Navy Contracting

The Military Sealift Command (MSC) regularly charters both commercial and government-owned vessels to ship military cargo. Under a time-chartered contract, MSC pays a daily fee for the use of a ship during a specific time period but the owner remains responsible for ship operations, such as supplying the crew. MSC believes that it has complied with the law in allowing three of its time-charted ships--the Atlantic Forest, the Green Wave, and the Green Ridge--to be worked on in foreign shipyards. GAO found that (1) MSC's decision to allow the Atlantic Forest to be reflagged overseas appears to have been within its discretion and (2) MSC's position that time-chartered ships remain within the jurisdiction of their owners, and are therefore allowed to be repaired overseas, appears reasonable.

GAO found that: (1) MSC is not required to have a foreign-flagged ship reflagged in a U.S. shipyard; (2) MSC charted a foreign-flagged ship to return shipping capabilities to the level that existed before the Persian Gulf War; (3) two ships had some repair work done at overseas shipyards; (4) MSC does not require U.S. shipyards to repair time-chartered ships; and (5) from 1988 to 1991, U.S. shipyards performed most repairs, except for emergency repairs and those necessary to meet Persian Gulf War scheduling requirements.