National Maritime Strategy: DOT Is Taking Steps to Obtain Interagency Input and Finalize Strategy

DOT's efforts related to a national maritime strategy aimed at helping to ensure the sustainability and competitiveness of the U.S.-flag fleet were first mandated in statute in 2014. In 2018, the due date for the national maritime strategy was extended to February 2020.

A provision in statute directed GAO to identify the challenges facing the U.S. maritime industry and the status of the national maritime strategy. This report (1) identifies selected stakeholders' views on the key national defense implications of the challenges facing the U.S. maritime industry, among other things, and (2) examines the status of the national maritime strategy and the extent to which DOT coordinated the strategy's development with relevant federal agencies.

GAO reviewed relevant laws and analyzed DOT and DOD documents related to the U.S. flag fleet. GAO also interviewed: (1) staff in the Executive Office of the President, including OMB, and (2) officials in DOT, DOD, and other federal agencies as well as selected industry stakeholders. Interview selections were based on a range of factors to gather different perspectives across the industry and results are not generalizable to all industry stakeholders.

Selected stakeholders identified some key national defense implications of the challenges facing the U.S. maritime industry. This industry—which includes oceangoing U.S.-registered (i.e., U.S.-flag) ships and U.S. citizen mariners—provides global transportation capabilities to the Department of Defense (DOD) in times of peace, crisis, and war. The Department of Transportation (DOT), in cooperation with DOD and other federal agencies, is responsible for federal programs to ensure that this industry meets defense needs. Stakeholders, as well as DOD officials, cautioned that continued declines in the size and capabilities of the oceangoing U.S.-flag fleet could lead to inadequate capacity for DOD to transport military cargo during a national defense crisis. Likewise, a potential shortage of mariners could lead to DOD not having adequate crews to operate government-owned reserve ships that may be activated during a wartime surge. Seven of the 10 industry stakeholders GAO interviewed stated that a comprehensive national strategy could help address industry challenges.

After a stalled strategy development process that did not include key stakeholders, DOT established a new interagency working group, in September 2019, to finalize the national maritime strategy. DOT has been working on a draft strategy since 2014 to address statutory mandates. In 2017, DOT began revising the draft strategy to align with the new administration's priorities. Interagency coordination, however, was limited as DOT did not include DOD or other key federal stakeholders. In August 2018, DOT submitted the revised draft to the Office of Management and Budget (OMB) for interagency review. OMB staff told GAO they circulated this draft to 12 agencies and two policy councils in the Executive Office of the President. However, according to OMB staff, OMB suspended this process shortly after it began at the request of the Executive Office of the President because of its plans to convene a committee to consider policy matters related to the strategy. According to DOT officials, the process remained suspended until DOT learned in September 2019 that the Executive Office of the President had not convened and no longer planned to convene such a committee. DOT then established a new interagency working group to revise and finalize the strategy, ending a year-long delay in the strategy's development (see figure). This working group includes DOD and other key agencies that were not previously consulted and should address gaps in interagency coordination. DOT officials told GAO that they intend to submit the strategy to Congress by February 2020, as required.

Federal policy has long acknowledged the importance of the oceangoing  U.S.-flag maritime industry to national defense. The industry includes the  ships registered in the United States (U.S.-flag ships), the U.S. citizen  mariners who crew these ships, and the U.S. shipyards that build and  repair ships. The Department of Defense (DOD) relies on this industry in  times of peace, crisis, and war. DOD relies on the commercial fleet of  U.S.-flag ships engaged in international trade to provide global sealift of  equipment, supplies, fuel, and other cargo to destinations worldwide.  DOD also relies on U.S. citizen mariners to help crew a reserve fleet of  government-owned cargo ships in times of need. These ships are held in  reduced operating status with minimal crew in peacetime. When put into  full operating status—such as for a surge related to a wartime effort— these reserve ships need additional crew, such as the mariners working  on oceangoing U.S.-flag ships. However, as we reported in 2018, the  U.S.-flag fleet, shipyards, and workforce have been in decline, and the  industry as a whole faces significant economic sustainability challenges.  For example, the U.S.-flag oceangoing fleet had over a thousand ships  after World War II, but today has approximately 180 total, with less than  half engaged in international trade.

