MARITIME 

ADMINISTRATION

Ship Disposal 

Program Needs 

Improved 

Communications and 

Updated Strategic 

Plan

Report to Congressional Committees

February 2014

GAO-14-223

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-223, a report to 

congressional committees

February 2014

MARITIME ADMINISTRATION

Ship Disposal Program Needs Improved 

Communications and Updated Strategic Plan

Why GAO Did This Study

Timely and proper disposal of obsolete 

ships in the National Defense Reserve 

Fleet—older ships designated for use 

in national emergencies—is critical to 

protecting the environment. Because 

these ships often contain hazardous 

materials, members of Congress and 

others have raised issues about the 

environmental concerns. As part of the 

Department of Transportation, 

MARAD’s Ship Disposal Program 

serves as the federal government’s 

agent for competing and awarding 

contracts for recycling the ships’ 

materials. Congress has required 

MARAD’s ship disposal program to 

award ship recycling contracts to 

qualified ship recycling facilities on the 

basis of best value. The Coast Guard 

and Maritime Transportation Act of 

2012 mandated that GAO review 

MARAD’s source selection procedures 

and practices used to award ship 

recycling contracts. 

In this report, GAO assessed 

MARAD’s (1) source selection process; 

(2) communication strategy with ship 

recycling contractors; and (3) long-term 

ship disposal strategy. To complete 

this work, GAO reviewed and analyzed 

documentation on MARAD’s 

qualification process, source selection 

procedures, and strategies; and 

interviewed MARAD and all of its 

qualified ship recycling contractors.

What GAO Recommends

GAO is recommending that the 

Department of Transportation improve 

its communication strategy and update 

its strategic plan. The Department 

agreed with the facts but did not take a 

position on our recommendations. 

What GAO Found

The Maritime Administration (MARAD) uses a two-step source selection process, 

first by qualifying contractors and then awarding contracts for ship recycling 

services based on best value, consistent with the Federal Acquisition Regulation 

(FAR). In the first step, MARAD qualifies contractors’ ship recycling facilities. The 

qualification process involves evaluating ship recycling facilities’ proposals based 

on multiple criteria, including how a facility plans to dismantle ships and the 

extent to which the contractor—including its ability to meet local, state, and 

federal regulations—supports that effort. For the second step, MARAD awards 

ship recycling contracts for specific ships using a best value source selection 

process. The best value source selection process allows the government to 

accept an offer other than the best-priced offer, considering both price and nonprice factors, that provides the greatest overall benefit to the government. 

MARAD considers three evaluation criteria—price, schedule and capacity, and 

past performance.

MARAD has made some efforts over the last year to clarify certain elements of 

its source selection process; however, MARAD could strengthen its 

communication strategy with its contractors. All of the qualified contractors GAO 

spoke with were confused about MARAD’s source selection process—including 

how MARAD uses past performance to evaluate contractors’ offers. MARAD has 

made an effort to clarify its past performance criterion by further explaining what 

is considered in its most recent solicitation. However other concerns remain. For 

example, some contractors expressed concern as to whether changes to their 

facility were approved by MARAD. GAO’s standards for internal controls state 

that management should ensure adequate means of communicating with 

external stakeholders that may have a significant impact on the agency achieving 

its goals. Improving its communication strategy with its contractors could help 

MARAD maximize the transparency of its source selection process.

In 2006, MARAD issued a comprehensive management plan, or strategic plan, 

that outlined short- and long-term strategies for the disposal of MARAD’s 

obsolete ships; however several key elements are now outdated or no longer 

applicable. According to program officials, MARAD was required to provide 

regular reports to Congress for several years, the last of which was in March 

2011, on the progress made to address the backlog of obsolete ships. However, 

these reports did not provide the strategic short- and long-term direction for the 

program. Further, they indicated that the principles of the plan remain relevant; 

but the 2006 strategy does not take into account current market conditions, 

goals, and external risks. For example, concerns about maintaining the supplier 

base are not addressed in the plan. MARAD wants to maintain a supplier base to 

ensure competition for future ship recycling contracts, but has not fully 

considered risks and options to address this pending issue. Competition is a 

cornerstone in federal contracting and a critical tool for achieving the best return 

on the government’s investment. An updated strategic plan that reflects the 

current external environment and risks could better position MARAD to identify 

future challenges and opportunities to help ensure the long-term participation and 

competition of the industrial base for ship disposal.

View GAO-14-223. For more information, 

contact Marie A. Mak at (202) 512-4841 or 

makm@gao.gov
Page i GAO-14-223 Maritime Administration

Letter 1 

Background 3

MARAD’s Two-Step Source Selection Process Uses A Best Value 

Process Consistent with the Federal Acquisition Regulation 5

MARAD Has Taken Steps to Clarify Its Source Selection Process, 

but Could Strengthen Its Communication Strategy 15

MARAD’s Strategic Plan Does Not Reflect Current Conditions 17

Conclusions 20

Recommendations for Executive Action 20

Agency Comments and Our Evaluation 21

Appendix I Objectives, Scope and Methodology 23

Appendix II Maritime Administration’s Ship Disposal Options 26

Appendix III Maritime Administration’s Process for Qualifying Ship Disposal 

Facilities 27

Appendix IV GAO Contact and Staff Acknowledgments 28

Table

Table 1: Maritime Administration’s (MARAD) Qualification Process 

of Ship Disposal Facilities 27

Figures

Figure 1: Maritime Administration’s (MARAD) Qualification 

Process of Ship Recycling Facilities 7

Figure 2: Locations of National Defense Reserve Fleets and 

Number of Ships, Naval Inactive Ship Maintenance 

Facilities and Number of Ships, and Qualified Facilities as 

of October 2013 10

Contents
Page ii GAO-14-223 Maritime Administration

Figure 3: Maritime Administration’s (MARAD) Source Selection 

Process for Sales Contracts for Ship Recycling, Fiscal 

Year 2013 13

Figure 4: Percentage of the Maritime Administration’s (MARAD) 

Ship Recycling Contracts Awarded to the Best Price 

Offer, Other than Best Price Offer, and NonCompetitively, Fiscal Years 2009 through 2013 14

Figure 5: Number of Ships in Fleet that were Available for 

Disposal at the Start of the Fiscal Year and Removed 

from the Fleet during the Fiscal Year, Fiscal Years 2005 

through 2013 18

Figure 6: Number of Ships the Maritime Administration (MARAD) 

