Coast Guard
Observations on the Fiscal Year 2008 Budget, Performance, Reorganization, and Related Challenges Gao ID: GAO-07-489T April 18, 2007The U. S. Coast Guard is a multimission agency responsible for maritime safety, security, and stewardship. It performs these missions, relating to homeland security and non-homeland security in U.S. ports and inland waterways, along the coasts, and on international waters. The President's budget request, including the request for the Coast Guard, was transmitted to Congress on February 5, 2007. This testimony, which is based on current and past GAO work, synthesizes the results of this work as it pertains to the following: budget requests and performance goals, organizational changes and related management initiatives, current acquisition efforts and challenges, and challenges related to performing traditional legacy missions.
The Coast Guard's fiscal year 2008 budget request totals $8.7 billion, an increase of 3 percent over the enacted budget for fiscal year 2007 and a slowing of the agency's budget increases over the past 3 fiscal years. The Coast Guard expects to meet its performance goals in 6 of 11 mission areas in fiscal year 2006, down from 8 in 2005. Trends indicate increased homeland security activities have not prevented meeting non-homeland security goals. Two new reorganization efforts are under way. One creates a single command for all specialized deployable units, such as those for responding to pollution or terrorist incidents. However, experience with an effort to reorganize field units suggests there may be challenges in such matters as merging different operating approaches and addressing resource issues. The other effort merges the Coast Guard's various acquisition management efforts under a single Chief Acquisition Officer. The reorganization of acquisition management is in part a response to past troubled acquisition efforts. This change in the acquisition structure is too new to assess. Current major acquisitions include Deepwater for cutters and aircraft, the Rescue 21 communication system, and the National Automatic Identification System for vessel tracking. Deepwater and Rescue 21 have had schedule delays and performance reductions in the past, but the Coast Guard has been taking actions to improve oversight. Installation of equipment for the first phase of the National Automatic Identification System is under way, but the Coast Guard is still determining which types of vessels will have to participate. All three programs have also accumulated sizeable carryover balances of unspent moneys from previous years. Competing funding priorities have placed aging polar icebreakers and aids-to-navigation assets at risk. Many aids-to-navigation vessels are near the end of their service lives. The Coast Guard is exploring alternatives for replacement or extending their service. Similarly, high maintenance costs prompted the Coast Guard to take one of two Antarctic icebreakers out of service, increasing reliance on the remaining one.
GAO-07-489T, Coast Guard: Observations on the Fiscal Year 2008 Budget, Performance, Reorganization, and Related Challenges
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Statement for the Record to the Subcommittee on Oceans, Atmosphere,
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 2:30 p.m. EDT:
Wednesday, April 18, 2007:
Coast Guard:
Observations on the Fiscal Year 2008 Budget, Performance,
Reorganization, and Related Challenges:
Statement for the Record by Stephen L. Caldwell,
Acting Director:
Homeland Security and Justice Issues:
GAO-07-489T:
GAO Highlights:
Highlights of GAO-07-489T, a statement for the record to the
Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard,
Committee on Commerce, Science, and Transportation, U.S. Senate
Why GAO Did This Study:
The U. S. Coast Guard is a multimission agency responsible for maritime
safety, security, and stewardship. It performs these missions, relating
to homeland security and non-homeland security in U.S. ports and inland
waterways, along the coasts, and on international waters.
The President‘s budget request, including the request for the Coast
Guard, was transmitted to Congress on February 5, 2007.
This testimony, which is based on current and past GAO work,
synthesizes the results of this work as it pertains to the following:
* budget requests and performance goals,
* organizational changes and related management initiatives,
* current acquisition efforts and challenges, and
* challenges related to performing traditional legacy missions.
What GAO Found:
The Coast Guard‘s fiscal year 2008 budget request totals $8.7 billion,
an increase of 3 percent over the enacted budget for fiscal year 2007
and a slowing of the agency‘s budget increases over the past 3 fiscal
years. The Coast Guard expects to meet its performance goals in 6 of 11
mission areas in fiscal year 2006, down from 8 in 2005. Trends indicate
increased homeland security activities have not prevented meeting non-
homeland security goals. Two new reorganization efforts are under way.
One creates a single command for all specialized deployable units, such
as those for responding to pollution or terrorist incidents. However,
experience with an effort to reorganize field units suggests there may
be challenges in such matters as merging different operating approaches
and addressing resource issues. The other effort merges the Coast
Guard‘s various acquisition management efforts under a single Chief
Acquisition Officer. The reorganization of acquisition management is in
part a response to past troubled acquisition efforts. This change in
the acquisition structure is too new to assess. Current major
acquisitions include Deepwater for cutters and aircraft, the Rescue 21
communication system, and the National Automatic Identification System
for vessel tracking. Deepwater and Rescue 21 have had schedule delays
and performance reductions in the past, but the Coast Guard has been
taking actions to improve oversight. Installation of equipment for the
first phase of the National Automatic Identification System is under
way, but the Coast Guard is still determining which types of vessels
will have to participate. All three programs have also accumulated
sizeable carryover balances of unspent moneys from previous years.
Competing funding priorities have placed aging polar icebreakers and
aids-to-navigation assets at risk. Many aids-to-navigation vessels are
near the end of their service lives. The Coast Guard is exploring
alternatives for replacement or extending their service. Similarly,
high maintenance costs prompted the Coast Guard to take one of two
Antarctic icebreakers out of service, increasing reliance on the
remaining one.
Figure: Competing priorities have reduced funds to maintain or replace
aging Coast Guard assets, such as aids-navigation vessels and polar
icebreakers:
[See PDF for Image]
Source: Coast Guard.
[End of figure]
What GAO Recommends:
While this statement makes no recommendations, in the past GAO has made
a number of recommendations on issues covered in this statement. The
Coast Guard is in various stages of implementing these recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-489T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Stephen Caldwell at (202)
512-9610 or caldwells@gao.gov.
[End of section]
Madame Chair and Members of the Subcommittee:
I am pleased to provide this statement for the record about the
President's fiscal year 2008 budget request for the Coast Guard. As you
know, the Coast Guard has grown significantly since September 11, 2001,
to help meet its responsibility to protect America's ports, waterways,
and waterside facilities from terrorist attacks while 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. While the Coast Guard budget request continues to
increase in fiscal 2008, it also shows shifts in direction. By placing
less emphasis on acquiring new assets and reorganizing some of its
functional areas, the Coast Guard is attempting to rectify some of its
management concerns of the past while better preparing itself for the
challenges of the future.
My statement today provides:
² an overview of the Coast Guard's fiscal year 2008 budget request and
key performance indicators,
² a discussion of various organizational changes and related management
initiatives,
² a status update on some current acquisition efforts and challenges,
and:
² a look at additional challenges related to traditional legacy
missions.
My statement is based in part on prior GAO work focusing on the Coast
Guard's programmatic and management initiatives (a listing of related
reports is included at the end of my statement). Additionally, we
conducted interviews with headquarters, Pacific Area, and Sector San
Francisco personnel, and reviewed budget, performance, and acquisition
documents. The scope of our work did not include evaluating whether the
proposed funding levels are commensurate with the Coast Guard's stated
needs. Our scope was limited due to the short time available between
the release of the President's fiscal year 2008 budget request and the
hearing date of mid-April. All work for this statement was conducted in
accordance with generally accepted government auditing standards
between February and March 2007.
Summary:
The Coast Guard's fiscal year 2008 budget request is moderately higher
than its fiscal year 2007 budget, but it increased at a lower rate,
mainly reflecting a slowing in requests for funding acquisition,
construction, and improvement (AC&I) projects. The 2008 overall budget
request of $8.73 billion is approximately 3 percent higher than the
2007 enacted budget, but unlike in prior years, the AC&I budget
decreased by 19 percent. According to Coast Guard officials, this
decrease is in part due to some recognized problems with ongoing
acquisition programs and the desire to strengthen operating
capabilities, including contract and acquisition oversight. While the
AC&I budget request is down, a substantial pool of unspent funds
appropriated for acquisition projects in previous years remains
available to the Coast Guard. Current unobligated balances in these
projects total $1.96 billion, of which $1.63 billion is associated with
Integrated Deepwater System acquisitions. The Coast Guard expects to
meet its performance goals in 6 of the 11 mission areas in fiscal 2006
(as compared to meeting performance goals in 8 of 11 missions in fiscal
2005). Performance trends over the past 5 years also show that
increased homeland security activities have not prevented the Coast
Guard from meeting its non-homeland security mission goals. The Coast
Guard continues to develop ways to better understand the links between
resources it expends and the results it achieves.
The budget request reflects a continued emphasis on reorganization
efforts, all of which carry ongoing challenges. These efforts began
with the combination of marine safety offices and Coast Guard groups
into sectors in 2006. While the Coast Guard has completed its
organizational changes to place local units under sector commands, not
all of the units have been able to move to a single location, a key
ingredient in bringing about the improved integration expected from the
realignment. Funding was not provided in the fiscal year 2008 budget to
complete the desired colocation. A reorganization effort that is to
begin this year is designed to bring the different mobile deployable
units responsible for such actions as pollution response, law
enforcement, port security, and counterterrorism under a single command
rather reporting to three different authorities. The Coast Guard hopes
to gain more effective management, oversight, and coordination of these
deployable forces. Challenges here include addressing "buy-in" and
related issues from units affected by the changes, ensuring that
mission performance of sectors that previously made use of these units
for everyday activities is not compromised, and effectively
establishing and operating the new centralized command. A third
organizational effort to improve Coast Guard operations--in this case,
to improve its troubled acquisition contract management--is the merging
of the various acquisition management efforts under a Chief
Acquisitions Officer. One challenge in making this move effective is
the need to build a more robust cadre of acquisition management
professionals.
