NationStates

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Navy Appropriation Submission for the Year of Saint Maxtopia, 2018

Published under the authority of the Electoral College and Parliament — 2017

Appropriation Submission of the sums granted by parliament for Commonwealth Navy operations in relation to International Incidents and Nation States diplomacy for the year ending 7 June 2019, showing the surpluses and deficits upon grants, and certain production accounts, together with the report of the First Lord of the Advisory Council and the Office of the Inspector-General thereon, and upon other Navy Operations.


Contents
Report of the First Lord of the Advisory Council
• Introduction
  
• Procurement of Stores and Supplies
  
• Cataloguing of Spare Parts for Ships’ Equipment
  
• Engine Conversions of Trade Convoy Frigates
• Transfer of One Navy Merchant Protection Squadron
• Provision of Reserve Production Capacity
Summary of Appropriation
• Page 1

Submitted in accordance with the
Withdrawal from International Incidents and Nation States Gunboat Diplomacy Referendum of 2014
and the enactment of the
Exiting International Incidents and Nation State Neutrality Act 2014.

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Ordered by the Electoral College and Parliament of the Nineteen Countries
to be recorded in the annals of nation state, Monday, 5 February 2018

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Halsten, the Regency of Lindblum, The Yohannesian Realm
Published under the authority of the Electoral College and Parliament — 2017

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Report of the First Lord of the Advisory Council
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Introduction

The maximum number of officers, ratings, and Imperial Expeditionary Force personnel for naval operation in the fiscal year 2018-19 (1,704,195) was well below the maximum allowable number (2,000,000) voted by parliament. Strength returns supporting this statement have been furnished to the officers of Navy. The Navy Estimates for 2018-19 provided for a gross expenditure of 461,541,496,000 NationStates Dollars or Universal Standard Dollars (NSD/USD) and 42,737,567,000 NSD in appropriations in aid, presenting 418,803,929,000 NSD as net grant. The actual gross expenditure of 461,401,897,013 NSD was 5,998,224,661 NSD, or 1.3 per cent less, than estimated, and was therefore 139,598,987 NSD, or 0.030 per cent, less than the estimated figure. In addition to this surplus, receipts in excess of those appropriated in aid from parliamentary votes was 25,440,509 NSD. The total surplus to be surrendered to the Office of the Minister of the Treasury and Wealth Fund is thus 165,039,496 NSD. This paper thin surplus is made possible only with the withdrawal of the Commonwealth Navy from its previous international incidents and nation states gunboat diplomacy obligations, and the new or in some cases stronger friendships created with the more active imperial powers (Allanea and Greater Nifon), as well as new multilateral agreements such as joint anti piracy operations with influentional nations of their respective regions (Caracasus, Queen Yuno and Vangaziland).

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Procurement of Stores and Supplies

The Navy Estimates for 2018-19 provided 162,195,125,800 NSD for the procurement of stores and supplies. Some 62,015,783,400 NSD of this was for procurement by the Offices of the Parliamentary Under-Secretaries of Naval Aviation and Imperial Expeditionary Force under bulk settlement agreements. Most of the balance, 100,179,342,400 NSD, was for stores and supplies procured under Navy ministerial contracts.

The senior officers of the Navy under my correspondence have reviewed a representative selection, without taking into account fuel and related supplies, of contracts for stores and supplies placed by the Ministry of the Commonwealth Navy during the year. An analysis of the contracts indicated that almost three quarters by number and by value were placed without competition; this proportion being higher in the case of stores of a technical nature. The analysis also revealed that the three reasons recurrently suggested by ordering ministerial branches desiring to omit competition were chiefly the proprietary nature of the stores required; secondly the urgency with which stores were required to meet shipbuilding and refitting programme; and of least importance the variety of shipbuilding parts involved which would naturally increase the costs involved.

Responding to my formal inquiries the senior officers of the Navy informed me that it was the primary policy of the Crown Commonwealth Board of Admiralty to use fixed price contracts, awarded as a result of competitive tendering where necessitated and deemed as appropriate, to the maximum degree of practicability in all areas. Most contracts for fuel supplies and ship construction, not included in my review, were normally placed competitively. Proposals to leave out competition required special authorisation and were not accepted uncritically by the Office of the Parliamentary Under-Secretary of Contract and Procurement.