Removed from the Fleet for Disposal, by Type, Fiscal 

Years 2001 through 2013 26

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Page 1 GAO-14-223 Maritime Administration

441 G St. N.W.

Washington, DC 20548

February 12, 2014

Congressional Committees

As part of the Department of Transportation, the Maritime Administration’s 

(MARAD) Ship Disposal Program serves as the federal government’s 

agent for competing and awarding contracts for disposal of obsolete ships 

in the National Defense Reserve Fleet (NDRF) and some of those from 

other federal agencies weighing 1,500 gross tons or more.1

MARAD can dispose of obsolete ships through sales recycling 

contracts—in which the government sells the ship to the contractor and 

the contractor dismantles the ship and sells the scrap for profit. Prior to 

2000, MARAD sold ships to the contractor with the highest price for the 

ship. By the late 1990s, the market price for scrap metal decreased, 

which contributed to a decline in contractors’ interest in purchasing ships. 

As a result, MARAD experienced a backlog of obsolete ships for disposal. 

Beginning in fiscal year 2001, Congress expanded MARAD’s ship 

disposal authority to include the option to pay for recycling services 

through contracts for services—through which the government pays the 

Many of 

these ships contain hazardous materials such as asbestos, lead, 

polychlorinated biphenyls, and residual oils and fuels. MARAD must 

comply with certain federal statutes that affect ship disposal including 

those related to the handling of pollutants and hazardous waste. 

However, members of Congress and environmental groups have raised 

issues about the potential environmental hazards—such as costly oil 

spills or other environmental threats—posed by these ships and the need 

for the timely and proper disposal of them to protect the environment. 

MARAD’s disposal prioritization is based on ship material condition and a 

“worst first” disposal policy for obsolete ships in the NDRF. From fiscal 

year 2001 through fiscal year 2013, 197 ships have been removed from 

MARAD’s fleets for disposal. As of October 2013, 27 obsolete ships 

remain in the fleet, while about three to five additional ships are declared 

obsolete each year. 

 

1

Established in 1946, the National Defense Reserve Fleet serves as a reserve that could 

be activated to meet shipping requirements during national emergencies. The fleet 

contains some older ships that have been designated for disposal (referred to as nonretention ships). In this report, we refer to non-retention ships as obsolete ships.
 

Page 2 GAO-14-223 Maritime Administration

contractor to dismantle and dispose of the ship’s material.

2 Congress has 

also required MARAD, for both sales contracts and contracts for services, 

to select awardees on the basis of best value, consistent with the Federal 

Acquisition Regulation (FAR), considering, among other things, least cost 

to the government, timeliness, worker safety, and environmental 

concerns. When awarding these contracts on the basis of best value, 

MARAD selects a contractor’s offer that, in the government’s estimation, 

provides the greatest overall benefit in response to the requirement, 

considering both price and non-price factors.3 At times, this may result in 

an award that is not the best price.4

The Coast Guard and Maritime Transportation Act of 2012 mandated that 

GAO conduct an assessment of the source selection procedures and 

practices used to award MARAD’s NDRF ship recycling contracts, 

including MARAD’s processes, procedures, and practices for the 

qualification of ship recycling facilities, determining whether MARAD’s 

contract source selection procedures and practices are consistent with 

the law and best practices associated with making source selection 

decisions, as well as any other aspect we deem appropriate to review.

MARAD started using best value 

source selection procedures for ship recycling contracts beginning in 

2002.

5

To determine MARAD’s source selection process for ship recycling, 

including facility qualification and best value process for contract awards, 

and the extent to which MARAD communicates that process with 

contractors, we identified and reviewed federal laws and regulations 

This report assesses MARAD’s (1) source selection process; (2) 

communication strategy with ship recycling contractors; and (3) long-term 

ship disposal strategy.

 

2

Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, Pub. L. No. 

106-398, § 3502 (2000). For the purposes of this report, we generally refer to sales 

contracts and contracts for services as recycling contracts. 

3

An agency can obtain best value by using certain source selection approaches. MARAD 

specifically uses a tradeoff process which permits tradeoffs among cost or price and noncost factors and allows the Government to accept other than the best priced offer. FAR § 

15.101. See FAR § 2.101 for the definition of best value.

4

For the purposes of this report, when we use the term “best price” we mean an award of 

a sales contract to the highest priced offer, or an award of a contract for services to the 

lowest priced offer.

5

Pub. L. No. 112-213, § 415.
 

Page 3 GAO-14-223 Maritime Administration

associated with MARAD’s source selection processes, including FAR 

regulations on simplified acquisition procedures and best value 

determinations, and compared these to MARAD’s processes. We 

reviewed and analyzed the cognizant facility qualification documents, 

including the proposals submitted to MARAD. Further, to identify how 

MARAD made best value determinations, we identified and reviewed a 

random, non-representative sample of source selection documents from 

fiscal year 2010 through fiscal year 2013 to identify the steps and analysis 

conducted by MARAD to select a contractor for award. We selected 

contracts awarded from fiscal year 2010 to 2013 to include both sales 

contracts and contracts for services in our sample. We interviewed 

MARAD Ship Disposal Program officials responsible for source selection 

and all six qualified contractors and one contractor going through 

qualification to determine the facility qualification process and how 

MARAD communicates with contractors.6 We also compared MARAD’s 

communication strategy to criteria in Standards for Internal Control in the 

Federal Government related to effective communications.7

To assess MARAD’s long-term disposal strategy, we reviewed MARAD’s 

documentation related to its ship disposal strategies. We reviewed 

Standards for Internal Control in the Federal Government related to 

strategic planning, and assessed MARAD’s actions against these 

standards. We also interviewed MARAD officials to identify MARAD’s 

program goals and long term strategies related to ship disposal.

We conducted this performance audit from May 2013 to February 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

MARAD’s Office of Ship Operations maintains the NDRF as a reserve of 

ships for defense and national emergencies. When ships are no longer 

 

6

Two of the contractors we interviewed no longer have a qualified facility.

7

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C. Nov. 1999).

