Wednesday, January 16, 2008

Musings: Lifting the Veil: Part VII (All Pau)

As you may recall, when I started the “Lifting the Veil” series I was motivated by my own questions and a tip from a caller who knew my work, but not me.

After spending many hours researching the issue and interviewing various people, I’m convinced that Hawaii Superferry was created not to provide the islands with an alternative form of transportation, but to essentially build and test a military prototype vessel at very little risk to investors.

I’m not just talking about ferrying the Stryker Brigade when it comes to Hawaii, either. That’s the small stuff. What’s really at stake here are Joint High Speed Vessel (JHSV) and Littoral Combat Ship (LCS) contracts potentially worth billions.

My hunch was confirmed by a source from my days as a journalist in San Diego, who told me that Austal USA also is looking to sell the Superferry design to foreign navies.

In the series, I outlined the Navy’s push to quickly build up its fleet with these lighter, faster, more versatile craft, as well as the budgetary challenges it’s facing in meeting that goal.

I also noted how John Lehman, chairman of Hawaii Superferry, has championed both the rapid build-up of the fleet and the Sea Fighter LCS, which is slightly smaller than the Superferry and the only LCS to hit the water.

From the get-go it seemed odd to me that his firm, J.F. Lehman and Co., which invests primarily in marine and aerospace defense projects, would suddenly go into the passenger service in a big way, investing $58 million equity capital in the Superferry project.

I also found it interesting that, according to the Superferry website, four of the 10 members of the HSF Board of Directors have strong ties to the Navy and defense industries. They include Lehman, who was Secretary of the Navy for six years under President Reagan, as well as Tig Krekel, vice chairman of J.F. Lehman and the former president and chief executive officer of Hughes Space and Communications and the past president of Boeing Satellite Systems. Krekel also is a graduate of the U.S. Naval Academy who spent five years as a naval officer, where he served as an aide in the office of the Chief of Naval Operations at the Pentagon.

Director George A. Sawyer, a founding partner of J.F. Lehman, is former assistant secretary of the U.S. Navy, Shipbuilding & Logistics. He was also a submarine engineer officer in the U.S. Navy, and is a member of the American Society of Naval Engineers and the Society of Naval Architects and Marine Engineers.

Director John W. “Bill” Shirley is the former program manager of the U.S. Department of Energy, Naval Reactors Division, Seawolf and Virginia Class Submarines. He has 34 years of experience in senior positions at the Navy Division of Naval Reactors. Shirley now works as a private consultant, giving preference to J.F. Lehman Partners.

And two of the remaining six directors — C. Alexander Harman and Louis N. Mintz — are employed by J.F. Lehman.

Since its involvement with HSF, J.F. Lehman has made acquisitions that could support both JHSV and LCS construction contracts, including Elgar Electronics, which manufactures electrical power test and measurement equipment for the military and commercial uses, and Atlantic Inertial Systems, a leading niche supplier of highly-engineered guidance, stabilization and navigation products and systems for aircraft, weapons and land systems applications.

Most notably, J.F. Lehman also bought Atlantic Marine Holding Co., a leading provider of repair, overhaul and maintenance services for commercial seagoing vessels and U.S. Navy ships that is located adjacent to the Austal USA shipyard in Mobile, Ala. The company owns and operates another shipyard in Mobile, as well as one in Jacksonville, Fla., where it also leases a third facility at the Naval Station Mayport.

Meanwhile, the Navy is moving ahead this year to award a contract to build eight JHSVs, and plans to award an LCS contract in 2010. The LCS program is already behind schedule, and the Navy is at least three years behind its fleet-building goals.

The LCS program is also way over budget. This has prompted some to question whether the Sea Fighter, which has the strong support of Rep. Duncan Hunter of San Diego, former Chairman and now Ranking Republican on the House Armed Services Committee, might be proposed as a cheaper substitute. Navy officials already have said it could be outfitted with electronics and weaponry.

But the Sea Fighter has demonstrated some fishtailing and other performance problems, and Nichols Brothers, the Washington State firm that built the vessel, shut down last November.

And here comes the Superferry, which is not only very similar in design and specifications to the Sea Fighter, but proving itself by running at high speeds day after day, weather and harbor surges permitting, in some of the nation’s roughest waters.

As one source told me: “In an accelerated procurement environment, it would give [Congressional appropriations] committees great comfort in granting money for something up and running.”

I contacted Terry O’Halloran, director of business development, while writing my article for the current Honolulu Weekly (which goes on line next week). Although he called back too late to meet my deadline, I asked him my questions, anyway.

He said the premise that Superferry is being used a military prototype is “absolutely false. Boy, that’s a good one,” he added.

O’Halloran did acknowledge that Lehman had discussed using the vessel to transport the Stryker, and initially felt the military “could be a good potential market. Subsequently, we have learned our primary market is our local residents and businesses. We’re not in any discussion with the military about a contract to move personnel,” he said.

But then, the Stryker isn’t here yet, either.

He did add: “We welcome the military use of HSF just like they currently use Young Brothers and Aloha and Hawaiian airlines to move personnel between the islands.”

O’Halloran also said the Superferry — the largest aluminum ship ever built in the United States, whose construction was documented by National Geographic — is no different than other fast ferries around the world.

“The idea that this vessel is uique….or has some kind of military connection is absolutely false,” he said.

Only time will tell if he’s telling the truth.

So what do I care if he isn’t? Well, I guess it just kinda bugs me to think we’re compromising our resources, dividing our community, spending taxpayer dollars and undermining our environmental laws to help a corporation make serious money while further militarizing our nation.

