Testimony 

Before the Subcommittee on Coast Guard 

and Maritime Transportation, Committee 

on Transportation and Infrastructure, 

House of Representatives 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m. EST 

Tuesday, April 1, 2003 COAST GUARD 

Challenges during the 

Transition to the 

Department of Homeland 

Security 

Statement of JayEtta Z. Hecker, Director Physical 

Infrastructure 

GAO-03-594T 
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Data on the most recent levels of effort for the Coast Guard’s various 

missions show clearly the dramatic shifts that have occurred among its 

missions since the September 11, 2001, attacks. Predictably, levels of effort 

related to homeland security remain at much higher levels than before 

September 11th. Other missions, such as search and rescue, have remained 

at essentially the same levels. In contrast, several other missions—most 

notably fisheries enforcement and drug interdiction—dropped sharply after 

September 11th and remain substantially below historical levels. Continued 

homeland security and military demands make it unlikely that the agency, in 

the short run, can increase efforts in the missions that have declined. 

Further, the fiscal year 2004 budget request contains little that would 

substantially alter the existing levels of effort among missions. 

The Coast Guard faces fundamental and daunting challenges during its 

transition to the new department. Delays in the planned modernization of 

cutters and other equipment, responsibility for new security-related tasks as 

directed under the Maritime Transportation Security Act (MTSA), and 

mandatory responses to unexpected events, such as terrorist attacks or 

extended terror alerts, will have an impact on the Coast Guard’s ability to 

meet its new security-related responsibilities while rebuilding its capacity in 

other missions. Also, as one of the agencies being merged into the new 

department, the Coast Guard must deal with a myriad of organizational, 

human capital, acquisition, and technology issues. The enormity of these 

challenges requires the development of a comprehensive blueprint or 

strategy that addresses how the Coast Guard should balance and monitor 

resource use among its various missions in light of its new operating reality. 

Number of Resource Hours Spent on Drug Interdiction, by Quarter, October 1997-December 

2002.

Drug interdiction is one of several missions with levels of effort that are substantially below those 

that existed prior to the September 11th attacks. The dotted line shows actual quarter-by-quarter 

totals; the thicker line is a regression line showing the general trend. 

COAST GUARD 

Challenges during the Transition to the 

Department of Homeland Security 

www.gao.gov/cgi-bin/getrpt?GAO-03-534T.

To view the full testimony, including the scope 

and methodology, click on the link above. 

For more information, contact JayEtta Hecker 

at (206) 512-2834 or heckerj@gao.gov. 

Highlights of GAO-03-594T, a testimony 

before the Subcommittee on Coast Guard 

and MaritimeTransportation, Committee 

on Transportation and Infrastructure, 

House of Representatives 

April 2003 

The Coast Guard is one of 22 

agencies being placed in the new 

Department of Homeland Security 

(DHS). With its key roles in the 

nation’s ports, waterways, and 

coastlines, the Coast Guard is an 

important part of enhanced 

homeland security efforts. But it 

also has important nonsecurity 

missions, such as search and 

rescue, fisheries and environmental 

protection, and drug and migrant 

interdiction. GAO has conducted a 

number of reviews of the Coast 

Guard’s missions and was asked to 

testify about the Coast Guard’s 

most recent level of effort for its 

various missions and the major 

operational and organizational 

challenges facing the agency during 

its transition into the newly created 

DHS. 

In order to monitor resource use 

and measure performance, GAO 

recommended in November 2002 

that the Coast Guard develop a 

long-term blueprint or strategy 

outlining how resources will be 

distributed across missions, a time 

frame for achieving this desired 

balance, and a useful format for 

reporting progress to the Congress. 

The Coast Guard agreed with the 

need for such a strategy and has 

started to develop one. 
Page 1 GAO-03-594T 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss major operational and 

organizational challenges facing the Coast Guard during this period of 

transition into the newly created Department of Homeland Security (DHS). 

The creation of DHS represents one of the largest reorganizations and 

consolidations of government agencies, personnel, programs, and 

operations in recent history. Creating this new department means merging 

22 agencies—with their disparate organizational structures, cultures, and 

systems—into a cohesive working unit. For these and other reasons, we 

have designated the implementation and transformation of DHS as a highrisk area.1

As one of the agencies being merged into the new department, the Coast 

Guard must deal with a myriad of organizational, human capital, process, 

and technology challenges and, at the same time, carry out its expanding 

mission responsibilities. But the Coast Guard, even as a separate entity, 

was rapidly reinventing itself in many respects in the wake of the 

September 11, 2001, terrorist attacks. After the attacks, the Coast Guard’s 

priorities and focus had to shift suddenly and dramatically toward 

protecting the nation’s vast and sprawling network of ports and 

waterways. Cutters, aircraft, boats, and personnel normally used for 

traditional missions—such as drug and migrant interdiction, fisheries 

enforcement, and marine environmental protection—were shifted to 

homeland security functions, which previously consumed only a small part 

of the agency’s operating resources. As we have recently reported,2

 the 

Coast Guard has begun restoring activity levels for many of its traditional 

missions, but doing so is a work in process. 

To help meet its increased homeland security responsibilities and restore 

activity levels for its traditional missions, the Coast Guard has received 

substantial budget increases over the last 2 years. This trend continued 

with the President’s fiscal year 2004 budget request for the Coast Guard of 

$6.8 billion—a 9.6 percent increase over the previous year. Still, despite 

 1

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Homeland Security, GAO-03-102 (Washington, D.C.: January 2003). 

2

U.S. General Accounting Office, Coast Guard: Strategy Needed for Setting and 

Monitoring Levels of Effort for All Missions, GAO-03-155 (Washington, D.C.: November 

2002); U.S. General Accounting Office, Coast Guard: Comprehensive Blueprint Needed to 

Balance and Monitor Resource Use and Measure Performance for All Missions, 

GAO-03-544T (Washington D.C.: March 2003). 
Page 2 GAO-03-594T 

the large budget increases for the Coast Guard since September 11th, there 

is much congressional concern about how—and whether—the Coast 

Guard can continue to meet its responsibilities for all of its missions, given 

the increased emphasis on and additional resources required for homeland 

security. 