Background
 

Page 4 GAO-14-223 Maritime Administration

considered useful for defense or aid missions, the Office of Ship Disposal, 

which reports to the Associate Administrator for National Security, 

arranges for their responsible disposal. NDRF ships are located at three 

sites: the James River Reserve Fleet at Fort Eustis, Virginia; the 

Beaumont Reserve Fleet in Beaumont, Texas; and the Suisun Bay 

Reserve Fleet at Benicia, California. In addition, as established in a 

Memorandum of Agreement with the Navy in 2011, MARAD disposes of 

certain non-combatant ships from the Naval Inactive Ship Maintenance 

Facilities in Pearl Harbor, Hawaii and in Philadelphia, Pennsylvania.

Naval Inactive Ship Maintenance Facilities are used to hold 

decommissioned U.S. Navy and auxiliary ships pending determination of 

their disposal.

MARAD’s Ship Disposal Program’s mission is to dispose of obsolete 

NDRF ships through the most expedient, best value, and environmentally 

safe disposal methods. The program’s approach is to remove all ships 

that present the highest risk to the environment as soon as possible, and 

to have disposal alternatives and the necessary funding in place to 

ensure that obsolete ships can be disposed of at a faster rate than ships 

in the NDRF are designated as obsolete. MARAD’s Ship Disposal 

Program is authorized to consider alternative ship disposal methods in 

addition to recycling obsolete NDRF ships, including, for example, 

artificial reefing and donation. MARAD has made limited use of these 

methods because of a number of environmental, financial, and legal 

barriers. According to MARAD, recycling is the most expedient, 

environmentally sound, and cost-effective method of disposal available.

After MARAD determines that a ship is ready for recycling, it first offers 

the ship for sale to qualified contractors through sales contracts. If it 

receives no offers to purchase the ship, MARAD will then procure 

services to dispose of the ship through a contract for services—in which 

the government pays the contractor to recycle the ship’s material. When 

acquiring services through a contract, MARAD uses simplified acquisition 

procedures, as defined in the FAR, which allow for simplified processes to 

award contracts under a certain dollar threshold.8

 

8

Specifically, MARAD uses the Commercial Item Test Program, FAR Subpart 13.5. This 

generally authorizes the use of simplified procedures for the acquisition of services in 

amounts under $6.5M, including options, if the contracting officer reasonably expects that 

offers will include only commercial items.

MARAD is generally not 

required to follow the procedures delineated in the FAR when awarding 
 

Page 5 GAO-14-223 Maritime Administration

sales contracts because the government is not acquiring supplies or 

services with appropriated funds. However, MARAD officials explained 

that because they are required to adhere to the FAR when awarding 

contracts for services, to be consistent, they adopted similar procedures 

for sales contracts.

In the past two years, MARAD has disposed of the ships exclusively

through domestic recycling using sales contracts. See appendix II for 

more information on the ship disposal options used since 2001. In its 

most recent announcement in November 2013, however, three ships 

were announced as ready for recycling and MARAD received no sales 

offers. As a result, MARAD plans to procure the services to recycle the 

ships through contracts for services. MARAD officials explained that, 

while they cannot know all the factors the contractors considered when 

deciding whether or not to submit a sales offer on a ship, the specific 

ships in this announcement may not have looked profitable to the 

contractors for a variety of reasons. One ship was tested and proven to 

have polychlorinated biphenyls, which must be removed through a very 

costly process before the steel can be sold to recyclers. The other two 

ships were small, and MARAD officials noted that contractors may have 

estimated that the costs of towing the ship to the facility plus the labor 

were not likely to be recovered in the sale of the steel.

Since 2005, MARAD has been using a two-step source selection process 

for ship recycling. The first step is to qualify the facilities of ship recycling 

contractors that respond to MARAD’s solicitation for ship disposal, 

thereby creating a pool of qualified facilities for contracts for either sales 

or services. In this step, MARAD determines if a ship recycling facility is 

qualified by evaluating the facility against multiple criteria as outlined in 

the solicitation. The second step is to award ship recycling contracts for 

specific ships to qualified contractors. Qualified contractors submit offers 

in response to MARAD’s announcements—which inform the contractors 

about the location, names, and work to be completed on multiple ships 

available for recycling. MARAD then evaluates the offers and determines 

which offer is the best value for the government, consistent with the FAR, 

using price and non-price factors such as schedule, capacity, and past 

performance.

MARAD’s Two-Step 

Source Selection 

Process Uses A Best 

Value Process 

Consistent with the 

Federal Acquisition 

Regulation
 

Page 6 GAO-14-223 Maritime Administration

The first step for a contractor interested in having their facility qualified is 

to submit a proposal in response to MARAD’s solicitation. MARAD’s 

process for determining if a ship recycling facility is qualified consists of 

evaluating the facility’s proposal against multiple criteria as outlined in 

MARAD’s solicitation for ship disposal. These criteria include considering 

how a contractor plans to dismantle ships and the extent that the site is 

capable to support that effort. Beginning in 2005, MARAD began using an 

open solicitation process—in which interested vendors can respond at 

any time as opposed to by a specific date.9

Once the interested recycling contractor submits a proposal, MARAD 

follows the steps indicated in figure 1 to determine if the ship recycling 

facility is qualified.

Periodically, MARAD will 

update and reissue the solicitation, as it did in fiscal year 2009 and again 

in fiscal year 2014. When the solicitation was updated in fiscal year 2014, 

previously-qualified facilities needed to re-qualify based on any new 

criteria incorporated into the updated solicitation.

 

9

Prior to 2005, MARAD used Program Research and Development Announcements 

(PDRA) to award ship disposal contracts. In 2005, we reported that MARAD’s use of 

PDRAs was inappropriate because PDRAs are intended to be used to acquire research or 

development services. See GAO, Maritime Administration: Improved Program 

Management Needed to Address Timely Disposal of Obsolete Ships, GAO-05-264, 

(Washington, D.C.: Mar. 7, 2005).

MARAD’s Qualification 

Process Is Based on 

Multiple Criteria and Varies 

in the Time It Takes to 

Complete
Page 7 GAO-14-223 Maritime Administration

Figure 1: MARAD’s Qualification Process of Ship Disposal Facilities

Source: GAO analysis of MARAD information.

Interactive Graphic Rollover the the green circle and purple boxes for more information. See appendix III for the non-interactive, printer-friendly version.

Qualification

requirements and 

criteria are posted

in its most recent 

solicitation.

