Coast Guard
Budget and Management Challenges for 2003 and Beyond Gao ID: GAO-02-538T March 19, 2002Like many federal agencies, the Coast Guard's priorities were dramatically altered by the events of September 11. The Coast Guard has requested $7.3 billion for fiscal year 2003--a 36 percent increase from the previous year. The events of September 11 caused a substantial shift of effort toward homeland security and away from other missions. As resources were shifted to meet these needs, the law enforcement mission area, which consists mainly of drug and migrant interdiction and fisheries enforcement, saw a dramatic drop in mission capability. The Coast Guard's fiscal year 2003 budget request reflects an attempt to maintain and enhance heightened levels of funding for homeland security while also increasing funding for all other Coast Guard missions beyond fiscal year 2002 levels. The Coast Guard faces substantial management challenges in translating its requested funding increases into increased service levels in its key mission areas. For example, workforce issues present a daunting challenge. If the budget request for fiscal year 2003 is approved, the Coast Guard will add 2,200 full-time positions, retain and build on the expertise and skills of its current workforce, and deal with already high attrition rates and looming civilian retirements. The Coast Guard has yet to determine the long-term level of security needed to protect the nation's major ports. These challenges mean that, in the short term, additional funding may not increase the Coast Guard's ability to carry out its missions.
GAO-02-538T, Coast Guard: Budget and Management Challenges for 2003 and Beyond
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United States General Accounting Office:
GAO:
Testimony:
Before the Subcommittee on Oceans and Fisheries, Committee on Commerce,
Science, and Transportation, U.S. Senate.
For Release on Delivery:
Expected at 3:00 p.m. EST:
Tuesday March 19, 2002:
Coast Guard:
Budget and Management Challenges for 2003 and Beyond:
Statement of JayEtta Z. Hecker:
Director, Physical Infrastructure Issues:
GAO-02-538T:
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss the challenges that the Coast
Guard faces in its fiscal year 2003 and future budgets and the critical
management issues it must resolve as it focuses relatively more of its
resources on homeland security. Like many federal agencies, the Coast
Guard‘s priorities were dramatically altered by the events of September
11, 2001. Analysis of changes in the Coast Guard budget is made more
difficult by the fact that funds from the emergency supplemental were
made available at different times.[Footnote 1] The Coast Guard‘s fiscal
year 2003 budget request of $7.3 billion is a 36 percent increase from
the previous year, part of which is for an increased emphasis on
homeland security. At the same time, the Coast Guard has many other
ongoing responsibilities, ranging from boater safety to icebreaking.
How”and whether”the Coast Guard can continue to meet all of these
responsibilities is a matter of concern to the Congress.
My testimony today, which is based on recently completed and ongoing
work, addresses three topics: (1) the extent to which the homeland
security measures undertaken by the Coast Guard since September 11th
affected the agency‘s multiple missions; (2) how these changes are
reflected in the requested fiscal year 2003 funding levels for each of
the Coast Guard‘s major missions, and (3) the challenges the Coast Guard
faces in 2003 and beyond in continuing to perform all of these missions.
Appendix I describes the scope and methodology of our review.
In summary, our work shows the following:
* The events of September 11th caused a substantial shift of effort
toward homeland security and away from certain other missions. Cutters
and aircraft, used mainly on the high seas, were redeployed closer to
major harbors; security was strengthened for potential terrorist
targets such as oil refineries, cruise ship terminals, and port
facilities; and security patrols and monitoring of ships in port were
stepped up. As resources were shifted to meet these needs, the law
enforcement mission area, which consists mainly of drug and migrant
interdiction and fisheries enforcement, saw the most dramatic drop in
mission capability, according to the Coast Guard. Although activity
levels for law enforcement and other mission areas are once again on
the rise, they have not all reached levels of activity that existed
before the terrorist attacks.
* The Coast Guard‘s fiscal year 2003 budget request reflects an attempt
to maintain and enhance heightened levels of funding for homeland
security while also increasing funding for all other Coast Guard
missions beyond fiscal year 2002 levels. About two-thirds of the
requested increase of $1.9 billion would be used for future retirement
payments, in keeping with proposed legislation that would make agencies
more accountable for funding such obligations on an ongoing basis. The
remaining one-third of the requested increase, or $680 million, would
be used for maintaining and enhancing missions. Marine safety and
security, the mission area that encompasses most of the Coast Guard‘s
homeland security activities, is slated to receive the largest
percentage increase in operating expenses of any mission area”20
percent, or $180 million. The remaining mission areas would each
receive an increase over fiscal year 2002 levels of at least 12
percent. A substantial part of the increase in each mission area would
go to pay increases and other entitlements, but we have not yet
determined these amounts.
