Federal Surplus Ships:

Government Efforts to Address the Growing Backlog of Ships Awaiting Disposal

NSIAD-99-18: Published: Oct 22, 1998. Publicly Released: Oct 22, 1998.

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Pursuant to a congressional request, GAO reviewed the status of federal ship scrapping programs, focusing on: (1) the factors contributing to the backlog of about 200 surplus ships waiting to be scrapped; and (2) federal agencies' efforts to address the backlog.

GAO noted that: (1) key factors contributing to the current backlog of surplus ships awaiting scrapping are the Navy's downsizing following the collapse of the former Soviet Union, the unavailability of overseas scrapping, and a shortage of qualified domestic scrappers; (2) as a result, the backlog of Navy ships to be scrapped has increased since 1991 from 25 to 127; (3) overseas scrapping has been suspended because of legal constraints on the export of polychlorinated biphenyls for disposal; (4) a 1997 agreement to resume overseas scrapping has been temporarily suspended largely because of concerns about environmental and worker safety problems in foreign countries and the impact of foreign scrapping on the domestic industry; (5) progress in reducing the backlog using domestic scrappers has been limited; (6) one reason has been domestic contractor performance difficulties; (7) a second reason has been a shortage of qualified domestic bidders; (8) between the beginning of 1996 and the end of 1997, the Navy and the Maritime Administration (MARAD) requested scrapping bids on 19 ships, but only 4 were actually sold--all to the same domestic bidder--because of the limited number of qualified bidders; (9) since then, MARAD has sold an additional 11 ships for scrapping; (10) federal agencies have identified and begun implementing a number of initiatives to address some of the specific performance issues associated with domestic scrapping; (11) since a key performance issue was contractor noncompliance with environmental and worker safety requirements, several of the initiatives provide for increased screening of contractors prior to award and increased oversight of the performing contractor after award; (12) other initiatives are intended to help attract more qualified domestic bidders; (13) it is too early to assess the impact of these initiatives because few ships have been scrapped since their implementation; (14) additional recommendations for addressing both domestic and overseas scrapping issues were made in April 1998 by an interagency panel; (15) the panel's recommendations expand on the actions to address contracting and oversight problems; (16) however, they only generally address key issues relating to government actions to expand the domestic industry and the scrapping of federal ships in foreign countries; (17) the process for deciding whether to accept and ultimately implement the panel's recommendations is informal; and (18) also, no procedures have been established for implementing the recommendations that are accepted.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: A workgroup of all agency panel liaisons was convened. The liaison workgroup reviewed the panel's recommendations and decided to focus on all recommendations except for those concerned with overseas scrapping because of the moratorium on overseas scrapping. The agencies have had periodic meetings to discuss these recommendations, to establish milestones for their review efforts, and to discuss the status of their efforts. Lead agencies were established and actions on recommendations are complete. Action on the remainder of the recommendations will continue indefinitely. The interagency panel agreed to reconvene in one year to reassess progress and provide further direction.

    Recommendation: The Secretaries of Defense and Transportation should take the lead and work with other agencies involved in ship scrapping such as the Environmental Protection Agency and the Departments of State and Commerce to establish a specific timeframe for completing the review of the interagency panel's recommendations.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: A workgroup of all agency panel liaisons was convened. The liaison workgroup reviewed the panel's recommendations and decided to focus on all recommendations except for those concerned with overseas scrapping because of the moratorium on overseas scrapping. The agencies have had periodic meetings to discuss these recommendations, to establish milestones for their review efforts, and to discuss the status of their efforts.

    Recommendation: The Secretaries of Defense and Transportation should take the lead and work with other agencies involved in ship scrapping such as the Environmental Protection Agency and the Departments of State and Commerce to establish a specific timeframe for completing the review of the interagency panel's recommendations.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: The agencies' liaison workgroup identified lead agencies for each of the recommendations. DOD has designated lead responsibilities within its organization.

    Recommendation: Once the review is complete, each agency should establish milestones for implementing those recommendations that are adopted and that the Secretaries of Defense and Transportation designate lead responsibilities within their respective organizations for addressing individual panel recommendations.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: Please call 202/512-6100 for information.

    Recommendation: Once the review is complete, each agency should establish milestones for implementing those recommendations that are adopted and that the Secretaries of Defense and Transportation designate lead responsibilities within their respective organizations for addressing individual panel recommendations.

    Agency Affected: Department of Transportation

 

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