The Maritime Administration (MARAD) provides ships from the National Defense Reserve Fleet as training vessels for cadets at the State maritime academies to become licensed mariners. In fiscal year 2015, MARAD began the design of National Security Multi-Mission Vessels (NSMV) to replace five training ships nearing the end of useful life. Congress directed MARAD to use an entity other than itself to contract for NSMV construction using commercial design standards and construction practices and has thus far appropriated approximately $1.3 billion for the NSMV program.
Given this significant investment and MARAD’s support of national security, the Office of Inspector General (OIG) at the Department of Transportation initiated an audit to assess MARAD’s management of the NSMV Program, including oversight of the vessel construction manager (VCM) contract and use of commercial design standards and commercial construction practices consistent with the best interests of the federal government.
OIG found that vulnerabilities in MARAD’s NSMV program management may hinder achievement of program goals. Though some risk mitigation steps have been taken, the watchdog said MARAD’s program risk management is inadequate. In particular, its risk assessment lacked complete analysis of important elements such as individual risk likelihood, consequences and mitigation strategies.
In addition, OIG found that MARAD has not reviewed complete versions of three required oversight plans that describe key areas of the VCM’s strategy for managing and overseeing NSMV design and construction.
Further, OIG said delays in the VCM contract and shipyard subcontract awards may increase MARAD’s exposure to program risks. Later-than-planned awards reduced the time between first vessel delivery and placement into service from 17 months to 1. This lost cushion increases the possibility that the VCM and shipyard will not have enough time to address issues and that contingency plans for late vessel delivery will be implemented, thus adding cost to the program’s billion-plus dollar investment.
OIG made two recommendations, with which MARAD has agreed. First, to document and implement a risk management process to analyze program risk, including risk identification, likelihood and consequence, mitigation strategy, and monitoring activities. This documented process should also include steps for monitoring, tracking, and updating risks throughout the life of the program. OIG added that this recommendation should be completed prior to the start of full-scale vessel construction.
Secondly, MARAD is recommended to obtain, review, and approve complete versions of each of the following VCM oversight plans: the Configuration Design and Technical Management Plan; Quality Assurance, Risk Management, and Metrics Plan; and Test and Evaluation Plan. AGain, OIG said this recommendation should be completed prior to the start of full-scale vessel construction.