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Testimony before the Subcommittee on Coast Guard and Maritime 
Transportation, Committee on Transportation and Infrastructure, U.S. 
House of Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 10:00 a.m. EST:
Thursday, February 25, 2010: 

Coast Guard: 

Observations on the Requested Fiscal Year 2011 Budget, Past 
Performance, and Current Challenges: 

Statement of Stephen L. Caldwell, Director: 
Homeland Security and Justice Issues: 

GAO-10-411T: 

GAO Highlights: 

Highlights of GAO-10-411T, a report to Subcommittee on Coast Guard and 
Maritime Transportation and Infrastructure Committee, U.S. House of 
Representatives. 

Why GAO Did This Study: 

The U.S. Coast Guard, a component of the Department of Homeland 
Security (DHS), conducts 11 statutory missions that range from marine 
safety to defense readiness. In an effort to enhance performance the 
Coast Guard continues to implement its Deepwater program—the 
acquisition program to replace or upgrade its vessels and aircraft––
while also carrying out a reorganization program to update its command 
structure, among other things. This testimony discusses the Coast Guard’
s (1) budget request for fiscal year 2011 and key performance 
indicators for fiscal year 2009; and (2) key management challenges 
confronting the Coast Guard. This testimony is based on GAO products 
issued in 2009 and 2010 (including GAO-09-682, GAO-09-810T, and GAO-10-
268R); other GAO products issued over the past 11 years—with selected 
updates in February 2010; and preliminary observations from ongoing 
GAO work on the Deployable Operations Group. GAO analyzed budget and 
performance documents, such as DHS’s fiscal year 2011 budget 
justification, and interviewed Coast Guard officials. 

What GAO Found: 

The Coast Guard’s budget request for fiscal year 2011 is slightly 
lower than the agency’s 2010 enacted budget and year-to-year mission 
performance trends are mixed. The Coast Guard’s fiscal year 2011 
budget request of $9.87 billion is approximately $35.8 million (or 0.4 
percent) less than the service’s enacted budget for fiscal year 2010. 
The slight reduction is largely attributable to a decrease in funds 
requested for (1) acquisition, construction, and improvement and (2) 
research, development, test, and evaluation. The reductions in these 
and other appropriation accounts are balanced by increases in funds 
requested for operating expenses and retired pay. One of the key 
themes of the fiscal year 2011 budget is the trade off between current 
operational capacity and continued investment in future capability 
through capital investment. Specifically, the Coast Guard is reducing 
funds for current assets and missions to increase funds for its top 
budget priority—long-term recapitalization of vessels and aircraft. 
The Coast Guard acknowledges that the proposed emphasis on 
recapitalization of aging assets may lead to a short term decline in 
mission performance. With regard to fiscal year 2009 performance, 
Coast Guard met its performance goals for 6 of 11 statutory mission 
areas but year-to-year performance trends are mixed. For example, the 
Coast Guard reported an improvement in reducing the maritime terrorism 
risk but reported a decline in the percentage of time that Coast Guard 
assets met designated combat readiness levels. Specifically, the Coast 
Guard reported that, for fiscal year 2009, agency assets met 
designated combat readiness levels 44 percent of the time, well below 
its goal of 100 percent. The Coast Guard attributes this decline in 
performance to reduced High Endurance Cutter readiness and personnel 
and training shortfalls for port security unit reserve forces. 

The Coast Guard continues to face several management challenges. Our 
prior work has identified continuing problems in Deepwater costs, 
management and oversight that have led to some delivery delays and 
operational challenges for some Coast Guard assets. Additionally, the 
Coast Guard is in the process of a major reorganization effort to 
establish a new command structure. While the Coast Guard reported 
completing all interim key actions for the reorganization program on 
schedule with some aspects of the transition—such as the deployable 
operations group—resulting in operational improvements, the agency 
desires additional statutory authorities to fully establish the new 
command structure and senior leadership positions. The Coast Guard has 
submitted a legislative proposal to request the statutory authority 
needed to make such changes. Lastly, the Coast Guard has a history of 
workforce management challenges which they have worked to address by 
developing plans and tools to better identify appropriate personnel 
for their assigned positions and allocate personnel resources. 
However, it is too soon to assess these efforts’ impact. Moreover, as 
the Coast Guard faces a change in leadership in May 2010, it will be 
increasingly important to sustain its efforts to address the 
challenges that it faces. 

What GAO Recommends: 

GAO has made recommendations in prior reports to DHS to improve 
planning and other aspects of the Deepwater program. DHS concurred and 
is in various stages of implementing them. GAO provided a copy of new 
and updated information in this statement to DHS and incorporated 
comments as appropriate. 

View [hyperlink, http://www.gao.gov/products/GAO-10-411T] or key 
components. For more information, contact Stephen Caldwell at (202) 
512-9610 or caldwells@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Coast Guard's fiscal year 
2011 budget, mission performance, and related management challenges. 
For many years, we have provided Congress with information and 
observations on the Coast Guard's budget and related issues. 
Consistent with this approach, this statement will include information 
from our prior work to help provide perspective as appropriate. The 
Coast Guard, an Armed Service of the United States housed within the 
Department of Homeland Security, is the principle federal agency 
responsible for maritime safety, security, and environmental 
stewardship through multimission resources, authorities, and 
capabilities. The Coast Guard has faced various management challenges 
over the years, many of which we have identified in previous reports. 
[Footnote 1] 

As you know, the Coast Guard has grown considerably since 2002 to meet 
new homeland security requirements while continuing to carry out its 
traditional missions such as marine safety and search and rescue 
operations. See appendix I for a description of the Coast Guard's 11 
statutory missions. To help fulfill all of its missions, the Coast 
Guard is currently implementing several major initiatives, including 
the multi-billion dollar Deepwater acquisition program,[Footnote 2] 
while continuing efforts to improve its command structure and mission- 
support processes. 

This statement will discuss: 

* the Coast Guard's budget request for fiscal year 2011 and the extent 
to which it met key performance indicators for fiscal year 2009; and: 

* key management challenges confronting the Coast Guard. 

In assessing the Coast Guard's budget request for fiscal year 2011 and 
performance results in fiscal year 2009, we reviewed the President's 
budget request, related Coast Guard documents--including the U.S. 
Coast Guard Posture Statement, issued in February 2010--and the 
agency's fiscal year 2009 performance report.[Footnote 3] The scope of 
our review did not include evaluating whether the proposed funding 
levels were appropriate for the Coast Guard's stated needs. In 
identifying and discussing various management challenges confronting 
the Coast Guard, we focused on the information presented in our past 
and recently issued products including, among others, the service's 
large-scale Deepwater acquisition program, command realignment, 
[Footnote 4] and the workforce planning report we are publicly 
releasing today.[Footnote 5] The scope of our prior work included 
reviews of program documents, such as the Coast Guard's Major Systems 
Acquisition Manual (MSAM); analysis of applicable program databases; 
and interviews with Coast Guard officials at headquarters and field 
units in domestic and international locations. Our prior work was 
conducted in accordance with generally accepted standards and our 
previously published reports contain additional details on the scope 
and methodology for those reviews. This statement also provides 
preliminary observations from our ongoing work on the Deployable 
Operations Group for the Senate and House Appropriations' Committee's 
Subcommittees on Homeland Security. 

We conducted selected updates for this statement from July 2009 
through February 2010 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

Summary: 

The Coast Guard's budget request for fiscal year 2011 is slightly 
lower than the agency's 2010 enacted budget and year-to-year mission 
performance trends are mixed. The Coast Guard's fiscal year 2011 
budget request totals $9.87 billion and is approximately 0.4 percent 
lower than its fiscal year 2010 enacted budget.[Footnote 6] The slight 
reduction is largely attributable to a decrease in funds requested for 
acquisition, construction, and improvement and research, development, 
test, and evaluation. The reductions in these and other appropriation 
accounts are balanced by increases in funds requested for operating 
expenses and retired pay. While the Coast Guard's fiscal year 2011 
request for operating expenses is higher than last year's enacted 
budget, the year-to-year percentage increase in this appropriation 
account is down from last year. Specifically, last year the agency 
requested a 5.8 percent increase for this account and this year it is 
requesting a 1.3 percent increase. According to Coast Guard documents, 
key initiatives for fiscal year 2011 include recapitalization of 
surface assets including production of Coast Guard cutters, 
recapitalization of air assets including the production of additional 
Maritime Patrol Aircraft and upgrades to several classes of aircraft, 
and continuing development and upgrades to key equipment and services 
such as communications systems and shore side infrastructure. The 
Coast Guard acknowledges that due to resource tradeoffs, the proposed 
emphasis on recapitalization of aging assets will come at the expense 
of current operations and may lead to an immediate decline in mission 
performance. With respect to the agency's performance, Coast Guard met 
its performance goals for 6 of 11 mission areas for fiscal year 2009 
but year-to-year performance trends are mixed. For example, the Coast 
Guard reported an improvement over last year in reducing the maritime 
terrorism risk but reported a decline in the percentage of time that 
Coast Guard assets met designated combat readiness levels. 
Specifically, the Coast Guard reported that, for fiscal year 2009, key 
agency assets met designated combat readiness levels 44 percent of the 
time, well below their goal of 100 percent. The Coast Guard attributes 
this decline in performance to reduced High Endurance Cutter readiness 
and personnel and training shortfalls. 

The Coast Guard faces management challenges in a number of areas, many 
of which we have identified in our prior work. Our work on the 
Deepwater acquisition program identified problems in costs, management 
and oversight that have led to delivery delays and other operational 
challenges for certain assets and missions, but it also recognized 
several steps the Coast Guard has taken to improve Deepwater 
management. Another management challenge is the Coast Guard's ongoing 
major reorganization effort to update its command structure, support 
systems, and business practices.[Footnote 7] The Coast Guard reported 
completing all interim key actions for the reorganization program on 
schedule. Additionally, some facets of the transition--such as the new 
deployable operations group--are already resulting in operational 
improvements. The Coast Guard has requested but has not yet received 
additional statutory authorities to fully establish its desired new 
command structure and associated senior leadership positions. Finally, 
the Coast Guard has a well-documented history of workforce challenges, 
including problems identifying its workforce needs. For example, the 
agency has had difficulty determining critical skills and defining 
appropriate staffing levels to achieve its missions. The report we are 
issuing today suggests that the agency has responded to these 
workforce challenges by developing plans and tools to better identify 
appropriate personnel for their assigned positions and allocate 
personnel resources, but it is too soon to assess the impact of these 
efforts.[Footnote 8] While Coast Guard has efforts underway to address 
many of the key challenges confronting the agency, sustaining these 
efforts will be a challenge for the new Coast Guard leadership team. 

Coast Guard Budget Request for Fiscal Year 2011 Is Slightly Lower than 
the Previous Year's Enacted Budget; Year-to-Year Mission Performance 
Trends are Mixed: 

Coast Guard's Fiscal Year 2011 Budget Request Is Lower: 

The Coast Guard's budget request for fiscal year 2011, at $9.87 
billion, is approximately $35.8 million (or 0.4 percent) less than the 
service's enacted budget for fiscal year 2010 (see table 1).[Footnote 
9] This slight reduction is largely driven by a $155 million (10 
percent) decrease in funds requested for acquisition, construction, 
and improvement (AC&I) and a $4.7 million (19 percent) decrease in 
funds requested for research, development, test, and evaluation. The 
Coast Guard's budget justification shows that the proposed reduction 
in AC&I funds is largely due to decreases in funding for the response 
boat-medium; the Maritime Patrol and HH-65 Aircraft, among others; and 
Rescue 21.[Footnote 10] The reductions in these and other 
appropriation accounts were balanced by requested increases including 
approximately an additional $87 million (1.3 percent increase) 
requested for operating expenses and $39.5 million more (about a 3 
percent increase) for retired pay, a mandatory appropriation account. 
While the Coast Guard's fiscal year 2011 request for operating 
expenses is higher than last year's enacted budget, the year-to-year 
percentage increase in this appropriation account is down from last 
year. Specifically, last year the agency requested a 5.8 percent 
increase for this account and this year it is requesting a 1.3 percent 
increase. 

