    Coast Guard: Observations on the Fiscal Year 2008 Budget,
    Performance, Reorganization, and Related Challenges (18-APR-07,
    GAO-07-489T).

    The U. S. Coast Guard is a multimission agency responsible for
    maritime safety, security, and stewardship. It performs these
    missions, relating to homeland security and non-homeland security
    in U.S. ports and inland waterways, along the coasts, and on
    international waters. The President's budget request, including
    the request for the Coast Guard, was transmitted to Congress on
    February 5, 2007. This testimony, which is based on current and
    past GAO work, synthesizes the results of this work as it
    pertains to the following: budget requests and performance goals,
    organizational changes and related management initiatives,
    current acquisition efforts and challenges, and challenges
    related to performing traditional legacy missions.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-489T
        ACCNO:   A68385
      TITLE:     Coast Guard: Observations on the Fiscal Year 2008 Budget,
    Performance, Reorganization, and Related Challenges
         DATE:   04/18/2007
      SUBJECT:   Agency missions
    	     Federal agency reorganization
    	     Financial analysis
    	     Homeland security
    	     Performance measures
    	     Presidential budgets
    	     Procurement
    	     Procurement planning
    	     Program management
    	     Ships
    	     Unobligated budget balances
    	     Coast Guard Automatic Identification
    	     System

    	     Coast Guard Deepwater Project
    	     Coast Guard Rescue 21 System

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    GAO-07-489T

         * [1]Summary
         * [2]Background
         * [3]Budget Places More Emphasis on Operational Expenses; Overall

              * [4]Overall Budget Request Is 3.3 Percent Higher than Previous Y
              * [5]Budget Includes Reallocations to Match Reorganization
              * [6]Acquisition Budget Request Declines, but Substantial Unoblig
              * [7]Performance Trends Generally Positive and Non-Homeland Secur

         * [8]Coast Guard Continues to Make Organizational Changes Designe

              * [9]Further Action Needed to Ensure Operational Benefits from Se
              * [10]Unified Command Structure for Deployable Forces Is Being Dev
              * [11]Consolidation of Acquisitions Oversight Management Challenge

         * [12]Acquisition Challenges Continue as Several Programs Make Pro

              * [13]Coast Guard Continues to Face Acquisition Challenges with De

                   * [14]Deepwater Asset Delivery Schedule Is Mixed and Somewhat
                     Unce
                   * [15]Deepwater Program Management, Contractor Accountability,
                     and
                   * [16]Deepwater Performance and Design Problems Creating
                     Operation

              * [17]Initial Deployment of Nationwide Automatic Identification Sy
              * [18]Coast Guard Has Taken Actions to Improve Oversight of Rescue

         * [19]Coast Guard Faces Additional Challenges Addressing Tradition

              * [20]Decline in Condition of Some ATON and Domestic Icebreaking A
              * [21]Coast Guard Faces Decision on Future of Polar Icebreakers

         * [22]GAO Contacts and Staff Acknowledgments
         * [23]GAO's Mission
         * [24]Obtaining Copies of GAO Reports and Testimony

              * [25]Order by Mail or Phone

         * [26]To Report Fraud, Waste, and Abuse in Federal Programs
         * [27]Congressional Relations
         * [28]Public Affairs

    Statement for the Record to the Subcommittee on Oceans, Atmosphere,
    Fisheries, and Coast Guard, Committee on Commerce, Science, and
    Transportation, U.S. Senate

    United States Government Accountability Office

    GAO

    For Release on Delivery Expected at 2:30 p.m. EDT
    Wednesday, April 18, 2007

    COAST GUARD

    Observations on the Fiscal Year 2008 Budget, Performance, Reorganization,
    and Related Challenges

    Statement for the Record by Stephen L. Caldwell,
    Acting Director
    Homeland Security and Justice Issues

    GAO-07-489T

    Madame Chair and Members of the Subcommittee:

    I am pleased to provide this statement for the record about the
    President's fiscal year 2008 budget request for the Coast Guard. As you
    know, the Coast Guard has grown significantly since September 11, 2001, to
    help meet its responsibility to protect America's ports, waterways, and
    waterside facilities from terrorist attacks while maintaining
    responsibility for many other programs important to the nation's
    interests, such as helping stem the flow of illegal drugs and illegal
    immigration, protecting important fishing grounds, and responding to
    marine pollution. While the Coast Guard budget request continues to
    increase in fiscal 2008, it also shows shifts in direction. By placing
    less emphasis on acquiring new assets and reorganizing some of its
    functional areas, the Coast Guard is attempting to rectify some of its
    management concerns of the past while better preparing itself for the
    challenges of the future.

    My statement today provides:

               o an overview of the Coast Guard's fiscal year 2008 budget request
               and key performance indicators,

               o a discussion of various organizational changes and related
               management initiatives,

               o a status update on some current acquisition efforts and
               challenges, and

               o a look at additional challenges related to traditional legacy
               missions.

    My statement is based in part on prior GAO work focusing on the Coast
    Guard's programmatic and management initiatives (a listing of related
    reports is included at the end of my statement). Additionally, we
    conducted interviews with headquarters, Pacific Area, and Sector San
    Francisco personnel, and reviewed budget, performance, and acquisition
    documents. The scope of our work did not include evaluating whether the
    proposed funding levels are commensurate with the Coast Guard's stated
    needs. Our scope was limited due to the short time available between the
    release of the President's fiscal year 2008 budget request and the hearing
    date of mid-April. All work for this statement was conducted in accordance
    with generally accepted government auditing standards between February and
    March 2007.

    Summary

    The Coast Guard's fiscal year 2008 budget request is moderately higher
    than its fiscal year 2007 budget, but it increased at a lower rate, mainly
    reflecting a slowing in requests for funding acquisition, construction,
    and improvement (AC&I) projects. The 2008 overall budget request of $8.73
    billion is approximately 3 percent higher than the 2007 enacted budget,
    but unlike in prior years, the AC&I budget decreased by 19 percent.
    According to Coast Guard officials, this decrease is in part due to some
    recognized problems with ongoing acquisition programs and the desire to
    strengthen operating capabilities, including contract and acquisition
    oversight. While the AC&I budget request is down, a substantial pool of
    unspent funds appropriated for acquisition projects in previous years
    remains available to the Coast Guard. Current unobligated balances in
    these projects total $1.96 billion, of which $1.63 billion is associated
    with Integrated Deepwater System acquisitions. The Coast Guard expects to
    meet its performance goals in 6 of the 11 mission areas in fiscal 2006 (as
    compared to meeting performance goals in 8 of 11 missions in fiscal 2005).
    Performance trends over the past 5 years also show that increased homeland
    security activities have not prevented the Coast Guard from meeting its
    non-homeland security mission goals. The Coast Guard continues to develop
    ways to better understand the links between resources it expends and the
    results it achieves.

    The budget request reflects a continued emphasis on reorganization
    efforts, all of which carry ongoing challenges. These efforts began with
    the combination of marine safety offices and Coast Guard groups into
    sectors in 2006. While the Coast Guard has completed its organizational
    changes to place local units under sector commands, not all of the units
    have been able to move to a single location, a key ingredient in bringing
    about the improved integration expected from the realignment. Funding was
    not provided in the fiscal year 2008 budget to complete the desired
    colocation. A reorganization effort that is to begin this year is designed
    to bring the different mobile deployable units responsible for such
    actions as pollution response, law enforcement, port security, and
    counterterrorism under a single command rather reporting to three
    different authorities. The Coast Guard hopes to gain more effective
    management, oversight, and coordination of these deployable forces.
    Challenges here include addressing "buy-in" and related issues from units
    affected by the changes, ensuring that mission performance of sectors that
    previously made use of these units for everyday activities is not
    compromised, and effectively establishing and operating the new
    centralized command. A third organizational effort to improve Coast Guard
    operations--in this case, to improve its troubled acquisition contract
    management--is the merging of the various acquisition management efforts
    under a Chief Acquisitions Officer. One challenge in making this move
    effective is the need to build a more robust cadre of acquisition
    management professionals.

    Three major Coast Guard acquisition projects are making progress at
    varying rates, but challenges remain for all three in the future. The
    record for Deepwater has been mixed. Seven of 10 asset classes being
    acquired are on or ahead of schedule. Three classes, however, are behind
    schedule for various reasons and several factors add to the uncertainty
    about the delivery schedule of other Deepwater assets. Contract management
    issues, accountability of the contractor, and cost control through
    competition have been recurring challenges for the Coast Guard. Separate
    from Deepwater, the National Automatic Identification System (NAIS), a
    program designed to allow the Coast Guard to monitor and track vessels as
    far as 2,000 nautical miles off the U.S. coast, is under way, and
    infrastructure for the first phase of the system is currently being
    installed. The Coast Guard is considering whether to require more types of
    vessels to install and operate tracking equipment--an issue that affects
    the extent to which the system will provide information on the location of
    vessels of interest. The Coast Guard's timeline for achieving full
    operating capability for its search and rescue communications system,
    Rescue 21, was delayed from 2006 to 2011, and the estimated total
    acquisition cost increased from 1999 to 2005, but according to Coast Guard
    officials, many of the issues that led to these problems are being
    addressed. Coast Guard acquisition officials said they are providing more
    oversight to the contractor after we reported on contract management
    shortcomings. According to Coast Guard officials, the contracts that would
    set specific schedules and budgets for the last 25 regions in which the
    system will be installed have yet to be signed. Also, there has been a
    reduction in promised improvements to limit communications gaps;
    originally, Rescue 21 was intended to limit communications gaps to 2
    percent, and that target was reduced to less than 10 percent.