It has long been recognized that the operating costs of U.S.-flag ships are  higher than the operating costs of foreign-flag ships, and that government  support is therefore necessary to maintain a fleet of internationally trading  U.S.-flag ships. In our 2018 report, we identified two broad challenges in  sustaining the U.S.-flag international trading fleet. The first is maintaining  the financial viability of the fleet in the face of increasing operating costs  and declining government cargo. The second is a potential shortage of  U.S. citizen mariners to crew the government-owned ships.

Current federal maritime activities related to these industry challenges are  fragmented across multiple agencies and lack a unified federal strategy to  address them, but the Department of Transportation (DOT) has been  working on a strategy related to some industry challenges. In 2014, DOT  was statutorily required to develop two national maritime strategies, one  to address the competitiveness of the industry due in 2015 and the other  to ensure sufficient capacity is available to meet military sealift needs,  among other things, due in 2014. DOT has not yet submitted either  strategy and intends to submit a single maritime strategy to Congress to  meet both mandates. The Maritime Administration (MARAD), within DOT,  is the primary federal agency responsible for federal policy in support of  the industry and is the lead in developing the strategy. This national  maritime strategy is currently required to be submitted to Congress in  February 2020.

Amid congressional concerns about the status of the strategy, the John S.  McCain National Defense Authorization Act for Fiscal Year 2019 included  a provision that GAO report on challenges to ensuring that the U.S.  maritime industry is sufficient to support defense needs, the status of the  national maritime strategy, and other issues. This report describes the key national defense implications of challenges facing  the U.S.-flag maritime industry, according to selected stakeholders,  and the actions the Department of Transportation and other federal  agencies have taken to address them, and examines the status of the national maritime strategy and the extent  to which DOT coordinated the development of the strategy with  relevant federal agencies.

To describe selected stakeholders’ views on the defense implications of  U.S. maritime industry challenges and federal actions to address these  challenges, we reviewed documentation from DOT, DOD, and U.S. Coast  Guard, among other federal agencies, and our prior work and other  relevant reports. We also interviewed federal officials with maritime  responsibilities at MARAD, DOD, U.S. Coast Guard, and the Department  of Agriculture and the U.S. Agency for International Development, the two  agencies that use U.S.-flag ships to deliver food aid internationally (food  aid agencies), and a nonprobability sample of 10 industry stakeholders.  We made our selection from three broad groups—ocean carriers,  mariners, and shipyards—that together comprise the U.S.-flag maritime  industry, as well as researchers engaged in this area. Stakeholders were  selected to ensure that we gathered information from multiple  perspectives and sectors within the industry and included large carriers  with U.S.-flag internationally trading ships that participate in federal  maritime programs, shipbuilders recommended by industry stakeholders,  a union representing mariners, researchers, and relevant industry  associations. Because of the broad scope of the industry and wide range  of federal involvement, our review does not provide an exhaustive list of  industry challenges and their defense implications, nor do we identify all  federal maritime actions. Results of our interviews are not generalizable  to all stakeholders but provide insight about and illustrative examples of  industry challenges and federal actions.

To examine the status of the national maritime strategy and the extent to  which DOT coordinated its development with relevant federal agencies,  we reviewed relevant laws and Office of Management and Budget (OMB)  guidance on the interagency review process. In addition, we interviewed  relevant DOT and MARAD officials as well as the OMB staff responsible  for interagency review. We also inquired with all of the agencies and the  policy councils in the Executive Office of the President (EOP) that OMB  said it had included in interagency review to understand the nature and  extent of their involvement. We interviewed subject matter experts within  DOD, U.S. Coast Guard within the Department of Homeland Security,  and food aid agencies to obtain their perspectives on the development of  the strategy. We did not evaluate the content of the draft strategy  because the strategy is currently under development and subject to  change. To consider the extent to which MARAD coordinated its  development with relevant federal agencies, we also used our prior work  on leading practices for enhancing and sustaining interagency  collaboration. Because we focused on the extent to which DOT obtained  sufficient input in developing and revising the strategy, we determined  that one of these key practices—ensuring that all the relevant participants  have been included in the collaborative effort—was most relevant to this  review.

We conducted this performance audit from December 2018 to January  2020 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

A series of laws and policy directives dating back to 1904 require DOD to  rely in large part on U.S.-flag commercial ships over government-owned  or foreign-flag ships for its sealift needs. More recently, a 1989 National  Security Directive reaffirmed the policy of relying on U.S.-flag commercial  ships to provide sealift in times of peace, crisis, and war. These  requirements and policies align with the following principles from the  Merchant Marine Act of 1936, as amended:

A fleet of commercial ships with military utility that are owned and  operated by U.S. citizens and are able to provide reliable support  during difficult wartime missions is necessary for national defense.  According to testimony by the Commander of U.S. Transportation  Command (USTRANSCOM), during Operation Desert Shield, 7  percent of foreign-flag ships refused to go into war zones, whereas  U.S.-flag ships continued to deliver cargo as promised. DOD  officials we interviewed also noted that U.S. mariners have a history of  providing outstanding support to the nation, but cited several  situations in which civilian mariners refused to complete a government  mission due to security concerns.