Table 1: Comparison of Coast Guard's Budget Request for Fiscal Year 
2011 and the Enacted Budget for Fiscal Year 2010: 

Appropriations Account[A]: Operating expenses; 
Enacted budget for FY 2010 (in millions): $6,563.9; 
Requested budget for FY 2011 (in millions: $6,651.0; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): $87.1; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: 1.3%. 

Appropriations Account[A]: Acquisition, construction, and improvements; 
Enacted budget for FY 2010 (in millions): $1,536.3; 
Requested budget for FY 2011 (in millions: $1,381.2; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): -$155.1; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: -10.1%. 

Appropriations Account[A]: Retired pay; 
Enacted budget for FY 2010 (in millions): $1,361.2; 
Requested budget for FY 2011 (in millions: $1,400.7; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): $39.5; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: 2.9%. 

Appropriations Account[A]: Medicare Eligible Retiree Health Care Fund 
Contribution; 
Enacted budget for FY 2010 (in millions): $266.0; 
Requested budget for FY 2011 (in millions: $265.3; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): -$0.7; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: -0.3%. 

Appropriations Account[A]: Reserve training; 
Enacted budget for FY 2010 (in millions): $133.6; 
Requested budget for FY 2011 (in millions: $135.7; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): $2.0; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: 1.5%. 

Appropriations Account[A]: Research, development, test and evaluation; 
Enacted budget for FY 2010 (in millions): $24.7; 
Requested budget for FY 2011 (in millions: $20.0; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): -$4.7; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: -19.0%. 

Appropriations Account[A]: Alteration of bridges; 
Enacted budget for FY 2010 (in millions): $4.0; 
Requested budget for FY 2011 (in millions: 0.0; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): -$4.0; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: -100.0%. 

Appropriations Account[A]: Environmental compliance and restoration; 
Enacted budget for FY 2010 (in millions): $13.2; 
Requested budget for FY 2011 (in millions: $13.3; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): $0.1; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: 1.0%. 

Appropriations Account[A]: Total (see note [B]); 
Enacted budget for FY 2010 (in millions): $9,903.0; 
Requested budget for FY 2011 (in millions: $9,867.2; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Amount (in millions): -$35.8; 
Difference between FY 2011 requested budget and FY 2010 enacted 
budget: Percentage change: -0.4%. 

Source: GAO analysis of Coast Guard data. 

[A] Table above does not include transfers, supplementals or mandatory 
funding for boating safety, oil spill liability trust fund, or gift 
fund. 

[B] Column and calculation totals may not add up due to rounding. 

[End of table] 

Of the $9.87 billion requested for fiscal year 2011, about $6.7 
billion, or approximately 67 percent, is for operating expenses (OE). 
The OE account is the primary appropriation that finances Coast 
Guard's activities, including operating and maintaining multipurpose 
vessels, aircraft, and shore units. The remaining part of the request 
consists primarily of funds for AC&I and retired pay, each 
representing around $1.4 billion, or 14 percent of the total.[Footnote 
11] 

One of the key themes of the fiscal year 2011 budget is the trade off 
between current operational capacity and continued investment in 
future capability through capital investment because of fiscal 
constraints. Specifically, the Coast Guard is reducing funds for 
current assets and missions to increase funds for its "top budget 
priority" of long-term recapitalization of vessels and aircraft. 
According to the Commandant, this trade off reflects "hard choices" by 
the Coast Guard to manage current operations (as funded at lower 
levels) to sustain its recapitalization program. 

The reductions in current operational capacity include retirement of 5 
major cutters (4 High Endurance Cutters and 1 Medium Endurance Cutter) 
and 9 aircraft (4 HU-25 falcon jets, and 5 HH-65 helicopters as part 
of a larger realignment of helicopters).[Footnote 12] The Coast Guard 
will also reduce the number of Maritime Security and Safety Teams 
(MSST) from 12 to 7.[Footnote 13] The Coast Guard expects that these 
changes in capacity will reduce the overall level of service it 
provides the nation and that performance will be diminished in a 
variety of areas. For example, retirement of these vessels and 
aircraft will reduce performance across several of its missions--
including illegal drug interdiction, undocumented migrant 
interdiction, defense readiness, living marine resources, and other 
law enforcement to prevent illegal fishing. Similarly, reducing the 
number of MSSTs will decrease operational capacity and performance in 
the ports, waterways, and coastal security mission, according to the 
Coast Guard. While some of this lost operational capacity will 
ultimately be restored through ongoing recapitalization (e.g., new 
National Security Cutters will eventually replace the decommissioned 
High Endurance Cutters), some capacity reductions will have long-term 
implications (i.e., the five HH-65 helicopters and five MSSTs will not 
be replaced). 

The Coast Guard intends to take the funds saved by these measures and 
use them to continue recapitalization of key vessels, aircraft, and 
shore infrastructure. Deepwater aircraft include the Maritime Patrol 
Aircraft and continued upgrades to existing aircraft (e.g., the HC- 
130).[Footnote 14] In addition, continued funding is planned for the 
maintenance of legacy cutters until the new Deepwater assets are 
acquired and become operational.[Footnote 15] Management of the 
Deepwater program is discussed later in this testimony. The Coast 
Guard has allocated funds for recapitalization of other assets outside 
the Deepwater program including response boats, communications 
systems, and aids-to-navigation. The Coast Guard expects that 
recapitalization of these assets will restore and sustain performance 
across a variety of missions in the long term. 

As with the last year's enacted budget, the Coast Guard's fiscal year 
2011 budget request for homeland security missions represents 
approximately 36 percent of the service's overall budget, with the non-
homeland security funding representing approximately 64 percent. 
[Footnote 16] That said, there were several notable year-to-year 
changes within mission areas. Appendix II compares the Coast Guard's 
fiscal year 2010 enacted budget and requested fiscal year 2011 funding 
levels by statutory mission. According to Coast Guard officials, the 
most significant changes are a result of changes to project funding 
levels within the AC&I appropriation. For example, proposed funding to 
support the Ports, Waterways, and Coastal Security mission decreased 
by about $101 million or 6 percent.[Footnote 17] This reduction is in 
part the result of a reduction in capital funding for the Response 
Boat-Medium which the Coast Guard anticipates will substantially 
contribute to this mission. This reduction is also the result of plans 
to decommission 5 of 12 MSSTs. The Coast Guard estimates that these 
decommissionings will result in $18.2 million in savings but they may 
also decrease operational capacity and performance. To manage this 
risk, the agency plans to implement a regionalized deployable force 
construct for the remaining 7 MSSTs, with resources apportioned to 
operational commanders based on the highest prevailing risk in the 
nation's ports. In another example, the proposed funding for Search 
and Rescue is about $49.6 million or 5 percent lower than last year's 
enacted budget.[Footnote 18] Coast Guard officials explained that the 
planned decommissioning of 5 High Endurance Cutters will result in 
some reduction in search and rescue capacity but, overall, the 
proposed budget preserves basic search and rescue requirements. 
Further, the Coast Guard reports that it has enhanced its ability to 
detect and locate persons in distress through technology improvements 
such as Rescue 21 and the installation of advanced equipment on 
response assets. 

Performance goals for 6 of 11 missions were met, but year-to-year 
trends are mixed: 

The Coast Guard's overall performance for fiscal year 2009 is 
generally consistent with recent years but trends among some missions 
have been mixed. The Coast Guard assessed its fiscal year 2009 
performance on 27 measures covering all of its statutory mission 
areas. The Coast Guard found that it met 19 of 27 performance measures 
and met all performance goals for 6 of 11 missions.[Footnote 19] 
Similarly, in fiscal year 2008 Coast Guard reported meeting all 
performance goals in 5 mission areas. See table 2 for Coast Guard's 
mission performance results and see Appendix III for a detailed list 
of Coast Guard's performance results for fiscal years 2004 through 
2009. 

Table 2: Coast Guard Mission Performance Results for Fiscal Year 2009: 

Coast Guard mission: Missions meeting 2009 performance targets: 

* Search and Rescue; 
Number of performance targets: 1; 
Number of performance targets: 1. 

* Ports, waterways, and coastal security; 
Number of performance targets: 2; 
Number of performance targets: 2. 

* Marine safety; 
Number of performance targets: 6; 
Number of performance targets: 6. 

* Marine environmental protection; 
Number of performance targets: 4; 
Number of performance targets: 4. 

* Other law enforcement; 
Number of performance targets: 2; 
Number of performance targets: 2. 

* Ice operations; 
Number of performance targets: 1; 
Number of performance targets: 1. 

Coast Guard mission: Missions partially meeting 2009 performance 
targets: 

* Aids to navigation; 
Number of performance targets: 2; 
Number of performance targets: 1. 

* Illegal drug interdiction; 
Number of performance targets: 2; 
Number of performance targets: 1. 

* Migrant interdiction; 
Number of performance targets: 2; 
Number of performance targets: 1. 

Coast Guard mission: Missions that did not meet 2009 performance 
targets: 

* Defense readiness; 
Number of performance targets: 4; 
Number of performance targets: 0. 

* Living marine resources; 
Number of performance targets: 1; 
Number of performance targets: 0. 

Coast Guard mission: Total; 
Number of performance targets: 27; 
Number of performance targets: 19. 

Source: GAO analysis of Coast Guard data (see table 5 in appendix III). 

[End of table] 

As table 2 shows, the Coast Guard reported meeting all performance 
targets for 6 of the 11 statutory missions--search and rescue; ports, 
waterways, and coastal security; marine safety; marine environmental 
protection; other law enforcement; and ice operations.[Footnote 20] 
Regarding the Ports, Waterways, and Coastal Security mission, for 
example, one of the Coast Guard's fiscal year goals was to reduce 
maritime terrorism risk by 21 percent. The Coast Guard exceeded this 
target by ten percent. For another 3 of the 11 statutory missions--
aids to navigation, migrant interdiction, and illegal drug 
interdiction--the Coast Guard met 1 of 2 performance targets in each 
mission area. For illegal drug interdiction, the Coast Guard narrowly 
missed its goal of removing 15.7 percent of cocaine from non-
commercial vessels in maritime transit zones (actual was 15 percent) 
but exceeded its goal of removing 134 tons of cocaine (actual was 
about 160 tons).[Footnote 21] As in fiscal year 2008, the Coast Guard 
did not meet any of the related performance measures for the remaining 
two missions--defense readiness and living marine resources. For the 
defense readiness mission, the Coast Guard reported that, for fiscal 
year 2009, agency assets met designated combat readiness levels 44 
percent of the time, well below the goal of 100 percent.[Footnote 22] 
The Coast Guard has historically lagged in this mission area and this 
year's performance results are the lowest since 2004. The Coast Guard 
attributes this decline in performance primarily to the declining 
material condition and readiness of aging High Endurance Cutters and 
training shortfalls for High Endurance Cutter and port security unit 
reserve forces. The planned retirement of multiple High Endurance 
Cutters--the agency's primary deployable surface assets for combatant 
commander support--may continue to put achievement of these defense 
readiness objectives at risk. 

