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The U.S. Flag Fleet and the "Self-Licking Ice Cream Cone"

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Offloading food aid from USAID in Yemen, 2018 (USAID)

By Denise Krepp 12-18-2019 08:25:00

Last week, the Washington Post published a series of articles on the U.S. government's $130 billion aid and development effort in Afghanistan. The Post's "Afghanistan Papers," based on the work of the Special Inspector General for Afghanistan Reconstruction (SIGAR), describe a “self-licking ice cream cone” of fraud, waste, and abuse.  

I served as the Maritime Administration's chief counsel during the period covered by the report. My days were filled with fights with the U.S. Agency for International Development (USAID) over the "cargo preference rules," a set of laws that require that a percentage of U.S.-financed goods - food aid, tractors, etc. - must be transported on U.S.-flagged ships crewed by U.S. mariners.

MARAD wanted USAID to comply with cargo preference, but USAID wanted waivers and cash payments to foreign partners instead. Then-Secretary of State Hillary Clinton supported USAID’s position, and ultimately MARAD stood down. This decision resulted in lost cargo and lost jobs for the U.S. flag deep sea fleet.

The Post's revelations about USAID's troubled program in Afghanistan are not entirely new. In 2013, SIGAR sent a letter to USAID highlighting “poor coodination, waste, and mismanagement” which occurred because“USAID did not exercise effective oversight of the implementing partner.” The SIGAR memo was public, and I recommended in a Maritime Executive essay that the “Administration … focus its attention of fixing existing problems instead of changing the current international food aid distribution structure and giving USAID more money to lose.”

Two years later, the Government Accountability Office (GAO) recommended that USAID should establish formal processes for reviewing contract modifications for food aid. Like SIGAR's 2013 memo, GAO's report was publicly available for Congress and anyone in an oversight role to read.

It’s now 2019, and the detailed regulations that would implement cargo preference still haven't left the Office of Management and Budget. They're stuck there because USAID and others continue to advocate for assistance in the form of cash payments, not donations of American-made, American-transported food and goods. These are the same corrupting cash payments that the Washington Post so eloquently wrote about in the Afghanistan Papers.

There were 115 ships in the U.S. flag fleet in foreign trade in 2010. There are now 81. The fleet dwindled because the cargo dwindled. Cargo has dwindled because USAID doesn’t want to follow cargo preference laws, and they have the political clout to slow-roll implementation.

The House-passed Coast Guard Authorization Act of 2019 directs GAO to audit the enforcement of cargo preference laws at all federal agencies. The audit will examine compliance and non-compliance by each agency going back to 2008. I urge Congress to pass the bill. This bright light will expose long-known but little-shared policies that hurt the U.S. flag fleet and cost American jobs. 

K. Denise Rucker Krepp is a homeland security, transportation and energy expert who began her career as an active duty Coast Guard officer in 1998. She served as chief counsel for the Maritime Administration.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.