* The Coast Guard faces substantial management challenges in translating
its requested funding increases into increased service levels in its key
mission areas. When the Coast Guard received supplemental fiscal year
2002 funding after September 11th, it increased services by stretching
available equipment and personnel to the limit, according to Coast Guard
personnel. Additional cutters, aircraft, and patrol boats are not
immediately available. Workforce issues present a daunting challenge:
the Coast Guard will add an additional 2,200 full-time positions in the
fiscal year 2003[Footnote 2] (if the budget request is approved),
retain and build the expertise and skills of its current workforce, and
deal with issues of already high attrition rates and looming civilian
retirements. Finally, the Coast Guard has not yet determined the level
of security required in the long term to protect the nation‘s major
ports. These challenges mean that in the short term giving the Coast
Guard additional funding does not immediately translate into an
increased ability to carry out its missions.
Background:
The Coast Guard, a Department of Transportation agency, is involved in
seven main mission or program areas: (1) enforcing maritime laws and
treaties, (2) search and rescue (3) aids to navigation, (4) marine
environmental protection, (5) marine safety and security (including
homeland security), (6) defense readiness, and (7) ice operations. Most
of the Coast Guard‘s services are provided through a number of small
boat stations, air stations, marine safety offices, and other
facilities and assets located in coastal areas, at sea, and near other
waterways like the Great Lakes. Its equipment in operation today
includes 228 cutters, approximately 1,200 small patrol and rescue
boats, and 200 aircraft.
As an organization that is also part of the armed services, the Coast
Guard has both military and civilian positions. At the end of fiscal
year 2001, the agency had over 39,000 total full-time positions”about
33,700 military and about 5,700 civilians. The Coast Guard also has
about 8,000 reservists who support the national military strategy and
provide additional operational support and surge capacity during
emergencies, such as natural disasters. Also, about 34,000 volunteer
auxiliary personnel assist in a wide range of activities ranging from
search and rescue to boating safety education.
Overall, after adjusting for the effects of inflation, the Coast
Guard‘s total budget grew by 32 percent between fiscal years 1993 and
2002. During nearly half this period, however, in real terms the budget
was basically flat. As figure 1 shows, in constant 2001 dollars, the
Coast Guard‘s budget remained essentially static from fiscal year 1993
to 1998. Significant increases have occurred since fiscal year 1998.
Figure 1: Annual Budgets for the Coast Guard, Fiscal Years 1993-2002
(Dollars in Millions):
[See PDF for image]
This figure is a line graph representing the annual budgets for the
Coast Guard, fiscal years 1993-2002.
Note: Amounts are presented in 2001 dollars.
Source: GAO analysis of data provided by the Office of Management and
Budget.
[End of figure]
The Coast Guard‘s initial budget request for fiscal year 2002, submitted
early in 2001, represents a pre-September 11th picture of how the Coast
Guard intended to operate. As figure 2 shows, law enforcement was by far
the largest mission category, with budgeted expenses estimated at $1.47
billion, or about 43 percent of total operating expenses. Marine safety
and security, at $456 million, was about 13 percent of the total.
[Footnote 3]
Figure 2: Distribution of Budgeted Operating Expenses by Mission,
Fiscal Year 2002 Budget Request (Dollars in Millions):
[See PDF for image]
This figure is a vertical bar graph depicting the distribution of
budgeted operating expenses for the following missions:
Law Enforcement;
Aids to Navigation;
Marine Safety and Security;
Search and Rescue;
Marine Environmental Protection;
Ice Operations;
Defense Readiness.
Source: GAO analysis of data provided by the United States Coast Guard.
[End of figure]
Following the events of September 11th, the Congress provided the Coast
Guard with a supplemental appropriation of $209 million. After it
received this additional amount, the Coast Guard revised the budget
allocation for its various missions. As figure 3 shows, the revision
produced a doubling of projected expenses for marine safety and
security and smaller increases for aids to navigation and search and
rescue. By contrast, projected expenses for law enforcement, ice
operations, and marine environmental protection were reduced.
Figure 3: Comparison of Initial and Final Operating Expense Projections
by Mission, Fiscal Year 2002 (Dollars in Millions):
[See PDF for image]
This figure is a multiple vertical bar graph depicting the distribution
of budgeted operating expenses in two categories (Requested 2002 Budget
Authority and Enacted 2002 Budget Authority) for the following
missions:
Law Enforcement;
Aids to Navigation;
Marine Safety and Security;
Search and Rescue;
Marine Environmental Protection;
Ice Operations;
Defense Readiness.
