Naval Ship Donation: Existing Procedures Inadequate for the Use of
Additional Evaluation Criteria (Letter Report, 08/15/97,
GAO/NSIAD-97-180).
Pursuant to a congressional request, GAO reviewed the facts surrounding
the donation of the U.S.S. Missouri to the U.S.S. Missouri Memorial
Association, focusing 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.
GAO noted that: (1) the Navy began the donation process for the U.S.S.
Missouri in the same 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; (2) subsequently, the Navy
decided that, with respect to the U.S.S. 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; (3) this was the first time such
additional criteria were used in any donation selection process; (4)
while the donation 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; (5) specifically, applicants
were not told: (a) what the relative importance of the evaluation
criteria was in the process (the added criteria actually represented 75
percent of the donation award weight); (b) what the added evaluation
criteria meant; or (c) how well already submitted applications met the
added criteria; (6) 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; (7) as a result, the Navy
evaluation teams found that the applications had limited information
that could be applied against the added criteria; (8) according to some
applicants, had they known that the additional criteria carried so much
weight, they would have revised their applications; (9) what appears to
have been an otherwise open process with clear communications and
frequent interaction between the Navy and the applicants for the U.S.S.
Missouri was not with respect to the additional two criteria; (10) the
Secretary of the Navy, by statute, has broad discretion in making ship
donation decisions; (11) 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; and
(12) when additional criteria beyond financial and technical
requirements are used and applicants are asked to submit information to
address them, existing application procedures do not provide guidance on
how the Navy should proceed.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-97-180
TITLE: Naval Ship Donation: Existing Procedures Inadequate for the
Use of Additional Evaluation Criteria
DATE: 08/15/97
SUBJECT: Public relations
Evaluation criteria
Historic preservation
Military vessels
Gifts or gratuities
IDENTIFIER: U.S.S. Missouri
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Cover
================================================================ COVER
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
Ship Donation
(707267)
Abbreviations
=============================================================== ABBREV
Letter
=============================================================== LETTER
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.
--------------------
\1 USS Missouri: Navy's Evaluation Process in Ship Donation
(GAO/NSIAD-97-171R, June 3, 1997).
BACKGROUND
------------------------------------------------------------ Letter :1
The Secretary of the Navy has legal authority (10 U.S.C. 7306) to
transfer 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.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
The Navy began the donation process for the USS Missouri in the same
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 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.
RECOMMENDATION
------------------------------------------------------------ Letter :3
In the future, the Navy may again face situations where there are
multiple 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.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :4
In commenting on a draft of this report, the Navy took the position
that there was already in place a process that maximizes both
communication 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
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.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :5
This report is based on information gathered for our June 3, 1997,
report on the USS Missouri. To obtain information for that report,
we interviewed 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.
---------------------------------------------------------- Letter :5.1
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.
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
(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
THE NAVY
============================================================== Letter
(See figure in printed edition.)
(See figure in printed edition.)
*** End of document. ***