THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, May 3, 1995 TAG: 9505030459
SECTION: FRONT PAGE: A2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Short : 50 lines
The Navy knew as early as 1986 that a Pennsylvania shipbuilder couldn't adequately complete two refueling ships but ``went ahead and threw more money at it,'' a top Pentagon official said Tuesday.
In a tale of government mismanagement, Pentagon Deputy Inspector General Derek Vander Schaaf told a Senate panel of the chain of events that led the Navy to spend more than $400 million on two ships that were never delivered.
It began at the height of the Reagan administration defense buildup, Vander Schaaf told the Senate Governmental Affairs investigations subcommittee.
Driving toward a goal of a 600-ship Navy, the Reagan Pentagon was placing shipbuilding contracts on a fast track and seeking new contractors to handle the increasing volume of work.
In 1985, the Navy awarded a $400 million contract to Penn Ship Co. of Philadelphia to build four oilers - tankers designed to refuel other Navy ships at sea. Initial concerns that the company was inexperienced and would be unable to deliver the ships were waved off.
The worst fears of Navy shipbuilding watchdogs were soon realized. Progress on the ships ground to a halt by the late 1980s despite infusion of additional Navy funds.
``They should have terminated it in 1986 - instead they went ahead and threw more money at it,'' Vander Schaaf said.
Although Vander Schaaf's investigation found that inexperience was the main problem at Penn Ship, a retired Navy officer who oversaw the project raised other concerns.
The officer, retired Capt. C.J. ``Pete'' Schrodt listed some of the bills Penn Ship submitted to the Navy for payment: charges for new furniture for a home in Texas and the costs of bulldozing work done on the Texas property, $25,000 in contributions to the United Way that had been deducted from employees' wages but never paid to the charity, an employee's child support payments deducted from the individual's salary but never forwarded to the child.
The Navy refused to pay these and other bills and in 1989 ordered work stopped on the project and sought to transfer the two unfinished hulls to Tampa Shipyards in Florida, owned by George Steinbrenner, New York Yankees owner. A more experienced shipyard completed the other two tankers originally awarded to Penn Ship. by CNB