My testimony today, which is based on recently completed work, 

addresses two topics: (1) the most recent levels of effort for the Coast 

Guard’s various missions, and how these levels compare to those in the 

past; (2) the challenges the Coast Guard faces in balancing its resources 

among its missions and ensuring and maximizing its effectiveness in each 

of its missions. The scope and methodology of our review is described in 

the appendix. 

In summary: 

• The most recent levels of effort for the Coast Guard’s various missions—

as measured by the use of multiple-mission resources such as cutters, 

patrol boats, and aircraft—show clearly the dramatic increase in the 

amount of time spent on homeland security following the September 11th 

attacks. In the months after the attacks, as the initial surge in homeland 

security activities was abating, activity in many other missions began 

returning to pre-September 11th levels, but some have not yet recovered. 

For example, the amount of resource hours currently being spent on 

search and rescue and maintaining aids to navigation are fairly consistent 

with traditional levels over the last 5 years. However, there have been 

substantial declines from traditional levels of time spent on two law 

enforcement missions—fisheries enforcement and drug interdiction. The 

fiscal year 2004 budget request for the Coast Guard, which includes a $592 

million increase over the 2003 budget, does not include initiatives that 

would substantially reverse these declines. The majority of this increase 

would cover pay increases for current or retired employees or continue 

certain programs already under way, such as upgrades to information 

technology. About $168.5 million of the increase would fund new 

initiatives, most of which relate either to homeland security or to search 

and rescue. As such, these initiatives do not represent substantial shifts in 

current levels of effort among missions. This situation is further 

exacerbated by the diversion of Coast Guard resources to respond to 

heightened terror alerts at home and military operations in the Middle 

East. 

• The Coast Guard faces fundamental challenges in being able to 

accomplish all of its new homeland security responsibilities, while 

rebuilding capacity in other missions to pre-September 11th levels. For 
Page 3 GAO-03-594T 

example, the Coast Guard’s Deepwater Project, a modernization effort for 

cutters, patrol boats, and aircraft, has already experienced delays in the 

delivery of key assets, jeopardizing the agency’s future ability to carry out 

a number of missions at optimum levels. This situation could worsen 

because the Coast Guard has tied successful completion of the project to 

levels of funding that are beyond what has been available. Another 

challenge involves the implementation of the Maritime Transportation 

Security Act of 2002 (MTSA), which requires the Coast Guard to undertake 

a variety of new homeland security tasks. Since an implementation 

strategy has not yet been fully developed for MTSA, and funding to 

accomplish implementation is not provided in the fiscal year 2004 budget 

request, for the foreseeable future, the Coast Guard will need to absorb the 

costs related to these tasks within its operating budget. Similarly, any 

unexpected events—such as terrorist attacks or extended terror alerts—

could also result in using resources for homeland security purposes that 

would normally be used for other missions. Further, the Coast Guard’s 

expanded role in homeland security and its relocation in the newly created 

DHS have changed many of its priorities and working parameters; its 

adjustment to this new environment is a work in progress. Altogether, 

these factors raise serious concerns about the Coast Guard’s ability to 

meet traditional expectations across the broad range of all of its missions.3

In recent reports, 4

 we have pointed to several steps that are needed in 

such an environment. One is to continue finding ways to operate more 

efficiently to maximize the existing resources available. Another is to 

develop a comprehensive blueprint or strategy for accomplishing mission 

responsibilities. This blueprint needs to recognize the new operating 

reality created by the Coast Guard’s increasing homeland security role and 

translate that reality into (1) realistic level-of-effort targets for all of its 

missions, (2) a plan for achieving these targets with appropriate 

performance measurements, and (3) a framework for monitoring and 

reporting on levels of effort and performance in achieving mission goals so 

that the agency and the Congress can better decide how limited dollars 

can be spent. 

 3

Some additional funding may be provided to address these challenges through the 

proposed fiscal year 2003 supplemental budget. However, the impact of this potential 

funding on these challenges is unknown. 

4

U.S. General Accounting Office, Coast Guard: Strategy Needed for Setting and 

Monitoring Levels of Effort for All Missions, GAO-03-155 (Washington, D.C.: November 

2002), and U.S. General Accounting Office, Homeland Security: Challenges Facing the 

Coast Guard as it Transitions to the New Department, GAO-03-467T (Washington, D.C.: 

February 2003). 
Page 4 GAO-03-594T 

The Coast Guard, which became a part of DHS on March 1, 2003, has a 

wide variety of both security and nonsecurity missions. (See table 1.) The 

Coast Guard’s equipment includes 141 cutters, approximately 1,400 small 

patrol and rescue boats, and about 200 aircraft. Coast Guard services are 

provided in a variety of locations, including ports, coastal areas, the open 

sea, and in other waterways like the Great Lakes and the Mississippi River. 

The Coast Guard’s installations range from small boat stations providing 

search and rescue and other services to marine safety offices that 

coordinate security and other activities in the nation’s largest ports. 

Table 1: Security and Nonsecurity Missions of the Coast Guard 

Mission areaa Activities and functions within each mission area 

Security missions 

Ports, waterways, and coastal security Conducting harbor patrols, vulnerability assessments, intelligence gathering and analysis, 

and other activities to prevent terrorist attacks and minimize the damage from attacks that 

occur. 

Drug interdiction Deploying cutters and aircraft in high drug trafficking areas and gathering intelligence to 

reduce the flow of illegal drugs across maritime boundaries. 

Migrant interdiction Deploying cutters and aircraft to reduce the flow of undocumented migrants entering the 

United States by maritime routes. 

Defense readiness Participating with the Department of Defense (DOD) in global military operations; 

deploying cutters and other boats in and around harbors to protect DOD force 

mobilization operations. 

Nonsecurity missions 

Maritime safety Setting standards and conducting vessel inspections to better ensure the safety of 

passengers and crew aboard cruise ships, ferries, and other passenger vessels and 

commercial and fishing vessels; partnering with states and boating safety organizations to 

reduce recreational boating deaths. 

