Coast Guard
Observations on Agency Priorities in Fiscal Year 2006 Budget Request Gao ID: GAO-05-364T March 17, 2005The Coast Guard's budget has steadily increased in recent years, reflecting the agency's need to address heightened homeland security responsibilities while also addressing traditional programs such as rescuing mariners in distress and protecting important fishing grounds. The fiscal year 2006 budget request, which totals $8.1 billion, reflects an increase of $570 million over the previous year. GAO has conducted reviews of many of the Coast Guard's programs in recent years, and this testimony synthesizes the results of these reviews as they pertain to three priority areas in the Coast Guard's budget: (1) implementing a maritime strategy for homeland security, (2) enhancing performance across missions, and (3) recapitalizing the Coast Guard, especially the Deepwater program--an acquisition that involves replacing or upgrading cutters and aircraft that are capable of performing missions far out at sea. GAO's observations are aimed at highlighting potential areas for ongoing congressional attention.
The Maritime Transportation Security Act of 2002 charged the Coast Guard with many maritime homeland security responsibilities, such as assessing port vulnerabilities and ensuring that vessels and port facilities have adequate security plans, and the Coast Guard has worked hard to meet these requirements. GAO's reviews of these efforts have disclosed some areas for attention as well, such as developing ways to ensure that security plans are carried out with vigilance. The Coast Guard has taken steps to deal with some of these areas, but opportunities for improvement remain. The Coast Guard has three efforts under way that hold promise for enhancing mission performance but also merit ongoing attention. One is a new coastal communication system. The fiscal year 2006 budget request includes $101 million to move the system forward. A successful system would help almost all Coast Guard missions, but to develop it the Coast Guard must build more than 300 towers along the nation's coasts, some of them in environmentally sensitive areas. The second effort involves restructuring the Coast Guard's field units--tying resources and command authority closer together. This effort represents a major organizational change, and as such, it may be challenging to implement successfully. The third effort, enhancing readiness at the Coast Guard's stations for search and rescue and other missions, remains a work in process. The Deepwater program, which would receive $966 million under the budget request, appears to merit the most ongoing attention. GAO reviews of this program have shown that the Coast Guard clearly needs new or upgraded assets, but the Coast Guard's contracting approach carries a number of inherent risks that, left unaddressed, could lead to spiraling costs and slipped schedules. The Coast Guard is taking some action in this regard, but GAO continues to regard this approach as carrying substantial risk. Some expansion of cost and slippage in schedule has already occurred.
GAO-05-364T, Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 Budget Request
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Testimony:
Before the Subcommittee on Fisheries and Coast Guard, Committee on
Commerce, Science, and Transportation, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, March 17, 2005:
Coast Guard:
Observations on Agency Priorities in Fiscal Year 2006 Budget Request:
Statement of Margaret T. Wrightson, Director, Homeland Security and
Justice Issues:
GAO-05-364T:
GAO Highlights:
Highlights of GAO-05-364T, a report to the Subcommittee on Fisheries
and Coast Guard, Committee on Commerce, Science, and Transportation,
U.S. Senate:
Why GAO Did This Study:
The Coast Guard‘s budget has steadily increased in recent years,
reflecting the agency‘s need to address heightened homeland security
responsibilities while also addressing traditional programs such as
rescuing mariners in distress and protecting important fishing grounds.
The fiscal year 2006 budget request, which totals $8.1 billion,
reflects an increase of $570 million over the previous year. GAO has
conducted reviews of many of the Coast Guard‘s programs in recent
years, and this testimony synthesizes the results of these reviews as
they pertain to three priority areas in the Coast Guard‘s budget: (1)
implementing a maritime strategy for homeland security, (2) enhancing
performance across missions, and (3) recapitalizing the Coast Guard,
especially the Deepwater program”an acquisition that involves replacing
or upgrading cutters and aircraft that are capable of performing
missions far out at sea. GAO‘s observations are aimed at highlighting
potential areas for ongoing congressional attention.
What GAO Found:
The Maritime Transportation Security Act of 2002 charged the Coast
Guard with many maritime homeland security responsibilities, such as
assessing port vulnerabilities and ensuring that vessels and port
facilities have adequate security plans, and the Coast Guard has worked
hard to meet these requirements. GAO‘s reviews of these efforts have
disclosed some areas for attention as well, such as developing ways to
ensure that security plans are carried out with vigilance. The Coast
Guard has taken steps to deal with some of these areas, but
opportunities for improvement remain.
The Coast Guard has three efforts under way that hold promise for
enhancing mission performance but also merit ongoing attention. One is
a new coastal communication system. The fiscal year 2006 budget request
includes $101 million to move the system forward. A successful system
would help almost all Coast Guard missions, but to develop it the Coast
Guard must build more than 300 towers along the nation‘s coasts, some
of them in environmentally sensitive areas. The second effort involves
restructuring the Coast Guard‘s field units”tying resources and command
authority closer together. This effort represents a major
organizational change, and as such, it may be challenging to implement
successfully. The third effort, enhancing readiness at the Coast
Guard‘s stations for search and rescue and other missions, remains a
work in process.
The Deepwater program, which would receive $966 million under the
budget request, appears to merit the most ongoing attention. GAO
reviews of this program have shown that the Coast Guard clearly needs
new or upgraded assets, but the Coast Guard‘s contracting approach
carries a number of inherent risks that, left unaddressed, could lead
to spiraling costs and slipped schedules. The Coast Guard is taking
some action in this regard, but GAO continues to regard this approach
as carrying substantial risk. Some expansion of cost and slippage in
schedule has already occurred.
Coast Guard Budget, Fiscal Years 2002-2006 (dollars in millions):
[See PDF for image]
[End of figure]
www.gao.gov/cgi-bin/getrpt?GAO-05-364T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Margaret Wrightson, (415)
904-2200, or wrightsonm@gao.gov.
[End of section]
Madame Chair and Members of the Subcommittee:
I am pleased to be here today to discuss the President's fiscal year
2006 budget request for the Coast Guard, focusing on three priority
areas the Coast Guard believes are critical to improving performance
and reducing vulnerabilities within the U.S. maritime domain. As you
know, the Coast Guard continues to face extraordinary, heightened
responsibilities to protect America's ports, waterways, and waterside
facilities from terrorist attacks, while also maintaining
responsibility for many other programs important to the nation's
interests, such as helping stem the flow of illegal drugs and illegal
immigration, protecting important fishing grounds, and responding to
marine pollution. At the same time, the Coast Guard is adjusting to its
new home in the Department of Homeland Security (DHS) and attempting to
manage the largest acquisition in its history, replacing or upgrading
virtually all of its deepwater assets (ships and aircraft capable of
operating further out to sea). It is an understatement to say that the
Coast Guard has a lot going on. In recognition of this, the Coast Guard
has received substantial budget increases since the terrorist attacks
on September 11, 2001.
My testimony today provides a brief overview of the Coast Guard's
budget and performance information, and then discusses key Coast Guard
programs and activities within the context of a three-part framework
that the Coast Guard outlines in its fiscal year 2006 budget documents.
The Coast Guard believes that funding three priority areas--
implementing the maritime strategy for homeland security, enhancing
mission performance, and recapitalizing the Coast Guard--are essential
to best position the agency to implement the President's strategies and
reduce vulnerabilities in the U.S. maritime domain. My testimony is
based on a number of reviews we have conducted in recent years on
several Coast Guard programs. (See app. II for a listing of recent
reports.) Our work for this testimony has been conducted from February
2005 to March 2005 in accordance with generally accepted government
auditing standards. (See app. I for additional information regarding
our scope and methodology.)
In summary, the 2006 request reflects the continuing importance the
administration attaches to the Coast Guard's missions--especially those
that relate to homeland security. Our recent work indicates that
funding increases may be warranted, given the condition of the Coast
Guard's aging assets and the fact that the systems and processes the
agency needs to improve maritime domain awareness and security were
either inadequate or nonexistent prior to the terrorist attacks.
Nevertheless, as our work also has shown, dramatic infusions of money
do not guarantee success, but bring added responsibility to ensure that
these large investments of taxpayer dollars are wisely spent. The risk
that an agency may simply attempt to do too much and do it too quickly
is increased when an agency faces as many significant new heightened
responsibilities as the Coast Guard. We have not evaluated the Coast
Guard's priorities or whether the funding levels proposed are those
needed to accomplish these priorities. However, our work does show that
in key areas the Coast Guard has not always paid as much attention to
program design and management as it should. These design and management
issues can often have implications for how effectively money is spent.
My testimony focuses on findings from our recent work as they relate to
each of the Coast Guard's three priority areas, the recommendations we
made, the progress that the Coast Guard has made in addressing them,
and the issues that remain. First, I would like to put the fiscal year
2006 budget request in a historical context and also provide some
perspective on the Coast Guard's reported performance results.
