 million of the $490 million that defaults cost the government from 1993 through 2002.

Inouye sponsored a provision in a defense bill called the U.S. Flag Cruise Ship Pilot Project, he said at a hearing in 1999. The project gave American Classic Voyages exclusive rights to operate cruise ships in Hawaii, the company said in a Securities and Exchange Commission filing in 2000. The ships were to be built at Ingalls Shipbuilding in Pascagoula, Mississippi, Lott’s hometown. Lott declined to be interviewed.

American Classic Voyages filed for Chapter 11 bankruptcy in October 2001. The default cost taxpayers $187 million, according to the maritime agency.

Hawaii Connections

“The project, while proceeding with considerable difficulty, including delays and increased costs in construction, ultimately became a victim, like many other industries, of the September 11 attack on our nation,” Inouye said in a floor speech in 2003.

Inouye didn’t respond to a question about the default, saying in an e-mail that “loan-guarantee programs are one of the many ways that government can partner with the private sector to create jobs and expand the economy.”

Hawaii Superferry, chaired by former Navy Secretary John Lehman, spent up to $20,000 a year lobbying Congress, the maritime agency, the Environmental Protection Agency and other agencies on Title XI and “vessel financing issues” between 2004 and 2006, according to federal lobbying disclosures. The loan guarantees helped the firm finance the ferry purchases from shipbuilder Austal USA, based in Mobile, Alabama.

The Superferry’s default occurred because a Hawaii court ruled the state shouldn’t have let the company skip an environmental impact study, said William Schubert, maritime administrator from December 2001 to February 2005. “The people of Hawaii wanted the service, and when it went to the state Supreme Court it pretty much put an end to the program,” Schubert said in a phone interview.

The quote from Schubert is incorrect on a few ponts.  Activists figured out early on that the Superferry business model was unprofitable.  As Austal USA, the shipbuilder, pointed out to the Hawaii Superferry executives in the beginning, the ships on order were too large for the Hawai’i market. But they did meet military specifications, which in the end, paid off for Austal, who leveraged the Hawaii Superferry as a proof of concept to win a contract to supply Joint High Speed Vessels to the military.  Some people from some islands may have wanted the Superferry.  But many strongly opposed the project as another threat to the environment and sustainability.  And Hawaii taxpayers were left holding the bag for $40 million in state harbor improvements that were never recovered from the company.

Orca and Superferries

July 26, 2011 

The Honolulu Star Advertiser reports that researchers studying the effects of naval sonar on marine mammals spotted a pod of orca off Kaua’i:

The whales appeared at about 9 a.m. Sunday in the channel between Kauai and Niihau where Baird and other Cascadia scientists are conducting a three-week project for the Navy to gauge the effect of sonar training on various species of marine mammals.

The project, which began Wednesday and ends Aug. 8, involves tagging tooth-whale species, including false killer whales, short-finned pilot whales and Blainville’s beaked whales.

[...]

The scientists will study the habitat and population, and the behavior and response to sonar during an upcoming submarine training exercise.

Meanwhile, the Maritime Administration received four bids for the two Hawaii Superferry catamarans:

An effort by the federal government to sell the two former Hawaii Superferry high-speed catamarans has attracted four interested buyers, though it’s not certain when or if a winning bidder will be picked.

The U.S. Department of Transportation’s Maritime Administration said on Monday it received four bids to buy the two ships, the 321-foot Alakai and 338-foot Huakai. But the agency said it can’t identify the bidders or say when it might complete its review of the bids.

The first time the ships came up for auction during foreclosure proceedings, no bidders came close to the actual cost of building the ships:

The agency provided two loan guarantees totaling roughly $140 million toward the $190 million construction cost of the two ships for the Superferry. At the foreclosure auction, no one bid more than $25 million per ship, so the agency kept the vessels.

The Superferry were proposed as transport vessels for Strykers and other military equipment.  It was the prototype for the Joint High Speed Vessel, a fast military transport ship.  Community protest and legal challenges successfully stopped the invasive project.

Superferry maker transforms into military ship builder

May 23, 2011 

A recent article from the Alabama Press Register describes Austal USAʻs transformation into a military ship-builder.  Austal was the ship builder of the controversial Hawaii Superferry.  Opponents of the Superferry raised concerns that the project was a “Trojan Horse” military transport ship, but were ridiculed by the mainstream press and the political and business supporters of the Superferry.  But as time rolls on, the military-industrial business model of making fast transport and combat ships is materializing as opponents forewarned. Here are a few excerpts from the article:

Austal USA‘s startling transformation from a commercial ferry builder with an uncertain future to a major player in the U.S. military-industrial complex has raised eyebrows in the shipbuilding world but hasn’t quite gotten Austal invited to the grown-ups’ table, according to industry analysts.

For Austal to join the Navy shipbuilding fraternity for the long haul, analysts said, the ships need to prove their value on the water, and the company itself needs to prove that it can build more complex vessels.

[...]