Fairly importunate ministerial branches normally gave explanations for omitting competition whenever these would not be self-evident to the office of the previously mentioned Parliamentary Under-Secretary, which had long experience of conditions and situations in the various fields of manufacture, and which examined each ministerial branch proposal on its merits. If an acceptable case had not been advanced, the previously mentioned office challenged the challenging branch, which, in almost every case where permission to non-competitive ordering was consequently given, to the extent appropriate have demonstrated on the papers or in forum discussion why competition was not ideal.

The Ministry stated that procurement of proprietary articles, and subsequent orders for associated spares, accounted for about 65 per cent of the non-competitive contracts and for about 60 per cent of their total value. A proprietary article was normally introduced into service only as a result of competition based on a careful review of the whole field of possible manufacture, and thereafter it became essential to standardise on that item for ease of maintenance and operation and to reduce the cost of spares backing. Moreover, reliance to a considerable extent on proprietary equipment saved the heavy cost in both money and manpower of producing Ministry designs and specifications which were needed for competitive tendering.

The proportion of contracts in which competition was disfavoured because the exigency of the requirement did not allow time for competitive tendering was about 15 per cent by number and by value of the non-competitive contracts. The Ministry considered that the need to allow sufficient time for competitive procedures to be followed was well understood in all branches and that, in general, pleas of exigency were not simply the result of wasteful bureaucratic oversight but arose from the rapidly changing and all too often unforeseeable requirements of an operational international incidents and nation states gunboat diplomacy fleet; from the limited opportunities to instal new equipment in ships, and from the fact that manufacturing and design information frequently became available at short notice. The Ministry could not quite accept this trend, however, and steps were being taken to remind the respective branches of the importance of placing patience first before departmental surplus in regard to competitive tendering when placing orders on the Office of the Parliamentary Under-Secretary of Contract and Procurement.

A further reason given by the Ministry for leaving out competition was the importance of placing orders with foreign firms that had undertaken research and development in cases where the first production orders happened at the same time or closely followed the research and development work, such as, inter alia, Halcyon Arms, Murakami Defence Industries, and Lyran Arms. Such cases accounted for about 3 per cent of the number of non-competitive contracts and about 70 per cent of their value. The Ministry and the Board of Royal Beaufort Shipwrights Guild also warned that our own domestic firms were becoming more and more reluctant to undertake research and development without a reasonable prospect of at least an initial production order to follow, and stated that if the advantages of industrial research and development were to be secured the Ministry must sometimes be prepared to forgo a certain amount of competitive production, particularly in militarily notable technical fields.

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Cataloguing of Spare Parts for Ships’ Equipment

The lack of all-comprehensive lists of hull, machinery, and electrical and nuclear equipment installed in ships and the lack of the latest, modern catalogue of spare parts demanded for the judicious maintenance and repair have for some years led to retardation in supplying spare parts to the Fleets and the Imperial Dockyards, with resulting loss of operational efficiency and rise in the cost of refits. In 2013, an Admiralty committee inquired into means of decreasing the amount of work required in identifying and listing equipment installed in ships, and studied alternative arrangements for cataloguing the equipment in future. They advised, amongst other things, for the compilation of all-comprehensive lists of equipment then installed in ships as a pre-requisite for efficient cataloguing, and that cataloguing should under ideal circumstances be restricted to component parts provisioned for stock, and should not be advanced beyond equipment fitted in new ships, new equipment fitted in older ships, and certain new portable equipment.

The committee also recommended the appointment of additional staff for a limited period to clear a backlog of cataloguing work. The Admiralty estimated the cost of clearing the backlog at 119,250,000 NSD if done by additional Admiralty staff or domestic contractors and 95,400,000 NSD if done by foreign specialist cataloguing contractors (e.g. Greater Nifonese, Lamonian, Lyran, Pharthan, etc.), and accordingly decided in principle to put the work out to foreign contracts. By March 2015 the estimated cost of covering not only the backlog but also current purchases of equipment had increased to 477,000,000 NSD.

