Coast Guard

The Coast Guard is responsible for maritime missions ranging from search and rescue operations to the enforcement of fisheries, immigration, and drug laws. The Coast Guard initially received $3.9 billion in appropriated funds to carry out its mission in fiscal year 1999. It received another $377 million in emergency funding to pay for additional equipment and operations, most of which was for expanding its anti-drug efforts. This increased the Coast Guard's total funding for fiscal year 1999 to about $4.3 billion. For fiscal year 2000, the Coast Guard is requesting $4.1 billion. GAO has issued reports during the past two years on the overall fiscal challenges facing the Coast Guard and the affordability of its multi-billion dollar program to replace or modernize its ships and aircraft. (See GAO/RCED-97-110, May 1997, and GAO/RCED-99-6, Oct. 1998.) The program, called the Deepwater Replacement Project, may cost as much as $9.8 billion over the next 20 years and is potentially the largest acquisition project in the agency's history. This testimony discusses (1) the Coast Guard's progress in justifying the Deepwater Replacement Project and addressing GAO's concerns about its affordability, (2) the Coast Guard's plans for spending fiscal year 1999 emergency funds, and (3) the budget strategies that the agency may have to consider in the future to address continuing budget constraints.

GAO noted that: (1) while the Coast Guard has made progress in addressing GAO's concerns about the justification and the affordability of the Deepwater Project, additional work is needed; (2) the Coast Guard had not sufficiently justified the project in that it lacked accurate and complete information on the condition and the performance shortcomings of its ships and aircraft and the resource hours needed to fulfill its missions; (3) the Coast Guard and its contractors are currently developing this information, but some of it will not be available until later this year; (4) in the meantime, contractors working on the conceptual design for the project will be assessing alternatives without the benefit of current data on the performance shortcomings of the agency's ships and aircraft and the resource hours needed to fulfill its missions; (5) the Coast Guard plans to have performance data on its current ships and aircraft by April 1999, and the agency plans to provide that information to contractors at that time; (6) GAO reported that if the cost of the Deepwater Project approaches the agency's planning estimate of $500 million dollars annually, it would consume more than the agency now spends for all capital projects and leave little funding for other critical capital needs; (7) Coast Guard officials said that competition among contractors would cut costs and more closely align the potential cost of the project with probable funding levels; (8) however, until the Coast Guard develops its new justification for the Deepwater Project in early 2000 and contractors provide their cost estimates for various alternatives, neither GAO nor the Coast Guard can tell whether the affordability issue has been adequately addressed; (9) by the end of FY 1999, the Coast Guard plans to spend about 78 percent of the $377 million in emergency funds that it received, primarily to expand its anti-drug efforts; (10) as directed by Congress, it has begun buying more patrol boats, reactivating its surveillance aircraft and ships, and obtaining additional equipment to improve its ability to detect drug smugglers and to coordinate its anti-drug activities; (11) in the future, the agency might have to develop different budget strategies and approaches to live within its budget; (12) typically, the Coast Guard has adopted a budget strategy that relies heavily on cost-cutting initiatives to improve efficiency; and (13) GAO's work has shown that additional cost-cutting measures to improve efficiency are possible, and the Coast Guard should renew its efforts in this area.