Coast Guard

Since fiscal year 1992, the Coast Guard has assumed increased responsibilities while cutting its workforce by nearly 10 percent and operating with a budget that has increased by about one percent a year in actual dollars. The Commandant of the Coast Guard told Congress last year that funding was no longer sufficient to sustain the normal pace of operations over time. Yet the Coast Guard, like other federal agencies, faces the prospect of further budget cuts to meet deficit reduction targets during the next several years. By fiscal year 2002, the Coast Guard is projected to have a gap of as much as $493 million between the Office of Management and Budget's budget target and the estimated cost of maintaining services at current levels. Whether the Coast Guard can close the gap with its current budget strategy is highly uncertain at this point and is likely to remain so for some time. GAO believes that the Coast Guard needs to quantify the extent of likely savings from ongoing or planned actions. Except for a recent streamlining program, the Coast Guard has relatively incomplete knowledge about the savings that it can expect in coming years from cost-saving measures that are in various stages of implementation. In addition, the Coast Guard may have to consider significant changes in its operating culture, such as changing its military rotation policy, or measures that stir public opposition, such as closing small boat stations.

GAO noted that: (1) deficit reduction efforts will create substantial pressure on the Coast Guard's budget; (2) by FY 2002, the Coast Guard is projected to have a gap of as much as $493 million between OMB's budget target and the estimated cost of maintaining services at current levels; (3) eliminating a gap of this size means that by FY 2002, the Coast Guard would need to identify cuts in operating expenses of $363 million and defer a substantial portion of its budget to replace or modernize its aging ships, aircraft, and facilities through FY 2002, according to OMB and Coast Guard estimates; (4) whether the Guard can close the gap with its current budget strategy is highly uncertain and is likely to remain so for some time; (5) Coast Guard managers have acknowledged the task's enormity, but have not yet fully developed an approach or a specific plan for addressing the task; (6) agency managers have begun to strengthen planning and budgeting processes, but these changes will not be fully in place for a year or more, and their usefulness in addressing immediate needs for reductions is unclear; (7) in the meantime, the Coast Guard continues to rely heavily on its past strategy, which focuses almost exclusively on cutting costs through greater efficiency; (8) while this strategy has yielded savings of about $343 million, achieving OMB's targets will be a much more difficult challenge; (9) the gap's sheer size and the dwindling number of available efficiency-related options mean that in developing its plan for meeting OMB's budget targets, the Coast Guard may have to reexamine its current focus; (10) GAO's past work shows that when private-sector and public organizations have successfully faced fiscal constraints like the Coast Guard's, they have done so through a much broader approach that includes the consideration of alternatives; (11) except for the recent streamlining program, the Coast Guard has relatively incomplete knowledge about the savings that it can anticipate in the next several years from cost-saving steps that are in various stages of implementation; (12) as a result, the agency does not know the degree to which these steps would close future funding gaps; (13) in addition, the Coast Guard may have to consider measures that call for considerable change in its operating culture or that stir public opposition; and (14) fully addressing such options may require further study or new implementation strategies.

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.

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