Coast Guard:

Challenges for Addressing Budget Constraints

RCED-97-110: Published: May 14, 1997. Publicly Released: May 21, 1997.

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Pursuant to a congressional request, GAO reviewed the fiscal constraints that the Coast Guard is facing and the efforts that it is making to adjust to constrained budgets, focusing on: (1) the extent of the gap between the funding needed to maintain the Coast Guard's current level of services and the funding that the Office of Management and Budget (OMB) has targeted for the agency through fiscal year (FY) 2002; (2) the Coast Guard's strategy for addressing this gap, and whether the strategy is adequate; and (3) what additional actions, if any, would help close the gap. GAO did not verify the accuracy of or attempt to validate the Coast Guard's estimates for future acquisition needs.

GAO noted that: (1) deficit reduction efforts will create substantial pressure on the Coast Guard's budget; (2) by FY 2002, the Coast Guard is projected to have a gap of as much as $493 million between OMB's budget target and the estimated cost of maintaining services at current levels; (3) eliminating a gap of this size means that by FY 2002, the Coast Guard would need to identify cuts in operating expenses of $363 million and defer a substantial portion of its budget to replace or modernize its aging ships, aircraft, and facilities through FY 2002, according to OMB and Coast Guard estimates; (4) whether the Guard can close the gap with its current budget strategy is highly uncertain and is likely to remain so for some time; (5) Coast Guard managers have acknowledged the task's enormity, but have not yet fully developed an approach or a specific plan for addressing the task; (6) agency managers have begun to strengthen planning and budgeting processes, but these changes will not be fully in place for a year or more, and their usefulness in addressing immediate needs for reductions is unclear; (7) in the meantime, the Coast Guard continues to rely heavily on its past strategy, which focuses almost exclusively on cutting costs through greater efficiency; (8) while this strategy has yielded savings of about $343 million, achieving OMB's targets will be a much more difficult challenge; (9) the gap's sheer size and the dwindling number of available efficiency-related options mean that in developing its plan for meeting OMB's budget targets, the Coast Guard may have to reexamine its current focus; (10) GAO's past work shows that when private-sector and public organizations have successfully faced fiscal constraints like the Coast Guard's, they have done so through a much broader approach that includes the consideration of alternatives; (11) except for the recent streamlining program, the Coast Guard has relatively incomplete knowledge about the savings that it can anticipate in the next several years from cost-saving steps that are in various stages of implementation; (12) as a result, the agency does not know the degree to which these steps would close future funding gaps; (13) in addition, the Coast Guard may have to consider measures that call for considerable change in its operating culture or that stir public opposition; and (14) fully addressing such options may require further study or new implementation strategies.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The Congress has yet to take action on this recommendation in the over four years since it was made.

    Matter: If future funding levels require the Coast Guard to consider closing operational units such as small boat stations, air stations, marine safety offices, or training centers, the Congress may wish to establish an independent panel to review potential agency facilities closures in view of the: (1) potential financial benefits; (2) impact on beneficiaries of services currently provided; and (3) potential opposition that inevitably accompanies consolidation and closure decisions. A panel much like the Defense Base Closure and Realignment Commission established to review military installations may be useful to address these issues.

  2. Status: Closed - Not Implemented

    Comments: The Congress has yet to take action on this recommendation in the over four years since it was made.

    Matter: If the Congress believes that potentially controversial issues within the Coast Guard, such as changing military rotation policies or converting more military positions to civilian positions, merit further consideration, the Congress may wish to: (1) direct the Coast Guard to commission an outside study of these options; or (2) otherwise ensure either that the options are reviewed independently or that the Coast Guard's studies of controversial internal issues are validated by a third party.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Coast Guard concurred with the recommendation and is now and will continue to quantify the anticipated year-by-year savings from actions already under way or planned. These actions will be conducted on a continuing basis.

    Recommendation: The Secretary of Transportation should direct the Commandant of the Coast Guard to incorporate the following approach into the Coast Guard's strategy for confronting and managing possible changes in the current budget climate: to the maximum extent possible, quantify the anticipated year-by-year savings from actions already under way or planned, such as specifying the future savings realized by replacing old vessels with fewer new ones and implementing alternative vessel inspection methods.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: In December 1999, the Interagency Task Force on Coast U.S. Coast Guard Roles and Missions released its report "A Coast Guard for the Twenty-First Century." The report evaluated most of the Coast Guard's roles and missions and concluded that recapitalization of the agency's capability is a near-term national priority and endorsed its acquisition process. Moreover, the Coast Guard has made progress in improving its fiscal year 2002 Agency Capital Plan and has prioritized projects within OMB budget targets. According to the Coast Guard, further refinements are planned for the 2003 plan, including fully funding major capital projects within existing OMB budget targets. In addition, the agency is working on performance based budgeting, and it hopes to further improve the linkage between its budget requests and its mission performance.

    Recommendation: The Secretary of Transportation should direct the Commandant of the Coast Guard to incorporate the following approach into the Coast Guard's strategy for confronting and managing possible changes in the current budget climate: develop a more comprehensive strategy and corresponding plan for addressing impending budget targets, including systematically identifying and prioritizing alternatives that could be considered if future budget targets require additional spending reductions. In so doing, the Coast Guard should give serious consideration to relevant but unimplemented recommendations from past studies and options identified in its recent National Streamlining Study. The agency should also identify the legislative actions necessary to implement these alternatives. Particularly in light of the large anticipated backlog of capital projects, the Coast Guard should consider including a reassessment of its missions and its relationship to user groups as part of this activity.

    Agency Affected: Department of Transportation

 

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