Funding Has Escalated in Recent Years, but Is Difficult to Link to
Performance Results:
The Coast Guard's 2006 budget request continues a trend of increasing
budgets that began in fiscal year 2002, as figure 1 shows.
Figure 1: Coast Guard Budget from Fiscal Year 2002 to Fiscal Year 2006
(dollars in millions):
[See PDF for image]
[End of figure]
If the Coast Guard's full budget request is granted, its funding will
have increased by 45 percent in nominal terms in this 5-year period. A
major portion of this growth will have occurred in the acquisition,
construction, and improvements account, which grew 81 percent in
nominal dollars between the fiscal year 2002 actual funds and the
fiscal year 2006 requested funds--a $568 million increase. Much of this
increase can be attributed to two major acquisition projects--Deepwater
and Rescue 21. Deepwater is the Coast Guard's largest-ever acquisition
program. It replaces or modernizes cutters, aircraft, and
communications equipment for missions that require mobility, extended
presence on scene, and the capability of being deployed overseas.
Rescue 21, the Coast Guard's second largest procurement in fiscal year
2006, will replace the Coast Guard's current antiquated coastal
communication system.
The fiscal year 2006 budget request shows a $570 million increase to
$8.1 billion,[Footnote 1] which is an increase of about 11 percent in
its discretionary funding over the enacted budget for fiscal year
2005.[Footnote 2] The majority of the total is for operating
expenditures: $5.5 billion. Capital acquisition accounts for another
approximately $1.3 billion, and the remainder is primarily for retired
pay. (See app. III for more detail on the Coast Guard's fiscal year
2006 budget accounts.) Much of the additional $570 million over and
above the 2005 budget covers such things as mandatory pay increases for
current employees and operating expenses for existing programs--many of
which relate to homeland security functions. In addition, more than $50
million of the increase would fund new or enhanced initiatives, all of
which relate to homeland security. For example, a portion of this
funding would be dedicated to increasing maritime patrol aircraft
operations, increasing the Coast Guard's presence in ports, and
providing enhanced security for liquefied natural gas transports. Of
the nearly $1.3 billion requested for capital projects, $966 million,
or 76 percent, would be dedicated to the Deepwater acquisition, while
$101 million would be dedicated to Rescue 21.
By comparison with the pattern of budget increases, performance
results--indicators that track a program's progress from year to year-
-have been more mixed in terms of the number of performance targets met
each year.[Footnote 3] (See app. IV for a detailed discussion of the
Coast Guard's performance measures and results.) The Coast Guard has a
key performance target--the goal it aims to achieve each year--for 10
of its 11 programs.[Footnote 4] For search and rescue, for example, its
target is to save the lives of at least 85 percent of mariners in
distress. For the 8 programs with performance results through fiscal
year 2004,[Footnote 5] the Coast Guard met or exceeded its targets in
4--a decline from the 2003 results, when the Coast Guard met 6 of these
targets (see fig. 2). Such changes can involve relatively small shifts
in results. For example, in fiscal year 2004, 96.3 percent of domestic
fishermen were found to be in compliance with regulations, compared
with 97.1 percent the year before--but the percentage for fiscal year
2004 was below the Coast Guard's target of 97.0 percent, while the
percentage for fiscal year 2003 was above it.
Figure 2: Number of Coast Guard Performance Targets Met for the 8
Programs with Performance Results between Fiscal Years 2001 and 2004:
[See PDF for image]
Note: Only those performance results that were available for each
fiscal year between 2001 and 2004 were included in these results. As
such, performance results for marine safety, illegal drug interdiction,
and ports, waterways, and coastal security are not included in these
figures.
[End of figure]
As we have reported in the past, it is difficult to link spending and
resource allocations to performance and results, because many other
factors also are at work.[Footnote 6] For example, one of the Coast
Guard's measures--the number of incursions into U.S. fishing grounds by
foreign fishing vessels--is affected by oceanic and climatic shifts
that can cause fluctuations in the migrating patterns of fish. The
number of foreign vessels drawn to U.S. waters could be affected by
these fluctuations. In addition, the Coast Guard is still developing
its performance measures and targets for its primary homeland security
program, so this major reason for funding increases is not yet
reflected in the results. These complicating factors suggest caution in
attempting to read too much into the fiscal year 2004 drop.
Nevertheless, attention to these trends over the long term is
important, as a way to help ensure that taxpayer dollars are spent
wisely.
Efforts Made on Coast Guard's Maritime Security Strategy Show Promise,
but Concerns Remain:
One of the Coast Guard's fiscal year 2006 priorities involves
implementing a maritime strategy for homeland security. Major portions
of this endeavor are heavily influenced by the requirements of the
Maritime Transportation Security Act (MTSA) of 2002.[Footnote 7] We
have reviewed the Coast Guard's response to a number of these
requirements, and our findings have implications for several aspects of
the budget request.
MTSA seeks to establish a comprehensive security regime for the
nation's ports--including planning, personnel security, and careful
monitoring of vessels and cargo--and charges the Coast Guard with lead
responsibility for implementing this regime. Since MTSA was enacted,
the Coast Guard has worked to address vulnerabilities by spurring the
development of meaningful security plans for thousands of facilities
and vessels in the nation's ports. The Coast Guard has taken many other
actions as well, including establishing area maritime security
committees to improve information sharing, increasing port presence
through increased security patrols, enhancing intelligence capabilities
by establishing field intelligence teams in ports, and beginning to
implement an electronic identification system for vessels in the
nation's ports. As we have reported, the Coast Guard deserves credit
for taking fast action on so many MTSA security provisions at once,
especially with regard to MTSA's aggressive requirement that regulated
facilities and vessels have security plans in place by July
2004.[Footnote 8] However, the combination of so many reforms and an
aggressive schedule posed a daunting challenge, and our review of Coast
Guard efforts to meet these requirements showed some areas for
improvement where we have made recommendations--most notably the
following three from reports issued in 2004.
* Automatic Identification System (AIS) has potential for cost savings.
National development of this system, which identifies vessels traveling
to or through U.S. waters, is an important step in the overall effort
to increase port safety and security. The Coast Guard faced several key
decisions to determine AIS's technical requirements, waterway coverage,
and vessels to be equipped with identification equipment. Estimates to
establish such a system, however, were well above funding levels. We
thought the goals of the system might be achieved more quickly and the
costs to the federal government reduced by pursuing cost-sharing
options. Consequently, we recommended that the Coast Guard seek and
take advantage of partnerships with organizations willing to develop
AIS systems at their own expense.
* Port security assessments could be more useful. The port security
assessment program is intended to assess port vulnerabilities and
security measures in the nation's 55 most economically and militarily
strategic ports. Our review showed that while some improvements were
made, the Coast Guard risked producing a system that was not as useful
as it could have been because its approach lacked a defined management
strategy, specific cost estimates, and a clear implementation schedule.
A major factor of the program--a computer-based geographic information
system that would provide information to personnel in charge of port
security--was developed in such a way that gaps in port security
postures could be overlooked. We recommended that the Coast Guard
define and document the functional requirements for this computer
system and develop a long-term project plan for the system and for the
port security assessment program as a whole.
* The Coast Guard's strategy for conducting oversight and compliance
inspections of facilities and vessels could be improved. Because the
program was new, we recommended that the Coast Guard undertake a formal
evaluation after the first round of inspections and use the results to
improve the program. The evaluation was to include the adequacy of
security inspection staffing, training, and guidance. To improve the
program strategy, we also recommended that the Coast Guard clearly
define the minimum qualifications for inspectors and link these
qualifications to a certification process, as well as consider
unscheduled and unannounced inspections, and covert testing as a way to
ensure that the security environment at the nation's seaports met the
nation's expectations.
The Coast Guard agreed with many of our recommendations and has made
progress in implementing some of them, but the remaining issues have
implications for the availability of funds or the effectiveness with
which available funds are spent.
* AIS. Coast Guard officials have taken a number of steps to encourage
stakeholder participation, although they have not formally sought AIS
partners to date. For example, the Coast Guard has a contract with
PETROCOMM (a provider of communications services in the Gulf of Mexico)
to provide locations, maintenance, and data services for several AIS
base stations on offshore platforms in the Gulf of Mexico.[Footnote 9]
The Coast Guard believes that it is too early to consider partnerships
beyond these initial efforts, because the Coast Guard is still
developing operational requirements for AIS systems and vetting these
requirements with stakeholders and Coast Guard field units. However,
Coast Guard officials also reported that in their discussions with
private parties, these parties have shown little interest in
shouldering any of the financial burden associated with achieving AIS
capability. The Coast Guard estimates that the installation of AIS
nationwide could cost nearly $200 million. The fiscal year 2006 budget
requests $29.1 million for this project, in addition to the $48 million
previously enacted ($24 million per year in fiscal years 2004 and
2005)--leaving a substantial sum to be financed.
