Ronald W. Reagan National Defense Authorization Act for 2005 Analysis

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TITLE X — GENERAL PROVISIONS
P. L. 108-375	House Conference Report 108-767
SEC. 1011. AUTHORITY FOR AWARD OF CONTRACTS FOR SHIP DISMANTLING ON NET-COST BASIS. (a) IN GENERAL. — Chapter 633 of title 10, United States Code, is amended by inserting after section 7305 the following new section: ‘‘§ 7305a. Vessels stricken from Naval Vessel Register: contracts for dismantling on net-cost basis ‘‘(a) AUTHORITY FOR NET-COST BASIS CONTRACTS. — When the Secretary of the Navy awards a contract for the dismantling of a vessel stricken from the Naval Vessel Register, the Secretary may award the con tract on a net-cost basis. ‘‘(b) RETENTION BY CONTRACTOR OF PROCEEDS OF SALE OF SCRAP AND REUSABLE ITEMS. — When the Secretary awards a contract on a net-cost basis under subsection (a), the Secretary shall provide in the contract that the contractor may retain the proceeds from the sale of scrap and reusable items removed from the vessel dismantled under the contract. ‘‘(c) DEFINITIONS. — In this section: ‘‘(1) The term ‘net-cost basis’, with respect to a contract for the dismantling of a vessel, means that the amount to be paid to the contractor under the contract for dismantling and for removal and disposal of hazardous waste material is discounted by the offeror’s estimate of the value of scrap and reusable items that the contractor will remove from the vessel during performance of the contract. ‘‘(2) The term ‘scrap’ means personal property that has no value except for its basic material content. ‘‘(3) The term ‘reusable item’ means a demilitarized component or a removable portion of a vessel or equipment that the Secretary of the Navy has identified as excess to the needs of the Navy but which has potential resale value on the open market.’’. (b) CLERICAL AMENDMENT. — The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 7305 the following new item: ‘‘7305a. Vessels stricken from Naval Vessel Register: contracts for dismantling on net-cost basis.’’.	The House bill contained a provision (sec. 1011) that would allow the Secretary of the Navy to award contracts for the dismantling of vessels stricken from the Naval Vessel Register on a net-cost basis. The Senate amendment contained a similar provision. (sec. 1013). The Senate recedes.
	House Report 108-491
	This section would allow the Secretary of the Navy to accept bids for domestic warship dismantling contracts based on the estimated cost of performance as well as the estimated value of scrap and reusable equipment. This section would also allow contractors to retain proceeds from the sale of such scrap and reusable equipment. With the price of steel at very high levels, this provision is intended to allow for greater efficiencies in the disposal of obsolete former naval vessels. Nothing in the provision alters any environmental requirements pertaining to disposals.
	Senate Report 108-260
	The committee recommends a provision that would allow the Secretary of the Navy to accept competitive bids for domestic warship dismantling contracts based on a net cost basis, that is, the estimated cost of performance of the contract minus the estimated value of the scrap and reusable equipment. Under existing law, the Department of the Navy cannot award contracts based on the estimated value of the sale of the scrap and reusable equipment. This provision would encourage contractors to employ scrap processing and sale methods that result in a lower overall cost to the government.