Fairness questioned in ghost fleet scrap deal

The Daily Press ^ | July 16 ,2003 | David Lerman

[americaprd]

A plan to let a British company scrap 13 ships from the James River Reserve Fleet came under fire Tuesday amid revelations the pending deal is tied to a sale of two Navy oilers that had not been disclosed to domestic ship-scrappers.

The disclosure, made by Rep. Curt Weldon, R-Pa., raised new questions about the fairness of the bidding process used by the Maritime Administration in deciding who should dispose of the obsolete "ghost fleet," which has become a floating environmental hazard.

Domestic scrappers expressed frustration that much-needed shipyard work would be sent overseas - under conditions they said made them unable to compete effectively.

The pending deal, negotiated through the New York-based Post Remediation Partners, calls for the British company, Able UK Ltd., to scrap 13 ships at its environmentally approved shipyard in Teesside, England. But the agreement also would allow the company to buy - and later sell at a profit - two never-completed Navy ships that could be used as oilers, officials acknowledged.

Weldon, who held a forum Tuesday to call attention to the agreement, produced copies of legislation showing that such an overseas sale had been authorized as far back as 1999. An unidentified lawmaker slipped the provision into that year's defense appropriations bill.

"Obviously, somebody had the skids greased," said Weldon, the vice chairman of the House Armed Services Committee, who has been pushing for more domestic scrapping work.

Weldon claimed the ability of the British company to sell the two oilers for extra profit - a provision domestic scrappers had no way of knowing was possible - likely made most other bids uncompetitive.

"I don't think any domestic ship scrapper realized they could use two other ships to sweeten the financial deal," Weldon said. "That's not right. That's not kosher. I'm very unhappy about it."

Domestic scrappers echoed that view, saying the ability to sell two ships - instead of scrapping them - could have allowed them to propose disposing of a greater number of ships.

"None of us knew this avenue was open to us," said Richard Goldbach, chief executive officer of Metro Marine, which has facilities in Norfolk and Philadelphia.

A top Maritime Administration official defended the bidding process, saying the agency issued an open-ended proposal that asked industry to come up with as many creative ideas as possible for disposing of the greatest number of ships.

Post Remediation Partners, the New York company working with the British, first won the right to sell the two oilers in 1999, but never completed the deal because of poor market conditions, said Chris Bridge, a consultant to the company who did not attend Tuesday's forum. The company then decided to include the sale as part of its new bid for scrapping work this year, she said. The two 15-year-old oilers, which sit in the James River, were never completed and would sell for less than $2 million each, according to a MARAD spokeswoman.

The disclosure of the oiler sale came as an embarrassment to Rep. Jo Ann S. Davis, R-Gloucester, who has publicly backed MARAD and has pushed for the British deal as the most efficient way to get ships out of the James.

"It seems to me the whole thing has probably been handled very poorly," Davis said. But she stopped short of calling for canceling the deal, saying she did not want to do anything that would slow down efforts to remove the ships before the peak of hurricane season.

Percy R. Pyne IV, head of The Pyne Companies, which is affiliated with Post Remediation Partners, donated $500 to Davis's congressional campaign last month, her latest campaign disclosure report shows.

But in another sign of her discontent, Davis decided Tuesday to return the money, said Christopher Connelly, her chief of staff.

"If they did grease the skids, we don't want anything to do with it," Connelly said. "We're not saying it's dirty money. We just don't want an appearance of any conflict."

[americaprd]

I talked to one domestic scrapper who estimateds tha the two oilers have an estimated value of $25 million a piece, not the $2 million that MARAD claims. They say the ships are being given away -- for free -- and that they could be converted and sold to a NATO government for more than $100 million. This Percy Pyne, who by the way is the son in law of Rawleigh Warner former CEO of Mobil Oil, stands to make a hell of a lot of money off of taxpayers.

Former Congresswoman Helen Bently also mentioned at the meeting that the Navy has more than $200 million invested in each of these two ships -- Benjamin Isherwood (AO-192) and the Henry Eckford (AO-191) -- which have never even been comissioned! And now we're just going ot give them a way as part of soem backroom deal!

[Support Free Republic]

Any way I can talk you into making a donation?? Thanks if you will!

[Al B.]

FYI -- something smells here.

[GATOR NAVY]

Kaiser class oilers-these are nice ships. Acoording to http://navysite.de/ships/ao.htm#190 Isherwood is 95.3% complete and Eckford is 84% complete. Work was stopped on both ships because "Tampa [Shipbuilding,Inc] and NAVSEA had differing interpretations over responsibility for correction of defects or deficiencies for work performed by Pennsylvania Shipbuilding [original contractor] and concerning the amount of material necessary to complete the ships. Tampa experienced significant financial and performance problems..."

[americaprd]

Thanks for the additional info. I can't believe they are going to get away with giving these things away. This guy and his company are going to make a boat load of money on this deal.

[HalfFull]

indeed...

[csvset]

Here's an article from the Virginian Pilot. No mention of the deal sweetener oilers, though. They talk up "bipartisanship" & enviromental "issues".

Bipartisanship, momentum aid Ghost Fleet removal

Waving bye-bye to 21 of the worst ships in the doddering, dangerous Ghost Fleet could come as early as this year. When that occurs, the Hampton Roads congressional delegation — especially Rep. Jo Ann Davis, a Peninsula Republican — will have earned huge praise.