Port security assessments. Coast Guard officials said they are working
with the Department of Homeland Security to determine the focus and
scope of the fiscal year 2006 port assessments and are taking into
consideration the progress being made by ports to identify shortcomings
and improve security. However, the Coast Guard continues to move
forward with the overall program, as well as the geographic information
system, without a plan that clearly indicates how the program and its
information component will be managed, what they are expected to cost,
or when the various work steps should be completed. The lack of a plan,
in our view, increases the risk that the program will be unsuccessful.
In response to our recommendation, the Coast Guard has indicated that
it will develop a long-term plan for the port security assessment
program but they did not indicate when this effort will begin or when
they expect a plan to be completed.
* Strategy for ensuring facility and vessel compliance. The Coast Guard
has taken a number of actions but has not focused its resources on
doing unscheduled or unannounced spot checks to verify whether domestic
vessels are complying with requirements.[Footnote 10] We continue to
believe that without unscheduled inspections, vessel owners and
operators can mask security problems by preparing for the annually
announced inspections in ways that do not represent the normal course
of business. Unannounced inspections are a way of ensuring that
planning requirements translate into security-conscious behavior.
Three Efforts to Enhance Mission Performance Bear Watching:
A second Coast Guard priority is to enhance mission performance. Many
Coast Guard personnel and assets are involved in performing multiple
missions. For example, Coast Guard cutters and crews may be involved
with fisheries patrols, distress calls, oil spills, stopping and
boarding vessels of interest, and many other tasks. In fiscal years
2005 and 2006, the Coast Guard plans to continue developing several
initiatives that agency officials believe will yield increased
performance across multiple Coast Guard missions over time. Three
initiatives, in particular, deserve mention. These are a new coastal
communication system, called Rescue 21; a new field command structure,
called Sectors; and efforts to improve readiness at multimission
stations that conduct search and rescue as well as other missions. All
three efforts carry some risk and will merit close attention.
* Rescue 21. The Coast Guard has resolved some initial development
problems that delayed the implementation of this new coastal command
and control communication system and is now poised to move forward
again, with a fiscal year 2006 budget request of $101 million.
According to Coast Guard officials, Rescue 21 can improve coastal
command and control communications and interoperability with other
agencies, helping to improve not only search and rescue efforts but
also other missions such as illegal drug and migrant interdiction. The
program is composed of very-high-frequency-FM radios, communication
towers, and communication centers. Rescue 21 was originally scheduled
to be ready for operational testing by September 2003, but this was
delayed because of problems in developing system software. Operational
testing of this software has been completed.[Footnote 11] The program
is now set--once additional Coast Guard and DHS approvals are obtained-
-to move into its next phase of production, and the Coast Guard
anticipates that the program will be operational by the end of 2007.
According to the Coast Guard, one risk that remains in moving ahead
with Rescue 21 involves locating sites for about 330 towers that must
be built. The Coast Guard must locate these towers in accordance with
the requirements of the National Environmental Policy Act of 1969
(NEPA), as amended, which requires federal agencies to prepare an
environmental impact statement for major federal actions that may
significantly affect the quality of the human environment.[Footnote 12]
Towers can have environmental effects; for example, when they are built
in migratory bird locations, birds can fly into the towers or their
supporting wires. Additionally, for effective communications, each
tower must be placed in a way that one tower's coverage meets the next
tower's coverage without interference. Thus, if one tower must be moved
for environmental reasons, neighboring towers may also have to be
moved--leading to a potential for schedule slippage, if additional
sites must be identified and developed. The NEPA process represents the
Rescue 21 program's greatest risk, according to a program
official.[Footnote 13]
* Sectors. This is a new field command structure that will unify
previously disparate Coast Guard units such as air stations, groups,
and marine safety offices into integrated commands. This effort is a
budget neutral effect in the fiscal year 2006 request, but it bears
attention for operational effectiveness reasons. The Coast Guard is
making this change to improve mission performance through better
coordination of Coast Guard command authority and resources such as
boats and aircraft. Under the previous field structure, for example, a
marine safety officer who had the authority to inspect a vessel at sea
or needed an aerial view of an oil spill as part of an investigation
would often have to coordinate a request for a boat or aircraft through
a district office, which would obtain the resource from a group or air
station. Under the Sector realignment, these operational resources will
be available under the same commanding officer. To date, 8 sectors have
been established, with approximately 28 to be established by the end of
2006.[Footnote 14] According to Coast Guard personnel, the realignment
is particularly important for meeting new homeland security
responsibilities, and will facilitate the Coast Guard's ability to
manage incidents in close coordination with other federal, state, and
local agencies.
While the establishment of Sectors appears to be an important step that
could positively affect the Coast Guard's mission performance, the
Coast Guard is likely to face a number of implementation challenges
that it will need to overcome to help ensure success. First, Sectors
change a long-standing cultural divide within the agency. This divide
has separated those personnel who typically operate aircraft and boats
from those personnel who typically enforce marine safety, security, and
environmental protection laws. Second, it has implications for
alignment above the field operations level as well. Realignment is
likely to be needed at the district office and headquarters levels to
help ensure that management misalignments among these levels do not
pull the field reorganization off track. Third, it will likely require
training, such as taking steps to ensure that senior commanders are
aware of key issues critical for decision making across the various
Coast Guard mission areas. Coast Guard officials acknowledge these
challenges but believe that the culture challenge will be overcome in
time as a result of increased familiarity and training. They also
acknowledged that further realignments at the district and headquarters
levels are likely to be needed over time and that efforts are under way
to implement training changes.
* Multimission stations. Another area where the Coast Guard has an
opportunity to improve mission performance involves its 188
multimission stations. These stations located along the nation's
coastlines and interior waterways have been the mainstay of one of the
Coast Guard's oldest missions--finding and rescuing mariners in danger.
In 2001, after a series of search and rescue mishaps, the Coast Guard
began efforts to improve station readiness, which had been declining
for more than 20 years. This included reconfiguring operations and
bolstering resources in four areas--staffing, training, boats, and
personal protection equipment used by personnel during operations, such
as life vests and survival suits. This effort was complicated by the
new and increased homeland security responsibilities that stations
assumed after the terrorist attacks of September 11.
Today, 4 years after efforts began to improve station readiness, there
have been operational improvements in staffing, training, boats, and
personal protection equipment, as well as increases in resource levels
at stations. However, even though readiness concerns have been
mitigated to some extent, the stations have still been unable to meet
standards and goals relating to staffing, boats, and equipment, which
indicates that the stations are still significantly short of desired
readiness levels in some areas. For example, even though station
staffing has increased 25 percent since 2001, station personnel
continue to work significantly longer hours than are allowed under the
Coast Guard's work standards.
To address continued readiness concerns, actions are needed in two
areas, and the Coast Guard says that it has such efforts underway.
Currently, the Coast Guard does not have an adequate plan in place for
achieving and assessing readiness in its new post-September 11
operating environment. The Boat Forces Strategic Plan--the Coast
Guard's strategy for maintaining and improving essential multimission
station capabilities over the next 10 years--is the agency's main tool
for measuring progress in meeting station readiness requirements, but
it has not been updated to reflect increased homeland security
responsibilities. However, Coast Guard officials recently reported that
they will update the plan to reflect its homeland security mission and
identify actions taken and results achieved. Second, the Coast Guard is
operating under interim homeland security guidelines, which establish
recommended security activities for field units according to each
maritime security threat level. Coast Guard officials said they would
incorporate measurable station readiness goals into the plan. The Coast
Guard plans to complete these efforts in the next 6-9 months.
Important but Costly Programs for Maintaining and Recapitalizing
Deepwater Assets Need Careful Monitoring:
The third Coast Guard priority involves the single largest and most
complex acquisition program in the agency's history--a project designed
to improve the mission performance of the range of cutters and aircraft
that currently conduct the agency's offshore missions. We have
previously reported on the risky approach for this
acquisition,[Footnote 15] and although progress has been made to
address our past recommendations, the risks still remain substantial.
As it undergoes a transformation to these new or upgraded assets, the
Coast Guard is also faced with sustaining its legacy assets[Footnote
16] to ensure that they can continue to perform the Coast Guard's
missions until new or upgraded assets are in place. Revisions to the
Coast Guard's mission requirements for Deepwater, slippages in the
acquisition schedule, and limited information about the condition of
and likely costs for maintaining the legacy assets all highlight the
need for continued attention to this area.
Deepwater Acquisition Involves a Major Recapitalization of the Coast
Guard:
In 1996, the Coast Guard initiated a major recapitalization effort--
known as the Integrated Deepwater System--to replace or modernize the
agency's deteriorating aircraft and cutters. These legacy assets are
used for missions that require mobility, extended presence on scene,
and the capability of overseas deployment. Examples of such missions
include interdicting illegal drug shipments or attempted landings by
illegal aliens, rescuing mariners in difficulty at sea, protecting
important fishing grounds, and responding to marine pollution. The
Deepwater fleet consists of 187 fixed-wing aircraft and helicopters,
and 88 cutters of varying lengths. As currently designed, the Deepwater
program replaces some assets (such as deteriorating cutters) with new
ones while upgrading other assets (such as some types of helicopters)
so that all of the assets can meet new performance
requirements.[Footnote 17]
In an effort to maintain its existing assets until the Deepwater assets
are in place, the Coast Guard is conducting extensive maintenance work.
