U.S. Coast Guard

The Fiscal Year 1997 Department of Defense Appropriations Act made $300 million available for transfer from the Defense Department (DOD) to the Coast Guard. The law requires that the transferred funds be used only for the Coast Guard's performance of national security functions in support of DOD. This report (1) discusses whether the transfer of the DOD funds to the Coast Guard in fiscal year 1997 was made in accordance with the legislative provisions and (2) examines the Coast Guard's expected use of the transferred funds for fiscal year 1997 and the Coast Guard's actual expenditure of them for national security functions that year.

GAO noted that: (1) the $300 million was transferred to the Coast Guard in compliance with the statutorily required certification by the Secretary of Transportation and the Secretary of Defense that those funds would be used only for the performance of national security functions; (2) the funds were transferred to the operating expense account from which all the Coast Guard programs and activities are paid; (3) since the Coast Guard's operating expense account was not set up to distinguish between national security expenses and civilian expenses, it is not possible to precisely identify how the transferred funds were used; (4) the Coast Guard estimated that it would spend approximately $324 million in FY 1997 for four selected national security functions in support of DOD; (5) these functions included defense readiness, domestic support of ports and waterways, specific functions spelled out in a memorandum of agreement with DOD, and support of commanders in chief operation plans; (6) these functions appear to be appropriately designated as national security functions in support of DOD; (7) the Coast Guard also identified other substantial national security expenses in the areas of military personnel and assets that are not included in their estimated expenses; (8) in addition, $320 million was planned for drug interdiction, which the Coast Guard currently considers to be a national security function in support of DOD; (9) in FY 1997, the Coast Guard spent approximately $254 million of the $324 million budgeted for the above four national security functions; (10) the Coast Guard stated that it spent less than expected in the four categories because of a shift in mission priorities to drug interdiction; (11) drug interdiction expenses totalled $472 million for FY 1997, exceeding the $320 million budgeted; and (12) combining the four national security functions with drug interdiction yields $726 million, which was more than the $300 million received from DOD.