Naval Ship Donation: Selection Decision for U.S.S. New Jersey Was
Objective, but Selection Process Can Be Strengthened (Letter Report,
10/12/2000, GAO/GAO-01-31).

On January 20, 2000, the Secretary of the Navy approved the selection of
the Home Port Alliance, a nonprofit organization, to receive the U.S.S.
New Jersey under the Navy's ship donation program. This report
summarizes GAO's findings on the selection process' credibility and
opportunities for improvement. The Navy applied its donation evaluation
criteria in an impartial, multiple-stage process that led to a credible
and objective decision. Although not significant to the outcome of the
U.S.S. New Jersey decision, opportunities exist to strengthen the
selection process in the areas of timeliness, clarity of guidance, and
communications.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-31
     TITLE:  Naval Ship Donation: Selection Decision for U.S.S. New
	     Jersey Was Objective, but Selection Process Can Be
	     Strengthened
      DATE:  10/12/2000
   SUBJECT:  Evaluation criteria
	     Historic preservation
	     Military vessels
	     Gifts or gratuities
IDENTIFIER:  U.S.S. New Jersey
	     Naval Vessel Register
	     U.S.S. Missouri

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GAO-01-31

A

Report to Congressional Requesters

October 2000 NAVAL SHIP DONATION

Selection Decision for U. S. S. New Jersey Was Objective, but Selection
Process Can Be Strengthened

GAO- 01- 31

Lett er

October 12, 2000 The Honorable Marge Roukema The Honorable Robert Menendez
The Honorable James Saxton The Honorable Robert Andrews House of
Representatives

On January 20, 2000, the Secretary of the Navy approved the selection of the
Home Port Alliance (the Alliance), a nonprofit organization, to receive the
U. S. S. New Jersey under the Navy's ship donation program. The organization
had sought to obtain the ship for use as a floating museum to be moored in
Camden, New Jersey. The Secretary's decision represented

the culmination of a competition between the Alliance and the U. S. S. New
Jersey Battleship Commission (the Battleship Commission), another nonprofit
organization, which had sought to obtain the ship for a proposed museum in
Bayonne, New Jersey. After the Navy's decision, questions were

raised concerning whether each competing organization had received equitable
treatment in the selection process. At your request, we reviewed the
selection process. This report addresses whether (1) the selection decision
was credible and (2) opportunities exist to improve the selection process
for future donations. Results in Brief The Navy applied its donation
evaluation criteria in an impartial, multiple- stage process that led to a
credible and objective decision.

Multiple Navy evaluators independently reviewed each application according
to preestablished evaluation criteria, drawing tentative conclusions about
them, and then came together as a group to reach composite ratings for each
application. The evaluations were supplemented by a higher level advisory
panel that provided oversight to the evaluations, as well as completed its
own assessment before submitting a recommendation to the Secretary of the
Navy. The process also provided

opportunities for applicants to strengthen their applications in response to
inquiries by the Navy prior to completion of the evaluation process.
Although not significant to the outcome of the U. S. S. New Jersey decision,
opportunities exist to strengthen the selection process in the areas of
timeliness, clarity of guidance, and communications. Changes to the

process could strengthen the public's confidence in and understanding of

future donation decisions. Opportunities for such improvements were evident
in the U. S. S. New Jersey selection process where key aspects of selection
criteria were not finalized until late in the application submission period.
There was a lack of specificity at times in communications regarding the
requirements or the competitiveness of individual applications. A
misunderstanding appeared to have resulted from the

Navy's January 3, 2000, letter that notified applicants of the results of
the Navy's evaluation of three initial evaluation criteria categories. This
led one applicant to erroneously believe that the final decision would hinge
on the results of the Navy's evaluation of the final two selection criteria
categories. In fact, the Navy's decision was based on the comparative
results of each of the five criteria categories. The winning application was
judged superior to the other application in four of the five evaluation
categories. In the fifth evaluation category (financial), both applications
were rated equally (excellent).

This report provides recommendations for strengthening the Navy's process
for making future donation decisions. The Navy agreed with the report and
concurred with the recommendations.

