GAO Testimony before the Subcommittee on 

Fisheries and Coast Guard, Committee on 

Commerce, Science, and Transportation, 

U.S. Senate 

COAST GUARD

Observations on Agency 

Performance, Operations 

and Future Challenges 

Statement of Stephen L. Caldwell, Acting Director 

Homeland Security and Justice Issues 

For Release on Delivery

Expected at 10:30 a.m. EDT 

Thursday, June 15, 2006

 

GAO-06-448T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 15, 2006

COAST GUARD 

Observations on Agency Performance, 

Highlights of GAO-06-448T, a testimony Operations, and Future Challenges 

before the Subcommittee on Fisheries and 

Coast Guard, Committee on Commerce,

Science, and Transportation, U.S. Senate 

The Coast Guard’s fiscal year 2007

budget request totals $8.4 billion, 

an increase of 4 percent ($328

million) over the approved budget 

for fiscal year 2006 and a slowing

of the agency’s budget increases 

over the past 2 fiscal years.

 

This testimony, which is based on 

both current and past GAO work, 

synthesizes the results of these 

reviews as they pertain to the 

following: 

• meeting performance goals,

• adjusting to added 

responsibilities, 

• acquiring new assets

(especially the Deepwater 

program—to replace or 

upgrade cutters and aircraft, 

and the Rescue 21 program—

to modernize rescue

communications), and 

• meeting other future

challenges. 

According to the Coast Guard, the agency’s fiscal year 2005 performance, as

self-measured by its ability to meet program goals, was the highest since the 

terrorist attacks in September 2001. Even with the need to sustain new 

homeland security duties, respond to particularly destructive hurricanes, 

and cope with aging assets, the Coast Guard reported meeting or exceeding 

performance targets for 7 of 11 mission programs, and it anticipates meeting 

the target for 1 more program once final results for the year are available. In 

particular, based on our discussions with Coast Guard and other officials, as 

well as our review of pertinent documents, the Coast Guard’s response to 

Hurricane Katrina highlighted three elements key to its mission 

performance: a priority on training and contingency planning, a flexible 

organizational structure, and the agency’s operational principles. 

Three organizational changes appear to be helping the Coast Guard adjust to 

added responsibilities. First, according to agency officials, a realigned field 

structure will allow local commanders to manage resources more efficiently.

Second, according to the Coast Guard, a new response team for maritime 

security is expected to provide greater counterterrorism capability. Finally, 

new and expanded partnerships inside and outside the federal government 

have the potential to improve operational effectiveness and efficiency. 

While some progress in acquisition management has been made, continued 

attention is warranted. Within the Deepwater program, additional action is 

needed before certain past recommendations can be considered as fully 

implemented. Also, the program recently had difficulties in acquiring Fast 

Response Cutters to replace aging patrol boats. For the Rescue 21

program, deficiencies in management and oversight appear similar to 

those that plagued the Deepwater program, leading to delays and cost 

overruns, and demonstrating that the Coast Guard has not translated past 

lessons learned into improved acquisition practices. Two additional future 

challenges also bear close attention: deteriorating buoy tenders and 

icebreakers that may need additional resources to sustain or replace them, 

and maintaining mission balance while taking on a new homeland security 

mission outside the agency’s traditional focus on the maritime environment. 

Coast Guard Helicopters Such as the HH-65 (left) and HH-60 (right) Shown Here Were 

Extensively Involved in the Rescues of Stranded Persons Following Hurricane Katrina. 

 Source: Coast Guard.

www.gao.gov/cgi-bin/getrpt?GAO-06-448T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Stephen L. 

Caldwell (202) 512-9610 or

caldwells@gao.gov. 
Madame Chair and Members of the Subcommittee: 

I am pleased to be here today to discuss the President’s fiscal year 2007 

budget request for the Coast Guard—funding that the Coast Guard 

believes is critical to improving its performance and reducing 

vulnerabilities within the U.S. maritime domain. As you know, the Coast 

Guard has faced many extraordinary challenges and new responsibilities 

in recent years, including heightened responsibility for protecting 

America’s ports, waterways, and waterside facilities from terrorist attacks, 

while maintaining responsibility for many other programs important to the 

nation’s interests, such as helping stem the flow of illegal drugs and illegal 

immigration, protecting important fishing grounds, and responding to 

marine pollution. Overall, the Coast Guard has met these heightened 

responsibilities despite added challenges posed by the declining condition 

of its aging assets and special surge operations it has periodically 

experienced—such as responding to Hurricane Katrina. 

My testimony today provides (1) an overview of the Coast Guard’s fiscal 

year 2007 budget request and key performance information, (2) a 

discussion of the changes and initiatives the Coast Guard has implemented 

to meet growing responsibilities, (3) a status update on some current 

acquisition efforts, and (4) a look at some future Coast Guard challenges 

as it attempts to balance its various missions. My testimony is drawn from

a number of reports we have issued on Coast Guard operations, as well as 

from work done specifically for this hearing. In some cases our work is 

still ongoing and fuller results will be reported once the engagements are 

completed. The scope of our work did not include evaluating whether the 

proposed funding levels are commensurate with the Coast Guard’s stated 

needs. All of our work has been conducted in accordance with generally

accepted government auditing standards. (See app. I for additional 

information regarding our scope and methodology and see related GAO 

reports for a listing of recent reports.) 

Although the Coast Guard’s budget continues to grow, the agency’s fiscal 

year 2007 budget request indicates a more moderate growth than that of 

previous years. Even with the need to sustain new homeland security 

duties, respond to particularly destructive hurricanes, and cope with aging 

assets, the Coast Guard reported that its fiscal year 2005 performance, as 

self-measured by its ability to meet performance targets, was the highest 

since the terrorist attacks in September 2001. The Coast Guard reported 

that it met or exceeded performance targets for 7 of 11 programs, and 

anticipates meeting the target for 1 additional program once final results 

Summary 

Page 1 GAO-06-448T Coast Guard 
for the year are available. Coast Guard officials attributed the missed 

targets to, among other factors, the increased flow of migrants and staffing 

shortages for certain security units within the defense readiness program. 

In particular, our ongoing work found that the Coast Guard’s response to 

Hurricane Katrina highlighted three key elements that enabled the Coast 

Guard to provide an unprecedented search and rescue response during 

Hurricane Katrina: a priority on training and contingency planning, a 

flexible organizational structure, and the agency’s operational principles.

The Coast Guard has undertaken three organizational changes designed to

assist it in adjusting to its added responsibilities. First, it is completing a 

realignment of its field structure, an effort that, according to the Coast 

Guard, will allow a field level commanding officer to manage operational 

resources more efficiently. Second, Coast Guard officials expect that the 

development and implementation of a new Maritime Security Response 

Team, modeled after Department of Defense (DOD) counter-terrorism 

teams, will provide increased counterterrorism capability to respond to 

threats in waters under Coast Guard jurisdiction. Finally, new and 

expanded partnerships that cut across both government and industry to 

address maritime security concerns also have the potential to improve 

operational effectiveness and efficiency. For instance, under requirements 

of the Maritime Transportation Security Act of 2002 (MTSA), each Coast 

Guard Captain of the Port is required to work in conjunction with a range 

of local partners to develop a security plan for its port area to address 

security vulnerabilities and respond to any incidents.1

 Another partnership 

that leverages governmental resources is the Coast Guard’s relationship 

with the National Oceanic and Atmospheric Administration (NOAA). This 

partnership allows vessel tracking information obtained with NOAA 

technology to be shared with the Coast Guard, thereby assisting the Coast

Guard with its enforcement of domestic fisheries regulations.

Our recent reviews indicate that while the Coast Guard has made progress

in managing Deepwater acquisitions, further actions are needed and the 

lessons learned from this effort have not been applied to other ongoing 

acquisitions. In specific, the Coast Guard has successfully implemented 

most of GAO’s recommendations to improve the Integrated Deepwater 

System, the largest, and most significant ongoing Coast Guard acquisition 

initiative. However, further attention and action are needed before all of 

our past recommendations for improving accountability and program 

 1

Pub. L. No. 107-295, 116 Stat. 2064 (2002). 

Page 2 GAO-06-448T Coast Guard 
management can be considered fully implemented. Despite these 

improvements in program management, the Deepwater program has 

continued to encounter difficulties, most recently in the acquisition of the 

Fast Response Cutters which are scheduled to replace the Coast Guard’s 

aging patrol boat fleet. Meanwhile, the Rescue 21 program—an effort to 

replace antiquated command, control, and communication infrastructure 

used to monitor mariner distress calls and coordinate search and rescue 

operations—continues to be of concern as the program has been plagued 

by delays, technical problems, and cost escalation. Currently estimated 

implementation costs have escalated from $250 million to more than 

$710.5 million, and GAO’s analysis, based on prior trends, indicates that 

Rescue 21 costs could be as high as $872 million. In addition, the 

program’s originally proposed schedule for full implementation has 

slipped by 5 years resulting in continuing performance challenges for field 

units, and the potential for additional costs to keep the current system 

functioning until it is replaced. These problems and the causes underlying 

them have much in common with the issues we identified with the 

Deepwater program which has also experienced management and 

contractor oversight problems, schedule delays, and cost escalation. A 

third acquisition effort, designed to provide the Coast Guard with the 

capability to transmit and receive information to and from vessels entering 

and leaving U.S. waters, is still early in its development, limiting the Coast 

Guard’s ability to identify and leverage potential partners to share costs, 

according to Coast Guard officials. The Coast Guard is taking steps to 

better manage these programs, but it cannot lose sight of the need to 

address and resolve these ongoing acquisition management concerns. 