Pre-proposal 

meetings/

teleconferences 

are held with

contractor upon 

request

Proposal is 

received and 

MARAD conducts

initial evaluation

MARAD monitors 

facilities and 

conducts 

re-qualifications

as deemed necessary

MARAD completes

 proposal evaluation 

and reaches a 

qualification 

decision

Proposal 

deficiencies

communicated in 

writing to contractor

Are proposals 

complete and

feasible?

Contractor submits 

additional 

information 

to complete

their proposal

MARAD conducts 

site visit and 

pre-qualification

survey with facility

No Yes
 

Page 8 GAO-14-223 Maritime Administration

MARAD reviews the proposal—including a technical compliance plan that 

addresses performance capability and ability to comply with all applicable 

local, state, and federal environmental, safety, and health laws and 

regulations—for completeness in its initial evaluation. Once MARAD 

determines that the proposal is complete, it begins evaluating the 

proposal against multiple criteria including:

• feasibility and likelihood of success of the engineering, technical, and 

management approach for disposal of obsolete ships and associated 

risks; 

• productivity of the proposed approach including schedule and cost 

assessments; 

• type and sufficiency of proposed methods, processes, and 

procedures; and

• depth, relevance, and currency of requisite experience of the facility.

The length of the qualification process—which has been as short as a few 

months or as long as five years—varies for several reasons. One reason 

for the variation, according to MARAD officials, is that the initial proposals 

are rarely complete. This part of the process is iterative and MARAD 

officials stated that they work closely with individual contractors to obtain 

the necessary information to enable the completion of the evaluation 

process. In its fiscal year 2014 solicitation, MARAD’s stated goal is to 

complete the initial evaluation of proposals within eight weeks from the 

date the proposals are submitted. This timeline, according to officials, is 

based on the availability of MARAD’s resources. However, MARAD 

officials noted that the contractor’s responsiveness to requests for 

additional explanation or information is out of their control and can impact 

their ability to move forward with the qualification process. In some cases, 

a contractor may opt to not continue with the qualification process.

Another reason for the different timetables for qualification, according to 

MARAD officials, is that each facility is unique and faces individual 

challenges. MARAD officials explained that it is incumbent upon the 

contractor to identify all of the local, state, and federal laws and 

regulations that apply to ship recycling for the location where the facility is 

located, and to comply with those laws. For example, a facility in 

California took over five years to qualify because, according to MARAD 

officials, it had to address strict state and local environmental laws and 

regulations and experienced significant delays in obtaining necessary 
 

Page 9 GAO-14-223 Maritime Administration

permits from state environmental regulators. Further, the proposed 

location had not been used for many years, and MARAD needed 

additional assurances to ensure qualification criteria were met.10

As shown in figure 2, MARAD currently has six qualified recycling 

facilities, represented by four contractors, in two states: Louisiana and 

Texas. As of October 2013, there were 27 MARAD and two Navy-owned 

ships awaiting disposal.

When a 

new process is introduced by a ship recycling facility, qualification may 

take more time. For instance, a contractor recently proposed a new 

method for ship recycling that involves dismantling the ship while afloat. 

MARAD considers the procedures for maintaining the stability of the ship; 

environmental abatement of hazardous materials, such as asbestos and 

paint disposal; worker safety; and health considerations under this new 

approach before making a qualification decision.

 

10This facility is no longer qualified. According to MARAD, the contractor decided not to 

respond to the fiscal year 2014 solicitation to remain a qualified facility and to instead 

focus on other business opportunities.
 

Page 10 GAO-14-223 Maritime Administration

Figure 2: Locations of National Defense Reserve Fleets and Number of Ships, Naval Inactive Ship Maintenance Facilities and

Number of Ships, and Qualified Facilities as of October 2013

After a facility is deemed qualified, MARAD conducts regular oversight, to 

include bi-weekly teleconferences and quarterly visits to the facilities. 

During its visits, MARAD checks the facility’s compliance processes and 

issues deficiency notices if corrective action is needed. In addition, 

MARAD conducts oversight of the environmental protection and worker 

safety procedures for the facility. If there is a deficiency found, MARAD 

refers the issue to the appropriate federal agency, such as the 

Environmental Protection Agency or Occupational Safety and Health 

Administration. Further, through its announcement process, MARAD 

requires existing qualified contractors to report changes made to their 
 

Page 11 GAO-14-223 Maritime Administration

ship recycling facilities. These changes could range from a minor change 

to one part of its recycling process, such as a change in paint removal 

process, or a significant change such as when a facility is changing 

ownership.

After becoming qualified, a contractor’s facility is eligible to compete for 

ship recycling contracts, and does so by providing offers in response to 

MARAD’s announcements on specific ships. Approximately three to four 

announcements are issued per year, with three to six ships offered per 

announcement. MARAD’s announcement includes the location and 

names of the ships that MARAD would like recycled, and the work to be 

accomplished for each ship. According to MARAD officials, including 

multiple ships in each announcement optimizes competition and 

minimizes costs.

To decide which facility should receive contracts for the ships in the 

announcement, MARAD uses a source selection process to determine 

which offer provides the best value to the government. This process 

allows the government to accept an offer other than the best priced offer, 

considering both price and non-price factors. MARAD uses the following 

three evaluation criteria to determine which offers provide the best value 

for the government:

• price,

• schedule and capacity, and

• past performance.

Because it is using simplified acquisition procedures, MARAD is not 

required to disclose the relative importance assigned to each evaluation 

factor.11

Although not required to state the relative importance of the evaluation 

criteria, MARAD’s source selection process generally addresses the 

criteria in a specific order. Initially, MARAD ranks contractors’ sales offers 

For example, MARAD is not required to state in the 

announcement whether price is more, less, or equal in importance to past 

performance.

 

11FAR §13.106-1(a)(2) allows the agency not to specify the relative order of importance of 

the evaluation factors. Under negotiated contracting processes, agencies are required to 

provide a relative order of importance of the evaluation criteria.

MARAD’s Best Value 

Process for Source 

Selection of Its Ship 

Recycling Contracts is 

Consistent with the 

Federal Acquisition 

Regulation
 

Page 12 GAO-14-223 Maritime Administration

on individual ships by highest to lowest price, then by shortest to longest 

schedule. MARAD then determines a competitive range—in other words, 

a subset of all the offers that represents the most highly rated offers. 

