A 

Maintenance, Rehabilitation, and 

Upgrading of Shore Facilities in Support of 

United States Coast Guard Missions

DEPARTMENT OF HOMELAND SECURITY 

Office of Inspector General 

OIG-08-24 February 2008 
Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

 February 14, 2008 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established by 

the Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector General 

Act of 1978. This is one of a series of audit, inspection, and special reports prepared as part of our 

oversight responsibilities to promote economy, efficiency, and effectiveness within the department. 

This report addresses the effectiveness of the United States Coast Guard’s maintenance, 

rehabilitation, and upgrading of shore facilities in support of its missions. It is based on interviews 

with employees and officials of relevant agencies and institutions, direct observations, and a review 

of applicable documents. 

The recommendations herein have been developed to the best knowledge available to our office, and 

has been discussed in draft with those responsible for implementation. It is our hope that this report 

will result in more effective, efficient, and economical operations. We express our appreciation to 

all of those who contributed to the preparation of this report. 

 

Richard L. Skinner 

Inspector General 
Table of Contents/Abbreviations 

Executive Summary...............................................................................................................................1 

Background............................................................................................................................................2 

Results of Audit .....................................................................................................................................4 

 Shore AC&I Funding Is Below Industry Standard..........................................................................4 

 Overhaul of Prioritized Shore AC&I Projects Not Timely..............................................................5 

Inappropriate Use of Maintenance Funds........................................................................................7 

 Shore AC&I and Maintenance Backlogs Do Not Reflect Most Urgent Priorities ........................11 

 Conclusions and Recommendations ..............................................................................................13 

 Management Comments and OIG Analysis ..................................................................................14 

Appendices 

Appendix A: Purpose, Scope, and Methodology.........................................................................17 

Appendix B: Management Comments to The Draft Report........................................................18 

Appendix C: Coast Guard’s Prioritized Projects.........................................................................21 

Appendix D: Sector Southeastern New England Planning Proposal Report Excerpt .................23 

Appendix E: Station Juneau Problem Statement Excerpt ...........................................................24 

Appendix F: Base Galveston Project Proposal Report Excerpt..................................................26 

Appendix G: Fort Wadsworth Planning Proposal/Project Proposal Report Excerpt ..................28 

Appendix H: Recapitalization of 186 Buildings Problem Statement Excerpt.............................30 

Appendix I: Station Boothbay Harbor Problem Statement Excerpt ..........................................31 

Appendix J: Station Fire Island Project Proposal Report Excerpt ............................................33 

Appendix K: Station Hatteras Inlet Problem Statement Excerpt ................................................34 

Appendix L: Major Contributors to The Report .........................................................................36 

Appendix M: Report Distribution ................................................................................................37 

Abbreviations 

AC&I Acquisition, Construction, and Improvements 

ANT Aids to Navigation Team 

Coast Guard United States Coast Guard 

Deepwater Integrated Deepwater System Program 

DHS Department of Homeland Security 

DOT Department of Transportation 

FASAB Federal Accounting Standards Advisory Board 

FY Fiscal Year 

HQ Coast Guard Headquarters 

ISC Integrated Support Command 

MSST Maritime Safety and Security Team 

OIG Office of Inspector General 

OMB Office of Management and Budget 

PP&E Property, Plant, and Equipment 

PRV Plant Replacement Value 

WPB Patrol Boats
OIG 

Maintenance, Rehabilitation, and Upgrading of Shore Facilities in Support of United States Coast Guard Missions 

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Department of Homeland Security 

Office of Inspector General 

Executive Summary 

This report presents the results of our audit of shore facilities that support the 

missions of the United States Coast Guard. Our objective was to determine 

the extent to which the United States Coast Guard is properly maintaining, 

rehabilitating, and upgrading its shore facilities. 

The United States Coast Guard has been working diligently to maintain its 

more than 22,000 shore facilities. However, as each year passes, this task is 

becoming increasingly challenging. More than 80% of its current acquisition, 

construction, and improvements funding is directed to the Integrated 

Deepwater System Program, leaving funding available for shore facilities well 

below the industry and United States Coast Guard accepted standard of 2% of 

plant replacement value. For fiscal years 2003 through 2006, the United 

States Coast Guard funded shore acquisition, construction, and improvements 

at approximately 0.3% of plant replacement value, resulting in a funding gap 

of about $511 million. To compensate for the gap, the United States Coast 

Guard improperly used maintenance funds to upgrade or expand its shore 

facilities. 

Although the United States Coast Guard funded maintenance at the minimum 

recommended level, we identified instances where the United States Coast 

Guard used maintenance funds to augment shore acquisition, construction, 

and improvement activities. This resulted in the under funding of the 

maintenance program. Using maintenance funds to support shore acquisition, 

construction, and improvement activities does not comply with the 

requirements set forth in Office of Management and Budget Circular No. A11 and Federal Accounting Standards Advisory Board Statement No. 6. 