Background Ships that are part of the Navy's force structure are listed on
the Naval Vessel Register, the official inventory of ships and service craft
in the custody of or owned by the Navy. Ships no longer needed may be
removed from the Register and can be donated and used as memorials,
transferred to foreign governments, scrapped, or otherwise disposed of as
authorized by Congress. The Secretary of the Navy has discretionary
authority 1 to donate ships no longer needed for the Navy's purposes to not-
for- profit entities and others. 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 30 days of continuous session to review the Secretary's
decision. Absent action by Congress to negate such a decision, the Secretary
may donate the applicable ship to the selected organization.

The donation of the U. S. S. New Jersey represents the Navy's 46th ship
donation since 1948, but only the third donation that included multiple
applicants. Absent competing applications, Navy officials historically have
worked with interested organizations in developing their applications to

1 10 U. S. C., sec. 7306.

ensure applicants met the Navy's financial and technical requirements for
the donations. Where multiple organizations have sought donation of the same
ship, the Navy has used a competition to select the best application.

Despite long- standing private sector interest in obtaining the U. S. S. New
Jersey under the donation program, the ship was subject to several
administrative and legislative actions that caused it to be taken off, then
placed back on, the Naval Vessel Register in the 1990s, before being finally
removed in 1999. It was removed from the Register in January 1995 as part of
a Navy decision to remove the four Iowa class battleships built for the Navy
during World War II. It was placed back on the Register in February 1998 as
the result of legislation enacted as part of the National Defense
Authorization Act for Fiscal Year 1996, which required that two battleships
be placed back on the Register for mobilization purposes. 2 The Navy
substituted another battleship on the Register in 1999 so that it could
again

remove the U. S. S. New Jersey and make it available for donation in
response to congressional direction under section 1012 of the Strom Thurmond
National Defense Authorization Act for Fiscal Year 1999. 3 One of the
legislation's requirements was that the ship be located in New Jersey as a
condition of the donation. A November 17, 1998, Federal Register notice

announced the availability of the U. S. S. New Jersey for donation, the
Navy's donation and application requirements, and a May 17, 1999, deadline
for receipt of applications.

The U. S. S. New Jersey Battleship Commission, created in 1980 under New
Jersey law for the purpose of facilitating the donation of the ship for use
as a museum, submitted an application for the battleship to the Navy in
1996.

Initially, the Battleship Commission designated Liberty State Park in Jersey
City, New Jersey, as the intended mooring site. However, Navy officials
noted that uncertainties over the availability of the ship caused them not
to fully evaluate the application. Subsequently, in 1998, when it appeared
that congressional action would make the battleship available for donation,
the Battleship Commission voted Bayonne, New Jersey, as the proposed mooring
site in its application. 4 However, by this time, the Home Port 2 P. L. 104-
106, sec. 1011, 110 stat. 421. 3 The ship was officially removed from the
Naval Vessel Register by authorization of the Secretary of the Navy on
January 4, 1999. 4 Available information indicates the change in mooring
locations was a result of cost and technical challenges associated with
mooring the ship in Liberty State Park.

Alliance, Inc., had stated its intention to submit an application, proposing
Camden, New Jersey, as the mooring site. Subsequently, the Governor of New
Jersey expressed neutrality over the Navy's selection decision in choosing
between these two competing groups and locations. Prior to July 1998, the
ship donation program was managed as a collateral responsibility by the
Naval Sea Systems Command's Office of Congressional and Public Affairs.
However, in July 1998, in anticipation of a number of future ship donations,
the Command established a program office specifically for ship donations,
under the Command's Program Executive Office for Expeditionary Warfare. The
donation involving the

U. S. S. New Jersey was the first competitive ship donation to be executed
under this new office. As such, the program office was responsible for
convening two evaluation boards, 5 comprised of a variety of subject matter

experts drawn from across the Navy, and each chaired by the head of the ship
donation office. These boards evaluated the applications against specific
criteria and summarized their work in written reports to an

Executive Advisory Panel chaired by the Deputy Assistant Secretary of the
Navy (Ship Programs). This Panel provided oversight to the evaluation board
process, reviewed the board's reports, conducted site visits to candidate
sites, completed its own report, and made a recommendation through the
Assistant and Under Secretaries of the Navy to the Secretary

for his decision. Multiple Evaluation The Navy's evaluation criteria for the
U. S. S. New Jersey donation decision Criteria and Multistage

evolved over time, even as applications were being prepared. Nevertheless,
the Navy applied its criteria in an impartial, multiple- stage evaluation
Process Used to

process. This multistage process served to identify distinctions between
Ensure Thorough the competing applications based on specific evaluation
criteria and led to Evaluation of Each a credible donation decision.
Application and Credible Decision- Making

5 While Navy documents referred to the “evaluation board” in
singular fashion, it was actually conducted in two phases, with largely
different board membership during the second phase. We refer to this as the
work of the first and supplemental evaluation boards.

