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An analysis of the National defense reserve fleet, the ready reserve force component and their capability to meet national emergency.

Harlow, Louis Francis

Monterey, California. Naval Postgraduate School http://ndl.handle.net/10945/18600

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AN ANALYSIS OF THE NATIONAL DEFENSE

RESERVE FLEET, THE READY RESERVE FORCE

COMPONENT AND THEIR CAPABILITY TO MEET NATIONAL EMERGENCY

Louis Francis Harlow

3

NAVAL POSTGRADUATE SCHOOL

Monterey, California

THESIS.

AN ANALYSIS OF THE NATIONAL DEFENSE RESERVE FLEET, THE READY RESERVE FORCE COMPONENT AND THEIR CAPABILITY TO MEET

NATIONAL EMERGENCY

by

Louis Francis Harlow

September ESI:

hesis Advisor:

Approved for public release; distribution unlimited.

UNCLASSIFIED

SECURITY CLASSIFICATION OF THIS PAGE (When Date Entered)

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heey «wf an

4. TITLE Subsitte An Ana Vsis of the National Defense

Reserve Fleet, the Ready Reserve Force Component and Their Capability to Meet National Emergency |7. AUTHOR(e)

READ INSTRUCTIONS BEFORE COMPLETING FORM

S. TYPE OF REPORT & PERIOO COVERED pina Ree y

Louis Francis Harlow

9. PERFORMING ORGANIZATION NAME AND AOORESS . ancusame ee ECT, TASK Naval Postgraduate School Monterey, California 93940

11. CONTROLLING OFFICE NAME ANO ACORESS Naval Postgraduate School SePeSw = = a Monterey, California 93940 30

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18 SUPPLEMENTARY NOTES

19. KEY WORDS (Continue on reveree aide if neceseary and identify by block number)

National Defense Reserve Fleet Ready Reserve Force

20. ABSTRACT (Continue reveree e(de if neceseary and identify by stock manber)

This study examines various facets of activating the National Defense Reserve Force. Its history and background are reviewed and | Jits present status of readiness considered. Specific areas covered are monetary costs, tlanpower capabilitit#s (seagoing and ashore) as well as the physical condition and capabilities of the fleet.

DD on ss 1473 coition oF | Nov 68 1s oMsoLeTe

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#20 —- ABSTRACT - (CONTINUED)

The sub-structure of the Reserve Fleet known as the Ready Reserve Force is covered in depth. In this area the inception of the ready force idea is presented along with its goals and accomplishments to date. Of unique interest is the joint funding of the Ready Reserve Force which is contributed to by both the Department of Commerce and the Department of Defense.

Conclusions are drawn from its past performance, documented present status, and projected industrial capabilities.

DD Form 1473 R Jan ia fi S/N 0102-014-6601 SECURITY CLASSIFICATION QF THIS PAGESWHen Date Entered)

Approved for public release; distribution unlimited.

An Analysis of the National Defense Reserve Fleet, the Ready Reserve Force Component and Their Capability to Meet

National Emergency

by Louis Francis Harlow

Lieutenant Commander, United States Navy B.S.M.T., State University of New York at Fort Schuyler, 1968

Submitted in partial fulfillment of the requirements for the degree of

MASTER OF SCIENCE IN MANAGEMENT

from the NAVAL POSTGRADUATE SCHOOL

September 1979

ABSTRACT

This study examines various facets of activating the National Defense Reserve Force. Its history and background are reviewed and its present status of readiness considered. Specific areas covered are monetary costs, Manpower capabili- ties (seagoing and ashore) as well as the physical condition and capabilities of the fleet.

The sub-structure of the Reserve Fleet known as the Ready Reserve Force is covered in depth. In this area the inception of the ready force idea is presented along with its goals and accomplishments to date. Of unique interest is the joint funding of the Ready Reserve Force which is contributed to by both the Department of Commerce and the Department of Defense.

Conclusions are drawn from its past performance, documented

present status, and projected industrial capabilities.

1E1E*

AE Ee

IV.

