In administering the Federal Ship Financing Program (commonly called the title XI program), the Maritime Administration (MARAD), within the Department of Transportation (DOT), is responsible for a portfolio of guaranteed loans valued at nearly $2.6 billion. The primary collateral for the guarantees is the privately owned vessels being financed. When a borrower defaults on a loan, MARAD pays off the loan and usually takes custody and eventually title to the vessel. The agency must decide how to maintain and when to sell the vessel--decisions that determine the amount the government recoups on the loss incurred by paying off the loan. The General Accounting Office reviewed the adequacy of MARAD's policies and procedures, or management controls, for the custody, maintenance, and sale of vessels acquired by the Federal Ship Financing Program. GAO also determined if any problems found are similar to management control problems, previously reported by GAO and others, in MARAD's National Defense Reserve Fleet (NDRF) program, which maintains government-owned vessels intended to help meet shipping requirements in national emergencies. Briefly, GAO found that MARAD has not developed adequate controls for the custody, maintenance, and sale of vessels acquired by the title XI program. The lack of these management controls (1) precludes the agency from being sure it is recouping the maximum amount on the government's losses and acting in the maritime industry's best interest and (2) increases the program's vulnerabilty to fraud, waste, misappropriation, and mismanagement. The problems were found to be similar to those in the NDRF program, which suggests that MARAD's senior management could do more to convey to program managers the importance of establishing appropriate management controls.

  • Supplemental Notes:
    • Report to the Chairman, Subcommittee on Regulation, Business Opportunities, and Energy, Committee on Small Business, House of Representatives.
  • Corporate Authors:

    U.S. General Accounting Office

    441 G Street, NW
    Washington, DC  United States  20548
  • Publication Date: 1992-5


  • English

Media Info

  • Features: Appendices;
  • Pagination: 12 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00624866
  • Record Type: Publication
  • Report/Paper Numbers: GAO/RCED-92-147
  • Files: TRIS
  • Created Date: Sep 2 1993 12:00AM