Management Challenges and Competing Priorities Continue to Present 
Challenges to Coast Guard Leadership: 

The Deepwater Program Continues to Present Budget and Management 
Challenges: 

Over the years, our testimonies on the Coast Guard's budget and 
performance have included details on the Deepwater acquisition 
program--the service's top recapitalization budget priority--related 
to affordability, management, and operations.[Footnote 23] Given the 
size of Deepwater funding requirements, the Coast Guard faces a long-
term challenge in funding the program within its overall and AC&I 
budgets. The Deepwater program, at $1.11 billion, accounts for 
approximately 11 percent of the Coast Guard's overall $9.87 billion 
budget request and 80 percent of the agency's $1.38 billion AC&I 
request for fiscal year 2011 capital spending. The Deepwater 
acquisition program also continues to represent a significant source 
of unobligated balances--money appropriated that is available but not 
yet committed for projects included in previous years' budgets. 
[Footnote 24] For example, as of November 2009, approximately $472 
million remained unobligated for the Deepwater's aircraft program. 
Continuing into future budgets, Deepwater affordability is likely to 
continue to be a major challenge for the Coast Guard given other 
demands on the agency for both capital and operations spending. 
[Footnote 25] 

In addition to fiscal constraints, the Coast Guard has also had 
several acquisition management challenges throughout the history of 
this program and some of those challenges remain. To address some of 
these past acquisition management challenges, in April 2007, the Coast 
Guard assumed the role of systems integrator for the Deepwater 
Program, reduced the scope of the work by the former systems 
integrator (or prime contractor), Integrated Coast Guard Systems 
(ICGS), and assigned these functions to Coast Guard stakeholders. 
[Footnote 26] Additionally, the Coast Guard has improved and begun to 
apply the disciplined management process contained in its Major 
Systems Acquisition Manual (MSAM) for individual assets, although it 
did not meet its goal of adhering to this process for all Deepwater 
assets by March 2009. In addition, we reported in July 2009 that the 
MSAM does not appear to be consistent with DHS policy that requires 
entities responsible for operational testing to be independent of the 
system's users.[Footnote 27] The Coast Guard concurred with our 
recommendation to consult with DHS on policies regarding the 
independent operational test authority. 

The Coast Guard has also made other improvements to its oversight and 
management of the Deepwater program. Due in part to the Coast Guard's 
increased insight into its purchases, the anticipated cost, schedules, 
and capabilities of many Deepwater assets have changed since the $24.2 
billion baseline was established in 2007. Coast Guard officials have 
stated that this baseline reflected not a traditional cost estimate, 
but rather the anticipated contract costs as determined by ICGS. As 
the Coast Guard developed its own cost baselines for some assets, as 
of July 2009, it has become apparent that some of the assets it is 
procuring will likely cost up to $2.7 billion more than anticipated. 
This represents about a 39 percent cost growth for the assets under 
the revised cost estimates.[Footnote 28] According to Coast Guard, as 
more cost baselines are developed and approved, further cost growth is 
likely. Updated baselines also indicate that schedules have slipped 
for delivery of several of the assets. 

Problems in Deepwater management and oversight have led to delivery 
delays and other operational challenges for certain assets, as our 
prior work has identified, particularly (1) patrol boats and their 
anticipated replacements, the Fast Response Cutters[Footnote 29] and 
(2) the National Security Cutter. Specifically, we reported in June 
2008 that conversion of the first eight 110-foot patrol boats was 
unsuccessful, and subsequently, the Coast Guard decided to remove 
these vessels from service and accelerate the design and delivery of 
the replacement Fast Response Cutters.[Footnote 30] The removal from 
service of the eight converted patrol boats in November 2006 created 
operational challenges by reducing potential patrol boat availability 
by 16 percent or 20,000 annual operational hours.[Footnote 31] To 
mitigate the loss of these eight patrol boats and the associated 2,500 
operational hours per patrol boat in the near term, the Coast Guard 
implemented a number of strategies beginning in fiscal year 2007. For 
example, the Coast Guard began using the crews from the eight patrol 
boats removed from service to augment the crews of eight other patrol 
boats so that these assets could operate for longer duration, yet 
still met crew rest requirements. To help fill the longer-term patrol 
boat operational gap, Coast Guard officials continue to pursue the 
acquisition of a commercially available Fast Response Cutter. The 
Coast Guard reports that the first of these cutters, the Sentinel, 
will commence operations in Miami, Florida in fiscal year 2011. While 
the contract is for the design and production of up to 34 cutters, the 
Coast Guard intends to acquire a total of 12 by fiscal year 2011 to 
assess the capabilities of these first 12 before exercising options 
for additional cutters. Coast Guard officials noted that they plan to 
assess the capabilities of the new cutter through operational test and 
evaluation before exercising options for additional cutters. 

Regarding the National Security Cutters, delays in the delivery of 
National Security Cutters and the support assets of unmanned aircraft 
and small boats have created operational gaps for the Coast Guard that 
include the projected loss of thousands of days in National Security 
Cutter availability for conducting missions until 2018, as we reported 
in July 2009.[Footnote 32] The first vessel (USCGC Bertholf, see 
figure 1) was initially projected for delivery in 2006 but was not 
delivered to the Coast Guard until May 2008. We reported in July 2009 
that this first vessel was undergoing final trials as the Coast Guard 
prepared it for full operational service in the fourth quarter of 
fiscal year 2010. The Coast Guard deployed this first National 
Security Cutter without its planned support assets.[Footnote 33] Given 
the delivery delays, the Coast Guard must continue to rely on High 
Endurance Cutters that are becoming increasingly unreliable. Coast 
Guard officials said that the first National Security Cutter 
capabilities will be greater than those of a High Endurance Cutter; 
however, the Coast Guard cannot determine the extent to which the 
National Security Cutters' capabilities will exceed those of the High 
Endurance Cutter until the National Security Cutters' support assets 
are operational, which will take several years. To mitigate these 
operational gaps, the Coast Guard is considering extending the service 
life of some of its High Endurance Cutters and is using existing 
aircraft and small boats until unmanned aircraft and new small boats 
are operational. However, because the High Endurance Cutters are 
increasingly unreliable, the Coast Guard planned to perform a series 
of upgrades and maintenance procedures on selected vessels. Before 
this work could begin, the Coast Guard conducted an analysis on the 
condition of the High Endurance Cutters and this resulted in the plan 
to decommission 4 High Endurance Cutters by fiscal year 2011, which 
could further negatively impact the Coast Guard's ability to more 
effectively conduct missions. 

Figure 1: The Coast Guard's First National Security Cutter, The 
Bertholf: 

[Refer to PDF for image: photograph] 

Source: U.S. Coast Guard. 

[End of figure] 

Looking forward, Coast Guard officials stated that they must review 
and continuously re-validate whether assumptions used to determine the 
original fleet mix (i.e., types and number of vessels and aircraft) of 
Deepwater assets are still reflective of mission demands and 
operational requirements. For example, the Coast Guard is conducting 
an updated review to determine whether it will continue with the 
contractor's original 2001 baseline mix of 8 National Security 
Cutters, 25 Offshore Patrol Cutters, and 58 Fast Response Cutters. 
From 2005 to 2006, the Coast Guard worked to rebaseline the Deepwater 
program to reflect its post-September 11 mission. In April 2006, we 
reported on this baseline, looking at key changes in asset numbers and 
capabilities between the original (2001) and revised (2005 and 2006) 
Deepwater baseline implementation plans.[Footnote 34]At that time, we 
found that the Coast Guard's analytical methods were appropriate for 
determining if the revised asset mix would provide greater mission 
performance and whether the mix was appropriate for meeting Deepwater 
missions. In May 2007, the DHS approved the Deepwater Acquisition 
Program Baseline, which reflects the revised 2005 to 2006 
implementations plans. Since that time, as the Coast Guard has taken 
over the acquisition and management responsibilities for the Deepwater 
program from the contractor, it has realized that its knowledge of how 
the various proposed assets would work together to help meet mission 
needs were limited because the contractor, in certain cases, had 
developed the plans for these assets without using all of the input 
from the Coast Guard.[Footnote 35] Coast Guard officials stated that 
as part of the on-going process to review the original work completed 
by the contractor, and in light of technology advances, the 
Department's maturation, program oversight, and new assets coming 
online, the Coast Guard has initiated an analysis of the capabilities, 
number, and mix of assets it needs to fulfill its Deepwater missions 
by undertaking a new fleet mix analysis.[Footnote 36] The Coast Guard 
expects that this fleet mix analysis will assist in determining 
capability-capacity-performance sensitivities and serve as one tool, 
among many, in making future capability requirements determinations, 
including future fleet mix decisions. The results of this study were 
originally expected in the summer of 2009, but U.S. Coast Guard 
officials told us that, as of February 2010, the finalization of this 
study is not expected for a few more months, at which time Coast Guard 
leadership is to assess the results and plan for future asset 
procurement decisions. According to Coast Guard officials, the Coast 
Guard plans to update this fleet mix analysis every 4 years and use it 
as a basis to update the numbers and types of assets needed for the 
Deepwater program. At this time, it is too soon to determine the 
extent to which the fleet mix analysis will inform the Coast Guard's 
future Deepwater investment decisions. 

Coast Guard has Efforts Underway to Address Key Reorganization 
Challenges: 

The Coast Guard is also continuing its command reorganization, but has 
not received requested statutory authorities designed to establish its 
new command structure.[Footnote 37] This reorganization is intended to 
better position the service to fulfill not only traditional missions--
such as ensuring the safety and security of commercial shipping, 
safeguarding U.S. fisheries, interdicting illicit drugs, and 
conducting search and the rescue operations--but also homeland 
security responsibilities that expanded after the September 11 
terrorist attacks. The reorganization is specifically focused on 
modifying the Coast Guard's command and control structure[Footnote 
38]--including the establishment of four new organizational entities--
as well as updating mission support systems, such as maintenance, 
logistics, financial management, human resources, acquisitions, and 
information technology. 