A pool of trained U.S. mariners is needed to crew the U.S.-flag fleet.

According to USTRANSCOM and MARAD, U.S. mariners are  necessary to crew not only the U.S.-flag commercial ships but also  the U.S. government-owned reserve cargo ships. When put into full  operating status—such as for a surge related to a wartime effort—the  government needs additional trained and qualified mariners to operate  these U.S. reserve cargo ships. U.S.-flag commercial ships, which are  required to be staffed by U.S.-citizen mariners, provide a pool of  mariners who can be used for this task. Because mariners work on  ships for months at a time, commercial ships typically have at least  two full sets of mariners to crew a single ship—one set of which is on  the ship while the other is on leave. In times of crisis, one set of  mariners could continue to work on the commercial ship, while some  of those on leave could be called upon to voluntarily crew ships in the  government-owned reserve fleet.

A U.S. presence in international trade is needed to carry goods  overseas. According to MARAD, a U.S. presence in international  trade helps ensure that both commercial shippers and the military can  access ships, and associated transportation networks, to carry their  goods overseas at all times, both in times of peace and in times of  war.

Government Support of U.S.-Flag Industry

The U.S. government financially supports oceangoing U.S.-flag ships in  two key ways: (1) Maritime Security Program (MSP) stipends and (2)  cargo preference requirements.

Maritime Security Program: Since fiscal year 1996, the MSP has  provided an annual stipend set by statute, subject to annual  appropriations, to support a specific number of internationally trading  U.S.-flag ships. In return for receiving the stipend, the MSP ship  operator agrees to keep the ship or an equivalent ship under the U.S.  flag for the life of the MARAD-issued operating agreement, and  enrolled in a Voluntary Intermodal Sealift Agreement. By statute, the  MSP is to enroll no more than 60 ships and provide each with a  stipend of $5 million annually in fiscal years 2018-2020, subject to the  availability of appropriations. The MSP was designed as a less  costly replacement for the Operating Differential Subsidy that, since  1936, had subsidized the higher operating costs of the U.S.-flag fleet  compared to foreign-flag ships operating on similar routes and trades.  The MSP currently covers approximately 71 percent of the average  annual operating cost differential between U.S. and foreign-flag ships,  although this share varies across ships in the MSP, according to  DOT’s estimates. The other key way that these ships can make up the  operating cost differential is by carrying government cargo under  cargo preference requirements.

Cargo Preference: A series of laws requires federal agencies to  transport some portion of their cargo on U.S.-flag ships, to the extent  such ships are available at fair and reasonable rates. For example,  current law requires that 100 percent of military cargo be transported  on U.S.-flag ships, unless the rates are found by the President to be  excessive or otherwise unreasonable. According to a 2015 MARAD  report, DOD accounts for 59 percent of total government cargoes.  For non-military cargo, including food aid, current law requires federal  agencies to transport a minimum of 50 percent of their cargo on  privately owned U.S.-flag commercial ships. Federal agencies can  meet cargo preference requirements by transporting cargo on any  privately owned U.S.-flag commercial ships, including those in the  MSP. As we reported in 2018, federal stakeholders have differing  views on cargo preference requirements. On the one hand, these  requirements result in higher shipping costs for food aid agencies,  costs that agency officials said negatively affect their missions. On  the other hand, these requirements help support the financial viability  of U.S.-flag ships by helping to offset the cost differential between  U.S.-flag and foreign-flag ships. According to the 2015 MARAD report,  the higher freight rates that DOD and other federal agencies pay to  transport government cargo on U.S.-flag ships are critical to the  financial viability of U.S.-flag ships in international trade, including  MSP ships.

