Ship Disposal

FY 2005 was the third year MARAD received direct appropriations for the Ship Disposal Program, receiving $19.5 million to dispose of obsolete vessels. MARAD used four performance measures and goals in FY 2005 for the Ship Disposal Program.

(1) The number of contract awards of obsolete vessels from the National Defense Reserve Fleet (NDRF) site for subsequent disposal. The target was 15; the actual number of contracts awarded for obsolete, non-retention ships was 20, exceeding the FY 2005 goal by five.
(2) The number of obsolete vessels removed from the NDRF site for subsequent disposal. The goal was 15 vessels; the actual number of vessels removed in FY 2005 was 18, exceeding the FY 2005 goal by three.
(3) The number of obsolete vessels disposed of from the NDRF sites. The goal was 15 ships; the actual number of vessels disposed in FY 2005 was 13. Adjustments have been made in the consistency of the funding stream, and those should improve performance.
(4) The cost-per-ton for obsolete vessel disposal actions from the (NDRF). The target cost was $170 per ton; the actual cost-per-ton figure for FY 2005 was $109, exceeding the goal.

Taken together, the FY 2005 results from these measures indicate a reduced likelihood of environmental damage from the obsolete ship inventory now and into the near future.

In April 2005, the Government Accountability Office (GAO) issued a report, Maritime Administration: Improved Program Management Needed to Address Timely Disposal of Obsolete Ships. The report stated that MARAD needed a more integrated ship disposal program. MARAD has adopted the GAO's recommendations, and is moving forward in continuing to dispose of obsolete ships. The report had three recommendations for improving MARAD's ship disposal program and MARAD has acted on all three.

First, MARAD created a Ship Disposal Comprehensive Management Plan that implements disposition of all existing obsolete ships and future transfers in a timely manner, maximizing the use of all available disposal methods. Second, MARAD continues to communicate its disposal plan and impediments to Congress. And third, since January 2005, MARAD has been using the Federal Acquisition Regulation Test Program for Certain Commercial Items. MARAD implemented the use of Standing Quotations in FY 2005 as the primary procurement method for soliciting ship disposal services. The use of Standing Quotations is a simplified acquisition procedure for the competitive procurement of commercial services.

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