According to these pronouncements, Office of Management and Budget 

Circular No. A-11 defines maintenance of facilities as routine repair, and, 

similarly, Federal Accounting Standards Advisory Board Statement No. 6 

defines maintenance as normal repairs, replacement of parts, and other 

activities needed to preserve the asset so that it continues to provide 

acceptable services and achieve its expected life. The gap in shore 

acquisition, construction, and improvements funding and the inappropriate use 

of maintenance funds could hasten the deterioration of the United States Coast 
Guard’s critical shore facilities and ultimately affect its overall operational 

capability. 

 

We recommend that the Commandant, United States Coast Guard: (1) fund 

shore acquisition, construction, and improvements and maintenance according 

to the industry standard and United States Coast Guard policy; (2) spend 

maintenance funds according to the definitions set forth in Office of 

Management and Budget Circular No. A-11 and Federal Accounting 

Standards Advisory Board Statement No. 6; (3) revise shore acquisition, 

construction and improvement backlogs to include only prioritized projects; 

(4) revise the maintenance backlog according to United States Coast Guard 

policy; and (5) identify expenditures that may have been inappropriately 

charged to the maintenance appropriation since October 1, 2002, and if 

appropriate, charge those expenditures against the shore acquisition, 

construction, and improvements appropriation. 

The United States Coast Guard concurred with the findings and 

recommendations in the report. Three of the recommendations will remain 

open until more specific details and documentation are provided on actions 

taken such that we can determine whether these actions adequately address the 

substance of our findings and recommendations. The Chief of Staff’s 

comments to our report are incorporated into the body of this report, as 

appropriate, and are included in their entirety as Appendix B. 

Background 

The United States Coast Guard (Coast Guard) reported that it occupies more 

than 22,000 shore facilities with a plant replacement value (PRV) of $7.4 

billion. The Coast Guard also reported that the funds required for its 

acquisition, construction, and improvements (AC&I) and maintenance 

backlog projects supporting these shore facilities exceeded $3.5 billion in 

fiscal year (FY) 2006. 

Table 1 provides a breakdown of AC&I funding supporting Integrated 

Deepwater System Program (Deepwater)1

 and shore facilities for FYs 2000 

through 2006. The remaining AC&I funding, not depicted in Table 1, 

includes expenses to acquire, repair, renovate, or improve vessels, small boats 

and related equipment, other equipment such as the Nationwide Automatic 

Identification System and Rescue 21, personnel compensation and benefits 

and related costs, and costs from carrying out activities in support of the Oil 

Pollution Act of 1990. 

 

1

 Deepwater is Coast Guard’s $24 billion/25 year program intended to replace or modernize the approximately 90 ships 

and 200 aircraft used in Deepwater missions. Although the program’s contract was awarded in June 2002, funding for 

the program began in FY 2000. 

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Maintenance, Rehabilitation, and Upgrading of Shore Facilities in Support of United States Coast Guard Missions 

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Table 1: Breakdown of AC&I Funding Levels for Deepwater and Shore Facilities 

FYs 2000 – 2006

($ in thousands)

% Funded Amount % Funded 

Amount to Funded to to Shore 

Total AC&I Funded to Deepwater Shore Facilities 

FY Appropriation Deepwater (rounded) Facilities (rounded)

2000 $389,326 $44,200 11 $63,800 16 

2001 $415,000 $42,300 10 $63,336 15 

2002 $636,354 $320,190 50 $73,100 11

2003 $737,277 $474,893 64 $49,874 7

2004 $967,200 $668,200 69 $0 0

2005 $982,200 $723,950 74 $5,000 1

2006 $1,141,800 $933,100 82 $31,700 3

The Coast Guard manages the AC&I and maintenance of its shore facilities 

under two major categories: 

• AC&I – Funds major acquisition, construction, and improvements that 

increase the capacity or longevity of an asset. AC&I funds are allocated 

on a prioritized basis; and 

• Maintenance – Funds preventive maintenance, normal repairs, alterations, 

and renewal of assets to achieve their full-expected life. 

The Coast Guard updates and reprioritizes the projects in its shore AC&I 

backlog for modernization or replacement semi-annually. This is intended to 

ensure that the planning, development, and execution of shore construction 

provides the maximum benefit from the Coast Guard’s limited shore AC&I 

budget. The typical shore AC&I project requires 6-7 years to complete; this 

includes (1) 3 years to plan, (2) 2 years to obtain funding and complete the 

design, and (3) another 1-2 years to construct. The Coast Guard’s 

Maintenance and Logistics Commands for the Atlantic and Pacific areas rank 

shore AC&I projects in their backlogs, but Coast Guard Headquarters (HQ) 

sets the final priorities. 