Search and rescue Operating small boat stations and national distress and response communication system; 

conducting search and rescue operations for mariners in distress. 

Living marine resources Protecting our nation’s fishing grounds from foreign encroachment; enforcing domestic 

fishing laws and regulations through inspections and fishery patrols. 

Environmental protection Preventing and responding to marine oil spills; preventing the illegal dumping of plastics 

and garbage into our nation’s waters. 

Aids to navigation Maintaining the extensive system of navigation aids in our waterways; monitoring marine 

traffic through traffic service centers. 

Ice operations Conducting polar operations to facilitate the movement of critical goods and personnel in 

support of scientific and national security activity; conducting domestic icebreaking 

operations to facilitate year-round commerce. 

Source: U.S. Coast Guard. 

a

The Coast Guard’s security and nonsecurity missions are delineated in the Homeland Security Act of 

2002 (P. L. 107-296, Nov. 25, 2002). 

As an organization that is also part of the armed services, the Coast Guard 

has both military and civilian positions. At the end of fiscal year 2002, the 

agency had over 42,000 full-time positions—about 36,000 military and 

about 6,600 civilians. The Coast Guard also has about 7,200 reservists who 

Background 
Page 5 GAO-03-594T 

support the national military strategy and provide additional operational 

support and surge capacity5

 during emergencies, such as natural disasters. 

In addition, about 36,000 volunteer auxiliary personnel assist in a wide 

range of activities from search and rescue to boating safety education. 

The events of September 11th caused the Coast Guard to direct its efforts 

increasingly into maritime homeland security activities, highlighted by the 

Coast Guard’s establishing a new program area: Ports, Waterways, and 

Coastal Security (coastal security). Prior to September 11th, activities 

related to this area represented less than 10 percent of the Coast Guard’s 

operating budget, according to Coast Guard officials. In the fiscal year 

2004 budget request, coastal security represents about one-quarter of the 

Coast Guard’s planned operating budget. Other mission areas, most 

notably drug interdiction, have declined substantially as a percentage of 

the operating budget. 

The emphasis the Coast Guard placed on security after September 11th 

has had varying effects on its level of effort among all of its missions, as 

measured by the extent to which multiple-mission resources (cutters, 

other boats, and aircraft) are used for a particular mission.6 The most 

current available data show that some security-related missions, such as 

migrant interdiction and coastal security, have grown significantly since 

September 11th. Other missions, such as search and rescue and aids to 

navigation remained at essentially the same levels as they were before 

September 11th. However, the level of effort for other missions, most 

notably the interdiction of illegal drugs and fisheries enforcement, is 

substantially below pre-September 11th levels. 

Missions such as coastal security, and migrant interdiction have 

experienced increased levels of effort. Coastal security has seen the most 

dramatic increase from pre-September 11th levels. (See fig. 1.) For 

 5

During emergencies, such as the events of September 11th, Coast Guard reservists can be 

activated or full-time agency personnel temporarily transferred to provide additional 

support at Coast Guard field locations where such help is needed. 

6

A 5-year time frame was used to depict trend data for all missions except coastal security. 

For that mission, a 4-year time frame was used. 

The Coast Guard’s 

Emphasis on Security 

Continues to Affect 

Its Levels of Effort in 

Some Missions 

Missions with Increased 

Levels of Resources 
Page 6 GAO-03-594T 

example, it went from 2,400 resource hours7 during the first quarter of 

1999, peaked at 91,000 hours during the first quarter of fiscal year 2002 

(immediately after September 11, 2001), and most recently stood at nearly 

37,000 hours for the first quarter of fiscal year 2003. In figure 1, as well as 

the other resource figures that follow, we have added a line developed by 

using linear regression8

 techniques to show the general trend for the 

period. It is important to note that while such lines depict the trend in 

resource hours to date, they should not be taken as a prediction of future 

values. Other activity indicators, such as sea marshal9 boardings, also 

demonstrate an increased level of emphasis. Before September 11th, such 

boardings were not done; but there were over 550 boardings during the 

first quarter of 2003. Similarly, vessel operational control actions10 have 

risen by 85 percent since the fourth quarter of fiscal year 2001. 

 7

The Coast Guard maintains information, on a mission-by-mission basis, about how cutters, 

patrol boats, and aircraft are used. Each hour that these resources are used in a mission is 

called a resource hour. Resource hours do not include such things as the time that the 

resource stands idle or the time that is spent maintaining it. 

8

Linear regression estimates the coefficients of the linear equation, involving one or more 

independent variables, that best predict the value of the dependent variable. 

9

Sea marshals are armed Coast Guard personnel who board selected vessels operating in 

and around U.S. ports and harbors and take position on the ship’s bridge and other areas 

determined to be necessary to vessel safety. These teams provide additional security to 

ensure that only authorized personnel maintain control of the vessel at all times. 

10Vessel operational control actions are efforts to control vessels and can include captain of 

the port orders, administration orders, letters of deviation, and the designation of security 

zones. 
Page 7 GAO-03-594T 

Figure 1: Number of Resource Hours Spent on Ports, Waterways, and Coastal 

Security, by Quarter, October 1998 – December 2002 

Note: GAO analysis of data from the Coast Guard’s Abstract of Operations includes resource hours 

for cutters, boats, and aircraft. Figures shown are for the first quarter of fiscal year 1999 and 2003, 

respectively. The dotted line shows actual quarter-by-quarter totals; the thicker line is a regression 

line showing the general trend. 

Given the emphasis on homeland security, it is not surprising that efforts 

to interdict illegal immigrants have also increased. For example, during 

the first quarter of 2003, the level of effort in this area was 28 percent 

higher than it was for the comparable period in 1998. 

Some of the Coast Guard’s traditional missions, such as providing aids to 

navigation and search and rescue, have been the least affected by the 

increased emphasis on security. (See fig. 2.) While resource hours for both 

of these missions have declined somewhat since the first quarter of fiscal 

year 1998, the overall pattern of resource use over the past 5 years has 

remained consistent. Although search and rescue boats and buoy tenders 

were used to perform homeland security functions immediately after 

September 11th, these activities did not materially affect the Coast Guard’s 

ability to carry out its search and rescue or aids to navigation missions. 