Source: GAO analysis of data provided by the United States Coast Guard.
[End of figure]
Events of September 11th Substantially Affected Some Coast Guard
Missions:
For the Coast Guard, the events of September 11th produced a dramatic
shift in resources used for certain missions. The Coast Guard responded
quickly to the attacks with a number of significant steps to ensure
that the nation‘s ports remained open and operating. The Coast Guard
relocated vessels, aircraft, and personnel from traditional
missions”especially law enforcement”to enhance security activities.
Subsequently, the Coast Guard has returned some of these resources to
their more traditional nonsecurity missions, but in some areas, it
faces challenges in restoring the level of activity to what it had
been.
Protecting Port Facilities Became a Top Priority:
After September 11th, the Coast Guard responded by positioning vessels,
aircraft, and personnel not only to provide security, but also to
increase visibility in key maritime locations. Key actions taken
included the following:
* Recalling all cutters that were conducting offshore law enforcement
patrols for drug, immigration, and fisheries enforcement and
repositioning them at entrances to such ports as Boston, Los Angeles,
Miami, New York, and San Francisco. The Coast Guard also used smaller
assets, such as patrol boats, motor lifeboats, and aircraft, to
supplement increased port security activities. The smaller boats were
used mainly for conducting security patrols within port facilities and
in fact, became the port‘s ’cop on the beat,“[Footnote 4] according to
Coast Guard officials.
* Establishing a new National Vessel Movement Center to track the
movement of all foreign-flagged vessels entering U.S. ports of call. The
center is now the clearinghouse for vessel information, such as type of
cargo and crew manifest. All commercial vessels over 300 gross tons are
required to report this information to the center 96 hours in advance of
their arrival. This information is then provided to the Coast Guard‘s
local marine safety offices, which use a risk-based decision model to
decide if a specific vessel is considered high interest, thus requiring
an escort or additional security and safety inspections or oversight.
* Implementing a series of limited risk assessments that identified
high-risk infrastructure and facilities within specific areas of
operation.[Footnote 5] These assessments, which were done by Coast
Guard marine safety office personnel at individual ports, were the
basis for deploying small boats for security patrols inside harbors and
focused on identified high-threat facilities.
* Adopting a temporary regulation prohibiting any private vessel from
approaching within 100 yards of Navy ships without permission. The Coast
Guard is proposing that such a restriction become permanent.
* Activating and deploying the Coast Guard‘s port security units
[Footnote 6] to help support local port security patrols in high-threat
areas. To maintain surge capacity and to deploy these units overseas,
the Coast Guard also formed five interim marine security and safety
teams, using full-time Coast Guard personnel trained in tactical law
enforcement and based in Yorktown, Virginia. The Coast Guard is
considering adding more of these teams in the future.
* Recalling about 2,700 reservists to active duty. Today, more than
1,800 are still on active duty. According to Coast Guard officials,
reservists have played a major role in allowing the Coast Guard to
respond to both its homeland security and other mission functions.
Their functions include staffing boat crews and port security units and
performing administrative functions in place of active duty personnel
who were pressed into new responsibilities elsewhere.
Enhanced Security Activities Drew Resources From Other Missions:
The precise extent to which these responses changed the Coast Guard‘s
allocation of mission resources cannot be determined, mainly because the
Coast Guard is still gathering and analyzing the data. However, in our
discussions with Coast Guard personnel, we were told that law
enforcement activities, such as fisheries and counter drug patrols, saw
the greatest reduction in actual services. For example:
* A number of Coast Guard districts have reported that security
activities have impacted their ability to conduct fisheries enforcement
missions, such as boarding of recreational and commercial fishing
vessels. For example, District 17 reported a drop in fishing boat
boardings in the New England fishing grounds, from 300 in the first
quarter of fiscal year 2001 to just 38 during the first quarter of
fiscal year 2002. Also, law enforcement-related civil penalties and
fines were down substantially for the District as well.
* Districts also reported reduced drug interdiction efforts. For
example, prior to September 11th, District 118 would send 110-foot
patrol boats, which serve as the District‘s primary boats for drug
patrols, from Alameda to areas off the southern California and Mexican
shores. The District had to eliminate these patrols when the boats were
reallocated for security functions.
* Some districts had to re-allocate personnel to specific security
activities. For example, District 13[Footnote 9] reallocated personnel
from small boat stations along the Washington coast to help implement
added security measures in ports in Puget Sound. District 13 staff
reported that patrol boats and small boats experienced a large increase
in operational hours and that Coast Guard personnel who were assigned
to boat stations experienced a marked increase in work hours from 60 to
80 hours per week. Other districts reported similar strains on
personnel.