Once the competitive range is determined, MARAD requests multi-ship 

recycling schedules from contractors with competitive offers on more than 

one ship to gain insight into what the schedule would be if the facility wins 

more than one ship in the announcement. For example, if a contractor 

made offers on two ships that were determined to be in the competitive 

range, MARAD would ask the contractor to provide a revised schedule 

showing how many days it would take the contractor’s facility to recycle 

both ships. MARAD then reviews capacity at each facility in the 

competitive range. Capacity, according to MARAD, refers to the facility’s 

ability to take possession of and actively work on the ship(s) at its facility, 

which reflects current and future ship recycling work from all sources at 

the recycling facility. Finally, MARAD considers past performance, which 

can include timeliness on past contracts, a change in management, or the 

amount of time since the facility last recycled a MARAD ship. Figure 3 

describes in more detail the steps MARAD uses in its best value source 

selection for ship recycling contracts.12

 

12To determine that MARAD’s process is consistent with the FAR, we considered the 

general processes that we observed in our review of selected contract awards and 

discussed these with MARAD. We did not consider how this process is applied in the 

context of a specific solicitation or contract award. Consequently, this determination does 

not represent a decision by GAO’s bid protest function.
 

Page 13 GAO-14-223 Maritime Administration

Figure 3: Maritime Administration’s (MARAD) Source Selection Process for Sales Contracts for Ship Recycling, Fiscal Year 

2013
 

Page 14 GAO-14-223 Maritime Administration

As indicated in figure 4, most contracts were awarded to the contractor 

with the best price offer.

Figure 4: Percentage of the Maritime Administration’s (MARAD) Ship Recycling 

Contracts Awarded to the Best Price Offer, Other than Best Price Offer, and NonCompetitively, Fiscal Years 2009 through 2013

For fiscal year 2009 through fiscal year 2013, about 78 percent of 

MARAD’s contract awards for ship recycling, including both sales 

contracts and contracts for services, were awarded to the contractor that 

offered the best price. Half of all contracts were awarded to the contractor 

that offered both the best price and shortest schedule. Another 19 percent 

of the awardees were selected based on factors other than the best price, 

and 3 percent were awarded non-competitively, which means these 

awards were not subject to MARAD’s typical source selection process. 

For example, one contract was awarded non-competitively because it 

was in the best interest of the government to support an increased 

industrial base of ship recycling facilities on the west coast.
 

Page 15 GAO-14-223 Maritime Administration

MARAD has made some efforts over the last year to clarify certain parts 

of its source selection process; however, during our review, contractors 

told us that they do not fully understand how it works. Almost all of the 

contractors were unsure as to how MARAD determines best value under 

sales contracts. Most of the contractors told us that they did not always 

understand why they lost a ship recycling contract. Three contractors 

noted it was particularly confusing when they offered the best price with 

what they believed to be a reasonable schedule compared to other 

contractors, yet still lost the contract. A couple admitted that there were 

instances where they did not understand why they won a contract.

One consistent source of confusion was that they did not know how 

MARAD values past performance when awarding contracts for ship 

recycling—both in how past performance affected the chance to be 

awarded a future contract and in what factors were considered. For 

example, they did not know if environmental infractions or late 

performance on previous contracts played a role in the ability to win future 

MARAD ship recycling contracts. MARAD, for its part, explained to us that 

past performance has rarely affected a contractor’s ability to win a 

contract for one ship in an announcement, but has had a greater affect 

when MARAD considers the award of more than one ship to the 

contractor. In addition, in our review of contract documentation, we found 

several instances where MARAD considered past performance in 

combination with capacity. For example, a contractor may have had 

schedule delays on prior ships which were then exacerbated when the 

contractor was managing the recycling schedule for multiple ships. How 

MARAD considers the multiple factors when making a best value award 

varies depending on the specific circumstances of the procurement. As a 

result, the basis for each award may be unique, which may contribute to 

the contractor’s confusion on how MARAD is making these decisions. To 

clarify past performance, in the fiscal year 2014 solicitation, MARAD has 

elaborated on what will be evaluated within the past performance 

criterion—stating that it includes the contractor’s history of reasonable 

and cooperative behavior, record of integrity, and business relationships 

with the customer. Although a positive step, lack of communication with 

contractors regarding effects of their past performance, if any, on their 

future offers remains a source of confusion.

Further, MARAD recently improved its contractor debriefing process by 

adding two more narrative sections to its pre-debriefing form, one on 

capacity and one on best value. Under the simplified acquisition process, 

if a contractor requests information on an award that was based on 

factors other than price alone, MARAD is to provide a brief explanation of 

MARAD Has Taken 

Steps to Clarify Its 

Source Selection 

Process, but Could 

Strengthen Its 

Communication 

Strategy
 

Page 16 GAO-14-223 Maritime Administration

the basis for the contract award decision. Although not required to do so, 

about two years ago, MARAD decided to offer more formal debriefings to 

convey this information. The debriefings are intended to help contractors 

understand how their offer compared to the winning offer and to help 

improve offers for the next time. Once a facility contractor requests a 

debriefing, MARAD creates a pre-debriefing report that compares the 

contractor’s offer—price and schedule—to the successful contractor’s 

price and schedule. The pre-debriefing report is then sent to the 

requesting contractor with an invitation to participate in a debriefing 

meeting. MARAD told us that all contractors have been informed of the 

availability, upon request, of debriefing after a contract award. However, 

according to MARAD, after the last four ship recycling announcements, 

only three of the six contractors that bid on the ships asked for a 

debriefing.

These three contractors stated that MARAD’s debriefing process did not 

help them understand why they lost the contract or how MARAD 

considered price and non-price factors in its best value determinations. 

MARAD revised the debriefing form to include the additional narrative 

sections; however, it has not informed contractors of this change. 

Contractors may not be aware that the additional information is available 

unless they request a debriefing. MARAD officials told us that they plan to 

inform contractors of the new debriefing form through an amendment to 

the solicitation. If MARAD communicates the additions to the debriefing 

form in an open and transparent way, facility contractors may seek to 

obtain information in order to improve their offers for the next 

announcement, which ultimately could lead to better results for the 

government.

Contractors that we spoke with also expressed confusion about other 

parts of MARAD’s source selection process, including its qualification 

process. For example, four contractors said that they notified MARAD of a 

change to an element of their recycling process at a facility, and that 

MARAD acknowledged receipt of the notification but did not indicate 

whether the change was approved or not approved. These contractors 

were confused about whether certain changes made would affect their 

eligibility to compete for a contract. In one instance, a contractor told us 

they informed MARAD about newly-installed ship cutting pads and some 

dredging they had completed at their facility, but they heard no response 

from MARAD. According to the contractor, a MARAD official only 

recognized the changes during a site visit to the facility.
 