Districts, Sectors, Stations, and Civil Engineering Units establish maintenance 

backlogs. The Planned Obligations Priorities Boards and District-level 

commands prioritize maintenance projects. The Coast Guard considers the 

maintenance backlog as an indicator of the condition of the shore facilities. 

The Coast Guard’s management objective is to manage the backlog, not 

eliminate it. According to the Coast Guard’s Civil Engineering Manual, the 
Maintenance, Rehabilitation, and Upgrading of Shore Facilities in Support of United States Coast Guard Missions 

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maintenance backlog should represent all maintenance projects planned for 

execution within 5 years following the current fiscal year. 

Results of Audit 

Shore AC&I Funding Is Below Industry Standard

The Coast Guard faces significant challenges to ensure its 22,000 shore 

facilities are properly maintained, rehabilitated, and upgraded. For FYs 2003 

through 2006, the Coast Guard funded shore AC&I at approximately 0.3% of 

PRV. This funding level is well below the industry and Coast Guard accepted 

standard of 2% of PRV. Funding at the level of 2% of PRV would have 

provided approximately $511 million in additional funding to shore facilities 

for the period FYs 2003 through 2006. Because of limited shore AC&I 

funding, the Coast Guard used maintenance funds to complete shore AC&I 

projects, which resulted in growing deferred maintenance. 

The National Research Council, the agency that provides standards for federal 

facilities, recommends that AC&I be funded at 2% of PRV annually and that 

maintenance be funded at 2-4% of PRV annually.2

 For FYs 2003 through 

2006, the Coast Guard funded maintenance at approximately 2% of PRV, but 

as evidenced in Table 2, during the same period, shore AC&I was funded at 

well below 2% of PRV. The Coast Guard funded shore AC&I, with an 

average PRV of $7.475 billion, at approximately 0.3% of PRV for FYs 2003 

through 2006. 

Table 2: Breakdown of 2 Percent of PRV, Coast Guard's Congressional Requested 

Amounts, Enacted Appropriation Amounts, and Funding Gap 

FYs 2003 - 2006

($ in thousands)

Coast Guard’s Amount of 

Congressional Enacted AC&I 

2% Request - Appropriation to 

FY of PRV Shore AC&I Shore Facilities Funding Gap

2003 $154,000 $28,700 $49,874 $104,126

2004 $148,000 $0 $0 $148,000

2005 $148,000 $5,000 $5,000 $143,000

2006 $148,000 $39,700 $31,700 $116,300

Total $598,000 $73,400 $86,574 $511,426

 

2 Stewardship of Federal Facilities, A Proactive Strategy for Managing the Nation’s Public Assets, 1998, National 

Research Council. 
In order to properly preserve and maintain a public building, both AC&I and 

maintenance should be funded annually at proper levels. Although the Coast 

Guard funded maintenance at approximately 2% of PRV, it has had to use 

maintenance funds to execute shore AC&I projects. Therefore, the amount of 

funds actually used on maintenance was below the level of 2% of PRV. 

By not adequately funding shore AC&I for its shore facilities, the Coast 

Guard may encounter a critical situation with the structural integrity of its 

shore facilities, which, if left uncorrected, could compromise overall 

operational capability. 

Overhaul of Prioritized Shore AC&I Projects Not Timely 

The Coast Guard’s shore AC&I funding is not adequate to fund prioritized 

projects resulting in a growing backlog of projects. As of August 2006, the 

Coast Guard’s shore AC&I backlog totaled $2.6 billion for 479 projects. Of 

these 479 projects, 80 projects totaling $491 million were projects prioritized 

by the Coast Guard as having pressing needs for modernization or 

replacement. In FY 2007, the Coast Guard planned to fund $22 million for 

shore AC&I, including six prioritized projects. See Appendix C for the Coast 

Guard’s list of 80 prioritized projects for FYs 2006 through 2021. 

As illustrated in Table 3, the dollar amount of the shore AC&I backlog and 

the prioritized shore AC&I projects have generally increased since FY 2003. 

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Table 3: Shore AC&I Backlog, Prioritized AC&I, and 

Percentage of Shore AC&I Backlog Prioritized 

($ in thousands)

% of Shore AC&I 

Backlog

Prioritized 

FY Shore AC&I Backlog Prioritized AC&I (rounded)

2003 $819,761 $328,731 40

2004 $1,908,030 $349,200 18

2005 $1,805,063 $423,430 23

2006 $2,594,676 $491,391 19

As a result of limited funding, there are several prioritized projects that have 

been on the shore AC&I backlog for many years including: 

• In October 1999, the Coast Guard approved a shore AC&I project to raze 

and replace the Aids to Navigation Team (ANT)/Patrol Boats (WPB) 

building at Sector Southeastern New England, Woods Hole, 

Massachusetts. The primary reason for this project is to include a 
Trailerable Aids to Navigation Boat bay with the new ANT/WPB 

building. The lack of a Trailerable Aids to Navigations Boat bay has had 

a significant negative effect on ANT mission performance. See Appendix 

D for an excerpt of the project’s Planning Proposal describing the 

functional deficiencies of the building. The August 2006 shore AC&I 

backlog lists the ANT/WPB building project at an estimated cost of $6.9 

million for FY 2009. Figure 1 is a March 2006 photograph of an interior 

office in this building. The photograph demonstrates the deteriorating 

conditions of the building. 

