United States General Accounting Office GAO Report to the Secretary of the Navy August 1997 NAVAL SHIP DONATION Existing Procedures Inadequate for the Use of Additional Evaluation Criteria GAO/NSIAD-97-180 United States GAO General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-277399 August 15, 1997 The Honorable John F. Dalton The Secretary of the Navy Dear Mr. Secretary: On August 21, 1996, you announced your decision to donate the USS Missouri, a ship of historical significance, to the USS Missouri Memorial Association in Hawaii. At the request of Congressman Norman Dicks, we reviewed the facts surrounding the donation process. Specifically, we obtained information on the (1) process of applying for the ship, (2) evaluation criteria and weighting used to evaluate the applications, and (3) use of the criteria and weighting in the selection process. On June 3, 1997, we reported our results to Congressman Dicks.1 The purpose of this letter is to quickly summarize our findings and to recommend ways to improve the process for any future ship donation. The Secretary of the Navy has legal authority (10 U.S.C. 7306) to transfer Background title of ships no longer needed for the Navy’s purposes to not-for-profit entities and others. However, the law requires that (1) such a donation be made at no cost to the government, (2) the recipient maintain the ship, and (3) Congress be allowed 60 days to review the Secretary’s decision. The Navy’s ship donation evaluation process is designed to help the Secretary of the Navy determine whether those seeking a donation of a ship meet the Navy’s requirements for financial and technical capabilities. The overall purpose of the ship donation program is to promote the public interest in the defense of the nation and to commemorate historic deeds performed by naval ships. In the past, with one exception, only 1 application was received for each of 43 donations and the qualified applicant received the donation. However, for the USS Missouri, the Navy received five applications. The Navy began the donation process for the USS Missouri in the same Results in Brief manner as prior donations, by requesting financial and technical information from the applicants and working with applicants to help ensure that their applications would satisfy the Navy’s financial and technical requirements. Subsequently, the Navy decided that, with respect 1 USS Missouri: Navy’s Evaluation Process in Ship Donation (GAO/NSIAD-97-171R, June 3, 1997). Page 1 GAO/NSIAD-97-180 Ship Donation B-277399 to the USS Missouri, additional evaluation criteria, “historical significance” and “public affairs benefits to the Navy,” were needed to assist the Secretary of the Navy in making the donation decision among four of five applicants that met the Navy’s financial and technical requirements. This was the first time such additional criteria were used in any donation selection process. While the donation process appears to have been impartially applied, and all applicants were provided the same information on the additional criteria at the same time, the Navy did not do a good job in communicating its additional requirements to the applicants. Specifically, applicants were not told (1) what the relative importance of the evaluation criteria was in the process (the added criteria actually represented 75 percent of the donation award weight), (2) what the added evaluation criteria meant, or (3) how well already submitted applications met the added criteria (a procedure routinely used in the financial and technical evaluation process). These factors were particularly important because the Navy’s evaluation teams were told to base their scoring only on the information contained in the applications. As a result, Navy evaluation teams found that the applications had limited information that could be applied against the added criteria. According to some applicants, had they known that the additional criteria carried so much weight, they would have revised their applications. What appears to have been an otherwise open process with clear communications and frequent interaction between the Navy and the applicants for the USS Missouri was not with respect to the additional two criteria . The Secretary of Navy, by statute, has broad discretion in making ship donation decisions. The Navy’s existing donation application procedures are designed for assessing applicants in terms of their financial and technical capabilities to move and sustain a vessel. When additional criteria beyond financial and technical requirements are used and applicants are asked to submit information to address them, as was the case with the USS Missouri, existing application procedures do not provide guidance on how the Navy should proceed. We believe that, had there been written procedures that required the Navy to communicate to the applicants the meaning and relative importance of the additional criteria and to work with applicants to address the additional criteria, the problems encountered in the USS Missouri case could have been avoided. Page 2 GAO/NSIAD-97-180 Ship Donation B-277399 In the future, the Navy may again face situations where there are multiple Recommendation applicants for a ship donation and may decide that additional criteria beyond the traditional financial and technical evaluation are necessary. Therefore, we recommend