Page 17 GAO-14-223 Maritime Administration

In response to these concerns, MARAD officials explained that they are 

always available to hear questions from contractors should any questions 

arise, and contractors should feel comfortable contacting them with any 

questions. Standards for Internal Control in the Federal Government state 

that management should ensure there are adequate means of 

communicating with external stakeholders that may have a significant 

impact on the agency achieving its goals.13 Although MARAD has 

improved some aspects of communication with facility contractors, it 

could strengthen its communication strategy. For example, one method to 

improve communication could involve an annual industry day or 

conference where all contractors can ask questions and request 

clarification on any part of MARAD’s source selection process or other 

aspects of ship disposal resulting in all contractors hearing the same 

responses at the same time. Regular individual meetings might also be 

scheduled with contractors where their specific concerns are discussed. 

Improving its communication strategy with its contractors could help 

MARAD maximize the transparency of its source selection process.

In our 2005 report, we found MARAD had not developed a 

comprehensive management approach that could address the myriad of 

environmental, legal, and regulatory challenges that the program faces. 

As a result, we recommended that it develop a comprehensive approach 

to manage its ship disposal program.14

 

13

In 2006, MARAD issued a 

comprehensive management plan, or strategic plan, which outlined short 

and long-term strategies for the disposal of the agency’s obsolete ships; 

however, several key elements are outdated or no longer applicable. The 

plan stated that MARAD will annually assess and report on its progress 

and all factors affecting the program, and if necessary, revise the shortand long-term strategy and implementation plan. Since then, however, it 

has not updated its plan, because, according to program officials, the 

principles of the plan remain relevant. MARAD was required, however, to 

provide regular reports to Congress for several years, the last of which 

was in March 2011. The reports provided information on the progress 

made to address the backlog, and other activities accomplished since the 

GAO/AIMD-00-21.3.1.

14GAO-05-264. 

MARAD’s Strategic 

Plan Does Not 

Reflect Current 

Conditions
 

Page 18 GAO-14-223 Maritime Administration

last report, but did not provide the strategic short- and long-term direction 

for the program.15

The 2006 strategy does not take into account current market conditions, 

goals, and external risks. For example, one of MARAD’s stated goals was 

to eliminate the backlog of high priority ships that accumulated in the 

1990s. MARAD officials we spoke with acknowledge that the backlog has 

been addressed and they are now focused on maintaining a steady 

stream of ships entering the NDRF to be removed from the fleet for 

disposal. As shown in figure 5, from fiscal years 2005 through 2013, 168 

ships were removed from the fleet in preparation for disposal. MARAD 

has 27 NDRF and 2 Navy ships for disposal at the start of fiscal year 

2014 and about three to five obsolete ships will be added to its inventory 

during fiscal year 2014. Further, MARAD’s target is to remove 12 ships 

for disposal in fiscal year 2014.

Figure 5: Number of Ships in Fleet that were Available for Disposal at the Start of 

the Fiscal Year and Removed from the Fleet during the Fiscal Year, Fiscal Years 

2005 through 2013

 

15In 2011, Congress amended the reporting requirement to simply require MARAD to 

provide briefings upon request. National Defense Authorization Act for Fiscal Year 2012, 

Pub. L. No. 112-81, § 3504 (2011).
 

Page 19 GAO-14-223 Maritime Administration

The 2006 plan also discusses options for ship disposal that are no longer 

applicable.

• The plan points to available domestic recycling facilities located along 

the East and Gulf Coasts; however, as of October 2013, the East 

Coast facility is no longer considered a qualified facility.

• The plan notes that one of the critical factors that will impact 

MARAD’s goals for ship disposal is making foreign recycling a viable 

disposal option in 2006 and beyond. Foreign recycling is not an option 

because the Duncan Hunter National Defense Authorization Act for 

Fiscal Year 2009 generally prohibited sales to foreign facilities, 

unless, among other things, no domestic capacity is available.16

• The plan describes sales contracts as an option that is of occasional 

interest and not considered a trend that can be relied upon. MARAD 

has experienced a trend of sales contracts starting in fiscal year 2011. 

(See appendix II)

Further, MARAD officials expressed concern about maintaining the 

supplier base to help ensure adequate competition among contractors as 

the number of ships available for disposal decreases, a concern that is 

not addressed in the 2006 plan. Competition is a cornerstone of federal 

contracting and a critical tool for achieving the best return on the 

government’s investment. Achieving effective competition, in which the 

government receives more than one offer in response to a solicitation, 

has been a focus of other agencies, such as the Office of Management 

and Budget and Department of Defense, because of its noted benefits to 

the government, including the ability to consider alternative solutions in a 

reasoned and structured manner.

MARAD officials also expressed concerns about the potential effect on 

the capacity of three of their qualified facilities that were recently awarded 

Navy contracts to recycle three large aircraft carriers. According to them, 

one aircraft carrier is approximately equivalent to eight MARAD ships, 

and they are concerned that this will reduce the capacity of these facilities 

which will in turn reduce their availability to compete on future MARAD 

announcements. Standards for Internal Control in the Federal 

Government call for identifying risks to the agency arising from external 

and internal factors, and developing a thorough analysis of the possible 

 

16Pub. L. No. 110-417, § 3502 (2008).
 

Page 20 GAO-14-223 Maritime Administration

effect of the risks and an approach for risk management.17 In addition to 

updating the current goals and ship disposal options available, MARAD 

can use the plan to assess future risks and strategies to address internal 

and external factors, such as supplier base. For example, MARAD has a 

fiscal year 2011 Memorandum of Agreement with the U.S. Navy to 

dispose of certain non-combatant ships, a fiscal year 2013 Letter of 

Agreement with the General Services Administration to disposed of 

certain federally-owned excess ships, and a Memorandum of Agreement 

with the U.S. Coast Guard to dispose of certain excess cutters, none of 

which are included in the 2006 plan. An updated strategic plan that 

reflects the current external environment and risks could better position 

MARAD to identify challenges and opportunities confronting the future 

management of the ship disposal program, including maintaining longterm participation in and competition within the industrial base for ship 

disposal.

