The Maritime Administration and Maritime Subsidy Board have authorized execution of the agency's first construction-differential subsidy (CDS) contracts for the retrofitting of tankers in compliance with the Port and Tanker Safety Act of 1978. The CDS, estimated to total $9,153,273, would aid in the reconstruction of three 89,700-dwt tankers owned by subsidiaries of the Berger Group, at the National Steel and Shipbuilding Company in San Diego. Specifically, the contracts call for the installation of crude oil washing systems and other retrofits required under the act.

The vessels and companies involved are the Rose City, owned by Northwest Shipping Corporation; the Beaver State, owned by Yeon Shipping Corporation; and the Worth, owned by Worth Oil Transport Company. All three were built and are being operated with the assistance of Federal subsidy.

The Beaver State and Rose City currently hold 20-year "hell-or-high-water" time charters and are sub-time-chartered to Texaco. The Worth has a 10-year time charter with Texaco. Assuming the vessels meet the requirement of the 1978 act, all three are guaranteed revenue through 1986.

The Board approved a negotiated fixed price of $6,607,291 for reconstruction of each vessel. Of that total, the Government will pay 46.17 percent, or $3,051,091 in CDS.

The modifications involved have been approved by the Department of the Navy as suitable for use in time of war or national emergency. The Navy has also suggested that eight additional features would enhance the usefulness of the vessels for national defense. These include alongside-fueling at sea and high-line transfer; astern fueling at sea; prohibition of grey cast iron; nuclear, biological, and chemical washdown, MARISAT communications equipment; maximum clear-deck area; steering control systems; and steering gear emergency electrical supply. The Board approved NASSCO's negotiated fixed prices totaling $816,508 to cover the cost of these national defense features.

The Berger Group has similar applications pending for CDS assistance in retrofitting four other tankers.