This project is also an example of how HQ’s priorities of shore AC&I 

projects change over time. In FY 2003, HQ ranked this project as priority 

number four, in FY 2004 it ranked 13th, and in FY 2005 it was not ranked. 

As of August 2006, HQ ranked this project as third for execution in FY 

2009. Between September 1994 and April 2006, the Coast Guard has 

awarded $187,000 in maintenance funds for short-term fixes to this 

project. 

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Figure 1: Interior of ANT/WPB Building, Sector Southeastern New England 

Source: DHS OIG 

• In December 1992, the Coast Guard approved a shore AC&I project to 

replace the covered boat facility at Coast Guard Station Juneau, Alaska. 

As of August 2006, this project’s cost was estimated at $2.9 million. The 

primary reason for this project is to provide a covered mooring for Station 

Juneau personnel. The lack of a covered mooring causes both personnel 

safety and boat maintenance to suffer under adverse working conditions, 

which may impact mission performance. See Appendix E for an excerpt 

of the project’s Problem Statement describing the impact of the problem. 

The Coast Guard reported that neglecting the timely overhaul of its 

infrastructure could cause the infrastructure to degrade, which in turn could 

hinder mission performance and compromise safety. 
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Inappropriate Use of Maintenance Funds 

The Coast Guard is improperly using maintenance funds to augment and 

compensate for underfunding shore AC&I project funding. Although the 

Coast Guard is funding maintenance at the minimum recommended level, 

using this funding to support AC&I activities results in an underfunded 

maintenance program. The gap in shore acquisition, construction and 

improvements funding and the inappropriate use of maintenance funds could 

hasten the deterioration of the Coast Guard’s critical shore facilities and 

ultimately affect its overall operational capability. 

Furthermore, although Coast Guard manuals, as interpreted by the Coast 

Guard, permit using maintenance funds for shore AC&I projects, this practice 

is not consistent with guidance contained in Office of Management and 

Budget (OMB) Circular No. A-11 and Federal Accounting Standards 

Advisory Board (FASAB) Statement No. 6. OMB provides guidance on 

preparing, submitting, and executing the budget, and FASAB establishes 

generally accepted accounting principles for federal entities. OMB Circular 

No. A-11 defines maintenance of facilities as routine repair, and, similarly, 

FASAB Statement No. 6 defines maintenance as normal repairs, replacement 

of parts, and other activities needed to preserve an asset so that it continues to 

provide acceptable services and achieve its expected life. In OMB Circular 

No. A-11, maintenance excludes amounts for construction and rehabilitation, 

including new works and major additions, alterations, improvements to, and 

replacements of existing works. In FASAB Statement No. 6, maintenance 

excludes the acquisition of general Property, Plant, and Equipment (PP&E), 

and activities aimed at expanding the capacity of an asset or otherwise 

upgrading it to serve needs different from, or significantly greater than, those 

originally intended. By using maintenance funds to support shore AC&I 

funding deficits, the Coast Guard is not investing adequate funding in routine 

repairs, which will potentially lead to higher maintenance costs or 

rehabilitation needs in the future. 

The Coast Guard has funded the maintenance program between $136 million 

and $160 million for FYs 2003 through 2006. This represents approximately 

2% of the PRV, according to the industry standard. The scope of our audit did 

not include testing these expenditures. Therefore, we cannot estimate the 

extent maintenance funds were spent for nonmaintenance-related projects. 

However, in October 1997, a Department of Transportation (DOT) OIG 

Management Advisory Report reported inappropriate use of maintenance 

funds. For example, the DOT OIG found that the Coast Guard used 

maintenance funds to add to a depot, expand building capacity, construct a 

parking lot, and convert a building to a rescue swimmer school. The DOT 
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OIG recommended that the Coast Guard take the necessary action to stop the 

use of maintenance funds for projects that should be charged to the AC&I 

appropriation, identify expenditures that were inappropriately charged to the 

maintenance appropriation and charge them against the AC&I appropriation, 

and notify the Secretary of Transportation and the Congress that funds were 

used inappropriately and report statutory violations, if appropriate. 