The Coast Guard also faces two additional challenges in managing its 

assets and balancing its various missions. Our ongoing work for this 

committee found that some of the Coast Guard’s buoy tenders and 

icebreakers are deteriorating and may need additional resources to sustain 

or replace them. Like the Deepwater assets, many of these types of assets 

are approaching or have exceeded their initial design service lives, and our 

preliminary observations indicate that the Coast Guard’s key measure of 

their condition shows a decline for some assets of both types. Although 

the Coast Guard has identified the need to sustain or replace these assets, 

no funds have been budgeted to carry out this project. A second challenge 

the Coast Guard faces is the addition of a new mission, defending the air 

space surrounding the nation’s capital, which falls outside its traditional 

focus on the maritime environment and therefore represents further 

growth in its responsibilities. While groundwork has been laid through the 

request of fiscal year 2007 funds to purchase the equipment necessary to

Page 3 GAO-06-448T Coast Guard 
carry out this new responsibility, it is likely to require additional personnel 

and training.

The Coast Guard’s fiscal year 2007 budget request shows continued 

growth but at a more moderate pace than that of the past 2 years. The 

current budget request reflects a proposed increase of about $328 million, 

compared to increases for each of the past 2 budget years that exceeded 

$500 million for each year.2

 (See fig. 1.) About $5.5 billion, or more than 

65 percent of the total funding request of $8.4 billion, is for operating 

expenditures.3

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

account amounts to another $1.2 billion, or about 14 percent, and the 

remainder is primarily for retiree pay and healthcare fund contributions. 

(See app. II for more detail on the Coast Guard’s fiscal years 2002-2007

budget accounts.) 

Budget Request 

Reflects Moderate 

Growth, While Overall 

Program Performance 

Improved 

If the Coast Guard’s total budget request is granted, overall funding will 

have increased by more than 50 percent since fiscal year 2002, an increase 

of $2.82 billion. According to Coast Guard officials, much of the additional 

$328 million in this fiscal year’s budget request, which is about 4 percent

over and above the fiscal year 2006 budget of $8.1 billion, covers such 

things as salary and benefit increases and maintenance. In addition, more 

than $57 million of this increase is to establish a permanent National 

Capital Region Air Defense program to enforce the National Capital 

Region no-fly zone, a program previously conducted by U.S. Customs and 

Border Protection (CBP).4

 By comparison, the increases for the AC&I 

account for this time period have been even greater than the overall 

funding increase, growing by 66 percent since fiscal year 2002. However, 

the fiscal year 2007 AC&I budget request of almost $1.2 billion represents 

little change in funding from the Coast Guard’s fiscal year 2006 enacted 

AC&I budget. 

 2

GAO’s analysis of the Coast Guard’s budget is presented in nominal terms throughout this

testimony. 

3

The $8.4 billion request for the Coast Guard represents about 20 percent of the 

Department of Homeland Security’s (DHS) budget request for fiscal year 2007. 

4

In addition to the $57.4 million request, the Coast Guard’s fiscal year 2007 budget request 

includes a $5 million transfer from CBP to support the National Capital Regional Air 

Defense program. 

Page 4 GAO-06-448T Coast Guard 
Figure 1: Coast Guard Budget from Fiscal Year 2002 to Fiscal Year 2007 

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2007 

requested

2006 

actual

2005 

actual

2004 

actual

2003

 actual

2002 

actual

Dollars in millions (in nominal terms)

Source: GAO analysis of Coast Guard data.

Fiscal year

Total Coast Guard budget

Operating expense

Acquisition, construction and improvements

5,602

3,757

702

6,811

4,920

720

4,718

1,007

5,250 5,231 5,519

1,080 1,220 1,170

7,012

7,525

8,094

8,422

Notes: In order to provide greater year-to-year consistency for budget comparisons, the fiscal years 

2005 and 2006 enacted amounts do not include supplemental appropriations. The supplemental 

amounts were largely for unforeseen events. According to a Coast Guard budget official, in fiscal year

2005 the Coast Guard received supplemental appropriations of $34 million for Operation Iraqi 

Freedom and $195 million for hurricane and tsunami relief efforts, and in fiscal year 2006 the Coast 

Guard received supplemental appropriations of $100 million for Operation Iraqi Freedom and 

$206 million for Hurricane Katrina relief efforts.

The total Coast Guard budget is a sum of operating expenses; AC&I; and other accounts such as

environmental compliance and restoration; alteration of bridges; retired pay; research, development,

testing and evaluation; oil spill recovery; boat safety; and Medicare-eligible healthcare fund 

contributions. Operating expenses and the AC&I accounts are almost 80 percent of the total Coast

Guard’s budget request for fiscal year 2007, and are shown because they are of primary interest for 

this analysis. Detailed information on all of these accounts is in app. II. 

Page 5 GAO-06-448T Coast Guard 
Even with sustained homeland security responsibilities, aging assets, and a 

particularly destructive hurricane season stretching resources across the 

agency, in fiscal year 2005 the Coast Guard reported that 7 of its 

11 programs met or exceeded program performance targets.5

 In addition, 

the agency reported that it anticipates meeting the target for 1 additional 

program when final results become available in July 2006, potentially 

bringing the total met targets to 8 out of 11 programs.6

 According to Coast 

Guard documents, the agency missed targets for three programs—

undocumented migrant interdiction, defense readiness, and living marine 

resources—in fiscal year 2005, as it had in some previous years. Coast 

Guard officials attributed these missed targets to, among other factors, the 

increased flow of migrants and staffing shortages for certain security units

within the defense readiness program. (See app. III for more detailed 

information on each program.) If the Coast Guard meets 8 performance 

targets as it predicts, the results would represent the greatest number of 

performance targets met in the last 4 years. (See fig. 2.) The preliminary 

results of our ongoing work reviewing the Coast Guard’s six nonhomeland security performance measures suggests that, for the most part, 

the data used for the measures are reliable and the measures themselves 

are sound. That is, they are objective, measurable, and quantifiable as well 

as cover key program activities. However, given the DHS policy of 

reporting only one main performance measure per program and the limits 

on how comprehensive a single measure is likely to be, there may be 

opportunities to provide additional context and information to 

decisionmakers about Coast Guard performance results. We will provide 

final results on this work in a report to be published later this summer. 

Coast Guard Reported 

Progress Made in Meeting 

Program Performance 

Targets 

 5

These seven programs are ice operations, search and rescue, marine environmental 

protection, marine safety, aids to navigation, U.S. exclusive economic zone enforcement, 

and ports, waterways, and coastal security. 

6

The one additional program the Coast Guard anticipates meeting the target for is the 

illegal drug interdiction program. 

Page 6 GAO-06-448T Coast Guard 
Figure 2: Number of Performance Targets the Coast Guard Met, or Anticipates 

Meeting, for the Coast Guard’s 11 Programs for Fiscal Years 2002 through 2005 

Notes: Fiscal year 2005 data includes the illegal drug interdiction program for which final data are not 

yet available. Data for this program are not available because the performance measures are based,

in part, on data from other agencies that are not reported until later in the fiscal year. However, based 

on past data trends and performance data collected to date, the Coast Guard anticipates meeting the 

performance target for this program. 

For fiscal year 2002 the Coast Guard had performance measures and targets for 9 of its 11 

programs—the two programs without measures and targets were the marine safety and ports, 

waterways, and coastal security programs. For fiscal years 2003 and 2004, the Coast Guard had 

performance measures and targets for 10 of its 11 programs—the one program without a measure 

and target during this time was the ports, waterways, and coastal security program. 

Overall Progress Came 

Despite Additional 

Demands Posed by 

Hurricane Katrina 

This overall progress came in a year when the Coast Guard faced 

significant additional demands brought on by Hurricane Katrina. As it had 

to do when it implemented MTSA and when it conducted heightened port 

security patrols immediately after the September 2001 terrorist attacks, 

the Coast Guard found itself operating at an increased operational tempo 

for part of fiscal year 2005. Although the Hurricane Katrina response 

period was relatively brief for some missions, such as search and rescue,

Coast Guard officials told us that the sheer magnitude of the response 

made it unique, and responding to it tested the agency’s preparedness and 

ability to mobilize large numbers of personnel and assets within a short 

Page 7 GAO-06-448T Coast Guard 
time. In this effort, the Coast Guard had several responsibilities during and 

immediately following the hurricane: to conduct search and rescue; to 

direct the closing and re-opening of ports in cooperation with 

stakeholders,(such as shipping companies, harbor police, DHS, CBP, and 

local fire and police departments), to ensure safety and facilitate 

commerce, thereby lessening the economic impact of the storm on the 

nation; and to monitor pollution clean up of the many oil spills that 

occurred in the wake of the flooding. For the purposes of this testimony, 

I would like to focus on the Coast Guard’s search and rescue response. 

We are conducting a more complete review of the Coast Guard’s role and 

response to Hurricane Katrina across several mission areas under the 

authority of the Comptroller General, and expect to provide additional 

information later this summer. So far, however, this work is showing that 

three factors appear to have been key to the Coast Guard’s response to 

Hurricane Katrina: 

• The Coast Guard was prepared to respond to search and rescue needs.

Although the magnitude of Hurricane Katrina required substantial 

response and relief efforts, the Coast Guard was well prepared to act 

since it places a priority on training and contingency planning. First 

and foremost, the missions the Coast Guard performed during 

Hurricane Katrina were the same missions that the Coast Guard trains 

for and typically performs on a day-to-day basis. The Coast Guard’s 

mission areas include, among others, search and rescue, law 

enforcement, regulatory functions, and, most recently, homeland 

security responsibilities, allowing the Coast Guard to respond and act 

in a myriad of situations. However, with regard to Hurricane Katrina, 

the magnitude of the Coast Guard’s mission activity appears 

noteworthy. For example, for all of 2004, according to the Coast 

Guard’s Fiscal Year 2005 Report, the Coast Guard responded to more 

than 32,000 calls for rescue assistance and saved nearly 

5,500 lives. By comparison, in 17 days of Hurricane Katrina response, 

Coast Guard officials reported conducting over 33,500 rescues, 

including rescuing 24,135 people by boat and helicopter and evacuating 

9,409 people from hospitals. Coast Guard officials we spoke to 

underscored the importance of the planning, preparation, and training 

that they regularly conduct that allowed them to complete the many 

challenging missions presented by Katrina. 