In addition, the law commonly referred to as the Jones Act generally  requires that maritime transport of cargo between points in the United  States be carried by ships that are owned by U.S. citizens, registered  under the U.S.-flag, and built in the United States. One of the purposes of  the Jones Act is to provide the nation with a strong domestic maritime  industry that can serve as a naval or military auxiliary in time of war or  national emergency. As of August 2019, there were 99 oceangoing ships  operating domestically (i.e., in the Jones Act fleet), according to MARAD  data. We reported in 2013 that the effect of any potential modifications to  the Jones Act on the U.S.-flag maritime industry would be uncertain.  While repealing the Jones Act could increase competition with foreign-flag  ships and reduce costs for shippers, it could also affect the reliability of  the industry and have a negative effect on the U.S.-flag maritime industry  and national security.

Maritime Roles Split across Multiple Federal Agencies

DOT, DOD, and the Department of Homeland Security, among others,  play a key role in federal policy related to the U.S.-flag maritime industry.  Specifically:

DOT, through MARAD, is the primary federal agency responsible for  federal policy in support of the industry. DOT administers the MSP in  consultation with DOD, provides funding to federal and state maritime  academies, provides financial assistance to shipyards, and maintains  a fleet of 56 government-owned cargo ships in reserve to provide  sealift during war and national emergencies.

DOD, through USTRANSCOM, jointly administers the MSP with DOT,  and uses the U.S.-flag maritime industry to meet its sealift needs.  DOD also maintains a fleet of 15 government-owned ships in reserve  to provide sealift during war and national emergencies. We refer to  DOT’s and DOD’s fleets together as the government-owned reserve  fleet.

The Department of Homeland Security, through the U.S. Coast  Guard, oversees and regulates the U.S. maritime industry and marine  transportation system. This includes overseeing and approving  merchant mariner training programs, credentialing U.S. merchant  mariners, documenting U.S.-flag ships, and maintaining the U.S,  registry, among other functions.

The Department of Agriculture and United States Agency for  International Development administer multiple international food-aid  programs. Under cargo preference requirements, they must use the  U.S.-flag maritime industry to transport at least 50 percent of their  government cargo when U.S.-flag ships are available at fair and  reasonable rates.

Since 2014, DOT has been required by law to develop two strategies: one  to address industry challenges and the other to ensure the viability of U.S.  sealift capability. First, the Howard Coble Coast Guard and Maritime  Transportation Act of 2014 mandated that DOT, in consultation with U.S.  Coast Guard, submit a national maritime strategy to Congress by  February 2015. The law mandated that this strategy:  Identify federal regulations and policies that reduce the  competitiveness of the U.S.-flag maritime industry.

Provide recommendations to make the fleet more competitive in  international trade.

In January 2018, the John S. McCain National Defense Authorization Act  for Fiscal Year 2019 provided a new deadline of February 2020 for this  strategy to be submitted.

The second strategy, due in April 2014 and mandated by the  Consolidated Appropriations Act of 2014, was to develop a national sealift  strategy in collaboration with DOD to ensure the long-term viability of the  U.S. Merchant Marine. This act additionally required DOT to identify the  impact of reduced cargo preference requirements. DOT plans to submit a  single maritime strategy to meet both these 2014 mandates. DOT  completed a draft national maritime strategy that went through OMB  interagency review in 2016. However, DOT did not finalize this strategy  and submit it to Congress prior to the change in presidential  administration. In August 2018, we recommended that DOT complete the  strategy and publish a timeline for finalizing the strategy. DOT agreed to  implement our recommendation.

Industry Challenges Could Affect National Defense and Federal Actions Are Limited

Selected Stakeholders Identified Several Areas in which Maritime Industry Challenges Could Affect National Defense

The U.S.-flag maritime industry faces an array of challenges that could  negatively affect national defense. Federal assessments, as well as the  federal officials we interviewed, underscored that the industry is critical to  national defense, and that some potential sealift needs could be difficult  for the U.S. industry to meet. All 10 of the industry stakeholders we  interviewed identified at least one challenge related to each of the three  broad sectors of the industry: (1) ships, (2) shipyards, and (3) mariners.