Three major Coast Guard acquisition projects are making progress at
varying rates, but challenges remain for all three in the future. The
record for Deepwater has been mixed. Seven of 10 asset classes being
acquired are on or ahead of schedule. Three classes, however, are
behind schedule for various reasons and several factors add to the
uncertainty about the delivery schedule of other Deepwater assets.
Contract management issues, accountability of the contractor, and cost
control through competition have been recurring challenges for the
Coast Guard. Separate from Deepwater, the National Automatic
Identification System (NAIS), a program designed to allow the Coast
Guard to monitor and track vessels as far as 2,000 nautical miles off
the U.S. coast, is under way, and infrastructure for the first phase of
the system is currently being installed. The Coast Guard is considering
whether to require more types of vessels to install and operate
tracking equipment--an issue that affects the extent to which the
system will provide information on the location of vessels of interest.
The Coast Guard's timeline for achieving full operating capability for
its search and rescue communications system, Rescue 21, was delayed
from 2006 to 2011, and the estimated total acquisition cost increased
from 1999 to 2005, but according to Coast Guard officials, many of the
issues that led to these problems are being addressed. Coast Guard
acquisition officials said they are providing more oversight to the
contractor after we reported on contract management shortcomings.
According to Coast Guard officials, the contracts that would set
specific schedules and budgets for the last 25 regions in which the
system will be installed have yet to be signed. Also, there has been a
reduction in promised improvements to limit communications gaps;
originally, Rescue 21 was intended to limit communications gaps to 2
percent, and that target was reduced to less than 10 percent.
Some of the Coast Guard's non-homeland security missions are facing
challenges based on competition for resources with homeland security-
oriented funding needs. Many domestic icebreaking and aids-to-
navigation vessels are also reaching the end of their designed service
lives. While these vessels have been able to meet mission goals to
date, without major rehabilitation or replacement, their ability to
carry out their designated missions will likely decline in the future.
The Coast Guard is currently examining options for addressing this
issue. Similarly, the inability to obtain needed maintenance funding
has led the Coast Guard to take one Polar-class icebreaker out of
service to keep its remaining aging Polar-class vessel, the Polar Sea,
operational. With only one icebreaker capable of keeping access to
Antarctica open, there is a greater possibility that mechanical
problems or other maintenance issues could affect this mission.
Background:
The U.S. Coast Guard is a multimission, maritime military service
within the Department of Homeland Security (DHS). To accomplish its
responsibilities, the Coast Guard is organized into two major commands
that are responsible for overall mission execution--one in the Pacific
area and the other in the Atlantic area. These commands are divided
into 9 districts, which in turn are organized into 35 sectors that
unify command and control of field units and resources, such as
multimission stations and patrol boats. In fiscal year 2005, the Coast
Guard had over 46,000 full-time positions--about 39,000 military and
7,000 civilians. In addition, the agency had about 8,100 reservists who
support the national military strategy or provide additional
operational support and surge capacity during times of emergency, such
as natural disasters. Furthermore, the Coast Guard also had about
31,000 volunteer auxiliary personnel help with a wide array of
activities, ranging from search and rescue to boating safety education.
The Coast Guard has responsibilities that fall under two broad
missions--homeland security and non-homeland security. The Coast Guard
responsibilities are further divided into 11 programs, as shown in
table 1.
Table 1: Homeland Security and Non-Homeland Security Programs by
Mission Area:
Homeland security missions.
Mission and program: Ports, waterways, and coastal security;
Activities and functions of each program: Conducting harbor patrols,
vulnerability assessments, intelligence gathering and analysis, and
other activities to prevent terrorist attacks and minimize the damage
from attacks that occur.
Mission and program: Undocumented migrant interdiction;
Activities and functions of each program: Deploying cutters and
aircraft to reduce the flow of undocumented migrants entering the
United States by maritime routes.
Mission and program: Defense readiness;
Activities and functions of each program: Participating with the
Department of Defense (DOD) in global military operations, deploying
cutters and other boats in and around harbors to protect DOD force
mobilization operations.
Non-homeland security missions.
Mission and program: Search and rescue;
Activities and functions of each program: Operating multimission
stations and a national distress and response communication system,
conducting search and rescue operations for mariners in distress.
Mission and program: Living marine resources;
Activities and functions of each program: Enforcing domestic fishing
laws and regulations through inspections and fishery patrols.
Mission and program: Aids to navigation;
Activities and functions of each program: Managing U.S. waterways and
providing a safe, efficient, and navigable marine transportation
system, maintaining the extensive system of navigation aids, monitoring
marine traffic through vessel traffic service centers.
Mission and program: Ice operations;
Activities and functions of each program: Conducting polar operations
to facilitate the movement of critical goods and personnel in support
of scientific and national security activity, conducting domestic
icebreaking operations to facilitate year-round commerce, conducting
international ice operations to track icebergs below the 48th north
latitude.
Mission and program: Marine environmental protection;
Activities and functions of each program: Preventing and responding to
marine oil and chemical spills, preventing the illegal dumping of
plastics and garbage in U.S. waters, preventing biological invasions by
aquatic nuisance species.
Mission and program: Marine safety;
Activities and functions of each program: Setting standards and
conducting vessel inspections to better ensure the safety of passengers
and crew aboard commercial vessels, partnering with states and boating
safety organizations to reduce recreational boating deaths.
Mission and program: Illegal drug interdiction;
Activities and functions of each program: Deploying cutters and
aircraft in high drug- trafficking areas and gathering intelligence to
reduce the flow of illegal drugs through maritime transit routes.
Mission and program: Other law enforcement (foreign fish enforcement);
Activities and functions of each program: Protecting U.S. fishing
grounds by ensuring that foreign fishermen do not illegally harvest
U.S. fish stocks.
Source: Coast Guard.
Note: The Coast Guard's homeland security and non-homeland security
missions are delineated in section 888 of the Homeland Security Act of
2002 (P. L. 107-296, 116 Stat. 2135, 2249 (2002)). Starting with the
fiscal year 2007 budget, however, the Office of Management and Budget
(OMB) designated the Coast Guard's drug interdiction and other law
enforcement as non-homeland security missions for budgetary purposes.
[End of table]
For these 11 programs, the Coast Guard has developed performance
measure to communicate agency performance and provide information for
the budgeting process to Congress, other policymakers, and taxpayers.
The Coast Guard's performance measures are published in various
documents, including the Coast Guard's fiscal year Budget-in-Brief. The
Coast Guard's Budget-in-Brief reports performance information to assess
the effectiveness of the agency's performance as well as a summary of
the agency's most recent budget request. This, and other documents,
reports the performance measures for each of the Coast Guard's
programs, as well as descriptions of the measures and explanations of
performance results.
To continue executing its missions, the Coast Guard has programs to
acquire a number of assets such as vessels, aircraft, and command,
control, communications, computer, intelligence surveillance, and
reconnaissance (C4ISR) systems. The Coast Guard's Deepwater program is
a 25-year, $24 billion effort to upgrade or replace existing vessels
and aircraft in order to carry out its missions along our coastlines
and farther out at sea. The program is eventually to include 10 major
classes of new or upgraded vessels and aircraft. The Coast Guard also
has an acquisition program called the National Automatic Identification
System to identify and track vessels bound for or within U.S. waters.
Another acquisition program is called Rescue 21, a program to replace
the Coast Guard's 30-year-old search and rescue communications systems.
Rescue 21 was to be used not only for search and rescue, but to support
other Coast Guard missions, including those involving homeland
security.
Budget Places More Emphasis on Operational Expenses; Overall
Performance Trends Remain Positive:
The Coast Guard's fiscal year 2008 budget request reflects a smaller
increase than in years past. Requests for new capital spending are
down, as the agency slows the pace of new acquisitions for Deepwater
and other capital projects. Instead, several of the budget initiatives
being emphasized reflect a reorganization of internal operations and
support command infrastructure. Although the Coast Guard met fewer
performance targets than last year, overall performance trends for most
mission programs remain positive. That is, many of the measures that
Coast Guard uses to evaluate performance have improved since last year,
even though the agency did not meet as many of its performance targets
in 2006 as in the year before.
Overall Budget Request Is 3.3 Percent Higher than Previous Year's:
The Coast Guard's budget request in fiscal year 2008 is $8.73 billion,
approximately $275 million, or 3.3 percent, more than in fiscal year
2007 (see fig. 1).[Footnote 1] About $5.9 billion, or approximately 68
percent, is for operating expenditures (OE). This funding supports its
11 statutorily identified mission programs; increases in cost of
living, fuel, and maintenance costs; and previous administration and
congressional initiatives. The greatest change from the previous year
is in the AC&I request, which at $949 million reflects about a 19
percent decrease from fiscal year 2007. According to Coast Guard
officials, no new appropriations are requested in fiscal year 2008 for
several Deepwater assets until business case reviews can be completed
to assess the viability of technology and contracting oversight. The
remaining part of the request consists primarily of funds requested for
retiree pay and health care fund contributions. If the Coast Guard's
total budget request is granted, overall funding will have increased by
over 55 percent since 2002, an increase of $3.1 billion.