Missions with a Steady 

State of Resources 
Page 8 GAO-03-594T 

Search and rescue boats were initially redeployed for harbor patrols after 

the September 11th terrorist attacks; but the impact on the mission was 

minimal because the deployments occurred during the off-season, with 

respect to recreational boating.11 Similarly, some boats that normally serve 

as buoy tenders—an aids to navigation function—were used for security 

purposes instead; but they were among the first to be returned to their 

former missions. For the first quarter of fiscal year 2003, the number of 

resource hours spent on these missions was very close to the number 

spent during the comparable quarter of fiscal year 1998. 

 11Search and rescue resources are subject to seasonal cycles, with more resources being 

used during the summer months when boating is at its peak. 
Page 9 GAO-03-594T 

Figure 2: Number of Resource Hours Spent on Search and Rescue and Aids to 

Navigation, by Quarter, October 1997-December 2002 

Note: GAO analysis of data from the Coast Guard’s Abstract of Operations includes resource hours 

for cutters, boats, and aircraft. Figures shown are for the first quarter of fiscal year 1998 and 2003, 

respectively. The dotted line shows actual quarter-by-quarter totals; the thicker line is a regression 

line showing the general trend. 

Performance measurement data further demonstrates the relatively 

minimal impact on these missions resulting from the Coast Guard’s 
Page 10 GAO-03-594T 

emphasis on homeland security. For example, for search and rescue, the 

Coast Guard was within about half a percentage point of meeting its target 

for saving mariners in distress in 2002. Likewise, data show that with 

respect to its aid to navigation mission, in 2002 the Coast Guard was about 

1 percent from its goal of navigational aid availability. 12

A number of missions have experienced declines in resource hours from 

pre-September 11th levels, including drug interdiction, fisheries 

enforcement (domestic and foreign), marine environmental protection, 

and marine safety. In particular, drug enforcement and fisheries 

enforcement have experienced significant declines. Compared with the 

first quarter of 1998, resource hours for the first quarter of fiscal year 2003 

represent declines of 60 percent for drug interdiction and 38 percent for 

fisheries enforcement. (See fig. 3.) In fact, resource hours for these areas 

were declining even before the events of September 11th; and while they 

briefly rebounded in early 2002, they have since continued to decline. A 

Coast Guard official said the recent decline in both drug enforcement and 

fisheries can be attributed to the heightened security around July 4, 2002, 

and the anniversary of the September 11th terrorist attacks, as well as the 

deployment of resources for military operations. They said the decline will 

likely not be reversed during the second quarter of 2003 because of the 

diversion of Coast Guard cutters to the Middle East and the heightened 

security alert that occurred in February and March 2003. 

 12The Coast Guard had a goal to save at least 85 percent of all mariners in imminent danger; 

they actually saved 84.4 percent. Similarly, the Coast Guard had a goal to have 99.7 percent 

of navigational aids available and their actual availability was 98.4 percent. 

Missions with a Decline in 

Resource Hours 
Page 11 GAO-03-594T 

Figure 3: Number of Resource Hours Spent on Drug Interdiction and Fisheries 

Enforcement, by Quarter, October 1997-December 2002 

Note: GAO analysis of data from the Coast Guard’s Abstract of Operations includes resource hours 

for cutters, boats, and aircraft. Figures shown are for the first quarter of fiscal year 1998 and 2003, 

respectively. The dotted line shows actual quarter-by-quarter totals; the thicker line is a regression 

line showing the general trend. 

The reduction in resource hours over the last several years in drug 

enforcement is particularly telling. In the first quarter of 1998, the Coast 
Page 12 GAO-03-594T 

Guard was expending nearly 34,000 resource hours on drug enforcement, 

and as of first quarter of 2003, the resource hours had declined to almost 

14,000 hours—a reduction of nearly two-thirds. Also, both the number of 

boardings to identify illegal drugs and the amount of illegal drugs seized 

declined from the first quarter of fiscal year 2000. The Coast Guard’s goal 

of reducing the flow of illegal drugs based on the seizure rate for cocaine 

has not been met since 1999. During our conversations with Coast Guard 

officials, they explained that the Office of National Drug Control Policy set 

this performance goal in 1997, and although they recognize that they are 

obligated to meet these goals, they believe the goals should be revised. 

Our review of the Coast Guard’s activity levels in domestic fishing shows 

U.S. fishing vessel boardings and significant violations13 identified are both 

down since 2000. Similarly, the Coast Guard interdicted only 19 percent as 

many foreign vessels as it did in 2000.14 The reduced level of effort 

dedicated to these two missions is likely linked to the Coast Guard’s 

inability to meet its performance goals in these two areas. For instance, in 

2002 the Coast Guard did not meet its goal of detecting foreign fishing 

vessel incursions,15 and while there is no target for domestic fishing 

violations, there were fewer boardings and fewer violations detected in 

2002 than in 2000.16

Recently, the Coast Guard Commandant stated that the Coast Guard 

intends to return the level of resources directed to law enforcement 

missions (drug interdiction, migrant interdiction, and fisheries 

enforcement) to 93 percent of pre-September 11th levels (using a baseline 

of the 8 quarters prior to September 11, 2001) by the end of 2003 and 95 

percent by the end of 2004. However, in the environment of heightened 

security and the continued deployment of resources to the Middle East, 

these goals will likely not be achieved, especially for drug interdiction and 

 13The Coast Guard defines significant violations as any or all of the following: (1) significant 

damage or impact to the resource or the fisheries management plan, (2) significant 

monetary advantage to the violator over the competition, or (3) a high regional interest of 

emotional or political nature as determined by regional fisheries councils. 

14Activity data for foreign fishing vessels is a comparison of fourth quarters in 2000 and 

2002. 

15In fiscal year 2002, the Coast Guard’s goal was to detect 250 foreign fishing vessel 

incursions into U.S. fishing waters—only 202 were detected that year. 