Ships. Seven of the 10 stakeholders we interviewed expressed  concern that declines in the size of the U.S.-flag fleet could lead to  shortfalls in overall capacity or number of certain types of ships  needed to carry defense cargo. Defense officials we interviewed and  recent DOD needs assessments indicated that the current  internationally trading U.S. fleet was generally sufficient to meet  current needs but also raised some concerns about potential future  gaps in certain situations. For example, the current U.S.-flag  internationally trading fleet has 6 petroleum tankers—down from 36 in  1990—and USTRANSCOM has estimated potential needs for 86  tankers to fulfill DOD sealift requirements under the National Defense  Strategy. Currently, according to USTRANSCOM officials we  interviewed, U.S.-flag tankers and tankers flagged in other countries  currently meet DOD needs, but these officials stated that access to  allied foreign-flag petroleum tankers is increasingly uncertain in the  current geo-political environment. Likewise, roll on/roll off ships  (commonly referred to as Ro-Ros because it is possible to drive  vehicles on and off the ships) are essential to move military vehicles,  and DOD officials we interviewed stated they currently have assured  access to roughly 3.5-million square feet of commercial capacity,  which just meets current needs. A recent DOD analysis estimated 3.9  million square feet of Ro-Ro capacity will be needed in 2023. Seven of  the stakeholders we interviewed raised concerns about limits in the  overall capacity or a mismatch between the types of ships most  needed for defense and those needed for commerce. Additionally,  three stakeholders added that the Jones Act fleet—which is larger  than the U.S.-flag fleet of internationally trading ships and also  includes ships with sealift capabilities—would likely not be available in  a time of crisis without significant disruption to U.S. domestic trade.

Shipyards. Seven of the 10 stakeholders we interviewed expressed  concerns about declines in U.S. shipyard capacity. According to  MARAD and DOD officials, U.S. shipyards are an important part of  ensuring government-owned cargo ships can be fully activated.  According to a USTRANSCOM official, a shortage of shipyard  capacity has contributed to increasing repair time for the government  reserve fleet. In August 2017, we reported that incidents of degraded  or out of service equipment in the government reserve fleet had  increased over the previous 5 years. According to two stakeholders  that operate U.S.-flag ships, U.S.-flag carriers are also experiencing  maintenance delays at U.S. shipyards. For example, a representative  of one U.S.-flag international carrier stated that it has difficulties  scheduling needed work in a timely manner in the United States. In  the face of these difficulties, as well as other business considerations,  international ocean carriers may turn to foreign shipyards for repair  services.

Currently, according to MARAD, in April 2019, there were nine active  shipyards in the United States with facilities capable of building large  commercial ships. MARAD officials noted that while the domestic tug  and barge industry is doing well, the side of the industry building  large, self-propelled oceangoing ships is struggling due to declines in  new orders. One stakeholder observed that U.S. shipyards are  building very few new ships and noted that the industry could lose  additional capacity in the coming years without a stream of new  orders. Three stakeholders also expressed concern that shipyard  workers have lost some of the necessary skills to support oceangoing  commercial ships.

Mariners. Nine of the 10 stakeholders we interviewed identified  potential gaps in the skills or availability of U.S. citizen mariners.  Likewise, federal officials we interviewed, as well as a recent  government study, indicated there could be too few mariners to  support sustained military sealift operations. When put into full  operating status—such as for a surge related to a wartime effort—the  government’s reserve fleet needs additional crew, and DOD counts on  mariners working on oceangoing U.S.-flag ships to meet this need.  MARAD and DOD have raised concerns about the sufficiency of U.S.- citizen mariners to meet this need. For example, in September 2017,  in a statutorily mandated report, MARAD’s Maritime Workforce  Working Group estimated a shortage of over 1,800 mariners in the  event of a drawn-out military effort, although it also recommended  data improvements to increase the accuracy of the count of available  mariners.

USTRANSCOM officials we interviewed added that they are  concerned with not only the total number of mariners but also their  specific mix of skills. Similarly, five stakeholders we interviewed  identified potential mariner skills gaps because the U.S.-flag  commercial fleet has modernized more quickly than the government- owned reserve fleet, so U.S.-citizen mariners in the commercial sector  may lack experience with the technologies used on aging  government-owned ships. Four stakeholders specifically noted  potential shortages in mariners qualified to operate the 26 steam- powered ships that are in the government-owned reserve fleet, noting  this older technology is no longer common on commercial ships.  Seven stakeholders we spoke with stated that fleet and cargo  reductions have led to fewer opportunities to crew ships, limiting  career development paths for mariners.