TABLE OF CONTENTS

INTRODUCTION ------------ - - - 10 Ae ENTEREST AND METHODS =-<---------------=--------- 10 B. DEFINITION reer rrrrr - Ll C. THE PROBLEM 3. ee 12 D. INTENT -------------------------- + - - - -- - - = 13 E. ASSUMPTIONS ------------ 13 BACKGROUND 9-2-2222 nr nn 5s A. CREATION ------------------- = - is B. ACTIVATION errr a a - 18 C. RENEWED INTEREST 3-9-0 ------------- === ---- == 21 THE PROBLEM ------------------=---- - - - - - - - - - - 25 A. PAST EXPERIENCE ------------------------------- 95 B. THE PRESENT === 3 = = cul C. CURRENT PROBLEMS 3rrr92re rr errr rrr rere enter 34 THE PROGRAM ---------------------------- - - - = - - - - 42 A. GENERAL 22 -0--- een = 4? B. RRF PLANNING ----------- 9-9 - 43 C. CONTRACTURAL ARRANGEMENTS 2-90-90 -------------- 46 D. PROCUREMENT --------------------------- -- -- -- A7 E. THE FUTURE ------------------------------------ A7 CONCLUSIONS ---------= = ne 4g A. SUMMARY --------------------------------------- 43 Sree oO thea ONG =—————————=———==———=———= << <= 55===— 49 Ce so mecONCLOaLONG =——==——===—=—==—<--=<-=—<—<=-------- a2

o &@e

VI. RECOMMENDATIONS -------------------------------------- 54 A. GENERAL ------------------------------------------ 54 B. RECOMMENDATIONS ---------------------------------- 54 C. SUMMARY ------------------ 2-0-2222 2-2 ------------ By D. THE IDEAL 2-2-9999 3-2 n en nnn en nnn nnn 58 APPENDIX A: PROBLEM AREAS DURING ACTIVATION --------------- 60 APPENDIX B: GAA MAINTENANCE AND REPAIR COSTS VIETNAM ------ 61 APPENDIX C: DELAYED SAILING DUE TO CREW SHORTAGE ---------- 62 APPENDIX D: OILY WASTE REQUIREMENTS ----------------------- 63 APPENDIX E: MARINE SANITATION DEVICES --------------------- 64 APPENDIX F: CODES OF FEDERAL REGULATIONS ------------------ 65 APPENDIX G: TYPES OF INSPECTIONS -------------------------- 66 APPENDIX H: AVERAGE MONTHLY EMPLOYMENT IN SELECTED COMMERCIAL SHIP REPAIR YARDS WITH DRYDOCK FACILITIES -------9- 9-2 n enn ee enn nnn een 67 APPENDIX I: SHIP REPAIR YARDS/EMPLOYMENT ----------------~-- 68 APPENDIX J: FOUR PHASED ACTIVATION PLAN ------------------- 70 APPENDIX K: BASIC CHARACTERISTICS OF MARINERS ------------- 71 APPENDIX Ds BASIC CHARACTERISTICS OF C-3-S-33a --=--------- 72 APPENDIX M: BASIC CHARACTERISTICS OF VICTORIES ------------ 73 APPENDIX N: BASIC CHARACTERISTICS OF SEATRAIN ------------- 74 nT OGIER) (ORB TRUS SO fC Se 15 [EISEN U a aN een a 77 ENETIAR DISTRIBUTION LIST —--<-<----<<<--<<<=----=~-=--=-==- 79

EXHIBIT

EXHIBIT

EXHIBIT

EXHIBIT

EXHIBIT

EXHIBIT

EXHIBIT

Liste Or EXHIBITS

NATIONAL DEFENSE RESERVE FLEET 1945-1979 ----- be SHIPS SOLD FOR SCRAP ------------------------- 23 ACTIVATION TIME FRAMES FOR VIETNAM ----------- 28 ACTIVATION AND REPAIR COSTS VIETNAM ---------- 29 READY RESERVE SHIPS -------------------------- 33 ESTIMATED ANNUAL SHIPYARD REVENUE

AVERAGES 1979-1983 --------------------------- 38 PRIVATE MERCHANT MARINE 1950-1976 ------------ 40

ABBREVIATIONS

AMERICAN BUREAU OF SHIPPING CIVIL AERONAUTICS BOARD

CODE OF FEDERAL REGULATIONS DEHUMIDIFICATION

DEPARTMENT OF COMMERCE DEPARTMENT OF DEFENSE

DEAD WEIGHT TONNAGE

FEDERAL COMMUNICATION COMMISSION FIVE YEAR DEFENSE PLAN GENERAL AGENCY AGREEMENT GOVERNMENT ACCOUNTING OFFICE GROSS NATIONAL PRODUCT

JOINT CHIEFS OF STAFF LIGHTER ABOARD SHIP LIQUEFIED NATURAL GAS MARITIME ADMINISTRATION MASTER REPAIR CONTRACT MILITARY SEALIFT COMMAND

MARINE SANITATION DEVICE

MILITARY SEA TRANSPORTATION SERVICE

NATIONAL DEFENSE RESERVE FLEET NATIONAL SHIPPING AUTHORITY

OFFICE OF MANAGEMENT AND BUDGET

ROLL ON/ROLL OFF SHIPS

Z5- 26. 27.