• The Coast Guard’s organizational structure and practices facilitated 

the agency’s response. In terms of the Coast Guard’s organizational 

structure, the Coast Guard has personnel and assets throughout the 

United States, which allows for more flexible response to threats. In 

terms of Coast Guard practices, according to the hurricane and severe 

Page 8 GAO-06-448T Coast Guard 
weather plans we reviewed for Coast Guard Districts 7 (Florida region) 

and 8 (Gulf region), and discussions we had in Washington, D.C., 

Virginia, Florida, Alabama, and Louisiana with Coast Guard officials 

responsible for implementing those plans, the Coast Guard tracks the 

likely path of an approaching storm, anticipates the necessary assets to 

address the storm’s impact, and repositions personnel and aircraft out 

of harm’s way, with a focus on reconstituting assets to respond to local 

needs once it is safe to do so. Given the magnitude of Hurricane 

Katrina, the Coast Guard took a more centralized approach to prioritize 

personnel and assets to respond, but the operational command 

decisions remained at the local level. That is, the Coast Guard’s 

Atlantic Area Command played a key role in identifying additional 

Coast Guard resources, and worked with District Commands to quickly

move those resources to the affected Gulf region, while local 

operational commanders directed personnel and assets to priority 

missions based on their on-scene knowledge. 

• The Coast Guard’s operational principles facilitated the agency’s 

actions. Throughout our field work, Coast Guard officials referred to 

the principles of Coast Guard operations that guide the agency’s 

actions. Coast Guard officials identified these principles, which ranged

from the importance of having clear objectives and flexibility to 

managing risks and exercising restraint, as instrumental in their 

preparation for Hurricane Katrina.7

 The Coast Guard prides itself on 

these operational principles that collectively form the foundation of 

Coast Guard culture and actions during operations. These principles 

set an expectation for individual leadership in crisis, and personnel are 

trained to take responsibility and action as needed based on relevant 

authorities and guidance. For example, during the initial response to 

Hurricane Katrina, a junior-level pilot, who first arrived on-scene in 

New Orleans with the planned mission of conducting an environmental 

inspection flight, recognized that search and rescue helicopters in the 

area could not communicate with officials on the ground, including 

those located at hospitals and at safe landing areas. This pilot took the 

initiative while on-scene—an operational principle—to redirect her 

planned mission, changing it from an environmental flight to creating 

the first airborne communication platform in the area. Doing so helped 

ensure that critical information was relayed to and from helicopter 

 7

The Coast Guard’s seven operational principles include the Principle of: (1) Clear 

Objective, (2) Effective Presence, (3) Unity of Effort, (4) On-Scene Initiative, (5) Flexibility, 

(6) Managed Risk, and (7) Restraint. U.S. Department of Transportation, Coast Guard 

Publication 1, U.S. Coast Guard: America’s Maritime Guardian, (Washington DC, 2002). 

Page 9 GAO-06-448T Coast Guard 
pilots conducting search and rescue so that they could more safely and 

efficiently continue their vital mission. When we consulted her 

commanding officer about these actions, he supported her decision and 

actions and noted that Coast Guard personnel generally have the 

flexibility to divert from their intended mission to accomplish a more 

important mission, without obtaining advance supervisory approval. He 

indicated that this was not only common practice, but it was supported 

by a written directive at his unit. 

While acknowledging the importance of these operational principles, it 

is equally important to note that the response to Hurricane Katrina also 

hinged on discipline and adherence to critical plans. For example, 

multiple aircraft were operating in a confined space with little 

separation, thus adhering to critical search and rescue plans, as well as 

using experience and judgment, resulted in numerous rescues despite 

these difficult circumstances. While the Hurricane Katrina search and 

rescue effort was unprecedented, sustaining this effort might have been 

much more difficult if it had gone on for a much longer period. 

Combining a longer-term catastrophic response with the continuing 

needs of the agency’s day-to-day missions would be more challenging 

for a small service such as the Coast Guard. Relative to other military 

services, the Coast Guard is small, and when resources are shifted to 

any one specific mission area, other mission areas may suffer.8 For 

example, Coast Guard units in Florida sent many air and surface assets 

to the Gulf region to respond to Hurricane Katrina. While the assets 

were deployed to the Gulf region, the Coast Guard noticed a spike in 

the level of illegal migration activity off of the Florida coast. However, 

once Coast Guard assets returned to the Florida region, the Coast 

Guard initiated a more intensive air and sea patrol schedule to

markedly announce their return to the area, and focus on interdicting 

illegal migrants. 

 8

Consisting of approximately 39,000 active duty personnel, the Coast Guard is a multimission agency with a longstanding federal leadership role in protecting life and property 

at sea, such as directing search and rescue operations. Furthermore, the Coast Guard is a

military service responsible for protecting U.S. ports and waterways. Other U.S. military 

branches include: U.S. Army with approximately 488,900 active duty personnel; U.S. Navy

with approximately 358,700 active duty personnel; U.S. Air Force with approximately 

351,700 active duty personnel; and U.S. Marines with approximately 178,700 active duty 

personnel. 

Page 10 GAO-06-448T Coast Guard 
Coast Guard organizational changes and expanded partnerships have 

helped to alleviate some resource pressures posed by added 

responsibilities or further deterioration of assets, as well as help 

accomplish its mission responsibilities. I would like to highlight three of 

these efforts: a revised field structure that consolidates decision-making 

processes at the operational level into a single command, a new resource 

for confronting and neutralizing terrorist activity, and new and stronger 

partnerships both within and outside DHS. 

The Coast Guard 

Continues with 

Organizational 

Changes and 

Expanded 

Partnerships to Meet 

Growing 

Responsibilities 

New Field Command 

Structure Aimed at 

Improving Operational 

Efficiency 

In conducting our work for this hearing, we followed up with the Coast 

Guard to obtain an update on the implementation of a new field command 

structure that unifies previously disparate Coast Guard units, such as air 

stations, groups, and marine safety offices into integrated commands.9

 As 

we reported to you last year, the Coast Guard began making this change to 

improve mission performance through better coordination of Coast Guard 

command authority with operational resources such as boats and 

aircraft.10 Under the previous field structure, for example, a marine safety 

officer who had the authority to inspect a vessel at sea or needed an aerial 

view of an oil spill as part of an investigation would often have to 

coordinate a request for a boat or an aircraft through a district office, 

which would obtain the resource from a group or air station. Under the 

realignment, these operational resources are to be available under the 

same commanding officer—allowing for more efficient operations. This 

revised structure involves dividing operations into 35 geographic “sectors.” 

Coast Guard officials stated that all 35 sectors have been established as of

May 2006. According to Coast Guard personnel, the realignment is 

particularly important for coordinating with other federal, state, and local 

agencies, as well as meeting new homeland security responsibilities and 

preparing for the challenge of protecting the United States against terrorist 

attacks. 

 9

A Coast Guard group is an operational unit that oversees station operations and provides 

guidance on policy and administrative matters. 

10GAO, Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 Budget 

Request, GAO-05-364T (Washington, D.C.: Mar. 17, 2005). 

Page 11 GAO-06-448T Coast Guard 
Another initiative to protect the United States against terrorist attacks is 

the Coast Guard’s development and implementation of a Maritime Security 

Response Team (MSRT)—a prototype team similar to DOD’s counterterrorism teams. The Coast Guard, in cooperation with DOD and other 

federal law enforcement agencies, plans to outfit the MSRT with 

specialized tactical equipment and train the team to conduct high-risk 

boardings of vessels and perform other offensive counter-terrorism 

activities within the maritime environment. The Coast Guard’s $4.7 million 

request for fiscal year 2007 would provide the team with chemical, 

biological, radiological, nuclear, and explosive detection equipment; 

improve the Coast Guard’s Special Missions Training Center facility; and 

provide additional personnel and operating capacity for a third 60-member 

unit, building the team toward 24/7 response capabilities. Coast Guard 

officials said that once the MSRT is fully developed, it will provide active 

counter-terrorism and advanced interdiction operations and address 

capacity and capability gaps in national maritime counter-terrorism 

response. 

New Maritime Security 

Response Team to Provide 

Additional Security 

Capability 

New and Evolving Coast 

Guard Partnerships 

Designed to Improve 

Operational Effectiveness 

and Efficiency 

In addition to partnering efforts associated with the development of the 

first MSRT, the Coast Guard is developing other partnerships, both 

internal and external to DHS, designed in part to improve operational 

effectiveness and efficiency. For example, the Coast Guard is currently 

developing a pilot program to increase operational efficiencies between 

the Coast Guard and CBP aimed at pushing potential threats away from 

U.S. ports. This offshore operation, currently in a pilot stage, includes the 

integration of each agency’s vessel targeting efforts, unifies their boarding 

operations, and includes professional exchange opportunities. Although 

this effort is only being tested within the Pacific Area Command of the 

Coast Guard, according to a senior Coast Guard official, the Pacific 

Command intends to send its results to Coast Guard headquarters so the 

agency can determine how to best implement the program across the 

Coast Guard at a later date. 

In addition to partnering with other federal agencies, the Coast Guard has 

also initiated partnerships with both government and industry. Under 

regulations implementing MTSA, a Coast Guard Captain of the Port must 

develop an Area Maritime Security Plan in consultation with an Area 

Maritime Security Committee. These committees are typically composed 

of members from federal, local, and state governments; law enforcement 

agencies; maritime industry and labor organizations; and other port 

stakeholders that may be affected by security policies. The security plan

they develop is intended to provide a communication and coordination 

Page 12 GAO-06-448T Coast Guard 
framework for the port stakeholders and law enforcement officials to 

follow in addressing security vulnerabilities and responding to any 

incidents. Stakeholders in two ports we visited identified their Area 

Maritime Security Committees as an invaluable forum for port partners. 

For example, they said meetings of these committees serve as an 

opportunity for members of the port community to network with one 

another, build relationships, address various maritime-related issues, and 

coordinate security planning efforts. 

