Navy Cancels $176-Million Pact With American Ship

The Navy has canceled a $176-million contract with American Ship Building Co., headed by New York Yankees owner George Steinbrenner, because of “severe” financial and performance problems.

The Navy said American Ship failed to respond adequately to a warning July 16 expressing concern about the contract to finish construction of two tankers.

Steinbrenner is acting chairman of American Ship, which last year threatened to file for bankruptcy protection if the Navy didn’t provide money to finish the work.

After lobbying by Steinbrenner, Congress in October provided the company with $58 million related to disputes on two contracts, including the tanker completion, after the Navy had refused to pay.

Rep. C.W. Bill Young (R-Fla.) said Thursday that $32 million of the appropriation had not been paid.

The Navy said in a statement issued late Wednesday that the $176-million contract was terminated because Tampa Shipyard had failed to make progress on the work.

American Ship attorney Robert Banker said the company will fight the Navy’s move.

American Ship was hired in November, 1989, to finish work on two 677-foot oilers, tankers that refuel other ships at sea. The work was begun by a Pennsylvania shipyard that went out of business.

Work was 95% complete on one of the ships and 76% on the other, said Lt. Conrad Chun, a Navy spokesman. The Navy said it had paid $98 million of the contract to date.