APPENDIX F
CURRENT U.S. NAVY SUPPORT FOR THE COMMERCIAL SALVAGE INDUSTRY

BACKGROUND

Following World War II Congress enacted the Salvage Facilities Act, P. L. 80-513, 10 U.S.C. §§ 7361-7367 "to authorize the Secretary of the Navy to provide salvage facilities, and for other purposes." While there have been no court decisions interpreting this act, the legislative history shows that Congress had several objectives:

  • To provide salvage resources to protect the redeployment of government-owned war materiel on chartered ships (but not in excess of national defense needs).

  • To foster (but not subsidize) the commercial salvage industry.

  • To allow (but not require) the Navy to render salvage services to private vessels when commercial salvors are not available, charging for those services to support the Navy's Salvage facilities.

The Salvage Facilities Act permits the Secretary of the Navy to:

  • Provide, by contract or otherwise, salvage facilities for public and private vessels (10 U.S.C. § 7361).

  • Acquire or transfer equipment and vessels for operation by private salvage companies (10 U.S.C. § 7362).

  • Advance funds to private salvage companies for immediate financing of salvage operations (10 U.S.C. § 7364).

  • Settle and receive payment for claims by the Navy for salvage services rendered by the Department of the Navy (10 U.S.C. § 7365).

In the postwar years the Navy provided ships to commercial salvage companies to "support organized offshore salvage facilities" (10 U.S.C. § 7363). This practice continued into the 1970s but was abandoned by 1982 when the Marine Board's report, Marine Salvage in the United States, was published.

THE PRESENT SITUATION

The Navy, through the Supervisor of Salvage, Naval Sea Systems Command (SUPSALV), now competitively awards contracts, pursuant to the Salvage Facilities Act, with three commercial salvors to provide salvage facilities for national defense needs around the world:

  • Donjon Marine Co., Inc. of Hillside, New Jersey, has responsibility for the Atlantic Ocean, Caribbean, and Mediterranean Seas.



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A Reassessment of the Marine Salvage Posture of the United States APPENDIX F CURRENT U.S. NAVY SUPPORT FOR THE COMMERCIAL SALVAGE INDUSTRY BACKGROUND Following World War II Congress enacted the Salvage Facilities Act, P. L. 80-513, 10 U.S.C. §§ 7361-7367 "to authorize the Secretary of the Navy to provide salvage facilities, and for other purposes." While there have been no court decisions interpreting this act, the legislative history shows that Congress had several objectives: To provide salvage resources to protect the redeployment of government-owned war materiel on chartered ships (but not in excess of national defense needs). To foster (but not subsidize) the commercial salvage industry. To allow (but not require) the Navy to render salvage services to private vessels when commercial salvors are not available, charging for those services to support the Navy's Salvage facilities. The Salvage Facilities Act permits the Secretary of the Navy to: Provide, by contract or otherwise, salvage facilities for public and private vessels (10 U.S.C. § 7361). Acquire or transfer equipment and vessels for operation by private salvage companies (10 U.S.C. § 7362). Advance funds to private salvage companies for immediate financing of salvage operations (10 U.S.C. § 7364). Settle and receive payment for claims by the Navy for salvage services rendered by the Department of the Navy (10 U.S.C. § 7365). In the postwar years the Navy provided ships to commercial salvage companies to "support organized offshore salvage facilities" (10 U.S.C. § 7363). This practice continued into the 1970s but was abandoned by 1982 when the Marine Board's report, Marine Salvage in the United States, was published. THE PRESENT SITUATION The Navy, through the Supervisor of Salvage, Naval Sea Systems Command (SUPSALV), now competitively awards contracts, pursuant to the Salvage Facilities Act, with three commercial salvors to provide salvage facilities for national defense needs around the world: Donjon Marine Co., Inc. of Hillside, New Jersey, has responsibility for the Atlantic Ocean, Caribbean, and Mediterranean Seas.

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A Reassessment of the Marine Salvage Posture of the United States Crowley Maritime Salvage, Seattle, is the Pacific Ocean contractor. Smit Tak, a Netherlands corporation, is the Navy's Western Pacific, Indian Ocean, and Arabian Sea/Arabian Gulf salvor. The contracts each run for a period of one year with four annual options to renew. The contracts require immediate response with designated facilities and carry a guaranteed minimum value. The contractors receive their costs plus an award fee for operations actually tasked. SUPSALV also competitively awards contracts with a number of salvage-related companies pursuant to 10 U.S.C. § 7362 to provide services using salvage equipment owned and furnished by the Navy. Military departments are authorized to lease government-owned equipment to private companies under 10 U.S.C. § 2667. Pursuant to this statute the Navy, through SUPSALV, may lease pollution response equipment to private organizations. The terms of these equipment rentals are similar to (but differ in several important respects from) those for salvage equipment leased pursuant to the Salvage Facilities Act. In each case the contractor is free to enter other contracts with private customers, but may not use the Navy's equipment, and the other contracts must not interfere with the Navy's requirements. These contracts provide for ocean floor search and recovery, in-water ship repair, oil spill response, and salvage equipment depot maintenance; the specific terms vary. The ocean floor search and recovery contracts are held by Oceaneering Technologies, Inc. This contractor maintains and operates SUPSALV's remotely operated vehicles and underwater search systems. The contracts provide for immediate response and mobilization and pay costs plus award fee for tasked operations. Oceaneering International, the parent of Oceaneering Technologies, holds the Navy contract to provide worldwide diving services. They include in-water ship inspection and repairs, such as underwater cutting and welding, rudder repair, and propeller and shaft bearing replacement. The contract requires the Navy to furnish certain equipment and requires Oceaneering to provide divers for Navy jobs worldwide. While the contractor is permitted to perform non-Navy work, such work must not interfere with Navy requirements and taskings. The contractor is paid on a daily fee schedule according to the type of diving services provided and recovers its costs plus an award fee. The salvage equipment depot contractor is Global Phillips Cartner (GPC). GPC maintains the Navy's Emergency Ship Salvage Material (ESSM) warehouses in Williamsburg, Virginia; Stockton, California; Bahrain; Pearl Harbor; Sasebo, Japan; Aberdeen, Scotland; Livorno, Italy; and Singapore. ESSM warehouses hold a large variety and quantity of salvage, diving, and pollution response equipment. The Williamsburg and Stockton facilities also develop and maintain specialized salvage and pollution response equipment. They employ skilled individuals capable of manufacturing, packing, and shipping equipment needed for a salvage and/or pollution response operation anywhere in the world. GPC earns costs plus award fee under this contract. It employs about 130 individuals full time to satisfy contract requirements. GPC also holds the Navy's pollution response contract and maintains and operates the Navy's extensive inventory of pollution response equipment. On occasion, GPC is tasked by the Navy to support U.S. Coast Guard pollution response operations involving private concerns, shipowners, cargo owners, or pollution liability underwriters. This support almost invariably includes providing Navy-owned pollution response equipment, maintained and operated by GPC, according to a published cost schedule. These costs are billed to the ''responsible party,'' either directly or through the Coast Guard. GPC receives its costs plus an award fee, which

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A Reassessment of the Marine Salvage Posture of the United States are also passed along via the Coast Guard to the customer or "responsible party" for reimbursement. CONCLUSION Through the Navy the U.S. government provides limited support for the commercial salvage and salvage-related industries through standing salvage contracts, contracts for salvage-related services, and leases of salvage and pollution abatement equipment.