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January 14, 2010

MARAD announces new round of Small Shipyard Grants

The U.S. Maritime Administration (MARAD) has announced the availability of $14,700,000 in additional funding under the Small Shipyards Grant Program. The deadline for submitting applications is 5:00 PM EST on February 16, 2010, and MARAD will award grants no later than April 15, 2010.

A client briefing from Winston & Strawn notes that the Small Shipyards Grant Program was originally authorized by the National Defense Authorization Act for FY 2006 under which $9.8 million in grants went to 19 shipyards on April 24, 2008. The American Recovery and Reinvestment Act, 2009 (popularly known as the Stimulus Bill), increased the program's funding by a factor of ten, to $100 million. For those funds, MARAD received over 500 applications requesting $1.5 billion.

In July 2009, MARAD posted a list of 67 grant awardees. But that the list was pulled and on July 22, 2009, Secretary of Transportation Ray LaHood said he had determined that the process used to evaluate applications was incomplete. Therefore, he said, he was instituting a process to ensure compliance with the legislation's mandate to consider economic conditions in the awardee communities, including unemployment rates and other economic data.

On August 18, 2009, notes the Winston & Strawn briefing, MARAD announced the true award of 70 grants totaling $98 million, with the remaining $2 million of funding reserved for program administration. Among other things, successful applications funded cranes, forklifts, drydock improvements, training, welding equipment, IT upgrades, waste water treatment barges, and various other pieces of equipment and systems.

The purpose of the Small Shipyards Grant Program, notes the briefing, is to assist small shipyards (generally fewer than 600 employees) in making capital improvements and investing in maritime training programs, particularly in communities whose economies are related to, or dependent upon, the maritime industry. Any small U.S. shipyard facility in a single geographic location qualifies. MARAD will take into account the economic circumstances and conditions of the maritime community near the shipyard facility, whether the project will be effective in fostering efficiency, competitive operations and quality ship construction and whether the project will enhance employee skills and productivity. Up to 25 percent of the funds are available for shipyards with more than 600 employees and fewer than 1,200 employees. No grants are available for shipyards with more than 1,200 employees.

The small shipyard program is a matching program whereby MARAD ordinarily will not fund more than 75 percent of the total cost of any project. Similarly, funds ordinarily will not be available to construct buildings or to acquire other real estate. Both the minimum private funding amount and the real estate prohibition can be waived by the Maritime Administrator if he "determines that a proposed project merits support and cannot be undertaken" otherwise, notes the briefing.


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