Maritime Administration:

Stronger Management Controls Needed Over Vessels in Title XI Custody

RCED-92-147: Published: May 22, 1992. Publicly Released: May 28, 1992.

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Pursuant to a congressional request, GAO examined the adequacy of the Maritime Administration's (MARAD) management controls for the custody, maintenance, and sale of vessels acquired by the Federal Ship Financing Program, also known as the Title XI Program.

GAO found that MARAD: (1) under the Title XI Program, pays the outstanding balance of guaranteed vessel purchase or construction loans that borrowers default on, and attempts to recoup the government's losses by selling the vessel; (2) does not have detailed formal policies, procedures, or guidance for decisions concerning the custody, maintenance, and sale of acquired vessels; (3) believes that its review system, which requires numerous officials to approve custody and sale decisions, adequately ensures that the program is achieving its objectives; (4) bases its vessel management and sale decisions on conversations with ship brokers, trade journal information, and field office recommendations; (5) does not have records of key information supporting its vessel management and sale decisions, and maintains some of the information that it does collect in a format that is not useful; (6) lacks procedures to assess its performance in managing and selling vessels or for determining the appropriateness of its decisions; and (7) stated that it has corrected similar problems identified with the National Defense Reserve Fleet Program, but the recurrence of those same problems in the Title XI Program points to an inadequate emphasis placed on developing management controls.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Maritime Administration issued a revised comprehensive policy paper outlining the objectives, policies, and procedures of the Title XI program in December 1992.

    Recommendation: To help ensure that the Title XI program is administered efficiently and effectively and provides reasonable assurance that government resources are protected against fraud, waste, misappropriation, and mismanagement, the Secretary of Transportation should direct the Administrator, MARAD, to develop detailed formal policies and procedures to guide decisionmaking regarding the custody, maintenance, and sale of Title XI vessels.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: A revised MARAD policy paper providing instructions regarding documenting significant activities was issued in December 1992.

    Recommendation: To help ensure that the Title XI Program is administered efficiently and effectively and provides reasonable assurance that government resources are protected against fraud, waste, misappropriation, and mismanagement, the Secretary of Transportation should direct the Administrator, MARAD, to identify and document significant information and program activities concerning decisions affecting the custody, maintenance, and sale of individual vessels.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: MARAD identified certain statistical information it collects as performance indicators and included such in its policy paper issued in December 1992.

    Recommendation: To help ensure that the Title XI Program is administered efficiently and effectively and provides reasonable assurance that government resources are protected against fraud, waste, misappropriation, and mismanagement, the Secretary of Transportation should direct the Administrator, MARAD, to develop indicators to allow MARAD officials and others to better monitor the program's performance.

    Agency Affected: Department of Transportation

 

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