As part of DOT, MARAD serves as the federal government’s disposal agent for government-owned merchant vessels weighing 1,500 gross tons or more. MARAD’s ship disposal program, in the Office of Ship Operations, is responsible for disposing of these vessels. Historically, MARAD has disposed of its obsolete ships primarily by selling them to overseas scrapping companies. From 1983 to 1994, MARAD scrapped over 200 vessels through overseas sales, which represented close to 100 percent of all of MARAD’s scrapping activity. Ships were sold “as is/where is” to the highest bidder. The sale of vessels for overseas scrapping was curtailed in 1994 because of concerns raised by EPA about the presence of PCBs in various shipboard components. The Toxic Substances Control Act and EPA’s implementing regulations govern the use of PCBs. According to MARAD, the act and EPA regulations limit MARAD’s ability to export vessels for disposal without first removing regulated PCBs. Ship scrapping is also subject to other federal, state, and local government laws that are meant to protect the environment and ensure worker safety. In addition, overseas disposal can be more complicated and time consuming because it requires the involvement of foreign governmental agencies and is subject to additional laws related to exporting hazardous materials. Similarly, disposing of ships through artificial reefing also requires coordination with several federal agencies. After overseas sales were curtailed in 1994 and halted in 1998, MARAD had little success in selling its obsolete ships domestically, leading to a backlog of ships awaiting disposal. At the same time, the fleet had several well-publicized leaks, which raised concerns about the risk of continued storage. . . . in the manner that provides the best value to the Government, except in any case in which obtaining the best value would require towing a vessel and such towing poses a serious threat to the environment; and . . .through qualified scrapping facilities, using the most expeditious scrapping methodology and location practicable. Scrapping facilities shall be selected…on a best value basis consistent with the Federal Acquisition Regulation, as in effect on the date of the enactment of this Act, without any predisposition toward foreign or domestic facilities taking into consideration, among other things, the ability of facilities to scrap vessels— (1) at least cost to the Government; (2) in a timely manner; (3) giving consideration to worker safety and the environment; and (4) in a manner that minimizes the geographic distance that a vessel must be towed when towing a vessel poses a serious threat to the environment. The 2001 Authorization Act also required MARAD, within 6 months of its enactment, to provide Congress with a report on its program for disposing of ships and subsequent progress reports every 6 months thereafter. As of September 2004, MARAD had submitted two reports to Congress. In its first report to Congress, issued in April 2001, MARAD stated that its primary goal for the ship scrapping program was to meet the statutory deadline. The report also provided a plan to dispose of all ships that MARAD expected would be in its inventory through the deadline. Highlights from the report included that MARAD would use fiscal years 2001 and 2002 to refine cost estimates specific to merchant type ships, and from fiscal years 2003 through 2006, would dispose of 35 ships per year mostly through domestic scrapping. MARAD, at that time, estimated that it would be able to scrap 140 ships at an average cost of $2.5 million per ship and donate or reef 15 ships by the 2006 deadline. Also, in accordance with the statute, MARAD developed milestone dates for disposal of each ship and developed an approach that focused disposal efforts on its highest priority ships (ships in the worst condition) considering the condition of the vessel hulls; the amount, type, and location of potential pollutants on board; and the vessel spill history. MARAD stated it recognized that the immediate threat that these high-priority ships posed at the sites, in all likelihood, would result in using the domestic scrapping industry in the near term, and stated it would continue to seek innovative solutions to the challenging issue of ship disposal. MARAD also stated that, while there was much scrapping capacity overseas, exporting ships was banned by the Toxic Substances Control Act because PCBs can be found in shipboard systems. The second report to Congress, issued in June 2002, indicated that MARAD no longer expected that it could meet the statutory deadline of September 30, 2006, if it used domestic scrapping as the predominate disposal method because no funds had been appropriated for the program in fiscal year 2002 and that the prospects for future funding were considered uncertain. The report also discussed an additional planned procurement method to contracting by negotiation, which was the use of PRDAs. At the time the 2006 deadline was set, the reserve fleet consisted of 115 vessels designated as