The Coast Guard has expanded its partnership with NOAA to enforce 

domestic fisheries regulations. NOAA operates a technology-based system, 

called the vessel monitoring system, to track and monitor fishing vessels. 

This system offers real-time data on a ship’s course and position, where 

the ship has requested to fish, the type of fishing requested, and the 

number of days the ship has been out of port. The Coast Guard uses this 

information to assist with its enforcement of domestic fisheries 

regulations by identifying vessels that may not be in compliance with 

domestic fisheries regulations. For example, the monitoring information 

will show if fishing vessels are operating within a restricted area. 

According to Coast Guard officials, the information shared from this 

partnership has allowed Coast Guard assets to be used more efficiently in 

checking on potentially noncompliant vessels and enforcing fishing laws. 

Our recent reviews indicate that while the Coast Guard has made progress

in managing the Deepwater program, further actions are needed and the 

lessons learned from this effort have not been applied to other ongoing 

acquisitions. For example, even with the Coast Guard’s improved 

management and oversight of its Deepwater program, further steps are 

needed before all of our past recommendations for improving 

accountability and program management can be considered fully 

implemented. In addition, the acquisition of Fast Response Cutters has 

recently experienced setbacks. Meanwhile, the Rescue 21 program 

continues to be of concern as the program has been plagued by delays, 

technical problems, and cost escalation—issues that parallel the problems 

encountered in the early years of the Deepwater program. Another 

program, the Nationwide Automatic Identification System, is still in early 

development stages and specific technical system requirements remain 

undefined. As a result, according to Coast Guard officials, this has affected 

the Coast Guard’s efforts to respond to our recommendation that the 

agency cultivate potential partnerships in order to leverage resources 

toward implementing the system. Because all of these programs are 

important for the Coast Guard in meeting growing operational demands, 

Progress Made with 

Ongoing Acquisition 

Efforts, but Continued 

Attention Is 

Warranted

Page 13 GAO-06-448T Coast Guard 
they bear close monitoring to help ensure they are delivered in an efficient 

and effective manner. 

Progress Continues in 

Making Recommended 

Improvements to 

Deepwater Program 

Management, but Some 

Recommendations Are Not 

Yet Fully Implemented 

One of the largest and most significant acquisitions that the Coast Guard 

has undertaken is the upgrade and replacement of its Deepwater assets, an 

acquisition approach that has raised a number of management and 

accountability concerns over the past 8 years.11 The Coast Guard has 

devoted considerable attention to concerns that we and others raised, in 

particular to implementing recommendations for improvement. Our past 

concerns about the Deepwater program have been in three main areas—

ensuring better program management and oversight, ensuring greater 

accountability on the part of the system integrator, and creating sufficient 

competition to help act as a control on costs—and to address these 

concerns, we made a total of 11 recommendations.12 Table 1 provides an 

overview of the 11 recommendations, including their current status. In 

short, five recommendations have been fully implemented, five have been 

partially implemented, and one has not been implemented.13 Three of the 

five partially implemented recommendations appear close to being fully

implemented, in that the actions taken appear to be sufficient but results 

are not yet known or final procedural steps (such as issuing a policy 

currently in draft form) are not complete. The remaining two partially 

implemented recommendations, both of which deal with effective program 

management and contractor oversight, remain somewhat more 

problematic, and these are discussed further below. In both cases, 

however, the steps needed to fully implement these recommendations are 

relatively straightforward. 

 11GAO, Contract Management: Coast Guard’s Deepwater Program Needs Increased

Attention to Management and Contractor Oversight, GAO-04-380 (Washington, D.C.: 

Mar. 9, 2004). 

12In June 2002, the Coast Guard contracted with Integrated Coast Guard Systems to identify 

and deliver the assets needed to meet a set of mission requirements specified by the Coast 

Guard. Integrated Coast Guard Systems is a business entity jointly owned by Lockheed 

Martin Corporation and Northrop Grumman Ship Systems, which act as first-tier 

subcontractors and either provide Deepwater assets or award second-tier subcontracts for 

providing the assets. 

13The Coast Guard disagreed with and declined to implement a recommendation that 

pertained to updating its cost baseline to determine whether the Deepwater acquisition 

approach is costing more than a conventional acquisition approach. While we stand behind 

our original recommendation, we decided not to pursue it further because the Coast Guard

has decided not to take action on this issue. 

Page 14 GAO-06-448T Coast Guard 
Table 1: Status of GAO Recommendations to the U.S. Coast Guard Regarding Management of the Deepwater Program

Areas of concern Recommendations to the U.S. Coast Guard

Recommendation 

status

Put in place a human capital plan to ensure adequate staffing of the 

Deepwater program 

Implemented 

Improve integrated product teams responsible for managing the 

program by providing better training, approving charters, and 

improving systems for sharing information between teams 

Partially implemented 

Key components of management 

and oversight are not effectively 

implemented

Provide field personnel with guidance and training on transitioning to 

new Deepwater assets 

Partially implemented 

Develop measurable award fee criteria consistent with guidance from 

the Office of Federal Procurement Policy 

Implementeda

Provide for better input from Coast Guard technical representatives Implemented 

Hold the system integrator accountable for improving effectiveness of 

the integrated product teamsb

Implemented 

Establish a baseline for determining whether the acquisition

approach is costing the government more than the tradition asset 

replacement approach 

Will not be implemented 

Establish a time frame for putting steps in place to measure 

contractor’s progress toward improving operational effectiveness 

Partially implemented 

Procedures for ensuring contractor 

accountability are inadequate

Establish criteria to determine when to adjust the project baseline 

and document the reasons for change 

Partially implemented 

For subcontracts over $5 million awarded by the system integrator to 

the two major subcontractors, require notification to the Coast Guard 

about decision to perform the work in-house rather than contracting it 

out 

ImplementedaControl of future costs through 

competition remains at risk 

because of weak oversight 

Develop a comprehensive plan for holding the system integrator 

accountable for ensuring adequate competition among suppliers 

Partially implemented 

Source: GAO analysis of Coast Guard data. 

a

Determined to be implemented during work performed in 2005 for GAO’s report, Coast Guard: 

Progress Being Made on Addressing Deepwater Legacy Asset Condition Issues and Program 

Management, but Acquisition Challenges Remain, GAO-05-757 (Washington, D.C.: July 22, 2005). 

b

Integrated product teams are responsible for overall program planning and management, asset 

integration, and overseeing delivery of specific Deepwater assets. They are generally chaired by a 

subcontractor representative and consist of members from subcontractors and the Coast Guard. 

In 2004, we reported that the integrated product teams (IPTs), the Coast 

Guard’s primary tool for managing the Deepwater program and overseeing 

contractor activities, were struggling to carry out their missions because 

of four major issues: (1) lack of timely charters to provide authority 

needed for decision making, (2) inadequate communication among team 

members, (3) high staff turnover, and (4) insufficient training. Despite 

progress in addressing these four issues, we do not consider this 

recommendation to be fully implemented. There are indications that the 

Strengthening Integrated 

Product Teams 

Page 15 GAO-06-448T Coast Guard 
IPTs are still not succeeding in developing sufficient collaboration among 

subcontractors. Coast Guard officials recently reported that collaboration 

among the subcontractors continues to be problematic and that the system 

integrator wields little influence to compel decisions among them. For 

example, when dealing with proposed design changes for assets under 

construction, the system integrator has submitted the changes as two 

separate proposals from both first-tier subcontractors rather than 

coordinating the separate proposals into one coherent plan. According to

Coast Guard performance monitors, because the two proposals often carry 

a number of overlapping work items, this approach complicates the Coast 

Guard’s review of the needed design change. Several improvements 

designed to address these problems are under way, but it is too early to 

determine if these will effectively eliminate the problems. 

In 2004, we reported the Coast Guard had not effectively communicated 

decisions on how new Deepwater and existing assets are to be integrated 

during the transition and whether Coast Guard or contractor personnel 

(or a combination of the two) will be responsible for maintenance of the 

Deepwater assets. For example, Coast Guard field personnel, including 

senior-level operators and naval engineering support command officials, 

said they had not received information about how they would be able to 

continue meeting their missions using existing assets while also being 

trained on the new assets. Since that time the Coast Guard has placed

more emphasis on outreach to field personnel, including surveys, face-toface meetings, and membership in IPTs. Despite these efforts, there are 

indications that the actions are not yet sufficient to consider the 

recommendation to be fully implemented. In particular, our review of 

relevant documents and discussions with key personnel make clear that

field operators and maintenance personnel are still concerned that their

views are not adequately acknowledged and addressed, and have little 

information about maintenance and logistics plans for the new Deepwater 

assets. For example, though the first National Security Cutter is to be 

delivered in August 2007, field and maintenance officials have yet to 

receive information on plans for crew training, necessary shore facility 

modifications, or how maintenance and logistics responsibilities will be 

divided between the Coast Guard and the system integrator. According to

Coast Guard officials, many of these decisions need to be made and 

communicated very soon in order to allow for proper planning and 

preparation in advance of the National Security Cutter’s delivery. 

Providing Field Personnel with 

Guidance and Training 

on Transitioning to New 

Deepwater Assets 

Page 16 GAO-06-448T Coast Guard 
Despite improvements in Deepwater program management, the Coast 

Guard has encountered difficulties in the conversion and acquisition of 

one Deepwater asset—its Fast Response Cutter (FRC). Under the original 

2002 Deepwater Implementation Plan, all 49 of the Coast Guard’s 110-foot 

patrol boats were to be converted into 123-foot patrol boats, with 

increased capabilities, as a bridging strategy until a replacement vessel, 

the 140-foot FRC, came on line beginning in 2018. The Coast Guard 

converted 8 of the 110-foot patrol boats to 123-foot boats, but discontinued 

further conversions because the patrol boats were experiencing technical 

difficulties, such as hull buckling, and were not able to meet postSeptember 11, 2001 mission requirements. This prompted the Coast Guard 

to revise this part of the Deepwater program. The 2005 Revised Deepwater 

Implementation Plan reflected the Coast Guard’s cancellation of further 

patrol boat conversions and acceleration of the design and delivery of the 

FRC, which was being designed to use composite materials in the hull, 

decks and bulkheads.14 Under the 2005 revised plan, the first FRC was 

scheduled to come on line in 2007—11 years earlier than originally 

planned. 

