The Navy, MarAd, And RRF Deactivations
With the completion of operations in the Persian Gulf, the ships of the Ready Reserve Fleet (RRF), which had supported the lift of material to the operations area, are returning and will need to be deactivated. This deactivation is critically important since the proper layup of these ships will make it easier to mobilize them in the event that we need them in the future.
Normally, the Maritime Administration (MarAd) would compete that work among private shipyards and award the contracts to the most competitive bidder among the interested yards. The result of such bidding activity is that the shipyards get an opportunity to participate in a project that generates much needed workload, while the U.S. Government obtains repair services that are essential for national defense at a cost savings for the taxpayer.
But language in last year's Dire Supplemental Bill, used to finance the Persian Gulf operation, clearly indicates that some old, bad habits die hard. In the Supplemental, there was report language that directed the Navy/ MarAd to allocate 50 percent of all deactivations to public sector shipyards. Notice that the tried and true word "competition" is nowhere to be seen. Since the Administration claims to believe that competition is vital in the development of markets, it is amazing that this report language is not only being adhered to, it is being slavishly followed, although there is no statutory requirement mandating such a division of work.
The Maritime Administration is planning to perform 81 deactivations. Initially, the industry had been informed that perhaps 3 or 4 availabilities would be assigned to the Charleston Navy Yard. Now, however, because of political pressure, as many as 21 deactivations may go to the Navy yards, with 13 planned for Charleston, 6 for Philadelphia (a facility that is on the 1991 Base Closure List), and 2 for a West Coast Navy yard. The reader should be aware that we are talking about allocations, not contracts awarded as a result of competition.
In point of fact, the real scandal has to do with the fact that the Navy yards are not even expected to meet what the Maritime Administration believes will be the cost to perform the deactivation in the most competitive shipyard.
The procedure follows a path that suggests the days of smoke-filled rooms and back-door deals are not over: MarAd prepares a list of expected deactivations and the scheduled dates for those availabilities. The list is provided to the Naval Sea Systems Command (NAVSEA, Code 072).
The Command identifies those ships that it wants. Then MarAd provides NAVSEA with the specification of work to be performed. If the Navy cost estimate is within 30 percent of the estimated cost to complete the job, the contract is awarded to the Navy yard. There is no competition, no pre-award survey to see if the yard is capable of performing the work, no post-performance audit to see if the Navy yard has properly charged its costs.
The amazed reader might ask, "How did the Maritime Administration determine that a 30 percent differential is acceptable?" The analysis that was performed was limited to one direct competition between public and private sectors for the first deactivation availability for the SS Cape Canaveral. In that competition, which was conducted in September 1991, the low bidder was determined to be Stevens Tech of Norfolk, Va. The winning bid was $946,000. The bid from the Charleston Navy Yard was $1,223,000.
This result has essentially "baselined" the remaining deactivations.
While it is true that there were other private yards that bid on this job (including some that offered higher bids than did Charleston), the fact of the matter is that the Maritime Administration had no idea what constituted the quality of the Navy yard bid. In other publicprivate competitions, there are strict rules for bidding and cost comparability that are followed.
This was clearly not the case in the September 1991 bid.
In fact, the befuddled reader should understand that the Maritime Administration is really caught between a rock and a hard place. On the one hand, MarAd is responsible for maintaining the Ready Reserve Fleet, but on the other hand, the purse strings Eire held by the Navy. The old hackneyed Pentagon rubric of the Golden Rule clearly applies, "He who has the gold rules." The bottom line is that the nation's private ship repair sector has to compete against not only subsidized foreign yards in Japan, Germany, and the European Community, but also against subsidized yards from the public sector.
Only in ship repair do we see a Republican Administration abandon its free market principles to reward a defense arsenal structure that is more reminiscent of the 1890s, rather than that of the 1990s. If socialism has been rejected in the Commonwealth of Independent States, why does it hang on in the Naval Sea Systems Command?
Let competition decide where these jobs are to go.