obsolete and available for disposal. Of these, 40 were considered high priority for disposal because of their deteriorated condition. MARAD projected that another 40 ships would enter the fleet, for a total of 155 ships that it expected would need disposal. These ships are located at MARAD’s three anchorages: with the James River Reserve Fleet (near Fort Eustis, Virginia) having the most ships and most of the highest priority ships; the Beaumont Reserve Fleet (Beaumont, Texas); and the Suisun Bay Reserve Fleet (near Benicia, California). In disposing of its nonretention vessels, MARAD has usually had its excess ships dismantled, or scrapped—a labor intensive approach that poses certain environmental and worker safety risks. Ships are normally dismantled from the top down and from one end to the other, using torches and/or shears to cut away large parts of the vessel. Cranes are often used to move larger metal pieces to the ground where they can be cut into the shapes and sizes required by the foundry or smelter where the scrap will be sent. The scrapping process produces some products, such as steel and other metals, that can be sold to recyclers. Remediation of hazardous materials, such as asbestos, PCBs, lead, mercury, and cadmium, takes place before, as well as during, the dismantling process. If it is not done properly, ship scrapping can pollute the ground and water around the scrapping site and jeopardize the health and safety of the workers involved in the scrapping process. The following figures illustrate various stages of the scrapping process. MARAD is unlikely to meet the statutory deadline of September 30, 2006, to dispose of its inventory of obsolete ships. Since October 2000, when Congress established the deadline, MARAD has disposed of only 18 ships, or about 12 percent of its inventory. There still remain more than 100 ships still needing disposal. MARAD’s current approach, which has resulted in an average of about 5 ships disposed of per year, has not been sufficient to meet the deadline. The ship disposal program’s slow progress stems primarily from program leaders not establishing a comprehensive management approach that better focuses the program’s efforts on meeting the myriad of challenges that the program faces in eliminating its inventory in a timely and efficient manner. Key elements necessary for effective program management that are missing or inadequate include (1) no integrated strategy or milestones for meeting the 2006 deadline; (2) no identification of funding resources needed to meet the 2006 deadline; (3) inadequate performance measures; (4) inadequate identification of the legal, regulatory, and environmental external impediments that could impact progress; (5) inadequate formal decision-making framework; and (6) no formal program evaluations. In the absence of a comprehensive management approach that includes all of these key elements, MARAD’s ship disposal program lacks the vision needed to sustain a long-term effort. MARAD has also not provided Congress with all of the required reports on the program’s progress. As a result, MARAD has not been able to ensure Congress that it can dispose of its obsolete ships in a timely way. Since October 2000, when Congress specifically authorized MARAD to pay for ship disposal services and set a September 30, 2006, deadline to dispose of all vessels, the agency has made slow progress toward achieving this goal. In 2000, MARAD reported that it had 115 ships in its inventory. Between October 2000 and September 2004, MARAD received 42 additional ships through transfers, bringing the total number of ships that needed to be disposed of to 157 (the beginning inventory of 115 plus 42 transfers). Of these 157 ships, 18 ships, or about 12 percent of the inventory (as of September 2004), had been disposed of, leaving 139 still in the inventory (see table 1). Of the remaining 139 ships, as of September 2004, MARAD had awarded contracts for the disposal of another 29, leaving 110 ships that were still awaiting disposal actions. The status of the 29 ships under contract is as follows: Twenty ships are waiting to be moved to a scrapping company. Of these, 9 are awaiting a court ruling on whether MARAD will be able to export them to the United Kingdom. Four ships have been towed but have not begun scrapping. These ships were towed in October 2003 to the United Kingdom where they are waiting for a U.K. company to obtain the proper permits to scrap them. Five ships are either at scrapping facilities in the process of being dismantled or are en route to scrapping facilities. Of the ships that have been part of MARAD’s inventory since October 2000, more than 40 ships have been designated as high priority for disposal because of their severely deteriorating conditions. Ships in this category have had known holes in their underwater hulls that may or may not have been patched, and the potential for additional holes is considered to be moderate or high. Consequently, these ships are considered to pose the most immediate threat to the environment.