New lease on life for ex-Navy ships

Sea Power, Dec 1998 by Kreisher, Otto

The former Knox-class frigate Aylwin, commissioned in 1971 and stricken from active U.S. Navy service in 1992, is prepared for transfer to Taiwan as the Ning Yang at Detyens Shipyard, Charleston, S.C. (formerly the Charleston Naval Shipyard). Now in the fourth year of its contract to manage the shiptransfer program for the U.S. Navy, VSE Corp. has guided 19 ships through the reactivation process at domestic U.S. shipyards.

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, manpowerintensive 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 govement 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.