January 4, 2005

Port grant program's real problem: Not enough money

Responding to recent news coverage about major management challenges facing the Department of Homeland Security (DHS), including the way the department has handled its Port Security Grants Program, American Association of Port Authorities (AAPA) President Kurt Nagle yesterday said the criticism "misses the mark," noting that the program's biggest problem is a serious lack of money to assist American seaports in paying for critical security measures.

"Like airports, protecting our seaports against terrorism must be a top priority and a shared responsibility between the federal government, local public ports and private industry," said Nagle. "The federal government has mandated security enhancements for marine facilities, but has yet to adequately fund those mandates, creating huge financial burdens on ports that have both security and economic consequences."

Ports are already spending more than $3 billion annually on infrastructure improvements and operating expenses to keep pace with burgeoning world trade. Without adequate federal help for security enhancements, Nagle said that ports will be forced to spend money on security instead of capital improvements, likely resulting in a system unable to handle the expected growth in trade volumes and causing enormous impacts on America's economy.

Ports face massive new security spending requirements. For instance, the Port of Miami has absorbed $6 million in costs annually for the past three years to pay for additional security operating costs, except for two grants totaling $4 million. The additional expenses have caused the port to put on hold such projects as road improvements, bulkhead repairs and construction of an intermodal container transfer facility.

According to a Dec. 27, 2004 Associated Press wire story, port directors on the Great Lakes say they are spending money on security enhancements that otherwise would pay for terminal and transportation improvements, such as dredging channels at the gateways for materials used in construction and to produce steel used in automobiles, appliances and other consumer goods.

In a draft report to be issued this month, a former DHS Inspector General questioned the prioritization of port security grant funding and procedures related to post-award grant administration. AAPA's Nagle noted that seaport security grant money is used to reimburse marine facilities only after they have spent money on an approved project. So, while some post-award projects may not be visited by DHS auditors, grant program money goes only to cover authorized expenses, which exclude personnel, maintenance and operating costs.

"Ensuring adequate security against terrorism is important for all ports, large and small," remarked Nagle, saying the problem is a matter of funding. For FY2005, the AAPA advocated a federal funding level for America's seaport facilities of $400 million, based on Coast Guard estimates that it will cost $5.4 billion over the next 10 years to address terrorist threats. However, the federal funding level for FY'05 was $150 million. For the last round of grants, ports received only about 8 percent of what they requested.

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