The 'Scrap War': U.S. may complete nuclear ship disposal deal with bidders

Christopher P. Cavas, Defense News
17 May 2015

WASHINGTON – All nuclear-powered U.S. Navy ships go to die at Puget Sound Naval Shipyard in Bremerton, Washington. That's been an immutable mantra since the early 1990s, when the shipyard developed a recycling plan to dispose of old submarines and cruisers that were piling up as they reached the end of their lives.
Under the shipyard's direction, shipboard nuclear reactors are defueled, the reactor vessels and their compartments are removed, encased and barged to the federal government's Hanford Nuclear Reservation in southern Washington State, and the ships' remains are cut up for scrap and recycling. The program has successfully disposed of more than 100 nuclear submarines and eight nuclear cruisers.
As the only U.S.-certified facility with experience recycling nuclear ships, the plan has long been that, sometime in early 2017, Puget Sound would take on its largest disposal job by far – that of the aircraft carrier Enterprise, one of the most famous ships of the Cold War era.
But now, the Navy is considering throwing open the job to commercial bidders – a clear break from prior practice that could open the nuclear ship-disposal world to more competition.
It is not clear exactly what is driving the move, which was announced in May 2014 when Naval Sea Systems Command (NAVSEA) published a request for information (RFI) soliciting ideas on how the Enterprise's "non-propulsion sections" – that is, everything but the ship's reactors and propulsion machinery – could be dismantled. A subsequent industry day in June, according to two persons who attended, was as much about the Navy listening to industry's ideas as providing further information.
The Navy refused to discuss the situation or provide further context for this report, declining repeated requests to do so. But NAVSEA, in a tersely-worded written statement, confirmed the issue is still open.
"To ensure the best use of resources, the Navy is currently looking at options for recycling of USS Enterprise (CVN 65), including the possibility of commercial recycling," NAVSEA said May 4 in the statement. "All reactor compartments and radioactive systems will be disposed of by [Puget Sound Naval Shipyard and the Intermediate Maintenance Facility]. No final decisions have been made."
But in discussions with non-Navy sources familiar with various aspects of the situation, it appears that two factors are driving the interest in opening the Enterprise job to commercial bidders. First and possibly foremost, several sources reported the Navy was unhappy with the high cost put forth by the naval shipyard to do the job – which includes towing the Enterprise nearly 14,000 nautical miles from Virginia around South America to Puget Sound. Reportedly, the estimated cost far exceeds funds budgeted for the move.
Another issue seems to be that of capacity at Puget Sound. The shipyard is the primary carrier overhaul facility on the northwest Pacific coast, and it's known to be quite busy tending to the fleet's active ships. The facility also has a backlog of nuclear ships on its waterfront awaiting recycling, including a dozen inactivated Los Angeles-class submarines and the cut-down hulk of the nuclear cruiser Long Beach.
Enterprise is at Newport News Shipbuilding (NNS) in Newport News, Virginia – the same yard that built the Big E from 1957 to 1961. The ship was taken to the yard from nearby Norfolk Naval Base in 2013 for defueling and stripping, part of a workload carefully choreographed between Newport News and Puget Sound. Negotiations, for example, included whether the island superstructure giving the ship its famous profile would be taken off in Virginia or remain in place for the transcontinental tow. Puget Sound reportedly insisted the ship arrive at Bremerton looking as much like her old self as possible, and the island is to remain in place.
And while Newport News is primarily concerned with building and overhauling nuclear carriers and submarines, stripping and defueling the world's first nuclear carrier is a major job, with about 1,100 people across the yard working on the ship.
Newport News has said for some time that it is well-positioned to completely dispose of the Enterprise, being the only shipyard in the U.S. that builds nuclear aircraft carriers. The company's parent corporation, Huntington Ingalls Industries, is expanding its work in the nuclear energy field, and in January formed SN3 – Stoller Newport News Nuclear – described as a "full-service nuclear operations and environmental services company combining the company's S.M. Stoller Corp. and Newport News Nuclear subsidiaries."
Newport News attended the June 2014 industry day – dubbed by NAVSEA as the "CVN 65 Ship-Shaping Industry Day" – and confirmed its continuing interest in bidding for further work on the Enterprise.
"We believe that NNS, working with our SN3 nuclear energy business in a partnership that may also include others, possesses the technical expertise and certainly a great knowledge of the ship that, when combined, may offer our Navy customer with a lower cost option and we are interested in doing this work," company spokeswoman Jerri Dickseski said in a statement.
