Government officials have turned down a £350,000 offer from private businesses that was claimed could have unlocked a multi-million pound development of NI's most important fishing harbour.
Firms linked to various industries at Kilkeel had offered to pay for the work.
An environmental survey and other works are required to push forward a £36m redevelopment of the facilities.
However, the department that owns the harbour has declined the cash.
In a letter, Denis McMahon, the permanent secretary of the Department of Agriculture, Environment and Rural Affairs (DAERA), has said it would be "inappropriate" to accept the offer.
Companies 'turning away customers'
DAERA has previously said there was no budget for the work and that it could not authorise expenditure without a minister.
The chief executive of a Kilkeel-based co-operative has accused the department of burying its head in the sand.
Alan McCulla claimed companies were now "turning away customers" because of the limitations of the existing infrastructure.
The proposed redevelopment of Kilkeel harbour would see a new outer harbour designed with bigger boats in mind, as well as a range of other new facilities.
As DAERA owns the harbour, it would have to approve the plan and lodge the planning application.
Mr McCulla said, as landlord, DAERA had a responsibility to support businesses based around the harbour and facilitate investment that would create new jobs.
Investment must 'meet principles'
He said a redeveloped Kilkeel could become an economic driver for the region, doubling the current harbour workforce of about 1,000.
Dr McMahon said he understood the "strong desire" of the Kilkeel community to develop their harbour.
But he said, given that it was in public ownership, it would be wrong to accept a private financial contribution for work linked to any future planning application.
"You will understand our need to ensure that this public asset is developed in line with principles of good governance and that any proposed investment of public money meets the principles of regularity, propriety and value for money."
Dr McMahon said there would have to be a review of the entire needs of the local fishing industry spread across the three ports of Kilkeel, Portavogie and Ardglass before big decisions were made about future investment.
It is expected the review will be completed by the end of 2019.