16According to Coast Guard officials, budget constraints that occurred in fiscal years 2000 

and 2001 resulted in a 15 percent reduction in operating levels. 
Page 13 GAO-03-594T 

fisheries enforcement, which are currently far below previous activity 

levels. 

The Coast Guard’s budget request for fiscal year 2004 does not contain 

initiatives or proposals that would substantially alter the current levels of 

effort among missions. The request for $6.8 billion represents an increase 

of about $592 million, or about 9.6 percent in nominal dollars, over the 

enacted budget for fiscal year 2003.17 The majority of this increase covers 

pay increases for current or retired employees or continues certain 

programs already under way, such as upgrades to information technology. 

About $168.5 million of the increase would fund new initiatives, most of 

which relate either to homeland security or to search and rescue. As such, 

these initiatives do not represent substantial shifts in current levels of 

effort among missions. 

However, the 2004 budget request does address a long-standing 

congressional concern about the Coast Guard’s search and rescue mission. 

The search and rescue initiative is part of a multiyear effort to address 

shortcomings in search and rescue stations and command centers. In 

September 2001, the Department of Transportation Office of the Inspector 

General reported that readiness at search and rescue stations was 

deteriorating.18 For example, staff shortages at most stations required 

crews to work an average of 84 hours per week, well above the standard 

(68 hours) established to limit fatigue and stress among personnel. The 

initiative seeks to provide appropriate staffing and training to meet the 

standards of a 12-hour watch and a 68-hour work week. The Congress 

appropriated $14.5 million in fiscal year 2002 and $21.7 million in fiscal 

year 2003 for this initiative. The increased amount requested for fiscal year 

2004 ($26.3 million) for search and rescue would pay for an additional 390 

full-time search and rescue station personnel and for 28 additional 

instructors at the Coast Guard’s motor lifeboat and boatswain’s mate 

schools. 

 17The $592 million requested increase breaks down as follows: $440 million of the $592 

million requested increase is for operating expenses for the Coast Guard’s mission areas, 

$20.8 million is for capital projects, and $131 million is for pay for retired personnel. 

18Audit of the Small Boat Station Search and Rescue Program. MH-2001-94 (Washington, 

D.C.: Sept 14, 2001). 

Fiscal Year 2004 Budget 

Request Will Not 

Substantially Alter Current 

Levels of Effort 
Page 14 GAO-03-594T 

The Coast Guard faces fundamental challenges in balancing resource use 

among its missions and accomplishing everything that has come to be 

expected of it. We have already described how the Coast Guard has not 

been able, in its current environment, to both assimilate its new homeland 

security responsibilities and restore levels of effort for all other missions. 

Several other challenges further threaten the Coast Guard’s ability to 

balance these diverse missions. For example, the Coast Guard’s 

Deepwater Project19 has already experienced delays in delivery of key 

assets and could face additional delays if future funding falls behind what 

the Coast Guard had planned. Such delays could also seriously jeopardize 

the Coast Guard’s ability to carry out a number of security and nonsecurity 

missions. Similarly, for the foreseeable future, the Coast Guard must 

absorb the cost of implementing a variety of newly mandated homeland 

security tasks by taking resources from ongoing activities. Funding for 

these tasks are not provided in the fiscal year 2004 budget request. The 

Coast Guard also faces the constant possibility that future terror alerts, 

terrorist attacks, or military actions will likely require it to shift additional 

resources to homeland security missions. Finally, the Coast Guard’s 

transition to DHS brings additional challenges, particularly with respect to 

establishing effective communication links and building partnerships both 

within DHS and with external agencies. 

Such challenges raise serious concerns about the Coast Guard’s ability to 

accomplish all of its responsibilities and balance the level of effort among 

all missions in an environment where it strives to be “all things to all 

people,” and attempts to do so as one of many agencies in a cabinet 

department whose primary mission is homeland security. In past work, we 

have pointed to several steps that the Coast Guard needs to take in such 

an environment. These include continuing to address opportunities for 

operational efficiency, especially through more partnering and developing 

a comprehensive blueprint or strategy for balancing and monitoring 

resource use across all of its missions. 

 19Begun in 1996, the Integrated Deepwater Project is a program to replace or modernize the 

Coast Guard’s existing ships and aircraft, as well as make use of innovative technology 

such as satellites and improved detection capabilities to carry out its varied mission 

responsibilities. 

Significant Challenges 

Raise Concerns about 

Coast Guard’s Ability 

to Accomplish Its 

Diverse Missions 
Page 15 GAO-03-594T 

Under current funding plans, the Coast Guard faces significant potential 

delays and cost increases in its $17 billion Integrated Deepwater Project. 

This project is designed to modernize the Coast Guard’s entire fleet of 

cutters, patrol boats, and aircraft over a 20-year period. Given the way the 

Coast Guard elected to carry out this project, its success is heavily 

dependent on receiving full funding every year. So far, that funding has not 

materialized as planned. Delays in the project, which have already 

occurred, could jeopardize the Coast Guard’s future ability to effectively 

and efficiently carry out its missions, and its law enforcement activities—

that is, drug and migrant interdiction and fisheries enforcement—would 

likely be affected the most, since they involve extensive use of deepwater 

cutters and aircraft. 

Under the project’s contracting approach, the responsibility for 

Deepwater’s success lies with a single systems integrator20 and its 

contractors for a period of 20 years or more. Under this approach, the 

Coast Guard has started on a course potentially expensive to alter. It is 

based on having a steady, predictable, annual funding stream of $500 

million in 1998 dollars over the next 2 to 3 decades. Already the funding 

provided for the project is less than the amount the Coast Guard planned 

for. The fiscal year 2002 appropriation for the project was about $28 

million below the planned level, and the fiscal year 2003 appropriated level 

was about $90 million below the planning estimate. Further, the 

President’s fiscal year 2004 budget request for the Coast Guard is not 

consistent with the Coast Guard’s deepwater funding plan. If the requested 

amount of $500 million for fiscal year 2004 is appropriated, it would 

represent another shortfall of $83 million, making the cumulative shortfall 

about $202 million in the project’s first 3 years, according to Coast Guard 

data. If appropriations hold steady at $500 million (in nominal dollars) 

through fiscal year 2008, the Coast Guard estimates that the cumulative 

shortfall will reach $626 million.21

The shortfalls in the last 2 fiscal years (2002 and 2003) and their potential 

persistence could have serious consequences. The main impact is that it 

 20The prime contractor, known as the “systems integrator,” is responsible for ensuring that 

each ship, aircraft, or other equipment is delivered on time and in accordance with agreed 

to prices and in compliance with the Coast Guard’s system performance specifications. 

