A lucrative Navy ship-scrapping contract that would have meant work for 200 people at Baltimore Marine Industries Inc. was awarded to an out-of-state company, officials said yesterday.
The Navy is nearing the end of a pilot program to dismantle ships on U.S. shores instead of selling them to companies that scrap them overseas - often under unsafe conditions that have led to worker injuries and deaths.
Baltimore Marine, the Sparrows Point shipyard formerly owned by Bethlehem Steel, had won a $3.8 million contract to break up the frigate USS Patterson - a job that is all but completed - and was competing against Metro Machine Corp. of Philadelphia to scrap another ship under the pilot program.
Metro's $2.7 million bid came in lower than Baltimore Marine's, but officials declined to disclose specifics.
"It's really upset us," said William A. Richardson, president of the local Machinists union at the Baltimore shipyard. "It would have been steady work."
Four ships were scrapped recently under the pilot program - one each in California, Texas, at Metro and at Baltimore Marine. The Navy budget could finance two more - one on the West Coast, the other on the East.
The additional West Coast contract, worth $3.2 million, was won by a joint venture firm based in Alexandria, Va., though the work will be done in San Francisco.
Officials at Baltimore Marine have asked for a "debriefing" from the Navy's contracting division in hopes of finding out why they didn't get the contract and what they can do to improve chances of winning future contracts.
"Meanwhile, our employees - those who are working and those who had hoped to return to work from layoffs - are deeply disappointed," said Baltimore Marine Vice President Steve Sullivan.
A Navy spokesman said the contracts were awarded based on "best value to the government - an evaluation of price, past performance and schedule."
Capt. Garry Hall, manager of the Navy's ship-disposal program, said this month that Baltimore Marine had completed goals in the initial scrapping project ahead of schedule.
Though the Baltimore shipyard lost this round, more contracts could be available in October when the new fiscal year begins.
President Clinton requested $12 million for domestic ship scrapping in next year's budget, and the Senate Appropriations Committee, which includes Maryland Democrat Barbara A. Mikulski, recently designated $38 million for scrapping at U.S. yards. Both measures are winding their way through the budget process.
But those funding measures could be supplanted by others moving through the House and Senate which would require that many or all retired defense vessels be scrapped overseas. Sending the ships overseas, proponents say, would put money in U.S. coffers and swiftly dispose of rotting ships that pose environmental and safety hazards.
Mikulski and Maryland Democrat Sen. Paul S. Sarbanes sent a letter to Clinton this month encouraging him to institute a one-year moratorium on overseas scrapping. Mikulski's office said the White House has not responded.
A prior one-year moratorium expired in October.
Jobs on the line
Baltimore Marine has contracts to overhaul several ships in June, allowing some laid-off workers to return.
The yard averaged 750 employees last year, but in its final days of scrapping the Patterson is down to about 450.
Still, that number is higher than some predicted three years ago when the yard was nearly closed after Bethlehem couldn't find a buyer. Two deals fell through before the shipyard was sold to New York-based merchant banking fund Veritas Capital Inc. for $16 million - about half what Bethlehem was originally seeking.
Then, the yard employed a skeleton staff of about 25 people. Since the sale, employment has grown to 750 - far lower than the 4,000 workers in the 1970s when the yard still built ships.
The yard dropped its shipbuilding business in 1990; its staple now is ship repair - short-term projects that might last a month or two.
"If we get two ships [to scrap], then we know we've got them and it doesn't matter if other repair jobs come and go; we'd have them to fall back on," said the union's Richardson. "We did such a great job - on schedule, the right cost, all of it was in our favor. It was almost a sure thing."