Figure 1: Coast Guard Budget from Fiscal Year 2002 to Fiscal Year 2008:
[See PDF for Image]
Source: GAO analysis of Coast Guard data.
Note: The Coast Guard's budget consists of discretionary and mandatory
funding line items. The operating expenses and acquisition,
construction, and improvements line items make up the biggest portion
of discretionary funding. Other line items in the Coast Guard's
discretionary budget include environmental compliance and restoration,
health care contributions, research and development, and reserve
training costs. Retiree pay is the largest item the Coast Guard's
mandatory funding budget, and the Coast Guard is requesting $1.18
billion for retiree pay in 2008. Other mandatory funding line items
include boating safety, oil spill liability trust fund, and the gift
fund.
[End of figure]
The Coast Guard's budget request for homeland security missions
represents approximately 35 percent of the overall budget.[Footnote 2]
Figure 2 illustrates the percentage of funding requested for homeland
security versus non-homeland security funding, and figure 3 shows the
funding levels by each mission program.
Figure 2: Amount (in millions of dollars) and Percentage of Homeland
Security versus Non-Homeland Security Funding:
[See PDF for Image]
Source: GAO analysis of Coast Guard data.
[End of figure]
Figure 3: Coast Guard Fiscal Year 2008 Budget Request by Mission
Program:
[See PDF for Image]
Source: GAO analysis of Coast Guard data.
[End of figure]
Budget Includes Reallocations to Match Reorganization:
Two key budget initiatives--both reallocations rather than increases--
reflect reorganization efforts. First, a major budget reallocation
within the operating expenditures category establishes a single unified
command for the agency's deployable specialized forces. These are the
Coast Guard's response teams that can deploy wherever needed for
natural disasters, terrorism incidents, and other concerns. According
to senior Coast Guard officials, this initiative entails a onetime,
budget-neutral reallocation of $132.7 million from the Atlantic and
Pacific Area Commands to a new deployable operations command, which
will be located in Ballston, Virginia. No new funds have been requested
for this initiative. This initiative is discussed in more detail later
in this testimony. The second reallocation involves an $80.5 million
transfer from AC&I into the operating expense appropriation. The
operational aspect of this reallocation is associated with creating a
new consolidated acquisition function, also discussed in further detail
below. Coast Guard officials said this reallocation consolidates all
personnel funding into the operating expense appropriation and enables
the Coast Guard to manage one personnel system for the entire agency.
They said although this reallocation is budget neutral in 2008, future
budget requests may include financial incentives that will enable the
Coast Guard to develop a more robust cadre of acquisition
professionals.
Acquisition Budget Request Declines, but Substantial Unobligated
Balances Are Also Available:
The 19 percent decrease in fiscal year 2008 for AC&I reflects a slowing
in the pace of acquisition efforts, which, according to Coast Guard
officials, is an attempt to address technology issues and contracting
oversight associated with Deepwater programs such as the Vertical
Unmanned Aerial Vehicle and Fast Response Cutter. The Coast Guard also
recognizes that it is carrying significant unobligated balances for a
number of its acquisition projects. These balances reflect money
appropriated but not yet spent for projects included in previous years'
budgets. During our work for this testimony, we reviewed budget data
and Coast Guard documentation showing the current status of the
agency's unobligated balances. We found, for example, that the current
unobligated balances total $1.96 billion for all acquisition projects.
The Deepwater acquisition alone has $1.6 billion in total unobligated
balances, which is nearly double the Coast Guard's fiscal year 2008
request for the Deepwater project. Other acquisition programs, such as
the Nationwide Automatic Identification System and Rescue 21, also have
unobligated balances, but these are considerably lower (see table 2).
The unobligated balance for Rescue 21, for example, is $30.5 million.
Table 2: Total Unobligated Balances for Selected Acquisition Projects
(dollars in millions):
Acquisition project: Integrated Deepwater Systems;
Fiscal year 2008 request: $836.9;
Unobligated balance: $1,632.6.
Acquisition project: Shore Facilities and Aids to Navigation;
Fiscal year 2008 request: 37.9;
Unobligated balance: 156.8.
Acquisition project: Nationwide Automatic Identification System;
Fiscal year 2008 request: 12.0;
Unobligated balance: 36.0.
Acquisition project: Rescue 21;
Fiscal year 2008 request: 80.8;
Unobligated balance: 30.5.
Acquisition project: Vessels and Critical Infrastructure Projects;
Fiscal year 2008 request: 9.2;
Unobligated balance: 30.3.
Source: GAO analysis of Coast Guard data.
[End of table]
These unobligated balances have accumulated for a variety of reasons as
the Coast Guard has found itself unable to spend previous-year
acquisition appropriations. For example, we and others have documented
technical design issues involving the Coast Guard's 123-foot patrol
boat and the Fast Response Cutter. These problems have led to major
delays in some programs and outright cancellations in others. We asked
Coast Guard officials about their plans to spend these unobligated
balances either in fiscal year 2008 or beyond, but at this point they
were unable to provide us with detailed plans for doing so. To the
agency's credit, steps have been taken to address the issue, including
reporting quarterly acquisition spending levels. Since these
unobligated balances represent a significant portion of the Coast
Guard's entire budget, the degree to which the Coast Guard spends these
balances in fiscal year 2008 could have a substantial impact on the
overall level of capital spending for the year.
According to senior Coast Guard officials, each acquisition project is
now receiving more scrutiny and oversight of how previous funds are
spent. The Coast Guard is not requesting additional funds for the
Offshore Patrol Cutter, Fast Response Cutter, and Vertical Unmanned
Aerial Vehicle in the fiscal year 2008 budget request until business
case reviews are completed to assess the viability of the technology
and contracting oversight.
Performance Trends Generally Positive and Non-Homeland Security
Measures Generally Sound:
Despite the fact that Coast Guard met fewer performance targets than
last year, overall performance trends for most mission programs remain
positive. Performance in 7 of 11 Coast Guard mission areas increased in
the last year, but the Coast Guard also set performance targets at a
higher level than it did last year. Coast Guard's performance did not
improve sufficiently for the Coast Guard to meet as many of its higher
performance targets in 2006 as it did in 2005. In fiscal year 2006, the
Coast Guard reported that 5 of its 11 programs met or exceeded program
performance targets. In addition, agency officials reported that the
Coast Guard expected to meet the target for 1 additional program when
results become available in August 2007, potentially bringing the total
met targets to 6 out of 11 (see fig. 4). In comparison, last year we
reported that in fiscal year 2005, Coast Guard met 8 out of 11 targets.
In fiscal year 2006, the agency narrowly missed performance targets for
3 programs--Search and Rescue, Living Marine Resources, and Aids to
Navigation. In fiscal year 2005, it missed only 1 of these 3, Living
Marine Resources. The Coast Guard more widely missed performance
targets for 2 programs, Defense Readiness and Marine Safety. In fiscal
year 2005, Coast Guard met its Marine Safety target, but missed on
Defense Readiness. See appendix I for more information on Coast Guard
performance results.
Figure 4: Number of Performance Targets the Coast Guard Met, or
Anticipates Meeting, for the Coast Guard's 11 Programs for Fiscal Years
2002 through 2006:
[See PDF for Image]
Source: GAO analysis of Coast Guard data.
[End of figure]
Congressional committees have previously expressed concern that Coast
Guard's shift in priorities and focus toward homeland security missions
following the events of September 11, 2001, may have affected the
agency's ability to successfully perform its non-homeland security
missions. However, the Coast Guard's performance on its non-homeland
security indicators has not changed substantially over the past 5
years.
This past year, we also completed an examination of some of the
performance indicators themselves.[Footnote 3] We found that while the
Coast Guard's non-homeland security measures are generally sound and
the data used to collect them are generally reliable, there are
challenges associated with using performance measures to link resources
to results. Such challenges include comprehensiveness (that is, using a
single measure per mission area may not convey complete information
about overall performance) and external factors outside agency control,
(such as weather conditions, which can affect the amount of ice that
needs to be cleared or the number of mariners who must be rescued). The
Coast Guard continues to work on these measures through such efforts as
the following:
* Standardized reporting. The Coast Guard is currently developing a way
to standardize the names and definitions for all Coast Guard activities
across the agency, creating more consistent data collection throughout
the agency.
* Measurement readiness. The Coast Guard is developing a tool to track
the agency's readiness capabilities with up-to-date information on
resource levels at each Coast Guard unit as well as the certification
and skills of all Coast Guard uniformed personnel.
* Framework for analyzing risk, readiness, and performance. The Coast
Guard is developing a model for examining the links among risk,
readiness management, and agency performance. This model is intended to
help the Coast Guard better understand why events and outcomes occur,
and how these events and outcomes are related to resources.