28.

RRF

SCA

SPANS

USCG

READY RESERVE FORCE

SHIPBUILDERS COUNCIL OF AMERICA

SEALIFT PROCUREMENT AND NATIONAL SECURITY

UNITED STATES COAST GUARD

I. INTRODUCTION

A. INTEREST AND METHODS

The National Defense Reserve Fleet (NDRF) has been of great interest to the author having seen many of its ships in service throughout Southeast Asia during the Vietnam action. The thought of millions of dollars in assets "mothballed" and idle supposedly constantly ready for service was the driving theme behind this paper. How this use or lack of use of tax- payers’ funds can be justified in this era of Proposition 13 the author believes deserves closer scrutiny. Specifically this paper is focused on how this situation came about, how it has continued, and why. In general the paper attempts to answer the question "Is the NDRF necessary and, if it is, is 1t being properly maintained and ready if called upon again by the Department of Defense?"

In the search for facts and information various interviews were conducted both personally and by telephone. Cooperation from the Maritime Administration (MARAD) was excellent. Both the Western Regional Office in San Francisco, California and the Washington D.C. Headquarters were extremely helpful. Peterial was readily available from both MARAD and the Naval Postgraduate School Library, however, it appears that an eighteen month to two year time lag is present between events occurring

and the information being available in print.

10

B. DEFINITION

The purpose of the National Defense Reserve Fleet is to serve as an inactive reserve for selected ships which would be activated in order to meet the shipping requirements of the United States during national emergencies.(4:1) The NDRF currently consists primarily of World War II Victory ships and assorted Naval auxiliary ships.

The Maritime Administration has the authority to place in reserve for national emergency purposes those ships which it deems necessary for future defense requirements. The choice of retention ships is made by MARAD in conjunction with the Secretary of the Navy. (4:1)

The current functions of the NDRF program are two fold in purpose. First, the preservation of those ships that are re- quired by law which are considered eligible for retention. Second, the disposal of non-retention ships, that is those Ships no longer considered necessary for national defense.

The ships designated as retention ships are placed under a rigorous program of preservation and maintenance with the objective of performing all work necessary to maintain them in the same or better condition than they were received in by the fleet. In view of the unspecified time frame for lay up, the ships are presumed to be in "lay-up" for an indefinite period. In this condition, these ships would require thirty to forty days of activation, once called upon.(4:1) Non-retention ships

are usually sold for scrapping purposes on the open market.

dpe

C. THE PROBLEM

pe eseneny the NDRF is comprised mostly of dry-cargo vessels capable of self discharge, especially suited for outsize mili- tary cargo, such as the Army's main battle tank. Ships of this type are commonly referred to as break-bulk vessels . Although multi-purpose in neeanetan very versatile a large majority of the ships assigned to the NDRF are small, slow, and old. There- fore they have been bypassed technologically and are in need of modernization.

New ship designs, those post dating World War II, have generally been in the direction of the intermodal type, mainly non-self sustaining containerships, Roll-on/Roll-off (Ro/Ro), Lighter Aboard Ship (Lash), and specialized cargo carriers such as Liquefied Natural Gas (LNG) type ships. While these special- ized vessels are highly profitable and competitive in world trade they lack one or more of the defense-desirable features found in the general purpose break-bulk vessels of the NDRF. (5:55)

As American shipbuilders produce fewer general cargo ships and the existing break-bulk ships age and are scrapped the Department of Defense (DOD) sealift problems increase. Addi- tionally as DOD break-bulk capabilities are reduced in the active merchant fleet the NDRF and its break-bulk capacity will increase in importance for national defense purposes as the only domestic source of break-bulk shipping available to aug- ment the U.S. Merchant Marine and/or the U.S. Navy in time of need. The necessity for the NDRF is not in question, and the

concept is accepted and supported by DOD.

2

However, problem areas do arise in regard to the NDRF. Specifically a majority of the ships in the fleet are in excess of thirty years of age and have not been used in over nine years therefore their capability of meeting DOD requirements is in question. It can be expected that these ships will have to be replaced eventually if the NDRF is to remain a viable arm of national defense, and the question of cost effectiveness, in this era of cost conscious taxpayers, places the entire pro- gram in jeopardy. Finally the ultimate problem for DOD is whether the NDRF can be placed in service quickly enough to meet national or global emergencies effectively and efficiently

as they have in the past.

S&S. ILNIENT

It is the overall intent of this study to investigate the current capabilities of the merchant reserve fleet, the direc- tion and course of action undertaken by MARAD and DOD in order to update and enhance the United States NDRF and to meet their objectives.