Major Job
The aircraft carriers now being disposed of are the largest warships ever to be scrapped, anywhere. NAVSEA recently broke a longstanding logjam and began awarding recycling contracts for decommissioned conventionally-powered carriers of the Forrestal and Kitty Hawk classes, and three ships – Forrestal, Saratoga and Constellation – are in the ship channel at Brownsville, Texas, all in various stages of being broken up by three different shipbreaking companies. A fourth ship, Ranger, is in the middle of a four-month tow from Puget Sound. Now off Argentina, she is expected to arrive in Brownsville in mid-summer.
Representatives from all three shipbreaking companies in Brownsville – International Shipbreaking LLC, All-Star Metals and ESCO Marine – also attended NAVSEA's industry day. International Shipbreaking and All-Star Metals said they remain interested in the Enterprise job.
Nikhil Shah, president of All-Star Metals, confirmed his company responded to the RFI.
"I think it opened their eyes to see what else is out there," he said May 14 of the industry day. "The Navy does a very good job trying to understand what the industry has to offer, and needed to hear from industry what different options there are."
Shah felt the Navy learned "about certain items they didn't think was in issue, just because they hadn't done it in a private contract." Some of those items included asking about a contractor's nuclear waste disposal capability, and what plan they might have for transporting nuclear waste.
"The Navy has to feel comfortable with the process," Shah said. "They have to identify the process and put it in writing, probably with a request for proposal. There's a technical side to this that takes time to understand so that everyone's on the same page."
All-Star is recycling the carrier Forrestal, and is about 75 percent complete with the task, Shah said. The company is to finish the job in October.
International Shipbreaking is working on the carrier Constellation, Vice President Robert Berry said May 14, and will recycle the Ranger. Work on the Constellation, he said, is about 20 to 25 percent done, with completion expected in 2016. Berry provided some insight into what the Navy is looking for with the Enterprise.
"They were looking for ideas on how to reduce the amount of material that had to go to Bremerton – in other words, cut the ship down to size so that Bremerton wouldn't have so much to deal with."
The Navy, he said, "had a couple of scenarios. One was to cut the carrier down to the hangar deck, then put it on a semi-submersible heavy-lift ship and carry it" to Puget Sound. "The thing was to get some weight off it and reduce the width."
Another scenario discussed, Berry said, was to "take some weight off, narrow it up," then tow the cut-down Enterprise through the new Panama Canal, which is expected to open in 2016.
The original canal's 110-foot wide locks have been the most significant factor limiting the size of ships that pass through since completion in 1914. U.S. capital ships were once designed to fit that restriction, but beginning with the Midway-class carriers in 1945 all U.S. flattops have been too large to use the canal. The overall width of most U.S. carriers, including Enterprise, is about 250 feet – a figure that includes the hull, projecting sponsons and the overhang of the flight deck. But the hull, with all projections cut off, is only 133 feet wide.
The new Panama Canal now under construction will have much larger lock chambers – 180 feet wide, 1,400 feet long and 60 feet in depth. Enterprise, Berry said, could be cut down to fit through those new locks.
The Navy has given no indication which way it's leaning, Berry said. "We really don't know what they're going to come up with."
The situation with the third company in Brownsville, ESCO Marine, is in doubt. The company completed about 25 percent of the recycling and remediation work on the carrier Saratoga before it suspended operations last winter in a dispute with a creditor. According to media reports, ESCO Marine laid off about 300 employees in February and is effectively closed. Phone calls and emails to ESCO were unanswered.
"The Navy is monitoring the situation at ESCO Marine, and is working closely with the company to ensure they fulfill their contractual obligations," Chris Johnson, a NAVSEA spokesman, said May 14. "The Navy retains ownership of the Saratoga until all scrapping work is completed. We are assured the vessel is being kept in a secure condition as specified in the contract."
Should Newport News secure the Enterprise work, several sources indicated, the actual job of reducing or breaking the ship would not likely be done in Virginia. No one would confirm specific talks between Newport News, All-Star Metals, International Shipbreaking or others, but it seems certain discussions have been held about potential partnerships.
"We'd do anything that makes good business sense, absolutely," Berry said.
"We're always in discussions, always looking at strategic partnerships to grow and foster the maritime business," Shah said. "The maritime world is small and getting smaller. We're always looking at alternative ways to partner with someone."