During our audit, we also found examples of inappropriate use of maintenance 

funds. In April 1994, the Coast Guard approved a shore AC&I project to 

construct a 13,500-square-foot multipurpose building at Coast Guard Base 

Galveston. The primary reason for this project is to provide a building to 

support various missions because Coast Guard Base Galveston facilities are 

obsolete, inefficient, hazardous, and deteriorating, which may impact mission 

performance. See Appendix F for an excerpt of the Project Proposal Report 

summarizing the project. According to the Coast Guard’s August 2006 shore 

AC&I backlog, Phase I of this project is scheduled to be completed in FY 

2007 at an estimated cost of $5.2 million and Phase II is scheduled for FY 

2008, also at an estimated cost of $5.2 million. However, due to the pressing 

need for a multipurpose building to assist missions, per procurement 

documentation the Coast Guard used $1.6 million in maintenance funds in FY 

2003 to construct five modular buildings, totaling 9,220 square feet, as a 

temporary solution to the problem. Figure 2 shows the five modular buildings 

constructed by Nortex, a contractor. By splitting the original shore AC&I 

project into five modular buildings, the Coast Guard, according to its 

interpretation of its own manuals, was able to classify and fund the project as 

maintenance even though the project represents the construction of new work 

and acquisition of general PP&E. 
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Figure 2: Five Modular Buildings Coast Guard Base Galveston 

 

Source: Nortex’s website 

1 

3 

2 

4 

5 

Also, the Coast Guard is scheduled to remove or has removed certain projects 

from its shore AC&I backlog, since it anticipates using $15.1 million in 

maintenance funding to complete these projects. In practice, the Coast Guard 

split AC&I projects into several maintenance projects or over several years. 

For example: 

• In November 1999, the Coast Guard approved a Fort Wadsworth, New 

York, shore AC&I project totaling $8 million, of which $5 million was to 

install automatic fire suppression systems to the housing complex and $3 

million was to correct various code compliance violations. In April 2006, 

the Coast Guard listed the automatic fire suppression systems project on 

its maintenance backlog as 33 separate projects totaling $8.7 million. See 

Appendix G for an excerpt of the Planning Proposal/Project Proposal 

Report summarizing the project. 

Further, the Coast Guard funded the new construction of the Maritime Safety 

and Security Team (MSST) Building on the campus of Integrated Support 

Command (ISC) Boston at a total cost of $1.5 million with maintenance 

funds. These costs included the design, MSST portion, ANT Group portion, 

wharf repairs, and MSST garage extension. Although a small portion of the 

building relates to the ANT Group, the construction of the MSST Building 

represents an upgrade to serve needs different from those originally intended 

because MSST was a new mission. The Coast Guard funded the construction 

of this building over two fiscal years. Figure 3 illustrates partial construction 

of the MSST Building as published in spring of 2004. Note the foundation 
Maintenance, Rehabilitation, and Upgrading of Shore Facilities in Support of United States Coast Guard Missions 

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footing for the garage extension. Figure 4 illustrates the MSST Building with 

the garage extension, which was completed in the fall of 2004. 

 Figure 3: MSST Building, ISC Boston 

 

Source: Building Profit Magazine 

Figure 4: MSST Building With Garage Extension, ISC Boston 

 Source: DHS OIG, spring of 2006 

In addition, three other examples of Coast Guard plans to use maintenance 

funds for shore AC&I projects include: 

• In November 2003, the new construction of a shop building at the Coast 

Guard Academy was approved. It was listed on the AC&I backlog as a 

$2.1 million project. This project also is on the maintenance backlog as 

two separate projects totaling $2.2 million. See Appendix H for an 

excerpt of the Problem Statement for the recapitalization of the 186 

buildings. 
• In November 2002, the rehabilitation of a boathouse at Station Boothbay 

Harbor, Maine, was approved. It was listed on the AC&I backlog as a 

$1.1 million project. This project also is listed on the maintenance 

backlog as five separate projects totaling $1.1 million. See Appendix I for 

an excerpt of the Problem Statement for this project. 

• In February 2003, the rehabilitation of the waterfront at Station Fire 

Island, New York, was approved. It was listed on the AC&I backlog at $1 

million. In June 2006, the Coast Guard approved a maintenance backlog 

project totaling $1.5 million to address the same deficiencies. See 

Appendix J for an excerpt of the Project Proposal Report summarizing the 

project.

Shore AC&I and Maintenance Backlogs Do Not Reflect Most Urgent 

Priorities 

Shore AC&I and maintenance backlogs do not reflect a realistic account of 

construction and maintenance needs for the Coast Guard. This is because the 

shore AC&I backlog included nonprioritized projects and the maintenance 

backlog included projects with contract award dates in FY 2012 or later, or 

had estimated award amounts exceeding $1.5 million.3 As a result, the Coast 

Guard is overstating the AC&I backlog by $2.1 billion and the maintenance 

backlog by $236 million. 