Specifically special attention will be focused on the Ready Reserve Force (RRF) program recently undertaken jointly by MARAD and DOD in order to ensure the readiness and availability of

the NDRF.

E. ASSUMPTIONS The assumptions listed below have been imposed throughout this study. They are neither new nor are they original but

rather observations of history and general policy in this country:

13

The United States will, because of its political and military leadership position in the world, continue to need a strategic deterrent and a complete capa- bility to conduct both total and selected warfare, and a merchant marine is part of that capability

and deterrent.

The United States will not embark on an all encom- passing program to revitalize the country's merchant Marine nor will it develop an overall and integrated maritime policy.

Time and technology will continue to advance and the American Merchant Marine will continue to excel in the field of advanced Marine Technology. American shipping companies and shipbuilders have been inno- vators in developing faster and more technologically advanced merchant ships. (9:23)

The necessity and viability of the merchant marine and the NDRF as the fifth arm of defense can be measured and will continue to be needed and required

by DOD.

14

If. BACKGROUND

A. CREATION

At the end of World War II the United States government held title to more than 5,000 vessels. In order to reestab-. lish world trade the U.S. government decided to sell these vessels to American citizens and foreign nationals. This action of providing the means of transportation for inter- \ national trade was expected to stimulate and renew world commerce. The legislation utilized to achieve the disposal of the excess shipping was the Merchant Ship Sales Act of 1946.

The Ship Sales Act gave United States citizens preference in purchasing excess government vessels and also allowed for trade~in of old ships as credit toward the newer war built ships. Buying of war surplus ships was also open to foreign nationals provided the vessels were not needed for future defense purposes or deemed a necessity for the American Merchant Marine.

Although sales terms were liberal for both U.S. citizens and foreign nationals, legislators realized that a large majority of the surplus ships would not be sold and that a considerable number of them would remain unused. In order to address this particular problem the Ship Sales Act created a government~owned and administered National Defense Reserve

Fleet, which would remain idle and ready for service until needed.

4

iS

These ships originally were incorporated into eight different sheltered backwater eSiases: Vectra’ throughout the United States. On the Atlantic Coast the locations were Hudson River, New York, James River, Virginia, and Wilmington, Delaware. The Gulf Coast fleets were Situated at Mobile, Alabama and Beaumont, Texas. The Pacific Coast ships were anchored at Suisun Bay, California, Astoria, Oregon and Olympia, Washington. On July 1, 1945 there 1,421 ships in the NDRF. Exhibit 1 is a breakdown of the total number of NDRF ships by Fiscal Year in the combined anchorages.

At the time of establishment the ships in the NDRF were mostly of World War II construction. As a result of world Shipping fluctuations periodic demands were placed on the NDRF and a small number of ships cycled in and out of the fleet. In 1950 an amendment to the Ship Sales Act allowed the bareboat charter of NDRF ships for use in any service not adequately served by U.S. flag, private operators on reasonable condi- tions at reasonable rates.(6:28) The bareboat charter required the charterer to perform all functions of an owner and only supplied an unmanned and unprovisioned ship.

The Ship Sales Act of 1946 does not require that every ship in the NDRF be maintained indefinitely nor does it pre- clude additions to the fleet. As the immediate demand for shipping after World War II subsided, many ships were returned by their owners to the NDRF, and at the end of fiscal year

1950 the fleet had increased to 2,277 vessels.

16

EXHIBIT 1

National Defense Reserve Fleet 1945-1979

FISCAL YEAR SHIPS FISCAL YEAR SHIPS 1945 5 1962 1862 1946 1421 1963 1819 1947 1204 1964 1739 1948 1675 1965 1594 1949 1934 1966 1327 1950 Da 1967 1pS2 1951 1767 1968 1062 1952 1853 1969 1017 1953 1932 1970 1027 1954 2067 1971 860 1955 2068 1972 673 1956 2061 1973 541 1957 1889 1974 487 1958 2074 1975 419 1959 2060 1976 348 1960 2000 1977 333 1961 1923 1979 318

Sources: 1. MARAD 1977 (2,69)

2. Ships in The National Defense Reserve Fleet by Design (10:1)

1

In 1950 the Maritime Administration (MARAD) was created as an agency within the Department of Commerce (DOC) to assume responsibility for the preservation and maintenance of the NDRF. On January 15, 1951 the legislation which authorized the sales of NDRF ships to operators for commercial trade purposes expired. Because of this expiration reserve ships could thereafter only be sold for scrap or for non-transportation purposes or broken out only in time of national emergencies. (6:28) Presently the ships of the NDRF are still under the con- trol of MARAD but their numbers have been reduced to 318. The vessels in the fleet are of various ship types mainly Victories, C-3-S-33a, Mariners, and Seatrains. The funding for the NDRF comes from both DOC and DOD and will be addressed later in this

study.