    Some of the Coast Guard's non-homeland security missions are facing
    challenges based on competition for resources with homeland
    security-oriented funding needs. Many domestic icebreaking and
    aids-to-navigation vessels are also reaching the end of their designed
    service lives. While these vessels have been able to meet mission goals to
    date, without major rehabilitation or replacement, their ability to carry
    out their designated missions will likely decline in the future. The Coast
    Guard is currently examining options for addressing this issue. Similarly,
    the inability to obtain needed maintenance funding has led the Coast Guard
    to take one Polar-class icebreaker out of service to keep its remaining
    aging Polar-class vessel, the Polar Sea, operational. With only one
    icebreaker capable of keeping access to Antarctica open, there is a
    greater possibility that mechanical problems or other maintenance issues
    could affect this mission.

    Background

    The U.S. Coast Guard is a multimission, maritime military service within
    the Department of Homeland Security (DHS). To accomplish its
    responsibilities, the Coast Guard is organized into two major commands
    that are responsible for overall mission execution--one in the Pacific
    area and the other in the Atlantic area. These commands are divided into 9
    districts, which in turn are organized into 35 sectors that unify command
    and control of field units and resources, such as multimission stations
    and patrol boats. In fiscal year 2005, the Coast Guard had over 46,000
    full-time positions--about 39,000 military and 7,000 civilians. In
    addition, the agency had about 8,100 reservists who support the national
    military strategy or provide additional operational support and surge
    capacity during times of emergency, such as natural disasters.
    Furthermore, the Coast Guard also had about 31,000 volunteer auxiliary
    personnel help with a wide array of activities, ranging from search and
    rescue to boating safety education. The Coast Guard has responsibilities
    that fall under two broad missions--homeland security and non-homeland
    security. The Coast Guard responsibilities are further divided into 11
    programs, as shown in table 1.

    Table 1: Homeland Security and Non-Homeland Security Programs by Mission
    Area

    Mission and program          Activities and functions of each program
    Homeland security missions
          o Ports, waterways, and   Conducting  harbor   patrols,   vulnerability
          coastal security          assessments,   intelligence   gathering   and
                                    analysis, and  other  activities  to  prevent
                                    terrorist attacks  and  minimize  the  damage
                                    from attacks that occur.
          o Undocumented migrant    Deploying cutters and aircraft to reduce  the
          interdiction              flow of  undocumented migrants  entering  the
                                    United States by maritime routes.
          o Defense readiness       Participating with the Department of  Defense
                                    (DOD)   in   global   military    operations,
                                    deploying cutters  and  other  boats  in  and
                                    around   harbors   to   protect   DOD   force
                                    mobilization operations.
    Non-homeland        security
    missions
          o Search and rescue       Operating   multimission   stations   and   a
                                    national distress and response  communication
                                    system,   conducting   search   and    rescue
                                    operations for mariners in distress.
          o Living marine resources Enforcing   domestic    fishing   laws    and
                                    regulations through  inspections and  fishery
                                    patrols.
          o Aids to navigation      Managing U.S. waterways and providing a safe,
                                    efficient,     and      navigable      marine
                                    transportation   system,   maintaining    the
                                    extensive   system   of   navigation    aids,
                                    monitoring  marine  traffic  through   vessel
                                    traffic service centers.
          o Ice operations          Conducting polar operations to facilitate the
                                    movement of critical  goods and personnel  in
                                    support of scientific  and national  security
                                    activity,  conducting  domestic   icebreaking
                                    operations to facilitate year-round commerce,
                                    conducting international  ice  operations  to
                                    track icebergs below the 48th north latitude.
          o Marine environmental    Preventing and responding  to marine oil  and
          protection                chemical  spills,   preventing  the   illegal
                                    dumping  of  plastics  and  garbage  in  U.S.
                                    waters, preventing  biological  invasions  by
                                    aquatic nuisance species.
          o Marine safety           Setting  standards   and  conducting   vessel
                                    inspections to  better ensure  the safety  of
                                    passengers   and   crew   aboard   commercial
                                    vessels, partnering with  states and  boating
                                    safety organizations  to reduce  recreational
                                    boating deaths.
          o Illegal drug            Deploying  cutters  and   aircraft  in   high
          interdiction              drug-trafficking    areas    and    gathering
                                    intelligence to  reduce the  flow of  illegal
                                    drugs through maritime transit routes.
          o Other law enforcement   Protecting U.S. fishing  grounds by  ensuring
          (foreign fish             that  foreign  fishermen  do  not   illegally
          enforcement)              harvest U.S. fish stocks.

    Source: Coast Guard.

    Note: The Coast Guard's homeland security and non-homeland security
    missions are delineated in section 888 of the Homeland Security Act of
    2002 (P. L. 107-296, 116 Stat. 2135, 2249 (2002)). Starting with the
    fiscal year 2007 budget, however, the Office of Management and Budget
    (OMB) designated the Coast Guard's drug interdiction and other law
    enforcement as non-homeland security missions for budgetary purposes.

    For these 11 programs, the Coast Guard has developed performance measure
    to communicate agency performance and provide information for the
    budgeting process to Congress, other policymakers, and taxpayers. The
    Coast Guard's performance measures are published in various documents,
    including the Coast Guard's fiscal year Budget-in-Brief. The Coast Guard's
    Budget-in-Brief reports performance information to assess the
    effectiveness of the agency's performance as well as a summary of the
    agency's most recent budget request. This, and other documents, reports
    the performance measures for each of the Coast Guard's programs, as well
    as descriptions of the measures and explanations of performance results.

    To continue executing its missions, the Coast Guard has programs to
    acquire a number of assets such as vessels, aircraft, and command,
    control, communications, computer, intelligence surveillance, and
    reconnaissance (C4ISR) systems. The Coast Guard's Deepwater program is a
    25-year, $24 billion effort to upgrade or replace existing vessels and
    aircraft in order to carry out its missions along our coastlines and
    farther out at sea. The program is eventually to include 10 major classes
    of new or upgraded vessels and aircraft. The Coast Guard also has an
    acquisition program called the National Automatic Identification System to
    identify and track vessels bound for or within U.S. waters. Another
    acquisition program is called Rescue 21, a program to replace the Coast
    Guard's 30-year-old search and rescue communications systems. Rescue 21
    was to be used not only for search and rescue, but to support other Coast
    Guard missions, including those involving homeland security.

    Budget Places More Emphasis on Operational Expenses; Overall Performance Trends
    Remain Positive

    The Coast Guard's fiscal year 2008 budget request reflects a smaller
    increase than in years past. Requests for new capital spending are down,
    as the agency slows the pace of new acquisitions for Deepwater and other
    capital projects. Instead, several of the budget initiatives being
    emphasized reflect a reorganization of internal operations and support
    command infrastructure. Although the Coast Guard met fewer performance
    targets than last year, overall performance trends for most mission
    programs remain positive. That is, many of the measures that Coast Guard
    uses to evaluate performance have improved since last year, even though
    the agency did not meet as many of its performance targets in 2006 as in
    the year before.

    Overall Budget Request Is 3.3 Percent Higher than Previous Year's

    The Coast Guard's budget request in fiscal year 2008 is $8.73 billion,
    approximately $275 million, or 3.3 percent, more than in fiscal year 2007
    (see fig. 1).1 About $5.9 billion, or approximately 68 percent, is for
    operating expenditures (OE). This funding supports its 11 statutorily
    identified mission programs; increases in cost of living, fuel, and
    maintenance costs; and previous administration and congressional
    initiatives. The greatest change from the previous year is in the AC&I
    request, which at $949 million reflects about a 19 percent decrease from
    fiscal year 2007. According to Coast Guard officials, no new
    appropriations are requested in fiscal year 2008 for several Deepwater
    assets until business case reviews can be completed to assess the
    viability of technology and contracting oversight. The remaining part of
    the request consists primarily of funds requested for retiree pay and
    health care fund contributions. If the Coast Guard's total budget request
    is granted, overall funding will have increased by over 55 percent since
    2002, an increase of $3.1 billion.

    1GAO's analysis of the Coast Guard's fiscal year 2008 budget request is
    presented in nominal terms. Supplemental funding received for Operation
    Iraqi Freedom and Hurricane Katrina are not included in the analysis,
    except where noted.

    Figure 1: Coast Guard Budget from Fiscal Year 2002 to Fiscal Year 2008

    Note: The Coast Guard's budget consists of discretionary and mandatory
    funding line items. The operating expenses and acquisition, construction,
    and improvements line items make up the biggest portion of discretionary
    funding. Other line items in the Coast Guard's discretionary budget
    include environmental compliance and restoration, health care
    contributions, research and development, and reserve training costs.
    Retiree pay is the largest item the Coast Guard's mandatory funding
    budget, and the Coast Guard is requesting $1.18 billion for retiree pay in
    2008. Other mandatory funding line items include boating safety, oil spill
    liability trust fund, and the gift fund.

    The Coast Guard's budget request for homeland security missions represents
    approximately 35 percent of the overall budget.2 Figure 2 illustrates the
    percentage of funding requested for homeland security versus non-homeland
    security funding, and figure 3 shows the funding levels by each mission
    program.

    2Beginning with the fiscal year 2007 budget, the Office of Management and
    Budget designated the Coast Guard's drug interdiction and other law
    enforcement programs as non-homeland security missions for budgetary
    purposes. If these two programs are included as homeland security
    missions, overall homeland security funding in the fiscal year 2008 budget
    request is approximately 52 percent of the total budget.