21The $28 million shortfall is expressed in 2002 dollars, the $90 million shortfall in 2003 

dollars, and the $202 million shortfall in 2004 dollars. The $626 million dollar shortfall is 

expressed in 2008 dollars. 

Continued Funding 

Shortfalls Could Delay the 

Deepwater Project and 

Adversely Affect the Coast 

Guard’s Mission 

Capabilities 
Page 16 GAO-03-594T 

would take longer and cost more in the long run to fully implement the 

deepwater system. For example, due to funding shortfalls experienced to 

date, the Coast Guard has delayed the introduction of the new maritime 

patrol aircraft by 19 months and slowed the conversion and upgrade 

program for its 110-foot patrol boats. According to the Coast Guard, if the 

agency continues to receive funding at levels less than planned, new asset 

introductions—and the associated retirement of costly, less capable Coast 

Guard resources—will continue to be deferred. 

The cost of these delays will be exacerbated by the accompanying need to 

invest additional funds in maintaining current assets beyond their planned 

retirement date because of the delayed introduction of replacement 

capabilities and assets, according to the Coast Guard. For example, 

delaying the maritime patrol aircraft will likely require some level of 

incremental investment to continue safe operation of the current HU-25 jet 

aircraft. Similarly, a significant delay in the scheduled replacement for the 

existing 270-foot medium endurance cutter fleet could require an 

unplanned and expensive renovation for this fleet. 

System performance—and the Coast Guard’s capability to effectively carry 

out its mission responsibilities—would also likely be impacted if funding 

for the Deepwater Project does not keep pace with planning estimates. For 

example, Coast Guard officials told us that conversions and upgrades for 

its 110-foot patrol boats would extend its operating hours from about 1,800 

to 2,500 per year. Once accomplished, this would extend the time these 

boats could devote to both security and nonsecurity missions. As with the 

maritime patrol aircraft, reductions in funding levels for the project have 

slowed the conversions and upgrades for these vessels, which in turn, has 

prevented enhancements in mission performance that newer vessels 

would bring. Coast Guard officials also said that with significant, 

continuing funding shortfalls delaying new asset introductions, at some 

point, the Coast Guard would be forced to retire some cutters and 

aircraft—even as demand for those assets continues to grow. For example, 

in 2002, two major cutters and several aircraft were decommissioned 

ahead of schedule due to their deteriorated condition and high 

maintenance costs. 
Page 17 GAO-03-594T 

The Coast Guard has also been tasked with a myriad of new homeland 

security requirements, but funding to implement them is not provided in 

either the enacted fiscal year 2003 budget or the fiscal year 2004 budget 

request. As a result, the Coast Guard will have to meet many of these 

requirements by pulling resources from other activities. Under the 

Maritime Transportation Security Act (MTSA),22 signed into law in 

November 2002, the Coast Guard must accomplish a number of securityrelated tasks within a matter of months and sustain them over the long 

term. For example, MTSA requires the Coast Guard to be the lead agency 

in conducting security assessments, developing plans, and enforcing 

specific security measures for ports, vessels, and facilities. In the near 

term, the Coast Guard must prepare detailed vulnerability assessments of 

vessels and facilities it identifies to be at high risk of terrorist attack. It 

must also prepare a National Maritime Transportation Security Plan that 

assigns duties among federal departments and agencies and specifies 

coordination with state and local officials—an activity that will require 

substantial work by Coast Guard officials at the port level. The Coast 

Guard must also establish plans for responding to security incidents, 

including notifying and coordinating with local, state, and federal 

authorities. 

Because the fiscal year 2004 budget request was prepared before MTSA 

was enacted, it does not specifically devote funding to most of these port 

security responsibilities. Coast Guard officials said that they will have to 

absorb costs related to developing, reviewing, and approving plans, 

including the costs of training staff to monitor compliance, within their 

general budget.23 Coast Guard officials expect that the fiscal year 2005 

budget request will contain funding to address all MTSA requirements. In 

the meantime, officials said that the Coast Guard would have to perform 

most of its new port security duties without additional appropriation, and 

that the funds for these duties would come from its current operations 

budget. The costs of these new responsibilities, as well as the extent to 

which they will affect resources for other missions, are not known. 

 22P. L. 107-295, Nov. 25, 2002. 

23The Coast Guard had already begun work on two aspects of the legislation; these aspects 

are accounted for in the fiscal year 2004 budget request. These two items are requirements 

to (1) create marine safety and security teams and (2) to dispatch armed officers as sea 

marshals for some port security duties. 

Some New Homeland 

Security Duties Are Not 

Fully Factored into the 

Coast Guard’s Distribution 

of Resources 
Page 18 GAO-03-594T 

Security alerts, as well as actions needed in the event of an actual terrorist 

attack, can also affect the extent to which the Coast Guard can devote 

resources to missions not directly related to homeland security. For 

example, Coast Guard officials told us that in the days around September 

11, 2002, when the Office of Homeland Security raised the national threat 

level from “elevated” to “high risk,” the Coast Guard reassigned cutters 

and patrol boats in response. In February 2003, when the Office of 

Homeland Security again raised the national threat level to high risk, the 

Coast Guard repositioned some of its assets involved in offshore law 

enforcement missions, using aircraft patrols in place of some cutters that 

were redeployed to respond to security-related needs elsewhere. While 

these responses testify to the tremendous flexibility of a multi-mission 

agency, they also highlight what we found in our analysis of activity-level 

trends—when the Coast Guard responds to immediate security needs, 

fewer resources are available for other missions. 