While the Coast Guard reported completing all interim key actions for 
the reorganization program on schedule, it has not received requested 
statutory authorities designed to fully establish the new command 
structure and associated senior leadership positions. Specifically, 
the Coast Guard submitted a legislative change proposal to, in 
general, amend Title 14 of the U.S. Code, changing the Vice 
Commandant's grade from that of a vice admiral to an admiral, and 
enabling the Coast Guard to appoint four vice admirals rather than 
two.[Footnote 39] Lacking these legislative authorities, the Coast 
Guard is not able to fully implement its envisioned command structure 
realignment leaving the Coast Guard with its existing geographically-
divided command structure--Pacific Area and Atlantic Area. As a 
result, the Coast Guard has reported that some role ambiguity 
currently exists due to the combination of both old and new 
organizational components operating concurrently. For example, many 
personnel designated to the new Force Readiness Command are continuing 
to focus almost exclusively on Pacific Area responsibilities. 
According to the Coast Guard, the staff is currently able to shift 
resources internally to meet changing demands and priorities; however, 
the situation is not sustainable. That is, without the legislative 
changes, personnel will not be able to fully carry out their duties as 
envisioned by the new command structure. However, as we previously 
reported, even if the proposed command realignment is fully 
implemented through enactment of legislative changes, development of 
relevant performance metrics also remains critically important to 
ensure that the purported organizational benefits of reorganization 
are realized. The Coast Guard has taken steps to identify applicable 
business metrics, which are intended to be used to evaluate the 
performance and effectiveness of modernized Coast Guard processes and 
facilitate continued improvement: 

Establishment of the Deployable Operations Group is one example of 
Coast Guard reorganization that appears to be achieving organizational 
benefits, although selected management challenges also exist. 
Established in July 2007, the Deployable Operations Group aligns all 
of the Coast Guard's deployable specialized forces under a single 
unified command with national, rather than regional focus. To date, 
the Deployable Operations Group has largely achieved many of the 
organizational benefits that it intended as a result of establishing a 
single command entity to manage and oversee all of its deployable 
specialized forces. For example, the Deployable Operations Group has 
(1) standardized tactics, techniques, and procedures; (2) streamlined 
the process used to request and allocate deployable resources; and (3) 
implemented an employment schedule that provides dedicated training 
periods for deployable units, among other improvements. As the 
Deployable Operations Group continues to mature, however, the command 
faces challenges to ensure that deployable units are adequately 
prepared and have the necessary resources to carry out both routine 
operations and respond to national events and emergencies. For 
example, the Deployable Operations Group faces human resource 
challenges associated with a reduction in number of personnel allotted 
to perform key duties. Specifically, the Deployable Operations Group 
is operating with 113 staff although initial planning estimates called 
for 147. Other challenges involve achieving and maintaining 
qualifications for capabilities that are critical for maritime 
interdiction missions, such as vertical insertion from a helicopter 
onto the deck of a target vessel. Although three different types of 
deployable units are designated to be capable of performing this 
action, a limited number of required helicopters and trained pilots 
are available to meet the ongoing training demand. Coast Guard 
officials stated that they expect that the proposed elimination of 
dedicated helicopter support to the Maritime Security Response Team 
(MSRT) will likely exacerbate this challenge.[Footnote 40] In 
addition, while the Deployable Operations Group was created to 
leverage existing resources--potentially doing more with the same 
resources--its enhanced oversight has also identified new resource 
requirements. For example, the Deployable Operations Group has 
identified areas of increasing demand and potential resource gaps that 
may require difficult decisions about Deployable Specialized Forces 
roles', required capacity, and their resulting impact on the Coast 
Guard's overall budget. These challenges may be further exacerbated by 
having fewer Coast Guard personnel available to meet the increasing 
demand. We are continuing to assess the Coast Guard's Deployable 
Operations Group and will report on the results of our review this by 
spring of this year. 

However, the Coast Guard has not made progress in all of its efforts 
to improve mission support challenges, such as financial management. 
According to the DHS-OIG's report on the fiscal year 2009 financial 
statement and internal controls, the Coast Guard did make some 
progress in fiscal year 2009.[Footnote 41] In response to reporting 
from previous years on several internal control deficiencies that led 
to a material weakness in financial reporting, the Coast Guard 
developed its Financial Strategy for Transformation and Audit 
Readiness, which is a comprehensive plan to identify and correct 
conditions that are causing control deficiencies. However, the DHS-
Office of Inspector General's (DHS-OIG) report also found that the 
Coast Guard was unable to provide documentation of key processes, risk 
assessments, or evidence supporting the existence of internal 
controls. Coast Guard management acknowledged that pervasive material 
weaknesses exist in key financial processes, and therefore the agency 
is unable to make an assertion on the effectiveness of internal 
control over financial reporting. In addition, the Coast Guard was 
unable to provide evidence to support transactions and account 
balances that are material to DHS's financial statements. In addition, 
the Deputy Inspector General testified before Congress on financial 
management challenges at the Department and noted that the Coast Guard 
was one of three components primarily responsible for material 
weaknesses in the department's internal controls.[Footnote 42] In 
addition, the Coast Guard also contributed to the Transportation 
Security Administration's (TSA's) financial systems security material 
weakness due to TSA's reliance on the Coast Guard's financial systems. 
According to the Commandant, the financial audit is a top Coast Guard 
responsibility, and the solution ultimately lies in the transition to 
a new financial accounting system that is being developed by DHS. In 
addition, Coast Guard officials stated that the Coast Guard must also 
correct deficiencies which are not dependent upon the system, as well 
as work to have policies, processes, and data ready to successfully 
migrate and operate under a new financial system. As we reported in 
December 2009, DHS has developed certain elements for its financial 
management strategy--the Transformation and Systems Consolidation 
(TASC) program--and a plan for moving forward with its financial 
system integration efforts, but it faces significant challenges in 
completing and implementing its strategy.[Footnote 43] Although we 
made seven recommendations and reaffirmed six prior recommendations to 
mitigate DHS's risk in acquiring and implementing the TASC, none were 
specific to the Coast Guard.[Footnote 44] We will, however, continue 
to closely monitor the progress of this new financial management 
systems strategy, which will ultimately affect all components, 
including the Coast Guard. 

Coast Guard Also Facing Workforce Challenges: 

In addition to having efforts underway to address key reorganization 
challenges, the Coast Guard is also working to address workforce 
challenges. We reported in January 2010 that the Coast Guard has 
efforts underway to address some long-standing workforce challenges, 
but it is too soon to determine the impact of these efforts.[Footnote 
45] The Coast Guard has a well-documented history of workforce 
problems, identified by Congress, GAO, and marine safety industry 
stakeholders, among others. For example, the Coast Guard faces 
continuing problems in balancing homeland security and more 
traditional missions, such as law enforcement and marine safety, in 
the wake of the September 11 terrorist attacks. In 2002 and 2003, we 
reported that the Coast Guard did not have a long-term strategy that 
outlined how it sees its resources--including personnel--distributed 
across its various missions. Furthermore, we reported that although 
the Coast Guard used a variety of mission performance measures, it 
lacked a useful reporting mechanism to synthesize and convey data to 
Congress about its non-homeland security mission resource levels. 
Thus, we recommended in 2004 that the Coast Guard implement a system 
to accurately account for resources expended in each of its mission 
areas.[Footnote 46] Although the Coast Guard generally agreed with 
this recommendation, the agency took no formal position. The agency 
explained that it believed that its multimission nature posed a higher 
degree of difficulty for the agency to implement the recommendations. 
The Coast Guard has reported improvements in the transparency and 
accuracy of its financial systems and data, though concerns remain, as 
reported by the DHS-OIG. Further, in 2008, we reported that the Coast 
Guard's execution of a security-related program was at risk because it 
lacked a strategic workforce plan that (1) defined appropriate 
staffing levels, (2) identified the critical skills needed to achieve 
the mission, and (3) eliminated workforce gaps to prepare for future 
needs. As a result, we recommended that Coast Guard fully develop a 
workforce plan for this program. DHS partially concurred with our 
recommendation, saying current workforce needs had been analyzed, but 
acknowledged the need to do more if new authorities were provided to 
expand the program's capacity-building activities. However, we found 
that those actions fell short of the planning called for by the human 
capital management guidance and that further development of a 
workforce plan was still appropriate.[Footnote 47] 

The Coast Guard has made efforts to address these workforce challenges 
through the development of servicewide mission-support and mission- 
specific plans, as well as the creation or expansion of data-driven 
management tools. However, most of these efforts are either in early 
stages of implementation or expansion or the data are not yet 
available to assess them. One of the four plans we reviewed did not 
fully conform to congressional direction. For example, one servicewide 
effort, the Workforce Action Plan, was developed in response to 
appropriations committee report direction, whose members had expressed 
concern that the size of the Coast Guard's workforce had not kept pace 
with its increased mission requirements.[Footnote 48] The Workforce 
Action Plan did not provide a gap analysis of the mission areas and 
personnel needed, and thus also did not provide a strategy with 
proposed funding, milestones, and a timeline for addressing these 
workforce gaps for each employee, consistent with congressional 
direction. The remaining three plans generally conformed to best 
practices.[Footnote 49] 

Furthermore, as the Coast Guard continues to develop and implement 
these workforce-related efforts, it faces challenges due to resource 
constraints, data reliability problems, and coordination. The Coast 
Guard acknowledged that it faces two types of resource challenges-- 
first, dedicating the necessary resources to implement and monitor its 
planning and data-tool workforce initiatives, and second, having the 
resources to meet its workforce and mission requirements once they are 
established. Coast Guard officials also acknowledged challenges with 
obtaining reliable, verifiable, and repeatable data that may affect 
the data-driven tools created by the Coast Guard. Along with resource 
and data reliability challenges, the Coast Guard faces potential 
challenges in coordinating its various workforce-related plans and 
tools. Specifically, in the midst of the large organizational 
transformation that is under way involving numerous changes to the 
Coast Guard's command structure, enterprisewide support systems, and 
business practices, it may prove difficult for the Coast Guard to 
coordinate more narrowly defined workforce management efforts, such as 
plans and tools that span a range of specific functions and encompass 
a variety of Coast Guard activities. The Coast Guard has established 
an office to coordinate the modernization effort and other broad 
organizational change initiatives; however, it is not clear whether 
its span of control or influence will extend to the specific workforce-
related plans and tools. 

Leadership Is Key to Sustaining the Coast Guard's Efforts to Address 
Challenges: 

Leadership is critical as the Coast Guard faces large scale changes 
and resource decisions in the near term. While the Coast Guard has 
efforts underway to address many of the key challenges confronting the 
agency, sustaining these efforts will be a challenge for the new Coast 
Guard leadership team.[Footnote 50] As we have previously reported, at 
the center of any serious change management initiative--such as the 
reorganization plan--are the people.[Footnote 51] Thus, the key to a 
successful merger and transformation is to recognize the "people" 
element and implement strategies to help individuals maximize their 
full potential in the new organization, while simultaneously managing 
the risk of reduced productivity and effectiveness that often occurs 
as a result of the changes. One key practice in this effort is 
ensuring that the organization's top leadership drives the change 
initiative and defines and articulates a succinct and compelling 
reason for the change. For example, in 2003 we reported that because a 
merger or transformation entails fundamental and often radical change, 
strong and inspirational leadership is indispensable, and that top 
leadership that is clearly and personally involved in the merger or 
transformation represents stability and provides an identifiable 
source for employees to rally around during tumultuous times. The 
agency's leadership must set the direction, pace, and tone for the 
transformation. For all of these ongoing efforts and changes to 
achieve their intended benefits, it is important that Coast Guard 
leadership maintains attention to these challenges. 

Mr. Chairman and members of this Subcommittee, this concludes my 
prepared statement. I would be happy to respond to any questions that 
you or other Members of the Subcommittee may have. 

GAO Contacts and Staff Acknowledgments: 

For information about this statement, please contact Stephen L. 
Caldwell, Director, Homeland Security and Justice Issues, at (202) 512-
9610, or caldwells@gao.gov. Contact points for our Office of 
Congressional Relations and Office of Public Affairs may be found on 
the last page of this statement. Other individuals making key 
contributions to this testimony include Sylvia Bascopé, Claudia 
Becker, Dawn Hoff, John Hutton, Lara Kaskie, J. Kristopher Keener, Dan 
Klabunde, Ryan Lambert, and Michele Mackin. 