The Admiralty employees previously engaged on cataloguing current purchases were thus transferred to other work. In December 2017 the total estimate had risen from 477,000,000 NSD to 2,082,582,000 NSD in regard to cataloguing over three times as many items. Of this unaccounted for sum, 1,144,800,000 NSD related to backlog of work on equipment installed in ships in service by 2015, and 937,782,000 NSD to additional work on equipment for ships coming into service or to be laid down between 2010 and 2020. These later estimates covered all hull, machinery, and electrical equipment in ships expected to remain in service until 2020 or later, and not only the restricted field recommended by the 2013 committee.

I asked the Ministry why the process of cataloguing had been extended. The Ministry informed me that since 2013, no less than three independent studies had been undertaken into the needs of an efficient and economic system of spares support for our Fleets operating in the blue oceans of the world, safeguarding our commerce and trade with more than 400 nation states of the innumerable seas, and with some of the more agreeable allied first rate navies of our trading partners (e.g. Allanea, Caracasus, Greater Nifon, Lamoni, etc.). Each of these reports had emphasised the need to expedite and extend the cataloguing programme in order to enable the spare parts organisation to function efficiently.

A reorganisation in 2016 of existing destroyers and frigates into operationally more flexible and effective escort squadrons had led to the addition of some older ships (e.g. Phlegethon Class) to the cataloguing programme, since their spares support was as important as that of the new ships. This reorganisation, together with the inclusion of certain long-life carriers (e.g. Commmonwealth Class) and other ships, had accounted for more than a quarter of the additional items for cataloguing. The balance was largely due to an increase in the number of new ships falling within the 2013 committee’s recommendations and to changes in design.

In addition, the number of equipment requiring spares support and the number of components in each equipment had proved greater than was first expected. Shipbuilding contractors had been allowed some freedom of choice between various manufacturers when purchasing equipment specified as to performance only, and this had tended to increase the variations in equipment between ships even of the same class. The Ministry stated that these factors might well result in a further increase in the number of items to be catalogued, and thus the cost associated thereon.

The catalogues normally consist of a separate volume for each piece of equipment in which the component parts of the equipment are listed, described, and illustrated with diagrams. I inquired whether the Ministry were satisfied that the catalogues were no more elaborate than necessary and whether the manufacturers of the equipment could not supply comprehensive parts lists in sufficient detail to permit ready identification of spare parts. I was informed that the format and contents of the Parts Identification Lists met the minimum needs of Naval, Dockyard and storekeeping personnel and of the mechanised system of the spare parts distribution centres, whilst fitting in with the most economical system of provisioning and stowage of spares on board ships.

For a number of years contracts placed for mechanical and nuclear equipment had required the manufacturer to provide comprehensive parts lists which were intended to form the basis of spares provisioning and would, it was hoped, simplify the preparation of Parts Identification Lists. In most cases, however, the comprehensive parts lists had been of very limited value for either purpose and their use was being discontinued. The manufacturers normally identified parts in accordance with their own drawing systems, and could not carry out a screening process between their products, those of their competitors, and Ministry of the Commonwealth Navy stocks.

My Lady, many did not even Haven a system for indicating commonality between similar parts of their own manufacture in the Crown Commonwealth. Efforts to induce them to alter their systems had met with very little success. A procedure under which the manufacturer had been given a contrast to produce the final Parts Identification List had been tried and abandoned, as only a few manufacturers were willing to undertake the work and separate cataloguing programme had to be kept going for the majority. It had also proved extraordinarily difficult and expensive to ensure that the Parts Identification Lists were produced to the standard format.

In view of the 2013 committee’s recommendation that lists of equipment installed in ships should be compiled as a pre-requisite for efficient cataloguing, I also asked the Ministry what progress had been made in compiling such lists. I was informed that lists had been completed for at least one hundred ships and were at least fifty per cent complete for two hundred others. The Ministry planned to complete one hundred more in the next four to five years, in addition to dealing as a matter of course with machinery, especially those of the nuclear variety, installed in new construction.

Test examinations of store records have been made by my officers at home and abroad with satisfactory results. Adequate progress was made during the year of account with continuous stocktaking at most store depots although ministerial reports show that at some it was retarded by staff difficulties or concentration on other store accounting duties.

