GAO Report Reveals Critical Gaps in Maritime Administration’s Shipbuilding Support Programs

A recent Government Accountability Office (GAO) report has found that despite having four financial assistance programs designed to bolster U.S. shipbuilding, the Maritime Administration (MARAD) lacks proper performance metrics to determine their effectiveness in growing the nation’s maritime fleet.

Under U.S. coastwise laws, vessel owners and operators engaged in domestic trade must generally use U.S.-built vessels, which supports the maritime industry’s vital role in national defense. However, since American-built vessels typically cost more than foreign-built alternatives, MARAD operates four financial assistance programs to encourage domestic shipbuilding.

The Federal Ship Financing Program has provided loan guarantees totaling nearly $400 million to two vessel owners in the last five years. Meanwhile, tax deferral options through the Construction Reserve Fund Program and Capital Construction Fund Program allow vessel owners to defer taxes on eligible deposits used for U.S. shipyard projects. In 2024, these programs served seven and 137 vessel owners respectively.

Additionally, the Small Shipyard Grant program provides funding for equipment and training to smaller operations. For fiscal year 2024, the program had $8.75 million available but received 78 applications requesting nearly $50 million.

“These four financial assistance programs have provided some support for vessel owners or operators and shipyards, but the programs’ administration does not follow leading practices for assessing program performance,” the GAO report states.

The GAO noted that MARAD “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.”

This evaluation comes at a critical time, as U.S. commercial shipbuilding has been declining for decades despite its importance to national security. An April 2025 Executive Order established a policy to revitalize domestic shipbuilding and grow the U.S. maritime fleet.

The report, mandated by the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, has prompted GAO to make seven recommendations, primarily focusing on developing measurable goals and performance assessment processes for all four financial assistance programs.

The Department of Transportation has agreed with the recommendations.

It’s worth noting that the Trump Administration’s pick for Maritime Administrator, Stephen Carmel, is still awaiting Senate confirmation. Sang H. Yi is serving as Acting Maritime Administrator in the interim.

Subscribe for Daily Maritime Insights

Sign up for gCaptain’s newsletter and never miss an update

— trusted by our 109,140 members