B. ACTIVATION

Throughout the thirty-four year history of the NDRF it has been called upon many times to support various national emer- gencies both military and non-military in nature. The first national crisis that the NDRF participated in began in 1950 when the United Nations, along with the United States, deemed it necessary to support South Korea, which was resisting the aggressions of North Korea. The fact that privately owned Shipping could not meet the military sealift demand for the conflict quickly became apparent. Over an eighteen month period during the Korean hostilities 778 U.S. government-owned vessels were withdrawn from the NDRF, repaired, refitted, and placed

in service. (4:7)

18

While the Korean action placed unexpected demands on world shipping another situation develped half a world away which pushed shipping capabilities to their limits. The ex- tremely severe winter of 1950 created an inordinately high demand for American coal in Europe which in turn caused a shortage of bulk shipping capabilities. The end result of this shortage was that the freight rates on coal more than tripled from $3.50 a ton to $13.00 a ton in less than one year as demand out-distanced supply. This development clearly jeo- pardized the Marshall Plan because aid money was being unpro- portionately spent for shipping charges. Action was vitally needed to drive down shipping costs to ensure that the aid money went to rebuild war-torn Europe. Again the NDRF was called into service and the result was that freight rates dropped as supply met demand with the introduction of more bottoms.

As the coal problem in Europe was alleviated a more desperate Situation developed in India. Crop failures caused food short- ages in that country and massive imports of grain were deemed necessary if the new and fragile democratic government was to survive. Political impacts aside only the NDRF could pro- vide the tonnage necessary to move the amounts of grain needed.

By 1953 the world situation had stabilized and the tem- porary need for additional shipping had decreased considerably. However, in the United States a shortage of grain storage

space had developed and a new use for the NDRF was about to

eg

be discovered. On March ll, 1953 the Department of Agricul- ture requested the use of fifty Liberty ships to be used for surplus grain storage. By February 1954 MARAD had made avail- able 317 ships in which 72 million bushels of grain were stored. The program of wheat storage lasted for ten years

and at one time the NDRF had on board ten percent of the total surplus price supported wheat in the United States. (6:29)

In 1956 the "Suez Crisis" started first with the Egyptian nationalization of the Suez Canal quickly followed by the Anglo-French expeditionary force seizure of the canal. [In retaliation the Egyptian forces scuttled ships which very effectively blocked the usage of the waterway. The net result of this conflict was an eventual rise of charter rates as high as three hundred percent on some world trade routes as once again demand out-stripped supply.(6:29) These universal rate hikes again placed a severe burden on the American treasury because of the extensive U.S. aid program then being conducted throughout the world. As in the past the NDRF was called upon successfully to increase shipping tonnage and decrease overall world freight rates.

On July 16, 1965 DOD requested MARAD to activate fourteen Victory type ships and to place them in service at the earliest possible moment. Once again the aging ships of the NDRF were to go into service, this time in Southeast Asia. By the end of 1966, 161 of the 173 General Agency Agreement (GAA) ships

then in service had been activated from the NDRF.(4:7) Under

20

» ee =

the GAA a NDRF ship was operated by a private shipping company for use by DOD. When the need for government ships ended in 1970 only 123 ships were returned to the NDRF for retention and preservation. The remaining fifty ships were designated

as not required and were sold on the world market.

C. RENEWED INTEREST

The decade of the fifties saw an almost continual use of the NDRF. However, technology was already quickly surpassing the fleet. During that decade the S.S. United States was launched, and it was reputed to have a top speed approaching forty knots, far surpassing any ship previously built. (6:33) Also the N.S. Savannah was constructed putting the merchant marine in the realm of nuclear power. Probably the most impor- tant commercial marine break-through in modern times started in 1956 when Malcom P. Mclean, a former truck-line executive, proved it was feasible to stow cargo aboard ship in truck containers. This single innovation changed the face of the U.S. Merchant Marine and led to a dramatic decrease in the commercial use of break-bulk ships.

