TOTE's Four Delivered Training Ships Show VCM Works for US Yards

Four of five new MARAD training ships have been delivered on time and on budget, and the construction model behind them — Vessel Construction Management, or VCM — took center stage at the Shipbuilding in America conference held this week at the State University of New York Maritime College in the Bronx.

The numbers matter because US newbuild programs rarely hit either target. Under VCM, a third party acting as the owner's representative takes over oversight of a ship's entire construction, from design and material procurement through pre-delivery testing. MARAD adopted the approach when it procured a new generation of training ships for five of the six state maritime academies, with contractor TOTE Services running the builds. Four of the five vessels have now been delivered.

The first in the series, Empire State VII, arrived at SUNY Maritime College in September 2023 — on time and within budget.

Why does outsourced oversight save money?

Charlie Papavizas, an attorney with Winston Taylor in Washington, D.C., framed the commercial logic plainly at the conference: "The goal is to deliver a newbuild ship on time and on budget by reducing direct government involvement with the yard and making the construction process more commercial than normal government procurement."

Two mechanics drive the savings, according to material presented at the conference:

• VCM relies on commercial shipbuilding best practices and commercial off-the-shelf (COTS) components rather than military-specification parts, which can cut vessel costs and speed delivery.
• The model minimizes unnecessary design changes and the change orders that follow — change orders being a chronic source of costly contract disputes in government shipbuilding.

The upshot for taxpayers and operators: fewer disputes, faster deliveries and a procurement path that behaves more like a commercial transaction than a government program.

Where does VCM go next?

Chris Clark, vice president of new construction at TOTE Services, told the conference the next challenge is expanding VCM into commercial shipbuilding. TOTE is already carrying the model into two follow-on government programs: construction of missile range instrumentation vessels and a new class of medium landing ships for the Navy.

The supply side is not limited to one contractor. Several ship operators and ship management companies offer VCM services, with the scope of those services varying according to each firm's expertise — some cover the full arc from design to delivery, others a narrower slice of the project.

For US shipbuilding, the stakes extend beyond training vessels. The academies' new ships demonstrated that a government buyer can get a newbuild delivered on schedule by stepping back from day-to-day yard supervision and letting a commercial construction manager own the process end to end.

The open question is whether commercial owners — who already run their own procurement — see value in hiring a third party to manage construction, or whether the model's growth stays anchored in government work like the Navy landing-ship program. Clark's comments suggest the industry will push hard on the commercial front next.