    Figure 2: Amount (in millions of dollars) and Percentage of Homeland
    Security versus Non-Homeland Security Funding

    Figure 3: Coast Guard Fiscal Year 2008 Budget Request by Mission Program

    Budget Includes Reallocations to Match Reorganization

    Two key budget initiatives--both reallocations rather than
    increases--reflect reorganization efforts. First, a major budget
    reallocation within the operating expenditures category establishes a
    single unified command for the agency's deployable specialized forces.
    These are the Coast Guard's response teams that can deploy wherever needed
    for natural disasters, terrorism incidents, and other concerns. According
    to senior Coast Guard officials, this initiative entails a onetime,
    budget-neutral reallocation of $132.7 million from the Atlantic and
    Pacific Area Commands to a new deployable operations command, which will
    be located in Ballston, Virginia. No new funds have been requested for
    this initiative. This initiative is discussed in more detail later in this
    testimony. The second reallocation involves an $80.5 million transfer from
    AC&I into the operating expense appropriation. The operational aspect of
    this reallocation is associated with creating a new consolidated
    acquisition function, also discussed in further detail below. Coast Guard
    officials said this reallocation consolidates all personnel funding into
    the operating expense appropriation and enables the Coast Guard to manage
    one personnel system for the entire agency. They said although this
    reallocation is budget neutral in 2008, future budget requests may include
    financial incentives that will enable the Coast Guard to develop a more
    robust cadre of acquisition professionals.

    Acquisition Budget Request Declines, but Substantial Unobligated Balances Are
    Also Available

    The 19 percent decrease in fiscal year 2008 for AC&I reflects a slowing in
    the pace of acquisition efforts, which, according to Coast Guard
    officials, is an attempt to address technology issues and contracting
    oversight associated with Deepwater programs such as the Vertical Unmanned
    Aerial Vehicle and Fast Response Cutter. The Coast Guard also recognizes
    that it is carrying significant unobligated balances for a number of its
    acquisition projects. These balances reflect money appropriated but not
    yet spent for projects included in previous years' budgets. During our
    work for this testimony, we reviewed budget data and Coast Guard
    documentation showing the current status of the agency's unobligated
    balances. We found, for example, that the current unobligated balances
    total $1.96 billion for all acquisition projects. The Deepwater
    acquisition alone has $1.6 billion in total unobligated balances, which is
    nearly double the Coast Guard's fiscal year 2008 request for the Deepwater
    project. Other acquisition programs, such as the Nationwide Automatic
    Identification System and Rescue 21, also have unobligated balances, but
    these are considerably lower (see table 2). The unobligated balance for
    Rescue 21, for example, is $30.5 million.

    Table 2: Total Unobligated Balances for Selected Acquisition Projects
    (dollars in millions)

                                             Fiscal year 2008
    Acquisition project                            request Unobligated balance
    Integrated Deepwater Systems                    $836.9            $1,632.6
    Shore Facilities and Aids to                      37.9               156.8
    Navigation
    Nationwide Automatic Identification               12.0                36.0
    System
    Rescue 21                                         80.8                30.5
    Vessels and Critical Infrastructure                9.2                30.3
    Projects

    Source: GAO analysis of Coast Guard data.

    These unobligated balances have accumulated for a variety of reasons as
    the Coast Guard has found itself unable to spend previous-year acquisition
    appropriations. For example, we and others have documented technical
    design issues involving the Coast Guard's 123-foot patrol boat and the
    Fast Response Cutter. These problems have led to major delays in some
    programs and outright cancellations in others. We asked Coast Guard
    officials about their plans to spend these unobligated balances either in
    fiscal year 2008 or beyond, but at this point they were unable to provide
    us with detailed plans for doing so. To the agency's credit, steps have
    been taken to address the issue, including reporting quarterly acquisition
    spending levels. Since these unobligated balances represent a significant
    portion of the Coast Guard's entire budget, the degree to which the Coast
    Guard spends these balances in fiscal year 2008 could have a substantial
    impact on the overall level of capital spending for the year.

    According to senior Coast Guard officials, each acquisition project is now
    receiving more scrutiny and oversight of how previous funds are spent. The
    Coast Guard is not requesting additional funds for the Offshore Patrol
    Cutter, Fast Response Cutter, and Vertical Unmanned Aerial Vehicle in the
    fiscal year 2008 budget request until business case reviews are completed
    to assess the viability of the technology and contracting oversight.

    Performance Trends Generally Positive and Non-Homeland Security Measures
    Generally Sound

    Despite the fact that Coast Guard met fewer performance targets than last
    year, overall performance trends for most mission programs remain
    positive. Performance in 7 of 11 Coast Guard mission areas increased in
    the last year, but the Coast Guard also set performance targets at a
    higher level than it did last year. Coast Guard's performance did not
    improve sufficiently for the Coast Guard to meet as many of its higher
    performance targets in 2006 as it did in 2005. In fiscal year 2006, the
    Coast Guard reported that 5 of its 11 programs met or exceeded program
    performance targets. In addition, agency officials reported that the Coast
    Guard expected to meet the target for 1 additional program when results
    become available in August 2007, potentially bringing the total met
    targets to 6 out of 11 (see fig. 4). In comparison, last year we reported
    that in fiscal year 2005, Coast Guard met 8 out of 11 targets. In fiscal
    year 2006, the agency narrowly missed performance targets for 3
    programs--Search and Rescue, Living Marine Resources, and Aids to
    Navigation. In fiscal year 2005, it missed only 1 of these 3, Living
    Marine Resources. The Coast Guard more widely missed performance targets
    for 2 programs, Defense Readiness and Marine Safety. In fiscal year 2005,
    Coast Guard met its Marine Safety target, but missed on Defense Readiness.
    See appendix I for more information on Coast Guard performance results.

    Figure 4: Number of Performance Targets the Coast Guard Met, or
    Anticipates Meeting, for the Coast Guard's 11 Programs for Fiscal Years
    2002 through 2006

    Congressional committees have previously expressed concern that Coast
    Guard's shift in priorities and focus toward homeland security missions
    following the events of September 11, 2001, may have affected the agency's
    ability to successfully perform its non-homeland security missions.
    However, the Coast Guard's performance on its non-homeland security
    indicators has not changed substantially over the past 5 years.

    This past year, we also completed an examination of some of the
    performance indicators themselves.3 We found that while the Coast Guard's
    non-homeland security measures are generally sound and the data used to
    collect them are generally reliable, there are challenges associated with
    using performance measures to link resources to results. Such challenges
    include comprehensiveness (that is, using a single measure per mission
    area may not convey complete information about overall performance) and
    external factors outside agency control, (such as weather conditions,
    which can affect the amount of ice that needs to be cleared or the number
    of mariners who must be rescued). The Coast Guard continues to work on
    these measures through such efforts as the following:

    3GAO, Coast Guard: Non-Homeland Security Performance Measures Are
    Generally Sound, but Opportunities for Improvement Exist, [29]GAO-06-816
    (Washington, D.C.: August 2006).

               o Standardized reporting. The Coast Guard is currently developing
               a way to standardize the names and definitions for all Coast Guard
               activities across the agency, creating more consistent data
               collection throughout the agency.

               o Measurement readiness. The Coast Guard is developing a tool to
               track the agency's readiness capabilities with up-to-date
               information on resource levels at each Coast Guard unit as well as
               the certification and skills of all Coast Guard uniformed
               personnel.

               o Framework for analyzing risk, readiness, and performance. The
               Coast Guard is developing a model for examining the links among
               risk, readiness management, and agency performance. This model is
               intended to help the Coast Guard better understand why events and
               outcomes occur, and how these events and outcomes are related to
               resources.

    While the Coast Guard appears to be moving in the right direction and is
    about done with some of these efforts, it remains too soon to determine
    how effective the Coast Guard's larger efforts will be at clearly linking
    resources to performance results. These initiatives are not expected to be
    fully implemented until 2010.4

    4For more details on the Coast Guard's efforts to match resources to
    performance results, see appendix III in [30]GAO-06-816 .

    Coast Guard Continues to Make Organizational Changes Designed to Improve
    Operational Effectiveness and Resource Management

    The 2008 budget request reflects a multiyear effort to reorganize the
    Coast Guard's command and control and mission support structures. Three
    efforts are of note here--reorganizing shore-based forces into sector
    commands, placing all deployable specialized forces under a single
    nationwide command, and consolidating acquisitions management programs.
    Each of these efforts faces challenges that merit close attention.

    Further Action Needed to Ensure Operational Benefits from Sector Reorganization

    As we reported for the last 2 years, the Coast Guard has implemented a new
    field command structure that is designed to unify previously disparate
    Coast Guard units, such as air stations and marine safety offices, into 35
    different integrated commands, called sectors. At each of these sectors,
    the Coast Guard has placed management and operational control of these
    units and their associated resources under the same commanding officer.
    Coast Guard officials told us that this change helped their planning and
    resource allocation efforts. For instance, Coast Guard field officials
    told us the sector command structure has been valuable in helping to meet
    new homeland security responsibilities, and in facilitating their ability
    to manage incidents in close coordination with other federal, state, and
    local agencies. Our follow-up work found, however, that work remains to
    ensure the Coast Guard is able to maximize the potential benefits of
    sector realignment. In particular, Coast Guard officials reported that
    some sectors had yet to colocate their vessel tracking system (VTS)
    centers with the rest of their operational command centers. According to
    field officials, the lack of colocation has hindered communications
    between staff that formerly were from different parts of the agency.