Notwithstanding extensive overhauls and other upgrades, a number of the
cutters are nearing the end of their estimated service lives.
Similarly, while a number of the deepwater legacy aircraft have
received upgrades in engines, operating systems, and radar and sensor
equipment since they were originally built, they too have limitations
in their operating capabilities. For example, the surface search radar
system on the HC-130 long-range surveillance aircraft is subject to
frequent failures and is quickly becoming unsupportable. Flight crews
use this radar to search for vessels in trouble and to monitor ships
for illegal activity, such as transporting illicit drugs or illegal
immigrants. When the radar fails, flight crews are reduced to looking
out the window for targets, greatly reducing mission efficiency and
effectiveness. A flight crew in Kodiak, Alaska, described this
situation as being "like trying to locate a boat looking through a
straw." We have been reviewing the condition of Coast Guard Deepwater
assets for a number of years, and our work has shown that a need exists
for substantial replacement or upgrading.[Footnote 18] We have
additional work underway this year regarding the status of Deepwater
assets, and will be testifying on this work next month.
Deepwater Contracting Approach Remains Risky:
While we agree that the case for replacing and upgrading the Coast
Guard's legacy assets is compelling, the contracting strategy the
agency is using to conduct this acquisition carries a number of
inherent risks. This strategy relies on a contractor--called the system
integrator--to identify and deliver the assets needed to meet a set of
mission requirements the Coast Guard has specified, using tiers of
subcontractors to design and build the actual assets. The resulting
program is designed to provide an improved, integrated system of
aircraft, cutters, and unmanned aerial vehicles to be linked
effectively through systems that provide command, control,
communications, computer, intelligence, surveillance, reconnaissance,
and supporting logistics. However, from the outset, we have expressed
concern about the risks involved with this approach because of its
heavy reliance on a steady funding stream over several decades and the
potential lack of competition to keep contracting costs in
line.[Footnote 19]
These risks have had tangible effects, including rising costs and
slipped schedules. Early on in our reviews of the program, we expressed
concern that the Coast Guard risked schedule slippages and cost
escalation if project funding fell short of planned funding levels.
These concerns materialized in the first 2 years of the program, when
appropriated funding was $125 million less than planned for. And,
although funding in the fourth year of the program (fiscal year 2005)
exceeded the Coast Guard's request by about $46 million, the early
shortfalls, according to the Coast Guard, resulted in schedule slippage
and led to increases in the total projected costs for the program. As
of spring 2004, it was estimated that an additional $2.2 billion (in
nominal dollars) would be needed to return the program to its original
implementation schedule.[Footnote 20] In addition, there is clear
evidence that the asset delivery schedule has also slipped. For
example, under Deepwater's original schedule, the first major cutter,
the National Security Cutter was due to be delivered in 2006; the
current schedule indicates that it will now not be delivered until
2007. Similarly, the first nine Maritime Patrol aircraft were due to be
delivered in 2005; now only two will be delivered in 2007.
When we reviewed the Deepwater program again last year, we found that,
on many fronts, the Coast Guard was not doing enough to mitigate these
risks. For example, we found that well into the contract's second year,
key components needed to manage the program and oversee the system
integrator's performance had not been effectively implemented.[Footnote
21] We also reported that the degree to which the program was on track
could not be determined, because the Coast Guard was not updating its
schedule.[Footnote 22] We detailed needed improvements in a number of
areas, shown in table 1.
Table 1: Summary of Deepwater Areas Needing Management Attention as
Reported by GAO:
Area of concern: Key components of management and oversight not
effectively implemented;
Recommendations to the U.S. Coast Guard:
* Improve integrated product teams responsible for managing the program
by providing better training, approving charters, and improving systems
for sharing information between teams.
* Ensure adequate staffing of the Deepwater program.
* Provide field personnel with guidance and training on transitioning
to new Deepwater assets.
* Update the original acquisition schedule to support future budget
requests, starting with the fiscal year 2006 request.
Area of concern: Procedures for ensuring contractor accountability are
inadequate;
Recommendations to the U.S. Coast Guard:
* Develop measurable award fee criteria consistent with guidance from
the Office of Federal Procurement Policy.
* Provide for better input from technical representatives.
* Hold system integrator accountable for improving effectiveness of
integrated project teams.
* Establish a time frame for putting steps in place to measure
contractors' progress toward improving operational effectiveness.
* Establish a baseline for determining whether the acquisition approach
is costing the government more than a traditional asset replacement
approach.
* Establish criteria to determine when to adjust the project baseline
and to document the reasons for change.
Area of concern: Control of future costs through competition remains at
risk because of weak oversight;
Recommendations to the U.S. Coast Guard:
* Develop a comprehensive plan for holding the system integrator
accountable for ensuring adequate competition among suppliers.
* For subcontracts over $5 million awarded by the system integrator to
the two major subcontractors, require notification to the Coast Guard
about decisions to perform the work in- house rather than contracting
it out.
Source: Developed by GAO from our reports, GAO-04-380, and GAO-04-695. .
[End of table]
The Coast Guard agreed with nearly all of our recommendations and has
since made progress in implementing some of them. In most cases,
however, while actions are under way to address these concerns,
management challenges remain that may take some time to fully address.
Here are some examples.
* Strengthening integrated product teams. These teams, the Coast
Guard's primary tool for managing the program and overseeing the
contractor, consist of members from subcontractors and the Coast Guard.
In 2004, we found these teams often lacked training and in several
cases lacked charters defining clearly what they were to do. Most now
have charters setting forth the team's purpose, authority, and
performance goals, among other things, and more training is now being
provided. However, roles and responsibilities in some teams continue to
be unclear, and about one-third of team members have yet to receive
entry-level training.
* Holding the systems integrator accountable for competition. The Coast
Guard has taken a number of steps to improve cost control through
competition. For example, to improve competition among second-tier
suppliers, Coast Guard officials said they will incorporate an
assessment of the steps the system integrator is taking to foster
competition at the major subcontractor level as one of the factors they
take into account in deciding whether to award the first contract
option.
Besides the risks noted in table 1, the program also bears careful
watching because it is still being affected in midcourse by the Coast
Guard's additional homeland security responsibilities. Planning for the
Deepwater program had been set in motion before the terrorist attacks
of September 11, and while the initial program included consideration
of homeland security responsibilities, these responsibilities have
grown considerably in the interim. In March 2004, the Coast Guard
developed a revised mission needs statement (MNS) that indicated that
current specifications for Deepwater assets lacked some functional
capabilities needed to meet mission requirements. The MNS was approved
by DHS in January 2005.
According to the Coast Guard, some of the functional capabilities now
deemed to be required include the following:
* Rotary wing airborne use of force and vertical insertion/vertical
delivery capability;
* Greater speed, a larger flight deck, and automated defensive and
weapons systems for the National Security Cutter and Offshore Patrol
Cutter classes;
* A common operating picture (COP) for the entire Coast Guard (and
maritime ports of a unified Department of Homeland Security COP), an
interoperable network to improve performance in all mission areas, and
a Secure Compartmentalized Information Facility for improved
intelligence capabilities; and:
* Chemical, biological, radiological defense and decontamination
capability for selected Deepwater assets:
While we have not conducted an analysis of the likely cost and schedule
impact of the revised MNS requirements, they undoubtedly will have an
effect on cost and schedule. The Coast Guard's own estimates identified
in the March 2004 MNS show an increased acquisition cost for the
original 20-year acquisition of about $1 billion.[Footnote 23]
According to the Coast Guard, the revised MNS requirements and
associated cost and schedule information have been forwarded to the
Department of Homeland Security (DHS) and the Office of Management and
Budget for approval. As of this time, the implementation plan has not
been approved.
These issues point to the need for continued and careful monitoring of
the Deepwater acquisition program both internally and externally. One
positive development in this regard involves the Coast Guard's efforts
to update the Deepwater acquisition schedule--action that we suggested
in our June 2004 report.[Footnote 24] The original 2002 schedule had
milestone dates showing when work on an asset would begin and when
delivery would be expected, as well as the integrated schedules of
critical linkages between assets, but we found that the Coast Guard was
not maintaining an updated and integrated version of the
schedule.[Footnote 25] As a result, the Coast Guard could not
demonstrate whether individual components and assets were being
integrated and delivered on schedule and in critical sequence. While as
late as October 2004 Deepwater performance monitors likewise expressed
concern that the Coast Guard lacked adequate visibility into the
project's status, the Coast Guard has since taken steps to update the
outdated schedule, and has indicated that it plans to continue to
update the schedule--monthly for internal management purposes, and semi-
annually to support its budget planning efforts. We think this is an
important step toward improving the Coast Guard's management of the
program because it provides a more tangible picture of progress, as
well as a baseline for holding contractors accountable. And, as we have
said in the past on numerous occasions, we will continue to work
closely with the Coast Guard to monitor how risks are mitigated.