In 1960 a joint Navy-MARAD group determined that many NDRF ships no longer were beneficial for national defense. Asa result only 891 ships were selected for continued retention, with the remaining ships designated for scrapping. These ships were broken into two groups, the first Navy priority ships and

the second MARAD priority ships. These two groups were further

aM

broken down to number categories with certain ships being given preference with respect to maintenance and repair. (6:30) On October 23, 1969 the Merchant Marine Act of 1970 became law. The purpose of this legislation was to revitalize the United States Merchant Marine. Although during debate over the bill the NDRF was discussed and actions proposed, nothing concerning the NDRF was actually accomplished. When the legis- lation was finally enacted it was silent concerning the NDRF. In November of 1970 the last of the NDRF ships activated for service in Southeast Asia were deactivated. The ships had done their job. However, the future of the NDRF was becoming doubtful as the ships approached thirty years of age, clearly decisions concerning the NDRF had to be made. Various proposals surfaced concerning the fleet. In 1971 DOD sponsored a far-reaching review of the NDRF known as the "Sealift Procurement and National Security" (SPANS) study. Among other things it recommended the purchase of relatively new ships for the NDRF that would otherwise be sold to foreign countries or scrapped. In 1972 $30 million was added to the Department of Commerce budget request for the purchase of such shipping. However, this request was disallowed by the Office of Management and Budget (OMB) on the grounds that the NDRF was military in nature and as such funding for upgrading Should come from DOD. Although MARAD was responsible for the NDRF interest was

obviously low in the first half of the seventies. Naturally

22

MARAD attention focused on revitalizing the active merchant fleet in conjunction with the Merchant Marine Act of 1970. For fiscal year 1975, the total MARAD budget request was $586,162,000. Of this amount $4,358,000 - less than one per- cent was designated for NRDF support.(6:31) Although little money entered the NDRF it generated a great deal of revenue. Exhibit 2 shows revenues acquired for ships sold as scrap or

for non-transportation purposes for the U.S. government.

EXHIBIT 2

Ships Sold For Scrap

YEAR SHIPS SOLD VALUE

1976 12 $11,908,283 1977-T 2 $ 470,000 1977 21 $ 2,610,826 1958-1977 2,270 $192,200,,000

Sources: 1. MARAD 1976 (3:49)

2. MARAD 1977 (2:65)

On January 2, 1975 Public Law 93-045 was signed. It authorized the Secretary of Commerce to acquire Mariner class vessels from private owners (who would otherwise scrap them) in exchange for obsolete ships from the NDRF which could then be scrapped. The expressed purpose of this law was to upgrade the NDRF with newer ships specifically Mariner class hulls

built around 1952.

25

Early in 1976 discussions were held between Navy and MARAD personnel with an objective for developing an approach to provide DOD with sufficient break-bulk shipping during national emergencies in the shortest possible time. To accomplish this goal MARAD proposed that thirty of the NRDF ships be upgraded by a four phased plan. The DOD accepted this proposal and the Navy's Program Objective Memorandum for FY 1977 provides for Navy funding to commence work.(8:1) OBM apparently accepted this program in view of the fact that DOD and not MARAD money was utilized. At the beginning of FY 1977 the U.S. Navy trans- ferred to MARAD $5.2 million to begin upgrading selected ships

to Ready Reserve Fleet status. (2:65)

24

III. THE PROBLEM

A. PAST EXPERIENCE

As cited earlier the ships of the NDRF have been utilized for national defense purposes twice during their thirty-four year existence. Each time the ships were called upon they performed well but not without difficulties and certainly not without costs. The two defense related call ups discussed refer to the Korean Police Action and the conflict in South- east Asia.

Ny Korea: As of mid 1950, there were 2277 ships in the various reserve fleets: 239 were Victory ships, 1564 Liberty Ships and the remainder were miscellaneous military and pre- World War II vessels. During the Korean hostilities 778 Government-owned ships were withdrawn, repaired, refitted, and placed in service.(1:23) The method of utilizing these ships was the General Agency Agreement (GAA). Within DOD the ships came under the auspices of the Military Sea Transportation Service (MSTS). The private operator was responsible for overseeing repairs, providing a crew, and general provisioning. The government paid for the break-out costs, and activation costs in addition to the private operators expense and fees.

In March of 1951 the National Shipping Authority (NSA) was established to provide the administrative machinery to super- Vise the operation of the reactivated vessels. From mid-March

through December 1951, the NSA activated 443 vessels. The

2

© ene

cost of activation was $60 million or $135,000 per ship. By the second quarter of 1952 GAA ships decreased to 183 and government vessels on charter fell to 91 by mid-1952. As the need for the NDRF ships decreased they were returned to the reserve fleet at an average cost of $19,000 per ship. (4:7)

Although break-out times were excellent (an average of more than three ships every two days) and costs were reasonable it should be pointed out that the ships were fairly new and required little preparation. Even though time and cost figures are impressive for the NDRF during the Korean Action they do not tell the full story.