    According to Coast Guard officials, competing acquisition priorities are
    limiting the progress in obtaining funding needed to colocate these
    facilities. The fiscal year 2008 budget does not provide funds to colocate
    the VTS centers and command centers. Coast Guard headquarters officials
    told us they would work to address this challenge as part of the capital
    investment plan to build interagency operational centers for port
    security, as required under the SAFE Port Act, but they had not yet
    developed specific plans, timelines, and cost estimates.5

    Unified Command Structure for Deployable Forces Is Being Developed

    The Coast Guard is planning to reorganize its deployable specialized
    forces under a single unified command, called the Deployable Operations
    Group (DOG). This change is reportedly budget neutral in the fiscal year
    2008 request, but it bears attention for operational effectiveness
    reasons. According to Coast Guard officials, the agency is making this
    change based on lessons learned from the federal response to Hurricane
    Katrina. They said the response highlighted the need to improve
    effectiveness of day-to-day operations and to enhance flexibility and
    interoperability of forces responding to security threats and natural
    disasters. Currently, there are five different types of Coast Guard
    specialized forces, totaling about 2,500 personnel. Their roles and
    missions vary widely, ranging from conducting antiterrorism operations to
    conducting environmental response and cleanup operations (see table 3).

    5Pub. L. No. 109-347, 120 Stat. 1884 (2006).

    Table 3: Coast Guard Deployable Specialized Forces, Mission Area and
    Primary Operational Activity, and Force Size

                             Mission area and primary
    Specialized force     operational activities              Force size
    National strike force Marine environmental protection     3 strike teams /
    (NSF)                                                     328 personnel
                                o Domestic and international
                                response for oil spills
                                o Hazardous material cleanup
                                o Chemical, biological, and
                                radiological response
    Tactical law          Law enforcement                     2  units  /  180
    enforcement teams                                         personnel
    (TACLET)                 o Maritime interception
                                operations
    Port  security  units Defense readiness                   8 units /  1,144
    (PSU)                                                     personnel
                                o Expeditionary port security
    Maritime  safety  and Ports, waterways, and coastal       12 units  /  924
    security teams (MSST) security                            personnel

                                o Domestic port security
                                o Antiterrorism
    Maritime security     Ports, waterways, and coastal       1  unit  /   208
    response team (MSRT)  security                            personnel

                             Counterterrorism

    Source: Coast Guard.

    The Coast Guard's existing structure divides operational control of
    specialized forces into three different command authorities--headquarters,
    Pacific Area, and Atlantic Area. Under the planned realignment, these
    forces would be available under a single operational command, with the
    expectation of more effective resource management, oversight, and
    coordination.6 The Coast Guard plans to establish operating capability for
    this unified approach by July 20, 2007, with an initial command center
    located in Ballston, Virginia. Officials told us they were well under way
    in planning for this reorganization. Officials expect about 100 staff will
    be assigned to the center when it reaches its initial operating
    capability, growing to about 150 personnel once the command structure is
    completed. According to officials, all administrative staff selected for
    the center will be drawn from headquarters, district, and area levels.

    6Although the deployable forces will be reorganized under a single command
    authority, officials told us the units would remain based in their current
    locations. However, personnel on these teams may be rotated or
    cross-deployed with other specialized teams. For example, an MSST located
    at Seattle will remain based in that location, but the personnel attached
    to that MSST may be rotated or mixed with other MSST units to meet ongoing
    needs.

    We have not studied this reorganization, but our prior work on other
    aspects of Coast Guard operations suggests that the Coast Guard may face a
    number of implementation challenges. Some may be similar to those that
    Coast Guard faced when it created its sector commands, such as obtaining
    buy-in from personnel that will be affected by the reorganization or
    addressing realignment issues at the district level. Another challenge is
    to ensure that the change does not adversely affect mission performance at
    the sector and field unit levels. Currently, for example, sector
    commanders make use of available local MSST units--made available by
    district and area commanders--to help meet shortfalls in resource
    availability for everyday missions, such as conducting high-risk vessel
    escorts and harbor security patrols. If these units were not available to
    support mission needs, additional strain could be put on the performance
    of these local units.

    These changes to the command structure are part of plans that extend
    beyond fiscal year 2008. In his recent State of the Coast Guard speech,
    the Commandant of the Coast Guard unveiled a proposal to combine the Coast
    Guard's Atlantic and Pacific Area command functions into a single Coast
    Guard operations command for mission execution. In addition, the Coast
    Guard plans to establish a new mission support command, which will have
    responsibility for nationwide maintenance, logistics, and supply
    activities. According to Coast Guard officials, the current structure is
    not well suited to responding to post-September 11 transnational threats.
    For example, Coast Guard officials said the current structure at times
    works against the Coast Guard in operations with Joint Interagency Task
    Forces, whose operating areas are not the same as the Coast Guard's
    established area boundaries. Coast Guard officials told us a working group
    had developed a blueprint of the new operational force structure, but the
    Coast Guard is not ready to release it. Guard officials told us they
    expected the reorganization would be implemented during the current
    Commandant's 4-year term.

    Consolidation of Acquisitions Oversight Management Challenged By Staffing
    Shortfalls

    The Coast Guard also plans to consolidate its acquisitions management
    offices, placing all major acquisitions programs and oversight functions
    under the control of a single acquisitions officer. The goals of this
    consolidation are to improve Coast Guard oversight of acquisitions, better
    balance contracting officers and acquisition professionals among its major
    acquisition projects, and address staff retention and shortage problems
    associated with the acquisitions management program. However, the Coast
    Guard has not adequately staffed the acquisitions management program to
    meet its current workload, and maintaining an appropriate staff size will
    be challenging, despite the reorganization. For example, a February 2007
    independent analysis found that the Coast Guard does not possess a
    sufficient number of acquisition personnel or the right level of
    experience needed to manage the Deepwater program.7 Headquarters officials
    told us the reorganization would address retention problems by creating a
    new acquisitions specialty career ladder that could attract new pools of
    talent. Still, given its past history of staff shortages and difficulties
    retaining acquisition staff, the Coast Guard will face challenges
    maintaining an appropriately sized acquisition staff, at least in the near
    term. Coast Guard headquarters officials told us the Deepwater program had
    pushed other important acquisitions priorities aside, and this new
    organization would help the Coast Guard advance these other priorities,
    such as boats, piers, and other shoreside physical infrastructure. In our
    view, it is unclear how the reorganization of the acquisition function
    will improve the prospects for these other programs, given Coast Guard's
    priorities and ongoing constraints on funding.

    The reorganized acquisition office is expected to merge the now
    stand-alone Deepwater acquisition project with the existing acquisition
    directorate and research and development centers. The new office is
    expected to be led by a new Coast Guard Chief Acquisition Officer who will
    have responsibility over all procurement projects and by a deputy who will
    deal largely with Deepwater issues. At the program management level, Coast
    Guard is establishing four program managers to lead each acquisitions
    area, including (1) surface assets; (2) air assets; (3) command, control,
    communications, computers, intelligence, surveillance, and reconnaissance;
    and (4) small boats and shore-based infrastructure, such as command
    centers and boathouses. The Coast Guard plans to begin implementing this
    reorganization in July 2007. It is too early to tell if the Coast Guard's
    reorganization will enable it to achieve its goals--notably, better
    balance of acquisitions support between Deepwater and the Coast Guard's
    other acquisitions programs.

    7Defense Acquisition University, Quick Look Study: United States Coast
    Guard Deepwater Program, (Fort Belvoir, Virginia, 2007).

    Acquisition Challenges Continue as Several Programs Make Progress

    While some Coast Guard major acquisition projects continue to face
    challenges, especially the Deepwater program, several of these projects
    are making progress. The record for Deepwater has been mixed, with 7 of 10
    asset classes on or ahead of schedule. Three classes, however, are behind
    schedule for various reasons and several factors add to the uncertainty
    about the delivery of other Deepwater assets. Contract management issues
    that we have reported on previously continue to be challenges to the Coast
    Guard. Installation of equipment for the initial phase of NAIS, an
    acquisition that is designed to allow the Coast Guard to monitor and track
    vessels as far as 2,000 nautical miles off the U.S. coast, is currently
    under way, but without changes to existing regulations, some vessels will
    be able to avoid taking part in the system. The Coast Guard's timeline for
    achieving full operating capability for its search and rescue
    communications system, Rescue 21, was delayed from 2006 to 2011, and the
    estimated total acquisition cost increased from 1999 to 2005, but
    according to Coast Guard officials, many of the issues that led to these
    problems are being addressed. Coast Guard acquisition officials said they
    are providing more oversight to the contractor after we reported on
    contract management shortcomings.

    Coast Guard Continues to Face Acquisition Challenges with Deepwater Program

    The Coast Guard continues to face challenges in managing the Deepwater
    program. The delivery record for assets is mixed and technology and
    funding uncertainties, recent changes to Coast Guard plans for procuring
    Deepwater assets, as well as the 25-year time frame for asset delivery add
    to uncertainties about the delivery schedule for future Deepwater assets.
    We have reported concerns about management of the Deepwater program for
    several years now and have made recommendations aimed at improving the
    program. The Coast Guard continues to address these recommendations as it
    seeks to better manage the Deepwater program. In addition to these program
    management issues, performance and design problems for certain Deepwater
    assets have created additional operational challenges for the Coast Guard.
    The Coast Guard is taking steps to mitigate these problems, but challenges
    remain. Below is a summary of our recent Deepwater work.8

    8For a more complete description of our reviews of the Deepwater program,
    see GAO, Coast Guard: Preliminary Observations on Deepwater Program Assets
    and Management Challenges, [31]GAO-07-446T (Washington, D.C.: Feb. 15,
    2007).