that the Secretary of the Navy establish written procedures to require that, whenever the Navy decides to ask applicants to submit information to address additional criteria, the Navy (1) communicate to applicants, at the earliest possible date, necessary information that, at a minimum, includes the criteria that will be used to evaluate the applications, the relative importance of the criteria in the final selection, and clear definitions of what the criteria mean and (2) work with applicants to increase the likelihood that applications will adequately address the additional criteria, as has been the Navy’s practice in the financial and technical areas. In commenting on a draft of this report, the Navy took the position that Agency Comments there was already in place a process that maximizes both communication and Our Evaluation and flexibility. The Navy also stated that (1) it was important that the Navy have the flexibility to select the best approach for each donation and (2) whenever more than one application is received for the same ship, the Navy makes every effort to conduct an impartial and fair analysis of each application. The Navy also commented that a ship donation decision is not a procurement competition but felt that we were recommending procedures similar to those used for competitive procurements. Our review of the process used for the USS Missouri indicated that the Navy (1) did not explain the meaning of the added criteria and their relative importance and (2) used two different approaches—the Navy appeared to have used an open approach with clear communications and frequent interactions with the applicants for the traditional financial and technical capability criteria, but did not use a similar approach for the two added criteria. We are not recommending that ship donations be treated like competitive procurements. The intent of our recommendation is that the Navy commit itself, in its written procedures, to (1) explaining the meaning and relative importance of any added criteria for which it is requesting information from the applicants and (2) following the same approach for any added criteria that it uses for the traditional financial and technical capability criteria by working with the applicants to help ensure that their applications provide the level of details and specificity the Navy feels it needs. In an effort to ensure that readers of our final report will not Page 3 GAO/NSIAD-97-180 Ship Donation B-277399 misconstrue our intent, we have modified the language but not the thrust of our recommendation. The Navy’s comments are reprinted in appendix I. The Navy also provided a technical suggestion which we have incorporated in the background section of this report. This report is based on information gathered for our June 3, 1997, report Scope and on the USS Missouri. To obtain information for that report, we interviewed Methodology officials and reviewed files at the Naval Sea Systems Command, the Naval Historical Center, the Office of Chief of Naval Information, and the Office of the Deputy Assistant Secretary of the Navy for Ship Programs. We also interviewed representatives of four of the top five applicants; the fifth applicant has disbanded. We conducted our review during April and May 1997 in accordance with generally accepted government auditing standards. This report contains recommendations to you. The head of a federal agency is required under 31 U.S.C. 720 to submit a written statement on actions taken on our recommendations to the Senate Committee on Governmental Affairs and the House Committee on Government Reform and Oversight no later than 60 days after the date of the report. A written statement must also be submitted to the Senate and House Committees on Appropriations with an agency’s first request for appropriations made more than 60 days after the date of this report. We are sending copies of this report to appropriate congressional committees; the Secretary of Defense; and the Director, Office of Management and Budget. We will also make copies available to others upon request. Page 4 GAO/NSIAD-97-180 Ship Donation B-277399 Please contact me at (202) 512-4587 if you or your staff have any questions concerning this report. Major contributors to this report were Charles W. Thompson and John P. Ting. Sincerely yours, David E. Cooper Associate Director, Defense Acquisitions Issues Page 5 GAO/NSIAD-97-180 Ship Donation Appendix I Comments From the Department of the Navy Page 6 GAO/NSIAD-97-180 Ship Donation Appendix I Comments From the Department of the Navy Page 7 GAO/NSIAD-97-180 Ship Donation Appendix I Comments From the Department of the Navy (707267) Page 8 GAO/NSIAD-97-180 Ship Donation Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. For information on how to access GAO reports on the INTERNET, send an e-mail message with "info" in the body to: email@example.com or visit GAO’s World Wide Web Home Page at: http://www.gao.gov PRINTED ON RECYCLED PAPER United States Bulk Rate General Accounting Office Postage & Fees Paid Washington, D.C. 20548-0001 GAO Permit No. G100 Official Business Penalty for Private Use $300 Address Correction Requested
Naval Ship Donation: Existing Procedures Inadequate for the Use of Additional Evaluation Criteria
Published by the Government Accountability Office on 1997-08-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)