Design Risks Have Delayed 

Delivery of the Fast 

Respose Cutter 

In late February 2006, the Coast Guard suspended design work on the FRC 

because of risks with the emerging design. In particular, an independent 

design review by third-party consultants preliminarily demonstrated, 

among other things, that the FRC would be far heavier and less efficient 

than a typical patrol boat of similar length. As a result, the Coast Guard is 

now pursuing three strategies for moving forward with the FRC 

acquisition. The first strategy involves Integrated Coast Guard Systems, 

the prime contractor, purchasing design plans for and building an “off-theshelf” patrol boat that could be adapted for Coast Guard use as a way to 

increase patrol hours until the FRC design could be finalized. The Coast 

Guard issued a request for information in April 2006 to assess the off-the 

shelf options. The second strategy is to revise the requirements of the FRC 

in order to allow for modifications to the current FRC design. Concurrent 

with the first two strategies, the Coast Guard’s third strategy is to have a 

third party reassess the analyses used in the decision to use composite 

materials for the FRC to determine if the use of composite materials will, 

 14Composite materials, as used in shipbuilding, are typically fiber-reinforced plastic 

laminates consisting of plies of various reinforcing fabrics laminated together. Integrated 

Coast Guard Systems decided to use composite materials for the FRC’s hull after an 

analysis of alternatives found that the use of such materials instead of steel generally offers 

several advantages, such as lower maintenance and life cycle costs, a longer service life, 

and reduced weight. 

Page 17 GAO-06-448T Coast Guard 
in fact, reduce total ownership costs. The result of the Coast Guard 

pursuing these strategies is that the Coast Guard would end up with two 

classes of FRCs. The first class of FRCs would be based on an adapted

design from a patrol boat already on the market, to expedite delivery, and 

a follow-on class that would be based on revisions made to address the 

problems identified in the original FRC design plans. Pursuant to these 

three strategies, Coast Guard officials now estimate that the first FRC will 

likely not be delivered until late fiscal year 2009, at the earliest. GAO plans 

to release a report in late June 2006 providing updated information on the 

status of FRC design efforts. 

Rescue 21 Continues to Be 

of Concern as It Enters 

Implementation Phase 

The Rescue 21 acquisition program—the Coast Guard’s effort to replace its 

antiquated command, control and communication infrastructure used 

primarily to monitor mariner distress calls, and coordinate search and 

rescue operations—continues to be of concern as the program has been 

plagued by numerous delays, technical problems, and cost overruns. 

GAO’s recently released report shows that the program is about 5 years 

behind its originally proposed schedule for full implementation in 2006, 

as a result primarily of delays in development and testing of the system.15

In addition, these delays have raised the Coast Guard’s estimated costs for 

bringing Rescue 21 up to full operating capability from $250 million to 

$710.5 million.16 Moreover, our analysis of contractor performance trends, 

including a significant number of contract items not completed as 

planned and requiring renegotiation, indicates that total acquisition cost 

overruns will continue, and implementation costs could reach as high as 

$872 million.17 

These delays, technical problems, and cost overruns are the result of 

deficiencies in Coast Guard acquisition management and contractor 

oversight—deficiencies similar to those that we identified earlier in the 

Deepwater program. Such a pattern is of concern because it suggests that 

the Coast Guard has not translated the lessons learned from Deepwater to 

 15GAO, United States Coast Guard: Improvements Needed in Management and Oversight 

of Rescue System Acquisition, GAO-06-623 (Washington, D.C.: May 31, 2006). 

16In April 2006, the Department of Homeland Security approved a new acquisition program 

baseline for Rescue 21 with a total acquisition cost of $730.2 million after decreasing 

certain functionality. 

17The Coast Guard’s fiscal year 2007 budget request for Rescue 21 is $40 million, a slight 

decrease from the $41 million Congress approved for fiscal year 2006.

Page 18 GAO-06-448T Coast Guard 
its overall acquisition management.18 In particular, deficiencies in the 

Rescue 21 program include common problems of acquisition management 

and oversight including ineffective project monitoring and risk 

management, poorly defined user requirements, unrealistic schedule and 

cost estimates developed by the contractor, and limited executive-level 

oversight. And although the Coast Guard has developed the high-level 

requirements for Rescue 21, it has relied solely on the contractor to 

manage these requirements. 

As discussed, we found similar problems in the Deepwater program with 

comparable adverse impacts on cost, schedule and results. For example, 

at the start of the program we identified a number of risks that would need 

to be addressed for the program to be successful—including ensuring that 

procedures and personnel are in place for managing and overseeing the 

contractor, and taking steps to minimize potential problems in developing 

new technology. Since that time, we have made numerous specific 

recommendations to the Coast Guard based on the deficiencies uncovered 

by our audits.

19 

The delays in implementing Rescue 21 mean that field units will continue 

to face limitations in their ability to hear boaters in distress and the agency 

will be subject to cost and performance challenges to maintain the legacy 

equipment. For example, as a result of Rescue 21’s delay, some field units 

will likely continue to experience coverage gaps, limiting their ability to 

monitor mariners in distress and some will continue to be at risk of 

performing larger and potentially more costly searches due to the legacy

system’s more limited capabilities. In addition, because the legacy 

equipment is over 30 years old, it is at high risk for failure, a factor which 

 18Our concerns from past audits of the Deepwater acquisition focus on the Coast Guard’s 

overall ability to effectively and efficiently manage its major acquisitions, oversee 

contractors, and translate lessons learned from one program to another. 

19GAO-05-757; Coast Guard: Preliminary Observations on the Condition of Deepwater 

Legacy Assets and Acquisition Management Challenges, GAO-05-651T (Washington D.C.:

June 21, 2005); Coast Guard: Preliminary Observations on the Condition of Deepwater

Legacy Assets and Acquisition Management Challenges, GAO05-307T (Washington D.C.:

Apr. 20, 2005); GAO-05-364T; Coast Guard: Deepwater Program Acquisition Schedule

Update Needed, GAO-04-695 (Washington D.C.: June 14, 2004); GAO-04-380; Coast Guard: 

Actions Needed to Mitigate Deepwater Project Risks, GAO-01-659T (Washington, D.C.: 

May 3, 2001); Coast Guard: Progress Being Made on Deepwater Project, but Risks 

Remain, GAO-01-564 (Washington D.C.: May 2, 2001); and Coast Guard: Strategies for

Procuring New Ships, Aircraft, and Other Assets, GAO/T-RCED-99-116 (Washington, D.C.: 

Mar. 16, 1999). 

Page 19 GAO-06-448T Coast Guard 
could result in costly repairs. Moreover, although the Coast Guard 

previously issued a moratorium on upgrades to the legacy system, delays 

in the Coast Guard’s implementation of Rescue 21 may require units to 

upgrade or install new equipment for the legacy system. This would result 

in further costs, and in fact, this has already occurred at some units.20

The importance of resolving acquisition management problems is 

underscored by the operational benefits that are expected to be realized 

from system implementation, and some of these benefits have already 

been achieved in a few locations where the Rescue 21 system has been 

used. For example, following Hurricane Katrina, the Coast Guard took 

advantage of Rescue 21’s capabilities to address communications 

challenges through an early deployment of a portable antenna to Louisiana 

in September 2005 to provide communications capabilities that had been 

lost due to the storm. In another case, the direction-finding capability of

the Rescue 21 system helped the Coast Guard to rescue some stranded 

boaters who had inaccurately identified their location to the Coast Guard. 

Coast Guard in Early 

Phase of Developing the 

Nationwide Automatic 

Identification System 

The Coast Guard is at an early phase in developing the Nationwide 

Automatic Identification System (NAIS)—an important step in the overall

effort to increase port safety and security by collecting, integrating, and 

analyzing information on vessels operating within or bound for U.S. 

waters—and is pursuing partnership opportunities that could potentially 

accomplish NAIS installation goals more quickly and reduce installation

costs to the federal government. According to the Coast Guard, NAIS will 

allow the Coast Guard to both receive and transmit information to vessels

entering and leaving U.S. waters, supporting both MTSA and the National 

Plan to Achieve Maritime Domain Awareness.21 In July 2004, we 

recommended that the Coast Guard seek and take advantage of 

opportunities to partner with organizations willing to develop systems at 

 20Coast Guard officials reported that the agency upgraded a console at one unit to mitigate 

operational challenges and installed a new antenna at a second unit to address coverage 

gaps. 

21The National Plan to Achieve Maritime Domain Awareness was developed in October 

2005 in support of the National Strategy for Maritime Security, as directed by National 

Security Presidential Directive-41/Homeland Security Presidential Directive-13. The plan 

outlines national priorities for achieving maritime domain awareness, including near-term

and long-term objectives, required program and resource implications, and 

recommendations for organizational or policy changes.

Page 20 GAO-06-448T Coast Guard 
their own expense as part of the acquisition process.22 In response, 

according to Coast Guard officials, the agency has begun to develop 

partnerships. However, officials noted that because the project and 

technology are still in the early stages of development, these partnerships 

remain limited. For example, Coast Guard officials said that because the 

Coast Guard still does not know all of the specific technical system 

requirements, they do not yet know of all the potential partners that could 

enable the Coast Guard to leverage resources. In addition, system 

requirements may change as the technology is further developed, and as a 

result, some current partnerships may be short-term. 

The Coast Guard intends to use the fiscal year 2007 budget request of 

$11.2 million, along with past unobligated project funding, to award a 

NAIS contract in fiscal year 2007 for initial design, logistics, and 

deployment in strategic ports and critical coastal areas of the country. 