Federal Actions to Support Industry Are Largely Limited to the Administration of Established Programs and Policies and Studying Issues

Current federal actions to address industry challenges and meet defense  needs include administering long-standing policies and programs as well  as studying underlying issues, rather than new efforts to confront these  challenges. Established federal policies and programs—including the  MSP, cargo preference requirements, and the Jones Act, among others— have not markedly changed in recent years. Officials explained that within  the existing statutory framework, they have tried to better align the MSP  fleet with defense needs. For example, within the last 2 years, they  enrolled three roll on/roll off ships that provide a net increase in square- footage compared to the ships they replaced, among other  improvements. Cargo preference requirements, also, have largely  remained the same since 2012. MARAD has made efforts to better  ensure these requirements are understood and followed by federal  contracting officers, contractors, and sub-contractors who make shipping  decisions and are supposed to abide by these requirements. Specifically,  MARAD has developed training on cargo preference and conducted  outreach to various agencies and industries. Further, agencies have  taken other actions to improve existing programs in ways that could aid  defense. These actions include initiatives to make it easier for veterans to  earn merchant marine credentials and bureaucratic improvements to  speed the process to flag a ship in the United States.

Five of the 10 stakeholders we interviewed noted that these established  policies and programs, collectively, are vital to the U.S.-flag maritime  industry. Four stakeholders emphasized that the internationally trading  U.S.-flag industry is supported by three sources of revenue—MSP  stipends, government cargo, and commercial cargo—and stated that  reductions in any of these three sources would likely cause further  declines in the international-trading fleet. Similarly, an industry  organization representing Jones Act carriers and a representative of a  shipyard that builds ships for the fleet emphasized that the legal  requirements for domestic shipping were essential to the viability of the  fleet.

In recent years, MARAD and other key federal agencies with maritime  roles have focused on studying the industry and recent trends. DOT and  DOD officials we interviewed identified several recent and ongoing efforts  (see table 1). Currently, in response to a recommendation in the  previously mentioned Maritime Workforce Working Group report, MARAD  has begun a new effort to survey mariners to determine the number who  are qualified, available, and willing to serve on short notice on U.S.  government-owned sealift ships or commercial ships in times of national  emergencies or to meet defense sealift needs. At this early date, DOT  does not have specific plans for how to use the information gathered to  change programs or practices. Likewise, USTRANSCOM regularly  studies DOD’s sealift needs, through formal studies, ongoing cargo  forecasts, and drills. For example, the Mobility Capabilities and  Requirements Study of 2018 assessed the ability of mobility forces— including sealift capacity—to accomplish wartime missions as delineated  in the 2018 National Defense Strategy based on anticipated fiscal year  2023 fleet capabilities and capacities. This study updated a similar study  completed in 2010.

Federal agencies have taken limited actions to address challenges  industry stakeholders have identified, and the effects of those actions are  unclear. For example, in addition to procuring or repairing ships as a  customer, MARAD administers the small-shipyard grant program to  provide cash support to sustain some shipyard capacity. MARAD  officials we interviewed explained that while this grant program focuses  on shipyards that tend to be too small to serve larger commercial ships  needed to support defense sealift, it does help maintain the shipyard  workforce. Similarly, the effect on carriers of U.S. food aid shipments is  ambiguous in light of recent budget uncertainties. For example, officials  we interviewed at the Department of Agriculture did not have estimates of  food-aid cargo volumes beyond current appropriations because recent  budget proposals from the administration have proposed eliminating  much of the funding for these programs.

According to 7 of the 10 stakeholders we interviewed, federal actions  have not adequately addressed industry challenges, and many expressed  concern that defense needs are at risk because of certain weaknesses in  the federal approach. For example, four stakeholders noted that  MARAD’s strategy to operate its fleet of government-owned reserve  cargo ships in reduced operating status limits the opportunities for U.S.- citizen mariners to get experience on these ships, which may require  distinct skills to operate (e.g., steam engines). Five stakeholders worried  that federal actions were not working toward a common purpose or  spurring industry innovation. Seven stakeholders stated that a  comprehensive national strategy is needed to ensure, for example, that  federal actions are working toward common goals to support the industry  and are concerned that DOT had not yet submitted such a strategy,  despite working on one since 2014.

Following Stalled Development Process, DOT Recently Convened Interagency Group to Finalize Strategy

After a stalled strategy development process that did not include key  stakeholders, in September 2019 DOT established a new interagency  working group to finalize the strategy prior to the February 2020 deadline.  Since 2017, the draft national maritime strategy, initially completed in  2016, has gone through three subsequent phases of development—DOT  revision, OMB’s interagency review, and a renewed interagency working  group. However, key federal agencies were omitted from DOT’s revisions  and OMB’s interagency review. In September 2019, DOT formed a new  interagency working group through the Committee on the Marine  Transportation System (CMTS), an established interagency group for  improving federal coordination and policies that affect the marine  transportation system, as a way to bring key federal stakeholders  together to finalize the strategy.