Although the Coast Guard drew resources from many mission areas, some
areas were less negatively affected than law enforcement in continuing
to meet mission requirements. For example, although the Coast Guard had
to put search and rescue vessels and personnel into security roles,
doing so did not negatively affect search and rescue activities or
detract from saving lives, according to the Coast Guard. The main
reason was that the terrorist attacks occurred when the busiest part of
the search and rescue season was essentially over. In addition, during
the initial response, there were no major storms and the weather was
warmer, requiring less icebreaker services, search and rescue calls,
and oil tanker escorts.
Some Resources Are Returning to Non-Security Missions, but Others Are
Not:
In an attempt to restore capabilities in its key mission areas, the
Coast Guard has begun Operation NEPTUNE SHIELD, which has a goal of
performing new enhanced security missions, while at the same time
returning resources to other missions such as law enforcement, search
and rescue, defense readiness, and marine safety. Also, in March 2002,
the Coast Guard Commandant issued guidance [Footnote 10] that
instructed his Atlantic and Pacific Area Commanders to plan and manage
assets and personnel for long-term, sustainable operating tempos more
in line with traditional mission functions, while still maintaining
heightened security. Coast Guard officials from both the Atlantic and
Pacific Areas have started implementing this guidance. As a result,
deepwater cutters and aircraft are returning to traditional mission
allocations but are still not at pre-September 11th levels. For
example, because the Atlantic and Pacific areas each continue to
allocate a deepwater cutter for coastal security patrols, the amount of
time that will be spent on counter-drug and marine resources patrols is
still below pre-September 11th levels.
While a return to the pre-September 11th activity pattern is under way
for deepwater cutters, district patrol boats and small boats remain
deployed closer to their post-September 11th levels. Because the Coast
Guard has implemented a number of new security activities or has
increased the level of normal port security activities, the Coast Guard
has continued to use boats and personnel from small boats stations and
other areas for security missions. These missions include performing
security inspections of cargo containers and port facilities, escorting
or boarding high-interest commercial vessels, escorting Navy ships and
cruise ships, establishing and enforcing new security zones, and
conducting harbor security patrols. To relieve or augment its current
small boats now performing security functions, the Coast Guard plans to
purchase 70 new homeland security response boats with supplemental
funds appropriated for fiscal year 2002 and fiscal year 2003 funding.
[Footnote 11] According to the Coast Guard, these new boats will
increase the capabilities of existing stations at critical ports, while
others will provide armed platforms for the agency‘s newly established
marine safety and security teams.
One program, San Francisco‘s sea marshal program, illustrates the
continued strain occurring at local ports. This program uses armed Coast
Guard personnel to board and secure steering control locations aboard
high-interest vessels. Implementing this program has affected the
ability of the local Coast Guard office to accomplish its traditional
missions in at least two ways, according to Coast Guard officials.
First, the program has created new vessel boarding training needs for
the sea marshal personnel. Second, the program requires the use of
Coast Guard small boats in transporting sea marshals to vessels at
assigned boarding points. This means that the Coast Guard must use
small boats that are also being used for such missions as search and
rescue and marine environmental protection, which will require further
prioritizing and balancing of missions. Similar sea marshal programs
are being implemented at other ports, such as Boston and Seattle, with
similar impacts on other missions.
Fiscal Year 2003 Budget Request Reflects Changing Mission Priorities:
The fiscal year 2003 budget request of $7.3 billion would increase the
Coast Guard‘s budget by about $1.9 billion, or 36 percent, over the
fiscal year 2002 budget.[Footnote 12] More than $1.2 billion of this
increase is for retirement-related payments for current and future
retirees, leaving an increase of about $680 million for operating
expenses, capital improvements, and other expenses. Funding for
operating expenses for all of the Coast Guard‘s mission areas would
increase from fiscal year 2002 levels. Under the Coast Guard‘s
allocation formula,[Footnote 13] operating expenses for marine safety
and security (the mission area that includes most homeland security
efforts) would have the largest percentage increase”20 percent.
Increases in other mission areas would range from 12 percent to 16
percent.
Retirement Expenditures Account for Nearly Two-Thirds of the Budget
Increase:
The fiscal year 2003 budget contains a significant amount for retirement
funding. In October 2001, legislation was proposed[Footnote 14] that
would fully accrue the retirement costs of Coast Guard military
personnel. This legislation directs that agencies fully fund the future
pension and health benefits of their current workforces. Although this
proposed legislation has not been enacted, the Coast Guard prepared its
fiscal year 2003 budget to comply with these requirements.[Footnote 15]
Excluding the amounts for retirement costs,[Footnote 16] the fiscal
year 2003 increase totals about $680 million, which represents a 13
percent increase over the Coast Guard‘s fiscal year 2002 budget.