While the Coast Guard appears to be moving in the right direction and
is about done with some of these efforts, it remains too soon to
determine how effective the Coast Guard's larger efforts will be at
clearly linking resources to performance results. These initiatives are
not expected to be fully implemented until 2010.[Footnote 4]
Coast Guard Continues to Make Organizational Changes Designed to
Improve Operational Effectiveness and Resource Management:
The 2008 budget request reflects a multiyear effort to reorganize the
Coast Guard's command and control and mission support structures. Three
efforts are of note here--reorganizing shore-based forces into sector
commands, placing all deployable specialized forces under a single
nationwide command, and consolidating acquisitions management programs.
Each of these efforts faces challenges that merit close attention.
Further Action Needed to Ensure Operational Benefits from Sector
Reorganization:
As we reported for the last 2 years, the Coast Guard has implemented a
new field command structure that is designed to unify previously
disparate Coast Guard units, such as air stations and marine safety
offices, into 35 different integrated commands, called sectors. At each
of these sectors, the Coast Guard has placed management and operational
control of these units and their associated resources under the same
commanding officer. Coast Guard officials told us that this change
helped their planning and resource allocation efforts. For instance,
Coast Guard field officials told us the sector command structure has
been valuable in helping to meet new homeland security
responsibilities, and in facilitating their ability to manage incidents
in close coordination with other federal, state, and local agencies.
Our follow-up work found, however, that work remains to ensure the
Coast Guard is able to maximize the potential benefits of sector
realignment. In particular, Coast Guard officials reported that some
sectors had yet to colocate their vessel tracking system (VTS) centers
with the rest of their operational command centers. According to field
officials, the lack of colocation has hindered communications between
staff that formerly were from different parts of the agency.
According to Coast Guard officials, competing acquisition priorities
are limiting the progress in obtaining funding needed to colocate these
facilities. The fiscal year 2008 budget does not provide funds to
colocate the VTS centers and command centers. Coast Guard headquarters
officials told us they would work to address this challenge as part of
the capital investment plan to build interagency operational centers
for port security, as required under the SAFE Port Act, but they had
not yet developed specific plans, timelines, and cost
estimates.[Footnote 5]
Unified Command Structure for Deployable Forces Is Being Developed:
The Coast Guard is planning to reorganize its deployable specialized
forces under a single unified command, called the Deployable Operations
Group (DOG). This change is reportedly budget neutral in the fiscal
year 2008 request, but it bears attention for operational effectiveness
reasons. According to Coast Guard officials, the agency is making this
change based on lessons learned from the federal response to Hurricane
Katrina. They said the response highlighted the need to improve
effectiveness of day-to-day operations and to enhance flexibility and
interoperability of forces responding to security threats and natural
disasters. Currently, there are five different types of Coast Guard
specialized forces, totaling about 2,500 personnel. Their roles and
missions vary widely, ranging from conducting antiterrorism operations
to conducting environmental response and cleanup operations (see table
3).
Table 3: Coast Guard Deployable Specialized Forces, Mission Area and
Primary Operational Activity, and Force Size:
Specialized force: National strike force (NSF);
Mission area and primary operational activities: Marine environmental
protection;
* Domestic and international response for oil spills;
* Hazardous material cleanup;
* Chemical, biological, and radiological response;
Force size: 3 strike teams / 328 personnel.
Specialized force: Tactical law enforcement teams (TACLET);
Mission area and primary operational activities: Law enforcement;
* Maritime interception operations;
Force size: 2 units / 180 personnel.
Specialized force: Port security units (PSU);
Mission area and primary operational activities: Defense readiness;
* Expeditionary port security;
Force size: 8 units / 1,144 personnel.
Specialized force: Maritime safety and security teams (MSST);
Mission area and primary operational activities: Ports, waterways, and
coastal security;
* Domestic port security;
* Antiterrorism;
Force size: 12 units / 924 personnel.
Specialized force: Maritime security response team (MSRT);
Mission area and primary operational activities: Ports, waterways, and
coastal security; Counterterrorism;
Force size: 1 unit / 208 personnel.
Source: Coast Guard.
[End of table]
The Coast Guard's existing structure divides operational control of
specialized forces into three different command authorities--
headquarters, Pacific Area, and Atlantic Area. Under the planned
realignment, these forces would be available under a single operational
command, with the expectation of more effective resource management,
oversight, and coordination.[Footnote 6] The Coast Guard plans to
establish operating capability for this unified approach by July 20,
2007, with an initial command center located in Ballston, Virginia.
Officials told us they were well under way in planning for this
reorganization. Officials expect about 100 staff will be assigned to
the center when it reaches its initial operating capability, growing to
about 150 personnel once the command structure is completed. According
to officials, all administrative staff selected for the center will be
drawn from headquarters, district, and area levels.
We have not studied this reorganization, but our prior work on other
aspects of Coast Guard operations suggests that the Coast Guard may
face a number of implementation challenges. Some may be similar to
those that Coast Guard faced when it created its sector commands, such
as obtaining buy-in from personnel that will be affected by the
reorganization or addressing realignment issues at the district level.
Another challenge is to ensure that the change does not adversely
affect mission performance at the sector and field unit levels.
Currently, for example, sector commanders make use of available local
MSST units--made available by district and area commanders--to help
meet shortfalls in resource availability for everyday missions, such as
conducting high-risk vessel escorts and harbor security patrols. If
these units were not available to support mission needs, additional
strain could be put on the performance of these local units.
These changes to the command structure are part of plans that extend
beyond fiscal year 2008. In his recent State of the Coast Guard speech,
the Commandant of the Coast Guard unveiled a proposal to combine the
Coast Guard's Atlantic and Pacific Area command functions into a single
Coast Guard operations command for mission execution. In addition, the
Coast Guard plans to establish a new mission support command, which
will have responsibility for nationwide maintenance, logistics, and
supply activities. According to Coast Guard officials, the current
structure is not well suited to responding to post-September 11
transnational threats. For example, Coast Guard officials said the
current structure at times works against the Coast Guard in operations
with Joint Interagency Task Forces, whose operating areas are not the
same as the Coast Guard's established area boundaries. Coast Guard
officials told us a working group had developed a blueprint of the new
operational force structure, but the Coast Guard is not ready to
release it. Guard officials told us they expected the reorganization
would be implemented during the current Commandant's 4-year term.
Consolidation of Acquisitions Oversight Management Challenged By
Staffing Shortfalls:
The Coast Guard also plans to consolidate its acquisitions management
offices, placing all major acquisitions programs and oversight
functions under the control of a single acquisitions officer. The goals
of this consolidation are to improve Coast Guard oversight of
acquisitions, better balance contracting officers and acquisition
professionals among its major acquisition projects, and address staff
retention and shortage problems associated with the acquisitions
management program. However, the Coast Guard has not adequately staffed
the acquisitions management program to meet its current workload, and
maintaining an appropriate staff size will be challenging, despite the
reorganization. For example, a February 2007 independent analysis found
that the Coast Guard does not possess a sufficient number of
acquisition personnel or the right level of experience needed to manage
the Deepwater program.[Footnote 7] Headquarters officials told us the
reorganization would address retention problems by creating a new
acquisitions specialty career ladder that could attract new pools of
talent. Still, given its past history of staff shortages and
difficulties retaining acquisition staff, the Coast Guard will face
challenges maintaining an appropriately sized acquisition staff, at
least in the near term. Coast Guard headquarters officials told us the
Deepwater program had pushed other important acquisitions priorities
aside, and this new organization would help the Coast Guard advance
these other priorities, such as boats, piers, and other shoreside
physical infrastructure. In our view, it is unclear how the
reorganization of the acquisition function will improve the prospects
for these other programs, given Coast Guard's priorities and ongoing
constraints on funding.
The reorganized acquisition office is expected to merge the now stand-
alone Deepwater acquisition project with the existing acquisition
directorate and research and development centers. The new office is
expected to be led by a new Coast Guard Chief Acquisition Officer who
will have responsibility over all procurement projects and by a deputy
who will deal largely with Deepwater issues. At the program management
level, Coast Guard is establishing four program managers to lead each
acquisitions area, including (1) surface assets; (2) air assets; (3)
command, control, communications, computers, intelligence,
surveillance, and reconnaissance; and (4) small boats and shore-based
infrastructure, such as command centers and boathouses. The Coast Guard
plans to begin implementing this reorganization in July 2007. It is too
early to tell if the Coast Guard's reorganization will enable it to
achieve its goals--notably, better balance of acquisitions support
between Deepwater and the Coast Guard's other acquisitions programs.
Acquisition Challenges Continue as Several Programs Make Progress:
While some Coast Guard major acquisition projects continue to face
challenges, especially the Deepwater program, several of these projects
are making progress. The record for Deepwater has been mixed, with 7 of
10 asset classes on or ahead of schedule. Three classes, however, are
behind schedule for various reasons and several factors add to the
uncertainty about the delivery of other Deepwater assets. Contract
management issues that we have reported on previously continue to be
challenges to the Coast Guard. Installation of equipment for the
initial phase of NAIS, an acquisition that is designed to allow the
Coast Guard to monitor and track vessels as far as 2,000 nautical miles
off the U.S. coast, is currently under way, but without changes to
existing regulations, some vessels will be able to avoid taking part in
the system. The Coast Guard's timeline for achieving full operating
capability for its search and rescue communications system, Rescue 21,
was delayed from 2006 to 2011, and the estimated total acquisition cost
increased from 1999 to 2005, but according to Coast Guard officials,
many of the issues that led to these problems are being addressed.