Over the last decade, MARAD’s ship disposal program has made ample 

progress disposing of obsolete ships, effectively eliminating the past 

backlog. MARAD’s current process for making source selection decisions 

is consistent with the FAR’s procedures and processes for simplified 

acquisitions and determining best value. However, MARAD could improve 

its information sharing with its qualified contractors to be more 

transparent. Ship recycling contractors have been concerned whether 

changes in their facility and processes are being approved by MARAD. 

Contractors were also uncertain about how best value determinations are 

made. MARAD, on the other hand, believes it is always available to 

discuss concerns and relies on the contractors to reach out and ask for 

clarification. Until MARAD improves its communication strategy with 

contractors, it is not maximizing transparency in its efforts. Moreover, an 

updated strategic plan or new strategic plan reflecting the current external 

environment and risks could help MARAD improve its ship disposal 

program.

To enhance MARAD’s transparency in its source selection processes or 

other aspects of ship disposal and strategic direction for its efforts, we 

 

17GAO/AIMD-00-21.3.1.

Conclusions

Recommendations for 

Executive Action
 

Page 21 GAO-14-223 Maritime Administration

recommend that the Secretary of Transportation direct the MARAD 

Administrator to take the following two actions:

• Improve MARAD’s communication strategy, such as by holding an 

annual industry day or annual meetings with qualified contractors, to 

transparently communicate information to qualified contractors and to 

respond to their questions; and

• Update MARAD’s 2006 comprehensive management plan, i.e. 

strategic plan, or create a new strategic plan to reflect its current 

goals, external factors affecting the disposal program, and future risks 

and strategies based on those goals and factors, and periodically 

update this plan.

We provided a draft of this report to DOT for review and comment. DOT 

did not take a position on our recommendations, but generally agreed 

with the facts presented. DOT provided technical comments, which we 

incorporated as appropriate

We are sending copies of this report to the Secretary of Transportation 

and appropriate committees. In addition, the report will also be available 

at no charge on our website at http://www.gao.gov. 

If you or your staff have questions about this report, please contact me at 

(202)-512-4841 or makm@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix IV.

Marie A. Mak

Acting Director

Acquisition and Sourcing Management Team

Agency Comments 

and Our Evaluation
 

Page 22 GAO-14-223 Maritime Administration

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable John D. Rockefeller

Chairman

The Honorable John Thune

Ranking Member

Committee on Commerce, Science and Transportation

United States Senate

The Honorable Howard P. McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Bill Shuster

Chairman

The Honorable Nick J. Rahall

Ranking Member

Committee on Transportation and Infrastructure

House of Representatives

The Honorable Mike Thompson

House of Representatives
Appendix I: Objectives, Scope and 

Methodology

Page 23 GAO-14-223 Maritime Administration

The Coast Guard and Maritime Transportation Act of 2012 mandated that 

GAO conduct an assessment of the source selection procedures and 

practices used to award the Maritime Administration’s (MARAD) ship 

recycling contracts, including the process, procedures and practices used 

for qualification of ship disposal facilities, whether MARAD’s contract 

source selection procedures and practices are consistent with the law, 

and best practices associated with making source selection decisions, as 

well as any other aspect we deem appropriate to review. This report 

assesses MARAD’s (1) source selection process; (2) communication 

strategy with ship disposal facility contractors; and (3) long-term ship 

disposal strategy.

To assess MARAD’s source selection process—including facility 

qualification and best value determination—and its communication 

strategy, we reviewed federal laws and regulations, guidance, and other 

documentation associated with the agency’s source selection procedures, 

including simplified acquisition procedures and how best value 

determinations are addressed in the Federal Acquisition Regulation 

(FAR). We compared MARAD’s procedures to those in the FAR, as 

applicable. We analyzed its solicitations for fiscal years 2005, 2009, and 

2014 that describe the facility qualification process, which represent all 

the solicitations issued since the agency stopped using Program 

Research and Development Announcements in 2005. We also reviewed 

examples of correspondence between MARAD and facilities, specific ship 

announcements, and required reports and briefings for Congress and 

other communications with contractor facilities, such as debriefing forms, 

and recent bid protests related to facility qualification and source selection 

procedures. We compared MARAD’s communication strategy to criteria in 

Standards for Internal Control in the Federal Government related to 

effective communications.1

 

1

GAO, Standards for Internal Control in the Federal Government, 

In addition, we reviewed facility qualification 

documents, e.g. the facilities’ submitted general technical plans, 

MARAD’s letters of concern to contractors, and the notification of results 

from the evaluation of technical plans to determine the length of time it 

took to become qualified and how monitoring by MARAD was conducted. 

To identify how MARAD determined best value during the source 

selection process, we identified and reviewed a random nonrepresentative sample of source selection documents for fiscal year 2010 

GAO/AIMD-00-21.3.1

(Washington, D.C. Nov. 1999).

Appendix I: Objectives, Scope and 

Methodology
Appendix I: Objectives, Scope and 

Methodology

Page 24 GAO-14-223 Maritime Administration

through 2013, e.g., sales announcements for 18 obsolete ships, facility 

proposals and MARAD notification memorandums, and contracts, to 

determine the steps and analysis MARAD uses to select a contractor 

through a best value process. We selected contracts awarded from fiscal 

year 2010 to 2013 to include both sales contracts and contracts for 

services in our sample.

We also interviewed MARAD Ship Disposal Program officials and six 

contractors representing all seven qualified facilities at the time of our 

review to determine the processes that are used to select and award 

contracts. We also interviewed one contractor with one facility going 

through the qualification process at the time of our review. Through 

interviews with these officials, we determined (1) how the qualification 

process was applied for facilities to become technically acceptable and 

qualified; (2) how MARAD monitors a facility’s qualification status and any 

changes to the facility; (3) the process for source selection, including how 

best value determinations are made for specific ship announcements for 

disposal; (4) how MARAD communicates its source selection process 

with contractors; and (5) challenges identified by facilities or MARAD 

relating to the award of ship disposal contracts.