Remaining Budget Request Would Increase Operating Expenditures for All
Mission Areas:
About $542 million of the requested $680 million increase is for
operating expenses for the Coast Guard‘s mission areas.[Footnote 17]
The requested amount for operating expenses represents an increase of
15 percent over fiscal year 2002 levels. These expenses include such
things as pay increases and other entitlements as well as new
initiatives. Pay increases and military personnel entitlements in the
fiscal year 2003 budget request total about $193 million or 36 percent
of the requested increase for operating expenses. This leaves $349
million for new mission-related initiatives and enhancements. As figure
4 shows, all mission areas would receive more funding than in fiscal
year 2002.
Figure 4: Comparison of Operating Expenses by Mission Area for Fiscal
Years 2002 Enacted and 2003 Requested (Dollars in Millions):
[See PDF for image]
This figure is a multiple vertical bar graph depicting a comparison of
operating expenses by mission area for fiscal years 2002 enacted and
2003 requested. Bars represent Enacted 2002 Budget Authority and
Requested 2003 Budget Authority (excluding accruals) for the following
mission areas:
Law Enforcement;
Aids to Navigation;
Marine Safety and Security;
Search and Rescue;
Marine Environmental Protection;
Ice Operations;
Defense Readiness.
Source: GAO analysis of data provided by the United States Coast Guard.
[End of figure]
Projected increases in operating expenses would range from a high of 20
percent for the marine safety and security mission area to a low of 12
percent for the law enforcement mission area. (See table 1.) The Coast
Guard stated that the increases are intended to improve the Coast
Guard‘s capabilities in each respective mission area. For example, if
fully funded, operating expenses for the search and rescue mission area
would increase by 13 percent. According to Coast Guard officials, the
Coast Guard has experienced staffing shortages, resulting in personnel
working an average of 84 hours per week; therefore, if the budget
request is fully funded, the Coast Guard intends to improve readiness
at small boat stations by adding 138 new positions to reduce the number
of hours station personnel must work each week.
Table 1: Percentage Increase for Operating Expense by Mission Area,
Fiscal Year 2003 Budget Request Compared to Fiscal Year 2002 (Enacted):
Mission Area: Law enforcement;
Increase, Dollars (in millions): $131.5; 12%.
Increase, Percentage:
Mission Area: Aids to navigation;
Increase, Dollars (in millions): $94.3;
Increase, Percentage: 15%.
Mission Area: Marine safety and security;
Increase, Dollars (in millions): $180.5;
Increase, Percentage: 20%.
Mission Area: Search and rescue;
Increase, Dollars (in millions): $59.2;
Increase, Percentage: 13%.
Mission Area: Marine environmental protection;
Increase, Dollars (in millions): $45.5;
Increase, Percentage: 16%.
Mission Area: Ice operations;
Increase, Dollars (in millions): $17.3;
Increase, Percentage: 16%.
Mission Area: Defense readiness;
Increase, Dollars (in millions): $14.1;
Increase, Percentage: 15%.
Source: GAO analysis of data provided by the United States Coast Guard.
[End of table]
In line with the Coast Guard‘s relatively new responsibilities for
homeland security, the marine safety and security area would receive
the largest portion of the operating expenses increase. The levels of
funding requested for the maritime security area would allow the Coast
Guard to continue and enhance homeland security functions, begun in
2002, aimed at improving the security of the nation‘s ports, waterways,
and maritime borders. New security initiatives to be undertaken in
fiscal year 2003 include programs to build maritime domain
awareness,[Footnote 18] ensure controlled movement of high-interest
vessels,[Footnote 19] enhance presence and response capabilities,
protect critical infrastructure, enhance Coast Guard force protection,
and increase domestic and international outreach. For example, to
enhance presence and response capabilities, the Coast Guard intends to
spend $12.7 million to establish two additional deployable maritime
safety and security teams, which are mobile law enforcement and
security specialists that can be used in various regions during times of
heightened risk. These teams would be added to the four teams already
established with funds from the fiscal year 2002 supplemental
appropriation. Other new security initiatives would largely be funded
from the operating expenses appropriation.[Footnote 20] Table 2
provides a detailed breakdown of the cost of each of the proposed
security measures.
