Federal Surplus Ships

The government now has a backlog of about 200 surplus ships waiting to be scrapped. This backlog has grown by about 65 percent since 1994, and little progress has been made to reduce it. Many of the ships to be scrapped are more than 50 years old, and it costs millions of dollars each year to maintain them. Key factors contributing to the backlog are the Navy's downsizing following the collapse of the Soviet Union, the unavailability of overseas scrapping, and a shortage of qualified domestic scrappers. Federal agencies have taken several steps to address performance issues associated with domestic scrapping. Because contractor noncompliance with environmental and worker safety requirements was a major concern, several of the initiatives call for increased screening and oversight of contractors. Other initiatives are designed to attract more qualified domestic bidders. It is too early to assess the impact of these initiatives because few ships have been scrapped since their implementation. An interagency panel made additional recommendations in April 1998 for addressing domestic and overseas scrapping issues. However, it only generally addressed government actions to expand the domestic industry and the scrapping of federal ships overseas. Furthermore, the process for deciding whether to accept and implement the panel's recommendations is informal.

GAO noted that: (1) key factors contributing to the current backlog of surplus ships awaiting scrapping are the Navy's downsizing following the collapse of the former Soviet Union, the unavailability of overseas scrapping, and a shortage of qualified domestic scrappers; (2) as a result, the backlog of Navy ships to be scrapped has increased since 1991 from 25 to 127; (3) overseas scrapping has been suspended because of legal constraints on the export of polychlorinated biphenyls for disposal; (4) a 1997 agreement to resume overseas scrapping has been temporarily suspended largely because of concerns about environmental and worker safety problems in foreign countries and the impact of foreign scrapping on the domestic industry; (5) progress in reducing the backlog using domestic scrappers has been limited; (6) one reason has been domestic contractor performance difficulties; (7) a second reason has been a shortage of qualified domestic bidders; (8) between the beginning of 1996 and the end of 1997, the Navy and the Maritime Administration (MARAD) requested scrapping bids on 19 ships, but only 4 were actually sold--all to the same domestic bidder--because of the limited number of qualified bidders; (9) since then, MARAD has sold an additional 11 ships for scrapping; (10) federal agencies have identified and begun implementing a number of initiatives to address some of the specific performance issues associated with domestic scrapping; (11) since a key performance issue was contractor noncompliance with environmental and worker safety requirements, several of the initiatives provide for increased screening of contractors prior to award and increased oversight of the performing contractor after award; (12) other initiatives are intended to help attract more qualified domestic bidders; (13) it is too early to assess the impact of these initiatives because few ships have been scrapped since their implementation; (14) additional recommendations for addressing both domestic and overseas scrapping issues were made in April 1998 by an interagency panel; (15) the panel's recommendations expand on the actions to address contracting and oversight problems; (16) however, they only generally address key issues relating to government actions to expand the domestic industry and the scrapping of federal ships in foreign countries; (17) the process for deciding whether to accept and ultimately implement the panel's recommendations is informal; and (18) also, no procedures have been established for implementing the recommendations that are accepted.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: