U.S. NAVY SALVAGE REPORT DEEPWATER HORIZON ... - ESSM

Deepwater Horizon Oil Spill Response
3-5 Funding Process
As the operation progressed and funds were consumed, SUPSALV would notify the Unified Area
Command when the balance was low, and additional funds were authorized to cover foreseeable
future operations. Funding is summarized in Table 3-2.
Date Amount Task
02 May 2010 $ 3.5M Initial tasking
21 May 2010 $ 3.75M Mod 2 – increased funds and extended duration
18 June 2010 $ 5.5M Mod 3 – increased funds and extended duration
02 July 2010 $ 0.138M Mod 4 – Requested support to test advanced skimming
technologies
21 July 2010 $ 8.524M Mod 5 – increase funds and extended duration
Total: $ 21.412M
Table 3-2. USCG Funding Authorization Dates and Amounts
Funds provided used to replace equipment removed from service and determined to be beyond
economical repair (BER) at the end of the operation are listed in Appendix B.
3-6 Replacement of Items Beyond Economical Repair vs. Rental Rates
Reimbursement for the operation was a subject of great discussion between Unified Area
Command (UAC), the National Pollution Funds Center (NPFC), and SUPSALV from the
beginning of the operation. Rental rates, based on a depreciation formula to capture
recapitalization costs, are specifically allowed but not prescribed in Section VIII (c) of the
Interagency Agreement (addressed in Section 3-1). In determining the applicability of rental
rates, past practice was consulted. Typically, for smaller routine operations, the Navy had not
charged rental rates to the Coast Guard. Rental rates were last used for the Exxon Valdez
response, which was after the Interagency Agreement went into effect but predated OPA-90.
Subsequently SUPSALV's practice has been to apply rental rates and charge non-government
entities for use of SUPSALV equipment.
By Mid-June the issue of rental rates and replenishment of items BER had not been resolved.
On June 21, SUPSALV had been maintaining a rental rates spreadsheet and forwarded it to the
Coast Guard requesting action. SUPSALV made the case that the existing funding Request for
Assistance (RFA) and its modifications to support SUPSALV’s operation had been structured to
support ongoing operational expenses and did not include recapitalization/depreciation of
deployed gear. As of June 21, the rental rate charges were accumulating at a rate of $2M per
week with a total of $16M accumulated to date. These figures were forwarded to the Coast
Guard on 21 June requesting a funding document to provide separate funding for
recapitalization.
Over the following month negotiations resulted in a solution that allowed for documenting the
condition of demobilized equipment and determination that the equipment was damaged BER.
213RR forms were prepared for equipment identified as BER. This included: all 42” and 26” oil
containment boom that had been in the water for greater than 60 days, all deployed NOFI
Current Buster Vessel Skimming Systems, and a 50,000 gallon oil recovery bladder that had
been damaged during decontamination. The UAC required an approved USCG inspector
actually see the equipment SUPSALV claimed to be BER and concur with the assessment.
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