The contract with New York-based Post-Service Remediation Partners marks the largest ship-disposal deal since 1993, when the United States stopped selling rusting vessels to overseas scrappers because of environmental concerns.

"That has long been an environmental hazard. The ships, many of which date to World War II, are chock full of toxic PCBs, asbestos and other hazardous material that officials fear could quickly contaminate the James River." said Rep. Jo Ann S. Davis, R-Gloucester, who has lobbied for funding to scrap the vessels.

But domestic scrapping yards protested the deal and threatened legal action because most of the ships would be sent to Great Britain for disposal.

The contract calls for 13 ships to be towed to England for scrapping by a British shipyard, Able UK Ltd., at a cost to federal taxpayers of $14.8 million. In addition, the New York company, which negotiated the deal for the British yard, will be able to buy two uncompleted Navy oil tankers for $3 million. Those ships, which also are in the James River, could then be sold for profit, either for use as oilers or for scrap, according to the Maritime Administration.

The Maritime Administration, or MARAD, defended the deal, saying the British proposal offered the best value to taxpayers by scrapping the largest number of ships for the lowest price.

The price amounts to a scrapping rate of $104.50 per ton of steel - far lower, for example, than the $250-per-ton rate paid to domestic scrappers in 2001, the agency said." said MARAD spokeswoman Robyn Boerstling.But domestic scrappers remained skeptical of that claim.

Chris Bridge, a Newport News-based consultant for the New York company, said there was little reason to think a legal challenge would succeed.

The Coast Guard must still approve the towing of the ships to England, although an independent towing survey found no problems, Boerstling said.

Ten of the 13 ships to be scrapped are on MARAD's high-priority list- vessels that are considered in such poor condition that immediate action is required to address environmental concerns.

But contracts for the remaining six high-priority vessels will be awarded by the end of the year, she said.

The 13 ships to be scrapped in England are the Mormacwave, Santa Cruz, Marine Fiddler, Donner, American Banker, Mormacmoon, Protector, Rigel, Compass Island, Canisteo, Caloosahatchee, Santa Isabel and the American Ranger.

The two Navy oilers to be sold are the Benjamin Isherwood, which is 90 percent completed and worth about $2 million, and the Henry Eckford, which is 65 percent built and worth about $1 million, Boerstling said.

David Lerman can be reached at (202) 824-8224 or by e-mail at dlerman@tribune.com.