Its most prominent commercial contract was a $190 million deal to build two ships for Hawaii Superferry Inc. That deal turned into a quagmire for the shipbuilder. A judge made the Hawaiian company stop operating the ferry service because of environmental concerns. That caused Superferry to file for bankruptcy, forcing Austal to eat a $23 million loan it made to the company.

Defense contracting

While commercial results were mixed, Austal began seeing success in defense contracting. General Dynamics Corp. hired it to be a subcontractor to build two prototype littoral combat ships for the Navy.

General Dynamics eventually dropped out, and Austal became a prime contractor on the LCS program, winning a $3.6 billion, 10-vessel contract from the Navy in December.

In 2008 Austal won a $1.6 billion deal with the U.S. Army and Navy to build 10 high-speed vessels, which were basically militarized versions of the ferries it built for Hawaii.

The Pentagon’s Biggest Boondoggles

March 13, 2011 

The New York Times published this excellent Op-Chart graphic of the most wasteful military spending programs. Note that several of the programs listed are military earmarks backed by Senator Inouye or programs that related to Hawai’i in some way.

Missile Defense and Global Information Grid involves many of the wasteful programs associated with the Pacific Missile Range Facility on Kaua’i, computer and space warfare programs on Maui and a host of projects related to the ill-fated Project Kai e’e and Navy UARC at the University of Hawai’i. “Net-Centric Warfare” was one buzzword for these “revolutionary” technologies.

Along similar lines, Future Combat Systems was part of the transformation of the Army into modular, mobile, electronically networked and omniscient elements in the battlefield. The Stryker was one of the first elements to be deployed as a part of this transformation.

The Littoral Combat Ship is an enormously expensive program that was awarded to both Lockheed Martin and Austal USA. Austal USA was the manufacturer of the controversial Hawai’i Superferry, which was a prototype for the military’s Joint High Speed Vessel.   The Hawai’i Superferry contract helped Austal to establish its shipyard in the U.S., which enabled it to compete for the military contracts.

The F-35 Fighter is one of the troubled and expensive programs that President Obama vowed to veto. Senator Inouye went up against Obama to push for the F-35.

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Source: http://www.nytimes.com/2011/03/13/opinion/13arquilla.html?partner=rssnyt&emc=rss

Published: March 12, 2011

Op-Chart

The Pentagon’s Biggest Boondoggles

JOHN ARQUILLA and FOGELSON-LUBLINER

As our government teeters on the brink of a shutdown, and Congress and the president haggle over spending cuts, the Pentagon budget should be scoured for places where significant reductions may be made. Not the handful of trims alluded to by Defense Secretary Robert Gates — $78 billion over the next five years, with these savings simply used to shore up spending on other acquisitions — but major cuts to systems that don’t work very well or that are not really going to be needed for decades to come.

Unworkable or unnecessary systems tend to have something in common: their costs are often uncontrollable. A 2009 Government Accountability Office study of 96 major defense acquisition programs found that almost two-thirds of them suffered major cost overruns — 40 percent above contract prices, over all — with average delays of nearly two years. Those overruns totaled close to $300 billion, about the amount of President Bill Clinton’s last full defense budget request a decade ago.

Listed below is just a sampling of what systems could be ended without endangering America; indeed, abandoning some of them might actually enhance national security. These cuts would generate only small savings initially — perhaps just several billion this fiscal year, as contracts would have to be wound down. But savings would swiftly rise to more than $50 billion annually thereafter.

And there’s plenty more where these came from.

John Arquilla is a professor of defense analysis at the Naval Postgraduate School and author of “Worst Enemy: The Reluctant Transformation of the American Military.” Fogelson-Lubliner is a design firm.

Navy Awards Two Contracts to Build New Combat Ships

January 3, 2011 

The New York Times reports that Lockheed Martin and Austal USA got nice Christmas gifts from the Navy:

The Navy on Wednesday awarded two companies contracts that could be worth a total of more than $7 billion to build 20 of its new littoral combat ships, splitting the purchase to obtain the vessels more quickly.

Navy officials said that if it exercises all of its options under the contracts, Lockheed Martin would assemble 10 of the coastal warships for $3.62 billion over six years and Austal USA, a unit of an Australian company, would build 10 for $3.52 billion.

The littoral combat ship (LCS) is the U.S. Navy’s response to China’s fast shallow-water naval vessels.   This new ship design highlights the changing nature of naval warfare and the geopolitical importance of the Asia Pacific region.

Austal USA also built the two Hawaii Superferry ships, which were prototypes for the Joint High Speed Vessel (JHSV), a major contract that Austal USA recently won from the US Navy.  Activists opposed to the Hawaii Superferry pointed out that the ferry was just a front for these larger military plans.  At the time, these theories were ridiculed by the media and politicians.  But it seem now that the activists were right. And Austal is laughing all the way to the bank.

Lingle attempts to “Superferry” the Kulani prison transfer

November 5, 2010 

Yesterday Governor Lingle was on hand to dedicate the new Youth ChalleNGe facility at the former Kulani prison site on Hawai’i island. This was reported in the Honolulu Star Advertiser and Hawaii News Now.

But wait.