      Deepwater Asset Delivery Schedule Is Mixed and Somewhat Uncertain

    The Coast Guard's Deepwater program is a 25-year, $24 billion plan to
    replace or upgrade its fleet of vessels and aircraft. Upon completion, the
    Deepwater program is to consist of 5 new classes of vessels--the National
    Security Cutter (NSC), Offshore Patrol Cutter (OPC), Fast Response Cutter
    (FRC), Short-Range Prosecutor (SRP), and Long-Range Interceptor (LRI); 1
    new class of fixed-wing aircraft--the Maritime Patrol Aircraft (MPA); 1
    new class of unmanned aerial vehicles--the Vertical Unmanned Aerial
    Vehicle (VUAV); 2 classes of upgraded helicopters--the Medium-Range
    Recovery Helicopter (MRR) and the Multi-Mission Cutter Helicopter (MCH);
    and 1 class of upgraded fixed-wing aircraft--the Long-Range Surveillance
    Aircraft (LRS).9 Figure 5 illustrates the 10 classes of Deepwater assets.

    Figure 5: Deepwater Vessel and Aircraft Classes

    Our preliminary observations indicated that, as of January 2007, of the 10
    classes of Deepwater assets to be acquired or upgraded, the delivery
    record for first-in-class assets (that is, the first of multiple aircraft
    or vessels to be delivered in each class) was mixed. Specifically, 7 of
    the 10 asset classes were on or ahead of schedule. Among these, 5
    first-in-class assets had been delivered on or ahead of schedule; and 2
    others remained on schedule but their planned delivery dates were in 2009
    or beyond. In contrast, 3 Deepwater asset classes were behind schedule due
    to various problems related to designs, technology, or funding. Using the
    2005 Deepwater Acquisition Program Baseline as the baseline, figure 6
    indicates, for each asset class, whether delivery of the first in class
    asset was ahead of schedule, on schedule, or behind schedule as of January
    2007.

    9In addition to these asset classes, the Deepwater program includes other
    projects such as Command, Control, Communications, Computers,
    Intelligence, Surveillance and Reconnaissance (C4ISR) systems. For
    example, the Coast Guard plans to procure surveillance data from another
    unmanned aerial vehicle, the RQ-4A. Because this is not to be acquired as
    a capital investment, we do not include it among the assets to be acquired
    or upgraded.

    Figure 6: Comparison of the Estimated Delivery Dates for the
    First-in-Class Deepwater Assets from the 2005 Deepwater Acquisition
    Baseline and as of January 2007

    As part of our ongoing work, we are analyzing Coast Guard planning
    documents to evaluate the current estimates of Deepwater asset delivery
    dates. Several factors add to the uncertainty about the delivery schedule
    of Deepwater assets. First, the Coast Guard is still in the early phases
    of the 25-year Deepwater acquisition program and the potential for changes
    in the program over such a lengthy period of time make it difficult to
    forecast the ability of the Coast Guard to acquire future Deepwater assets
    according to its published schedule. For example, technology changes since
    the award of the original Deepwater contract in 2002 have already, in
    part, delayed delivery of the VUAV, and the Coast Guard is currently
    studying the potential use of an alternative unmanned aerial vehicle.
    Second, changes to funding levels can impact the future delivery of
    Deepwater assets. For example, despite earlier plans, the fiscal year 2008
    Department of Homeland Security congressional budget justification
    indicates that the Coast Guard does not plan to request funding for some
    Deepwater assets in FY 2008, such as the OPC and the VUAV. Acquisition of
    these two Deepwater assets has now been delayed until FY 2013, at the
    earliest. Finally, the Coast Guard has recently made a number of program
    management and asset-specific changes that could impact the delivery
    schedules for its Deepwater assets. For example, the Coast Guard has begun
    to bring all acquisition efforts under one organization. Further, the
    Coast Guard announced that it has terminated acquisition of the FRC-B, an
    off-the-shelf patrol boat that is intended to serve as an interim
    replacement for the Coast Guard's deteriorating fleet of 110-foot patrol
    boats, through the system integrator and plans to assign responsibility
    for the project to the Coast Guard's acquisition directorate. These types
    of programmatic changes will take time to implement, and thus add to
    uncertainty about the specific delivery dates of certain Deepwater assets.

      Deepwater Program Management, Contractor Accountability, and Cost Control

    In 2001, we described the Deepwater program as "risky" due to the unique,
    untried acquisition strategy for a project of this magnitude within the
    Coast Guard.10 The Coast Guard used a system-of-systems approach to
    replace or upgrade assets with a single, integrated package of aircraft,
    vessels, and unmanned aerial vehicles, to be linked through systems that
    provide C4ISR and supporting logistics. In a system of systems, the
    deliveries of Deepwater assets are interdependent, thus schedule slippages
    and uncertainties associated with potential changes in the design and
    capabilities of any one asset increases the overall risk that the Coast
    Guard might not meet its expanded homeland security missions within given
    budget parameters and milestone dates. The Coast Guard also used a systems
    integrator--which can give the contractor extensive involvement in
    requirements development, design, and source selection of major system and
    subsystem subcontractors. The Deepwater program is also a
    performance-based acquisition, meaning that it is structured around the
    results to be achieved rather than the manner in which the work is
    performed. If performance-based acquisitions are not appropriately planned
    and structured, there is an increased risk that the government may receive
    products or services that are over cost estimates, delivered late, and of
    unacceptable quality.

    10GAO, Coast Guard: Progress Being Made on Deepwater Project, but Risks
    Remain, [32]GAO-01-564 (Washington, D.C.: May 2, 2001).

    In 2004 and in subsequent assessments in 2005 and 2006, we reported
    concerns about the Deepwater program related to three main areas--program
    management, contractor accountability, and cost control.11 The Coast
    Guard's ability to effectively manage the program has been challenged by
    staffing shortfalls and poor communication and collaboration among
    Deepwater program staff, contractors, and field personnel who operate and
    maintain the assets. Despite documented problems in schedule, performance,
    cost control, and contract administration, measures for holding the
    contractor accountable resulted in an award fee of $4 million (of the
    maximum $4.6 million) for the first year. Through the first 4 years of the
    Deepwater contract, the systems integrator received award fees that ranged
    from 87 percent to 92 percent of the total possible award fee (scores that
    ranged from "very good" to "excellent" based on Coast Guard criteria), for
    a total of over $16 million. Further, the program's ability to control
    Deepwater costs is uncertain given the Coast Guard's lack of detailed
    information on the contractor's competition decisions. While the Coast
    Guard has taken some actions to improve program outcomes, our assessment
    of the program and its efforts to address our recommendations continues,
    and we plan to report on our findings later this year.

      Deepwater Performance and Design Problems Creating Operational Challenges for
      Coast Guard

    In addition to the program management issues discussed above, there have
    been problems with the performance and design of Deepwater patrol boats
    that have created operational challenges for the Coast Guard. The
    Deepwater program's bridging strategy to convert the legacy 110-foot
    patrol boats into 123-foot patrol boats has been unsuccessful. The Coast
    Guard had originally intended to convert all 49 of its 110-foot patrol
    boats into 123-foot patrol boats in order to increase the patrol boats'
    annual operational hours and to provide additional capabilities, such as
    small boat stern launch and recovery and enhanced and improved C4ISR.
    However, the converted 123-foot patrol boats began to display deck
    cracking and hull buckling and developed shaft alignment problems, and the
    Coast Guard elected to stop the conversion process at eight hulls upon
    determining that the converted patrol boats would not meet their expanded
    post-September 11 operational requirements.

    11GAO, Contract Management: Coast Guard's Deepwater Program Needs
    Increased Attention to Management and Contractor Oversight, [33]GAO-04-380
    (Washington, D.C.: Mar. 9, 2004); Coast Guard: Progress Being Made on
    Addressing Deepwater Legacy Asset Condition Issues and Program Management,
    but Acquisition Challenges Remain, [34]GAO-05-757 (Washington, D.C.: Jul.
    22, 2005); and Coast Guard: Changes in Deepwater Plan Appear Sound, and
    Program Management Has Improved, but Continued Monitoring is Warranted,
    [35]GAO-06-546 (Washington, D.C.: Apr. 28, 2006).

    These performance problems have had operational consequences for the Coast
    Guard. The hull performance problems with the 123-foot patrol boats led
    the Coast Guard to remove all of the eight converted normal 123-foot
    patrol boats from service effective November 30, 2006. The Commandant of
    the Coast Guard has stated that having reliable, safe cutters is
    "paramount" to executing the Coast Guard's missions.12 Thus, removing
    these patrol boats from service affects the Coast Guard's operations in
    its missions, such as search and rescue and alien and migrant
    interdiction. The Coast Guard is taking actions to mitigate the
    operational impacts resulting from the removal of the 123-foot patrol
    boats from service. Specifically, in recent testimony, the Commandant of
    the Coast Guard stated that the Coast Guard has taken the following
    actions:

               o multicrewing eight of the 110-foot patrol boats with crews from
               the 123-foot patrol boats that have been removed from service so
               that patrol hours for these vessels can be increased;

               o deploying other Coast Guard vessels to assist in missions
               formerly performed by the 123-foot patrol boats;

               o securing permission from the U.S. Navy to continue using three
               179-foot cutters on loan from the Navy (these were originally to
               be returned to the Navy in 2008) to supplement the Coast Guard's
               patrol craft; and

               o compressing the maintenance and upgrades on the remaining
               110-foot patrol boats.