Table 2: Homeland Security Strategies and Initiatives in the Fiscal
Year 2003 Budget Request (Dollars in millions):
Strategy: Build maritime domain awareness;
Security Initiative: Improve communications and connectivity;
Amount (in millions): $34.4.
Strategy: Build maritime domain awareness;
Security Initiative: Improve information and investigations capability;
Amount (in millions): $26.1.
Strategy: Ensure controlled movement of high interest vessels;
Security Initiative: Maritime escort and safety patrols;
Amount (in millions): $18.5.
Strategy: Enhance presence and response capabilities;
Security Initiative: Maritime Safety and Security Teams;
Amount (in millions): $47.5.
Strategy: Protect critical infrastructure and enhance Coast Guard force
protection;
Security Initiative: Chemical, biological and radiological
countermeasures;
Amount (in millions): $17.5.
Strategy: Protect critical infrastructure and enhance Coast Guard force
protection;
Security Initiative: Critical infrastructure protection;
Amount (in millions): $11.2.
Strategy: Protect critical infrastructure and enhance Coast Guard force
protection;
Security Initiative: Firearms and ammunition;
Amount (in millions): $9.1.
Strategy: Increase domestic and international outreach;
Security Initiative: Security readiness and planning;
Amount (in millions): $21.5.
Strategy: Increase domestic and international outreach;
Security Initiative: Incident command system;
Amount (in millions): $2.3.
Total fiscal year 2003 new initiatives:
Amount (in millions): $188.1.
Source: United States Coast Guard Fiscal Year 2001 Performance Report
and Fiscal Year 2003 Performance Plan.
Note: Figures may not add up to total due to rounding.
[End of table]
Coast Guard Faces Difficult Budget and Management Challenges:
While the fiscal year 2003 budget request provides funding increases for
every mission area, these increases alone may not return all of its
missions to levels that existed prior to September 11th. The Coast
Guard faces other daunting budget and management challenges and
unknowns as it strives to achieve its new mission priorities and
maintain its core missions at desired levels. The most serious
challenges are as follows:
* The Coast Guard is now at or near its maximum sustainable operating
capacity in performing its missions. The agency has a finite set of
cutters, boats, and aircraft to use in performing its missions, and
according to Coast Guard officials, these assets, particularly the
cutters, are now being operated at their maximum capabilities. In fact,
officials in some districts we visited said that some of the patrol
boats and small boats are operating at 120 to 150 percent of the levels
they normally operate. Significantly increasing the numbers of its
cutters, boats, and aircraft is not feasible in the short term. Adding
new deepwater cutters and aircraft, for example, is years away as are
new motor lifeboats to replace the aging 41-foot boats, which have been
the mainstay of harbor security patrols in recent months. Also,
according to officials in various Coast Guard units, many personnel
are also working long hours even now, six months after the terrorist
attacks.
* The Coast Guard does not yet know the level of resources required for
its ’new normalcy“”the level of security required in the long term to
protect the nation‘s major ports and its role in overseeing these
levels. Until the Coast Guard completes comprehensive vulnerability
assessments at major U.S. ports and the Congress decides whether or not
to enact proposed port security legislation,[Footnote 21] the Coast
Guard cannot define the level of resources needed for its security
mission. Also, the full extent of the demands on its resources to deal
with all of its missions may not have been fully tested. In terms of
its ability to respond to port security functions, the Coast Guard was
fortunate in the timing of the terrorist attacks. For example, the
busiest part of the search and rescue season was essentially over, and
the agency was able to redeploy search and rescue boats from stations
during the off-season to perform harbor security functions. The cruise
ship season was over in many locations, requiring fewer Coast Guard
escorts for these vessels. There were no major storms, and the weather
has been warmer”requiring less icebreaking services, search and rescue
calls, and oil tanker escorts. Also, there were no major security
incidents in our nation‘s ports. A major change in any or a series of
these events could mean major adjustments in mission priorities and
performance.
* The Coast Guard faces a host of human capital challenges in managing
its most important resource”its people. Even before September 11, 2001,
the Coast Guard saw signs of needed reform in its human resources
policies and practices. Attrition rates among military and civilian
employees are relatively high, and about 28 percent of the agency‘s
civilian employees are eligible to retire within the next five years.
Budget constraints during the last decade had led to understaffing and
training deficiencies in some program areas. For example, a recent
study [Footnote 22] of the Coast Guard‘s small boat stations showed
that the agency‘s search and rescue program is understaffed, personnel
often work over 80 hours each week, and many staff are not fully
trained. All of these challenges have been exacerbated by new
challenges added since September 11th. As a result of its new emphasis
on homeland security, the Coast Guard plans to hire over 2,200 new full-
time positions to its workforce and increase its pool of reservists by
1,000 if its funding request is approved”putting added strain on its
recruiting and retention efforts. While the Coast Guard has embarked on
a strategy to address these issues, many of its human capital
initiatives are yet to be developed or implemented.