Attention Also Needed to Planned Transition and Phase out of Legacy
Assets:
Although the Coast Guard expects to upgrade a number of its legacy
assets for use in the Deepwater program, a substantial portion of its
legacy assets--particularly cutters--are scheduled to be replaced.
Until their replacements are available, however, many of the cutters
will need to be kept in service so that the Coast Guard can continue to
perform its missions. Our visits to field locations and conversations
with Coast Guard operations and maintenance personnel clearly indicated
that the maintenance of these assets is already taking increasingly
more time and effort. For example, air station maintenance personnel
indicated that aircraft are being subjected to additional corrosion-
related problems. To address these problems, air station maintenance
personnel at the locations we visited said they have instituted
additional measures, such as washing and applying fluid film to the
aircraft prior to each deployment. Similar accounts were told by
personnel working on cutters. For example, officers of the 270-foot
cutter Northland told us that because of dated equipment and the
deteriorating condition of the vessel's piping and other subsystems,
crewmembers have to spend increasingly more time and resources while in
port to prepare for the cutter for the next deployment. While we could
not verify these increases in time and resources because of limitations
in the Coast Guard's data, the need for increasing amounts of
maintenance was a message we consistently heard from operations and
maintenance personnel.
The Coast Guard is aware that keeping these legacy assets mission
capable will likely require an additional infusion of funds for some
assets that are scheduled to be replaced. Since 2002, the Coast Guard
has annually created a compendium that consolidates information about
projects needed to maintain and sustain legacy assets. The Coast Guard
uses this compendium as a tool for setting priorities and planning
budgets. The most recent compendium (for fiscal year 2006), lists more
than $1 billion worth of upgrades to the Deepwater legacy assets. The
planned upgrades identified in the compendium that have been approved
and received initial funding account for an estimated $856 million the
Coast Guard anticipates it will need to complete those projects. In
addition, the compendium lists another estimated $409 million in
sustainment projects for the other legacy assets for which funding has
not been requested. If the condition of these assets continues to
deteriorate or replacement assets are further delayed, this additional
funding will likely be needed.
We are not questioning the Coast Guard's decisions about which projects
within the compendium should receive priority. We believe it is
important, however, for the Coast Guard to make Congress aware of the
magnitude of the potential funding needs for sustaining the assets that
are eventually scheduled for replacement. Given the schedule slippages
we have seen and the continued possibility that Deepwater requirements
may yet change, this information will be important to determine a
thoughtful and accurate estimate of future maintenance budget needs.
One planning effort under way within the Coast Guard illustrates the
kinds of considerations that may be needed with regard to these assets.
This effort is being undertaken by the Coast Guard's Pacific Area
Command, which to accomplish its missions, relies on 378-foot cutters-
-the first asset scheduled to be replaced under the Deepwater
program.[Footnote 26] Under the original Deepwater proposal, the final
378-foot cutter was to be decommissioned in 2013, but by 2005, that
date had slipped to 2016. To help keep these cutters running through
2016, Pacific Area Command officials are considering such strategies as
designating some of the 378-foot cutters as capable of performing only
certain missions, rather than attempting to keep them all fully capable
of performing all missions. Even so, the Pacific Area Commander told us
that in order for the 378-foot cutters to be properly maintained until
their replacements become operational; the Coast Guard will have to
provide more focused funding. So far, the Coast Guard's budget plans
and requests do not address this potential need.
Concluding Observations:
Over the past several years, the Coast Guard has been in the vortex of
the nation's response to homeland security concerns. It has been
charged with many new responsibilities related to ports and to marine
security in general, and from the outset, we have often used the word
"daunting" to describe the resulting tasks. In addition, expectations
continue that the Coast Guard will be able to rescue those in distress,
protect the nation's fisheries, keep vital marine highways operating
efficiently, and respond effectively to marine accidents and natural
disasters. Congress has acknowledged that these added responsibilities
carry a price tag and has, through the appropriations process, provided
substantially more money for the job.
As these efforts begin to move into a more mature phase, allowing
lessons that can already be learned to better inform judgments about
the future, it is increasingly important to explore ways to enhance
mission effectiveness while stretching taxpayer dollars for maximum
effectiveness. This is particularly true in the current budget climate.
While we have found the Coast Guard to be a willing participant in such
efforts, the agency's focus on achieving all of its missions can make
it difficult to carry through with the many intermediate steps that may
be needed to keep management problems to a minimum. We think the issues
we have highlighted are potential areas for ongoing congressional
attention, and we will continue to work with the Coast Guard on them.
Madame Chair and Members of the Subcommittee, this completes my
prepared statement. I would be happy to respond to any questions that
you or other Members of the Subcommittee may have at this time.
Contacts and Acknowledgements:
For information about this testimony, please contact Margaret
Wrightson, Director, Homeland Security and Justice Issues, at (415) 904-
2200, or wrightsonm@gao.gov. Other individuals making key contributions
to this testimony include Joel Aldape, Jonathan Bachman, Steve Calvo,
Christopher Conrad, Adam Couvillion, Michele Fejfar, Barbara Guffy,
Geoffrey Hamilton, Christopher Hatscher, Samuel Hinojosa, Dawn Hoff,
Julie Leetch, Dawn Locke, Michele Mackin, Sara Margraf, Stan Stenersen,
and Randall Williamson.
[End of section]
Appendix I: Objectives, Scope and Methodology:
To provide a strategic overview of the President's fiscal year 2006
budget request for the Coast Guard, focusing on several areas of
particular congressional interest, we reviewed the Coast Guard's
Congressional-stage budget and other financial documents provided by
the Coast Guard. We also interviewed Coast Guard headquarters officials
familiar with the Coast Guard's budget and acquisition processes.
To determine the status of the Coast Guard's performance measures and
results, we reviewed Coast Guard performance data and performance
documentation. We also obtained confirmation from knowledgeable Coast
Guard officials that the performance data sources and the systems that
produced them have not changed since our 2003 data reliability
analysis. We determined that Coast Guard performance measures are
sufficiently reliable for the purposes of this testimony.
To determine the status of key outstanding Coast Guard recommendations,
we reviewed past GAO reports and testimonies related to the Coast Guard
and identified the GAO recommendations contained in those reports. In
addition, we consulted with GAO staff who performed the work that
resulted in the recommendations and interviewed Coast Guard
headquarters officials regarding the status of the recommendations--
including any progress made to implement them. We also obtained and
reviewed relevant documents from the Coast Guard.
To assess the Coast Guard's recapitalization efforts, we analyzed data
and condition measures used by the Coast Guard for determining
deepwater legacy assets' condition, reviewed Coast Guard actions to
maintain and upgrade the legacy assets, and assessed the improvements
the Coast Guard is making in its management of the Deepwater
acquisition. We will be following up this testimony with a written
report that will contain detailed information related to the condition
of deepwater legacy assets, and the actions the Coast Guard is taking
to maintain and upgrade them. As part of the follow-on report we will
also provide more detailed information on the Coast Guard's management
of the Deepwater program.
This testimony is based on published GAO reports and briefings, as well
as additional audit work that was conducted in accordance with
generally accepted government auditing standards. We conducted our work
for this testimony between February and March 2005.
[End of section]
Appendix II: Related GAO Products:
Coast Guard: Station Readiness Improving, but Resource Challenges and
Management Concerns Remain (GAO-05-161, January 31, 2005).
Maritime Security: Better Planning Needed to Help Ensure an Effective
Port Security Assessment Program (GAO-04-1062, September 30, 2004).
Maritime Security: Partnering Could Reduce Federal Costs and Facilitate
Implementation of Automatic Vessel Identification System (GAO-04-868,
July 23, 2004).
Maritime Security: Substantial Work Remains to Translate New Planning
Requirements into Effective Port Security (GAO-04-838, June 30, 2004).
Coast Guard: Deepwater Program Acquisition Schedule Update Needed (GAO-
04-695, June 14, 2004).
Coast Guard: Station Spending Requirements Met, but Better Processes
Needed to Track Designated Funds (GAO-04-704, May 28, 2004).
Coast Guard: Key Management and Budget Challenges for Fiscal Year 2005
and Beyond (GAO-04-636T, April 7, 2004).
Coast Guard: Relationship between Resources Used and Results Achieved
Needs to Be Clearer (GAO-04-432, March 22, 2004).
Contract Management: Coast Guard's Deepwater Program Needs Increased
Attention to Management and Contractor Oversight (GAO-04-380, March 9,
2004).
Coast Guard: New Communication System to Support Search and Rescue
Faces Challenges (GAO-03-1111, September 30, 2003).