Coast Guard acquisition officials said they are providing more
oversight to the contractor after we reported on contract management
shortcomings.
Coast Guard Continues to Face Acquisition Challenges with Deepwater
Program:
The Coast Guard continues to face challenges in managing the Deepwater
program. The delivery record for assets is mixed and technology and
funding uncertainties, recent changes to Coast Guard plans for
procuring Deepwater assets, as well as the 25-year time frame for asset
delivery add to uncertainties about the delivery schedule for future
Deepwater assets. We have reported concerns about management of the
Deepwater program for several years now and have made recommendations
aimed at improving the program. The Coast Guard continues to address
these recommendations as it seeks to better manage the Deepwater
program. In addition to these program management issues, performance
and design problems for certain Deepwater assets have created
additional operational challenges for the Coast Guard. The Coast Guard
is taking steps to mitigate these problems, but challenges remain.
Below is a summary of our recent Deepwater work.[Footnote 8]
Deepwater Asset Delivery Schedule Is Mixed and Somewhat Uncertain:
The Coast Guard's Deepwater program is a 25-year, $24 billion plan to
replace or upgrade its fleet of vessels and aircraft. Upon completion,
the Deepwater program is to consist of 5 new classes of vessels--the
National Security Cutter (NSC), Offshore Patrol Cutter (OPC), Fast
Response Cutter (FRC), Short-Range Prosecutor (SRP), and Long-Range
Interceptor (LRI); 1 new class of fixed-wing aircraft--the Maritime
Patrol Aircraft (MPA); 1 new class of unmanned aerial vehicles--the
Vertical Unmanned Aerial Vehicle (VUAV); 2 classes of upgraded
helicopters--the Medium-Range Recovery Helicopter (MRR) and the Multi-
Mission Cutter Helicopter (MCH); and 1 class of upgraded fixed-wing
aircraft--the Long-Range Surveillance Aircraft (LRS).[Footnote 9]
Figure 5 illustrates the 10 classes of Deepwater assets.
Figure 5: Deepwater Vessel and Aircraft Classes:
[See PDF for Image]
Source: U.S. Coast Guard.
[End of figure]
Our preliminary observations indicated that, as of January 2007, of the
10 classes of Deepwater assets to be acquired or upgraded, the delivery
record for first-in-class assets (that is, the first of multiple
aircraft or vessels to be delivered in each class) was mixed.
Specifically, 7 of the 10 asset classes were on or ahead of schedule.
Among these, 5 first-in-class assets had been delivered on or ahead of
schedule; and 2 others remained on schedule but their planned delivery
dates were in 2009 or beyond. In contrast, 3 Deepwater asset classes
were behind schedule due to various problems related to designs,
technology, or funding. Using the 2005 Deepwater Acquisition Program
Baseline as the baseline, figure 6 indicates, for each asset class,
whether delivery of the first in class asset was ahead of schedule, on
schedule, or behind schedule as of January 2007.
Figure 6: Comparison of the Estimated Delivery Dates for the First-in-
Class Deepwater Assets from the 2005 Deepwater Acquisition Baseline and
as of January 2007:
[See PDF for Image]
Source: GAO analysis of documentation provided by U.S. Coast Guard.
[End of figure]
As part of our ongoing work, we are analyzing Coast Guard planning
documents to evaluate the current estimates of Deepwater asset delivery
dates. Several factors add to the uncertainty about the delivery
schedule of Deepwater assets. First, the Coast Guard is still in the
early phases of the 25-year Deepwater acquisition program and the
potential for changes in the program over such a lengthy period of time
make it difficult to forecast the ability of the Coast Guard to acquire
future Deepwater assets according to its published schedule. For
example, technology changes since the award of the original Deepwater
contract in 2002 have already, in part, delayed delivery of the VUAV,
and the Coast Guard is currently studying the potential use of an
alternative unmanned aerial vehicle. Second, changes to funding levels
can impact the future delivery of Deepwater assets. For example,
despite earlier plans, the fiscal year 2008 Department of Homeland
Security congressional budget justification indicates that the Coast
Guard does not plan to request funding for some Deepwater assets in FY
2008, such as the OPC and the VUAV. Acquisition of these two Deepwater
assets has now been delayed until FY 2013, at the earliest. Finally,
the Coast Guard has recently made a number of program management and
asset-specific changes that could impact the delivery schedules for its
Deepwater assets. For example, the Coast Guard has begun to bring all
acquisition efforts under one organization. Further, the Coast Guard
announced that it has terminated acquisition of the FRC-B, an off-the-
shelf patrol boat that is intended to serve as an interim replacement
for the Coast Guard's deteriorating fleet of 110-foot patrol boats,
through the system integrator and plans to assign responsibility for
the project to the Coast Guard's acquisition directorate. These types
of programmatic changes will take time to implement, and thus add to
uncertainty about the specific delivery dates of certain Deepwater
assets.
Deepwater Program Management, Contractor Accountability, and Cost
Control:
In 2001, we described the Deepwater program as "risky" due to the
unique, untried acquisition strategy for a project of this magnitude
within the Coast Guard.[Footnote 10] The Coast Guard used a system-of-
systems approach to replace or upgrade assets with a single, integrated
package of aircraft, vessels, and unmanned aerial vehicles, to be
linked through systems that provide C4ISR and supporting logistics. In
a system of systems, the deliveries of Deepwater assets are
interdependent, thus schedule slippages and uncertainties associated
with potential changes in the design and capabilities of any one asset
increases the overall risk that the Coast Guard might not meet its
expanded homeland security missions within given budget parameters and
milestone dates. The Coast Guard also used a systems integrator--which
can give the contractor extensive involvement in requirements
development, design, and source selection of major system and subsystem
subcontractors. The Deepwater program is also a performance-based
acquisition, meaning that it is structured around the results to be
achieved rather than the manner in which the work is performed. If
performance-based acquisitions are not appropriately planned and
structured, there is an increased risk that the government may receive
products or services that are over cost estimates, delivered late, and
of unacceptable quality.
In 2004 and in subsequent assessments in 2005 and 2006, we reported
concerns about the Deepwater program related to three main areas--
program management, contractor accountability, and cost
control.[Footnote 11] The Coast Guard's ability to effectively manage
the program has been challenged by staffing shortfalls and poor
communication and collaboration among Deepwater program staff,
contractors, and field personnel who operate and maintain the assets.
Despite documented problems in schedule, performance, cost control, and
contract administration, measures for holding the contractor
accountable resulted in an award fee of $4 million (of the maximum $4.6
million) for the first year. Through the first 4 years of the Deepwater
contract, the systems integrator received award fees that ranged from
87 percent to 92 percent of the total possible award fee (scores that
ranged from "very good" to "excellent" based on Coast Guard criteria),
for a total of over $16 million. Further, the program's ability to
control Deepwater costs is uncertain given the Coast Guard's lack of
detailed information on the contractor's competition decisions. While
the Coast Guard has taken some actions to improve program outcomes, our
assessment of the program and its efforts to address our
recommendations continues, and we plan to report on our findings later
this year.
Deepwater Performance and Design Problems Creating Operational
Challenges for Coast Guard:
In addition to the program management issues discussed above, there
have been problems with the performance and design of Deepwater patrol
boats that have created operational challenges for the Coast Guard. The
Deepwater program's bridging strategy to convert the legacy 110-foot
patrol boats into 123-foot patrol boats has been unsuccessful. The
Coast Guard had originally intended to convert all 49 of its 110-foot
patrol boats into 123-foot patrol boats in order to increase the patrol
boats' annual operational hours and to provide additional capabilities,
such as small boat stern launch and recovery and enhanced and improved
C4ISR. However, the converted 123-foot patrol boats began to display
deck cracking and hull buckling and developed shaft alignment problems,
and the Coast Guard elected to stop the conversion process at eight
hulls upon determining that the converted patrol boats would not meet
their expanded post-September 11 operational requirements.
These performance problems have had operational consequences for the
Coast Guard. The hull performance problems with the 123-foot patrol
boats led the Coast Guard to remove all of the eight converted normal
123-foot patrol boats from service effective November 30, 2006. The
Commandant of the Coast Guard has stated that having reliable, safe
cutters is "paramount" to executing the Coast Guard's
missions.[Footnote 12] Thus, removing these patrol boats from service
affects the Coast Guard's operations in its missions, such as search
and rescue and alien and migrant interdiction. The Coast Guard is
taking actions to mitigate the operational impacts resulting from the
removal of the 123-foot patrol boats from service. Specifically, in
recent testimony, the Commandant of the Coast Guard stated that the
Coast Guard has taken the following actions:
* multicrewing eight of the 110-foot patrol boats with crews from the
123-foot patrol boats that have been removed from service so that
patrol hours for these vessels can be increased;
* deploying other Coast Guard vessels to assist in missions formerly
performed by the 123-foot patrol boats;
* securing permission from the U.S. Navy to continue using three 179-
foot cutters on loan from the Navy (these were originally to be
returned to the Navy in 2008) to supplement the Coast Guard's patrol
craft; and:
* compressing the maintenance and upgrades on the remaining 110-foot
patrol boats.