The Coast Guard’s involvement in the military buildup for Operation 

Enduring Freedom in the Middle East further illustrates how such 

contingencies can affect the availability of resources for other missions. 

As part of the buildup, the Coast Guard has deployed eight 110-foot boats, 

two high-endurance cutters, four port security units, and one buoy tender 

to the Persian Gulf. These resources have come from seven different Coast 

Guard districts. For example, officials from the First District told us they 

sent four 110-foot patrol boats and three crews to the Middle East. These 

boats are multi-mission assets used for fisheries and law enforcement, 

search and rescue and homeland security operations. In their absence, 

officials reported, the First District is using other boats previously devoted 

to other tasks. For instance, buoy tenders have taken on some search and 

rescue functions, and buoy tenders and harbor tug/icebreakers are 

escorting high-interest vessels. Officials told us that these assets do not 

have capabilities equivalent to the patrol boats but have been able to 

perform the assigned mission responsibilities to date. 

The creation of DHS is one of the largest, most complex restructurings 

ever undertaken, and the Coast Guard, as one of many agencies joining the 

department, faces numerous challenges, including organizational, human 

capital, acquisition, process and technology issues.24 One particularly 

 24U.S. General Accounting Office, Homeland Security: Challenges Facing the Coast Guard 

as it Transitions to the New Department, GAO-03-467T (Washington, D.C.: February 

2003). 

External Uncertainties 

Place Additional Strain on 

Resources 

Transition to Homeland 

Security Poses Additional 

Challenges 
Page 19 GAO-03-594T 

formidable challenge involves establishing effective communication links 

and building partnerships both within DHS and with external 

organizations. While most of the 22 agencies transferred to DHS report to 

under secretaries for the department’s various directorates,25 the Coast 

Guard remains a separate entity reporting directly to the Secretary of DHS. 

According to Coast Guard officials, the Coast Guard has important 

functions that will require coordination and communication with all of 

these directorates, particularly the Border and Transportation Security 

Directorate. For example, the Coast Guard plays a vital role with Customs, 

Immigration and Naturalization Service, the Transportation Security 

Administration, and other agencies that are organized in the Directorate of 

Border and Transportation Security. Because the Coast Guard’s homeland 

security activities require interface with these and a diverse set of other 

agencies organized within several DHS directorates, communication, 

coordination, and collaboration with these agencies is paramount to 

achieve department-wide results. 

Effective communication and coordination with agencies outside the 

department is also critical to achieving the homeland security objectives, 

and the Coast Guard must maintain numerous relationships with other 

public and private sector organizations outside DHS. For example, 

according to Coast Guard officials, the Coast Guard will remain an 

important participant in the Department of Transportation’s (DOT) 

strategic planning process, since the Coast Guard is a key agency in 

helping to maintain the maritime transportation system. Also, the Coast 

Guard maintains navigation systems used by DOT agencies such as the 

Federal Aviation Administration. In the homeland security area, 

coordination efforts will extend well beyond our borders to include 

international agencies of various kinds. For example, the Coast Guard, 

through its former parent agency, DOT, has been spearheading U.S 

involvement in the International Maritime Organization. This is the 

organization that, following the September 11th attacks, began 

determining new international regulations needed to enhance ship and 

port security. Also, our work assessing efforts to enhance our nation’s port 

security has underscored the formidable challenges that exist in forging 

 25Most agencies within DHS are organized within one of the four directorates: Science and 

Technology, Information Analysis and Infrastructure Protection, Border and 

Transportation Security, and Emergency Preparedness and Response. 
Page 20 GAO-03-594T 

partnerships and coordination among the myriad of public and private 

sector and international stakeholders.26

In previous work, we have examined some of the implications of the Coast 

Guard’s new operating environment on the agency’s ability to fulfill its 

various missions.27 This work, like our testimony today, has pointed to the 

difficulty the Coast Guard faces in devoting additional resources to 

nonsecurity missions, despite the additional funding and personnel the 

agency has received. In particular, we have recommended that the 

following actions be taken as a more candid acknowledgment of the 

difficulty involved: 

• Opportunities for increased operational efficiency need to be explored. 

Over the past decade, we and other outside organizations, along with the 

Coast Guard, have studied Coast Guard operations to determine where 

greater efficiencies might be found. These studies have produced a 

number of recommendations, such as shifting some responsibilities to 

other agencies. One particular area that has come to the forefront since 

September 11th is the Coast Guard’s potential ability to partner with other 

port stakeholders to help accomplish various security and nonsecurity 

activities involved in port operations. Some effective partnerships have 

been established, but the overall effort has been affected by variations in 

local stakeholder networks and limited information-sharing among ports. 

• A comprehensive blueprint or strategy is needed for setting and 

assessing levels of effort and mission performance. One important effort 

that has received relatively little attention, while the Coast Guard has 

understandably put its homeland security responsibilities in place, is the 

development of a plan that proactively addresses how the Coast Guard 

should manage its various missions in light of its new operating reality. 

The Coast Guard’s adjustment to its new post-September 11th 

environment is still largely in process, and sorting out how traditional 

 26U.S. General Accounting Office, Container Security: Current Efforts to Detect Nuclear 

Materials, New Initiatives, and Challenges, GAO-03-297T (Washington, D.C.: November 

2002), and U.S. General Accounting Office, Port Security: Nation faces Formidable 

Challenges in Making New Initiatives Successful, GAO-02-993T (Washington, D.C.: August 

2002). 

27U.S. General Accounting Office, Coast Guard: Budget and Management Challenges for 

2003 and Beyond, GAO-02-588T (Washington, D.C.: March 2001), and U.S. General 

Accounting Office, Coast Guard: Strategy Needed for Setting and Monitoring Levels of 

Effort for All Missions, GAO-03-155 (Washington, D.C.: November 2002). 

Several Types of Actions 

Needed to Help Address 

Challenges 
Page 21 GAO-03-594T 

missions will be fully carried out alongside new security responsibilities 

will likely take several years. But it is important to complete this plan and 

address in it key elements and issues so that it is both comprehensive and 

useful to decision makers who must make difficult policy and budget 

choices. Without such a blueprint, the Coast Guard also runs the risk of 

continuing to communicate that it will try to be “all things to all people” 

when, in fact, it has little chance of actually being able to do so. 