During that national emergency the most acute problem encountered by activating the NDRF was the shortage of sea- going manpower. The number of seaman jobs increased dramatically from 57,000 in June 1950 to 87,000 in June 1951 an increase of fifty-three percent in one year.(1:24) Although jobs were plentiful at sea, personnel to fill them were in short supply. Specifically high wages and plentiful job opportunities ashore coupled with the uncertain future of a long career at sea made seafaring at this time unenhancing for many. This shortage occurred even though there was an abundance of trained mari- time personnel in the country with experience dating back to World War II. This shortage of skilled seamen in all ratings both crew and officers seriously delayed many sailings. (4:7)

2. Vietnam: The next military demand on the NDRF began

fifteen years later on July 16, 1965. At this time there were

26

1,594 ships in the reserve fleet and of them only 960 ships were under preservation. (5:53) As during the Korean Police Action the ships operated under General Agency Agreement con- tracts with private operators. By 1970 a total of 173 ships were under GAA and of these 161 had been activated between 1965 and 1970. They moved more than thirty percent of all cargo to Southeast Asia. Interestingly, during the Vietnam conflict ninety-six percent of all military freight moved by sealift under the auspices of the Military Sealift Command (MSC) which had replaced the MSTS.

The first fifty-one ships activated were placed on berth between twenty-one and forty-three days (See Exhibit 3). All activation costs for the first forty-seven ships averaged $500,000 per ship. (1:25) The initial group of fourteen ships were worked on around the clock and all short cuts allowed by safety requirements were taken.

During the initial operating period, approximately one year, about seventy percent of the fifty-one ships activated in 1965 suffered casualties resulting in lost time averaging ten days per ship.(1:27) Most major ship casualties occurred within the first three months of operation with boilers accounting for about one-third of all casualties. Appendix A lists problem areas causing lost time on reactivated Vietnam conflict ships.

During the six year period of operation, maintenance and repair costs totaled $84,940,291 for an average of $445 per voyage day.(1:28) Appendix B displays the number of voyage

days, total maintenance, and repair costs per voyage day for

27,

EXHIBIT 3

Activation Time Frames For Vietnam

AVERAGE AVERAGE AVERAGE ACTIVATION NUMBER DATE PLACED DATE ON DAYS IN FLIGHT NO. OF SHIPS IN SHIPYARD BERTH SHIPYARD 2 14 July 17, 1965 Aug. 7, 1965 oul 2 8 Aug. 17, 1965 Sept. 27, 1965 41 3 28 Alga. co; 1.965 ° 7OcG. 107.1965 43 4 Ik Oces 29, -1965-" Nov .-21,, 1965 SHE 5 25 Dec. 15, 1965 Feb. 6, 1966 53 6 6 Feb. 7, 1966 Apr. 15, 1966 67 7 6 Mar. 12, 1966 May 15, 1966 64 8 6 DDE. 22,,1966 “June 15, .1966 64 9 7 May 12, 1966 July 15, 1966 64

Source: National Defense Reserve Fleet Response Plan (1:26)

28

each year of reserve fleet vessel usage during the Southeast Asia conflict. Activation and repair costs are broken down

tm Exhibit 4.

EXHIBIT 4

ACTIVATION AND REPAIR COSTS: The average shipyard costs to reactivate, maintain and repair, and deactivate NDRF vessels

during Vietnam use were as follows:

Reactivation $476,937 (161 ships)

Maintenance and Repair $490,984 (173 ships)

Deactivation SO ee (123 ships) Sab (bee is

Source: National Defense Reserve Fleet Response Plan (1:28)

Shipyard capabilities during this period generally were sufficient to meet the demand placed on them. However, diffi- culties onboard ship did arise from prolonged operations out- Side the United States. The general lack of repair facilities in the Western Pacific caused ship delays far out of proportion to the severity of the casualties.

As during the Korean Action manpower was a severe problem. From 1965 to 1968 personnel shortages caused delays in 592 of 1,405 scheduled sailings. Appendix C displays delayed sailings

due to crew shortages. These shortages existed despite all

Zo

efforts made by MARAD, other Federal agencies, and private organizations to solve the problem. Reasons cited for this shortfall of seagoing personnel are as follows:

a. Lack of sufficient number of qualified crew.

b. Generous vacations requiring greater numbers of crews.

c. Reluctance to sail on older ships. d. High attrition rate of licensed officers due to long periods at sea, high average ages and

eligibility for retirement.

e. Inability of MARAD to have maritime personnel exempt from military service. (1:32)

Overall the aging ships of the NDRF performed well through- out the Vietnam conflict. Although break-downs occurred they were not the main cause for delays. Most delays were attri- buted to a shortage of Vietnamese docking facilities and crew shortages. (5:54) By November 1970, the last reserve ship was returned to the NDRF.