Maritime Security: Progress Made in Implementing Maritime
Transportation Security Act, but Concerns Remain (GAO-03-1155T,
September 9, 2003).
Coast Guard: Actions Needed to Mitigate Deepwater Project Risks (GAO-
01-659T, May 3, 2001).
Coast Guard: Progress Being Made on Deepwater Project, but Risks Remain
(GAO-01-564, May 2, 2001,).
Coast Guard's Acquisition Management: Deepwater Project's Justification
and Affordability Need to Be Addressed More Thoroughly (GAO/RCED-99-6,
October 26, 1998).
[End of section]
Appendix III: Breakdown of the Coast Guard's Fiscal Year 2006 Request:
In addition to operating expenses and acquisition, construction, and
improvements, the remaining Coast Guard budget accounts include areas
such as environmental compliance and restoration, reserve training and
oil spill recovery. (See table 2 below.)
Table 2: Coast Guard Funding Accounts by Fiscal Year:
Dollars in millions.
Operating expenses;
Fiscal year 2002 actual: $3,757;
Fiscal year 2003 actual: $4,920;
Fiscal year 2004 actual: $4,718;
Fiscal year 2005 enacted: $5,191;
Fiscal year 2006 request: $5,547.
Acquisition, construction, and improvements;
Fiscal year 2002 actual: $702;
Fiscal year 2003 actual: $720;
Fiscal year 2004 actual: $1,007;
Fiscal year 2005 enacted: $1,000;
Fiscal year 2006 request: $1,269.
Environmental compliance and restoration;
Fiscal year 2002 actual: $17;
Fiscal year 2003 actual: $17;
Fiscal year 2004 actual: $17;
Fiscal year 2005 enacted: $17;
Fiscal year 2006 request: $12.
Alteration of bridges[A];
Fiscal year 2002 actual: $15;
Fiscal year 2003 actual: $17;
Fiscal year 2004 actual: $19;
Fiscal year 2005 enacted: $16;
Fiscal year 2006 request: [A].
Retired pay;
Fiscal year 2002 actual: $876;
Fiscal year 2003 actual: $889;
Fiscal year 2004 actual: $1,020;
Fiscal year 2005 enacted: $1,085;
Fiscal year 2006 request: $1,014.
Reserve training;
Fiscal year 2002 actual: $83;
Fiscal year 2003 actual: $86;
Fiscal year 2004 actual: $94;
Fiscal year 2005 enacted: $113;
Fiscal year 2006 request: $119.
Research, development, test and evaluation[B];
Fiscal year 2002 actual: $20;
Fiscal year 2003 actual: $22;
Fiscal year 2004 actual: $15;
Fiscal year 2005 enacted: $19;
Fiscal year 2006 request: [B].
Oil spill recovery;
Fiscal year 2002 actual: $68;
Fiscal year 2003 actual: $75;
Fiscal year 2004 actual: $57;
Fiscal year 2005 enacted: $71;
Fiscal year 2006 request: $121.
Boat safety;
Fiscal year 2002 actual: $64;
Fiscal year 2003 actual: $65;
Fiscal year 2004 actual: $64;
Fiscal year 2005 enacted: $64;
Fiscal year 2006 request: $64.
Source: Coast Guard Fiscal Year 2005 Report.
[A] No funds have been requested for the alteration of bridges account
for fiscal year 2006.
[B] According to the Coast Guard, the research, development, test, and
evaluation account has been consolidated within the Department of
Homeland Security Science and Technology Directorate (S&T) in order to
maximize effective use of research and development resources and
minimize redundancies. S&T will continue its relationship with the
Coast Guard's Research and Development Center in fiscal year 2006 to
ensure that the on-going research needs of the Coast Guard are met.
[End of table]
[End of section]
Appendix IV: Coast Guard Performance Results, Fiscal Years 2001-2004:
Table 3 shows a detailed list of performance results for the eight
programs for which the Coast Guard has fiscal year 2001 through 2004
data.[Footnote 27] Shaded entries in the table indicate those years
that the Coast Guard reported meeting its target; unshaded entries
indicate those years that the Coast Guard reported not meeting its
target. The table also shows that there are three programs for which
performance results are pending and data is not available across the
four-year period. Each program is discussed in more detail below.
Table 3: Performance Targets by Program from Fiscal Year 2001 through
Fiscal Year 2004:
Programs that did not meet their 2004 targets:
Program: Foreign fish enforcement;
Performance measure: Number of detected Exclusive Economic Zone
(EEZ)[B] incursions by foreign fishing vessels;
Performance results by fiscal year: 2001: 212;
(Performance targets not met);
Performance results by fiscal year: 2002: 250;
(Performance targets not met);
Performance results by fiscal year: 2003: 152;
(Performance targets met);
Performance results by fiscal year: 2004: 247;
(Performance targets not met);
Fiscal year 2004 target[A]: > 202.
Program: Living marine resources;
(Performance targets not met);
Performance measure: Percentage of fisherman found in compliance with
regulations;
Performance results by fiscal year: 2001: 98.6%;
(Performance targets met);
Performance results by fiscal year: 2002: 97.3%;
(Performance targets met);
Performance results by fiscal year: 2003: 97.1%;
(Performance targets met);
Performance results by fiscal year: 2004: 96.3%;
(Performance targets not met);
Fiscal year 2004 target[A]: > 97%.
Program: Ice operations; (domestic icebreaking);
Performance measure: Number of waterway closure days;
Performance results by fiscal year: 2001: 7;
(Performance targets met);
Performance results by fiscal year: 2002: 7[C];
(Performance targets not met);
Performance results by fiscal year: 2003: 7;
(Performance targets met);
Performance results by fiscal year: 2004: 4[C];
(Performance targets not met);
Fiscal year 2004 target[A]: > 2[C].
Program: Defense readiness;
Performance measure: Percentage of time units meet combat readiness
level at C-2 level[D];
Performance results by fiscal year: 2001: 67%;
(Performance targets not met);
Performance results by fiscal year: 2002: 70%;
(Performance targets not met);
Performance results by fiscal year: 2003: 78%;
(Performance targets not met);
Performance results by fiscal year: 2004: 76%;
(Performance targets not met);
Fiscal year 2004 target[A]: 100%.
Programs that met their 2004 targets:
Program: Undocumented migrant interdiction;
Performance measure: Percentage of interdicted illegal migrants
entering the United States through maritime means;
Performance results by fiscal year: 2001: 82.5%;
(Performance targets not met);
Performance results by fiscal year: 2002: 88.3%;
(Performance targets met);
Performance results by fiscal year: 2003: 85.3%;
(Performance targets not met);
Performance results by fiscal year: 2004: 87.1%;
(Performance targets met);
Fiscal year 2004 target[A]: > 87%.
Program: Search and rescue;
Performance measure: Percentage of distressed mariners' lives saved;
Performance results by fiscal year: 2001: 84.2%;
(Performance targets not met);
Performance results by fiscal year: 2002: 84.4%;
(Performance targets not met);
Performance results by fiscal year: 2003: 87.7%;
(Performance targets met);
Performance results by fiscal year: 2004: 86.8%;
(Performance targets met);
Fiscal year 2004 target[A]: > 85%.
Program: Marine environmental protection;
Performance measure: Average of oil and chemical spills greater than
100 gallons per 100 million tons shipped;
Performance results by fiscal year: 2001: 40.3;
(Performance targets met);
Performance results by fiscal year: 2002: 35.1;
(Performance targets met);
Performance results by fiscal year: 2003: 29.4;
(Performance targets met);
Performance results by fiscal year: 2004: 22.1;
(Performance targets met);
Fiscal year 2004 target[A]: < 41.
Program: Aids to navigation;
Performance measure: Number of collisions, allisions, and groundings;
Performance results by fiscal year: 2001: 2,215;
(Performance targets met);
Performance results by fiscal year: 2002: 2,098;
(Performance targets met);
Performance results by fiscal year: 2003: 2,000;
(Performance targets met);
Performance results by fiscal year: 2004: 1,876;
(Performance targets met);
Fiscal year 2004 target[A]: < 1,923.
Program: Total targets met for the eight programs with 2001 to 2004
performance results;
Performance results by fiscal year: 2001: 4;
Performance results by fiscal year: 2002: 4;
Performance results by fiscal year: 2003: 6;
Performance results by fiscal year: 2004: 4.
Program: Programs with pending results[E]:
Program: Marine safety;
Performance measure: Average of maritime injuries and fatalities;
Performance results by fiscal year: 2001: 1,651[F];
(Performance targets not met);
Performance results by fiscal year: 2002: 1,332;
(Performance targets not met);
Performance results by fiscal year: 2003: 1,307;
(Performance targets met);
Performance results by fiscal year: 2004: TBD;
Fiscal year 2004 target[A]: < 1,513.