    The FRC, which was intended as a long-term replacement for the legacy
    patrol boats, has experienced design problems that have operational
    implications as well. As we reported in 2006, the Coast Guard suspended
    design work on the FRC due to design risks such as excessive weight and
    horsepower requirements.13 Coast Guard engineers raised concerns about the
    viability of the FRC design (which involved building the FRC's hull,
    decks, and bulkheads out of composite materials rather than steel)
    beginning in January 2005. In February 2006, the Coast Guard suspended FRC
    design work after an independent design review by third party consultants
    demonstrated, among other things, that the FRC would be far heavier and
    less efficient than a typical patrol boat of similar length, in part,
    because it would need four engines to meet Coast Guard speed requirements.

    12U.S. Coast Guard, Office of Public Affairs, Coast Guard Suspends
    Converted Patrol Boat Operations, (Washington, D.C., 2006).

    13GAO, Coast Guard: Status of Deepwater Fast Response Cutter Design
    Efforts, [36]GAO-06-764 (Washington, D.C.: June 23, 2006).

    One operational challenge related to the FRC is that the Coast Guard will
    end up with two classes of FRCs. The first class of FRCs to be built would
    be based on an adapted design from a patrol boat already on the market to
    expedite delivery. The Coast Guard would then pursue development of a
    follow-on class that would be completely redesigned to address the
    problems in the original FRC design plans. Coast Guard officials recently
    estimated that the first FRC delivery will slip to fiscal year 2009, at
    the earliest, rather than 2007 as outlined in the 2005 Revised Deepwater
    Implementation Plan. Thus, the Coast Guard is also facing longer-term
    operational gaps related to its patrol boats.

    Initial Deployment of Nationwide Automatic Identification System Is Under Way,
    with Decisions Still to Come about Extending Coverage to Additional Vessels

    Outside Deepwater, one acquisition project included in the fiscal year
    2008 budget is the Nationwide Automatic Identification System, a system
    designed to of identify, track, and communicate with vessels bound for or
    within U.S. waters and forwarding that information for additional
    analysis. NAIS uses a maritime digital communication system that transmits
    and receives vessel position and voyage data. The Coast Guard describes
    NAIS as its centerpiece in its effort to build Maritime Domain Awareness,
    its ability to know what is happening on the water.

    NAIS is not expected to reach full capability until 2014, when the system
    will be able to track ships as far as 2,000 nautical miles away and
    communicate with them when they are within 24 nautical miles of the U.S.
    coast. It is being implemented in three phases, the first of which is
    scheduled to be fully operational in September 2007. At that time, the
    Coast Guard expects to have the ability to track--but not communicate
    with--vessels in 55 ports and 9 coastal areas. The largest areas of the
    continental U.S. coastline that will remain without coverage after this
    first phase are the Pacific Northwest and Gulf coasts. The second phase
    calls for being able to track ships out to 50 nautical miles from the
    entire U.S. coast and communicate with them as far as 24 nautical miles
    out. This is the phase addressed in the fiscal year 2008 budget.

    The $12 million fiscal year 2008 AC&I request for NAIS is expected to pay
    for implementing the initial operating capability for phase two. The Coast
    Guard has received approval from the Department of Homeland Security to
    issue solicitations and award contracts for this initial capability, and
    the agency has held information sessions to gauge industry interest in
    participating and to help refine its statement of work for the initial
    solicitation. The initial solicitation will provide requirements for full
    receiving and transmitting capability for two sectors within one Coast
    Guard area and one sector in another area. With this infrastructure in
    place the Coast Guard expects to be able to test identification, tracking,
    and communication performance, including such features as the ability to
    determine if the vessel transmissions are accurately reflecting the actual
    location of a vessel.

    The Coast Guard is considering whether to require additional types of
    vessels to install and use the equipment needed for the Coast Guard to
    track vessels and communicate with them. Current regulations require
    certain vessels (such as commercial vessels over 65 feet in length)
    traveling on international voyages or within VTS areas to install and
    operate the transmission equipment.14 Vessels that are not subject to
    current regulations generally include noncommercial and fishing vessels
    and commercial vessels less than 65 feet long. This means that many
    domestic vessels are not required to transmit the vessel and voyage
    information and therefore will be invisible to the NAIS. The Coast Guard
    has indicated in the Federal Register that it is considering expanding the
    requirements to additional vessels.15

    14Vessel traffic services areas are locations where the Coast Guard
    monitors and communicates with vessels using AIS, radar, and other
    technologies to prevent collisions and other accidents.

    15In our previous report we recommended that the Coast Guard should pursue
    opportunities to cost-share with private entities that were interested in
    receiving vessel and voyage information transmissions. According to Coast
    Guard officials, subsequent to the publication of the report they have
    partnered with private entities in Tampa, Florida, and Alaska.

    Coast Guard Has Taken Actions to Improve Oversight of Rescue 21 Contracts, but
    System Coverage Has Been Reduced

    Another non-Deepwater project covered in the budget request is Rescue 21,
    the Coast Guard's command, control, and communication infrastructure used
    primarily for search and rescue. The fiscal year 2008 AC&I budget includes
    $81 million for continued development of Rescue 21. In May 2006 we
    reported that shortcomings in Coast Guard's contract management and
    oversight efforts contributed to program cost increases from $250 million
    in 1999 to $710.5 million in 2005 and delays in reaching full operating
    capability from 2006 to 2011.16 Our recommendations included better
    oversight of the project, completion of an integrated baseline review of
    existing contracts, and development of revised cost and schedule
    estimates. According to the Coast Guard, it has taken a series of actions
    in response, including program management reviews and oversight meetings,
    conducting integrated baseline reviews on existing contracts, and meeting
    regularly to assess project risks.

    According to the Coast Guard officials we met with, the contractor is
    currently on time and on budget for installing the full system in 11
    Rescue 21 regions, including such regions as New Orleans, Long Island/New
    York, and Miami. The last of the 11 regions covered by current contracts
    is scheduled to be completed by October 2008. Contracts for the 25 regions
    that remain have not been signed. To keep to current project cost and
    schedule baselines, however, the Coast Guard has reduced the required
    performance of the system. Originally, Rescue 21 was supposed to limit
    coverage gaps to 2 percent, meaning that the system had to be able to
    capture distress calls in 98 percent of the area within 20 nautical miles
    of the coast and within navigable rivers and other waterways. The current
    contract calls for coverage gaps of less than 10 percent. Rescue 21 was
    also intended to have the capability to track Coast Guard vessels and
    aircraft and provide data communication with those assets. Neither the
    capability to track the Coast Guard's own assets nor data communications
    is included in the current technology being installed.

    16GAO, United States Coast Guard: Improvements Needed in Management and
    Oversight of Rescue System Acquisition, [37]GAO-06-623 (Washington, D.C.:
    May 2006).

    Coast Guard Faces Additional Challenges Addressing Traditional Missions

    While the fiscal year 2008 budget request contains funding for
    specifically addressing the projects discussed above, certain other
    projects were judged by Coast Guard officials to be lower in priority and
    were not included. We have examined two of these areas in recent
    work--vessels for aids to navigation and domestic icebreaking activity,
    and vessels for icebreaking in polar areas.

    Decline in Condition of Some ATON and Domestic Icebreaking Assets May Require
    More Attention for Recapitalization or Outsourcing Options

    Last September, we completed work for this committee on the condition of
    Coast Guard aids-to-navigation (ATON) and icebreaking assets.17 More than
    half of these assets have reached or will be approaching the end of their
    designed service lives. In 2002, the Coast Guard proposed options for
    systematically rehabilitating or replacing 164 cutters and boats in these
    fleets after determining that the age, condition, and cost of operating
    these assets would diminish the capability of the Coast Guard to carry out
    ATON and domestic icebreaking missions. We noted that no funds had been
    allocated to pursue these options, apparently due to competing needs for
    replacing or rehabilitating other Coast Guard assets. These competing
    needs, reflected largely in the Coast Guard's expensive and lengthy
    Deepwater asset replacement program, will continue for some time, as will
    other pressures on the federal budget. The Coast Guard is requesting no
    additional spending for ATON assets or infrastructure in fiscal year 2008.

    Without specific funding to move forward, the Coast Guard has attempted to
    break the project into smaller components and pursue potential funding
    from within the Coast Guard's budget, focusing on the assets most in need
    of maintenance or replacement. In February 2006, the Coast Guard began a
    project to replace its fleet of 80 trailerable aids-to-navigation boats
    with new boats that have enhanced capabilities to do ATON work as well as
    other missions.18 According to a Coast Guard official, this acquisition
    would cost approximately $14.4 million if all 80 boats are purchased and
    would bring on new boats over a 5-year period as funds allow. The Coast
    Guard official responsible for the project said the Coast Guard intends to
    make the purchases using a funding stream appropriated for the maintenance
    of nonstandard boats that can be allocated to the boats with the most
    pressing maintenance or recapitalization needs. Availability of these
    funds, however, depends on the condition and maintenance needs of other
    nonstandard boats; if this funding has to be applied to meet other needs,
    such as unanticipated problems, it may not be available for purchasing
    these boats.

    17GAO, Coast Guard: Condition of Some Aids-to-Navigation and Domestic
    Icebreaking Vessels Has Declined; Effect on Mission Performance Appears
    Mixed, [38]GAO-06-979 (Washington, D.C.: Sept. 22, 2006).