* Other needs that have been put on the ’back burner“ in the fiscal
year 2003 request may require increased attention”some rather soon. For
example, sizeable capital improvements for shore facilities may be
required in the near future, and required funding for this purpose
could be considerable. For example, it appears that the agency reduced
the fiscal year 2003 budget request for this budget item to fund other
priorities. In last year‘s capital plan, the Coast Guard estimated that
$66.4 million would be required in fiscal year 2003 for shore
facilities and aids to navigation. However, the fiscal 2003 budget
request seeks only $28.7 million, a significant disparity from last
year‘s estimate. Other priorities, such as funding for the Deepwater
Project and the National Distress System, will consume much of the
funding available for its capital projects for years to come. Coast
Guard officials said that while they still face the need for
significant capital projects at their shore facilities, they are taking
steps in the fiscal year 2003 budget request to improve the agency‘s
maintenance program in an effort to forestall the need for capital
projects at these facilities.
In conclusion, to its credit, the Coast Guard has assumed its homeland
security functions in a stellar manner through the hard work and
dedication of its people. It has had to significantly adjust its mission
priorities, reposition and add to its resources, and operate at an
intense pace to protect our nation‘s ports. Now, six months after the
terrorist attacks, the agency is still seeking to define a ’new
normalcy“”one that requires a new set of priorities and poses new
challenges. By seeking increases in each of the agency‘s mission areas,
the fiscal year 2003 budget request is an attempt to provide the Coast
Guard with the resources needed to operate within this environment. But
particularly in the short term, increased funding alone is not
necessarily the answer and is no guarantee that key Coast Guard
missions and priorities will be achieved. In fact, because of the
formidable challenges the Coast Guard faces today” particularly the
finite numbers of cutters, boats, and aircraft it has available in the
short run and its significant human capital issues”the Coast Guard will
likely have to continue to make significant trade-offs and shifts among
mission areas until it develops clear strategies to address its new
mission environment.
Mr. Chairman, this concludes my testimony. I will be happy to respond to
any questions you or other Members of the Subcommittee may have.
[End of section]
Appendix I: Scope and Methodology:
To determine the nature of the Coast Guard‘s shift from traditional core
missions to its new security functions for homeland security, we
interviewed Coast Guard officials and reviewed relevant documents
regarding the reallocation of Coast Guard resources. Coast Guard
interviews involved personnel from Headquarters, Atlantic Area Command,
Pacific Area Command, District 1, District 5, District 11, District 13,
and a variety of group and small boat station personnel under these
commands. These officials provided examples of post-September 11th
activities and the operational status of assets and personnel. We
gathered information on asset planning and operations from the Coast
Guard‘s Abstract of Operations and the Commandant‘s Fiscal Year 2002
Law Enforcement Planning Guidance.
To evaluate the Coast Guard‘s efforts to fund enhanced security missions
and increase funding for all other Coast Guard missions beyond fiscal
year 2002 levels, we examined relevant budget and performance documents
including the Coast Guard‘s Fiscal Year 2003 Budget in Brief and the
Coast Guard‘s Fiscal Year 2001 Performance Report and Fiscal Year 2003
Performance Plan. We interviewed Coast Guard officials within the Office
of Programs regarding proposed legislation establishing an accrual
funding system, the Coast Guard‘s method of allocating operating costs
across mission areas, and the fiscal year 2003 budget request.
Analysis of changes in the Coast Guard budget is made more difficult by
the fact that funds from the emergency supplemental were made available
at different times. Eighteen million dollars was allocated to the Coast
Guard in fiscal year 2001 and $209 million in fiscal year 2002. In this
testimony we use the $209 million figure for fiscal year 2002 since
that is what is shown in the Coast Guard budget documents used for the
analysis.
To identify substantial management challenges that the Coast Guard will
face translating these budget request increases into increased service
levels, we relied on previous GAO work. We also interviewed Coast Guard
Headquarters and field personnel regarding the Coast Guard‘s ability to
establish a sustainable operating tempo, develop and implement new
security requirements and port security assessments, manage and plan for
major increases its workforce, and funding requests for capital
improvements at shore facilities.
[End of section]
Footnotes:
[1] Eighteen million dollars was allocated to the Coast Guard in fiscal
year 2001 and $209 million in fiscal year 2002. In this testimony we
use the $209 million figure for fiscal year 2002 since that is what is
shown in the Coast Guard budget documents used for the analysis.
