Coast Guard's Plans for Obligating Acquisition, Construction, and Improvement Funds

The Coast Guard was appropriated a total of $684 million for acquisition, construction, and improvements during fiscal years 1982 and 1983. This was nearly $200 million less than its budget request. Of this amount, $175 million is restricted for use in its Drug Interdiction Program. The Coast Guard has consistently stated that additional funds are needed to replace its aging fleet and to effectively carry out the additional responsibilities which it has been assigned. A prior GAO report pointed out that increases in the Coast Guard's responsibilities were not accompanied by adequate increases in its resources. A more recent GAO report stated that marihuana smuggling along the Texas coast had increased while the number of Coast Guard cutters and aircraft used to interdict the smuggling had not. The Coast Guard has estimated that its average seizure rate was about 15 to 20 percent of the marihuana smuggled by sea. The Coast Guard presently has three major procurement actions for aircraft and cutters which are in various stages of completion; delivery will be completed during the next few years. The Coast Guard makes progress payments on these contracts based on contractor performance. The recently submitted fiscal year 1983 budget is not sufficient to satisfy the progress payments due in that year. The Coast Guard plans to reserve some of its present resources for fiscal years 1983 and 1984 to meet progress payments and payments that will be required under new contracts. However, the Coast Guard does not record the full price of these contracts as obligated when they are awarded. The amount treated as obligated is the anticipated amount required to satisfy payments that must be made for work performed in that fiscal year. If the Coast Guard does not receive fiscal year 1983 funding sufficient to satisfy its projected progress payments, it will have to terminate some contracts and pay termination costs. GAO has not yet determined whether the Coast Guard's obligation practices are improper or the extent to which funds planned for use in fiscal year 1983 could be obligated this fiscal year. Some of the cutters and helicopters already contracted for will be used for drug interdiction. Until GAO examines the purposes for which obligated funds are being used, it is unable to determine whether the Coast Guard is complying with the limitation on the use of $175 million for drug interdiction.