Program: Illegal drug interdiction;
Performance measure: Percentage of cocaine removed out of total
estimated cocaine entering the United States through maritime means[G];
Performance results by fiscal year: 2001: NA[H];
Performance results by fiscal year: 2002: NA;
Performance results by fiscal year: 2003: NA;
Performance results by fiscal year: 2004: TBD;
Fiscal year 2004 target[A]: > 15.
Program: Ports, waterways, and coastal security;
Performance measure: Under development;
Performance results by fiscal year: 2001: NA;
Performance results by fiscal year: 2002: NA;
Performance results by fiscal year: 2003: NA;
Performance results by fiscal year: 2004: NA;
Fiscal year 2004 target[A]: TBD.
Source: GAO analysis of Cost Guard performance data.
Note: NA Not available.
[A] The target level for some performance measures has changed over
time as the Coast Guard seeks to improve its performance. For example,
the target level for aids to navigation has decreased between fiscal
years 2002 and 2004 from 2,098 to 1,923 collisions, allisions, and
groundings. (The Coast Guard defines an allision as a vessel collision
with a fixed object.)
[B] Pursuant to the 1976 Magnuson-Stevens Fishery Conservation and
Management Act, as amended, the EEZ for the U.S. is an area within 200
nautical miles of U.S. shores in which the U.S. has sovereign rights to
natural resources such as harvesting rights to fish stocks. Pub.L.No.
94-265, 90 Stat. 333 (1976).
[C] The target for ice operations noted here is for domestic
icebreaking only, and the target level varies according to the index of
severity of the entire winter. Thus, for those winters designated as
severe, the target is 8 or fewer closure days. For winters designated
as average, the target is 2 or fewer closure days. Because 2002 and
2004 were designated as average winters, the 7 days of closures did not
meet the target.
[D] According to Coast Guard information, the C-2 level is defined as
the level at which each unit possesses the resources and is trained to
undertake most of the wartime missions for which it is organized or
designed.
[E] According to the Coast Guard, performance results for all four
fiscal years (2001 to 2004) are not available for three programs and
are, therefore, not included in the fiscal year 2001 to 2004 figures.
They are: (a) marine safety--fiscal year 2004 performance results will
not be available until spring 2005, when the recreational boating data
is reported; (b) illegal drug interdiction--fiscal year 2004 results
will be calculated and released once flow information for fiscal year
2004 is known--sometime in the spring of 2005; and (c) ports,
waterways, and coastal security--performance measures are still under
development.
[F] The marine safety program did not have target measures in fiscal
years 2001 and 2002; therefore we are unable to indicate whether the
program did or did not meet its targets. However, the Coast Guard
established and met a performance target in fiscal year 2003.
[G] According to the Coast Guard, the illegal drug interdiction measure
and targets were revised to cocaine removal rate beginning in fiscal
year 2004. Consequently, performance results on cocaine removal for
fiscal years 2001, 2002, and 2003 are not available.
[H] According to the Coast Guard, the illegal drug interdiction
performance measure includes only cocaine, as cocaine has an analyzed
flow rate and it constitutes the preponderance of illegal drugs
entering the United States through maritime means (that is, cocaine
shipments are measured in tons, while heroin, marijuana, and other
illegal drugs are measured in pounds).
[End of table]
Programs Not Meeting Targets in Fiscal Year 2004:
* Foreign fish enforcement. The performance results for foreign fish
enforcement, which indicate the number of foreign vessel incursions
into the United States Exclusive Economic Zone (EEZ),[Footnote 28] has
experienced fluctuations from 152 incursions to 250 incursions in the
last 4 years. Such fluctuations can be due to oceanic and climatic
shifts that affect the migratory patterns of important fish stocks, and
limited Coast Guard assets, which the Coast Guard believes are unable
to cover the entire 3.4 million square mile EEZ. We reported previously
that performance measures for foreign fish may not reflect agency
efforts. [Footnote 29] Because EEZ encroachments can be affected by
oceanic and climatic shifts that can cause significant fluctuations in
the migratory patterns of fish, they could increase (or decrease) as
fishermen follow their intended catch across EEZ boundaries. According
to Coast Guard officials, this type of migratory factor can influence
the number of encroachments in a given year. Consequently, the Coast
Guard has added two additional measures to foreign fish that focus on
interception and interdiction. These two submeasures are not reflected
in the Coast Guard's foreign fish performance goal. However, the Coast
Guard believes that they help it to better distinguish between those
incursions that it is able to identify (for example, with a C-130 it
can identify a foreign fishing vessel incursion) and those incursions
that it can actually respond to (for example, 378-foot cutter can
interdict a stray foreign fishing vessel).
* Living marine resources. The performance measure for living marine
resources--defined as the percentage of fishermen complying with
federal regulations--has varied from 96.3 percent to 98.6 percent
between fiscal years 2001 to 2004. According to Coast Guard performance
documents, the agency missed the fiscal year 2004 target because of
poor economic conditions in the U.S. shrimp fisheries, which appear to
have made U.S. fishermen in the Southeast region more willing to
violate regulations in order to maintain operations. However, the Coast
Guard reported that while the number of fishermen in compliance
decreased slightly, its total number of fishery boardings (4,560) was
the highest number of boardings since 2001.
* Ice operations. To meet this performance target, the Coast Guard's
ice operations program must keep winter waterway closures under 8 days
per year for severe winters and under 2 days per year for average
winters. In fiscal year 2004, the Coast Guard reports missing its
target for an average winter with 4 days of waterway closures instead
of 2 or less. The Coast Guard reports that it extended the ice-breaking
season for an additional 10 days and because of worsened winter
conditions within that period, its icebreaking assets were challenged
to provide services in nine critical waterways of the Great Lakes. In
fiscal year 2006, the Coast Guard plans to complete the construction of
the Great Lakes Icebreaker, which will significantly improve
icebreaking on the Great Lakes.
* Defense readiness. Defense readiness, as measured by the percentage
of time units that meet combat readiness status at a C-2
level,[Footnote 30] improved from 67 percent to 78 percent during
fiscal years 2001 to 2003 but decreased to 76 percent in fiscal year
2004 due to a personnel shortage according to the Coast Guard. The
Coast Guard identified its need to supply personnel for the war in Iraq
as the main reason for failing to meet this performance target. To
support fiscal year 2004 efforts in Iraq, the Coast Guard provided
personnel for six patrol boats, one patrol boat support unit, one port
security unit, four law enforcement detachments, as well as two ships
and cutters.
Programs Meeting Fiscal Year 2004 Performance Targets:
* Undocumented migrant interdiction. The Coast Guard reported that it
achieved its fiscal year 2004 performance goal of interdicting or
deterring 87 percent of undocumented aliens attempting to enter the
United States. The undocumented migrant interdiction performance
measure assesses the percentage of migrants interdicted or deterred on
maritime routes.[Footnote 31] In 2004, the Coast Guard identified 4,761
successful arrivals out of an estimated threat of 37,000 migrants. In
fiscal year 2003, the Coast Guard missed this target, interdicting or
deterring 85.3 percent of migrants. Since 2001, the greatest percentage
of migrants deterred or interdicted--88.3 percent--was achieved in
fiscal year 2002.
* Search and rescue. The Coast Guard's performance in this area, as
measured by the percentage of mariners' lives saved from imminent
danger, was 86.8 percent, above the goal of 85 percent for fiscal year
2004. The Coast Guard identified continuing improvements in response
resources and improvements made in commercial vessel and recreational
boating safety as the main reasons for meeting the target.
* Marine environmental protection. The Coast Guard measures the marine
environmental protection target as the 5-year average of oil and
chemical spills greater than 100 gallons per 100 million tons shipped.
Since fiscal year 2001, the reported average number of oil and chemical
spills has dropped from 40.3 to 22.1 in fiscal year 2004. The Coast
Guard identified its prevention, preparedness, and response programs--
including industry partnerships and incentive programs--as reasons for
the drop.
* Aids to navigation. The aids to navigation program performance
measure--which assesses the total number of collisions, allisions, and
groundings--improved to 1,876 in fiscal year 2004, more than a 6
percent improvement over fiscal year 2003's total of 2,000, and below
the target of 1,923. [Footnote 32] (Since the aim is to prevent these
accidents, a lower number than the target represents attaining the
goal). The number has varied from year to year, but has remained below
or at the target in each of the 4 years. The Coast Guard attributes
this success to a multifaceted system of prevention activities,
including radio aids to navigation, communications, vessel traffic
services, dredging, charting, regulations, and licensing.
Programs with Pending Results:
* Marine safety. The marine safety measure, a 5-year average of
passenger and maritime deaths and injuries, decreased from 1,651 in
fiscal year 2001 to 1,307 in fiscal year 2003. The Coast Guard is
currently waiting on the states to supply recreational boating numbers
in order to release their total performance result for calendar year
2004. Coast Guard officials identified ongoing inspection,
investigation, prevention, and response programs, as well as work with
industry, states, and volunteers to promote boating safe operations, as
factors in reducing the number of deaths.