[End of section] 

Appendix I: The Coast Guard's Statutory Missions: 

This appendix outlines the Coast Guard's mission, activities and 
functions. A component of DHS, the Coast Guard is a multimission 
military service that serves as the principal federal agency 
responsible for maritime safety, security, and environmental 
stewardship. In addition to being one of the five armed Services of 
the United States, the Coast Guard serves as a law enforcement and 
regulatory agency with broad domestic authorities. The Coast Guard has 
responsibilities that fall under two broad mission categories--
homeland security and non-homeland security. Within these categories, 
the Coast Guard's primary activities are further divided into 11 
statutory missions, which are listed in table 3. 

Table 3: Coast Guard Homeland Security and Non-Homeland Security 
Missions: 

Homeland security missions: 

Statutory mission[A]: Ports, waterways, and coastal security; 
Primary activities and functions of each Coast Guard mission: 
* Conducting harbor patrols, vulnerability assessments, intelligence 
gathering and analysis, and other activities to prevent terrorist 
attacks and minimize the damage from attacks that occur. 

Statutory mission[A]: Defense readiness; 
Primary activities and functions of each Coast Guard mission: 
* Participating with the Department of Defense in global military 
operations; 
* Deploying cutters and other boats in and around harbors to protect 
Department of Defense force mobilization operations. 

Statutory mission[A]: Migrant interdiction; 
Primary activities and functions of each Coast Guard mission: 
* Deploying cutters and aircraft to reduce the flow of undocumented 
migrants entering the United States via maritime routes. 

Non-homeland security missions: 

Statutory mission[A]: Drug interdiction; 
Primary activities and functions of each Coast Guard mission: 
* Deploying cutters and aircraft in high drug-trafficking areas; 
* Gathering intelligence to reduce the flow of illegal drugs through 
maritime transit routes. 

Statutory mission[A]: Aids to navigation; 
Primary activities and functions of each Coast Guard mission: 
* 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. 

Statutory mission[A]: Search and rescue; 
Primary activities and functions of each Coast Guard mission: 
* Operating multi-mission stations and a national distress and 
response communication system; 
* Conducting search and rescue operations for mariners in distress. 

Statutory mission[A]: Living marine resources; 
Primary activities and functions of each Coast Guard mission: 
* Enforcing domestic fishing laws and regulations through inspections 
and fishery patrols. 

Statutory mission[A]: Marine safety; 
Primary activities and functions of each Coast Guard mission: 
* 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. 

Statutory mission[A]: Marine environmental protection; 
Primary activities and functions of each Coast Guard mission: 
* Preventing and responding to marine oil and chemical spills; 
* Preventing the illegal dumping of plastics and garbage in U.S. 
waters; 
* Preventing biological invasions by aquatic nuisance species. 

Statutory missions[A]: Other law enforcement (foreign fish 
enforcement); 
Primary activities and functions of each Coast Guard mission: 
* Protecting U.S. fishing grounds by ensuring that foreign fishermen 
do not illegally harvest U.S. fish stocks. 

Statutory missions[A]: Ice operations; 
Primary activities and functions of each Coast Guard mission: 
* 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. 

Source: Coast Guard. 

[A] The Coast Guard's homeland security and non-homeland security 
missions are delineated in section 888 of the Homeland Security Act of 
2002 (Pub. L. No. 107-296, 116 Stat. 2135, 2249 (2002)). Starting with 
the fiscal year 2007 budget, however, the Office of Management and 
Budget designated the Coast Guard's drug interdiction and other law 
enforcement missions--which were originally homeland security 
missions--as non-homeland security missions for budgetary purposes. 

[End of table] 

[End of section] 

Appendix II: Coast Guard's Budget Request, by statutory mission: 

This appendix compares the Coast Guard's proposed budget for fiscal 
year 2011 against the agency's enacted budget for the previous year, 
by mission. Table 4 highlights those mission areas in which the Coast 
Guard proposes change--either an increase or decrease in investment 
from year to year. The last two columns of the table give a sense of 
the magnitude of the proposed change, both as a dollar figure and as a 
percentage change. Figure 2 graphically illustrates these year-to-year 
changes, by mission. 

Table 4: Coast Guard Fiscal year 2011 Budget Request by Statutory 
Mission: 

Statutory Mission[A]: Search and rescue; 
FY 2010 Enacted: $985,991; 
FY 2011 Requested: $936,370; 
Change: -$49,621; 
Percentage Change: -5%. 

Statutory Mission[A]: Marine safety; 
FY 2010 Enacted: $649,711; 
FY 2011 Requested: $650,054; 
Change: $343; 
Percentage Change: 0. 

Statutory Mission[A]: Aids to navigation; 
FY 2010 Enacted: $1,215,310; 
FY 2011 Requested: $1,219,873; 
Change: $4,563; 
Percentage Change: 0. 

Statutory Mission[A]: Ice operations; 
FY 2010 Enacted: $167,397; 
FY 2011 Requested: $141,297; 
Change: -$26,100; 
Percentage Change: -16%. 

Statutory Mission[A]: Marine environmental protection; 
FY 2010 Enacted: $202,241; 
FY 2011 Requested: $198,711; 
Change: -$3,530; 
Percentage Change: -2%. 

Statutory Mission[A]: Living marine resources; 
FY 2010 Enacted: $893,391; 
FY 2011 Requested: $915,947; 
Change: $22,556; 
Percentage Change: 3%. 

Statutory Mission[A]: Drug interdiction; 
FY 2010 Enacted: $1,193,726; 
FY 2011 Requested: $1,239,658; 
Change: $45,932; 
Percentage Change: 4%. 

Statutory Mission[A]: Other law enforcement; 
FY 2010 Enacted: $148,840; 
FY 2011 Requested: $158,581; 
Change: $9,741; 
Percentage Change: 7%. 

Statutory Mission[A]: Migrant interdiction; 
FY 2010 Enacted: $742,322; 
FY 2011 Requested: $747,425; 
Change: $5,103; 
Percentage Change: 1%. 

Statutory Mission[A]: Ports, waterways, and coastal security; 
FY 2010 Enacted: $1,802,134; 
FY 2011 Requested: $1,700,995; 
Change: -$101,139; 
Percentage Change: -6%. 

Statutory Mission[A]: Defense readiness; 
FY 2010 Enacted: $540,686; 
FY 2011 Requested: $557,626; 
Change: $16,940; 
Percentage Change: 3%. 

Statutory Mission[A]: Total Discretionary Funding; 
FY 2010 Enacted: $8,541,749; 
FY 2011 Requested: $8,466,537; 
Change: -$75,212; 
Percentage Change: -1%. 

Source: GAO analysis of Coast Guard data. 

[A] The Coast Guard budgets by statutory appropriations account 
categories rather than statutory mission program categories. In order 
to display budget allocated by mission program, the agency uses an 
activity-based cost model that averages past expenditures to forecast 
future spending. 

[End of table] 

Figure 2: Coast Guard Fiscal Year 2010 Enacted Budget and FY 2011 
Budget Request, by Statutory Mission: 

[Refer to PDF for image: multiple vertical bar graph] 

Statutory mission: Search and rescue; 
FY 2010 Enacted budget: $985,991; 
FY 2011 Enacted budget: $936,370. 

Statutory mission: Marine safety; 
FY 2010 Enacted budget: $649,711; 
FY 2011 Enacted budget: $650,054. 

Statutory mission: Aids to navigation; 
FY 2010 Enacted budget: $1,215,310; 
FY 2011 Enacted budget: $1,219,870. 

Statutory mission: Ice operations; 
FY 2010 Enacted budget: $167,397; 
FY 2011 Enacted budget: $141,297. 

Statutory mission: Marine environmental protection; 
FY 2010 Enacted budget: $202,241; 
FY 2011 Enacted budget: $198,711. 

Statutory mission: Living marine resources; 
FY 2010 Enacted budget: $893,391; 
FY 2011 Enacted budget: $915,947. 

Statutory mission: Drug interdiction; 
FY 2010 Enacted budget: $1,193,730; 
FY 2011 Enacted budget: $1,239,660. 

Statutory mission: Other law enforcement; 
FY 2010 Enacted budget: $148,840; 
FY 2011 Enacted budget: $158,581. 

Statutory mission: Migrant interdiction; 
FY 2010 Enacted budget: $742,322; 
FY 2011 Enacted budget: $747,425. 

Statutory mission: Ports, waterways,and coastal security; 
FY 2010 Enacted budget: $1,802,130; 
FY 2011 Enacted budget: $1,701,000. 

Statutory mission: Defense readiness; 
FY 2010 Enacted budget: $540,686; 
FY 2011 Enacted budget: $55,7626. 

Source: GAO analysis of Coast Guard data. 

[End of figure] 

[End of section] 

Appendix III: Performance Results by Mission for Fiscal Years 2004 
through 2008: 

This appendix provides a detailed list of performance results for the 
Coast Guard's 11 statutory missions for fiscal years 2004 through 2009 
(see table 5). In some cases, noted by n/a, performance measures have 
changed and do not allow for direct comparison with the fiscal year 
2009 measure. The table is broken into three sections--missions 
meeting all of their 2009 performance targets, missions partially 
meeting their performance targets, and missions meeting none of their 
performance targets. 

Table 5: Coast Guard Performance Results by Mission from Fiscal Year 
2004 through Fiscal Year 2009: 

Missions meeting 2009 performance targets: 

Coast Guard mission: Search and rescue; 
Mission performance measures: Percentage of people saved from imminent 
danger in the maritime environment[A]; 
Performance results: 2004: 76.7%; 
Performance results: 2005: 77.1%; 
Performance results: 2006: 76.0%; 
Performance results: 2007: 76.6%; 
Performance results: 2008: 76.8%; 
Performance results: 2009: 77.3%; 
Performance target for 2009: greater than or equal to 76.0%. 

Coast Guard mission: Ports, waterways, and coastal security; 
Mission performance measures: Percent reduction in maritime terrorism 
risk over which the Coast Guard has influence; 
Performance results: 2004: n/a; 
Performance results: 2005: 14%; 
Performance results: 2006: 18%; 
Performance results: 2007: 15%; 
Performance results: 2008: 20%; 
Performance results: 2009: 31%; 
Performance target for 2009: greater than or equal to 21%. 

Coast Guard mission: Ports, waterways, and coastal security; 
Mission performance measures: MTSA annual required facility inspection 
rate; 
Performance results: 2004: n/a; 
Performance results: 2005: 100%; 
Performance results: 2006: 100%; 
Performance results: 2007: 78%; 
Performance results: 2008: 100%; 
Performance results: 2009: 100%; 
Performance target for 2009: 100%. 

Coast Guard mission: Marine safety; 
Mission performance measures: 5-year average commercial mariner deaths 
and injuries; 
Performance results: 2004: 483; 
Performance results: 2005: 473; 
Performance results: 2006: 502; 
Performance results: 2007: 527; 
Performance results: 2008: 494; 
Performance results: 2009: 475; 
Performance target for 2009: less than or equal to 529. 

Coast Guard mission: Marine safety; 
Mission performance measures: Annual commercial mariner deaths and 
injuries; 
Performance results: 2004: 460; 
Performance results: 2005: 522; 
Performance results: 2006: 617; 
Performance results: 2007: 480; 
Performance results: 2008: 388; 
Performance results: 2009: 369; 
Performance target for 2009: less than or equal to 496. 

Coast Guard mission: Marine safety; 
Mission performance measures: 5-year average commercial passenger 
deaths and injuries; 
Performance results: 2004: 170; 
Performance results: 2005: 171; 
Performance results: 2006: 215; 
Performance results: 2007: 238; 
Performance results: 2008: 250; 
Performance results: 2009: 228; 
Performance target for 2009: less than or equal to 251. 