According to the Coast Guard, officials are performing market research as 

part of the development phase of the Coast Guard and DHS major 

acquisition processes, and the project office is analyzing this information 

to determine capabilities within the market to satisfy NAIS requirements 

and to establish an optimal acquisition strategy. Coast Guard officials we 

spoke with noted that NAIS is currently in the initial stage of a major 

acquisition project. As such, the acquisition project plans for costs, 

schedule, and performance have not yet been established. The Coast 

Guard expects these project plans to be determined later this year and 

stated that both the baseline costs and current completion schedule are

early estimates and subject to revision as final requirements mature. 

The Coast Guard also faces two additional challenges in managing its 

assets and balancing its various missions. The first challenge is to find the 

resources to replace some additional assets, not included in the 

Deepwater program, for its non-homeland security missions. Our ongoing 

work found that some of the Coast Guard’s existing buoy tenders and 

icebreakers are approaching or have exceeded their initial design service 

lives. The second challenge the Coast Guard faces is the addition of a new 

mission, defending the air space surrounding the nation’s capital, which 

falls outside its traditional focus on the maritime environment. While 

Coast Guard Faces 

Future Challenges as 

It Balances Missions 

 22GAO, Maritime Security: Partnering Could Reduce Federal Costs and Facilitate 

Implementation of Automatic Vessel Identification System, GAO-04-868 (Washington, 

D.C.: July 23, 2004).

Page 21 GAO-06-448T Coast Guard 
groundwork has been laid through the request of fiscal year 2007 funds to

purchase the equipment necessary to carry out this new responsibility, it is 

likely to require additional personnel and training. 

Some ATON and 

Icebreaking Assets Show 

Decline and May Need 

Additional Resources to 

Sustain Capabilities 

To facilitate maritime mobility through its aids-to-navigation (ATON) and 

icebreaking missions, the Coast Guard uses a variety of assets, such as 

buoy tenders and icebreakers. Like the Deepwater legacy assets, many of 

these types of assets are approaching or have exceeded their initial design

service lives. We are currently conducting work for this committee to look 

at the condition and the Coast Guard’s actions to upgrade or better 

manage these assets. While this work is still ongoing, our preliminary 

observations indicate that some of these assets are experiencing 

maintenance issues that may require additional resources in order to 

sustain or replace their capabilities. 

From 2000 to 2004, the Coast Guard’s key condition measures show a 

decline for some ATON and icebreaking assets.23 For ATON and 

icebreaking cutter assets, 24 the key summary measure of condition—

percent of time free of major casualties25—fluctuated but generally 

remained below target levels26 for some asset types. According to Coast 

Guard officials, even though it did not have a centralized tracking system 

for the condition of its ATON small boat assets during this time period, the 

Coast Guard’s overall assessments of these smaller assets indicated that 

most of the asset types were in fair to poor condition. According to Coast 

Guard officials and documents, the reasons for their condition include the 

fact that many of the asset types are beyond their expected service lives 

Coast Guard’s Condition 

Measures Show Decline in 

Some ATON and Icebreaking 

Assets 

 23The assets discussed here vary greatly in terms of their size, age, and operating 

environment. In terms of size they range from a 420-foot polar icebreaker to a 21-foot 

trailerable boat to service aids-to-navigation. In terms of age, the range is 2 years for 

recently commissioned seagoing buoy tenders to more than 60 years for inland 

construction and buoy tenders. ATON assets are located on both East and West Coasts, as

well as the Gulf Coast and major Inland Rivers such as the Mississippi while domestic 

icebreakers are located on the East Coast and Great Lakes. The polar icebreakers operate 

in both Arctic and Antarctic regions. 

24The Coast Guard defines a cutter as any Coast Guard vessel 65 feet in length or greater, 

having adequate accommodations for crew to live on board. Boats are defined as those 

vessels under 65 feet in length that usually operate near shore and on inland waterways. 

25A casualty is a deficiency in mission essential equipment; a major casualty causes the 

major degradation or loss of at least one primary mission. 

26The standard target level for the “percent of time free of major casualties” is 72 percent,

which is a Navy standard that has been adopted by the Coast Guard. 

Page 22 GAO-06-448T Coast Guard 
and the general workload of the assets has increased to carry out other 

missions, such as maritime security after September 11, 2001, or providing 

disaster response after events such as the recent hurricanes on the Gulf 

Coast. 

Coast Guard personnel reported to us that crew members have had to

spend increasingly more time and resources to troubleshoot and resolve 

maintenance issues on the older ATON and domestic icebreaking assets. 

The Coast Guard personnel we met with indicated that because the 

systems and parts are outdated compared with the technology and 

equipment available today, it can be challenging and time consuming to 

diagnose a maintenance issue and find parts or determine what corrective 

action to take. For example, the propulsion control system on the 140-foot

icebreaking tugs uses circuit cards that were state-of-the-art when the tugs 

were commissioned in the late 1970s to 1980s but are no longer

manufactured today and have been superseded by computer control 

systems. According to the Coast Guard personnel we met with, the lack of 

a readily available supply of these parts has forced maintenance personnel 

to order custom made parts or refurbish the faulty ones, increasing the 

time and money it takes to address maintenance problems. The personnel 

also told us that because such equipment is outdated, finding

knowledgeable individuals to identify problems with the equipment is 

difficult, which further complicates the maintenance of the assets. Crews 

of other assets we visited also confirmed the difficulty of diagnosing 

problems and obtaining replacement parts for other critical subsystems 

such as the main diesel engines. 

Increasing Amount of 

Maintenance on ATON and 

Domestic Icebreaking Assets Is 

Being Performed 

Aware of such issues, the Coast Guard completed a mission needs analysis 

for ATON and domestic icebreaking assets, and developed an approach to 

renovate or recapitalize these assets. This analysis, which was completed 

in 2002, looked at the condition of the existing assets and their ability to 

support mission needs. The analysis concluded that all of the assets 

suffered in varying degrees with respect to safety, supportability, 

environmental compliance, and habitability, and would need replacement

or rehabilitation to address these issues. In response to this analysis, the 

Coast Guard developed a plan to systematically replace or renovate the 

assets. Program officials at the Coast Guard indicated that current 

estimates place the total cost to carry out this plan at about $550 million. 

According to a Coast Guard official, although resource proposals to carry 

out this project had been made during the budget planning processes for 

fiscal years 2004, 2005, 2006, and 2007, those proposals were either 

deferred or terminated by DHS or the Office of Management and Budget

from inclusion in the final budget requests. 

Page 23 GAO-06-448T Coast Guard 
Preliminary observations from our review of the Coast Guard’s polar 

icebreaking assets revealed similar challenges for the Coast Guard to 

perform the maintenance needed to sustain the capabilities of these 

assets. As with the other older ATON and domestic icebreaking assets, the 

two Polar Class icebreakers that are used for breaking the channel into the 

Antarctic research station are reaching the end of their design service lives 

of 30 years. 27 According to Coast Guard officials, the icebreakers’ age 

combined with recent harsh ice conditions and increased operational 

tempo have left the Polar Class icebreakers unable to continue the mission 

in the long term without a substantial investment in maintenance and

equipment renewal. These officials also told us that while the hull 

structures are sound, critical systems such as the main gas turbine 

controls and the controllable pitch propeller systems have become 

unreliable. Corroborating this account of the icebreakers’ condition, an 

interim report issued in December 2005 by the National Research Council

of the National Academies also found that the icebreakers have become 

inefficient to operate because substantial and increasing maintenance is 

required to keep them operating and that significant long-term 

maintenance had been deferred over the past several years.28

Polar Class Icebreaking Assets 

Are in Need of Significant 

Maintenance 

Given the age and obsolescence of the Polar Class icebreakers, funding for 

maintenance and repair has been and will likely continue to be a 

challenge. Coast Guard officials indicated that the cost of maintenance 

activity for the icebreakers required that additional funding be transferred 

from other Coast Guard asset maintenance accounts in previous years in 

order to carry out this maintenance. For fiscal years 2005 and 2006, the 

Coast Guard also obtained additional funds for maintenance from the 

 27In addition to the two Polar Class icebreakers, the Coast Guard acquired a third 

icebreaker, the Healy, in 2000. Unlike the Polar Class icebreakers, the Healy was designed

to be an Arctic scientific platform and does not have the capabilities to break ice in the

Antarctic under most conditions. According to Coast Guard officials, although the Healy

also has maintenance issues, the condition and extent of maintenance needed for the Polar 

Class icebreakers is more severe. 

28National Research Council of the National Academies, Polar Icebreaker Roles and U.S.

Future Needs: A Preliminary Assessment, 2005. The Council has been tasked to conduct

an assessment of the current and future roles of the Coast Guard’s polar icebreakers. A 

final report is expected to be released this summer in which it will provide a more detailed 

analysis and evaluation of the assets and capabilities needed to carry out the mission over

the longer term.

Page 24 GAO-06-448T Coast Guard 
National Science Foundation (NSF).29 The Coast Guard has considered 

undertaking a project to extend the service lives of the existing assets by 

refurbishing or replacing those systems that have reached the end of their 

service lives. The Coast Guard estimates that this extension project could 

provide an additional 25 years of service for the existing assets. The cost 

to carry out this project for both Polar Class icebreakers is estimated 

between $552 and $859 million. Coast Guard capital planning 

documentation indicates that failure to fund this project could leave the 

nation without heavy icebreaking capability and could jeopardize the 

investment made in the nation’s Antarctic Program. According to Coast 

Guard officials, the agency has identified these needs but has not yet 

requested funds in part, because other agencies have taken financial 

responsibility for funding polar icebreaking assets.30

The Coast Guard Is 

Undertaking New 

Responsibility beyond 

Typical Maritime Missions 

While the Coast Guard continues to face the challenge of performing the 

diverse array of responsibilities associated with its many missions, the 

fiscal year 2007 budget request includes initial funding for a new Coast 

Guard responsibility of enforcing a no-fly zone in the national capital 

region. The scope of the mission—intercepting slow and low flying 

aircraft—falls outside of the Coast Guard’s typical mission of protecting 

and preserving the nation’s ports and waterways. According to Coast 

Guard officials, DHS agreed to this mission through a memorandum of 

understanding with DOD and subsequently determined that the Coast 

Guard was the best suited agency within DHS to perform the mission.31

Coast Guard officials also said, the agency will officially take over these 

responsibilities from CBP in late fiscal year 2006. However, despite 

 29NSF is the lead agency responsible for supporting U.S. polar research. As such, it is the

primary user of the polar icebreakers to provide logistical support and serve as research

platforms in the polar regions. Coast Guard officials told us that under the terms of a

memorandum of agreement, entered into in 1986 and updated in 1999, NSF and other users

of the icebreakers reimbursed the Coast Guard for some of the operational costs. 

