Description
Organization: Military Sealift Command (MSC)
Team Name: Harbor Craft Privatization Initiatives Team
Related Acquisition Topic(s): Commercial Practices, Partnering, Performance Based Logistics, Performance Specs and Standards, Strategic Sourcing
Description:
From 01 January 1998 to 31 December 1998, MSC has demonstrated the effectiveness of relying on the commercial tug industry to support the Fleets for harbor craft services, in lieu of the continued use of Navy owned and operated harbor craft. This feat was accomplished with the innovative use of performance specifications, commercial procurement practices, and communication with the harbor craft industry to ensure our solicitations and contracts did not impose unnecessary administrative burdens while still meeting the customer's needs.
MSC successfully issued new contracts to privatize the tug services previously performed by Navy YTBs (Yard Tug Boats) in the ports of Pearl Harbor, Hawaii, Apra, Guam, and Norfolk, Virginia. These harbor craft provide critical support to the warfighters by assisting vessel docking/undocking, providing firefighting and salvage services, and providing personnel transfer platforms.
A failure to smoothly provide harbor tug services during peacetime or wartime could critically impair the operational effectiveness of the port. The contracts are set up to handle current peacetime harbor traffic volumes, but similar contracts have shown this approach capable of effectively handling increased volumes due to contingencies and adverse weather. Additionally, the contracts provide the Navy with services that will not soon be outdated, and allow for use of emergent commercial technologies.
These contracts obtain the best value to the Government by providing a more effective tug with a greater capability, and at a lower cost. Additionally, the contracts conform very closely to their commercial counterparts. They contain maritime clauses which are tailored to protect the Government while still recognizing commercial practices (e.g. insurance, crewing). Instead of complex contracts, the documents are easy to use and display a flexibility not commonly seen in the Government procurement world. The contracts, negotiated in an average of five months, allow for some notable innovations, including: > Allowing contractors to bid for different periods of performance to reduce cost and increase competition; > Allowing the Navy to charter tugs but permit the vessels to be released for commercial work, thus off-setting the Navy's costs; > Allowing the Navy to obtain the services of state-of-the art, highly maneuverable tugs which enhances safety and readiness; > Expanding the use of best value source selection; and > Representing a close partnership with industry to perform market research (including participation in industry-wide workboat conferences), identify process improvements, and eliminate unnecessary specifications. By requiring the commercial firm to provide fully operational tugs, including logistics, maintenance, and management/crewing support, these contracts allow the Navy to redistribute approximately 126 military personnel previously assigned to the Navy tugs. This increases readiness and is estimated to save at least $40 million over the next five years. Additional savings are anticipated as a result of right-sizing the integrated logistics chain that supported the Navy tugs.
The accomplishments of this team, and its willingness to listen to the contractor's ideas, has gained wide-spread attention in the industry and is one of the reasons that WorkBoat magazine placed this initiative in its list of the top ten Industry news-stories of 1998.
The primary incentives for this initiative are cost reduction and improved operational readiness. By providing cost-effective contracts and increased readiness capabilities, the Privatization Initiative Team has provided the Fleets with increased capability and an overall cost reduction to the Government. Additionally, these contracts free Navy billets formerly required for YTB operations for redistribution elsewhere in the Fleets.
Significant savings in manpower and operating dollars during 1998 have been achieved. Estimated savings (not including maintenance costs) for Pearl Harbor, Guam, and Norfolk for the five-year life of the contracts are illustrated below. Pearl Harbor $7.5 Million Guam $6.0 Million Norfolk $22.0 Million
Increased readiness and safety are also hallmarks of the privatization efforts during the past year. This is demonstrated by replacing, on average, three older Navy tugs with two modern, commercial vessels. These newer vessels are similar to those demanded by strict environmental states, such as California and Washington, for vessel-escort services to tank-vessels entering their waters. The contract vessels have greater power, fire-fighting capability, maneuverability, and faster response time than the Navy tugs they are replacing.
The benefits of negotiating commercial terms, developing commercial equivalent specifications, and obtaining both customer and industry input, translates into a win-win process for both the Navy and industry. Within five months from requirements development, the Privatization Team can award a contract that:
incorporates both customers’ and industry’s concerns/comments;
is extremely flexible and effective; and
results in substantial savings.
