Navy Contracting

U.S. Navy Ship Repair Contracting at Canadian Shipyards Gao ID: NSIAD-87-17FS October 10, 1986

Pursuant to a congressional request, GAO provided information concerning U.S. Navy ship repair contract awards to Canadian shipyards.

GAO found that: (1) the United States and Canada have had a special military contracting agreement since 1952; (2) the Navy's authority to contract with Canadian sources has several restrictions, such as those associated with small business and labor-surplus-area set-aside legislation; (3) subject to these restrictions, the Military Sealift Command (MSC) makes all ships for which it has repair responsibility available for potential contracting to qualified Canadian shipyards; (4) MSC has awarded seven ship repair contracts to Canadian firms since fiscal year 1980, at a total price of about $10 million; (5) MSC awarded the Canadian contracts based on the need to make emergency repairs or on price competition with U.S. shipyards; (6) Canadian shipyards do not have to comply with a number of statutory and regulatory guidelines that U.S. bidders must comply with, but these shipyards might have to comply with some similar Canadian policies; (7) there was no evidence in the contract files to indicate that the Canadian shipyards that have successfully bid for Navy contracts received any assistance from the Canadian Commercial Corporation in the bid preparation process; and (8) none of the nine western U.S. shipyards has repaired ships or has participated in competitive bidding to repair ships belonging to the Canadian government for at least 6 years.



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