A shore AC&I project goes through three phases between identification and 

execution. The three phases are as follows: 

• Problem Statement - identifies the initial need for a project; 

• Planning Proposal – documents an operational or support need and 

evaluates alternative operational solutions for the proposed project; and 

• Project Proposal Report - finalizes the project scope and sets the budget 

for the project. 

The typical shore AC&I project requires 6-7 years to complete. Yet, the 

Coast Guard has shore AC&I projects that have not advanced beyond the 

Problem Statement phase for 10 years or more, such as the replacement of the 

covered boat facility at Coast Guard Station Juneau, Alaska, and the 

expansion of unaccompanied personnel housing at Station Hatteras Inlet, 

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3

 The Coast Guard Civil Engineering Manual requires that the maintenance backlog reflect a list of projects planned for 

execution within five years following the current fiscal year. Further, the Financial Resource Management Manual 

requires maintenance projects not to exceed $1.5 million per project. 
Maintenance, Rehabilitation, and Upgrading of Shore Facilities in Support of United States Coast Guard Missions 

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North Carolina. The primary reason for the Station Hatteras Inlet project is to 

provide adequate unaccompanied housing to all eligible Coast Guard 

personnel. Without this project, the Coast Guard’s ability to provide adequate 

berthing, messing, and quality of life will be severely impaired. See 

Appendix K for an excerpt of the Problem Statement concerning this project. 

The Coast Guard’s shore AC&I backlog consisted of 479 projects valued at 

$2.6 billion as of August 2006. Of these 479 projects, 399 projects (83%), 

totaling $2.1 billion (81%), were nonprioritized projects. The remaining 80 

projects (17%), totaling $491 million (19%), mainly projects in the Planning 

Proposal and Project Proposal Report phase, were prioritized. 

The Coast Guard’s inclusion of nonprioritized projects in its shore AC&I 

backlog is misleading because these projects do not represent a realistic need 

at the time of budget submission. According to the Coast Guard, including all 

projects, both prioritized and nonprioritized, in the shore AC&I backlog is an 

indicator of the Coast Guard’s true shore facilities need. However, this 

approach creates confusion for two reasons: (1) the nonprioritized projects by 

definition do not represent pressing needs; and (2) the inclusion of 

nonprioritized projects could inadvertently mislead appropriators regarding 

the size, scope, and operational implications associated with the shore AC&I 

backlog. In our view, the Coast Guard should maintain a separate list of 

nonprioritized projects for planning purposes only. 

Districts, Sectors, Stations, and Civil Engineering Units establish a 

maintenance backlog. According to the Coast Guard’s Civil Engineering 

Manual, the maintenance backlog should represent a list of all maintenance 

projects planned for execution within five years following the current fiscal 

year. In addition, according to the Coast Guard’s Financial Resource 

Management Manual, considering local construction costs, maintenance 

projects should not exceed $1.5 million. 

As of April 2006, the Coast Guard’s maintenance backlog totaled $961 

million for 9,641 projects. However, 

• 1,796 projects, totaling $132 million, represent backlog projects with 

contract award dates of FY 2012 or later; and 

• 38 projects, totaling $104 million, have estimated award amounts at or 

greater than $1.5 million. 

As a result, the Coast Guard should not include projects totaling $236 million 

in its maintenance backlog. 
Conclusions and Recommendations 

The Coast Guard’s ability to effectively maintain, rehabilitate, and upgrade its 

more than 22,000 shore facilities is being challenged by limited funding. 

Shore AC&I funding remains well below the industry standard of 2% of PRV. 

As a result, the Coast Guard has significantly under funded shore AC&I for 

FYs 2003 through 2006. This occurred because the Coast Guard’s funding 

priority was Deepwater. To compensate for the funding gap, the Coast Guard 

used maintenance funds for shore AC&I projects and new construction in 

contradiction of FASAB Statement No. 6 and OMB Circular A-11. In 

addition, we determined that the Coast Guard’s shore AC&I and maintenance 

backlogs do not reflect the Coast Guard’s most urgent priorities. 

Although the Coast Guard works diligently with its limited shore AC&I 

funding to maintain its shore facilities, we are concerned that the gap in shore 

AC&I funding and increases in Deepwater funding will hasten the 

deterioration of critical shore facilities which, if left uncorrected, could 

compromise the Coast Guard’s overall operational capability and the health 

and welfare of its staff. 

Recommendations 

To improve the management of shore facilities, we recommend that the 

Commandant, United States Coast Guard: 

Recommendation #1: 

Develop a plan to fund shore AC&I and maintenance according to industry 

standard and Coast Guard policy. The plan should include a detailed 

description of steps to ensure that maintenance funds are not used to fund 

shore AC&I projects. The plan should include annual reporting requirements 

and the identity of organizational entities responsible for the implementation 

of the plan. 

