Hot Flashes from Marad
GMATS Decision Decoded
This week, in an obscure posting that was selectively delivered to a limited audience, the U.S. Maritime Administration finally came clean on their thought process for closing the Global Maritime and Transportation School (GMATS) at Kings Point, NY. Actually, the release was delivered in what Marad characterized as a “blog” posting, but to those who are most impacted by the decision and still others who have been asking why for the better part of two months, it was news. But, let’s not quibble.
The statement, attributed to U.S. Maritime Administrator David Matsuda, went like this:
Last month, the U.S. Department of Transportation’s Maritime Administration and the U.S. Merchant Marine Academy made the decision to close the Global Maritime and Transportation School (GMATS), based on a recommendation from an internal task force. We want to share with the maritime community why this step was necessary.
In 2009, the U.S. Government Accountability Office issued a report summarizing the findings of an investigation into the operations of the Academy and its Non-Appropriated Fund Instrumentalities (NAFIs), such as GMATS. As a result of that report, the Maritime Administration established an internal task force to review the operations and continued viability of the Academy’s NAFIs. And although it provides innovative education and training programs, this task force found that GMATS does not meet established criteria to continue operating as a NAFI. The GMATS Board of Directors, the USMMA, and the Maritime Administration all agreed on this fact, for several reasons:
NAFIs are supposed to benefit their agency’s employees, which in this case, would be Academy midshipmen or personnel. However, we found that GMATS customers are primarily other government agencies and commercial entities outside the Academy. In fact, during FY 2008, FY 2009 and the first three quarters of FY 2010, the Navy Reserve and the National Oceanic and Atmospheric Administration (NOAA) made up 95 percent of GMATS customers. Other maritime industry customers, including midshipmen – who are essentially GMATS’ target customer – accounted for just five percent.
GMATS also contradicts basic NAFI principles by operating in direct competition with private service providers like maritime labor union schools, which have made substantial investments in training facilities and capabilities. Not only is this bad public policy, but it is bad for the maritime industry as a whole to have commercial business being diverted to an instrumentality of the federal government
Finally, a NAFI must be self-sustaining, yet it is uncertain that GMATS’ business model can be sustainable without federal assistance.
We explored several options to keep GMATS open. However, GMATS cannot maintain its NAFI status, the USMMA lacks appropriated funding for this activity, and Congressional authorization would be required to transition it to some other entity. As a result, we had to make the decision to discontinue GMATS.
We value and appreciate the service of GMATS employees and are committed to working with them during their transition.
The U.S. Department of Transportation is absolutely committed to supporting programs that enhance maritime education, but we must do so in a manner that is consistent with federal financial management practices. The role of continuing maritime education at the Academy will be considered as part of the Academy’s strategic planning process, which launched earlier this month.
Translation and Analysis
Dissecting the statement (and right off the bat), I would argue that “sharing the message with the maritime community” involves actually delivering the news to EVERYONE and secondly – perhaps most importantly – in a timely manner. Did we really need to wait 55 days for the reasons why a respected industry asset was being dismantled or did it take that long for Marad to get their story straight? We’ll never know.
Matsuda’s reasoning grinds through the usual, tired old arguments that have been bandied about intermittently for the past decade. That it took two months to publicly announce it is – and there is just no other word for this – weak. That said; I take exception to at least two of Matsuda’s arguments.
First, the assertion that this “NAFI” did not benefit its host – the U.S. Merchant Marine Academy – is simply not true. And, I don’t think you’ll find that many would dispute this outside of Marad (no one at Marad gets to talk anymore unless it is first blessed by Secretary LaHood in any event). GMATS added value in every sense; through good will, international outreach and under the Radar (no pun intended) improvements in local curriculum. Mr. Matsuda should have left well enough alone and stuck to the NAFI argument.
Regarding the NAFI discussion, I can’t claim to be a legal expert on this concept so I won’t try to argue that point. But, when he freely admits that 95 percent of GMATS’ customers were U.S. Government employees, I fail to see where doing away with the school benefits anyone, much less the taxpayers. Operating at no theoretical cost to the Academy itself, GMATS was primarily providing cost-effective training to government personnel. And really, who was helping who? Was it the federal government helping GMATS or was GMATS providing economy of scale for the government itself? Let’s see Marad run the numbers on that. The real question(s) that Mr. Matsuda should have answered in his “blog” post are (a.) who will provide this training now, and (b.) will it be done at an equivalent cost and in a competent manner elsewhere?
Matsuda chides the GMATS model for competing in the private market place and then tells us that just 5 percent of its revenues stem from that sector. I suppose that this is the same sort of logic that goes into pouring 99.5% of all ARRA funds into concrete and high speed rail, to the detriment of the domestic waterfront. Yes, it is clear that sufficient training assets – exceptionally competent entities – exist elsewhere in the private sector that will probably more than take up the slack for any commercial training billets lost by the demise of GMATS. But, does it really matter? Spread that 5 percent over the breadth of the training sector and it probably doesn’t amount to but a very small percentage of the overall maritime training and credentialing output in this country.
The Marad Chief wraps it up nicely by saying, “We value and appreciate the service of GMATS employees and are committed to working with them during their transition.” Let’s hope this entails help and outreach that exceeds DOT’s so far tepid commitment to this island nation’s most important, environmentally efficient and cost effective transport mode (that’s the waterfront, if you didn’t know).
I’m a little irritated this week. You might have picked up on that thread. The full breadth of the U.S. maritime industry trade press has been asking Marad to clarify its decision since December 8th. This week, in belated response, we get a “blog.” On the other hand, it isn’t really “news” anymore, is it?
Navy Gets Hawaii Superferries from Marad for $35 Million
Separately and also this week (busy, busy at DOT) another obscure press posting from Marad announces that the U.S. Department of Transportation’s Maritime Administration has transferred two high speed vessels, the Huakai and the Alakai, to the U.S. Navy. The Navy plans to use the vessels to transport troops and equipment to training areas from Okinawa and other locations. Fair enough and I’m glad that the vessels finally found a home.
According to Marad, “the Navy provided $35 million to the Maritime Administration for both vessels. The Maritime Administration took possession of the two ships after their original owners, Hawaii Superferry, Inc., defaulted on loans that the Maritime Administration had guaranteed. The vessels are currently docked at Lamberts Point in Norfolk, VA.” This much we already knew. And, the $35 million fire sale price tag? That involves little more than a paper transaction between two government entities.
Built at a total cost that approached $140 million, Marad was apparently unable to secure bids from the private sector that exceeded what the Navy was willing to cough up. Hopefully, the Navy will get some real utility from the vessels. That said, I have also been told by better qualified readers that the costs of conversion will not be inexpensive, either. The announcement, nevertheless, closes a sad chapter for domestic shortsea shipping efforts. Along the way, the taxpayers took another bath because of it.
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Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at firstname.lastname@example.org or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.