of constructing the vessel determined by the Sec-
retary under section 1403(b)(2).
‘‘(b) DETERMINATIONS BY SECRETARY.—The Sec-
retary may not approve assistance for construction of a
series of vessels in a shipyard unless the Secretary has
determined the following:
‘‘(1) VESSEL
REQUIREMENTS.—The vessels
are—
‘‘(A) commercial vessels of at least 10,000
gross tons; and
‘‘(B) commercially marketable on the inter-
national market.
‘‘(2) SHIPYARD REQUIREMENTS.—The shipyard
in which the vessels will be constructed—
‘‘(A) is located in the United States; and
‘‘(B) upon completion of construction of
the vessels, will be capable of constructing addi-
tional vessels of the same type as those in the
series for a price that is competitive in the
international market.
‘‘(3) APPLICANT
REQUIREMENTS.—The appli-
cant for the assistance—
‘‘(A) has the ability, financial resources,
and other qualifications necessary for construc-
tion of the vessels;
‘‘(B) has entered into a contract for the
construction of each of the first 2 vessels to be
constructed in the series, which may include a
contract for a vessel that will be constructed
without assistance under this title; and
‘‘(C) is the owner of the shipyard in which
the vessels will be constructed.
‘‘(4) CONTRACT REQUIREMENTS.—Each of the
contracts required under paragraph (3)(B) are bind-
ing obligations on the applicant and all other parties
to the contracts, except that such a contract may be
contingent on—
‘‘(A) the approval of assistance under this
title for construction of a vessel under the con-
tract; and
‘‘(B) the making of a guarantee or com-
mitment to guarantee obligations under title XI
for construction under the contract.
‘‘(5) PURCHASER REQUIREMENTS.—Each per-
son that is a purchaser of a vessel under a contract
required under paragraph (3)(B)—
‘‘(A) has the ability, financial resources,
and other qualifications necessary to own and
operate the vessel in commercial service; and
‘‘(B) is a party to the contract.
‘‘(6) SERIES TRANSITION PAYMENT.—The se-
ries transition payment under section 1403 for each
vessel in the series.
‘‘(c) PRIORITY FOR CERTAIN SERIES OF VESSELS.—
In approving assistance under this title, the Secretary may
give priority to a series of vessels—
‘‘(1) if a smaller number of vessels in the series
are required to be constructed with assistance before
construction of that type of vessel becomes cost ef-
fective;
‘‘(2) for which the total of the series transition
payments determined under section 1403 for all ves-
sels in the series is less than that total for other se-
ries of vessels for which applications are submitted
for assistance under this title;
‘‘(3) that will be constructed in a shipyard with
respect to which assistance under this title has not
been provided; or
‘‘(4) that would contribute to the preservation
of a shipyard that would be essential in a time of
war or national emergency.
‘‘SEC. 1403. DETERMINATION OF SERIES TRANSITION PAY-
MENTS.
‘‘(a) IN GENERAL.—The Secretary shall determine
the series transition payment for each vessel in a series
of vessels for which an application for assistance under
this title is received by the Secretary.
‘‘(b) AMOUNT OF SERIES TRANSITION PAYMENT.—
The series transition payment for a vessel under sub-
section (a) is equal to the difference of—
‘‘(1) the estimated cost of completing construc-
tion of the vessel, as included in the application for
assistance submitted under section 1405; minus
‘‘(2) a reasonable estimate of the cost of con-
structing the vessel under similar plans and speci-
fications in a foreign shipyard that is considered by
the Secretary to be a fair and representative exam-
ple for purposes of determining the payment.
‘‘SEC. 1404. SERIES CONSTRUCTION AGREEMENT.
‘‘(a) IN GENERAL.—
‘‘(1) IN
GENERAL.—The Secretary shall, for
each series of vessels for which assistance is ap-
proved under section 1402, enter into a series con-
struction agreement with the owner of the shipyard
in which the series of vessels will be constructed,
under which the Secretary is required to pay the
owner assistance in accordance with a schedule es-
tablished under paragraph (2).
‘‘(2) SCHEDULE
FOR
PAYMENTS.—An agree-
ment under this subsection shall establish a schedule
‘‘(e) A contract for the ocean transportation of any
equipment, materials, or commodities under this section
or section 901b, to the extent the Secretary of Transpor-
tation, in consultation with the heads of other appropriate
agencies, determines necessary to further the purposes of
this section and section 901b, shall be based on contracts
used for commercial shipments.
‘‘(f) The Secretary of Transportation shall partici-
pate in negotiations relating to agreements with recipient
countries for equipment, materials, or commodities subject
to this section or section 901b to the extent the Secretary,
in consultation with the heads of other appropriate agen-
cies, considers to be necessary to ensure agreement provi-
sions relating to or affecting the transportation of such
equipment, materials, or commodities permit fair and rea-
sonable transportation services to be provided.
‘‘(g) No later than 180 days after the date of the
enactment of the Maritime Security and Competitiveness
Act of 1993, the heads of appropriate Federal agencies,
or their representatives, shall transmit to the Secretary
of Transportation recommendations relating to the meth-
odology used by the Secretary of Transportation to deter-
mine whether rates for United States-flag vessels are fair
and reasonable in compliance with section 901(b) and will
achieve the policy objectives of this Act.’’.