Audit Reports

August 02, 2013

MARAD Has Taken Steps To Develop a Port Infrastructure Development Program but Is Challenged in Managing Its Current Port Projects

Project ID: CR-2013-117


In 2003, the Maritime Administration (MARAD) was authorized to administer funds for developing and modernizing the Port of Anchorage, the main seaport in Anchorage, AK. MARAD has since been authorized to administer two other port projects in Hawaii and the Port of Guam. Given significant setbacks at the Port of Anchorage project, including construction problems and schedule delays, we evaluated MARAD’s (1) oversight and risk management of port infrastructure development projects, and (2) oversight of port infrastructure projects’ contract planning and administration.

We found that MARAD did not establish effective oversight mechanisms when it initiated its port infrastructure development responsibilities. For example, MARAD did not adequately define its oversight responsibilities or establish a sound risk management process. MARAD has recently taken steps to more clearly define its role in the Port of Guam project. While MARAD has taken steps to develop a congressionally mandated Port Infrastructure Development Program, it has not yet completed it. Our review also determined that MARAD did not effectively manage its port project contracts. Between 2003 and 2011, the Port of Anchorage project’s cost estimate grew over four and a half times from $211 million to $1 billion, with scheduled completion slipping 8 years. The Port of Anchorage project had significant contracting problems stemming from MARAD’s inadequate planning, lack of reliable cost estimates, and noncompliance with Federal contracting requirements when awarding and administering the port contracts.

MARAD concurred with all nine of our recommendations. For six recommendations, MARAD provided appropriate action plans. For the remaining three recommendations, we are requesting that MARAD provide additional information.