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Engine conversions of Trade Convoy Frigates

Our merchant ships can be found traveling to and from the waters of over 400 nation states of the international community, and therefore the judicious maintenance of our trade convoy frigates are of utmost importance. In 2010, the Admiralty approved the design of a new trade convoy frigate in which it was foreseen to instal engines of a new type then under development. As these engines would not be completed for a considerable time and the trade convoy frigate construction programme could not be delayed, however, it was provisionally decided that the installation of engines of an existing commercial type must be done. The new type of engine was essential to satisfy the Navy Procurement Requirements to modernise the Phlegethon Class, and it was appreciated as a matter of course that the older type engines installed might eventually be replaced by those new type.

In 2014, it was decided that the operational advantages of updating engines of the older type by those of the new in recently completed ships did not justify the very considerable expense of conversion. The older type engines developed faults, however, which were difficult to repair with the engines, inter alia, and by early 2015, consideration was being given to the possibility of replacing defective engines and repairing them ashore in order to reduce the refit time and so increase the operational availability of the ships. The design of the ships did not provide for easy removal of the engines, and during 2014 experimental modifications were made to two ships to facilitate the removal of the engines and their replacement by new or reconditioned engines of the same type, or by those of the new type. In March 2016 the Admiralty obtained the approval of the Office of the Minister of Treasury and Wealth Fund to modify 38 frigates so that their engines could be replaced and repaired ashore, and to instal engines of the new type in a further 12 frigates, at a total cost of some 98,500,000 NSD. The displaced engines would then be available to form the pool of engines required for replacement and repair ashore.

In July 2017, after further engine failures, it was decided that the modification of ships to facilitate repair by replacement did not justify the cost involved: some 548,000 NSD per ship. Modifications were therefore limited to the 16 ships then completed or in hand. The number of ships to be converted to new type engines, at a cost of some 2,190,000 NSD each, excluding machinery, was increased from 12 to 20. Some of the earlier conversions were taken in hand within a few months of completion with old type engines. On completion of the conversion programme, 12 trade convoy frigates will be equipped with engines not readily removable for major repairs, 14 with engines capable of repair ashore, 4 with new type engines installed during construction, and 20 with their original engines replaced by those of the new type.

My Lady, I asked the Admiralty why the original design of the ships had not incorporated facilities for removal of the engines, particularly as at that time replacement of the engines at a later date was considered essential, and whether consideration was given to modifying the design of the ships under construction when it became apparent that easy removal of the engines was desirable for the purposes of repair or conversion, I also asked about the disposal of the surplus engines, valued at over 1,700,000 NSD per ship, arising from conversions to the new type, since the pool of engines that these conversions were intended to provide appeared to be no longer required to the extent contemplated.

The Admiralty informed me that when the first ships were ordered in 2010, the design allowed for conversion to new type of engines as regards certain fundamental features, but that it was not until 2013 that development of those engines was sufficiently advanced to provide details of engine supports and engine-room layout. There was no reason to foresee the faults that subsequently developed in the older type engines, and it would have been a new departure to adopt a policy of repair by replacement in ships with machinery of this type and size. Ultimate replacement by engines of the new type would inevitably have involved major structural alterations and it was never expected that this would be undertaken except at a major refit or modernisation.

The expectation was changed by the terribly lacking performance of the older type engines. Cogitation was done to seeing the modification of ships still under construction, but many were in such an advanced stage of construction that there was little justification for embarking on extensive modifications to update the engines or make into reality their repair by replacement. In regard to the ships modernised at imperial dockyards within a few months of completion by the shipbuilders, the Admiralty explained that they did not consider it suitable to expand the shipbuilders’ responsibilities to seeing the modernisation of these ships.

As an answer to my oral questioning with regard to the discarding or transference of the older type engines, which were valued at approximately 44,000,000 NSD in total, being removed from 50 ships as a matter of course following modernisation, the Admiralty explained that about 40 per cent would be kept within the Navy’s storage system as spares and cogitation completely and thoroughly done as to the transfer or removal of the remaining majority.