30For fiscal year 2006, responsibility for funding the polar icebreaking assets was 

transferred to NSF, with the Coast Guard retaining custody of the assets to operate and 

maintain them. The President’s budget request for fiscal year 2007 proposes to continue

this arrangement. With this transfer of budget authority to NSF, Coast Guard officials 

indicated that while the Coast Guard plays an advisory role to NSF on the maintenance 

needs of the icebreakers, NSF is now responsible for making funding requests for 

maintenance projects such as the service life extension project. 

31The Coast Guard’s primary mission for the National Capital Region Air Defense program 

will be to determine intent of, and compel, low and slower moving aircraft to clear National 

Capital Region protected airspace. 

Page 25 GAO-06-448T Coast Guard 
previous experience performing air intercept activities, according to Coast 

Guard officials, the new homeland security mission has required 

additional training and assets.32 The Coast Guard’s $57.4 million fiscal year 

2007 budget request, the first year of a planned 2-year project, would 

provide funding to acquire five of the seven HH-65C helicopters needed for 

the mission, and, according to Coast Guard officials, update infrastructure 

at Air Station Atlantic City, as well as upgrade equipment at Reagan 

National Airport. Officials added that efforts to train Coast Guard pilots 

have already been underway. While groundwork has been laid through the 

request of fiscal year 2007 funds to purchase the equipment necessary to

carry out this new responsibility, it is likely to require additional personnel 

and training. 

Several of the developments we are reporting on today are good news. 

Despite many demands, the Coast Guard continues to make progress in 

meeting its performance targets, and its successful search and rescue 

work in responding to Hurricane Katrina is one positive aspect of what 

largely otherwise appears to be an ongoing tragedy. Certainly, if one 

measure of organizational excellence is performance in crisis, Hurricane 

Katrina shows that the Coast Guard is well along on that scale. Excellence 

must also be demonstrated in more mundane ways, however, such as how 

an organization manages its acquisitions. In this case, the Coast Guard 

needs to consistently, and from the beginning, employ widely known best 

practices for its acquisition management processes particularly with 

respect to developing requirements, project and risk management, and 

ensuring proper executive level oversight. Although the Coast Guard is to 

be complimented for its willingness to make improvements after our 

audits have identified problems, such as with the Deepwater program, its 

acquisition management would be better if the agency employed the 

lessons once learned and translated them into generally-improved 

practices. Better overall practices would help to ensure that future 

projects will not repeat past problems and will be completed on time and 

at cost. 

Concluding 

Observations 

The Coast Guard has clearly been at the vortex of many of the most 

sweeping changes in the federal government’s priorities over the past 

 32The Coast Guard’s previous experience with air intercept activities includes responsibility 

for air intercept during planned national security special events, such as the Democratic

and Republican national conventions and the Super Bowl, as well as performing some air 

intercept activities as part of its illegal drug interdiction program. 

Page 26 GAO-06-448T Coast Guard 
several years. “Homeland security” carries a much different tone, as well 

as budgetary significance, in the national consciousness after September 

11, 2001. However, dramatic infusions of money are no guarantee of 

success; rather they bring added responsibility to ensure that large 

investments of taxpayer dollars are wisely spent. Our work has shown that 

the Coast Guard continues to face some challenges in balancing all of its 

missions and in keeping a sustained focus on managing its significant 

capital acquisition programs. Continued efforts are needed to sustain the 

progress that has been made thus far.

Madame Chair and Members of the Subcommittee, this completes my 

prepared statement. I would be happy to respond to any questions that you 

or other Members of the Subcommittee may have at this time. 

For information about this testimony, please contact Stephen L. Caldwell, 

Acting Director, Homeland Security and Justice Issues, at (202) 512-9610, 

or caldwells@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this 

statement. Individuals making key contributions to this testimony include 

Joel Aldape, Nancy Briggs, Lisa Canini, Christopher Conrad, Adam 

Couvillion, Christine Davis, Josh Diosomito, Michele Fejfar, Kathryn 

Godfrey, Christopher Hatscher, Dawn Hoff, Lori Kmetz, Julie Leetch, Josh

Margraf, Dominic Nadarski, Jason Schwartz, and Stan Stenersen. 

GAO Contacts and 

Staff 

Acknowledgments 

Page 27 GAO-06-448T Coast Guard 
Page 28 GAO-06-448T Coast Guard 

Appendix I: Objectives, Scope, and 

Methodology 

To provide a strategic overview of the President’s fiscal year 2007 budget 

request for the Coast Guard, we analyzed the Coast Guard’s budget 

justification and other financial documents provided by the Coast Guard, 

focusing on several areas of particular congressional interest. We also 

interviewed Coast Guard headquarters officials familiar with the Coast 

Guard’s budget and acquisition processes. 

To report on the Coast Guard’s progress in meeting its performance 

targets, we reviewed Coast Guard data and documentation addressing the 

status of performance targets between fiscal years 2002 and 2005. In

reporting the performance results, we did not assess the reliability of the 

data or the credibility of the performance measures used by the Coast 

Guard. Previous GAO work indicates that the Coast Guard data are 

sufficiently reliable for the purposes of reporting on general performance, 

but we have not examined the external sources of data used for these 

measures. In addition, we are currently involved in ongoing work looking 

at the reliability of the data and credibility of performance measures for 

the Coast Guard’s six non-homeland security programs. 

To determine the status of key outstanding Coast Guard 

recommendations, we interviewed Coast Guard headquarters officials 

regarding the status of the recommendations—including any progress 

made to implement them. We also obtained and reviewed relevant 

documents from the Coast Guard. 

To discuss the Coast Guard’s response to Hurricane Katrina, we relied on

our ongoing work regarding Hurricane Katrina, with particular focus on 

the Coast Guard’s preparation, response, and recovery to Katrina with 

respect to search and rescue, pollution response, and facilitation of 

maritime missions. To obtain a more detailed understanding of the Coast 

Guard’s response to Hurricane Katrina, we interviewed officials, reviewed 

documents, and conducted site visits at two Coast Guard Districts, the 

Atlantic Command, and Coast Guard headquarters. We also interviewed 

city and state officials in areas impacted by Hurricane Katrina and assisted 

by the Coast Guard. 

To determine the Coast Guard’s progress in implementing our prior 

recommendations related to its Deepwater program, we drew from 

ongoing work, which included extensive reviews and analyses of 

documentation provided by the Coast Guard. We supplemented our 

document reviews and analyses with extensive discussions with officials 

at the Deepwater Program Executive Office, as well as with interviews 
with key Coast Guard operations and maintenance officials, contract 

monitors, and representatives of the system integrator. 

To report on the status and cost of Coast Guard’s Rescue 21 program, we 

drew from our work examining (1) the reasons for significant 

implementation delays and cost overruns against Rescue 21’s original 2002

proposal; (2) the viability of the Coast Guard’s revised cost and 

implementation schedule that is projected to reach full operational 

capability in 2011; and (3) the impact of Rescue 21’s implementation delay 

upon the Coast Guard’s field units which are awaiting modernization of 

antiquated communications equipment. This work has involved reviewing 

acquisition plans, implementation schedules and cost estimates for Rescue 

21, as well as documentation regarding problems associated with the 

antiquated communications equipment. We also interviewed Coast Guard 

field personnel at units using the antiquated equipment and at the two sites 

where Rescue 21 has been deployed.

We also drew from our ongoing work to report on Coast Guard’s ATON 

and icebreaking assets. Specifically, this work is examining (1) the recent

trends in the amount of time ATON and domestic icebreaking assets have 

spent performing various missions and the impact of these trends on their 

primary missions; (2) the condition of the ATON and domestic icebreaking 

assets and the impact of their condition on performing their primary 

missions; and (3) the actions the Coast Guard has taken to upgrade or 

better manage its ATON and domestic icebreaking assets or use 

alternatives to carry out their missions. While conducting this work, we 

have interviewed Coast Guard program and maintenance officials at 

headquarters, area commands, and selected districts to obtain information 

on the missions these assets carry out, the condition of the assets, and the 

past and estimated future costs to maintain and deploy them. We also 

interviewed these officials and reviewed documents about the Coast 

Guard’s plans to maintain or replace these assets. We also analyzed Coast 

Guard data from 2000 to 2004 on condition tracking measures, resources 

spent to operate the assets, and the number of hours the assets spent on 

Coast Guard missions. Finally, we interviewed crew members of various 

assets, selected by nonprobability sample—to provide diversity among 

asset types and locations—to obtain their views on the condition and 

Page 29 GAO-06-448T Coast Guard 
maintenance of their assets and any impact the assets’ condition may have 

had on their ability to carry out their missions.33

This testimony is based on published GAO reports and briefings, as well as 

additional audit work that was conducted in accordance with generally

accepted government auditing standards. We conducted our work for this 

testimony from July 2005 through May 2006. 

 33Nonprobability sampling is a method of sampling where observations are selected in a 

manner that is not completely random, usually using specific characteristics of the 

population as criteria. Results from nonprobability samples cannot be used to make

inferences about a population because in a nonprobability sample some elements of the 

population being studied have no chance or an unknown chance of being selected as part

of the sample. 

