The U.S. Government Accountability Office (GAO) has released a report highlighting significant gaps in the U.S. Coast Guard’s oversight of third-party organizations (TPOs) responsible for certifying the safety of U.S.-flagged vessels. The report, GAO-25-107139, finds that while TPOs have played an increasing role in vessel certification—supporting the Coast Guard’s certification of 22% of U.S.-flagged commercial vessels in 2023—the Coast Guard’s oversight mechanisms remain incomplete and ineffective in several key areas.

The reliance on TPOs has grown substantially in recent years. Between 2018 and 2023, the number of vessels using TPO-supported certification jumped from 483 to 3,786, largely due to the implementation of new inspection requirements for towing vessels. TPOs help the Coast Guard by conducting vessel surveys, audits, and compliance verifications, which reduce the Coast Guard’s direct workload. However, the GAO found that the Coast Guard has not developed a system to adequately measure TPO performance, ensure data completeness, or reassess the risks and benefits associated with using TPOs. These weaknesses raise concerns about whether the Coast Guard can effectively oversee TPOs and ensure that certified vessels meet safety standards.

One of the most pressing issues identified by the GAO is the Coast Guard’s lack of complete and accessible data on its oversight activities. The Coast Guard does conduct periodic inspections and observes TPO audit activities, but its procedures for recording these oversight efforts in its Marine Information for Safety and Law Enforcement (MISLE) database are inconsistent and inadequate. For example, many TPO audit observations are missing from official records, which prevents the Coast Guard from accurately tracking TPO performance and identifying deficiencies. Coast Guard field units appear to be conducting far more oversight activities than are actually being recorded, suggesting a systemic failure in data entry and monitoring.

Beyond data tracking issues, the GAO report criticizes the Coast Guard for failing to establish clear performance measures for TPOs. While the Coast Guard collects some key performance indicators—such as the number of vessel surveys and findings per audit—these metrics do not provide meaningful insights into TPO effectiveness. Even TPO representatives interviewed by the GAO acknowledged that existing indicators lack clear benchmarks and do not incentivize improved performance. Without a structured performance measurement system, the Coast Guard cannot effectively assess whether TPOs are ensuring vessel safety or contributing to regulatory compliance.

Another major concern is the Coast Guard’s failure to reassess the benefits and risks of using TPOs since 2017. The initial analysis conducted that year outlined the advantages of TPOs, including increased efficiency and reduced demand on Coast Guard personnel. However, it also warned of risks such as reduced Coast Guard oversight, industry conflicts of interest, and potential safety vulnerabilities. Since that assessment, the role of TPOs has expanded dramatically, yet the Coast Guard has not conducted any follow-up evaluations to determine whether TPO-supported certification programs are functioning as intended. Given the recent surge in TPO use, the GAO urges the Coast Guard to implement a systematic review process to reassess TPO-related risks and benefits on a recurring basis.

To address these shortcomings, the GAO makes four key recommendations:

1. Update procedures for recording TPO oversight data to ensure that all audit observations are properly documented and accessible.

2. Develop a process to monitor oversight data and ensure that field units comply with data entry requirements.

3. Establish a structured performance measurement system for TPOs, complete with clear benchmarks and timelines.

4. Conduct periodic assessments of the risks and benefits of using TPOs to support vessel certification.

The Department of Homeland Security, which oversees the Coast Guard, has concurred with all four recommendations and committed to taking corrective actions. However, as past GAO reports have shown, compliance with these types of recommendations often takes years and requires persistent oversight by Congress and maritime industry stakeholders.

For federal contractors working in the maritime sector, these findings have important implications. Contractors involved in vessel certification, regulatory compliance, and maritime safety may see new oversight requirements and performance metrics imposed on TPOs in the coming years. Additionally, the Coast Guard may seek to strengthen internal auditing procedures, which could increase scrutiny on vessel owners and operators that rely on TPO certifications. Federal contractors engaged in Coast Guard-related projects should monitor any policy changes stemming from this report and anticipate potential updates to inspection protocols, data reporting obligations, and certification standards.

The GAO-25-107139 report serves as a warning that despite the Coast Guard’s efforts to improve TPO oversight since the tragic 2015 sinking of the SS El Faro, significant weaknesses remain. If these oversight gaps are not addressed, the risks to maritime safety could escalate, undermining the very purpose of using third-party organizations for vessel certification. The Coast Guard now faces pressure to take concrete action to enhance data tracking, implement performance standards, and reassess its reliance on TPOs—all of which will shape the future of federal maritime safety regulations.

The full GAO report, “COAST GUARD: Actions Needed to Improve Oversight of Third-Party Organizations That Help Certify U.S.-Flagged Vessels,” was authored by Heather MacLeod and can be accessed at GAO.gov.

Disclaimer:
This blog post summarizes key points from the GAO report but does not guarantee accuracy and does not provide legal or regulatory advice. Readers should refer directly to the GAO report for official findings and consult legal professionals for compliance guidance.