    18These boats can be placed on trailers and transported on land by truck.

    In addition to carrying out their primary missions of ATON and domestic
    icebreaking, these assets have also been used in recent years for other
    missions such as homeland security. The Coast Guard's ATON and domestic
    icebreakers saw a sharp increase in use for homeland security missions
    after the attacks of September 11, and while this trend has moderated
    somewhat, the use of some assets in these missions continues well above
    pre-September 11 levels. This increase is most prominent for domestic
    icebreakers, which are being operated more extensively for other purposes
    at times of year when no icebreaking needs to be done. Newer ATON vessels,
    which have greater multimission capabilities than older vessels, tend to
    be the ATON assets used the most for other missions.

    In addition to considering options for replacing or rehabilitating its
    ATON assets, the Coast Guard also has examined possibilities for
    outsourcing missions. In 2004 and 2006, the Coast Guard completed analyses
    of what ATON functions could be feasibly outsourced. Although
    possibilities for outsourcing were identified for further study, Coast
    Guard officials noted that outsourcing also carries potential
    disadvantages. For example, they said it could lead to a loss of "surge"
    capacity-that is the capacity to respond to emergencies or unusual
    situations. Coast Guard officials noted that outsourcing or finding a
    contractor to do work after an event such as Katrina is difficult due to
    the increased demand for their services as well as the fact that the labor
    pool may have been displaced. When a contractor is found, it usually takes
    a long time to get the work completed due to the backlog of work and tends
    to be very expensive. In addition, this surge capability may be needed for
    other missions, such as those that occur when ATON assets can be used to
    support search and rescue efforts. In the aftermath of Hurricane Katrina,
    for example, some ATON assets provided logistical support for first
    responders or transported stranded individuals. Coast Guard officials
    stated that after Hurricane Katrina, its own crews were able to begin work
    immediately to repair damaged aids and get the waterways open to maritime
    traffic again. Coast Guard officials also indicated that outsourcing may
    adversely affect the Coast Guard's personnel structure by reducing
    opportunities to provide important experience for personnel to advance in
    their careers.

    Coast Guard Faces Decision on Future of Polar Icebreakers

    The Coast Guard confronts ongoing maintenance challenges that have left
    its polar icebreaking capability diminished. The Coast Guard has two
    Polar-class icebreakers for breaking channels in the Antarctic.19 Both are
    reaching the end of their design service lives, and given the funding
    challenges associated with maintaining them, the Coast Guard decided to
    deactivate one of the two, the Polar Star, in 2006. This reduced
    icebreaking capability since only one Polar-class icebreaker, the Polar
    Sea, was available, and for the Polar Sea it increased maintenance needs
    while reducing time available to conduct maintenance.20

    19In addition to the Polar-class icebreakers, the Coast Guard acquired a
    third icebreaker, the Healy, in 2000. Unlike the Polar-class icebreakers,
    the Healy was designed to be an Arctic scientific platform and does not
    have the capabilities to break ice in the Antarctic under most conditions.
    According to Coast Guard officials, although the Healy also has
    maintenance issues, the condition and extent of maintenance needed for the
    Polar-class icebreakers is more severe.

    20Coast Guard officials estimated it would require $40 million to $50
    million and 2 to 3 years of service to refurbish the deactivated
    Polar-class icebreaker--the Polar Star--to a capability level commensurate
    with its other Polar-class icebreaker. Coast Guard officials noted that
    this funding would cover upgrades to systems and to replace vessel
    infrastructure and parts that Coast Guard had cannibalized over the past
    years to replace parts on the Polar Sea.

    Figure: 7: Coast Guard Polar-class Icebreaker

    Coast Guard officials and others have reported that failure to address
    these challenges could leave the nation without heavy icebreaking
    capability and could jeopardize the investment made in the nation's
    Antarctic Program.21 According to Coast Guard officials, the remaining
    Polar-class icebreaker's age and increased operational tempo have left it
    unable to continue the mission in the long term without a substantial
    investment in maintenance and equipment renewal. One option, refurbishing
    the two existing Polar-class icebreakers for an additional 25 years of
    service, is estimated to cost between $552 million and $859 million.
    Another option, building new assets, would cost an estimated $600 million
    per vessel, according to Coast Guard officials.22

    21In the Antarctic, the United States maintains three year-round
    scientific stations. Coast Guard Polar-class icebreakers provide heavy
    icebreaking support necessary to open a shipping channel and allow
    maritime resupply of fuel, food, and cargo to these scientific stations.
    Polar icebreakers deploy to support primary missions such as the U.S.
    Antarctic Program, but while present in the polar region, they often
    support secondary missions such as search and rescue or respond to
    maritime environmental response situations as situations arise.

    Coast Guard officials have begun planning a transition strategy to help
    keep the sole operating Polar-class icebreaker mission-capable until new
    or refurbished assets enter service, which would take an estimated 8 to 10
    years.23 According to officials, this 10-year recapitalization plan will
    identify current and projected maintenance service needs and equipment
    renewal projects and associated costs, alternatives to address these
    needs, and timelines for completing these projects.

    Madam Chair and members of the subcommittee, this completes my statement
    for the record.

    22According to the Coast Guard, this estimate this is based on Healy
    construction costs, making adjustments for increased structural and power
    requirements.

    23In 2007, the National Research Council of the National Academies issued
    a final report on the condition of the U.S. polar icebreaking fleet (Polar
    Icebreakers in a Changing World: An Assessment of U.S. Needs). This report
    corroborated Coast Guard's assessment of the increased risks faced by the
    deteriorating condition of these vessels and recommended that Congress
    immediately take action to design, plan, and build two replacement polar
    icebreaking vessels to replace the aging Polar-class vessels. Moreover,
    because these new vessels would not be available for another 8 to 10
    years, the report recommends that Congress provide the Coast Guard with a
    sufficient operations and maintenance budget to address maintenance
    backlogs on the two operating polar icebreakers to ensure a minimum level
    of icebreaking capability during this period. The report also recommends
    leaving the Polar Star in caretaker status until the new vessels enter
    service.

    GAO Contacts and Staff Acknowledgments

    For information about this statement, please Contact Stephen L. Caldwell,
    Acting Director, Homeland Security and Justice Issues, at (202) 512-9610,
    or caldwells@gao.gov. Contact points for our Office of Congressional
    Relations and Public Affairs may be found on the last page of this
    statement. Individuals making key contributions to this testimony include
    Penny Augustine, Jonathan Bachman, Jason Berman, Steven Calvo, Jonathan
    Carver, Christopher Conrad, Adam Couvillion, Geoffrey Hamilton, John
    Hutton, Christopher Hatscher, Tonia Johnson, and Stan Stenersen.

    Appendix I: Performance Results by Program from Fiscal Year 2002 through
    Fiscal Year 2006

    Appendix I provides a detailed list of Coast Guard performance results for
    the Coast Guard's 11 programs from fiscal year 2002 through 2006.

                      Program                                         Performance
                      performance                                      target for
    Program        measure         2002     2003  2004  2005  2006        2006
    Programs meeting 2006
    targets:
    U.S. Exclusive Number of        250      152   247   174   164       =<199
    Economic Zone  detected
    Enforcement    Exclusive
                      Economic
                      Zone (EEZ)
                      incursions
                      by foreign
                      fishing
                      vessels
    Ice Operations Number of          7        7     4     0     0        =<2a
    (domestic      waterway
    icebreaking)   closure
                      days
    Marine         Average of      35.1     29.4  22.1  18.5  16.3        =<19
    Environmental  oil and
    Protection     chemical
                      spills
                      greater
                      than 100
                      gallons per
                      100 million
                      tons
                      shipped
    Ports,         Percent          n/a      n/a   n/a   14%   17%       >=14%
    Waterways, and reduction
    Coastal        in maritime
    Security       terrorism
                      risk over
                      which the
                      Coast Guard
                      has
                      influence
    Undocumented   Percentage     88.3%    85.3% 87.1%  85.5  89.1       >=89%
    migrant        of
    interdiction   interdicted
                      illegal
                      migrants
                      entering
                      the United
                      States
                      through
                      illegal
                      means
    Program expected to meet
    2006 target:
    Illegal Drug   Percentage       Not      Not 30.7% 27.3%  TBDc       >=22%
    Interdiction   of cocaine  reported reported
                      removed out
                      of total
                      estimated
                      cocaine
                      entering
                      the United
                      States
                      through
                      maritime
                      meansb
    Programs that did not meet
    their 2005 targets:
    Aids to        Number of      2,098    2,000 1,876 1,825 1,765      =<1748
    Navigation     collisions,
                      allisions,
                      and
                      grounding
    Defense        Percentage       70%      78%   76%   67%   62%        100%
    Readiness      of time
                      that units
                      meet combat
                      readiness
                      level
    Living Marine  Percentage     97.3%    97.1% 96.3% 96.4% 96.6%       >=97%
    Resources      of
                      fisherman
                      found in
                      compliance
                      with
                      federal
                      regulations
    Marine Safety  5-year         5,766    5,561 5,387 5,169 5,036      =<4721
                      average
                      annual
                      mariner,
                      passenger,
                      and boating
                      deaths and
                      injuries
    Search and     Percentage     84.4%    87.7% 86.8% 86.1% 85.3%       >=86%
    Rescue         of
                      distressed
                      mariners'
                      lives saved

    Source: GAO analysis of Coast Guard data.