The Board of Land and Natural Resources (BLNR) decision to transfer the land from the Department of Public Safety to the state Department of Defense is being challenged by three parties: Kat Brady of the Community Alliance on Prisons, Michael Lee, a Kanaka Maoli cultural practitioner and lineal descendant with ties to the lands in question and DMZ-Hawai’i / Aloha ‘Aina. Read more here and here

The three parties requested a contested case hearing before the BLNR.  This should place a hold on the BLNR decision going into effect.   To date, there has  been no correspondence from BLNR to the intervening parties.

The Kulani prison lands, which are zoned for conservation, were set aside decades ago by executive order of the Governor exclusively for a prison.  No other uses are permitted.   When Governor Lingle closed the Kulani prison she announced that she was giving the facility to the National Guard for the Youth ChalleNGe program.   The Department of Public Safety and the Department of Defense signed a memorandum of agreement to transfer the occupancy of the facility.   But the previous executive order has not been officially terminated. And a new executive order has not been issued nor approved by the legislature.   So the the new Youth ChalleNGe facility is illegal.

Lingle is not one to let the law get in the way of her plans.  We saw what lengths she would go to in order to circumvent the law in the case of the Hawaii Superferry.   Earlier, the Hawaii National Guard tried to sneak in military training, but community groups blocked the military training component.   In the last months of her term, the expedited transfer of the Kulani facility to the National Guard seems to be Lingle’s attempt to  “Superferry” the Kulani prison transfer.  This time she’s leaving the mess for the next governor to clean up.

In the military-industrial complex, “Hawaii Superferry’s Bankruptcy = US Navy Opportunity”

October 15, 2010 

The Defense Industry Daily blog wrote this about the recent auction of the Hawaii Superferry ships to MARAD:

Hawaii Superferry’s Bankruptcy = US Navy Opportunity

14-Oct-2010 14:04 EDT

In his April 6/09 discussion of the FY 2010 budget, Secretary of Defense Robert M. Gates said that the US military wanted to charter another 2 “JHSV-like” fast catamaran ships from 2009-2011, until the JHSV ships begin arriving. That meant JHSV-winner Austal would find its products competing once more with Incat, which has had 4 of its wave-piercing catamarans chartered by various American services. Their Swift wave-piercing catamaran is currently chartered by the Navy as HSV-2, just as the Austal-built Westpac Express is chartered by US Military Sealift Command for the Marines.

One obvious option was the Hawaiian Superferry catamarans, a larger pair of Austal-built ships that resemble the Westpac Express….

Oct 10/10: The US Maritime Administration (MARAD) buys the 2 ferries for $25 million each at a US District Court auction in Norfolk, VA. MARAD was able to use its owed debts to cover the bid cost, and will now look to sell the ferries. The US Navy has expressed interest in buying them. Maritime Matters | Alabama Press-Register | Honolulu Star-Advertiser | KITV Honolulu | Virginia Pilot | Gannett’s Navy Times.

May 2010: The federal government sues to get title to the 2 vessels, in order to recoup its $150 million loan guarantees. The suit leads to the October 2010 auction.

Feb 11/10: The former Hawaii superferries Huakai and Alakai are pressed into service by the USA’s Maritime Administration (MARAD), in the wake of the disaster in Haiti. The ships are managed by Hornblower Marine Services (HMS), and the deployment is seen as an earl concept test of the similar JHSV design’s operations. Haiti’s lack of port infrastructure has not, to date, been a major problem for these ships. Maritime Executive magazine.

March 30/09: Hawaii Superferry files for Chapter 11 bankruptcy, as it reportedly has just $1 million in cash, and is facing a $2.9 million principal and interest payment on one of the ferry construction loans. MarineLog’s “Hawaii Superferry files for Chapter 11” explains the situation, and details the firm’s various creditors.

  • The US Maritime Administration (MARAD) is owed more than $135.7 million because of 2 loan guarantees under the Title XI program
  • Shipbuilder Austal USA is owed $22.9 million, as a 2nd mortgage, on construction fees
  • The state of Hawaii, which provided $40 million in harbor improvements, held the 3rd mortgage.
  • Superferry is also in default to Guggenheim Funding LLC for $51.7 million, related to a secured note in August 2007.
  • J.F. Lehman & Co., the controlling private investor in the project, put up $85.2 million of the $92.9 million issued in preferred stock. The firm was founded by former Secretary of the Navy John F. Lehman, and seems set to lose its entire investment.

Unsecured creditors listed in the bankruptcy petition are headed by:

  • The Harbors Division of State of Hawaii: disputed claim for $731,080
  • MTU: $544,653 for engine maintenance related services
  • Hornblower Marine Services: $113,685 for management fees and services
  • Austal USA: $78,198 for travel and labor for professional services

See also: Journal of Commerce.

March 16/09: The Hawaiian Superferry service is shut down, after a Hawaiian Supreme court court decision strikes down a 2007 law that allowed them to operate. The ruling effectively mandates even more environmental reviews for the service, and forces the ferries to stop operating in the mean time. Alakai had been operating between Oahu and Maui. AP.

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