Coast Guard mission: Marine safety; 
Mission performance measures: Annual commercial passenger deaths and 
injuries; 
Performance results: 2004: 259; 
Performance results: 2005: 188; 
Performance results: 2006: 334; 
Performance results: 2007: 254; 
Performance results: 2008: 215; 
Performance results: 2009: 149; 
Performance target for 2009: less than or equal to 236. 

Coast Guard mission: Marine safety; 
Mission performance measures: 5-year average recreational boating 
deaths and injuries; 
Performance results: 2004: 4,703; 
Performance results: 2005: 4,503; 
Performance results: 2006: 4,367; 
Performance results: 2007: 4,249; 
Performance results: 2008: 4,147; 
Performance results: 2009: 4,038; 
Performance target for 2009: less than or equal to 4,248. 

Coast Guard mission: Marine safety; 
Mission performance measures: Annual recreational boating deaths and 
injuries; 
Performance results: 2004: 4,081; 
Performance results: 2005: 4,120; 
Performance results: 2006: 4,197; 
Performance results: 2007: 4,285; 
Performance results: 2008: 4,052; 
Performance results: 2009: 3,534; 
Performance target for 2009: less than or equal to 4,184. 

Coast Guard mission: Marine environmental protection; 
Mission performance measures: 5-year average number of oil spills 
greater than 100 gallons per 100 million short tons shipped; 
Performance results: 2004: 17.6; 
Performance results: 2005: 16.0; 
Performance results: 2006: 14.3; 
Performance results: 2007: 14.0; 
Performance results: 2008: 13.2; 
Performance results: 2009: 11.8; 
Performance target for 2009: less than or equal to 13.0. 

Coast Guard mission: Marine environmental protection; 
Mission performance measures: Annual number of oil spills greater than 
100 gallons; 
Performance results: 2004: 162; 
Performance results: 2005: 149; 
Performance results: 2006: 168; 
Performance results: 2007: 140; 
Performance results: 2008: 122; 
Performance results: 2009: 98; 
Performance target for 2009: less than or equal to 150. 

Coast Guard mission: Marine environmental protection; 
Mission performance measures: 5-year average number of chemical 
discharge incidents per 100 million short tons shipped; 
Performance results: 2004: 42.5; 
Performance results: 2005: 31.9; 
Performance results: 2006: 27.9; 
Performance results: 2007: 24.7; 
Performance results: 2008: 19.8; 
Performance results: 2009: 17.8; 
Performance target for 2009: less than or equal to 25.9. 

Coast Guard mission: Marine environmental protection; 
Mission performance measures: Annual number of chemical discharge 
incidents greater than 100 gallons; 
Performance results: 2004: 39; 
Performance results: 2005: 31; 
Performance results: 2006: 46; 
Performance results: 2007: 39; 
Performance results: 2008: 21; 
Performance results: 2009: 22; 
Performance target for 2009: less than or equal to 50. 

Coast Guard mission: Other law enforcement (foreign fishing 
enforcement); 
Mission performance measures: Number of incursions into U.S. exclusive 
economic zone; 
Performance results: 2004: 247; 
Performance results: 2005: 171; 
Performance results: 2006: 164; 
Performance results: 2007: 126; 
Performance results: 2008: 81; 
Performance results: 2009: 112; 
Performance target for 2009: less than or equal to 195. 

Coast Guard mission: Other law enforcement (foreign fishing 
enforcement); 
Mission performance measures: Interdiction rate of foreign vessels 
detected violating U.S. exclusive economic zone; 
Performance results: 2004: n/a; 
Performance results: 2005: n/a; 
Performance results: 2006: n/a; 
Performance results: 2007: 23.0%; 
Performance results: 2008: 16.0%; 
Performance results: 2009: 14.3%; 
Performance target for 2009: greater than or equal to 9%. 

Coast Guard mission: Ice operations; 
Mission performance measures: Number of days critical waterways are 
closed due to ice; 
Performance results: 2004: 4; 
Performance results: 2005: 0; 
Performance results: 2006: 0; 
Performance results: 2007: 0; 
Performance results: 2008: 0; 
Performance results: 2009: 0; 
Performance target for 2009: less than or equal to 2/8[B]. 

Missions partially meeting 2009 performance targets: 

Coast Guard mission: Aids to navigation; 
Mission performance measures: 5-year average number of collisions, 
allisions, and groundings[C]; 
Performance results: 2004: 1,928; 
Performance results: 2005: 1,875; 
Performance results: 2006: 1,818; 
Performance results: 2007: 1,823; 
Performance results: 2008: 1,857; 
Performance results: 2009: 1,878; 
Performance target for 2009: less than or equal to 1871. 

Coast Guard mission: Aids to navigation; 
Mission performance measures: Availability of federal short-range aids 
to navigation; 
Performance results: 2004: 97.5%; 
Performance results: 2005: 97.1%; 
Performance results: 2006: 97.0%; 
Performance results: 2007: 97.9%; 
Performance results: 2008: 98.3%; 
Performance results: 2009: 98.0%; 
Performance target for 2009: greater than or equal to 97.5%. 

Coast Guard mission: Migrant interdiction; 
Mission performance measures: Percentage of undocumented migrants 
attempting to enter the United States via maritime routes that are 
interdicted; 
Performance results: 2004: n/a; 
Performance results: 2005: n/a; 
Performance results: 2006: n/a; 
Performance results: 2007: 65.2%; 
Performance results: 2008: 62.7%; 
Performance results: 2009: 84.4%; 
Performance target for 2009: greater than or equal to 69.9%. 

Coast Guard mission: Migrant interdiction; 
Mission performance measures: Percentage of undocumented migrants 
attempting to enter the United States via maritime routes that are 
interdicted by the Coast Guard; 
Performance results: 2004: n/a; 
Performance results: 2005: n/a; 
Performance results: 2006: n/a; 
Performance results: 2007: 42.1%; 
Performance results: 2008: 46.9%; 
Performance results: 2009: 37.5%; 
Performance target for 2009: greater than or equal to 50%. 

Coast Guard mission: Illegal Drug interdiction; 
Mission performance measures: Removal rate for cocaine shipped via non-
commercial maritime means[D]; 
Performance results: 2004: n/a; 
Performance results: 2005: n/a ; 
Performance results: 2006: n/a ; 
Performance results: 2007: n/a ; 
Performance results: 2008: n/a; 
Performance results: 2009: 15%; 
Performance target for 2009: greater than or equal to 15.7%. 

Coast Guard mission: Illegal Drug interdiction; 
Mission performance measures: Metric tons of cocaine removed; 
Performance results: 2004: 133.4; 
Performance results: 2005: 153.2; 
Performance results: 2006: 130.2; 
Performance results: 2007: 161.7; 
Performance results: 2008: 166.9; 
Performance results: 2009: 160.1; 
Performance target for 2009: greater than or equal to 134. 

Missions that did not meet 2009 performance targets: 

Coast Guard mission: Defense readiness[E]; 
Mission performance measures: Percentage of time that Coast Guard 
assets meet designated combat readiness level; 
Performance results: 2004: 76%; 
Performance results: 2005: 67%; 
Performance results: 2006: 62%; 
Performance results: 2007: 51%; 
Performance results: 2008: 56%; 
Performance results: 2009: 44%; 
Performance target for 2009: 100%. 

Coast Guard mission: Defense readiness[E]; 
Mission performance measures: Defense Readiness of High Endurance 
Cutters; 
Performance results: 2004: 98.5%; 
Performance results: 2005: 99.5%; 
Performance results: 2006: 84.2%; 
Performance results: 2007: 47.0%; 
Performance results: 2008: 47.0%; 
Performance results: 2009: 20.7%; 
Performance target for 2009: 100%. 

Coast Guard mission: Defense readiness[E]; 
Mission performance measures: Defense Readiness of Patrol Boats; 
Performance results: 2004: n/a; 
Performance results: 2005: n/a; 
Performance results: 2006: 100%; 
Performance results: 2007: 100%; 
Performance results: 2008: 95.0%; 
Performance results: 2009: 94.0%; 
Performance target for 2009: 100%. 

Coast Guard mission: Defense readiness[E]; 
Mission performance measures: Defense Readiness of Port Security Units; 
Performance results: 2004: 29.0%; 
Performance results: 2005: 1.5%; 
Performance results: 2006: 1.0%; 
Performance results: 2007: 4.5%; 
Performance results: 2008: 24.5%; 
Performance results: 2009: 19.8%; 
Performance target for 2009: 100%. 

Coast Guard mission: Living marine resources; 
Mission performance measures: Percentage of fishing vessels observed 
to be in compliance with federal regulations; 
Performance results: 2004: 96.3%; 
Performance results: 2005: 96.4%; 
Performance results: 2006: 96.6%; 
Performance results: 2007: 96.2%; 
Performance results: 2008: 95.3%; 
Performance results: 2009: 96.7%; 
Performance target for 2009: greater than or equal to 97%. 

Source; GAO analysis of Coast Guard data. 

Note: n/a, not available. Performance targets for previous years may 
have been different than fiscal year 2009 targets. 

[A] This measure calculates the number or lives saved divided by the 
number of lives in distress, excluding cases involving 11 or more 
persons. Starting in fiscal year 2009, "lives in distress" now 
includes "lives unaccounted for"--persons still missing when search 
and rescue operations cease. 

[B] Closure day targets vary according to the relative severity of the 
winter. The standard is 2 days in an average winter and 8 days in a 
severe winter. 

[C] A collision refers to two moving vessels that strike one another 
whereas an allision is when a vessel strikes a fixed object, such as a 
bridge. 

[D] In fiscal year 2009, the Coast Guard revised its methodology for 
measuring drug interdiction performance by using the Consolidated 
Counter Drug Database (CCDB) as its source for tracking cocaine 
movement. Coast Guard states that the CCDB quarterly, event-based 
estimates are historically more than 60 percent higher than the annual 
production-and consumption-based estimates which had previously been 
used. This could make it appear as though Coast Guard performance 
dropped from fiscal year 2008. Therefore, no comparable prior year 
figures are available. 

[E] The Coast Guard reports that the defense readiness performance 
measures reported in fiscal year 2009 will be retired in fiscal year 
2010. The measures are being replaced with similar Status of Resources 
Training System based readiness measures that employ different 
methodology to better reflect readiness of all the Port Security Units 
and the entire fleet of patrol boats and High Endurance Cutters. 

[End of table] 

[End of section] 

GAO Related Products: 

Coast Guard: Service Has Taken Steps to Address Historic Personnel 
Problems, but It Is too Soon to Assess the Impact of These Efforts. 
[hyperlink, http://www.gao.gov/products/GAO-10-268R]. Washington, 
D.C.: January 29, 2010. 

Coast Guard: Better Logistics Planning Needed to Aid Operational 
Decisions Related to the Deployment of the National Security Cutter 
and Its Support Assets. [hyperlink, 
http://www.gao.gov/products/GAO-09-497]. Washington, D.C.: July 17, 
2009. 

Coast Guard: As Deepwater Systems Integrator, Coast Guard is 
Reassessing Costs and Capabilities but Lags in Applying its 
Disciplined Acquisition Approach. [hyperlink, 
http://www.gao.gov/products/GAO-09-682]. Washington, D.C.: July 14, 
2009. 

