REPORT ON SHIPBUILDING INVESTMENT STRATEGY.

SEC. 122. REPORT ON SHIPBUILDING INVESTMENT STRATEGY.(a) Study Required.—The Secretary of the Navy shall provide for a study to determine the effectiveness of current financing mechanisms for providing incentives for contractors to make shipbuilding capital expenditures, and to assess potential capital expenditure incentives that would lead to ship construction or life-cycle cost savings to the Federal Government. The study shall examine—(1) potential improvements in design tools and techniques, material management, technology insertion, systems integration and testing, and other key processes and functions that would lead to reduced construction costs;(2) construction process improvements that would reduce procurement and life-cycle costs of the vessels under construction at the contractor’s facilities; and(3) incentives for investment in shipyard infrastructure that support construction process improvements.(b) Report.—Not later than October 1, 2008, the Secretary of the Navy shall submit to the congressional defense committees a report providing the results of the study under subsection (a). The report shall include each of the following:(1) An assessment of the shipbuilding industrial base, as measured by a 10-year history for major shipbuilders with respect to—(A) estimated value of shipbuilding facilities;(B) critical shipbuilding capabilities;(C) capital expenditures;(D) major investments in process improvements; and(E) costs for related Navy shipbuilding projects.(2) A description of mechanisms available to the Government and industry to finance facilities and process improvements, including—(A) contract incentive and award fees;(B) facilities capital cost of money;(C) facilities depreciation;(D) progress payment provisions;(E) other contract terms and conditions;(F) State and Federal tax provisions and tax incentives;(G) the National Shipbuilding Research Program; and(H) any other mechanisms available.(3) A summary of potential shipbuilding investments that offer greatest reduction to shipbuilding costs, including, for each such investment—(A) a project description;122 STAT. 28(B) an estimate of required investment;(C) the estimated return on investment; and(D) alternatives for financing the investment.(4) The Navy’s strategy for providing incentives for contractors’ capital expenditures that would lead to ship construction or life-cycle savings to the Federal Government, including identification of any specific changes in legislative authority that would be required for the Secretary to execute this strategy.(c) Utilization of Other Studies and Outside Experts.—The study shall build upon the results of the 2005 and 2006 Global Shipbuilding Industrial Base Benchmarking studies. Financial analysis associated with the report shall be conducted in consultation with financial experts independent of the Department of Defense.