The FRC, which was intended as a long-term replacement for the legacy
patrol boats, has experienced design problems that have operational
implications as well. As we reported in 2006, the Coast Guard suspended
design work on the FRC due to design risks such as excessive weight and
horsepower requirements.[Footnote 13] Coast Guard engineers raised
concerns about the viability of the FRC design (which involved building
the FRC's hull, decks, and bulkheads out of composite materials rather
than steel) beginning in January 2005. In February 2006, the Coast
Guard suspended FRC design work after an independent design review by
third party consultants demonstrated, among other things, that the FRC
would be far heavier and less efficient than a typical patrol boat of
similar length, in part, because it would need four engines to meet
Coast Guard speed requirements.
One operational challenge related to the FRC is that the Coast Guard
will end up with two classes of FRCs. The first class of FRCs to be
built would be based on an adapted design from a patrol boat already on
the market to expedite delivery. The Coast Guard would then pursue
development of a follow-on class that would be completely redesigned to
address the problems in the original FRC design plans. Coast Guard
officials recently estimated that the first FRC delivery will slip to
fiscal year 2009, at the earliest, rather than 2007 as outlined in the
2005 Revised Deepwater Implementation Plan. Thus, the Coast Guard is
also facing longer-term operational gaps related to its patrol boats.
Initial Deployment of Nationwide Automatic Identification System Is
Under Way, with Decisions Still to Come about Extending Coverage to
Additional Vessels:
Outside Deepwater, one acquisition project included in the fiscal year
2008 budget is the Nationwide Automatic Identification System, a system
designed to of identify, track, and communicate with vessels bound for
or within U.S. waters and forwarding that information for additional
analysis. NAIS uses a maritime digital communication system that
transmits and receives vessel position and voyage data. The Coast Guard
describes NAIS as its centerpiece in its effort to build Maritime
Domain Awareness, its ability to know what is happening on the water.
NAIS is not expected to reach full capability until 2014, when the
system will be able to track ships as far as 2,000 nautical miles away
and communicate with them when they are within 24 nautical miles of the
U.S. coast. It is being implemented in three phases, the first of which
is scheduled to be fully operational in September 2007. At that time,
the Coast Guard expects to have the ability to track--but not
communicate with--vessels in 55 ports and 9 coastal areas. The largest
areas of the continental U.S. coastline that will remain without
coverage after this first phase are the Pacific Northwest and Gulf
coasts. The second phase calls for being able to track ships out to 50
nautical miles from the entire U.S. coast and communicate with them as
far as 24 nautical miles out. This is the phase addressed in the fiscal
year 2008 budget.
The $12 million fiscal year 2008 AC&I request for NAIS is expected to
pay for implementing the initial operating capability for phase two.
The Coast Guard has received approval from the Department of Homeland
Security to issue solicitations and award contracts for this initial
capability, and the agency has held information sessions to gauge
industry interest in participating and to help refine its statement of
work for the initial solicitation. The initial solicitation will
provide requirements for full receiving and transmitting capability for
two sectors within one Coast Guard area and one sector in another area.
With this infrastructure in place the Coast Guard expects to be able to
test identification, tracking, and communication performance, including
such features as the ability to determine if the vessel transmissions
are accurately reflecting the actual location of a vessel.
The Coast Guard is considering whether to require additional types of
vessels to install and use the equipment needed for the Coast Guard to
track vessels and communicate with them. Current regulations require
certain vessels (such as commercial vessels over 65 feet in length)
traveling on international voyages or within VTS areas to install and
operate the transmission equipment.[Footnote 14] Vessels that are not
subject to current regulations generally include noncommercial and
fishing vessels and commercial vessels less than 65 feet long. This
means that many domestic vessels are not required to transmit the
vessel and voyage information and therefore will be invisible to the
NAIS. The Coast Guard has indicated in the Federal Register that it is
considering expanding the requirements to additional vessels.[Footnote
15]
Coast Guard Has Taken Actions to Improve Oversight of Rescue 21
Contracts, but System Coverage Has Been Reduced:
Another non-Deepwater project covered in the budget request is Rescue
21, the Coast Guard's command, control, and communication
infrastructure used primarily for search and rescue. The fiscal year
2008 AC&I budget includes $81 million for continued development of
Rescue 21. In May 2006 we reported that shortcomings in Coast Guard's
contract management and oversight efforts contributed to program cost
increases from $250 million in 1999 to $710.5 million in 2005 and
delays in reaching full operating capability from 2006 to
2011.[Footnote 16] Our recommendations included better oversight of the
project, completion of an integrated baseline review of existing
contracts, and development of revised cost and schedule estimates.
According to the Coast Guard, it has taken a series of actions in
response, including program management reviews and oversight meetings,
conducting integrated baseline reviews on existing contracts, and
meeting regularly to assess project risks.
According to the Coast Guard officials we met with, the contractor is
currently on time and on budget for installing the full system in 11
Rescue 21 regions, including such regions as New Orleans, Long Island/
New York, and Miami. The last of the 11 regions covered by current
contracts is scheduled to be completed by October 2008. Contracts for
the 25 regions that remain have not been signed. To keep to current
project cost and schedule baselines, however, the Coast Guard has
reduced the required performance of the system. Originally, Rescue 21
was supposed to limit coverage gaps to 2 percent, meaning that the
system had to be able to capture distress calls in 98 percent of the
area within 20 nautical miles of the coast and within navigable rivers
and other waterways. The current contract calls for coverage gaps of
less than 10 percent. Rescue 21 was also intended to have the
capability to track Coast Guard vessels and aircraft and provide data
communication with those assets. Neither the capability to track the
Coast Guard's own assets nor data communications is included in the
current technology being installed.
Coast Guard Faces Additional Challenges Addressing Traditional
Missions:
While the fiscal year 2008 budget request contains funding for
specifically addressing the projects discussed above, certain other
projects were judged by Coast Guard officials to be lower in priority
and were not included. We have examined two of these areas in recent
work--vessels for aids to navigation and domestic icebreaking activity,
and vessels for icebreaking in polar areas.
Decline in Condition of Some ATON and Domestic Icebreaking Assets May
Require More Attention for Recapitalization or Outsourcing Options:
Last September, we completed work for this committee on the condition
of Coast Guard aids-to-navigation (ATON) and icebreaking
assets.[Footnote 17] More than half of these assets have reached or
will be approaching the end of their designed service lives. In 2002,
the Coast Guard proposed options for systematically rehabilitating or
replacing 164 cutters and boats in these fleets after determining that
the age, condition, and cost of operating these assets would diminish
the capability of the Coast Guard to carry out ATON and domestic
icebreaking missions. We noted that no funds had been allocated to
pursue these options, apparently due to competing needs for replacing
or rehabilitating other Coast Guard assets. These competing needs,
reflected largely in the Coast Guard's expensive and lengthy Deepwater
asset replacement program, will continue for some time, as will other
pressures on the federal budget. The Coast Guard is requesting no
additional spending for ATON assets or infrastructure in fiscal year
2008.
Without specific funding to move forward, the Coast Guard has attempted
to break the project into smaller components and pursue potential
funding from within the Coast Guard's budget, focusing on the assets
most in need of maintenance or replacement. In February 2006, the Coast
Guard began a project to replace its fleet of 80 trailerable aids-to-
navigation boats with new boats that have enhanced capabilities to do
ATON work as well as other missions.[Footnote 18] According to a Coast
Guard official, this acquisition would cost approximately $14.4 million
if all 80 boats are purchased and would bring on new boats over a 5-
year period as funds allow. The Coast Guard official responsible for
the project said the Coast Guard intends to make the purchases using a
funding stream appropriated for the maintenance of nonstandard boats
that can be allocated to the boats with the most pressing maintenance
or recapitalization needs. Availability of these funds, however,
depends on the condition and maintenance needs of other nonstandard
boats; if this funding has to be applied to meet other needs, such as
unanticipated problems, it may not be available for purchasing these
boats.
In addition to carrying out their primary missions of ATON and domestic
icebreaking, these assets have also been used in recent years for other
missions such as homeland security. The Coast Guard's ATON and domestic
icebreakers saw a sharp increase in use for homeland security missions
after the attacks of September 11, and while this trend has moderated
somewhat, the use of some assets in these missions continues well above
pre-September 11 levels. This increase is most prominent for domestic
icebreakers, which are being operated more extensively for other
purposes at times of year when no icebreaking needs to be done. Newer
ATON vessels, which have greater multimission capabilities than older
vessels, tend to be the ATON assets used the most for other missions.