DOT’s strategy revision. In 2017, the new administration instructed  DOT to revise the existing draft strategy—which had been completed  but not submitted to Congress under the prior administration—to align  with its priorities. These priorities included DOD’s revised National  Defense Strategy. Whereas DOT had held symposiums of maritime  industry stakeholders and a broad array of federal agencies in 2014  when developing the initial draft strategy, DOT’s efforts to revise the  strategy in 2017 and 2018 did not include substantive coordination  activities with industry or other federal agencies. Subject matter  experts within DOD reported to us in June 2019 that they had not  seen a draft of the strategy since they provided comments during the  OMB interagency review process that occurred in 2016. In addition,  these DOD officials were unaware that the strategy was under  revision. Similarly, in June and July 2019, officials at the Department  of Homeland Security and subject matter experts within the U.S.  Coast Guard told us they had not been consulted during the revision  of the strategy since 2017. Accordingly, the largest government user  of the U.S. flag fleet—DOD—and the agency overseeing credentialing  of the U.S. Merchant Marine—the U.S. Coast Guard—were not able  to provide input to DOT on revisions to the strategy mandated to  ensure the long term viability of the U.S.-flag maritime industry.

DOT officials we interviewed cited two main reasons for not engaging  in new outreach and coordination specific to the revision of the  strategy. First, they stated that the input they received in 2014  remained relevant as the challenges facing the industry have  remained consistent. Moreover, DOT officials stated they are in  regular contact with other federal agencies about maritime topics in  general and, therefore, had a good understanding of these agencies’  positions. As a result, DOT officials told us they did not expect that the  input they would receive from renewed outreach would be different  from what they received in 2014.

While DOT did not engage in substantive coordination during the  strategy’s revision, it did provide status updates to some stakeholders  on the progress of the strategy. For example, during a June 2018  meeting of the Marine Transportation System National Advisory  Committee, DOT officials briefed industry representatives and  participating federal agencies on the status of the strategy. During  this briefing, DOT officials stated that the strategy had “undergone  extensive revisions since 2015…but the vision, mission, and guiding  principles are largely the same,” with the strategy refocused on areas  where DOT plays a lead or major role. DOT officials stated this  meeting afforded participants an opportunity to comment on topics  germane to the strategy. DOT, however, did not circulate a draft of the  strategy at this meeting, and so substantive reviews of the draft’s  content were not possible. In August 2018, DOT completed its  revisions and submitted the draft strategy to OMB for interagency  review.

OMB’s interagency review process. After receiving the revised  strategy from DOT, OMB staff initiated the interagency review  process. In August 2018, OMB staff sent the strategy to 12 federal  agencies and 2 policy councils in the Executive Office of the  President, according to OMB staff. DOT officials did not provide  input to OMB on which agencies should review the strategy.  According to DOT officials, they do not typically provide this type of  input. We inquired with all 12 agencies and both councils whether  they received the strategy from OMB and provided comments. As of  September 2019, officials at six agencies or councils confirmed they  had received the strategy in August 2018, and relevant officials at  five agencies stated they did not have records of receiving the  strategy. OMB staff we interviewed emphasized that it is the  responsibility of each agency to make sure the strategy is provided to  the right people within the agency. OMB did not include the  Department of Agriculture, a major shipper of food aid, in the  interagency review process, and Department of Agriculture subject  matter experts told us they were not consulted by DOT during the  revision of the strategy.

Shortly after circulating the draft strategy, OMB suspended the  interagency review process following a request from the EOP.  According to OMB staff, in August 2018, an EOP policy council  planned to convene a Policy Coordination Committee to address  policy questions related to the strategy. As a result, OMB did not  pass on the interagency comments it had already received to DOT,  but instead provided those comments to the EOP policy council.  According to DOT officials, OMB did not inform them that OMB had  halted the interagency review process at the request of the EOP  policy council. According to DOT officials, the process remained  suspended until September 2019, when DOT officials learned from  OMB staff that this committee had not and would not convene on the  draft national maritime strategy. Furthermore, these DOT officials told  us that until September 2019, when we informed them that OMB had  suspended the process, they had been unaware that any such  committee had been under consideration. Moreover, they indicated  DOT had not worked with any EOP policy councils to resolve policy  questions or concerns during that time. Likewise, DOD officials we  interviewed also were unaware of any Policy Coordination Committee  related to the strategy and had not worked with any EOP policy  councils to resolve policy questions or concerns. As a result, from  approximately September 2018 to September 2019, DOT was not  working to advance the strategy, according to DOT officials we  interviewed, nor did the OMB interagency process provide DOT with  input from other agencies.