Application Requirements Available information indicates that donation
application requirements and

and Evaluation Criteria evaluation criteria for the U. S. S. New Jersey
evolved over time, from Evolved Over Time October 1998- just before the
formal Federal Register notice of availability of the ship for donation- to
March 1999 when the Navy formally notified

Congress and applicants regarding expanded criteria and their relative
weight. Nevertheless, the evaluation criteria were communicated to all
interested parties as the guidance evolved. On October 8, 1998, the Military
Procurement Subcommittee of the House Committee on National Security held a
hearing concerning Navy ship donation procedures following congressional
action directing the Navy to

remove the U. S. S. New Jersey from the Naval Vessel Register and to
transfer the vessel to a not- for- profit entity. The hearing record
indicated that one purpose of the hearing was to ensure that all
participants had an understanding of the donation process. Testifying before
the Subcommittee, the Navy's Deputy Assistant Secretary of the Navy (Ship
Programs) provided an overview of the Navy's tentative application
requirements and evaluation approach, pending presidential approval of the
legislation dealing with the donation. He indicated that applicants would be
expected to submit a financial plan, a mooring plan, a maintenance plan, a
towing plan, an environmental plan, a security plan, and a curatorial plan.
He indicated that (1) applications would be evaluated in these areas and (2)
if there was more than one applicant, and they all rated highly against the
initial criteria, then the Navy would consider adding additional criteria.
At that time, the Navy had not determined

whether the initial evaluation criteria would include the use of a point
system for scoring candidate proposals as it had done in a previous donation
competition.

Over the next few months, Navy officials made some minor revisions to their
previously announced criteria and grouped the basic criteria into three
categories: (1) financial, (2) technical, and (3) curatorial. The Navy also
identified two additional evaluation criteria categories,
“community” and “benefit to the Navy,” that would be
used if more than one application

was found acceptable based on the Navy's evaluation of the applications
against the first three criteria. The Navy stipulated that the technical and
financial criteria elements were equally the most important. Benefit to the
Navy was considered next in importance, followed by curatorial and
community, which were considered of equal importance. Subsequently, in July
1999, Navy officials identified and made public percentage weights

that could be- but which were not- assigned to each of the five evaluation
categories. Information concerning the evaluation criteria was made

available to applicants through an internet site as well as in
correspondence with the applicants. See appendix I for a summary description
of each of the categories as provided to interested Members of Congress in
March 1999, along with the quantitative weights subsequently added.

Multistage Review Process The Navy followed a multistage review process that
facilitated a thorough,

Showed Clear Distinctions if somewhat overlapping, review process that
identified clear differences Between Competing between the competing
applications for most evaluation criteria Applications

categories. The process also provided opportunities for applicants to
supplement their applications in response to inquiries by the evaluation
board and the higher level Executive Advisory Panel prior to each of these
groups completing their respective evaluations. 6

As previously indicated, the Navy used a two- phased evaluation board to
review the applications. During the first phase, a nine- member board, drawn
from various Navy offices, evaluated the applications against the first
three criteria categories (financial, curatorial, and technical) to
determine whether the applications met the Navy's minimum requirements for a
donation. Working independently, board members read the entire applications
and then focused on individual criteria related to their area of expertise,
such as financial management. Then, they worked collectively to agree on a
rating for all three criteria. During this phase, they identified

(1) strengths, weaknesses, and risks associated with each application and
(2) areas where additional information was needed to evaluate the
applications. On July 13, 1999, they sent applicable questions to the
respective applicants who were given a month to respond. Both applicants
provided supplemental information in response to the questions. Not

satisfied with the clarity of the Battleship Commission's response, the
board sought clarifying information regarding the Bayonne site from the
Bayonne Local Redevelopment Authority. Still not satisfied, the board sent a
second request for additional clarifying information to the Battleship
Commission on September 21, 1999. Later, the board obtained further
clarifying information concerning both applications based on a site visit to
each competing site by the Executive Advisory Panel in which questions

were posed. 6 The Navy established December 3, 1999, as the cut- off date
for applicants to submit any supplemental information in support of their
applications.

When the evaluation board completed its work, it characterized how well the
applications met the individual criteria using qualitative criteria
contained in the Navy's selection plan of May 18, 1999, which outlined the
Navy's approach to evaluating applications for the U. S. S. New Jersey
donation. An assigned rating of “outstanding” was to be used to
indicate that, in terms of the specific criterion, the application contained
no weakness or deficiency and met the highest expectation of the Navy with
very low cost risk. An “excellent” rating meant that the
application was responsive with no major weakness or deficiency, more than
adequately met the Navy's requirements, and was likely to produce good
results with low cost risk. An “acceptable” rating meant that
the application may

contain minor weaknesses or deficiencies, but the applicant would probably
complete necessary tasks adequately, although the Navy was concerned that
moderate cost or other risks may exist. A rating of “marginal”
indicated major weaknesses or deficiencies and few, if any, strengths, and
the application was considered to present significant cost or other risks.
An “unsatisfactory” rating indicated that the application was
not responsive with major weaknesses or deficiencies and was considered to
present major cost or other risks. The selection plan did not indicate

what combination of qualitative ratings was needed to meet minimum
requirements, leaving it to the subjective judgment of the evaluation board
members.

A majority of the board members eventually decided that both applications
met minimum requirements, although assigned qualitative ratings indicated
that the Alliance's application rated higher than the Battleship
Commission's application in two of the three criteria categories (see

table 1). Table 1: Evaluation Board Ratings of U. S. S. New Jersey
Applications against Initial Criteria Criterion Home Port Alliance
Battleship Commission

Financial Excellent Excellent Curatorial Outstanding Acceptable Technical
Acceptable Marginal Source: Evaluation board report.

The ratings were summarized in an evaluation board report to the Executive
Advisory Panel on December 17, 1999, along with details concerning strengths
and weaknesses of each application and the board's rationale for the
assigned ratings. Although not required to be retained,

available working notes of selected board members, as well as our interviews
with selected members, supported the ratings summarized in the report and
provided an indication of individual member's working

independently to evaluate the applications before agreeing on composite
ratings.

While a majority of the board members believed that both applications had
met minimum donation requirements and should be given further consideration,
two board members expressed a minority view that the Battleship Commission's
application did not meet minimum donation requirements. They also believed
that its technical plan should be rated as unsatisfactory because of
limitations in data provided related to permanent berthing authority,
mooring permit, and environmental issues.

With a majority of the board having decided that both applications met
minimum requirements, the Navy continued its evaluation, focusing on the
remaining two evaluation categories- community and benefit to the Navy. For
this portion of the evaluation, a three- person supplemental evaluation
board, headed by the chairman of the initial board, was convened along with
two new members who had not served on the initial evaluation board. These
members began their work by reviewing the applications, including the
information related to the two additional evaluation categories. Table 2
shows ratings in all five evaluation categories.

Table 2: Initial and Supplemental Evaluation Board Ratings of U. S. S. New
Jersey Applications Criterion Home Port Alliance Battleship Commission

Financial Excellent Excellent Curatorial Outstanding Acceptable Technical
Acceptable Marginal Community Outstanding Acceptable Benefit to the Navy
Outstanding Acceptable Source: Supplemental evaluation board report.

The supplemental evaluation board submitted its report to the Executive
Advisory Panel 7 on January 13, 2000. The narrative information contained in
the supplemental evaluation board report emphasized that portion of the
community criterion related to location and surrounding area, in
differentiating between the two applications.

The Executive Advisory Panel provided oversight to the evaluation boards and
received periodic briefings regarding their work. The Panel, which first
convened on September 8, 1999, assessed the applications, reviewed the
evaluation board's reports, and, as discussed previously, visited each

proposed mooring site to obtain additional information. The Panel had the
option of converting the boards' qualitative ratings to weighted numerical
scores for each application. However, since the Alliance's application

surpassed the Battleship Commission's on four of the criteria, the Panel
accepted the boards' evaluations without applying the numerical weights. In
a January 20, 2000, report, the Panel unanimously recommended that the
Secretary of the Navy select the Alliance as the recipient of the U. S. S.
New Jersey to be moored on the Camden, New Jersey, waterfront.

Opportunities Exist to Although not significant to the outcome of the U. S.
S. New Jersey decision, Strengthen the Navy's opportunities exist to
strengthen the Navy's donation decision- making

process to improve the clarity, specificity, and timeliness of guidance and
Process for Future

communications with applicants. Changes in these areas could strengthen
Donation Decisions

the public's confidence in and understanding of donation decisions. In
selected instances, we noted that the lack of clarity in communications may
have led to misunderstandings about the process and the relative standing of
individual applications. Also, in some instances, the absence of
documentation of Navy communications with applicants limited our ability to
corroborate exchanges of information between the Navy and the

applicants. 7 This Panel was comprised of five senior Navy personnel- the
Deputy Assistant Secretary of the Navy (Ship Programs), the Deputy Program
Executive Officer (Expeditionary Warfare), the Director of the Office of
Program Appraisal, the Director of the Maintenance Policy and Acquisition
Logistics Division, and the Director of the Naval Historical Center.

Timeliness and Stability in This is the second Navy ship donation decision
we have been asked to Application and Selection review in recent years. Our
first evaluation was of the Navy's 1996 donation

Criteria decision involving the U. S. S. Missouri and four competing
applications. We found that the Navy's donation process appeared to have
been impartially applied, but we identified opportunities to improve the
process and communications with applicants. 8 While we noted improvements in
the guidance to applicants for the U. S. S. New Jersey decision, we
nevertheless noted continuing changes in evaluation criteria and a lack of
timeliness in finalizing the criteria. Although we found that the Navy had
made fair and

credible selection decisions, greater stability in the application and
selection process could avoid confusion and increase the public's confidence
in the fairness and consistency of the Navy's decision- making process.

Although many similarities existed in evaluation criteria used for the two
donation decisions we reviewed, some changes have occurred as the criteria
evolved over time and both donations were notable for introduction of
additional criteria as the application process was underway. In the 1996
ship donation process used for the U. S. S. Missouri, the Navy, after having
determined that four applications met its financial and technical
requirements, added two criteria to better distinguish among the competing
applications and assigned numerical weights to each of the evaluation
criteria. 9 Our August 1997 report stated that the Navy had not done a good
job in communicating its additional criteria to the applicants and had not
told them the relative importance of the evaluation criteria. We made
several recommendations to improve the Navy's process, including a

recommendation that 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 and (2) the relative
importance of the criteria in the final selection.

8 We cited the importance of providing applicants, at the earliest possible
date, information concerning criteria that will be used to evaluate
applications, the relative importance of the criteria in the final
selection, and clear definitions of what the criteria mean. See Naval Ship
Donation: Existing Procedures Inadequate for the Use of Additional
Evaluation Criteria (GAO/ NSIAD- 97- 180, Aug. 15, 1997) and (GAO/ NSIAD-
97- 171R, June 3, 1997). 9 In the evaluation for the U. S. S. Missouri, the
Navy added public benefit to the Navy and historical significance associated
with each location as supplemental criteria; in the most recent competition,
the Navy used benefit to the Navy and community (local support, regional
support, and location and surrounding area) as supplemental criteria.

Available information indicates the Navy did a better job in communicating
its application requirements for the U. S. S. New Jersey than it did for the
U. S. S. Missouri decision. Nevertheless, in the most recent case, the Navy
still did not fully communicate application and selection requirements until

all applications had been prepared. For example, the Navy gave applicants
information concerning the relative importance of each criterion as they
were preparing their applications, and although ultimately not used,
provided information on numerical weights only after the deadline for
applications had expired. If they are going to be used, timely information
on what the numerical weights are for each criterion and how these weights
might be used could assist applicants in preparing their applications.

Clarity in Communicating In reviewing the Navy's donation selection process,
we noted selected Requirements and Status of instances where the Navy's
communications regarding requirements and Process status of the process may
have contributed to misunderstandings about the

selection process and the relative standing of individual applications.
While we found no indication that these issues would have changed the
outcome of the Navy's decision, they nevertheless point to opportunities to
strengthen decision- making processes for the future.