And what’s in it for Gov. Linda Lingle? After all, it was she who expended tremendous political capital to convince Legislators to pass a law overturning a Hawaii Supreme Court ruling, which effectively ensured the Superferry would be running in time for the JHSV contract award this year. Perhaps she thought such a favor might hold the prospect of substantial campaign backing if she decides to run for the Senate, or lucrative positions in private industry.

Only time will tell about that, too.

Maybe I’m cynical, or a conspiracy theorist, but I don’t think she did it solely for the good of the people. Just like I don't believe HSF is willing to lose serious money daily to bring the Islands’ ohana together.

As I said, only time will tell.


Anonymous said...

Hot off the presses. Thanks for the final installation. I look for the hard copy version next week. mahalo!

Anonymous said...

So, do you think the end result would be significantly different today if HSF was originally positioned as a military transport vessel that would also do public transport, thus benefitting both?

Maybe if the military had picked up some of the costs the state bore?

Joan Conrow said...

Well, Gadfly, I think if the Superferry's military connection had been fully disclosed, the Legislature probably wouldn't have over-ridden the Supreme Court decision and an EIS would have been required before it started running. And yes, maybe the state wouldn't have picked up so much of the tab.

Anonymous said...

I think that whether the EIS came before, during or after HSF start-up, the vessel(s) would be operational in pretty much their current form.

Power, fear (of "them", thus needing additional military protection) and money are a powerful triumvate tool.

HSF will get their new harbor improvements, more ferries will arrive and go online, life will roll along as it always has. At least for the next couple of decades.

Anonymous said...

You're not cynical, Joan, just observant. Both Lingle's and HSF's actions point to a future gain. Five years down the road, when the truth becomes apparent we'll know where we read it first!

Anonymous said...

Lifting the other veil
There is only weak and subjective evidence of a military connection. It started with Juan Wilson finding a picture of the Westpac ferry leased by the Navy, seeing it looked the same, and not going any farther to find out that all 25 of the Austral ferries have the same design. Its their design. Next, he found the 2005 Lehman statement; but, didn't go after any updates. Next, he read about the Navy's LCS and thought it sounded like the Superferry. He didn't learn enough about it to realize it doesn't fit; but, the JHSV does. Juan published a lengthy essay in TGI built around these 3 flawed items. Confronted with real information, he admitted that he was a political activist, not a researcher. This was the beginning, middle and end of the "Military Connection." Until now, nobody went beyond Juan's essay...they were too busy making "No Strykers" signs.
As for John Lehman. He was an investment banker before becoming Reagon's little Navy troll. Both of Clinton's Navy Secretarys were investment bankers also. Lehman went back to investment banking for more than twice as many years as he was Naval Sec. Why not think of him as an investment banker? He became incredibly successful at it. He has the deep deep pockets to invest for the long term. There are only a handful of people that can successfully do what he can at his level for this long. You and I have no idea what happens in that world. We can't sit around in our armchairs and conclude that his investment doesn't make sense to us so he has to have a hidden agenda of which we have no proof.
The world's Navys are going to Austral and Incat because they are the best with the best designs. They don't need some vast lengthy subterfuge to make their sales.
Its true that I have a pro-ferry bias; but, I consider this to be a debate, not an argument. So far, except for invasive species, all I've seen from the opposition is flawed research with holes in as big as the ship. Invasive species are a clear and present reality; but, the debate is on the justice of having the ferry do what others don't. This is besides the point. The debate should be on what is reasonable vs unreasonable to make the ferry do for prevention; then, we decide how and when to bring the "others" up to a higher standard that offers protection. This is the debate that can make a difference; the rest of the debate is strictly intellectual. If you want to make a difference, drop all the "Stupidferry, Cuz" posturing and work on the part that is real.
Regards, Pete Antonson...........#2

Joan Conrow said...

Dear Pete, What's Juan Wilson got to do with my series? I never even saw any of his writings on this topic. If you've got a problem with his credibility, don't try to taint my efforts by smearing him. I did a lot of research.

Anonymous said...

Just because you're paranoid doesn't someone isn't out to taint you. It isn't me though. I have a professional and life long interest in communication and I find it interesting how the Military association to the Superferry started and spread ultimately to the person who suggested it to you. On October 6, 2006, Juan Wilson posted the information that became his July 28, 2007 TGI editorial. The information was accepted at face value, spread across the internet, landed on every antiSuperferry blog, and became part of the protest chants/signs. Go ahead and try to find a reference to Superferry and the Military before October 6, 2006; you won't. My post above and in other parts of your series is simply to point out that the information started out flawed and continues to be flawed.
Regards, Pete Antonson

Anonymous said...

Aloha Joan.

Thank you for your work to expose the military-corporate-political game behind the Superferry. As you have documented, that's where the real money is.

I find it amazing that some people like Mr. Antonson vigorously deny the obvious. The Superferry fiasco was the product of the collusion (and sometimes competition) of elite special interest groups (political, corporate, scientific and military). And average citizens and the environment end up paying the price.

It was Lehman and his "Westpac Express" plans in 2005 that got a number of people investigating this connection. And it was Lehman who said that the Superferry could carry Strykers.

I think it is also significant that Austal needed to establish a US-based shipyard to compete for the LCS contract. The Austal Alabama shipyard is only working on Superferry and an LCS prototype. The Superferry contract probably helped them to set up shop in the US. Austal was always very clear that their business plans included competing for LCS and JHSV contracts.

Another question that remains is who appropriated the money for the $140 million MARAD loan guarantee? The Bush Administration opposes the Title XI program because it is a corporate subsidy. But MARAD has been directed by Congress to make specific loan guarantees. Who got MARAD to issue the Superferry loan guarantee?

As you say, time will tell. Keep up the great work.


Joan Conrow said...

Thanks, Kyle, I appreciate your kind words.