| By OTTO KREISHER Otto Kreisher is the national security reporter for
Copley News Service.
The U.S. Navy's post-Cold War decision to rapidly reduce the
size of its active fleet has created both problems and opportunities. One of the problems
is the need to dispose of more than 100 surface combatants and auxiliary ships that have
been or will be decommissioned during the cutback. (See Sea Power, August 1998,
page 47.)
That surplus, however, has created an
opportunity for the United States to help a number of its allies improve their navies by
acquiring some of the retired U.S. ships, many of which have a decade or more of service
life remaining. But managing the ship-transfer program is a demanding, manpower-intensive
job that is made more troublesome by the difficulty of providing the spare parts, and the
technical expertise, necessary to enable the receiving navies to maintain and operate
equipment no longer in service with the U.S. fleet. Absent contractor support, meeting
that challenge would further burden the Navy's uniformed and civilian work force and its
industrial infrastructure, which also are being downsized.
The Navy has solved some of those
problems by privatizing most of the ship-transfer program, awarding a competitive contract
in 1995 to VSE Corp., an Alexandria, Va., firm with a long record of Defense Department
work. The 10-year contract, with a potential total value of about $1 billion, is being
managed by a division within VSE, which is staffed mostly by former Navy personnel who
bring decades of experience in operating and maintaining the ships that are being
transferred.
A Major Challenge
VSE, established in 1959, is a
professional services company providing diversified engineering and technical services,
and information-technology services and products to the U.S. military, other government
agencies, and commercial customers. But, as one of the Navy's first major privatization
efforts, the ship-transfer contract was a challenge to both parties. "When we got
started on this, it was a learning curve for everyone," said James Knowlton, VSE's
executive vice president and deputy chief operating officer. "What we were doing,
basically, was totally outsourcing the Navy's infrastructure to provide support for ships
that are no longer in the active inventory."
Although Knowlton's division handles the
mechanics of the ships' transfer after approval by the secretary of the Navy and the
Department of State, the program is controlled by the U.S. Congress and the Clinton
administration, which must authorize major foreign military sales. The Naval Sea Systems
Command's Security Assistance Program office (PMS380) has direct supervision over the
contract.
Ships stricken from the Naval Vessel
Register can be transferred in a variety of ways, including sale, lease, or, in rare
cases, donation. The condition of the transfer is negotiated by the government before VSE
gets involved. "I am the doer, after they settle the case," Knowlton said,
"and the firm cannot do anything until the money to cover its work is provided."
The entire program is paid for by
nonappropriated funds, either from the Foreign Military Financing account or from the
receiving country's own treasury. But once the transfer is negotiated and the funds are
provided, the receiving nation and the Navy usually expect fast action.
"They require us to do it cheaper,
faster, better," Knowlton said. "We have had occasions where the delivery orders
were turned out on Friday, and we put a ship in the yard to start an availability on
Monday," he said. The firm is able to handle these short-notice yard periods through
its team of four Navy-certified master ship repair shipyards. The shipyards that VSE uses
are Cascade General, in Portland, Ore.; Ingalls Shipbuilding, in Pascagoula, Miss.;
Newport News Shipbuilding, in Newport News, Va.; and Detyens Shipyard, at the former Navy
yard in Charleston, S.C. Those yards have "signed up exclusively for this work,"
Knowlton said. "If I have a client who needs to dock a ship, they immediately make
space."
The Flexibility Factor
Where a ship is sent is determined by
several factors--e.g., which yard has the most experience with that type of vessel, the
location of the ship, and the receiving navy's preference--Knowlton said. VSE's
ship-transfer team also includes Booz Allen, and Hamilton as a managing partner; Lockheed
Martin, for combat systems; and W & W
Logistics--which has a database of 49,000 other vendors to provide the logistic support
needed for equipment no longer in the U.S. Navy's active inventory. Knowlton said he
usually has a core of about 50 employees working in his headquarters to help coordinate
the program with the Navy and the foreign client, and he may have a total of up to 110
people working on the contract in the United States or overseas.
But the size of the work force, including
shipyard employees, can go up and down dramatically, depending on the number and type of
ships being prepared for transfer. That ability to adjust the work force rapidly to meet
emergent demands is one of the key advantages provided by a private-sector contract.
"Private contractors can surge and downsize as required, trying to keep the minimal
number of people to keep the capability required," he noted.
Uniformed personnel or federal civilian
workers cannot be hired or laid off that easily. "That was one of the major
objectives of this contract--to reduce the Navy's infrastructure, to reduce the taxation
on the American public for maintaining a large industry base," Knowlton said.
One Stop, One Call
Another advantage of the contract is what
Knowlton called "one-stop shopping" for the foreign navies, with VSE providing a
"progress-management waterfront team" that interacts directly with the client
and the shipyard, he said. "The client makes one phone call--we control our shipyards
and retain the responsibility for the quality throughout," Knowlton added.
The challenges facing the subcontracted
firm vary widely, depending on the type and age of the ship that is being transferred.
Some ships have been out of service for a number of years, while others are
"hot" transfers--going almost directly from active U.S. Navy service to a
foreign navy.
