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Navy Courts Safe Ship Scrap Handlers  

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by Sandra I. Erwin  

Concerned about a growing backlog of obsolete ships that need dismantling, the Navy recently issued new guidelines to potential contractors interested in vessel disposal work.

Industry response to the Navy's request for proposals is due March 9-approximately one year after the service suspended its ship-scrapping program because it was deemed environmentally unsafe.

Last spring, the Navy stopped the program in response to highly publicized accounts of the U.S. government's failure to address environmental violations by overseas contractors. In the early 1990s, the U.S. Maritime Administration (MARAD) had been aggressively selling unneeded ships for scrap in foreign markets.

The Navy and MARAD were dealt an embarrassing public relations blow when it was revealed that contractors hired for ship breaking and disposal were suspected of violating environmental, worker health and safety requirements. Most of the horror stories dealt with ship scrappers in Pakistan and India.

The practice of selling vessels for scrap in the export market was also called into question. That had been traditionally a lucrative venture for the Defense Department. "The Navy is not exporting ships for scrap, but it is continuing to scrap ships in the inventory," says Sherri Goodman, deputy defense undersecretary for environmental security.

The service is also undertaking a pilot project to look more closely at the cost of actual ship scrapping "so that the government can make a determination about whether this is an undertaking that we can realistically hope to get money back from.

Ship-breaking processes are much different in nuclear submarines, for example. "We don't just give it to somebody and get money. The U.S. Navy does [the scrapping]. That's because of the nuclear materials and the nuclear hazards involved in that, so that whole life-cycle of the nuclear ship is internalized in the Department of Defense weapons acquisition process," explained Goodman.

"That's not so for conventional surface ships. And there are good reasons why it is not. The time is right now to begin to look fully at the full life-cycle costs and what's the best way to allocate those. And of course, one of the mandates is to make sure that the scrapping is done in an environmentally sound matter that also protects human life and safety."

Many U.S. ship breakers have left the business because they have been frustrated by the government's approach to scrapping, said Robin K. Wiener, executive director of the Institute of Scrap Recycling Industries, Inc., a Washington, D.C.-based trade association representing the scrap processing and recycling industry.

The U.S government, she said, generally sells ships for scrapping to the highest bidder, without substantial knowledge or regard for a bidder's ability or plan to protect worker health and safety or safeguard the environment during scrapping.

Because of the hazardous nature of some of the contaminants contained in ships being put up for bid by the Navy and MARAD, "it has become economically difficult, and at times impossible, to make a profit legitimately scrapping ships in the United States and also address worker health and safety needs," said Weiner.

In an interview, she predicted more U.S. ship scrappers would re-enter the markeplace if the Navy "addressed these problems."

The Navy has now revamped its ship disposal effort so that the ships to be dismantled will remain titled to the Navy and dismantled as a contractor-provided service.

The demand for ship disposal skyrocketed as a result of post-Cold War downsizing of the fleet. The Navy and MARAD have 185 surplus ships. Officials are increasingly concerned because they are quickly running out of space to store these obsolete vessels.

Older vessels contain polychlorinated biphenyl (PCBs) in various shipboard components. The Navy and the maritime administration as a rule remove ozone depleting substances and various other hazardous materials from the ships before they are turned over to the contractors.

New guidelines to companies interested in bidding for the work were unveiled several weeks ago. A Navy spokesman told National Defense that the service is taking no chances this time around. Because of the "political interest" in this project, the Navy must pursue its ship-scrapping efforts in an environmentally safe fashion.

The revamped ship dismantling program calls for the award of multiple indefinite delivery indefinite quantity (IDIQ) contracts, which are broad in scope and involve incremental work orders.

The work will involve towing and dismantling the vessel and establishing a schedule, as well as demilitarizing residual military equipment and completely scrapping the hull.

Contractors will be responsible for hazardous material, waste removal and disposal, and sale of scrap material.

The Navy will follow performance-based contracting methods-requiring the successful completion of ship scrapping while complying with environmental and worker safety regulations, rather than specifying the procedures on how the contractor should perform. Separate contracts will be awarded for the East Coast-for up to 12 ships-and for as many as 8 ships on the West Coast.

For Fiscal Year 1999, Congress appropriated $7.5 million for Navy ship disposal.ND

Associate Editor Joshua A. Kutner contributed to this report.

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