[2] With funding provided in the Coast Guard‘s $209 million
supplemental for fiscal year 2002, the agency plans to hire people
during fiscal 2002 to fill 843 of the 2,200 positions.
[3] Budget allocations such as these are estimates, not final amounts.
The Coast Guard‘s accounting system does not track cost by program
area, so there is no precise way to measure the extent to which actual
expenditures in each program area mirror these budget allocation
projections. Coast Guard officials note that as an agency with multiple
missions, the Coast Guard must be flexible in shifting resources from
one priority to another. This means that resources such as cutters may
be projected for one mission but, depending on circumstances, actually
be used for another more pressing need.
[4] The Coast Guard reported that for some facilities there were
requirements for conducting continuous 24-hour patrols, and this caused
a great strain on both assets and personnel.
[5] Examples of high-risk infrastructure include fossil fuel processing
and storage facilities, nuclear power plants, liquid natural gas
transfer facilities, naval ships and facilities, cruise ships, and
terminal facilities.
[6] The Coast Guard‘s port security units are specially trained reserve
personnel that provide port security for U.S. Navy vessels deployed
oversees.
[7] District 1 is headquartered in Boston, Massachusetts and is
responsible for Connecticut, Massachusetts, Maine, New Hampshire, New
Jersey, New York, Rhode Island, and Vermont.
[8] District 11 is headquartered in Alameda, California and is
responsible for Arizona, California, Nevada, and Utah.
[9] District 13 is headquartered in Seattle, Washington and is
responsible for Washington, Oregon, Idaho, and Montana.
[10] Operational and Marine Safety Mission Planning Guidance amended
the fiscal year 2002 Law Enforcement Planning Guidance dated July 16,
2001 and COMDT COGARD Washington DC//G-M//P 042025Z of October 1, 2001.
[11] The fiscal year 2002 supplemental appropriation provided funds to
purchase 42 homeland security response boats. The fiscal year 2003
request includes funding in the operating expenses account to purchase
an additional 28 of these boats.
[12] The Coast Guard‘s budget for fiscal year 2002 included both an
initial budget of $5.2 billion and a supplemental appropriation of $209
million for operating expenses. The supplemental appropriation was for
expenses to respond to the September 11, 2001 terrorist attacks on the
United States. Budget figures presented in the report are based on data
provided by the Coast Guard.
[13] The Coast Guard uses a cost allocation model to apply dollars to
mission resource hours. Direct, support, and overhead costs associated
with each asset type are multiplied by the operation baseline (resource
hours devoted to each mission area) to determine the allocation of
operating costs across mission areas.
[14] ’Managerial Flexibility Act of 2001“ (S.1612).
[15] The Coast Guard‘s fiscal year 2002 budget did not include
accruals.
[16] Retirement funding in the budget request includes a $736 million
payment to the Coast Guard‘s Military Retirement Fund and $496 million
included in the budget request for operating expenses, capital
improvements, and other expenditures.
[17] Most of the remainder of the $680 million increase would be for
Acquisition, Construction, and Capital Improvements (AC&I)”the Coast
Guard‘s capital expenditures budget. AC&I expenses would increase by
nearly $89 million, an increase of 14 percent. About $48 million of the
$680 million increase would be for other expenditures, which include
such things as environmental compliance and restoration; reserve
training; and research, development, testing, and evaluation.
[18] Maritime domain awareness is the real-time tracking of vessels,
people, and cargo. The Coast Guard plans to increase intelligence
efforts in ports and improve advanced information on passengers, crew,
and cargo.
[19] High-interest vessels are vessels that may pose a threat to the
United States or that require a heightened level of security. For
example, naval vessels or vessels carrying hazardous materials would be
considered high interest vessels.
[20] A portion of this funding, $9.4 million, would come from the AC&I
appropriation. This would fund the Maritime Domain Awareness
Information Management initiative, which is intended to enhance the
Coast Guard‘s information management capabilities and improve its
ability to collect, analyze, and disseminate information.
[21] Pending legislation (S. 1214 and H.R. 3437) proposed a number of
security measures for U.S. seaports. Major provisions of these bills
would require heavy involvement by the Coast Guard in conducting
vulnerability assessments at 50 U.S. ports, reviewing port security
plans, developing seaport security standards, and making loan
guarantees and authorizing grants for port security improvements.
[22] Report on Audit of the Small Boat Station Search and Rescue
Program, United States Coast Guard (MH-2001-094, September 14, 2001),
U.S. Department of Transportation, Office of Inspector General.
[End of section]
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