A key misunderstanding or a lack of clarity in communications appeared to
have resulted from the Navy's January 3, 2000, letter to both applicants
concerning the outcome of the evaluation board's review using the three
initial selection criteria. The letter stated that they had met minimum
technical, financial, and curatorial requirements and that the Navy had
initiated a review of additional criteria involving community and benefit to
the Navy. After the selection decision, a Battleship Commission official
told us that his understanding was that the final decision would be
determined

by the final two criteria- community and benefit to the Navy. We can
understand how one might interpret the Navy's letter to mean that both
applications were on equal footing at that point pending further evaluation
against the final two criteria, even though the Navy's process called for
applications to be evaluated against the five criteria.

Another example of a lack of clarity in communications involved whether and
when applicants were required to have obtained or show proof of their
ability to obtain permits such as an Army Corps of Engineers' ship mooring
permit. This became a point of dispute between the Navy and the Battleship
Commission when Navy officials debriefed Battleship Commission members
regarding the selection decision. Battleship

Commission members told us that, based on earlier discussions with Navy
officials, they had believed permits were not required at that time. While
initial questions from the evaluation board were less specific about this
issue, communications near the end of the Navy's evaluation process were
more specific regarding the mooring permits or expected approval of the

Battleship Commission's mooring plans. Nevertheless, this appears to be an
area where greater clarity is warranted to avoid potential misunderstandings
in the future.

Improved Documentation of During our review, we encountered a number of
instances where we could

Contacts With Applicants not corroborate exchanges of information between
the Navy and the applicants because memorandums of meetings or telephone
conversations

were either not developed or not retained. For example, Navy officials told
us that some key information on process and application requirements was
communicated by telephone to applicants but not documented. Likewise, the
Navy did not document its February 2000 debriefing to explain the factors
leading to its selection decision. Because this debriefing was not an
official part of the decision process, we have no reason to believe that
information conveyed in this meeting had the potential to change the

outcome of the Navy's decision. Nevertheless, documentation of this and
other key meetings and discussions between the Navy and applicants are
important to corroborating substantive exchanges of information and issues
being addressed. Conclusions While the Navy has followed an objective and
credible ship donation

evaluation process, opportunities exist to strengthen the process and the
public's understanding of, and confidence in, any future donation decisions.
Lessons learned from the most recent competitive donation decision show that
clarity and timeliness in the Navy's guidance and

communications with applicants concerning requirements and evaluation
results could be strengthened. Also, documenting exchanges of information
with applicants can be important to facilitating any independent assessments
of the selection process that may be later required.

Recommendations for To strengthen the Navy's ship donation process and the
public's confidence

Executive Actions and understanding of the results involving competing
applications, we

recommend that the Secretary of the Navy

provide all evaluation criteria, their relative importance, and other
applicable guidance to applicants when applications are solicited; reassess
the process of informing applicants about evaluation board

results before evaluations involving all criteria have been completed; and
require that documentation of key information exchanges between

donation office staff and applicants be established and retained. Agency
Comments The Navy provided written comments on a draft of this report. The
Navy

agreed with the report and concurred with the recommendations. It also
described actions it would take to address the recommendations. The Navy's
comments are included in appendix II.

Scope and To evaluate the Navy's ship donation selection process, we
obtained and Methodology reviewed available documentation related to the
Navy's ship donation

selection criteria, evaluation process and reports, and other pertinent
correspondence. We interviewed officials at the Naval Sea Systems Command's
Ship Donation Program Office, the Deputy Assistant Secretary

of the Navy for Ship Programs (the head of the Navy's Executive Advisory
Panel) and its staff, and members of the Navy's evaluation board who
provided available documents they had prepared in evaluating the
applications. We also interviewed representatives of the two U. S. S. New
Jersey applicants: Home Port Alliance, Inc. and the U. S. S. New Jersey
Battleship Commission. We visited the proposed mooring sites at Camden, New
Jersey, and Bayonne, New Jersey. We also visited the battleship U. S. S. New
Jersey at its current berth in the Naval Inactive Ships Maintenance Facility
in Philadelphia, Pennsylvania.

