Straight from the rules:
By default, a Vigenere cipher is using a simple Caesar shift. The modifed Vigenere cipher will add an offset to the encrypted characters on a per-word basis corresponding to the wordnumber in the sentence. Thus, the first word is using an offset of one, the second word is using an offset of two, and so on. For example encrypted character '1' with word-offset '1' (first word) results in '2, and encrypted charater 'b' with word-offset '2' (second word) results in 'd'.
The way I read this is that the first word in a sentence has an offset of one, the second word in a sentence has an offset of two, and so on. The same would apply for the second sentence and so on. Thus, MightyR1's examples are correct. There's also an example in the rules that illustrates the same procedure as it guides throught he encryption process step-by-step.
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There are two types of vessels, submarines and targets.
