Watercraft Materiel Master Plan


Chapter Eight

Divestment of Watercraft

  1. OBJECTIVE. Watercraft modernization programs, in conjunction with Army watercraft operational force structure changes resulting from revisions of the DoD Strategic Mobility Plan and J-LOTS doctrine, are causing the displacement of watercraft systems. As vessels are displaced, they become available for redistribution and reuse or disposal. A sound divestment program ensures that the best vessels are retained by DoD, and the remaining vessels are quickly, properly and efficiently removed from the inventory. This chapter outlines the Army watercraft divestment program.
  2. OVERALL STRATEGY. An Integrated Process Team has been formed consisting of representatives from the US Army TACOM Integrated Material Management Center, TACOM Deputy for Systems Acquisition, DLA Defense Reutilization and Marketing Service, DA DCSOPS, OCAR and USARC. Other commands, agencies and activities are included as necessary, depending on the systems and units involved. As vessels become available for divestment as a result of new equipment fielding or force restructuring, the IPT reviews redistribution/reuse and disposal alternatives. Where disposal is the appropriate action, various disposal alternatives are addressed, with the DoD Exchange/Sale disposal method being given first consideration because of its potential for generating funds for use in procuring replacement equipment.
  3. METHODOLOGY.
    1. Fleet Density Analysis. Divestiture candidates are identified by projecting procurement and force structure changes over time. Procurement is driven through a balance of requirements and budget resources. Force structure changes are reflected by redefinition of mission and consequent change in equipment allowance or by the establishment or disestablishment of units. By charting the needs of each unit over time and overlaying the procurement profile, decisions regarding divestment and On Condition Cyclic Maintenance (OCCM) can be made.
    2. Selection and timing criteria. Once divestment candidates are identified, various avenues are explored to retain the best assets thus reducing operating and maintenance costs.
      1. Redistribution to another unit. When a watercraft unit reports an excess vessel, the parent, then FORSCOM has the authority to transfer the vessel within respective organizations to fulfill a requirement. If the vessel is still available, DA may redistribute to Army Preposition Stocks.
      2. Exchange with another unit. Vessels nominated for divestment may be exchanged with newer vessels, based on condition or maintenance requirements, or to retain vessels with similar equipment (pure fleeting).
      3. Timing. OCCM consumes substantial funds. Since watercraft are required to have maintenance every 36 or 48 months, depending on the class, divestiture should be timed to maximize the benefit from the last OCCM. Unit readiness must also be considered before early divestiture is approved.
    3. Variables to differentiate vessels.
      1. Condition assessment based on survey
      2. User input
      3. Assessment of maintenance and modifications
      4. Conformity to class standards
      5. Location and costs to transport
      6. Age
      7. Environmental considerations including hazardous material.
    4. Divestment alternatives. When it has been determined that a vessel is not required by a user within the Army, several options exist:
      1. Redistribution to other Government Agencies
      2. Direct sale of Non-excess vessels
      3. Donation
      4. Foreign Military Sales
      5. Cannibalization (only if directed by NICP)
      6. Mothball.
    5. Environmental liability. Vessels cannot go into public commerce if levels of environmental contaminants are too high. These conditions must be abated before title can pass. Internal DA policy requires the turning-in agency to have an environmental inspection performed on vessels built before 1976 prior to turn-in.
    6. Administrative costs of vessel disposal are borne by TACOM.
  4. SALE OR EXCHANGE OF NON EXCESS VESSELS.
    1. The exchange or sale of non-excess personal property is governed by Code of Federal Regulations (CFR) Part 101-46. It is implemented in the Department of Defense by DoD Material Management Regulation DoD 4140.1.R, dated May 1998. This authority allows the sale or exchange of similar items with proceeds going to pay in whole or in part for property acquired through authorized procurements. Federal Supply Classification (FSC) groups 19 and 20 Ships, Small Craft, Pontoons, Floating Docks, Ship and Marine Equipment are specifically included in the exchange/sale authority.
    2. The sales/exchange process consists of the following procedure:
      1. Identify vessel as a sales/exchange candidate
      2. Verify that there are no outstanding Army claimants for vessel
      3. Coordinate release of vessel or substitute hull number with owning unit
      4. Assess vessel
        1. Condition/survey
        2. Environmental
        3. Sustainability
        4. Marketability and market interest
        5. Market value
      5. Evaluate economic benefit of sale/exchange with manufacturer
      6. Offer to sell to other Government Agencies at fair market value (may negotiate price)
      7. Offer to exchange with manufacturer (may negotiate price)
      8. Assess market interest
      9. Develop bid package
      10. Advertise
      11. Show vessel
      12. Receive/Process bids
      13. Determine winner
      14. Receive payment
      15. Deliver vessel and Certificate of Build or Quasi-Title
      16. Transfer funds to appropriate procurement program.
  5. FLEET DISPOSAL ISSUES.
    1. Condition of vessels to be divested Vessels should meet TM 10/20 serviceability standards if qualified for the Exchange/Sale disposal method so as to maximize sale value. Condition will otherwise be directed by the Disposition Authority.
    2. Inspection of vessels for disposal when a Request for Disposition Instructions is received by the NICP, a marine condition survey should be directed by the National Maintenance Point (NMP)/National Inventory Control Point (NICP) in the scope and depth specified in TB 55-1900-201-45/1. This inspection may be accomplished at the wholesale level by the NMP/NICP. Inspection results are used to facilitate NMP/NICP determination of the appropriate method of divestment.
    3. User involvement in sales program Vessels to be sold should be prepared to maximize their value and marketability. Owning units should ensure that preservation, cleanliness and maintenance are up to standards. Onboard manuals and as-built drawings should be retained and turned over with the vessel.
    1. Divestment Schedule TBP
    2. Summary. TBP