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Summary

On October 6 we issued our report on the Maritime Administration’s (MARAD) implementation of controls over payments to Maritime Security Program (MSP) contractors. Our objective was to determine whether payments to MSP contractors were reduced when minimum operating requirements (related to number of days in foreign trade and participation in other Federal programs) were not met. We determined that payments were properly reduced when minimum operating requirements were not met and, further, that MARAD’s controls are sufficient to ensure that payments to contractors are processed in the correct amounts. However, we made two observations for MARAD’s consideration regarding (1) MARAD’s assurance that MSP vessels adhered to cargo preference limitations and (2) MARAD’s exclusion of liquid cargo from its application of the cargo preference limitation. Neither of these issues affected our results because no MSP vessels have carried the cargo in question. MARAD agreed with our first observation and implemented the necessary procedures during the course of the audit. OIG Counsel is working with MARAD Counsel to resolve the second observation.