In addition to considering options for replacing or rehabilitating its
ATON assets, the Coast Guard also has examined possibilities for
outsourcing missions. In 2004 and 2006, the Coast Guard completed
analyses of what ATON functions could be feasibly outsourced. Although
possibilities for outsourcing were identified for further study, Coast
Guard officials noted that outsourcing also carries potential
disadvantages. For example, they said it could lead to a loss of
"surge" capacity-that is the capacity to respond to emergencies or
unusual situations. Coast Guard officials noted that outsourcing or
finding a contractor to do work after an event such as Katrina is
difficult due to the increased demand for their services as well as the
fact that the labor pool may have been displaced. When a contractor is
found, it usually takes a long time to get the work completed due to
the backlog of work and tends to be very expensive. In addition, this
surge capability may be needed for other missions, such as those that
occur when ATON assets can be used to support search and rescue
efforts. In the aftermath of Hurricane Katrina, for example, some ATON
assets provided logistical support for first responders or transported
stranded individuals. Coast Guard officials stated that after Hurricane
Katrina, its own crews were able to begin work immediately to repair
damaged aids and get the waterways open to maritime traffic again.
Coast Guard officials also indicated that outsourcing may adversely
affect the Coast Guard's personnel structure by reducing opportunities
to provide important experience for personnel to advance in their
careers.
Coast Guard Faces Decision on Future of Polar Icebreakers:
The Coast Guard confronts ongoing maintenance challenges that have left
its polar icebreaking capability diminished. The Coast Guard has two
Polar-class icebreakers for breaking channels in the
Antarctic.[Footnote 19] Both are reaching the end of their design
service lives, and given the funding challenges associated with
maintaining them, the Coast Guard decided to deactivate one of the two,
the Polar Star, in 2006. This reduced icebreaking capability since only
one Polar-class icebreaker, the Polar Sea, was available, and for the
Polar Sea it increased maintenance needs while reducing time available
to conduct maintenance.[Footnote 20]
Figure: 7: Coast Guard Polar-class Icebreaker:
[See PDF for Image]
Source: Coast Guard.
[End of figure]
Coast Guard officials and others have reported that failure to address
these challenges could leave the nation without heavy icebreaking
capability and could jeopardize the investment made in the nation's
Antarctic Program.[Footnote 21] According to Coast Guard officials, the
remaining Polar-class icebreaker's age and increased operational tempo
have left it unable to continue the mission in the long term without a
substantial investment in maintenance and equipment renewal. One
option, refurbishing the two existing Polar-class icebreakers for an
additional 25 years of service, is estimated to cost between $552
million and $859 million. Another option, building new assets, would
cost an estimated $600 million per vessel, according to Coast Guard
officials.[Footnote 22]
Coast Guard officials have begun planning a transition strategy to help
keep the sole operating Polar-class icebreaker mission-capable until
new or refurbished assets enter service, which would take an estimated
8 to 10 years.[Footnote 23] According to officials, this 10-year
recapitalization plan will identify current and projected maintenance
service needs and equipment renewal projects and associated costs,
alternatives to address these needs, and timelines for completing these
projects.
Madam Chair and members of the subcommittee, this completes my
statement for the record.
GAO Contacts and Staff Acknowledgments:
For information about this statement, please Contact Stephen L.
Caldwell, Acting Director, Homeland Security and Justice Issues, at
(202) 512-9610, or caldwells@gao.gov. Contact points for our Office of
Congressional Relations and Public Affairs may be found on the last
page of this statement. Individuals making key contributions to this
testimony include Penny Augustine, Jonathan Bachman, Jason Berman,
Steven Calvo, Jonathan Carver, Christopher Conrad, Adam Couvillion,
Geoffrey Hamilton, John Hutton, Christopher Hatscher, Tonia Johnson,
and Stan Stenersen.
[End of section]
Appendix I: Performance Results by Program from Fiscal Year 2002
through Fiscal Year 2006:
Appendix I provides a detailed list of Coast Guard performance results
for the Coast Guard's 11 programs from fiscal year 2002 through 2006.
Programs meeting 2006 targets:
Program: U.S. Exclusive Economic Zone Enforcement;
Program performance measure: Number of detected Exclusive Economic Zone
(EEZ) incursions by foreign fishing vessels;
2002: 250;
2003: 152;
2004: 247;
2005: 174;
2006: 164;
Performance target for 2006: 199.
Program: Ice Operations (domestic icebreaking);
Program performance measure: Number of waterway closure days;
2002: 7;
2003: 7;
2004: 4;
2005: 0;
2006: 0;
Performance target for 2006: 2[A].
Program: Marine Environmental Protection;
Program performance measure: Average of oil and chemical spills greater
than 100 gallons per 100 million tons shipped;
2002: 35.1;
2003: 29.4;
2004: 22.1;
2005: 18.5;
2006: 16.3;
Performance target for 2006: 19.
Program: Ports, Waterways, and Coastal Security;
Program performance measure: Percent reduction in maritime terrorism
risk over which the Coast Guard has influence;
2002: n/a;
2003: n/a;
2004: n/a;
2005: 14%;
2006: 17%;
Performance target for 2006: 14%.
Program: Undocumented migrant interdiction;
Program performance measure: Percentage of interdicted illegal migrants
entering the United States through illegal means;
2002: 88.3%;
2003: 85.3%;
2004: 87.1%;
2005: 85.5;
2006: 89.1;
Performance target for 2006: 89%.
Program expected to meet 2006 target:
Program: Illegal Drug Interdiction;
Program performance measure: Percentage of cocaine removed out of total
estimated cocaine entering the United States through maritime means[B];
2002: Not reported;
2003: Not reported;
2004: 30.7%;
2005: 27.3%;
2006: TBD[C];
Performance target for 2006: 22%.
Programs that did not meet their 2005 targets:
Program: Aids to Navigation;
Program performance measure: Number of collisions, allisions, and
grounding;
2002: 2,098;
2003: 2,000;
2004: 1,876;
2005: 1,825;
2006: 1,765;
Performance target for 2006: 1748.
Program: Defense Readiness;
Program performance measure: Percentage of time that units meet combat
readiness level;
2002: 70%;
2003: 78%;
2004: 76%;
2005: 67%;
2006: 62%;
Performance target for 2006: 100%.
Program: Living Marine Resources;
Program performance measure: Percentage of fisherman found in
compliance with federal regulations;
2002: 97.3%;
2003: 97.1%;
2004: 96.3%;
2005: 96.4%;
2006: 96.6%;
Performance target for 2006: 97%.
Program: Marine Safety;
Program performance measure: 5-year average annual mariner, passenger,
and boating deaths and injuries;
2002: 5,766;
2003: 5,561;
2004: 5,387;
2005: 5,169;
2006: 5,036;
Performance target for 2006: 4721.
Program: Search and Rescue;
Program performance measure: Percentage of distressed mariners' lives
saved;
2002: 84.4%;
2003: 87.7%;
2004: 86.8%;
2005: 86.1%;
2006: 85.3%;
Performance target for 2006: 86%.
Source: GAO analysis of Coast Guard data.
Note: TBD, to be determined; n/a, not available. Bold numbers indicate
that performance targets were met previously.
[A] The target for ice operations noted here is for domestic
icebreaking only, and the target level varies according to the index
for an 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 and 4 days did not meet the
target.
[B] The performance measure for the illegal drug interdiction program,
the percentage of cocaine removed, was revised in fiscal year 2004 from
the percentage of cocaine seized in order to more accurately report the
impact Coast Guard counterdrug activities have on the illicit drug
trade. As a result, the cocaine removal rates for fiscal year 2002-2003
are not available.
[C] Complete data are not yet available for the illegal drug
interdiction program. However, the Coast Guard anticipates meeting the
performance target for this program based on past performance.
[End of table]
[End of section]
Related GAO Products:
Coast Guard: Status of Efforts to Improve Deepwater Program Management
and Address Operational Challenges. GAO-07-575T. Washington, D.C.:
March 8, 2007.
Coast Guard: Preliminary Observations on Deepwater Program Assets and
Management Challenges. GAO-07-446T. Washington, D.C.: Feb. 15, 2007.
Coast Guard: Coast Guard Efforts to Improve Management and Address
Operational Challenges in the Deepwater Program. GAO-07-460T.
Washington, D.C.: Feb. 14, 2007.
Homeland Security: Observations on the Department of Homeland
Security's Acquisition Organization and on the Coast Guard's Deepwater
Program. GAO-07-453T. Washington, D.C.: Feb. 8, 2007.
Coast Guard: Condition of Some Aids-to-Navigation and Domestic
Icebreaking Vessels Has Declined; Effect on Mission Performance Appears
Mixed. GAO-06-979. Washington, D.C.: Sept. 22, 2006.
Coast Guard: Non-Homeland Security Performance Measures Are Generally
Sound, but Opportunities for Improvement Exist. GAO-06-816. Washington,
D.C.: Aug. 16, 2006.
Coast Guard: Observations on the Preparation, Response, and Recovery
Missions Related to Hurricane Katrina. GAO-06-903. Washington, D.C.:
July 31, 2006.
Maritime Security: Information-Sharing Efforts Are Improving. GAO-06-
933T. Washington, D.C.: July 10, 2006.
Coast Guard: Status of Deepwater Fast Response Cutter Design Efforts.
GAO-06-764. Washington, D.C.: June 23, 2006.
United States Coast Guard: Improvements Needed in Management and
Oversight of Rescue System Acquisition. GAO-06-623. Washington, D.C.:
May 31, 2006.