Coast Guard: Observations on the Fiscal Year 2010 Budget and Related 
Performance and Management Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-09-810T]. Washington, D.C.: July 7, 
2009. 

Coast Guard: Observations on the Genesis and Progress of the Service's 
Modernization Program. [hyperlink, 
http://www.gao.gov/products/GAO-09-530R]. Washington, D.C.: June 24, 
2009. 

Coast Guard: Update on Deepwater Program Management, Cost, and 
Acquisition Workforce. [hyperlink, 
http://www.gao.gov/products/GAO-09-620T]. Washington, D.C.: April 22, 
2009. 

Coast Guard: Observations on Changes to Management and Oversight of 
the Deepwater Program. [hyperlink, 
http://www.gao.gov/products/GAO-09-462T]. Washington, D.C.: March 24, 
2009. 

Maritime Security: Vessel Tracking Systems Provide Key Information, 
but the Need for Duplicate Data Should Be Reviewed. [hyperlink, 
http://www.gao.gov/products/GAO-09-337]. Washington, D.C.: March 17, 
2009. 

Coast Guard: Change in Course Improves Deepwater Management and 
Oversight, but Outcome Still Uncertain. [hyperlink, 
http://www.gao.gov/products/GAO-08-745]. Washington, D.C.: June 24, 
2008. 

Coast Guard: Strategies for Mitigating the Loss of Patrol Boats Are 
Achieving Results in the Near Term, but They Come at a Cost and Longer 
Term Sustainability Is Unknown. [hyperlink, 
http://www.gao.gov/products/GAO-08-660]. Washington, D.C.: June 23, 
2008. 

Status of Selected Aspects of the Coast Guard's Deepwater Program. 
[hyperlink, http://www.gao.gov/products/GAO-08-270R]. Washington, 
D.C.: March 11, 2008. 

Coast Guard: Observations on the Fiscal Year 2009 Budget, Recent 
Performance, and Related Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-08-494T]. Washington, D.C.: March 6, 
2008. 

Coast Guard: Deepwater Program Management Initiatives and Key Homeland 
Security Missions. [hyperlink, 
http://www.gao.gov/products/GAO-08-531T]. Washington, D.C.: March 5, 
2008. 

Maritime Security: Coast Guard Inspections Identify and Correct 
Facility Deficiencies, but More Analysis Needed of Program's Staffing, 
Practices, and Data. [hyperlink, 
http://www.gao.gov/products/GAO-08-12]. Washington, D.C.: February 14, 
2008. 

Maritime Security: Federal Efforts Needed to Address Challenges in 
Preventing and Responding to Terrorist Attacks on Energy Commodity 
Tankers. [hyperlink, http://www.gao.gov/products/GAO-08-141]. 
Washington, D.C.: December 10, 2007. 

Coast Guard: Challenges Affecting Deepwater Asset Deployment and 
Management and Efforts to Address Them. [hyperlink, 
http://www.gao.gov/products/GAO-07-874]. Washington, D.C.: June 18, 
2007. 

Coast Guard: Observations on the Fiscal Year 2008 Budget, Performance, 
Reorganization, and Related Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-07-489T]. Washington, D.C.: April 18, 
2007. 

Port Risk Management: Additional Federal Guidance Would Aid Ports in 
Disaster Planning and Recovery. [hyperlink, 
http://www.gao.gov/products/GAO-07-412]. Washington, D.C.: March 28, 
2007. 

Coast Guard: Status of Efforts to Improve Deepwater Program Management 
and Address Operational Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-07-575T]. Washington, D.C.: March 8, 
2007. 

Maritime Security: Public Safety Consequences of a Terrorist Attack on 
a Tanker Carrying Liquefied Natural Gas Need Clarification. 
[hyperlink, http://www.gao.gov/products/GAO-07-316]. Washington, D.C.: 
February 22, 2007. 

Coast Guard: Preliminary Observations on Deepwater Program Assets and 
Management Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-07-446T]. Washington, D.C.: February 
15, 2007. 

Coast Guard: Coast Guard Efforts to Improve Management and Address 
Operational Challenges in the Deepwater Program. [hyperlink, 
http://www.gao.gov/products/GAO-07-460T]. Washington, D.C.: February 
14, 2007. 

Homeland Security: Observations on the Department of Homeland 
Security's Acquisition Organization and on the Coast Guard's Deepwater 
Program. [hyperlink, http://www.gao.gov/products/GAO-07-453T]. 
Washington, D.C.: February 8, 2007. 

Coast Guard: Condition of Some Aids-to-Navigation and Domestic 
Icebreaking Vessels Has Declined; Effect on Mission Performance 
Appears Mixed. [hyperlink, http://www.gao.gov/products/GAO-06-979]. 
Washington, D.C.: September 22, 2006. 

Coast Guard: Non-Homeland Security Performance Measures Are Generally 
Sound, but Opportunities for Improvement Exist. [hyperlink, 
http://www.gao.gov/products/GAO-06-816]. Washington, D.C.: August 16, 
2006. 

Coast Guard: Observations on the Preparation, Response, and Recovery 
Missions Related to Hurricane Katrina. [hyperlink, 
http://www.gao.gov/products/GAO-06-903]. Washington, D.C.: July 31, 
2006. 

Maritime Security: Information-Sharing Efforts Are Improving. 
[hyperlink, http://www.gao.gov/products/GAO-06-933T]. Washington, 
D.C.: July 10, 2006. 

Coast Guard: Improvements Needed in Management and Oversight of Rescue 
System Acquisition. [hyperlink, 
http://www.gao.gov/products/GAO-06-623]. Washington, D.C.: May 31, 
2006. 

Coast Guard: Changes to Deepwater Plan Appear Sound, and Program 
Management Has Improved, but Continued Monitoring Is Warranted. 
[hyperlink, http://www.gao.gov/products/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. [hyperlink, http://www.gao.gov/products/GAO-05-757]. 
Washington, D.C.: July 22, 2005. 

Coast Guard: Station Readiness Improving, but Resource Challenges and 
Management Concerns Remain. [hyperlink, 
http://www.gao.gov/products/GAO-05-161]. Washington, D.C.: January 31, 
2005. 

Maritime Security: Better Planning Needed to Help Ensure an Effective 
Port Security Assessment Program. [hyperlink, 
http://www.gao.gov/products/GAO-04-1062]. Washington, D.C.: September 
30, 2004. 

Maritime Security: Partnering Could Reduce Federal Costs and 
Facilitate Implementation of Automatic Vessel Identification System. 
[hyperlink, http://www.gao.gov/products/GAO-04-868]. Washington, D.C.: 
July 23, 2004. 

Coast Guard: Relationship between Resources Used and Results Achieved 
Needs to Be Clearer. [hyperlink, 
http://www.gao.gov/products/GAO-04-432]. Washington, D.C.: March 22, 
2004. 

Contract Management: Coast Guard's Deepwater Program Needs Increased 
Attention to Management and Contractor Oversight. [hyperlink, 
http://www.gao.gov/products/GAO-04-380]. Washington, D.C.: March 9, 
2004. 

Coast Guard: Comprehensive Blueprint Needed to Balance and Monitor 
Resource Use and Measure Performance for All Missions. [hyperlink, 
http://www.gao.gov/products/GAO-03-544T]. Washington, D.C.: March 12, 
2003. 

[End of section] 

Footnotes: 

[1] See related GAO products at the end of this statement. 

[2] The Deepwater program is the largest acquisition program in Coast 
Guard history and is intended to replace or modernize the Coast 
Guard's aging vessels, aircraft, and some communications systems. 

[3] U.S. Coast Guard, U.S. Coast Guard Posture Statement with 2011 
Budget in Brief (February 2010) and U.S. Coast Guard, U.S. Coast Guard 
Fiscal Year 2009 Performance Report (February 2010). 

[4] The Coast Guard also refers to its command realignment effort as 
the modernization program. 

[5] Today we are releasing our report on the Coast Guard's personnel 
programs: Coast Guard: Service Has Taken Steps to Address Historic 
Personnel Problems, but It Is too Soon to Assess the Impact of These 
Efforts, [hyperlink, http://www.gao.gov/products/GAO-10-268R] 
(Washington, D.C.: Jan. 29, 2010). For examples of our prior Coast 
Guard work, see: GAO, Coast Guard: Better Logistics Planning Needed to 
Aid Operational Decisions Related to the Deployment of the National 
Security Cutter and Its Support Assets, [hyperlink, 
http://www.gao.gov/products/GAO-09-947] (Washington, D.C.: July 17, 
2009); GAO, Coast Guard: As Deepwater Systems Integrator, Coast Guard 
is Reassessing Costs and Capabilities but Lags in Applying its 
Disciplined Acquisition Approach, [hyperlink, 
http://www.gao.gov/products/GAO-09-682] (Washington, D.C.: July 14, 
2009); Coast Guard: Observations on the Genesis and Progress of the 
Service's Modernization Program, [hyperlink, 
http://www.gao.gov/products/GAO-09-530R] (Washington, D.C.: June 24, 
2009). 

[6] When supplemental funding and funds transferred from the National 
Science Foundation for Polar Operations are taken into account and 
added to the fiscal year 2010 enacted budget, the calculations reflect 
a decrease of about 3 percent from fiscal year 2010 to fiscal year 
2011. These figures include the Coast Guard's biggest mandatory 
appropriation account--retired pay--but do not include three smaller 
mandatory appropriation accounts-boating safety, oil spill liability 
trust fund, or gift fund. 

[7] [hyperlink, http://www.gao.gov/products/GAO-09-530R]. 

[8] [hyperlink, http://www.gao.gov/products/GAO-10-268R]. 

[9] GAO's analysis of the Coast Guard's budget request is presented in 
nominal terms. These calculations do not include either the $241.5 
million in supplemental funding that the Coast Guard received for 
overseas contingency operations in fiscal year 2010 or the $54 million 
transferred from the National Science Foundation for Polar Operations. 
When these funds are taken into account and added to the fiscal year 
2010 enacted budget, the calculations reflect a decrease of about 3 
percent from fiscal year 2010 to fiscal year 2011. Our calculations 
also do not include any of the $240 million in Recovery Act funding 
allocated to the Coast Guard in fiscal year 2009, some of which will 
be spent in fiscal years 2011 and 2012. Finally, these figures include 
the Coast Guard's biggest mandatory appropriation account--retired 
pay--but do not include three smaller mandatory appropriation 
accounts--boating safety, oil spill liability trust fund, or gift fund. 

[10] The HH-65 is the Coast Guard's main helicopter, serving such 
missions as search and rescue, drug and migrant interdiction, and 
homeland security. Rescue 21 is a Coast Guard program to modernize a 
30-year-old search and rescue communications system used for missions 
20 miles or less from shore, referred to as the National Distress and 
Response System. Among other things, it is to increase communications 
coverage area, allow electronic tracking of department vessels and 
other mobile assets, and enable secure communication with other 
federal and state entities. 

[11] The AC&I appropriation account finances the acquisition of new 
capital assets, construction of new facilities, and physical 
improvements to existing facilities and assets. The Retired Pay 
appropriation account provides payments as identified under the 
Retired Serviceman's Family Protection and Survivor Benefits Plans, as 
well as other personnel entitlements such as medical care of retired 
personnel and their dependents. 

