DEFENDING AMERICA
David H. Hackworth
August 8, 1995

SHIPS AHOY! WELL, ALMOST ...

WARNING: If you have high blood pressure or if your ticker skips a beat when you're upset, don't read any further -- the following saga is sure to trigger a cardiac arrest.

In 1985, the U.S. Navy awarded a contract for two oiler ships to the Penn Ship Company of Philadelphia at a cost of approximately $100 million per ship.

The Navy drew up the contract even though it knew Penn Ship finances were shaky. In fact, the brass hats were so concerned about the company's ability to do the job, they took a lien on Penn Ship's assets in case the contract was defaulted, which is exactly what happened.

Then for some inexplicable reason, the Navy canceled the lien agreement, leaving its financial interest -- our tax dollars -- totally unsecured. Despite tens of millions of dollars owed by Penn Ship as a result of the default, all the Navy received besides two unfinished hulks, which by now cost $300 million -- $100 million over the contract price -- was a floating dry dock valued at $19 million., which the Navy has never used.

Even though Penn Ship owed the brass in blue big bucks after terminating the contract for default, the Navy still paid Penn $45,000 per day and $90,000 on holidays for providing security for the unfinished ships and material. So the company was paid an additional $4.6 million -- a nice deal if you can get it -- for this cozy security arrangement.

The Navy then had the two hulks towed to Florida's Tampa Shipyards, which got the job of completing them even though that yard was incompetent and also going down the financial drain. En route, Tampa Ship- yards' towing contractor lost one of the ships, which ran aground on the coast of North Carolina, suffering serious damage.

As predicted by the Navy's own expert, Tampa Shipyards bellied-up and the contract was canceled, but only after the Navy sunk in another $102 million. Last May, the Navy made a final settlement with Tampa Shipyards, paying them an additional $18 million for "services rendered"!

The Navy supervisor of construction for the Penn Ship yard was Capt. C. J. Schrodt, who concluded even before the first keel was laid that Penn Ship did not have the 'core competencies and related skills" to do the job. Schrodt repeatedly told his bosses, Vice Adm. William H. Rowden and Assistant Secretary of the Navy Everett Pyatt, that the "contract should be terminated."

For two years, Schrodt sounded the alarm that the Navy should cut its losses and run, but his clear-eyed warnings didn't dent the Pentagon's thick hide.

Capt. Karl M. Klein, the guy who supervised Navy shipbuilding at the Tampa works, was concerned from the git-go that Tampa couldn't do the job. When Klein first visited the yard to square away the project, he found the place "filthy and littered with debris," with "no indication of an up and running management organization."

Klein told everyone in his chain of command up to the highest levels in the Pentagon that Tampa couldn't and wouldn't do the job and that good money was being recklessly thrown at a project that would never be completed. His warnings, too, were ignored.

The bottom line: Our Navy brass spent $450 million dollars for two ships, and almost a decade later all the taxpayers have to show for all that money is two rusting hulks sitting in Virginia's James River.

Now, Sen. Chuck Grassley, R- Iowa, a fire-eater when it comes to Pentagon abuse, is demanding that those high officials responsible for this disaster be nailed to the cross.

He says, "The people of the country desperately want to trust their government, and a government that doesn't hold corrupt officials accountable will lose the public trust."

Grassley wants the Pentagon Inspector General to conduct an investigation he hopes will discipline those responsible. So far, the investigation has been stonewalled by the Congressional porkers who greased the deal in the first place.

In the meantime, the two hulks should be parked at the base of the Capitol as monuments, daily reminders that those entrusted with the government of the people must be held accountable and responsible to the people for the waste of our tax dollars.