Coast Guard: Changes in Deepwater Acquisition Plan Appear Sound, and
Program Management Has Improved, but Continued Monitoring Is Warranted.
GAO-06-546. Washington, D.C.: April 28, 2006.
Coast Guard: Progress Being Made on Addressing Deepwater Legacy Asset
Condition Issues and Program Management, but Acquisition Challenges
Remain. GAO-05-757. Washington, D.C.: July 22, 2005.
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges. GAO-05-651T.
Washington, D.C.: June 21, 2005.
Maritime Security: Enhancements Made, but Implementation and
Sustainability Remain Key Challenges. GAO-05-448T. Washington, D.C.:
May 17, 2005.
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges. GAO-05-307T.
Washington, D.C.: April 20, 2005.
Coast Guard: Observations on Agency Priorities in Fiscal Year 2006
Budget Request. GAO-05-364T. Washington, D.C.: March 17, 2005.
Coast Guard: Station Readiness Improving, but Resource Challenges and
Management Concerns Remain. GAO-05-161. Washington, D.C.: January 31,
2005.
Maritime Security: Better Planning Needed to Help Ensure an Effective
Port Security Assessment Program. GAO-04-1062. Washington, D.C.:
September 30, 2004.
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: Substantial Work Remains to Translate New Planning
Requirements into Effective Port Security. GAO-04-838. Washington,
D.C.: June 30, 2004.
Coast Guard: Deepwater Program Acquisition Schedule Update Needed. GAO-
04-695. Washington, D.C.: June 14, 2004.
Coast Guard: Station Spending Requirements Met, but Better Processes
Needed to Track Designated Funds. GAO-04-704. Washington, D.C.: May 28,
2004.
Coast Guard: Key Management and Budget Challenges for Fiscal Year 2005
and Beyond. GAO-04-636T. Washington, D.C.: April 7, 2004.
Coast Guard: Relationship between Resources Used and Results Achieved
Needs to Be Clearer. GAO-04-432. Washington, D.C.: March 22, 2004.
Contract Management: Coast Guard's Deepwater Program Needs Increased
Attention to Management and Contractor Oversight. GAO-04-380.
Washington, D.C.: March 9, 2004.
Coast Guard: New Communication System to Support Search and Rescue
Faces Challenges. GAO-03-1111. Washington, D.C.: September 30, 2003.
Maritime Security: Progress Made in Implementing Maritime
Transportation Security Act, but Concerns Remain. GAO-03-1155T.
Washington, D.C.: September 9, 2003.
Coast Guard: Actions Needed to Mitigate Deepwater Project Risks. GAO-
01-659T. Washington, D.C.: May 3, 2001.
Coast Guard: Progress Being Made on Deepwater Project, but Risks
Remain. GAO-01-564. Washington, D.C.: May 2, 2001.
Coast Guard: Strategies for Procuring New Ships, Aircraft, and Other
Assets. GAO/T-HEHS-99-116. Washington, D.C.: Mar. 16, 1999.
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.
(440593):
FOOTNOTES
[1] GAO's analysis of the Coast Guard's fiscal year 2008 budget request
is presented in nominal terms. Supplemental funding received for
Operation Iraqi Freedom and Hurricane Katrina are not included in the
analysis, except where noted.
[2] Beginning with the fiscal year 2007 budget, the Office of
Management and Budget designated the Coast Guard's drug interdiction
and other law enforcement programs as non-homeland security missions
for budgetary purposes. If these two programs are included as homeland
security missions, overall homeland security funding in the fiscal year
2008 budget request is approximately 52 percent of the total budget.
[3] GAO, Coast Guard: Non-Homeland Security Performance Measures Are
Generally Sound, but Opportunities for Improvement Exist, GAO-06-816
(Washington, D.C.: August 2006).
[4] For more details on the Coast Guard's efforts to match resources to
performance results, see appendix III in GAO-06-816.
[5] Pub. L. No. 109-347, 120 Stat. 1884 (2006).
[6] Although the deployable forces will be reorganized under a single
command authority, officials told us the units would remain based in
their current locations. However, personnel on these teams may be
rotated or cross-deployed with other specialized teams. For example, an
MSST located at Seattle will remain based in that location, but the
personnel attached to that MSST may be rotated or mixed with other MSST
units to meet ongoing needs.
[7] Defense Acquisition University, Quick Look Study: United States
Coast Guard Deepwater Program, (Fort Belvoir, Virginia, 2007).
[8] For a more complete description of our reviews of the Deepwater
program, see GAO, Coast Guard: Preliminary Observations on Deepwater
Program Assets and Management Challenges, GAO-07-446T (Washington,
D.C.: Feb. 15, 2007).
[9] In addition to these asset classes, the Deepwater program includes
other projects such as Command, Control, Communications, Computers,
Intelligence, Surveillance and Reconnaissance (C4ISR) systems. For
example, the Coast Guard plans to procure surveillance data from
another unmanned aerial vehicle, the RQ-4A. Because this is not to be
acquired as a capital investment, we do not include it among the assets
to be acquired or upgraded.
[10] GAO, Coast Guard: Progress Being Made on Deepwater Project, but
Risks Remain, GAO-01-564 (Washington, D.C.: May 2, 2001).
[11] GAO, Contract Management: Coast Guard's Deepwater Program Needs
Increased Attention to Management and Contractor Oversight, GAO-04-380
(Washington, D.C.: Mar. 9, 2004); Coast Guard: Progress Being Made on
Addressing Deepwater Legacy Asset Condition Issues and Program
Management, but Acquisition Challenges Remain, GAO-05-757 (Washington,
D.C.: Jul. 22, 2005); and Coast Guard: Changes in Deepwater Plan Appear
Sound, and Program Management Has Improved, but Continued Monitoring is
Warranted, GAO-06-546 (Washington, D.C.: Apr. 28, 2006).
[12] U.S. Coast Guard, Office of Public Affairs, Coast Guard Suspends
Converted Patrol Boat Operations, (Washington, D.C., 2006).
[13] GAO, Coast Guard: Status of Deepwater Fast Response Cutter Design
Efforts, GAO-06-764 (Washington, D.C.: June 23, 2006).
[14] Vessel traffic services areas are locations where the Coast Guard
monitors and communicates with vessels using AIS, radar, and other
technologies to prevent collisions and other accidents.
[15] In our previous report we recommended that the Coast Guard should
pursue opportunities to cost-share with private entities that were
interested in receiving vessel and voyage information transmissions.
According to Coast Guard officials, subsequent to the publication of
the report they have partnered with private entities in Tampa, Florida,
and Alaska.
[16] GAO, United States Coast Guard: Improvements Needed in Management
and Oversight of Rescue System Acquisition, GAO-06-623 (Washington,
D.C.: May 2006).
[17] GAO, Coast Guard: Condition of Some Aids-to-Navigation and
Domestic Icebreaking Vessels Has Declined; Effect on Mission
Performance Appears Mixed, GAO-06-979 (Washington, D.C.: Sept. 22,
2006).
[18] These boats can be placed on trailers and transported on land by
truck.
[19] In addition to the Polar-class icebreakers, the Coast Guard
acquired a third icebreaker, the Healy, in 2000. Unlike the Polar-class
icebreakers, the Healy was designed to be an Arctic scientific platform
and does not have the capabilities to break ice in the Antarctic under
most conditions. According to Coast Guard officials, although the Healy
also has maintenance issues, the condition and extent of maintenance
needed for the Polar-class icebreakers is more severe.
[20] Coast Guard officials estimated it would require $40 million to
$50 million and 2 to 3 years of service to refurbish the deactivated
Polar-class icebreaker--the Polar Star--to a capability level
commensurate with its other Polar-class icebreaker. Coast Guard
officials noted that this funding would cover upgrades to systems and
to replace vessel infrastructure and parts that Coast Guard had
cannibalized over the past years to replace parts on the Polar Sea.
[21] In the Antarctic, the United States maintains three year-round
scientific stations. Coast Guard Polar-class icebreakers provide heavy
icebreaking support necessary to open a shipping channel and allow
maritime resupply of fuel, food, and cargo to these scientific
stations. Polar icebreakers deploy to support primary missions such as
the U.S. Antarctic Program, but while present in the polar region, they
often support secondary missions such as search and rescue or respond
to maritime environmental response situations as situations arise.
[22] According to the Coast Guard, this estimate this is based on Healy
construction costs, making adjustments for increased structural and
power requirements.
[23] In 2007, the National Research Council of the National Academies
issued a final report on the condition of the U.S. polar icebreaking
fleet (Polar Icebreakers in a Changing World: An Assessment of U.S.
Needs). This report corroborated Coast Guard's assessment of the
increased risks faced by the deteriorating condition of these vessels
and recommended that Congress immediately take action to design, plan,
and build two replacement polar icebreaking vessels to replace the
aging Polar-class vessels. Moreover, because these new vessels would
not be available for another 8 to 10 years, the report recommends that
Congress provide the Coast Guard with a sufficient operations and
maintenance budget to address maintenance backlogs on the two operating
polar icebreakers to ensure a minimum level of icebreaking capability
during this period. The report also recommends leaving the Polar Star
in caretaker status until the new vessels enter service.
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