For example, VSE helped to transfer the
ex-Lewis B. Puller, an Oliver Hazard Perry-class frigate, to Egypt this October
through a "hot transfer" in San Diego. At the same time, the firm was preparing
to help transfer to the Hellenic Navy the four Kidd-class guided-missile destroyers.
Older ships, obviously, pose a greater
challenge. Some of those ships have been decommissioned for seven to 12 years before a
decision is made to reactivate them. One example is the Newport-class tank landing ships
(LSTs), which VSE has transferred. "You don't find a lot of people today with
experience in the old LSTs, with bow ramps and stern gates," Knowlton said.
"Fortunately, much of the work is done on the East and West Coasts--where we have
many retired [Navy] people with the experience," he added.
Training and Spare Parts
Ships that have been out of service for a
long time also present a difficult challenge--finding spare parts for the on-board
systems. "But we do know most of the original equipment manufacturers," and W
& W Logistics has agreements with them to continue to support the older equipment,
Knowlton said. (The firm also went to Navy activities to purchase excess repair parts and
has about 67,000 items stored in a warehouse near Williamsburg, Va., to support most of
the older ships.)
But VSE's contract requires much more
than just mechanical preparation of the transferring ships. Knowlton's team also is
responsible for training the receiving navies' officers and sailors to maintain and sail
the former U.S. vessels. That training may be done in U.S. schools for ships or equipment
that the U.S. Navy still is using. If the ships and systems are no longer in the USN
inventory and the schools are closed, VSE works with Navy training officials to develop an
appropriate curriculum and conduct the training.
Either way, everything is paid for by the
foreign client. The training extends from classrooms on shore to ships at sea to ensure
that the receiving navy can operate the ships safely. "We have to certify, working
with the Navy ... that the ships are safe to sail before they go home," Knowlton
said. The receiving crew must be certified in ship
handling, underway replenishment, towing, and emergency procedures.
The foreign crew is held to virtually the
same standards of performance set for a U.S. Navy ship coming out of a yard availability.
That is where VSE makes good use of the wealth of experience possessed by its employees,
many of whom are former ship commanding officers, chief engineers, and key technicians who
are intimately familiar with the ships.
"Been There, Done
That"
When a foreign navy takes a ship to sea
for a shakedown cruise or training, the foreign clients understand that "VSE's people
have been there, done that, have steamed the ships ... [and] have the knowledge and the
experience," Knowlton said. Navy representatives also are on board for the at-sea
periods to ensure that the receiving crew is qualified to operate the ships safely.
The training and technical assistance can
continue after the former U.S. ships are operating with the foreign navies. "We do
about $35 million a year in follow-on technical support," sending teams overseas to
assist the foreign clients in maintaining the ships properly, Knowlton said. Ships that
are on lease have to be maintained to a minimum U.S. standard.
The transfer program itself has been
opposed by some members of Congress, and by arms-control advocates, who object to the
transfer of any U.S. military equipment that improves the combat capabilities of nations
in unstable regions. The Council for a Livable World, for example, noting the continuing
tension between Greece and Turkey, recently issued a statement opposing the transfer of
the Kidd-class ships.
But every transfer of U.S. ships and
associated equipment must be screened for compliance with U.S. antiproliferation laws
restricting the sale of arms abroad, as well as for foreign policy considerations and
approval by Congress.
Benefits to U.S.
Taxpayers
In addition to improving relations with
allied nations and upgrading the quality of their navies, the ship-transfer program
reduces the cost of storing surplus vessels at U.S. government expense, the Navy said in a
statement provided to Sea Power. Limited pier space suitable for storage and
far-reaching problems associated with the Navy's ship scrapping program also have
increased the appeal of foreign transfer.
Some critics have voiced concern about
the Navy's plans to retire ships with years of service life remaining. But that is a
consequence of the Navy's long-range recapitalization plan, which requires it to retire
older ships and aircraft that are more expensive to maintain and operate in order to make
funds available to buy the next generation of weapons. According to the Navy, operating
and maintaining less-capable ships until the end of their expected service lives would
force the Navy to forgo technical innovation and modernization of newer, more capable
ships.
Although U.S. shipbuilders obviously
would prefer that foreign navies buy new ships from them rather than receiving the retired
vessels, most of the nations receiving surplus U.S. ships either cannot afford new vessels
or would build them in their own yards, Knowlton and the Navy maintain. But American
industry benefits directly from the transfer program, because Congress requires that
surplus U.S. ships being sent to foreign navies should be reactivated in the United States
to the maximum extent practicable, Knowlton said. "That brings money back into our
industrial base and into our economy," he said. U.S. shipyards and ship-repair
activities, facing continued reductions in U.S. Navy maintenance and modernization
contracts as the U.S. fleet is downsized, are anxious to receive this new source of work.
Now in the fourth year of its contract,
VSE has earned about $250 million for its role in transferring 19 ships, including Knox-
and Perry-class frigates, LSTs, ocean-surveillance vessels, and diving and salvage ships.
Its customers include Egypt, Greece, New Zealand, Portugal, South Korea, Taiwan, Thailand,
and Turkey.
Knowlton said he receives a great
deal of satisfaction working with the foreign navies and developing trusting
relationships. For a retired master chief boiler technician who "steamed a lot of
these ships," he said, "it's very rewarding to me to see them brought back to
life and to go out there and continue to do what they were designed to do."
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