Recommendation #2: 

Implement controls to ensure that expenditures of maintenance funds comply 

with OMB Circular No. A-11 and FASAB Statement No. 6. At a minimum, 

these controls should prevent maintenance funds from being used to upgrade 

or expand the capacity of an asset. In addition, these controls should prevent 

splitting AC&I projects into several maintenance projects or over several 

years. 

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Recommendation #3: 

Revise shore AC&I backlogs to include only prioritized projects to better 

reflect a realistic account of the Coast Guard’s AC&I needs. 

Recommendation #4:

Revise the maintenance backlog in accordance with the Coast Guard policy to 

reflect maintenance projects for the next five years, which is a more realistic 

account of the Coast Guard’s needs. 

Recommendation #5:

Identify expenditures that may have been inappropriately charged to the 

maintenance appropriation since October 1, 2002 and, if appropriate, charge 

those expenditures against the AC&I appropriation. If warranted, the Coast 

Guard should notify the Secretary and the Congress that funds were used 

inappropriately and report statutory violations. 

Management Comments and OIG Analysis 

The Coast Guard concurred with the findings and recommendations in the 

report. Three of the recommendations will remain open until more specific 

details and documentation are provided on actions taken such that we can 

determine whether these actions adequately address the substance of our 

findings and recommendations. 

Management Comments to Recommendation #1

The Coast Guard concurred with our recommendation and stated that it has 

developed a five-year Capital Investment Plan whose funding requirements 

are reflected in the Coast Guard’s FY 2009 OMB Budget Submission, and 

designated shore infrastructure recapitalization as a strategic imperative of the 

Coast Guard’s FY 2010 budget. 

OIG Analysis 

We agree with the actions the Coast Guard has taken to address the intent of 

our recommendation. However, the recommendation will remain open until 

the Coast Guard provides us with documentation that specifically details 

actions taken to ensure that maintenance funds are not used to fund shore 

AC&I projects. The documentation should include annual reporting 

requirements and the identity of organizational entities responsible for the 

implementation. 

 

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Maintenance, Rehabilitation, and Upgrading of Shore Facilities in Support of United States Coast Guard Missions 

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Management Comments to Recommendation #2

The Coast Guard concurred with our recommendation and stated that it is 

further reviewing its financial policy to ensure that it matches the authority 

that the Coast Guard has in statute. In addition, the Coast Guard has requested 

statutory authority similar to that provided to the Department of Defense. 

OIG Analysis 

We agree with the actions the Coast Guard has taken to address the intent of 

our recommendation. However, the recommendation will remain open until 

the Coast Guard provides us with documentation that specifically details 

actions implemented to ensure that expenditures of maintenance funds comply 

with OMB Circular No. A-11 capacity of an asset. In addition, these controls 

should prevent splitting several AC&I projects into several maintenance 

projects, or over several years. 

Management Comments to Recommendation #3

The Coast Guard concurred with our recommendation and stated that it 

revised its Shore Facilities Requirement List in FY 2007 by expanding the 

requirements for project documentation and funding. The Coast Guard 

implemented this action in order to better identify those projects to include in 

its prioritized five-year shore AC&I Capital Investment Plan. 

OIG Analysis 

The Coast Guard has been responsive to our recommendation and has revised 

its shore AC&I backlogs to include only prioritized projects. We consider the 

recommendation closed. 

Management Comments to Recommendation #4

The Coast Guard concurred with our recommendation and stated that the 

maintenance backlog is being prioritized within the five-year funding levels 

displayed in the Future Years Homeland Security Program. 

OIG Analysis 

The Coast Guard has been responsive to our recommendation and has revised 

its maintenance backlog to reflect maintenance projects for the next five years. 

We consider the recommendation closed. 

Management Comments to Recommendation #5

The Coast Guard concurred with our recommendation and stated that it 

understands the severity and implications of potential violations of the AntiDeficiency Act and has taken steps to ensure project funding decisions are 

aligned with policies and statute-based authorities. 

OIG Analysis 
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We agree with the actions the Coast Guard has taken to address the intent of 

our recommendation. However, the recommendation will remain open until 

the Coast Guard provides us with documentation of those expenditures it has 

identified as inappropriately charged to the maintenance appropriation since 

October 1, 2002. The documentation should indicate the Coast Guard charged 

those expenditures against the AC&I appropriation when appropriate, and the 

Coast Guard notified the Secretary and the Congress that funds were used 

inappropriately and report statutory violations when warranted. 
Appendix A 

Purpose, Scope, and Methodology 

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Our objective was to determine the extent to which the Coast Guard is 

properly maintaining, rehabilitating, and upgrading shore facilities in support 

of its missions. 

