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 [email protected]. 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
Visible links
29. http://www.gao.gov/cgi-bin/getrpt?GAO-06-816
30. http://www.gao.gov/cgi-bin/getrpt?GAO-06-816
31. http://www.gao.gov/cgi-bin/getrpt?GAO-07-446T
32. http://www.gao.gov/cgi-bin/getrpt?GAO-01-564
33. http://www.gao.gov/cgi-bin/getrpt?GAO-04-380
34. http://www.gao.gov/cgi-bin/getrpt?GAO-05-757
35. http://www.gao.gov/cgi-bin/getrpt?GAO-06-546
36. http://www.gao.gov/cgi-bin/getrpt?GAO-06-764
37. http://www.gao.gov/cgi-bin/getrpt?GAO-06-623
38. http://www.gao.gov/cgi-bin/getrpt?GAO-06-979
39. http://www.gao.gov/cgi-bin/getrpt?GAO-07-575T
40. http://www.gao.gov/cgi-bin/getrpt?GAO-07-446T
41. http://www.gao.gov/cgi-bin/getrpt?GAO-07-460T
42. http://www.gao.gov/cgi-bin/getrpt?GAO-07-453T
43. http://www.gao.gov/cgi-bin/getrpt?GAO-06-979
44. http://www.gao.gov/cgi-bin/getrpt?GAO-06-816
45. http://www.gao.gov/cgi-bin/getrpt?GAO-06-903
46. http://www.gao.gov/cgi-bin/getrpt?GAO-06-933T
47. http://www.gao.gov/cgi-bin/getrpt?GAO-06-764
48. http://www.gao.gov/cgi-bin/getrpt?GAO-06-623
49. http://www.gao.gov/cgi-bin/getrpt?GAO-06-546
50. http://www.gao.gov/cgi-bin/getrpt?GAO-05-757
51. http://www.gao.gov/cgi-bin/getrpt?GAO-05-651T
52. http://www.gao.gov/cgi-bin/getrpt?GAO-05-448T
53. http://www.gao.gov/cgi-bin/getrpt?GAO-05-364T
54. http://www.gao.gov/cgi-bin/getrpt?GAO-05-161
55. http://www.gao.gov/cgi-bin/getrpt?GAO-04-1062
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58. http://www.gao.gov/cgi-bin/getrpt?GAO-04-695
59. http://www.gao.gov/cgi-bin/getrpt?GAO-04-704
60. http://www.gao.gov/cgi-bin/getrpt?GAO-04-636T
61. http://www.gao.gov/cgi-bin/getrpt?GAO-04-432
62. http://www.gao.gov/cgi-bin/getrpt?GAO-04-380
63. http://www.gao.gov/cgi-bin/getrpt?GAO-03-1111
64. http://www.gao.gov/cgi-bin/getrpt?GAO-03-1155T
65. http://www.gao.gov/cgi-bin/getrpt?GAO-01-659T
66. http://www.gao.gov/cgi-bin/getrpt?GAO-01-564
67. http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-99-116
68. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-6
76. http://www.gao.gov/cgi-bin/getrpt?GAO-07-489T
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