Coast Guard

Decision to Phase Out Curtis Bay Yard Is Inadequately Supported Gao ID: RCED-89-29 October 7, 1988

In response to a congressional request, GAO reviewed the proposed phaseout of industrial operations at the U.S. Coast Guard Yard at Curtis Bay, Maryland.

GAO found that: (1) the Coast Guard estimated that phasing out the Yard's industrial functions would result in annual savings of about $2.6 million; (2) Yard officials estimated that the savings would only total about $1 million due to offsetting increased overhead operating and maintenance costs; (3) neither the Coast Guard headquarters nor the Yard estimates considered certain annual offsetting administration costs associated with contracting out the industrial work; and (4) Coast Guard headquarters assumed that contracting the work would cost the same as performing it in-house. GAO also found that: (1) closing the Yard would result in one-time offsetting costs of between $5 million and $8 million for severance and annual leave pay to civilian employees and could delay any net savings for 2 to 3 years; (2) Yard officials stated that headquarters often overlooked the Yard's tangible benefits when deciding where it should make ship construction and repairs; (3) the Coast Guard also justified the phaseout as a means to avoid $20 million to $30 million in modernization costs; (4) although the Coast Guard anticipated declines in the Yard's work load, documents suggested that the Yard operations were an essential activity needed for effective and timely mission performance; and (5) the Coast Guard had not officially justified waiving a legislated prohibition against terminating the essential logistic activities before considering contracting out its activities. In addition, GAO found that, although the Coast Guard was developing a phaseout implementation plan that would include new cost savings estimates, an assessment of offsetting costs for contract administration, and a better assessment of one-time closing costs, until it corrected other weaknesses, it lacked assurance that its decision to close the Yard was proper.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.