To achieve our audit objective, we reviewed Coast Guard documentation and 

manuals related to civil engineering, including the Civil Engineering Manual, 

Financial Resource Management Manual, and Shore Facilities Standards 

Manual. We reviewed prior DHS OIG, Government Accountability Office, 

and Department of Transportation OIG audit reports. We also reviewed the 

Coast Guard’s 2004 strategic assessments. In addition, we analyzed 

emergency maintenance requests for the period October 2004 through January 

2006. 

During the period January 2006 through September 2006, we interviewed 

civil engineering officials at Coast Guard Headquarters in Washington, D.C., 

at the Civil Engineering Unit in Providence, Rhode Island, and at the 

Maintenance and Logistics Command and Facilities Design and Construction 

Center in Norfolk, Virginia. We judgmentally selected Coast Guard shore 

facilities to visit because of the proximity to the OIG field office in Boston. 

Specifically, we conducted site visits to the ISC in Boston, Massachusetts, and 

Sector Southeastern New England in Woods Hole, Massachusetts, on 

February 28, 2006 and March 16, 2006, respectively. At ISC Boston, we 

judgmentally selected and reviewed four projects from the maintenance 

backlog, and at Sector Southeastern New England, we reviewed one project 

on the shore AC&I backlog and judgmentally selected and reviewed six 

projects on the maintenance backlog. 

We analyzed shore AC&I backlogs from FY 2003 through August 16, 2006. 

Similarly, we analyzed the maintenance backlog as of February 27, 2006, for 

the Coast Guard’s First District (New England region) and expanded our audit 

to all districts as of April 13, 2006. We relied on the Coast Guard’s computer 

processed data that contained information on the shore AC&I and 

maintenance backlogs. We conducted limited testing of this data to source 

documentation. Based on these tests, we concluded that the data are 

sufficiently reliable to be used in meeting audit objectives. 

We conducted our audit between January 2006 and May 2007 under the 

authority of the Inspector General Act of 1978, as amended, and according to 

generally accepted government auditing standards. 

We would like to extend our appreciation to the Coast Guard for the 

cooperation and courtesies extended to our staff during this audit.
Appendix B 

Management Comments to The Draft Report

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Appendix B 

Management Comments to The Draft Report

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Appendix B 

Management Comments to The Draft Report

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Appendix C 

Coast Guard’s Prioritized Projects 

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Appendix C 

Coast Guard’s Prioritized Projects 

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Appendix D 

Sector Southeastern New England Planning Proposal Report Excerpt

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Appendix E 

Station Juneau Problem Statement Excerpt

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Appendix E 

Station Juneau Problem Statement Excerpt

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Appendix F 

Base Galveston Project Proposal Report Excerpt

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Appendix F 

Base Galveston Project Proposal Report Excerpt

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Appendix G 

Fort Wadsworth Planning Proposal/Project Proposal Report Excerpt

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Appendix G 

Fort Wadsworth Planning Proposal/Project Proposal Report Excerpt

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Appendix H 

Recapitalization of 186 Buildings Problem Statement Excerpt

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Appendix I 

Station Boothbay Harbor Problem Statement Excerpt

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Appendix I 

Station Boothbay Harbor Problem Statement Excerpt

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Appendix J 

Station Fire Island Project Proposal Report Excerpt

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Appendix K 

Station Hatteras Inlet Problem Statement Excerpt

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Appendix K 

Station Hatteras Inlet Problem Statement Excerpt

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Appendix L 

Major Contributors to The Report

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 Washington, D.C. Office 

Richard T. Johnson, Director 

Coast Guard and Maritime Security Operations Division 

Boston, MA Field Office 

Maureen Duddy, Supervisory Auditor 

Edward Jeye, Auditor-in-Charge 

David DeHaven, Auditor 

Brian Lynch, Auditor 

Colin Sullivan, Auditor 
Appendix M 

Report Distribution

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Department of Homeland Security

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Audit Liaison 

Assistant Secretary for Policy 

Assistant Secretary for Public Affairs 

Assistant Secretary for Legislative Affairs 

Commandant, USCG 

USCG Audit Liaison 

Office of Management and Budget

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress

Congressional Oversight and Appropriations Committees, as appropriate 
Appendix M 

Report Distribution

Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General (OIG) at 

(202) 254-4199, fax your request to (202) 254-4305, or visit the OIG web site at 

www.dhs.gov/oig. 

OIG Hotline 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal 

or noncriminal misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or

• Write to use at:

DHS Office of Inspector General/MAIL STOP 2600, Attention: 

Office of Investigations - Hotline, 245 Murray Drive, SW, Building 410, 

Washington, DC 20528, 

The OIG seeks to protect the identity of each writer and caller.