    Note: TBD, to be determined; n/a, not available. Bold numbers indicate
    that performance targets were met previously.

    aThe target for ice operations noted here is for domestic icebreaking
    only, and the target level varies according to the index for an entire
    winter. Thus, for those winters designated as severe, the target is 8 or
    fewer closure days. For winters designated as average, the target is 2 or
    fewer closure days. Because 2002 and 2004 were designated as average
    winters, the 7 and 4 days did not meet the target.

    bThe performance measure for the illegal drug interdiction program, the
    percentage of cocaine removed, was revised in fiscal year 2004 from the
    percentage of cocaine seized in order to more accurately report the impact
    Coast Guard counterdrug activities have on the illicit drug trade. As a
    result, the cocaine removal rates for fiscal year 2002-2003 are not
    available.

    cComplete data are not yet available for the illegal drug interdiction
    program. However, the Coast Guard anticipates meeting the performance
    target for this program based on past performance.

    Related GAO Products

    Coast Guard: Status of Efforts to Improve Deepwater Program Management and
    Address Operational Challenges. [39]GAO-07-575T . Washington, D.C.: March
    8, 2007.

    Coast Guard: Preliminary Observations on Deepwater Program Assets and
    Management Challenges. [40]GAO-07-446T . Washington, D.C.: Feb. 15, 2007.

    Coast Guard: Coast Guard Efforts to Improve Management and Address
    Operational Challenges in the Deepwater Program. [41]GAO-07-460T .
    Washington, D.C.: Feb. 14, 2007.

    Homeland Security: Observations on the Department of Homeland Security's
    Acquisition Organization and on the Coast Guard's Deepwater Program.
    [42]GAO-07-453T . Washington, D.C.: Feb. 8, 2007.

    Coast Guard: Condition of Some Aids-to-Navigation and Domestic Icebreaking
    Vessels Has Declined; Effect on Mission Performance Appears Mixed.
    [43]GAO-06-979 . Washington, D.C.: Sept. 22, 2006.

    Coast Guard: Non-Homeland Security Performance Measures Are Generally
    Sound, but Opportunities for Improvement Exist. [44]GAO-06-816 .
    Washington, D.C.: Aug. 16, 2006.

    Coast Guard: Observations on the Preparation, Response, and Recovery
    Missions Related to Hurricane Katrina. [45]GAO-06-903 . Washington, D.C.:
    July 31, 2006.

    Maritime Security: Information-Sharing Efforts Are Improving.
    [46]GAO-06-933T . Washington, D.C.: July 10, 2006.

    Coast Guard: Status of Deepwater Fast Response Cutter Design Efforts.
    [47]GAO-06-764 . Washington, D.C.: June 23, 2006.

    United States Coast Guard: Improvements Needed in Management and Oversight
    of Rescue System Acquisition. [48]GAO-06-623 . Washington, D.C.: May 31,
    2006.

    Coast Guard: Changes in Deepwater Acquisition Plan Appear Sound, and
    Program Management Has Improved, but Continued Monitoring Is Warranted.
    [49]GAO-06-546 . Washington, D.C.: April 28, 2006.

    Coast Guard: Progress Being Made on Addressing Deepwater Legacy Asset
    Condition Issues and Program Management, but Acquisition Challenges
    Remain. [50]GAO-05-757 . Washington, D.C.: July 22, 2005.

    Coast Guard: Preliminary Observations on the Condition of Deepwater Legacy
    Assets and Acquisition Management Challenges. [51]GAO-05-651T .
    Washington, D.C.: June 21, 2005.

    Maritime Security: Enhancements Made, but Implementation and
    Sustainability Remain Key Challenges. [52]GAO-05-448T . Washington, D.C.:
    May 17, 2005.

    Coast Guard: Preliminary Observations on the Condition of Deepwater Legacy
    Assets and Acquisition Management Challenges. GAO-05-307T. Washington,
    D.C.: April 20, 2005.

    Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 Budget
    Request. [53]GAO-05-364T . Washington, D.C.: March 17, 2005.

    Coast Guard: Station Readiness Improving, but Resource Challenges and
    Management Concerns Remain. [54]GAO-05-161 . Washington, D.C.: January 31,
    2005.

    Maritime Security: Better Planning Needed to Help Ensure an Effective Port
    Security Assessment Program. [55]GAO-04-1062 . Washington, D.C.: September
    30, 2004.

    Maritime Security: Partnering Could Reduce Federal Costs and Facilitate
    Implementation of Automatic Vessel Identification System. [56]GAO-04-868 .
    Washington, D.C.: July 23, 2004.

    Maritime Security: Substantial Work Remains to Translate New Planning
    Requirements into Effective Port Security. [57]GAO-04-838 . Washington,
    D.C.: June 30, 2004.

    Coast Guard: Deepwater Program Acquisition Schedule Update Needed.
    [58]GAO-04-695 . Washington, D.C.: June 14, 2004.

    Coast Guard: Station Spending Requirements Met, but Better Processes
    Needed to Track Designated Funds. [59]GAO-04-704 . Washington, D.C.: May
    28, 2004.

    Coast Guard: Key Management and Budget Challenges for Fiscal Year 2005 and
    Beyond. [60]GAO-04-636T . Washington, D.C.: April 7, 2004.

    Coast Guard: Relationship between Resources Used and Results Achieved
    Needs to Be Clearer. [61]GAO-04-432 . Washington, D.C.: March 22, 2004.

    Contract Management: Coast Guard's Deepwater Program Needs Increased
    Attention to Management and Contractor Oversight. [62]GAO-04-380 .
    Washington, D.C.: March 9, 2004.

    Coast Guard: New Communication System to Support Search and Rescue Faces
    Challenges. [63]GAO-03-1111 . Washington, D.C.: September 30, 2003.

    Maritime Security: Progress Made in Implementing Maritime Transportation
    Security Act, but Concerns Remain. [64]GAO-03-1155T . Washington, D.C.:
    September 9, 2003.

    Coast Guard: Actions Needed to Mitigate Deepwater Project Risks.
    [65]GAO-01-659T . Washington, D.C.: May 3, 2001.

    Coast Guard: Progress Being Made on Deepwater Project, but Risks Remain.
    [66]GAO-01-564 . Washington, D.C.: May 2, 2001.

    Coast Guard: Strategies for Procuring New Ships, Aircraft, and Other
    Assets. [67]GAO/T-HEHS-99-116 . Washington, D.C.: Mar. 16, 1999.

    Coast Guard's Acquisition Management: Deepwater Project's Justification
    and Affordability Need to Be Addressed More Thoroughly. [68]GAO/RCED-99-6
    . Washington, D.C.: October 26, 1998.

    (440593)

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    Highlights of [76]GAO-07-489T , a statement for the record to the
    Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard, Committee
    on Commerce, Science, and Transportation, U.S. Senate

    April 2007

    COAST GUARD

    Observations on the Fiscal Year 2008 Budget, Performance, Reorganization,
    and Related Challenges

    The U. S. Coast Guard is a multimission agency responsible for maritime
    safety, security, and stewardship. It performs these missions, relating to
    homeland security and non-homeland security in U.S. ports and inland
    waterways, along the coasts, and on international waters.

    The President's budget request, including the request for the Coast Guard,
    was transmitted to Congress on February 5, 2007.

    This testimony, which is based on current and past GAO work, synthesizes
    the results of this work as it pertains to the following:

               o budget requests and performance goals,

               o organizational changes and related management initiatives,

               o current acquisition efforts and challenges, and

               o challenges related to performing traditional legacy missions.

    [77]What GAO Recommends

    While this statement makes no recommendations, in the past GAO has made a
    number of recommendations on issues covered in this statement. The Coast
    Guard is in various stages of implementing these recommendations.

    The Coast Guard's fiscal year 2008 budget request totals $8.7 billion, an
    increase of 3 percent over the enacted budget for fiscal year 2007 and a
    slowing of the agency's budget increases over the past 3 fiscal years. The
    Coast Guard expects to meet its performance goals in 6 of 11 mission areas
    in fiscal year 2006, down from 8 in 2005. Trends indicate increased
    homeland security activities have not prevented meeting non-homeland
    security goals.

    Two new reorganization efforts are under way. One creates a single command
    for all specialized deployable units, such as those for responding to
    pollution or terrorist incidents. However, experience with an effort to
    reorganize field units suggests there may be challenges in such matters as
    merging different operating approaches and addressing resource issues. The
    other effort merges the Coast Guard's various acquisition management
    efforts under a single Chief Acquisition Officer. The reorganization of
    acquisition management is in part a response to past troubled acquisition
    efforts. This change in the acquisition structure is too new to assess.

    Current major acquisitions include Deepwater for cutters and aircraft, the
    Rescue 21 communication system, and the National Automatic Identification
    System for vessel tracking. Deepwater and Rescue 21 have had schedule
    delays and performance reductions in the past, but the Coast Guard has
    been taking actions to improve oversight. Installation of equipment for
    the first phase of the National Automatic Identification System is under
    way, but the Coast Guard is still determining which types of vessels will
    have to participate. All three programs have also accumulated sizeable
    carryover balances of unspent moneys from previous years.

    Competing funding priorities have placed aging polar icebreakers and
    aids-to-navigation assets at risk. Many aids-to-navigation vessels are
    near the end of their service lives. The Coast Guard is exploring
    alternatives for replacement or extending their service. Similarly, high
    maintenance costs prompted the Coast Guard to take one of two Antarctic
    icebreakers out of service, increasing reliance on the remaining one.

    Competing priorities have reduced funds to maintain or replace aging Coast
    Guard assets, such as aids-to-navigation vessels and polar icebreakers.

    References

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    *** End of document. ***