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Ready Reserve Force (RRF) Ship Manager

Ships in categories ROS-4, ROS-5, RRF-10, RRF-20 and RRF-30 require the services of a Ship Manager. MARAD contracts with U.S. commercial ship operators for the maintenance and operation of RRF vessels. The overall responsibility of Ship Managers is to maintain their assigned RRF ships in Fully Mission Capable Readiness Status and to efficiently activate and operate these vessels in support of national defense objectives. Fully Mission Capable Readiness Status is defined as capable of ship activation within the required readiness period and remaining fully available and operational for a period of 180 days without interruption to mission, and being in full compliance with all applicable Regulatory Body requirements.

On 12 June 1998 U.S. Transportation Secretary Rodney E. Slater announced the award of 39 performance-based contracts to 10 American ship-owning and -operating companies to manage 89 ships of the Ready Reserve Force. The total estimated combined value for all 39 contracts over five years is $1.1 billion. This figure includes the expected costs of shipyard work and other maintenance and operational expenses for which the ship managers will be reimbursed. The ship manager contracts are performance-based service contracts, allowing the government to capitalize on the ship managers’ expertise and commercial business practices.

In August 1999, the Department of Justice announced indictments of 23 individuals as a result of a four-year law enforcement investigation [code-named OCTANOVA]. The Federal Bureau of Investigation (FBI) Defense Criminal Investigative Service, the Naval Criminal Investigative Service, and the Office of Inspector General of the Department of Transportation focused on bribery, fraud, and kickbacks relating to the maintenance of both military sealift command ships and Ready Reserve fleet vessels. As part of "Operation Knotdock" the FBI set up an undercover company in New Orleans, Coastal Marine Engineering Group (CMEG), with agents posing as marine contractors to investigate bribery operations. The government's first conviction in the lengthy investigation came in 1998. Two MARAD employees eventually pleaded guilty to accepting unlawful gratuities from contractors, and MARAD took action to debar or suspend 16 companies and individuals. MARAD subsequently performed an audit to evaluate the adequacy of MARAD's internal control system for awarding and managing its contracts. While MARAD had effective policies and procedures related to the award of the new ship's contracts, the administration of those contracts with ship managers and general agents needed improvement. MARAD agreed to strengthen its controls for administering the contract and now must follow through on the necessary corrective action.

Following the announcement of contracts to manage RRF ships in 1998, MARAD rescinded the contracts. It extended existing contracts to make sure the ships remained mission ready. On 04 May 2000 Maritime Administrator Clyde J. Hart Jr. announced the award of 33 contracts, awarded on a competitive basis, to nine American ship owning and operating companies to manage 74 of the Ready Reserve Force ships. The total estimated combined value for all 33 contracts awarded over five years was $1.1 billion. This figure includes the $316.3 million value of the basic contracts, plus expected costs of shipyard work and other maintenance and operational expenses for which the ship managers will be reimbursed.

The Ready Reserve Force is composed of militarily useful ships maintained in a high state of readiness to be activated within four, five, ten, twenty or thirty days of notice from the Defense Department. MARAD is responsible for acquiring, upgrading, activating, deactivating and maintaining the RRF. Ship manager contracts are awarded on a competitive basis, utilizing full and open competition. U.S. companies that own or operate ships in commercial service or other government ships are eligible. Each contract covers a group of two or three ships, and the maximum award for any one contractor is 12 ships.

Ready Reserve Force Ship Manager Contracts
Annoucned June 1998

Key: JRRF=the James River Reserve Fleet site in Virginia.; BRF=the Beaumont, Texas, Reserve Fleet; SBRF=Suisun Bay Reserve Fleet in California; Prepo=serves as a maritime prepositioning ship for the armed forces.