[12] The 378-foot High Endurance Cutter class are the largest cutters 
ever built for the Coast Guard. Equipped with a helicopter flight 
deck, retractable hangar, and the facilities to support helicopter 
deployment, the High Endurance Cutter is versatile and capable of 
performing a variety of missions, and operates throughout the world's 
oceans. Medium Endurance Cutters are helicopter-capable medium-range, 
medium-endurance platforms. Their missions include enforcement of laws 
and treaties, fisheries, migrant interdiction, counter-drug 
activities, safety inspections, search and rescue, and homeland 
security. The HU-25 is a medium-range surveillance fixed-wing 
aircraft. There are three variants of the HU-25; the primary 
difference is in the installed sensor package. 

[13] The Coast Guard's MSSTs constitute a domestic force for 
mitigating or responding to terrorist threats or incidents. Teams have 
deployed, for example, to national special security events such as the 
Presidential Inauguration, the Olympics, and the Super Bowl. 

[14] The HC-130 Hercules is a long-range surveillance and transport, 
fixed-wing aircraft that is used to perform a wide variety of missions. 

[15] The Coast Guard budget includes funding for Deepwater assets, 
including the National Security Cutter, the Fast Response Cutter, and 
design funding for the Offshore Patrol Cutter. 

[16] As a multi-mission agency, the Coast Guard notes that it may 
conduct multiple mission activities simultaneously. As a result, it is 
difficult to accurately detail the level of resources dedicated to 
each mission. The Coast Guard uses an activity-based cost model that 
averages past expenditures and models future investments to 
approximate future spending by mission. 

[17] The goal of the Ports, Waterways, and Coastal Security program is 
to reduce the risk of maritime terrorism by improving maritime domain 
awareness, conducting maritime security and response operations, and 
developing maritime security regimes. 

[18] This reduction is also reflective of reductions in investments in 
Rescue 21 and the Response Boat-Medium. The key functions of the Coast 
Guard's Search and Rescue program are to operate multimission stations 
and a national distress and response communication system and conduct 
search and rescue operations for mariners in distress. 

[19] A goal (also known as a strategic goal or objective) constitutes 
a specific set of policy, programmatic, and management objectives for 
the programs and operations covered in the strategic plan, and serves 
as a framework from which the annual objectives and activities are 
derived. Performance measures are particular values or characteristics 
used to measure output or outcome of activities, objectives, and goals. 

[20] According to the Coast Guard, the other law enforcement mission 
is more accurately described as foreign fishing vessel law enforcement. 

[21] Starting in fiscal year 2009, the Coast Guard revised its 
methodology for measuring drug interdiction performance by adopting 
the Consolidated Counter-Drug Database as its source for tracking 
cocaine movement estimates. This change in methodology makes it 
difficult to compare the fiscal year 2009 performance to prior year's 
performance so we have not reported prior year results in table 5 of 
appendix III. 

[22] Coast Guard reports that its defense readiness performance 
measures will be retired in fiscal year 2010. The measures will be 
replaced with other measures that employ different methodology to 
better reflect readiness of the Port Security Units and the entire 
fleet of patrol boats and High Endurance Cutters. 

[23] To help carry out its missions, the Coast Guard has a large-scale 
acquisition program, called Deepwater, under way to replace or upgrade 
its fleet of vessels or aircraft. Our reports and testimonies over the 
past 12 years have included details on the Deepwater program. See, for 
example, [hyperlink, http://www.gao.gov/products/GAO-09-682]; Coast 
Guard: Update on Deepwater Program Management, Cost, and Acquisition 
Workforce, [hyperlink, http://www.gao.gov/products/GAO-09-620T] 
(Washington, D.C.: April 22, 2009); Coast Guard: Change in Course 
Improves Deepwater Management and Oversight, but Outcome Still 
Uncertain, [hyperlink, http://www.gao.gov/products/GAO-08-745] 
(Washington, D.C.: June 24, 2008); Coast Guard: Observations on the 
Fiscal Year 2009 Budget, Recent Performance, and Related Challenges, 
[hyperlink, http://www.gao.gov/products/GAO-08-494T] (Washington, 
D.C.: Mar. 6, 2008); and Coast Guard: Challenges Affecting Deepwater 
Asset Deployment and Management Efforts to Address Them, [hyperlink, 
http://www.gao.gov/products/GAO-07-874] (Washington, D.C.: June 18, 
2007). 

[24] See GAO, Coast Guard: Observations on the Fiscal Year 2008 
Budget, Performance, Reorganization, and Related Challenges, 
[hyperlink, http://www.gao.gov/products/GAO-07-489T] (Washington, 
D.C.: April 18, 2007); [hyperlink, http://www.gao.gov/products/GAO-08-
494T] and GAO, Coast Guard: Observations on the Fiscal Year 2010 
Budget and Related Performance and Management Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-09-810T] (Washington, D.C.: Jul. 7, 
2009). 

[25] Additionally, while a lot of attention has been given to the 
recent fiscal deterioration, the federal government faces even larger 
fiscal challenges that will persist long after the return of financial 
stability and economic growth. See GAO, The Federal Government's Long- 
Term Fiscal Outlook, Fall 2009 Update, [hyperlink, 
http://www.gao.gov/products/GAO-10-137SP] (Washington, D.C.: Oct. 15, 
2009). 

[26] To carry out this acquisition, the Coast Guard awarded the 
competitive contract to a systems integrator, which for the Deepwater 
program, was a contractor composed of two major companies acting as a 
joint venture, responsible for designing, constructing, deploying, 
supporting, and integrating the various assets to meet projected 
Deepwater operational requirements at the lowest possible costs, 
either directly or through subcontractors. 

[27] [hyperlink, http://www.gao.gov/products/GAO-09-682]. 

[28] As part of our ongoing work, we are updating the Coast Guard cost 
estimates of Deepwater assets and expect to report on this work by mid-
2010. 

[29] The Fast Response Cutter is slated to replace the 110' and 123' 
patrol boats under the Coast Guard's Deepwater system and is projected 
to provide greater speed, endurance, and operational hours then 
current patrol boats. 

[30] See GAO, Coast Guard: Strategies for Mitigating the Loss of 
Patrol Boats Are Achieving Results in the Near Term, but They Come at 
a Cost and Longer Term Sustainability Is Unknown, [hyperlink, 
http://www.gao.gov/products/GAO-08-660] (Washington, D.C.: June 23, 
2008). 

[31] Under the original 2002 Deepwater implementation plan, the Coast 
Guard intended to convert all 49 of its aging and deteriorating 110- 
foot patrol boats into 123-foot patrol boats with increased 
capabilities. This conversion was to serve as a bridging strategy 
until a replacement vessel, the Fast Response Cutter, became 
operational. 

[32] [hyperlink, http://www.gao.gov/products/GAO-09-497]. 

[33] The Bertholf was outfitted with cutter interceptor boats and an H-
65 helicopter during its first operational patrol. 

[34] See GAO, Coast Guard: Changes to Deepwater Plan Appear Sound, and 
Program Management Has Improved, but Continued Monitoring Is 
Warranted, [hyperlink, http://www.gao.gov/products/GAO-06-546] 
(Washington, D.C.: April 28, 2006). 

[35] In 2001, the contractor completed a study documenting the 
capabilities, types, and mix of assets the Coast Guard needed to 
fulfill its Deepwater missions, referred to as the Fleet Mix Study. 

[36] On October 24, 2008, a Coast Guard charter established a study 
group to conduct the Coast Guard fleet mix analysis. The group's 
purpose is to analyze, validate and make recommendations regarding 
capability requirements necessary to execute Coast Guard missions in 
the Deepwater operating environment. 

[37] See [hyperlink, http://www.gao.gov/products/GAO-09-530R]. As we 
reported, the U.S. Coast Guard is undertaking a major effort to update 
its command structure, support systems, and business practices. 

[38] Within the Coast Guard, command and control refers to the 
exercise of authority and direction by a properly designated commander 
over assigned forces in the accomplishment of the mission. Command and 
control functions are performed through an arrangement of personnel, 
equipment, communications, facilities, and procedures. 

[39] While several current bills (e.g., H.R. 2650, H.R. 3619, and S. 
1194) contain the Coast Guard's legislative change proposal 
provisions, as of February 15, 2010, such bills were still pending. 

[40] The Maritime Security Response Team (MSRT) is a highly 
specialized resource with advanced counterterrorism skills and 
tactics. The MSRT is trained to be a first responder to potential 
terrorist situations; deny terrorist acts; perform security actions 
against non-compliant actors; perform tactical facility entry and 
enforcement; participate in port level counterterrorism exercises; and 
educate other forces on Coast Guard counterterrorism procedures. 

[41] Department of Homeland Security, Office of Inspector General, 
Independent Auditor's Report on DHS' FY2009 Financial Statements and 
Internal Control Over Financial Reporting, OIG-10-11 (Washington, 
D.C., November 13, 2009). 

[42] Taylor, James L., Deputy Inspector General. Department of 
Homeland Security, Office of Inspector General. Testimony Before the 
House of Representatives, Committee on Homeland Security, Subcommittee 
on Management, Investigations, and Oversight. October 29, 2009. 

[43] See GAO, Financial Management Systems: DHS Faces Challenges to 
Successfully Consolidating Its Existing Disparate Systems, [hyperlink, 
http://www.gao.gov/products/GAO-10-76] (Washington, D.C.: Dec. 4, 
2009). 

[44] See, [hyperlink, http://www.gao.gov/products/GAO-10-76]. For 
further information on our prior work and recommendations in this 
area, see GAO, Homeland Security: Departmentwide Integrated Financial 
Management Systems Remain a Challenge, [hyperlink, 
http://www.gao.gov/products/GAO-07-536] (Washington, D.C.: June 21, 
2007); and, GAO, Financial Management Systems: DHS Has An Opportunity 
to Incorporate Best Practices in Modernization Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-06-553] (Washington, D.C.: Mar. 29, 
2006). 

[45] [hyperlink, http://www.gao.gov/products/GAO-10-268R]. 

[46] See, GAO, Coast Guard: Relationship between Resources Used and 
Results Achieved Needs to Be Clearer, [hyperlink, 
http://www.gao.gov/products/GAO-04-432] (Washington, D.C.: Mar. 22, 
2004). 

[47] GAO, Maritime Security: Coast Guard International Port Security 
Program Has Made Progress, but Additional Workforce Planning Is 
Needed, [hyperlink, http://www.gao.gov/products/GAO-08-335SU] 
(Washington, D.C.: Apr. 4, 2008). 

[48] The Senate Report (S. Rep. No. 110-396 at 80 (2008)) accompanying 
the Department of Homeland Security Appropriations Act, 2009 (Pub. L. 
No. 110-329, 122 Stat. 3574, 3652 (2008)) required the Commandant of 
the United States Coast Guard to address specific elements in the 
development of a workforce action plan. The Explanatory Statement 
accompanying the Department of Homeland Security Appropriations Act, 
2009, directed the Coast Guard to comply with the Senate report 
direction regarding a workforce action plan (H.Comm. on 
Appropriations, 110th Cong., Committee Print on H.R. 2638/Public Law 
110-329 at 646 (2008)). 

[49] For detailed information on each of these plans and tools 
including the issue they are intended to address, purpose, responsible 
command, time frames, and status, see pp. 23-44 of [hyperlink, 
http://www.gao.gov/products/GAO-10-268R]. 

[50] The current Coast Guard Commandant's 4-year term ends in May 
2010. At such time, he will be replaced by a new Commandant and Coast 
Guard leadership team. 

[51] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, [hyperlink, 
http://www.gao.gov/products/GAO-03-369] (Washington, D.C.: July 2, 
2003). 

[End of section] 

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