The fight to rid the James River of these rusting hulks shows how a nonpartisan issue can gain strong bipartisan support. The cooperation among local House members and Sens. John Warner and George Allen has kept this issue on the minds of Washington’s lawmakers. That’s no small feat, given the competition from the war in Iraq, the battle against terrorism, tax cuts and changes

At a special congressional hearing this week at Fort Eustis, William G. Schubert, chief of the U.S. Maritime Administration, noted that his agency has signed contracts or is negotiating with U.S. and British shipyards to dispose of or recycle 21 ships. Congress, urged on by Davis, Warner and others, last year increased the amount for scrapping the ships to $31 million, and that money is targeted for those on the James River. The fleet numbers 94 vessels and is moored near key shellfish grounds, the Surry nuclear power plant and Jamestown Island.

Until the ships are removed and broken down, local residents should remain concerned. A chart in Tuesday’s Virginian-Pilot shows that the 21 ships scheduled for disposal hold hundreds of thousand of gallons of stored oil. There’s some comfort, however, in the recognition of how much has been accomplished since an investigative report in The Pilot last year lita public fuse. Some of these ships date back to the 1940s.

The previous foot-dragging had been maddening.A government study two years ago projected that if just two of the hulls broke apart in a storm, the result would be a 50-mile slick that would harm wildlife, threaten an intake pipe at the Surry plant, and cost $45 million to clean up. Heavy oil, fuel, lead paint and toxic PCBs would befoul the James.

As Congress reassesses spending priorities, further funding for the Ghost Fleet cleanup might become scarce. It shouldn’t. The fleet is still a threat, but Virginia lawmakers have so far proved adept at minimizing that threat.

[americaprd]

Thanks for the info. The Congressional hearing this is referencing is prior to the one held on Tuesday by Congressmen Weldon and Ortiz. Apparently the one held in Fort Eustis was a love-fest put togetehr by the local Congressioanl delegation. They just want the ships out of there, and don't seem very concerned about the costs to taxpayers. Either that, or they're getting campaign contributions that are helping them to look the other way.

[americaprd]

Here's another article from an industry publication. I think the Navy Times is also working on something...

American Metal Market
July 17, 2003


'Ghost Fleet' side deal raises political ire

by Joseph McCann

PHILADEPHIA -- U.S. shipbreakers learned this week that the U.S. Maritime Administration (Marad) not only favored international shipbreakers but failed to notify them about a side deal that would make scrapping "Ghost Fleet" vessels more profitable.

Rep. Curt Weldon (R., Pa.) and Rep. Solomon Ortiz (D., Texas) revealed Tuesday that Able U.K. Ltd., Teesside, England, was allowed to bid on two unfinished U.S. Navy oilers, as well as the decrepit Ghost Fleet vessels, but U.S. shipbreakers were never told that the two vessels were among those to be sold.

Weldon and scrap industry members allege that the Navy oilers allowed Able U.K. to drastically underbid the competition for Reserve Fleet vessels and win the Marad contract.

"I don't think any domestic ship scrapper realized they could use two other ships to sweeten the financial deal," Weldon told reporters. "That's not right. That's not kosher."

When the search for Ghost Fleet recyclers began earlier this year, Marad and U.S. Environmental Protection Agency officials never toured domestic scrapyards but publicly maintained that international recyclers represented the best avenue for scrapping the aged Naval ships, some of which pose environmental hazards.

Sources within the ship scrapping industry said the two other vessels included in the pending agreement were Navy oilers Benjamin Isherwood and Henry Eckford, both moored on the James River like many of the Ghost Fleet vessels.

Although many of the Ghost Fleet vessels included in the Marad deal are dilapidated, the oilers are barely 15 years old and could be sold on the open market for a substantial profit. Construction work on both vessels was never completed.

"It seems to me the whole thing has probably been handled very poorly," Rep. Jo Ann S. Davis (R., Va.) told reporters Tuesday. Davis, who publicly supported the Marad/Able U.K. deal, reportedly was so upset by the revelation that she plans to return a $ 500 campaign contribution submitted last month by Post Remediation Partners (PRP). New York-based PRP brokered the deal between Marad and Able U.K. and originally won the two Navy oilers back in a 1999 auction but never completed the deal.

A final agreement on the Marad contract for Able U.K. to scrap 13 Ghost Fleet vessels is still pending but is expected shortly.

Calls to Marad and PRP were not returned Wednesday.

Joseph McCann

[Al B.]

Thanks for the update. This work ought to remain in the U.S. American shipyards have enough trouble staying in business as it is.

BTW, this discussion sure brought back old memories. When I was a kid (long time ago), one of my cousins had a boat and we use to water ski around that old fleet of ships. The fleet was a great breakwater for the sometimes rough waters of the James River.

[americaprd]

Glad it brought back some good memories.

It sounds like they have cracked down on boats going too close to the vessels now. Last summer, a boat's engine cut out and it eventually drifted between two of the vessels ,where it was crushed. I believe two people ended up being killed because of that accident.

[csvset]

Thanks for the update. I'm going to write a letter to the Virginian Pilot and ask them why they haven't covered the issue of the Benjamin Isherwood (AO-192) and the Henry Eckford (AO-191).

[GATOR NAVY]

Weldon and scrap industry members allege that the Navy oilers allowed Able U.K. to drastically underbid the competition for Reserve Fleet vessels and win the Marad contract.

I wouldn't be suprised that with oilers in hand, they are probably hoping the rest of the ships just sink on the tow over. More trouble than they're worth with all the hazmat on board.

[Al B.]

Here's a follow-up article from the Virginian-Pilot today:  Two Ghost Fleet ships leave for England.

Tugs ease a World War II oiler from its anchorage in the James River
"Ghost Fleet" early Monday morning. Photo by Bill Tiernan / The Virginian-Pilot

Quoting from the article:  ``I frankly don't care if the ships are scrapped internationally or domestically,'' U.S. Rep. Jo Ann Davis said as the ships began leaving. ``We just want them out of our back yard on the James River.''

You would think that a congressperson WOULD care about more work being lost at US shipyards, especially a rep. from Hampton Roads.