3. OTHER PAST PROBLEMS: Congressional hearings and MARAD/ GAO reports indicated the following additional problem areas encountered in past activations.

a. Procurement - GAO found that MARAD had not established adequate procurement procedures for purchase of necessary equipment and supply items to outfit vessels.

b. GAA Operator Compensation - there were con- tentions from GAA operators that the compen- Sation to husband vessels in the Vietnam reactivation ($75 per day initially, later revised to $125 per day) was non-compensatory.

c. GAA Funding Procedures - GAO concluded that excessive funds were being advanced to GAA

agents, pointing out that the amount of cash advanced should be as close to daily needs

30

of recipient agent as administratively prac- ticable, Marads' surveillance procedures over advanced funds were also criticized.

d. Other GAA Related Issues - these issues included the large number of agents, the continued expansion of agents no matter how marginally qualified and need for remedial action in case of inadequate performance. (1:35)

B. THE PRESENT

In order to activate a Victory ship of the NDRF in 1977 it was projected that it would take thirty to forty days. As discussed earlier DOD concluded that this time frame was unsatisfactory and deemed a five to ten day break out period for thirty Victory Ships was necessary. (4:11) Although the initial plan for the Ready Reserve Fleet composed of thirty World War II Victory ships was accepted by DOD and funded by the Navy, the Program was changed almost immediately.

In 1977 the trade-in of five C-3 break-bulk ships con- Structed in 1960-61 provided a more modern basis for the NDRF. Additionally, the "Seatrain" series of ships, which are fully self-sustaining, already in the NDRF presented to military planners a better alternative and a more efficient method of carrying vehicles and helicopters. Finally the addition of three Mariner Class vessels constructed in the 1950's joined the fleet in 1978 further offering newer, faster, and more modern ships for RRF status.

In view of the change taking place within the NDRF, MARAD

in conjunction with the Navy altered the objectives of the RRF.

The revised objectives were to first provide DOD with a sealift

ee

capability equivalent to that of thirty Victory ships (approxi- mately 340,000 measurement tons), that is a variety of ships types would be utilized rather than only Victories as originally planned, and second provide activation within five to ten days for deployment during national emergencies. (18:1) Obviously these goals cannot be met immediately. MARAD will, as money becomes available from the U.S. Navy, bring the required ton- nage up to RRF standards. Exhibit 5 presents the ships in

RRF status as of February 28, 1979 and the ships that may eventually join the fleet.

Although special attention has recently been given to the RRF ships it has not degraded the remaining ships in the NDRF. Even though the Victory ships are not utilized as much in the RRF as first planned they still constitute the largest, 130 out of 218, group of ships in the NDRF retention list for defense purposes. (10:3)

According to DOC the ships of the NDRF are deemed to be in good condition and properly maintained. (4:14) This is pri- marily due to the dehumidification (D/H) systems which have virtually eliminated interior corrosion and deterioration caused by moisture.(1:10) In addition to the D/H the ships are pro- tected with a hull electrocathodic protection system to minimize underwater hull deterioration through corrosion or electrolytic aetion.

Additionally spare parts for the Victory ships have been

carefully stored by the three remaining fleets aboard ship in

a2

YP E

5-5-3524 C3-S-33a €3-S-33a C3=-S-33a e2-5-33a

Ve2—-S=AP2

EXHIBIT 5

READY RESERVE FLEET SHIPS

NAME

Pride Bay Cove scan Lake

Catawba Victory

Container Carrier Washington

e2-S-i1P C4-S-1H C4-S-1H

LSD

Source:

Lone Star Mariner Old Dominion Mariner Cracker State Mariner

8 Ships

9 Ships

LOCATION

James

James

James

James

James

James

River River River River River

River

Beaumont

James

James

James

James

River River River

River

Suisun Bay

James

River

Beaumont Suisun Bay

Ships in the National Reserve Fleet

by Design (10:3)

ce

PURPOSE

HELD

RRF RR RRF

RRE

RRE

RRF potential reactivation

Possible Inclusion in RRF Program

Beaumont, Texas, Suisun Bay, California and in a warehouse in Kearney, New Jersey. The other four fleets having been phased out by 1973. These spare parts have been thoroughly

reconditioned and are ready for use.

C. CURRENT PROBLEMS

1. THE ENVIRONMENT: The ships of the NDRF were constructed well before the increased emphasis on environmental protection. Two environmental requirements imposed by Federal law impact on the NDRF. First, new requirements necessitate that oily waste and oily bilge slops be retained aboard for later dis- posal at sea or in special containers in port and secondly there 1S a new requirement to collect and dispose of all sanitation effluent.

Both of the requirements cited above help ensure that the waterways and coastal areas of the United States no longer suffer the ravages of pollution from passing ships.