Shipbuilders Council of America 4301 N. Fairfax Drive, Suite 330 Arlington, VA 22203 Tel.: (703) 276-1700
Other stories from May 1992 issue
- New Quality Assurance And Environmental/Safety Directors At IMC page: 4
- White House Promises New Merchant Marine Policy page: 4
- Major Changes Predicted For World Shipping Industry page: 6
- MHI Introduces New Bridge Operation Support System page: 6
- Comsat Develops Lightweight Satellite Battery page: 7
- Underwriters Told To Oppose Foreign Insurance Protectionism page: 7
- Fore River Yard Site Of $ 1.6-Billion Boston Project page: 7
- Overlay Finish For Fiber Ropes Improves Marine Performance page: 8
- MagneTek's PCB Testing Ensures EPA Compliance page: 9
- MagneTek's PCB Testing Ensures EPA Compliance page: 11
- NAVIONICS Introduces New Micro Chart Module page: 13
- Government And Oil Industry Begin Battle Over Oil Spill Assessments page: 13
- Inland Port Opened By Philadelphia page: 15
- IMC Announces New Board Of Directors, Corporate Officers page: 15
- AESA Appoints Gonzalez-Sama General Commercial Manager page: 17
- Ship Repair Revival Plan Outlined By San Francis page: 18
- Service Marine To Build HarrahVHammons Casino Boat For Illinois Operation page: 18
- Schichau Seebeckwerft Launches First Of Two Great White Fleet Reefers page: 19
- Del Norte Introduces Model 2006 GPS Receiver page: 19
- New Report Offers Detailed Study Of World Reefer Shipping page: 20
- R.H. Wager Opens New Mobile Office And Product Lines page: 20
- Double Christening Held For Avondale-Built National Marine Towboats page: 21
- DOUBLE HULL UPDATE page: 23
- New American Underpressure System —An Interim Solution page: 24
- 14 New Generation Double-Skin Tankers Being Built By Fincantieri page: 25
- Double-Hulled 'Patriot' Delivered By Samsung For Conoco Shipping page: 25
- HDW's Design For Double-Hull Tanker To Be European Standard page: 26
- Coast Guard Urges Unified Federal Spill Response Regulations page: 28
- Oil Pollution Act Spurs World Oil Industry To Drop Substandard Tankers page: 28
- Worldwide Tanker Order Book Hits 15-Year High page: 28
- Cruise Ship Zenith Delivered To Chandris Celebrity Cruises By Meyer Werft page: 29
- Diamond M-Odeco Teams With VODL To Enter Floating Production Market page: 29
- Newport News Markets Frigate Design To World page: 29
- Keel Layed For Cruise Ship Maasdam At Fincantieri Shipyard page: 29
- BOOM TIMES FOR KOREAN SHIPBUILDING page: 30
- MTlTs 595 Diesel Series Design Concept Proven Aboard Ferry 'Deutschland' page: 34
- Trinity Marine Awarded $31.2 Million Contract By U.S. Army To Build Two LSVs For Philippines Navy page: 36
- POSIDONIA 92 page: 37
- Tokimec's Marine Systems Division Offers Wide Range Of Navigation Equipment page: 38
- Port Of South Louisiana Plans To Turn Riverplex Into Intermodal Facility page: 39
- North Sea Operators Evaluating New Rig Concept For Long-Term Programs page: 39
- Boat Workers Rally For Luxury Tax Repeal page: 39
- EUROPEAN WORKBOAT SHOW page: 40
- Largest Cruise Liner Ever Built At Finnyards Delivered To Sally Line page: 41
- Bender Inc. Introduces New Portable Ground Fault Current Instrument page: 43
- NEI Syncrolift Receives Three Orders For Shiplifts And Transfer Systems page: 44
- Alden Electronics Introduces New Navtex AE-900 Receiver And Faxmate II Weather Chart Recorder page: 44
- 40th Annual Ft. Schuyler Forum Focuses On Marine Refrigeration And Diesel Engine Performance page: 44
- Glass Beads Demonstrated As Quick, Low-Cost Tool For Oil-Spill Cleanups page: 46
- Cruise Vessels To Be Built In Agreement Between McDermott/Swathtech page: 51
- Amclean Develops Multi-Nozzle Waterjet —Free Video Offered page: 51
- C. Plath Offers Free Color Brochure On Navipilot V page: 52
- New MSI-Operated Rotterdam Research, Training Center page: 52
- Guam Set To Become Key U.S. Military Outpost In Pacific page: 53
- CG Proposes New Rules For Unmanned Tanker Enginerooms page: 53
- Deep-Sea Towage, Salvage And Heavy-Lift Markets page: 54
- The Navy, MarAd, And RRF Deactivations page: 55
- Kranco Develops Automatic Synchronization Of Hoists Controls page: 56
- ABB Set To Get Power Supply System Job For Carnival's 'Imagination' page: 56
- Corps Of Engineers Asked To Fund More Renovations On Inland Waterways page: 57
- CD Based Government Logistics Data Available From USA Info Systems page: 57
- Major Conference On Oil Spill Laws & Response In Seattle, October '92 page: 58
- Open Committee On CG Oil Spill Legislation Completes 1 st Phase page: 58
- RORO 92 page: 60
- McQuay Chiller's QEII Experience Proves Reliability page: 61
- New Study Examines Under-Priced Ship Resale Market page: 62
- Raytheon Announces New Handheld VHF Radiotelephone page: 62
- Siemens To Supply Full Electrical System For New Research Vessel page: 62
- Propulsion System Demonstrator Powered By GE Gas Turbine page: 62
- Portland Box Volumes Up 25 Percent In February page: 62
- Washburn & Doughty Delivers Passenger/Auto Ferry Captain Henry Lee page: 64
- Crowley Maritime Celebrates 100 Years Of Service page: 64
- International Tug & Salvage Expo 1992 page: 66
- Capabilities Of Trinity Marine's New Beaumont Yard Highlighted page: 66
- NRC, Coastal And Phibro To Support Second National Response Network page: 67
- Mende Honored For Accomplishments In Marine Field page: 67
- U.S. NAVY FY 1993 page: 68
- Navy Expects To Award First Contracts From Sealift Fund In Early '93 page: 70
- MarAd Awards Yards Layberthing Contracts Worth $18 Million page: 71
- FY 1993 Budget For Coast Guard Shows Increase Over FY 1992 page: 71
- Appropriations Of $312 Million Requested For MarAd In FY 1993 page: 71
- Intermarine USA Launches Second Navy Minehunter page: 72
- DECK MACHINERY & CARGO-HAN DUNG EQUIPMENT page: 73
- USS Anzio, Ingall's 15th Aegis Cruiser Completed page: 81
- Wartsila's Vasa 32 Gas Diesel Now Ready For Global Sales page: 81
- Nichols Brothers Delivers 1,600-Passenger Dinner Boat For Hawaiian Service page: 83
- ABB Supplies Systems For New Icebreaker Being Built By Finnyards page: 84
- First Commercial Icebreaking Research Ship Delivered By North American page: 84