GAO turns its spotlight on MARAD financial assistance programs

Image: GAO

Back in February, a report from the U.S. Government Accountability Office (GAO) found, that while the Department of Transportation’s Maritime Administration (MARAD) has about 800 employees to carry out its many missions, and is facing staff turnover, high numbers of employees eligible to retire, and vacancies in critical positions. Nowt GAO has turned its attention to a key element of U.S. maritime support: MARAD financial assistance programs.

Those programs, or some revision to them, are likely to be key in delivering on President Trump’s wide ranging executive order on reviving and revitalizing U.S. Maritime.

Here’s what they are:

The Federal Ship Financing Program (Title XI) generally offers loan guarantees for vessel construction at U.S. shipyards. In the last 5 years, the program executed two loan guarantees for two vessel owners totaling nearly $400 million.

The two tax deferral programs, the Construction Reserve Fund Program and the Capital Construction Fund Program, allow vessel owners or operators to defer paying tax on certain eligible deposits that are placed into an account and can be used to fund projects at U.S. shipyards. In 2024, seven vessel owners or operators had a Construction Reserve Fund program account, and 137 vessel owners or operators had a Capital Construction Fund Program account.

Finally, the Small Shipyard Grant program provides grants to small shipyards for equipment or training. In fiscal year 2024, this program had $8.75 million in available funds and had 78 grant applications from shipbuilding or repair companies requesting just under $50 million.

GAO says that while the four MARAD financial assistance programs have provided some support for vessel owners or operators and shipyards, the programs’ administration does not follow leading practices for assessing program performance. For example, the Maritime Administration cannot determine to what extent the programs are effective in growing the U.S. maritime fleet because it has not established measurable goals for, or assessed the performance of, these programs. Doing so would allow the Maritime Administration to identify any changes that could better increase the nation’s shipbuilding capacity to promote national security and economic prosperity. \

In its study, GAO reviewed Maritime Administration documents and compared its four financial assistance programs with leading practices for performance management. GAO also surveyed domestic vessel owners and operators and shipbuilding or repair companies. GAO also visited selected shipyards and interviewed government officials and 31 industry stakeholders selected to provide a range of perspectives on the Maritime Administration’s programs and the maritime industry’s ability to contribute to national defense.

The full GAO report is well worth reading not only for what its says about the MARAD financial assistance programs but also because it contains a detailed appendix summarizing what it learned from its survey on shipyard capacity and capability. Though GAO says data from our survey are not generalizable or meant to represent the entire population of shipyards in the United States, they do have the benefit of being up to date. GAO says that in its initial efforts, it identified 220 shipyards, of which 105 responded to
the survey, an overall response rate.

Recommendations

Here are GAO’s recommendations for addressing issues with the MARAD financial assistance programs.

The Administrator of the Maritime Administration should develop measurable goals for the Capital Construction Fund Program to identify the results the program seeks to achieve, and then develop a process to collect information to measure progress and use that information to assess progress on a regular basis.

The Administrator of the Maritime Administration should develop measurable goals for the Construction Reserve Fund Program to identify the results the program seeks to achieve, and then develop a process to collect information to measure progress and use that information to assess progress on a regular basis.

The Administrator of the Maritime Administration should develop measurable goals for the Federal Ship Financing Program to identify the results the program seeks to achieve, and then develop a process to collect information to measure progress and use that information to assess progress on a regular basis. (

The Administrator of the Maritime Administration should assess the potential effects of either combining the Construction Reserve Fund Program and the Capital Construction Fund Program or eliminating the Construction Reserve Fund Program and, if warranted, develop a legislative proposal for congressional consideration.

The Administrator of the Maritime Administration should develop measurable goals for the Small Shipyard Grant program to identify the results the program seeks to achieve, and then develop a process to collect information to measure progress and use that information to assess progress on a regular basis. The Administrator of the Maritime Administration should document the agency’s decision rationale for selecting or not selecting applications to receive Small Shipyard Grant program awards. (Recommendation on

The Administrator of the Maritime Administration should notify all applicants to the Small Shipyard Grant program of their award status and how to request feedback on unsuccessful applications.

The Administrator of the Maritime Administration should document the agency’s decision rationale for selecting or not selecting applications to receive Small Shipyard Grant program awards.

The Administrator of the Maritime Administration should notify all applicants to the Small Shipyard Grant program of their award status and how to request feedback on unsuccessful applications.

• Download the full GAO report HERE