The Coast Guard has acknowledged the need to pursue such a planning 

effort, and the Congress has directed it to do so. Coast Guard officials told 

us that as part of the agency’s transition to DHS, they are updating the 

agency’s strategic plan, including plans to distribute all resources in a way 

that can sustain a return to previous levels of effort for traditional 

missions. In addition, the Congress placed a requirement in MTSA for the 

Coast Guard to submit a report identifying mission targets, and steps to 

achieve them, for all Coast Guard missions for fiscal years 2003 to 2005. 

However, this mandate is not specific about the elements that the Coast 

Guard should address in the report. 

To be meaningful, this mandate should be addressed with thoroughness 

and rigor and in a manner consistent with our recent recommendations; it 

requires a comprehensive blueprint that embodies the key steps and 

critical practices of performance management. Specifically, in our 

November 2002 report on the progress made by the Coast Guard in 

restoring activity levels for its key missions, we recommended an 

approach consisting of a long-term strategy outlining how the Coast Guard 

sees its resources—cutters, boats, aircraft, and personnel—being 

distributed across its various missions, a time frame for achieving this 

desired balance, and reports with sufficient information to keep the 

Congress apprised not only of how resources were being used, but what 

was being accomplished. The Coast Guard agreed that a comprehensive 

strategy was needed, and believes that it is beginning the process of 

developing one. Table 2 provides a greater explanation of what this 

approach or blueprint would entail. 
Page 22 GAO-03-594T 

Table 2: Elements of an Approach for Setting and Assessing Levels of Effort and Mission Effectiveness 

Element Explanation 

Setting realistic targets for levels of effort in 

each mission area 

Targets need to take into account the finite Deepwater and other resources 

available in the near to medium term and the likely homeland security 

scenarios, based on resource requirements needed to respond to various 

potential terrorist threats and attacks 

Developing an action plan for achieving 

targets 

Action plan needs to include: 

• an analysis of the mix of resources needed and timetables required to 

achieve level-of-effort targets; 

• strategies for partnering with other public and private sector organizations 

to accomplish mission activities; 

• contingency plans for addressing responsibilities for all of its missions 

during prolonged “high alert” periods; 

• new approaches and techniques, including the use of new technology, for 

achieving mission responsibilities; and 

• identifying operational efficiencies that would free up funds for more 

mission-enhancing needs, such as keeping the Deepwater Project on 

schedule. 

Establishing realistic performance measures 

for all missions 

Includes two steps: 

• completing performance measures for homeland security, and 

• evaluating and revising, where necessary, performance measures, such as 

those for drug interdiction, for all missions. 

Collecting sufficiently complete, accurate, and 

consistent performance data to measure effectiveness 

in meeting performance targets 

Includes data on: 

• resources being applied to each mission (money, personnel, and capital 

assets), 

• output measures that describe what is being done with these resources 

(e.g., numbers of patrols and inspections conducted), and 

• outcome data on the extent that program goals are being achieved. 

Source: GAO. 

The events of recent months heighten the need for such an approach. 

During this time, the budgetary outlook has continued to worsen, further 

emphasizing the need to look carefully at the results being produced by 

the nation’s large investment in homeland security. The Coast Guard must 

be fully accountable for investments in its homeland security missions and 

able to demonstrate what these security expenditures are buying and their 

value to the nation. At the same time, recent events also demonstrate the 

extent to which highly unpredictable homeland security events, such as 

heightened security alerts, continue to influence the amount of resources 

available for performing other missions. The Coast Guard needs a plan 

that will help the agency, the Congress, and the public understand and 

effectively deal with trade-offs and their potential impacts in such 

circumstances. 
Page 23 GAO-03-594T 

Mr. Chairman, this concludes my testimony today. I would be pleased to 

respond to any questions that you or Members of the Subcommittee may 

have at this time. 

For information about this testimony, please contact JayEtta Z. Hecker, 

Director, Physical Infrastructure, at (202) 512-2834, or heckerj@gao.gov, or 

Margaret T. Wrightson, at (415) 904-2200, or wrightsonm@gao.gov. 

Individuals making key contributions to this testimony include Steven 

Calvo, Christopher M. Jones, Sharon Silas, Stan Stenersen, Eric Wenner, 

and Randall Williamson. 

To determine the most recent levels of effort for the Coast Guard’s various 

missions and how these levels compare to those in the past, we reviewed 

the data from the Coast Guard’s Abstract of Operations. These data, 

reported by crews of cutters, boats, and aircraft, represent the hours that 

these resources spent in each of the Coast Guard’s mission areas. We 

reviewed these data to identify how resources were utilized across 

missions both before and after September 11th, and to identify any trends 

in resource utilization. In addition, we spoke with Coast Guard officials at 

headquarters about the use of Coast Guard resources both before and 

after September 11th. 

To determine the implications of the proposed fiscal year 2004 budget 

request for these various levels of effort, we reviewed the President’s fiscal 

year 2004 budget request for the Coast Guard, as well as the enacted 

budget for the Coast Guard for fiscal year 2003. We used the Department 

of Commerce’s chain-weighted price index for gross domestic product to 

adjust nominal dollar figures for the effect of inflation. In addition, we 

spoke with Coast Guard officials within the Coast Guard’s Office of 

Programs and Operations Directorate, the Marine Safety Directorate, and 

the Integrated Deepwater Systems Program Office. 

To identify the challenges the Coast Guard faces in balancing its resources 

among its missions and ensuring and maximizing its effectiveness in each 

of its missions, we reviewed our previous reports on performance 

management and developing performance measures. We also reviewed 

Coast Guard strategic documents and discussed them with staff in the 

Coast Guard’s Program Management and Evaluation Division. In addition, 

we met with officials from the Coast Guard’s DHS Transition team to 

discuss strategic planning and transition issues. 

Contacts and 

Acknowledgments 

Scope and 

Methodology 

(544068)