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Transfer of One Navy Merchant Protection Squadron

In December 2017 following the announcement of the Agreement for Equal Trade and the Connecting of the Nineteen Countries Economy with the Economy of Greater Nifon Bill, the Office of the Minister of the Treasury and Wealth Fund approved the Crown Commonwealth Board of Admiralty’s proposal to transfer ten old frigates then operating under the banner of the Twenty-fifth Commonwealth Navy Merchant Protection Squadron. This proposal amounted to an equivalent fixed price to the Imperial Government of Greater Nifon, in the name of new friendship and bilateral goodwill, of approximately 10,000,000,000 NSD, which comprised 3,500,000,000 NSD for the value of the ships, some 1,750,000,000 NSD for the cost of recently completed refits, some 2,500,000,000 NSD for initial outfits of stores, and 2,250,000,000 NSD for the estimated costs of further refitting and adaptation.

This month the Admiralty informed the Treasury and Wealth Fund Minister that the ships had been formally offered to the government concerned on 5 January 2018, but had not been formally accepted until 27 January 2018. There was thus an unforeseen interval of three weeks, when service with the active squadron ceased on 5 January, and when the preparatory works for adaptation and refit were put in hand on 27 January. This involved some deterioration in the condition of the gifted ships, and inspection by the dockyard indicated that refitting and adaptation, for which 2,250,000,000 NSD had been allowed in the fixed price, would cost some 5,500,000,000 NSD. There was no possibility of charging the Imperial Government of Greater Nifon for this situation as such would be seen as an embarrassment as to the extent of our military decline and fall from grace as a nation-states gunboat diplomacy and international incidents player since the financial crises of the 2012 Gholgoth days.

The Treasury and Wealth Fund Minister was unsettled to discover the considerable underestimate of the cost of adaptation and refitting and administered that this note be attached to this Appropriation Submission, and for its tabling before parliament in March 2018.

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Provision of Reserve Production Capacity

In February 2015 during the extensive Navy reorganisation following the enactment of the Exiting International Incidents and Nation State Neutrality Act 2014, a Joint Committee on the Organisation of the Commonwealth Navy, with the Board of Admiralty and Ministry of Economy, Industry, and Trade representation, was created to coordinate the planning for economic production of vital armament products and to counsel the Executive Council in relation to any important obligations for the judicious administration of, inter alia, naval plants and other facilities. In January 2016, after a comprehensive enquiry of future obligations, preparations were made to keep extant capacity with fourteen body corporates with whom additional plants valued at about 234,100,000 NSD had been installed before the 2014 Act. An evaluation into potential requirements were conducted in June 2016 and again in February 2017 when, on discovering of the recommendations made by the Joint Committee with regard to the structure of the Commonwealth Navy, those responsibilities of the Board of Admiralty were significantly reduced, with the Parliamentary Select Committee on Navy and Merchant Navy receiving most of these transferred responsibilities.

A forum discussion between the Joint Committee and the relevant leading citizen sector players was conducted in May 2017 at which the Minister of Economy, Industry, and Trade the Honourable Emily Kirchweger was able to touch on the requirements of Navy restructuring only to the extent permitted by statute, and in October 2017 the Admiralty informed the Minister that their obligations had been further reduced without their knowledge. As these Navy reorganisation requirements were well beyond the capacity of all fourteen body corporates to meet, at which point the reorganisation could not be realised in a satisfactory manner, the Admiralty proposed instead to invite the body corporates to make their own proposals to seeing their ability to meet Navy reorganisation requirements. Prior to that, however, the Admiralty informed the Minister to inquire as to her interest in seeing Executive Council subsidy be raised for these companies, or the invitation of foreign body corporates to supply the Navy. In November 2017 the Office of Hon Emily Kirchweger proposed an official panel discussion to investigate how total required capacity might be realised with a minimum of financial assistance by the Executive Council. In December 2017 the Admiralty relented, with the condition that a private meeting be arranged with members of the panel for the purpose of greater coordination.

