Excerpt from Navy T-Ao Kaiser Class Oiler Contracts: Hearings Before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, First Session; May 2 and 4, 1995 In 1985, the Navy awarded a contract for two oiler ships, with Options for two more, to the Penn Ship Company of Philadelphia at a cost of approximately $400 million, or about $100 million per ship. The contract was awarded despite great concern by the Navy about the contractor's financial capability to complete such a task. The Navy's financial concerns resulted in the assets of Penn Ship being placed in a trust designed to protect the interests of the Navy in case the contract was terminated for default, and that is exactly what happened. The Navy terminated the contract for default. For the first time in nearly 20 years, a Navy ship was not completed. Inexplicably, the Navy cancelled the trust agreement as part of the termination for default. A closer look at the trust agreement showed that the liens and mortgages on the various properties se cured for the Navy were never filed, leaving the Navy unprotected. The Navy's financial interest was unsecured. Despite tens of mi] lions of dollars owed by Penn Ship as a result of the default, the only thing the Navy received was a floating dry dock. After terminating the contract, the Navy had the two partially completed oilers towed out of Penn Ship Company's yard in Decem ber 1989. At that point, these two ships had cost the Navy over $300 million. Remember, under the original contract, four Ships were to cost roughly $400 million total. Our investigation has also revealed that, after terminating the contract for default, the Navy paid Penn Ship per day, and on holidays, for providing security for the ships and mate rials that remained at the yard but belonged to the Navy. The Navy continued to make these payments even after the ships were long gone and only left-over materials remained in the yard. Even though Penn Ship still owed the Navy millions of dollars, the Navy paid Penn Ship a total of million more under this security ar rangement. In the final settlement of this matter, the Navy credited Penn Ship With $19 million for a dry dock, which our investigation indi cates the Navy has never used. While the Navy is quick to explain that the dry dock is leased out, it appears that the Navy receives no money for the use of this $19 million asset. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.