We conducted our review from April 2000 through August 2000 in accordance
with generally accepted government auditing standards. We are sending copies
of this report to the Honorable William S. Cohen, Secretary of the Defense;
the Honorable Richard Danzig, Secretary of the Navy; and appropriate
congressional committees. We will also make copies available to others upon
request.

If you have any questions regarding this report, please contact me on (202)
512- 5581. Other key contributors to this report were Donald Snyder, Arnett
Sanders, and David Rowan.

Barry W. Holman, Director Defense Capabilities and Management

Appendi xes Evaluation Criteria for Navy's U. S. S. New Appendi x I

Jersey Donation Basic criteria Evaluation criteria used to ensure applicants
meet minimum donation requirements Financial Acquisition costs - Provide
costs associated with the following: assuming ownership of the ship, towing,
mooring, and

(25%) preparing the ship for visitors. Acquisition costs may also include
the cost of building, leasing, or improving facilities.

Sources of income - Indicate pledges, loans, gifts, bonds, and funds on
deposit in financial institutions. After donation, sources of income shall
include tour fees and gift shop revenues.

Operating and support - Provide costs associated with operating and
maintaining the vessel as a museum and memorial. For example, rent,
utilities, and personnel costs are typical operating and support costs.

Cash flow analysis - The Navy will perform an independent analysis to
determine whether capital funds are sufficient for capital costs associated
with the donation and whether the operating fund will be sufficient to cover
the projected cost of operation of the museum.

Technical Towing plan - Include a plan that describes how the ship will be
towed safely from the Naval Inactive Ships Maintenance

(25%) Facility - Philadelphia to the proposed display site. The plan must
meet the requirements in the Navy Tow Manual.

Mooring plan - Include a plan that describes how the ship will be secured
during normal and extreme weather conditions (100- year storm) to preclude
damage to the ship, its mooring system, or neighboring facilities.

Maintenance plan - Describe how the ship will be maintained and preserved
over many years. Typically the plan includes preservation, underwater hull
inspections, routine maintenance, periodic dry- docking, and pest control.

Environmental plan - Describe how the proposed mooring and display of the
ship will affect the environment. Describe how all local, state and regional
environmental, public health, and safety requirements will be met.

Curatorial Curator and staff plan - Describe the qualifications for a
professional curator on staff. Also address adequate curatorial (15%)
support.

Collection management plan - Describe how the museum intends to collect and
manage its artifacts. Typically, the plan includes a purpose, description,
access, authority, responsibility, and collection management activities.

Historical management plan - Describe how the museum will display the vessel
and exhibits. Typically, the plan describes the historical context of
vessel, historical subject matter that will be displayed, and tentative
exhibit plans.

Additional criteria Additional requirements if more than one acceptable
application is received Local support - Provide evidence of local support,
such as letters of support from individuals, organizations, newspaper

Community

articles or editorials, and letters of endorsement from the city or local
government. Approval from the Port Authority is (15%)

critical.

Regional support - Provide evidence of regional support, such as letters of
endorsement from adjacent counties, cities, or states. Local and regional
support may be from either public or private sources. For example, an
application may include letters from mayors, state officials, or federal
officials. Local or state referenda may also demonstrate support.

Location and surrounding area - Describe how the location of the ship will
enhance display of the vessel and encourage tourist visitation. Describe how
the vessel may become an integral part of the community, or how the vessel
may assist in local developments.

Benefit to Support for Navy recruitment - Describe how the donee may support
recruiting efforts by the Navy.

Navy (20%)

Association of site with Navy - Demonstrate a connection between the Navy
and the proposed berthing site. For example, was the ship built, repaired,
homeported, modernized, overhauled, or located at the proposed site.

Continued association with Navy and Navy veterans - Describe how veterans
associations in the area are willing to support the ship. Indicate how the
donee will honor veterans' contributions. Show how exhibits and events will
commemorate veterans and showcase naval traditions.

Source: Navy Ship Donation Program Office.

Appendi x II Comments From the Department of Defense

Now on p. 10. Now on p. 13. Now on p. 13.

(709500) Lett er

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Appendix I

Appendix I Evaluation Criteria for Navy's U. S. S. New Jersey Donation

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Appendix II

Appendix II Comments From the Department of Defense

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Appendix II Comments From the Department of Defense

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