The Official Panel met on 3 January 2018 and voted for the Admiralty’s condition. At this meeting the Admiralty representative gave their votes of agreement to bring to an end the exclusive commercial agreements with all fourteen body corporates, including the likes of Royal Beaufort Shipwrights Guild, whilst replacing these with those of overseas body corporates, such as Halcyon Arms and Murakami Defence Industries, inter alia, for the retention of naval reserve capacity and, on 18 January, this motion was tabled before parliament and the Select Committee on Navy and Merchant Navy, with the fourteen body corporates being given notice of termination of exclusive commerce effective from the third fiscal quarter of 2018. Since 2010, apart from the turbulent Lyran economic and military dominance and Gholgoth crises years of 2010-12 when a certain amount of the reserve capacity was used consistently due to the constant threats of international incidents and invasions, the Admiralty have made subsidy payments to the fourteen body corporates for the annual maintenance of reserve capacity ranging from 14,000,000,000 NSD to 18,000,000,000 NSD.

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Summary of Appropriation [Page 1]



Parliamentary Votes	Estimated Gross Expenditure	Estimated Appropriations in Aid	Net Grant
A. Remuneration and emolument of officers, ratings, and Imperial Expeditionary Force personnel	72,696,232,000 NSD	1,374,855,600 NSD	71,321,376,400 NSD
B. Food supplies and clothing of officers, ratings, and Imperial Expeditionary Force personnel	18,322,176,300 NSD	3,140,407,600 NSD	15,181,768,700 NSD
C. Medical and nursing institutions	1,584,545,800 NSD	35,607,800 NSD	1,548,938,000 NSD
D. Civilians employed by the Navy	9,009,755,100 NSD	31,651,400 NSD	8,978,103,700 NSD
E. Education and training	2,101,847,600 NSD	171,115,100 NSD	1,930,732,500 NSD
F. Scientific and technological institutions	25,356,689,200 NSD	2,502,435,000 NSD	22,854,254,200 NSD
G. Naval and merchant reserves provisions	1,238,359,200 NSD	494,400 NSD	1,237,864,800 NSD
H. Armaments, repairs and maintenance supplies	162,195,125,800 NSD	22,821,505,700 NSD	139,373,620,100 NSD
I. Shipbuilding, aircraft and weapons construction	141,131,528,500 NSD	7,886,489,700 NSD	133,245,038,800 MSD
J. Lands, buildings, and machinery upkeep at home and abroad	25,578,248,600 NSD	4,426,243,700 NSD	21,152,004,900 NSD
K. Miscellaneous effective and non-effective provisions	2,326,987,900 NSD	346,761,000 NSD	1,980,226,900 NSD
Totals	461,541,496,000 NSD	42,737,567,000 NSD	418,803,929,000 NSD





Actual Outlay	Actual Gross Expenditure	Actual Appropriations in Aid	Net Expenditure
A. Remuneration and emolument of officers, ratings, and Imperial Expeditionary Force personnel	72,851,694,558 NSD	1,374,855,600 NSD	71,476,838,958 NSD
B. Food supplies and clothing of officers, ratings, and Imperial Expeditionary Force personnel	18,112,874,733 NSD	3,140,407,600 NSD	14,972,467,133 NSD
C. Medical and nursing institutions	1,520,821,569 NSD	32,744,514 NSD	1,488,077,055 NSD
D. Civilians employed by the Navy	9,045,864,275 NSD	31,651,400 NSD	9,014,212,875 NSD
E. Education and training	2,057,235,916 NSD	171,115,100 NSD	1,886,120,816 NSD
F. Scientific and technological institutions	25,231,914,490 NSD	2,502,435,000 NSD	22,729,479,490 NSD
G. Naval and merchant reserves provisions	1,212,430,406 NSD	490,000 NSD	1,211,940,406 NSD
H. Armaments, repairs and maintenance supplies	168,682,930,832 NSD	22,642,991,713 NSD	146,039,939,119 NSD
I. Shipbuilding, aircraft and weapons construction	137,179,845,702 NSD	7,880,403,010 NSD	129,299,442,692 NSD
J. Lands, buildings, and machinery upkeep at home and abroad	23,206,686,806 NSD	4,649,035,260 NSD	18,557,651,546 NSD
K. Miscellaneous effective and non-effective provisions	2,299,597,726 NSD	336,878,312 NSD	1,962,719,414 NSD
Totals	461,401,897,013 NSD	42,763,007,509 NSD	418,638,889,504 NSD

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