23 November 2010

Mare Island ShipRecycling: Federal govt. shouldn't have scrapped open bidding

The $3.1 million federal contract awarded last week for a newly formed company, Allied Defense Recycling to scrap two obsolete World War II-era cargo ships in the Suisun Bay Reserve Fleet seemed perfect in every way, except one.
Allied Defense Recycling of Petaluma has been awarded a federal contract to handle the scrapping of two obsolete cargo ships in Suisun Bay. Photo: Kat Wade / The Chronicle

We say perfect in that it responded to so many North Bay community concerns.

It will remove a source of pollution created by lead-based paint from the derelict vessels flaking into the bay waters.

It will create as many as 120 jobs at the long-closed Mare Island shipyard in Vallejo, where unemployment is exceptionally high. And, while the initial contract is for two ships, there are more ships awaiting disposal. Jay Anast, business operations director for the contractor, Allied Defense Recycling of Petaluma, estimated there is six years of work. Dismantling won't begin until next year however, after ADR dredges the area around the doors to the Mare Island shipyard dry docks. ADR will contract with a local engineers union to do the ship breaking.

It will save the expense of towing the ships through the Panama Canal to ship breakers in Brownsville, Texas. Doing the work in Vallejo also eliminates the cost of making the ships seaworthy, including cleaning the hulls to ensure invasive clams are not spread to other waters - on average, $620,000 per vessel.

But why wasn't the contract put out to bid? Global prices for scrap metal are rising. Scrapping ships is profitable even without subsidy.

The U.S. Maritime Administration, which oversees the disposal of the "ghost fleet," said the justification for "other than full and open competition" is that ADR is the only qualified facility on the West Coast and the Obama administration is moving to dispose of the polluting ships quickly.

ADR is preparing a facility - just as another bidder might have done. The almost perfect outcome is tainted by a whiff of pork.

Source: San Francisco Chronicle; Saturday, November 20, 2010

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