* Illegal drug interdiction. The illegal drug interdiction performance
measure[Footnote 33]--the rate at which the Coast Guard seizes cocaine-
-is currently being modified by the Coast Guard. The Coast Guard
expects their performance results will be available in April 2005.
* Ports, waterways, and coastal security. The Coast Guard is currently
developing a performance measure for ports, waterways, and coastal
security.
FOOTNOTES
[1] The $8.1 billion request for the Coast Guard represents 20 percent
of the Department of Homeland Security's budget request for fiscal year
2006.
[2] This calculation is based on the Coast Guard's discretionary
funding and, for comparison purposes, removes the fiscal year 2005
hurricane supplemental ($33 million) and adds in the anticipated fiscal
year 2006 reimbursements for polar icebreaking ($47.5 million) and
research, development, test and evaluation ($24 million).
[3] Pursuant to the Government Performance and Results Act of 1993
(Pub. L. No. 103-62, 107 Stat. 285 (1993)), performance indicators are
to be used to assess relevant outputs, service levels, and outcomes of
each program activity. Performance targets or goals are defined as a
set of annual goals that establish the agency's intended performance,
stating a particular level of performance in either an absolute value
or as a targeted level of improvement.
[4] For homeland security (called ports, waterways, and coastal
security), performance measures are still under development.
[5] According to the Coast Guard, performance results for fiscal year
2004 are not available for two programs. They are: (1) marine safety--
fiscal year 2004 performance results will not be available until spring
2005, when the recreational boating data is reported; and (2) illegal
drug interdiction--fiscal year 2004 results will be calculated and
released once illegal drug flow information for fiscal year 2004 is
known--sometime in the spring of 2005.
[6] GAO, Coast Guard: Key Management and Budget Challenges for Fiscal
Year 2005 and Beyond, GAO-04-636T (Washington, D.C.: April 7, 2004);
and Coast Guard: Relationship between Resources Used and Results
Achieved Needs to Be Clearer, GAO-04-432 (Washington, D.C.: March 22,
2004).
[7] Pub. L. No. 107-295, 116 Stat. 2064, (2002).
[8] GAO, Maritime Security: Partnering Could Reduce Federal Costs and
Facilitate Implementation of Automatic Vessel Identification System,
GAO-04-868 (Washington, D.C.: July 23, 2004); Maritime Security: Better
Planning Needed to Help Ensure an Effective Port Security Assessment
Program, GAO-04-1062 (Washington, D.C.: September 30, 2004); and
Maritime Security: Substantial Work Remains to Translate New Planning
Requirements into Effective Port Security, GAO-04-838 (Washington,
D.C.: June 30, 2004).
[9] The other instances are (1) The Coast Guard has a contract with the
Port Graham Development Corporation (an Alaskan Native corporation) in
partnership with the Marine Exchange of Alaska to deploy and manage a
network of AIS receivers at 11 locations in Alaska; (2) the Volpe
Transportation Systems Center approached the Coast Guard to offer its
assistance in facilitating partnerships. (This was done in response to
GAO-04-868.) The Coast Guard entered into an agreement with Volpe for
the provision of a variety of support for AIS services, including its
help in setting up AIS capability in areas where partnerships may be of
assistance.
[10] Agency officials reported that they are focusing resources on
making the initial inspection of the nearly 10,000 vessels subject to
MTSA requirements. Coast Guard officials say the agency is using
unscheduled or unannounced spot checks for facilities, and for foreign
vessels. However, we have not assessed the extent to which this has
occurred.
[11] As a result of these delays, $40 million in fiscal year 2005 funds
were reprogrammed within the Coast Guard from Rescue 21 to other
purposes, and an additional $16 million was rescinded.
[12] Pub. L. No. 91-190, 83 Stat. 852 (1970) (environmental impact
statements provision found at 42 U.S.C. § 4332(2)(c)).
[13] To help address these concerns, the Coast Guard has agreed to
support U.S. Fish and Wildlife Service's studies examining what can be
done to prevent birds from hitting the towers or supporting wires. In
response to the Fish and Wildlife Service's concerns, the Coast Guard
has adapted the night lighting on the towers to make the towers more
visible for the birds and has used towers that do not require support
wires.
[14] Sectors will be organized along existing Captain of the Port
zones. The eight established sectors as of March 1, 2005, are in
Boston, Baltimore, San Diego, Honolulu, Miami, Key West, San Juan
(Puerto Rico), and Guam.
[15] GAO,Coast Guard's Acquisition Management: Deepwater Project's
Justification and Affordability Need to Be Addressed More Thoroughly,
GAO/RCED-99-6 (Washington, D.C.: October 26, 1998); GAO, Coast Guard:
Progress Being Made on Deepwater Project, but Risks Remain, GAO-01-564
(Washington, D.C.: May 2, 2001); and GAO, Contract Management: Coast
Guard's Deepwater Program Needs Increased Attention to Management and
Contractor Oversight, GAO-04-380 (Washington, D.C.: March 2004).
[16] For purposes of this testimony, we use the term "legacy assets" to
refer to the existing fleet of deepwater aircraft and cutters. These
legacy assets include the HC-130, HU-25, HH-60, and HH-65 aircraft and
the 378-foot high-endurance cutters, the 210-foot and 270-foot medium-
endurance cutters, and the 110-foot and 123-foot patrol boats. We did
not include the 213-foot Acushnet, the 230-foot Storis, or the 282-foot
Alex Haley as part of our analyses of the deepwater legacy assets
because they are one-of-a-kind vessels.
[17] Current plans call for the Coast Guard to replace all of its
deepwater legacy cutters and patrol boats, beginning with the 378-foot
cutters. The Coast Guard also plans to replace the HU-25 aircraft, but
will upgrade the existing HC-130 aircraft, and HH-60 and HH-65
helicopters to extend their service lives.
[18] GAO-01-564 and GAO-04-636T.
[19] GAO-01-564 and GAO/RCED-99-6.
[20] GAO-04-636T.
[21] GAO-04-380.
[22] GAO, Coast Guard: Deepwater Program Acquisition Schedule Update
Needed, GAO-04-695 (Washington, D.C.: June 14, 2004).
[23] According to the MNS, the original estimated acquisition,
construction, and improvement costs were bracketed at between $7.5
billion to $15 billion in fiscal year 1998 dollars. It then notes that
current Deepwater projections show an approximately $16 billion cost
for a 20-year implementation plan. However, GAO reported in April 2004
that the costs for the Deepwater program would reach $17 billion under
the funding stream that the Coast Guard projected that it would need to
complete the program in 20 years.
[24] GAO-04-695.
[25] Not maintaining a current and integrated schedule lessens the
Coast Guard's ability to monitor the system integrator's performance
and take early action to resolve risks that could become problems
later. Maintaining such a schedule is an industry best practice; the
Department of Defense is required to do so in order to be able to
report any breaches in cost, schedule, or performance targets.
Deepwater performance monitors (the contracting officers' technical
representatives who represent the contracting officer in monitoring the
contractor's performance) have likewise expressed concern that the
Coast Guard lacks adequate visibility to scrutinize schedules for
component-level items which prevents reliable forecasting and risk
analysis.
[26] The Pacific Area Command is responsible for operations covering 74
million square miles, ranging from South America, to the Arctic Circle
and west to the Far East.
[27] According to the Coast Guard, performance results for all four
fiscal years (2001 to 2004) are not available for three programs. They
are: (a) marine safety--fiscal year 2004 performance results will not
be available until spring 2005, when the recreational boating data is
reported; (b) illegal drug interdiction--fiscal year 2004 results will
be calculated and released once illegal drug flow information for
fiscal year 2004 is known--sometime in the spring of 2005; and (c)
ports, waterways, and coastal security--performance measures are still
under development.
[28] Pursuant to the 1976 Magnuson-Stevens Fishery Conservation and
Management Act, as amended, the EEZ for the U.S. is an area within 200
nautical miles of U.S. shores in which the U.S. has sovereign rights to
natural resources such as harvesting rights to fish stocks. Pub.L.No.
94-265, 90 Stat. 333 (1976).
[29] GAO, Coast Guard: Relationship between Resources Used and Results
Achieved Needs to Be Clearer, GAO-04-432 (Washington, D.C.: March 22,
2004).
[30] According to Coast Guard information, the C-2 level is defined as
the level at which a unit possesses the resources and is trained to
undertake most of the wartime missions for which it is organized or
designed.
[31] According to Coast Guard officials, the undocumented migrant
interdiction performance target was set at 87 percent based on a study
done to incorporate deterrence as a measure of Coast Guard performance.
[32] The Coast Guard defines allisions as vessel collisions with fixed
objects, as distinguished from collisions, which are vessel collisions
with movable objects.
[33] The illegal drug interdiction performance measure includes only
cocaine, because cocaine has an analyzed flow rate and is the
preponderant illegal drug.
