Coast Guard:

Decision to Phase Out Curtis Bay Yard Is Inadequately Supported

RCED-89-29: Published: Oct 7, 1988. Publicly Released: Oct 17, 1988.

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In response to a congressional request, GAO reviewed the proposed phaseout of industrial operations at the U.S. Coast Guard Yard at Curtis Bay, Maryland.

GAO found that: (1) the Coast Guard estimated that phasing out the Yard's industrial functions would result in annual savings of about $2.6 million; (2) Yard officials estimated that the savings would only total about $1 million due to offsetting increased overhead operating and maintenance costs; (3) neither the Coast Guard headquarters nor the Yard estimates considered certain annual offsetting administration costs associated with contracting out the industrial work; and (4) Coast Guard headquarters assumed that contracting the work would cost the same as performing it in-house. GAO also found that: (1) closing the Yard would result in one-time offsetting costs of between $5 million and $8 million for severance and annual leave pay to civilian employees and could delay any net savings for 2 to 3 years; (2) Yard officials stated that headquarters often overlooked the Yard's tangible benefits when deciding where it should make ship construction and repairs; (3) the Coast Guard also justified the phaseout as a means to avoid $20 million to $30 million in modernization costs; (4) although the Coast Guard anticipated declines in the Yard's work load, documents suggested that the Yard operations were an essential activity needed for effective and timely mission performance; and (5) the Coast Guard had not officially justified waiving a legislated prohibition against terminating the essential logistic activities before considering contracting out its activities. In addition, GAO found that, although the Coast Guard was developing a phaseout implementation plan that would include new cost savings estimates, an assessment of offsetting costs for contract administration, and a better assessment of one-time closing costs, until it corrected other weaknesses, it lacked assurance that its decision to close the Yard was proper.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Because the Coast Guard had such poor data to support its proposed closing of the Yard, Congress directed that the Yard be kept open. Since Congress directed that the Yard be kept open, this recommendation is no longer applicable.

    Recommendation: In order to develop more complete information upon which to base a decision on maintaining or phasing out the industrial activities of the Curtis Bay Yard, the Secretary of Transportation should direct the Commandant, Coast Guard, to identify and weigh the importance of the intangible benefits of maintaining the only ship repair and construction facility under Coast Guard control.

    Agency Affected: Department of Transportation

  2. Status: Closed - Not Implemented

    Comments: Since Congress directed that the Yard remain open, this recommendation is no longer applicable.

    Recommendation: In order to develop more complete information upon which to base a decision on maintaining or phasing out the industrial activities of the Curtis Bay Yard, the Secretary of Transportation should direct the Commandant, Coast Guard, to evaluate the feasibility of the less costly alternatives to modernize the Yard laid out in the Yard's 1987 Master Plan and develop a more precise estimate of future modernization costs.

    Agency Affected: Department of Transportation

  3. Status: Closed - Not Implemented

    Comments: Since Congress directed that the Yard remain open, this recommendation is no longer applicable.

    Recommendation: The Secretary of Transportation should adequately justify the required waiver, if the decision is made to terminate the Yard's essential logistics industrial activities. At a minimum, the justification should resolve inconsistencies in existing planning documents with respect to future work that could be done at the Yard and include the reasons why the Yard's technical personnel and base facilities are no longer necessary to ensure the effective and timely performance of the Coast Guard's missions under varying contingency operations.

    Agency Affected: Department of Transportation

 

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