Renewed interagency working group. Following our inquiries about  both DOT’s and OMB’s interagency collaboration, in September 2019,  DOT formed an interagency working group to finalize the strategy.  According to DOT officials, following discussions with OMB, they  understood that DOT could renew its efforts to finalize the strategy.  According to DOT officials, DOT determined that the CMTS was the  best forum for this finalization to occur. DOT officials explained the  purpose of the working group is to receive substantive input from  other agencies, fine tune the content of the strategy, and coordinate  final edits. DOT officials told us the working group is open to any  member of CMTS that elects to participate. Officials with CMTS we  interviewed told us that it functions as an interagency forum for policy  discussion and coordination, at the discretion of member agencies,  and can help address issues that cut across multiple agencies. As of  October 2019, participating agencies in the CMTS working group  included DOT, OMB, DOD, and the Department of Homeland  Security, among other agencies with maritime roles and  responsibilities relevant to the strategy. DOT officials expected the  working group to complete its work by the end of November 2019.  After that time, DOT plans to send the strategy to OMB for an  additional round of interagency review and clearance and to submit  the finalized strategy to Congress. DOT officials stated the  department remains committed to meeting the deadline to submit a  finalized strategy by the February 2020 deadline. See figure 1 for the  timeline of these three phases of development.

Our previous work has found that national strategies are a mechanism for  interagency collaboration, and that accordingly they can be used to  address a range of purposes, including policy development and program  implementation. We also found that collaborative mechanisms benefit  from certain leading practices, including ensuring that all relevant  participants have been included. These participants should have full  knowledge of the relevant resources in their agency, the ability to commit  those resources, and the knowledge, skills, and abilities to contribute to  the collaborative effort. In addition, OMB guidance states that prior to  submitting a document to OMB for interagency review, the submitting  agency should make intensive efforts to reach agreement on policy  issues in areas where there is overlapping interest between agencies.

Since 2017, and throughout DOT’s revision of the strategy and the OMB  interagency review initiated in 2018, key federal agencies and personnel  were not included in the strategy’s development and lacked opportunities  to provide their input on the strategy at that time. Without these agencies’  input, DOT did not have assurance that the strategy incorporated the  agencies’ expertise or the most up-to-date information relevant to the  strategy, including on DOD’s most recent sealift needs and priorities.  Given the interconnected nature of maritime issues and the breadth of the  statutory requirements for DOT to address in the strategy, including  provisions that call for collaboration with DOD, interagency collaboration  is an important step toward developing an effective national strategy.  DOT’s work with the CMTS interagency working group should help  ensure such collaboration and the input of key stakeholders that had  previously not contributed to the revision of the strategy. In light of this  new effort and our prior recommendation in 2018 that DOT complete and  finalize the strategy, we are not making a new recommendation in this  report.

We provided a draft of this report to DOD, OMB, DOT, and the  Department of Homeland Security for review and comment. DOD, DOT,  and the Department of Homeland Security provided technical comments,  which we incorporated as appropriate. OMB told us that they had no  comments on the draft report.

We are sending copies of this report to the appropriate congressional  committees, Secretaries of Transportation, Defense, Homeland Security,  and Director of OMB and other interested parties. In addition, the report  will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or flemings@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix I.

Appendix I: GAO Contact and Acknowledgments

In addition to the individual named above, Alwynne Wilbur (Assistant  Director); John Stambaugh (Analyst in Charge); David Blanding; Lilia  Chaidez; Emil Friberg; Geoffrey Hamilton; Dawn Hoff; Diana Maurer; Jan  Montgomery; Valerie Nowak; Josh Ormond; Molly Ryan; Travis Schwartz;  Sarah Veale; Michelle Weathers; and Suzanne Wren made key  contributions to this report.

The U.S. maritime industry includes U.S.-flag ships (registered to the United States), U.S. citizen crew, and U.S. shipyards. The Department of Defense relies on this industry to carry military cargo around the world in peace and war.

However, the industry has shrunk due to high operating costs and may not be sufficient to support sustained military operations.

In 2014, Congress directed the Department of Transportation to develop a national maritime strategy to help ensure the sustainability of the U.S.-flag fleet. In 2019, DOT renewed stalled efforts to do so, this time with participation from DOD and other key agencies.