The Bottom Line: What DOT & Marad are Not telling you.

In late July, I posted a weekly eColumn on MaritimeProfessional.com which was entitled, “Washington Explained: Budgets and Bewildering Blunders.” That column went on to explain just some of the ways we, as a nation, have gotten to the point of almost defaulting on the national debt. Waste occurs in all sectors of government, but the sad tale of the ex-USNS Benjamin Isherwood (T-AO-191) and the ex-USNS Henry Eckford (T-AO-192), both now irrevocably on their way to being scrapped with no benefit to the federal coffers, is particularly telling.

Various media outlets put the loss (related to these old oilers) to the taxpayers at about $300 million; according to my calculations, it probably exceeds $350 million. But, that’s an old story. Nevertheless, it got wide play in the national media last week as the angst over what to do over the federal budget and debt came to a boiling head. In particular, FOX News brought the matter to the attention of their viewers last Wednesday night. In that segment, I was invited, along with Taxpayers Protection Alliance President Dave Williams, to bring folks up-to-speed on the issue. And, we did just that.

I said so in July and I’ll say it again now: the tale of the ISHERWOOD and the ECKFORD has little to do with today’s version of DOT and Marad. They are merely finishing the hand dealt to them by their predecessors. On the other hand, mistakes continue to be made on the federal level with regard to Marad’s oversight of the ship disposal program – a process which is intended to ensure the safe and environmentally correct disposal of obsolete hulls, at best value to the taxpayers. Arguably, none of those goals are being met.

In a RULEMAKING COMMENT letter sent to the U.S. Department of Transportation on July 25th, Southern Recycling – a qualified domestic ship recycling company – accuses the U.S. Maritime Administration of many failures and violations of federal policy.  The letter goes to say, in part, “As a MARAD pre-qualified ship recycler, we have already seen evidence of this uneven playing field. MARAD has allowed U.S. vessel and marine structure owners – as well as foreign vessel owners using the U.S. flag as a convenience to get taxpayer subsidy and preferential trade routes – to openly and flagrantly violate the TSCA PCB export ban. Meanwhile, despite being handed evidence of PCB impregnated coatings on the hull of the Solon Turman, MARAD has allowed a sole-source, non-competitive subsidy domestic prime contractor to burn the coatings without removal of the paint, and export the metal still containing PCB impregnated coatings.”

Southern Recycling competes for ship disposal contracts and, on occasion, wins some of those bids. On the other hand, their Amelia, LA disposal facility – already disposing of several commercial hulls in an environmentally compliant fashion for commercial operators – has thus far been unable to achieve Marad approval to do the same with the vessels in the federal NDRF fleets located in Virginia, California and Texas. Maritime Administrator David Matsuda was grilled over the matter by Rep. Landry (R – LA) in a subcommittee hearing on the Hill in June, but had no satisfactory answers then, either. That matter still remains a mystery.

In 2002, 134 ships remained in the so-called National Defense Reserve Fleets (NDRF), all awaiting disposal. Since then, that number has dwindled to about 86, with the majority of them located in the Suisun Bay (California) location. The Golden State’s onerous and sometimes idiotic environmental regulations frustrated Marad for many years and during that extended period, the ships were moved out of the other two locations, as possible, while a compromise was sought on the West Coast. But, the ship disposal task – hindered by politics, inadequate funding on the federal level, as well as Marad’s well-documented inefficiencies – has averaged only about 5 ships per year. At this rate, it will take another 15 years to get rid of all of these dangerous hulls, while scores more will probably be added.  At a time when people need jobs, additional scrapping capacity is available (run by viable contractors who actually want to pay for these hulls); the snail’s pace is puzzling.

The recent bill introduced (July 27th) by Senator Lautenberg (for himself and Mr. Rockefeller) also raises some eyebrows. S. 1430, a bill to “authorize certain maritime programs of the Department of Transportation, and for other purposes,” leads us to believe that Congress is about to acquiesce to MARAD’s attempt to legalize being non-transparent in its contracting and reporting procedures.

While I’m willing to give the current MARAD crew some slack, the Ship Disposal related language just proposed in the Senate Commerce, Science,  and Transportation “Maritime Administration Authorization Act for Fiscal Year 2012” appears to drop any semblance of good government contracting.  Section 10 gives MARAD $18.5 million to play around with; Section 6 says they don’t have to follow any rules in their contracting of that money – or in their sales contracts for that matter – and Section 7 says they don’t have to tell Congress as a whole, or the public, how they are managing (or mismanaging) the program. To be fair, MARAD has not submitted the required Annual Report since 2008; so I guess we will never know what really happened with the Eckford and Isherwood – or any other number of interesting goings on in the program. But, you can read the bill for yourself and decide.

Summing up, the key questions to ask Marad and DOT regarding the current ship disposal procedures being used by Marad are as follows:

• Why do facilities which are not ready to perform given preference over others that have already proven that they can do the job?
• Why are contracts being awarded and denied in a non-transparent fashion when an open, competitive bid process would most certainly provide the taxpayers with best value?
• Why is Marad trying to usurp the authority of the Environmental Protection Agency (EPA)?
• Why it is necessary to drydock ships on the U.S. West Coast to remove hull growth before scrapping but on the East Coast and Gulf Coasts, it is perfectly fine to do it in situ, in the water?

In fact, all of these questions and more have already been asked. They haven’t been answered. The current administration prides itself on being environmentally correct in all ways while also pledging to remove the “lobbying” and special interests influence from government. But, as pointed out on July 13th, the errors continue. Or, maybe these are not errors at all. From my standpoint, none of it represents good value to the taxpayers. And, that’s the bottom line.

Source: Maritime Professional. by Joseph Keefe. 3 August 2011

http://www.maritimeprofessional.com/Blogs/The-Final-Word-with-Joseph-Keefe/August-2011/The-Bottom-Line-.aspx