MARAD’s pool of qualified ship disposal facilities at the time of GAO 

review included:2

1. All Star Metals, LLC

2. Mare Island Shipyard, LLC (formerly Allied Defense Recycling, LLC)

3. Bay Bridge Texas, LLC (undergoing qualification)

4. BB Metals Enterprises, Inc.

5. Esco Marine, Inc.

6. International Shipbreaking Ltd.

 

2 Mare Island Shipyard in Vallejo, Calif. and BB Metals Enterprise, Inc. in Baltimore, Md. 

are no longer qualified. Both facilities chose not to submit new general technical proposals 

as required under the new ship disposal solicitation. International Shipbreaking Ltd. and 

Southern Recycling, LLC are owned by the same contractor. Also, according to MARAD 

officials, since the time of our review, one additional facility owned by this contractor 

became qualified. To summarize, as of December 2013, there were six qualified facilities 

owned by four contractors. 
Appendix I: Objectives, Scope and 

Methodology

Page 25 GAO-14-223 Maritime Administration

7. Marine Metals, Inc.

8. Southern Recycling, LLC

To assess MARAD’s long-term strategy for its ship disposal program, we 

reviewed its current strategy—the fiscal year 2006 Comprehensive 

Management Plan for the Disposal of MARAD Non-Retention Vessels. In 

reviewing MARAD’s most recent strategy, we identified its decision 

making framework and its schedule and milestones for ship disposal, 

which included planning up through fiscal year 2007. We reviewed 

Standards for Internal Control in the Federal Government related to 

strategic planning, and assessed MARAD’s actions against these 

standards. We also reviewed MARAD’s agreements with other agencies 

to dispose of their obsolete ships, e.g., its memorandums of agreement 

with the U.S. Navy, General Services Administration, and U.S. Coast 

Guard to dispose of certain ships. We also obtained data from MARAD 

about the number of obsolete ships on hand and removed for disposal 

through MARAD’s Ship Disposal Program for fiscal years’ 2005 through 

2013. We spoke with MARAD officials and facility contractors to identify 

concerns related to MARAD’s strategy, including supplier base concerns 

for the ship recycling industry, and how it communicates its future ship 

disposal plans with qualified facilities.

We conducted this performance audit from May 2013 to February 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Maritime Administration’s Ship 

Disposal Options

Page 26 GAO-14-223 Maritime Administration

The Maritime Administration’s (MARAD) available ship disposal options 

include: domestic recycling, artificial reefing, deep-water sinking (called 

SINKEX), donations, and sale for reuse.

• Domestic recycling—MARAD sells the ships to qualified contractors 

or purchases recycling services from these contractors.

• Artificial reefing—MARAD accepts applications from coastal states, 

U.S. territories and possessions, and foreign governments for use of 

obsolete NDRF ships as offshore reefs for the conservation of marine 

life.

• SINKEX—Navy and MARAD jointly operate ship disposal projects 

through the Navy’s sink at-sea live-fire training exercises (SINKEX 

Program).

• Ship donations—MARAD may convey obsolete NDRF ships to a 

non-profit organization, state, commonwealth, or U.S. possession for 

ship reutilization including historic restoration of ships as memorials 

and museums, and the operational restoration of ships to support 

non-profit humanitarian missions.

• Sale for reuse—MARAD sells ships to another buyer for reuse.

Figure 6: Number of Ships the Maritime Administration (MARAD) Removed from the Fleet for Disposal, by Type, Fiscal Years 

2001 through 2013

Appendix II: Maritime Administration’s Ship 

Disposal Options
Appendix III: Maritime Administration’s 

Process for Qualifying Ship Disposal Facilities

Page 27 GAO-14-223 Maritime Administration

Table 1 presents the information in figure 1 in a non-interactive format. 

Table 1: Maritime Administration’s (MARAD) Qualification Process of Ship Disposal Facilities

Step in qualification process Information presented in step (interactive format)

Green circle:

Are proposals complete and feasible?

MARAD conducts an initial evaluation to determine if the proposal is complete, 

meaning it complies with the solicitation requirements and contains enough 

information to undergo evaluation. According to MARAD officials, most initial 

proposals are rarely complete and require iterative back and forth communication 

with the contractor to obtain sufficient information. Once complete, MARAD 

determines whether the proposal is feasible for further evaluation. Once proposal is 

considered feasible, MARAD will schedule a pre-qualification site visit.

Purple box 1:

Proposal deficiencies communicated in 

writing to contractor

MARAD requires facilities to demonstrate their ship disposal capability based on 

several criteria. Evaluation criteria of proposals include: feasibility and likelihood of 

success of engineering/technical/management approach for disposal of obsolete 

ships and associated risks; productivity of proposed approach, including 

schedule/cost; type and sufficiency of proposed methods, processes, and 

procedures; depth, relevance, and currency of requisite experience. According to 

MARAD officials, qualification criteria have not changed since 2005.

Purple box 2:

MARAD conducts site visit and prequalification survey with facility

MARAD conducts a pre-qualification survey during the facility site visit to verify the 

proposal’s information—such as the facility infrastructure, capacity, and the 

hazardous material and recycling processes capability—and to evaluate the 

contractor’s stated capabilities. As part of the pre-qualification survey, MARAD 

assesses the following areas relevant to the submitted proposal: (1) the feasibility of 

the engineering, technical, and management approach to conduct ship recycling 

activities, including the risks associated with the proposed approach; (2) the 

productivity of the proposed ship recycling approach, including the reasonableness 

of the performance schedule; (3) the type and sufficiency of proposed methods, 

processes and procedures for environmental abatement of hazardous materials, 

worker safety and health considerations proposed, and compliance with applicable 

laws; and (4) the depth, relevance and currency of requisite experience with the 

complete disposal of obsolete ships. As part of the assessment of experience, 

MARAD meets with the facility owners, management team, and major 

subcontractors.

Purple box 3:

MARAD completes proposal evaluation and 

reaches a qualification decision

A qualification determination is reached by MARAD in one of three possible 

categories:

• Technically unacceptable: no further consideration, but contractor can reapply 

with a new proposal;

• Technically unacceptable: but susceptible to being made technically acceptable 

(TUSTA): MARAD informs contractor of deficiencies; or

• Technically acceptable: contractor is included in the pool of qualified facilities. 

Source: GAO analysis of MARAD information.

Appendix III: Maritime Administration’s 

Process for Qualifying Ship Disposal 

Facilities
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 28 GAO-14-223 Maritime Administration

Marie A. Mak, (202) 512-4841, makm@gao.gov

In addition to the contact named above Tatiana Winger, Assistant

Director; Suzanne Sterling, and Alyssa Weir made contributions to this 

report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(121125)
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