Page 30 GAO-06-448T Coast Guard 
Page 31 GAO-06-448T Coast Guard 

Appendix II: Breakdown of the Coast Guard’s 

Fiscal Year 2007 Request 

Appendix II provides a breakdown of the Coast Guard’s fiscal year 2007 

budget request. In addition to operating expenses and acquisition, 

construction, and improvements, the remaining Coast Guard budget 

accounts include areas such as environmental compliance and restoration, 

reserve training, and oil spill recovery. (See table 2.) 

Table 2: Coast Guard Funding Accounts by Fiscal Year 

Dollars in millions (in nominal terms) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

actual actual actual enacted enacted request

Operating expenses $3,757 $4,920 $4,718 $5,066 $5,231 $5,519

Acquisition, construction, and improvements 702 720 1,007 1,065 1,220 1,170

Environmental compliance and restoration 17 17 17 17 12 12

Alteration of bridges 15 17 19 16 15 0

Retired pay 876 889 1,020 1,085 1,014 1,063

Reserve training 83 86 94 113 118 124

Research, development, testing, and evaluation 20 22 15 19 18 14

Oil spill recovery 68 75 57 71 168 127

Boat safety 64 65 64 64 101 115

Medicare-Eligible Retiree Healthcare Fund ContributionaNA NA NA 237 261 279

Source: GAO analysis of Coast Guard data. 

Note: NA not available. 

a

Fiscal year 2005 funding for the Medicare-Eligible Retiree Healthcare Fund Contribution was 

accounted for within the Operating Expenses appropriation, but it is displayed here for fiscal year

2005 separately for presentation purposes. Beginning in fiscal year 2006, the contribution was 

officially re-allocated from the Operating Expenses appropriation to the Medicare-Eligible Retiree 

Healthcare Fund Contribution appropriation. 
Page 32 GAO-06-448T Coast Guard 

Appendix III: Additional Information on 

Specific Coast Guard Program Results 

Appendix III provides a detailed list of Coast Guard performance results 

for the Coast Guard’s 11 programs from fiscal year 2002 through 2005. 

Shaded entries in table 3 indicate those years that the Coast Guard 

reported meeting its target; unshaded entries indicate those years that the

Coast Guard reported not meeting its target. Each program is discussed in 

more detail below. 

Table 3: Performance Results by Program from Fiscal Year 2002 through Fiscal Year 2005 

Performance results by FY

Program Program performance measure 2002 2003 2004 2005

Performance 

target for 

FY 2005 

Programs meeting 2005 

targets 

U.S. Exclusive Economic Zone

Enforcement 

Number of detected Exclusive 

Economic Zone incursions by foreign 

fishing vessels

250 152 247 174 ≤ 200

Ice operations (domestic 

icebreaking) 

Number of waterway closure days 7 7 4 0 ≤ 2a

Search and rescue Percentage of distressed mariners’ 

lives saved 

84.4% 87.7% 86.8% 86.1% ≥ 86%

Aids to navigation Number of collisions, allisions, and 

groundings 

2,098 2,000 1,876 1,825 ≤1,831 

Ports, waterways, and coastal

security 

Reduce homeland security risk in the 

maritime domain 

NA NA NA 14% NAb

Marine environmental 

protection

Average of oil and chemical spills 

greater than 100 gallons per 100 

million tons shipped 

35.1 29.4 22.1 18.5 ≤ 20

Marine safety Average of maritime injuries and 

fatalities 

1,332e1,307 1,299 1,311 ≤ 1,317 

Program expected to meet 

2005 target 

Illegal drug interdiction Percentage of cocaine removed out 

of total estimated cocaine entering 

the U.S. through maritime meansd

 

 Not

reported

Not

reported

30.7% TBDc

≥19%

Programs not meeting 2005 

targets 

Defense readiness Percentage of time units meet 

combat readiness level at C-2 level 

70% 78% 76% 67% 100%

Living marine resources Percentage of fisherman found in 

compliance with regulations 

97.3% 97.1% 96.3% 96.4% ≥ 97% 

Undocumented migrant 

interdiction 

Percentage of interdicted illegal 

migrants entering the U.S. through 

maritime means 

88.3% 85.3% 87.1% 85.5% ≥ 88%

Source: GAO analysis of Coast Guard performance data. 
Performance targets met 

Performance targets not met 

Note: TBD, to be determined; NA, not available. 

a

The target for ice operations noted here is for domestic icebreaking only, and the target level varies

according to the index of severity for an entire winter. Thus, for those winters designated as severe, 

the target is 8 or fewer closure days. For winters designated as average, the target is 2 or fewer 

closure days. Because 2002 and 2004 were designated as average winters, the 7 and 4 days of 

closures did not meet the target. 

b

The ports, waterways, and coastal securities program did not have a numeric target for the 

program’s performance measure because this was the first year this performance measure was used 

and a numeric baseline had not been established. However, according to the Coast Guard, in the 

absence of a numeric target, the program used, and met, a target of fully implementing all planned 

activities geared toward lowering the risk due to terrorism in the maritime domain. 

c

Complete data are not yet available for the illegal drug interdiction program, however, the Coast 

Guard anticipates meeting the performance target for this program based on past performance. 

d

The performance measure for the illegal drug interdiction program, the percent of cocaine removed, 

was revised in fiscal year 2004 from the percent of cocaine seized in order to more accurately report 

the impact Coast Guard counter-drug activities have on the illicit drug trade. As a result, the cocaine 

removal rates for fiscal years 2002-2003 are not available. 

e

The Coast Guard did not have a performance target for the marine safety performance measure in 

fiscal year 2002. Therefore, we were unable to determine whether marine safety program results met 

a performance target for fiscal year 2002.

• U.S. Exclusive Economic Zone Enforcement.34 The Coast Guard 

reported that in fiscal year 2005, it met the performance target for U.S. 

exclusive economic zone enforcement—defined as the number of 

foreign vessel incursions into the U. S. Exclusive Economic Zone, by 

detecting 174 foreign vessel incursions, within the performance target

of 200 or less incursions. This represents a more than 30-percent 

decrease in foreign vessel incursions since fiscal year 2004, when the 

Coast Guard detected 247 incursions. Coast Guard officials attributed 

this decrease in incursions to many factors, including the agency’s 

efforts in combating incursions, such as an increased number of air and 

water patrols, and the likelihood that some Mexican fleets known to 

cross into U.S. waters were damaged during the 2005 hurricane season. 

Programs Meeting 

Fiscal Year 2005 

Performance Targets 

 34The exclusive economic zone is defined as an area within 200 miles of U.S. shores in

which U.S. citizens have primary harvesting rights to fish stocks. The Coast Guard also 

refers to the U.S. exclusive economic zone enforcement program as either the foreign fish 

enforcement program or as other law enforcement. 

Page 33 GAO-06-448T Coast Guard 
• Ice operations. To meet this performance target, the Coast Guard’s ice 

operations program must keep winter waterway closures to 8 days or 

fewer for severe winters and less than 2 days per year for average 

winters. According to Coast Guard documents, the agency met its 

target for an average winter with 0 days of waterway closures during 

the 2005 ice season. 

• Search and rescue. The Coast Guard reported that performance in this 

area, as measured by the percentage of mariners’ lives saved from 

imminent danger, was 86.1 percent, just above the target of 86 percent 

for fiscal year 2005. This result is similar to the fiscal year 2004 result of 

saving 86.8 percent of lives in imminent danger. The Coast Guard 

identified continuing improvements in response resources and 

improvements made in commercial vessel and recreational boating 

safety as the main reasons for continuing to meet the target. 

• Aids to navigation. According to Coast Guard reports, the aids to 

navigation program performance measure—that is, the 5-year average 

number of collisions, allisions, and groundings—improved in fiscal year

2005 by dropping to 1,825 incidents from 1,876 incidents in fiscal year 

2004. The fiscal year 2005 total was also below the target of 1,831. The 

Coast Guard attributes this continued decrease to a multifaceted 

system of prevention activities, including radio aids to navigation, 

communications, vessel traffic services, dredging, charting, regulations, 

and licensing. 

• Ports, waterways, and coastal security. In fiscal year 2005, the Coast 

Guard began using a new measure of program performance—the 

percent reduction of terrorism-related risk in the maritime 

environment. According to Coast Guard officials, this measure is based 

on an assessment of the total amount of maritime risk under the Coast 

Guard’s authority. At the end of each fiscal year the Coast Guard 

calculates the amount of this total risk that has been reduced by the 

program’s activities throughout the fiscal year. Officials added that 

because of the dynamic and changing nature of risk, the total amount 

of maritime risk under the Coast Guard’s authority—the baseline level 

of risk—is recalculated annually. Because this was the first year the 

agency used the measure, there was no previous performance baseline

to establish a numeric annual target. However, according to the Coast 

Guard, in the absence of a numeric target, the program used, and met a 

target of fully implementing all planned activities geared toward 

lowering the risk due to terrorism in the maritime domain. 

Page 34 GAO-06-448T Coast Guard 
• Marine environmental protection. The marine environmental 

protection measure of performance is the 5-year average annual 

number of oil and chemical spills greater than 100 gallons per 100 

million tons shipped. According to Coast Guard reports, since fiscal 

year 2002, the reported average number of oil and chemical spills has 

dropped from 35.1 to 18.5 in fiscal year 2005. The Coast Guard 

identified its prevention, preparedness, and response programs—

including industry partnerships and incentive programs—as reasons 

for the drop. 

• Marine safety. The marine safety measure—a 5-year average of 

passenger and maritime deaths and injuries— achieved its fiscal year 

2005 performance target of 1,317. During fiscal year 2005 there were 

1,311 incidents, a slight increase from 1,299 incidents in fiscal year 

2004. Beginning in fiscal year 2006, the Coast Guard will use a revised 

version of this measure that includes injuries of recreational boaters as 

well, representing a broader and more complete view of marine safety. 

• Illegal drug interdiction. While complete results for the illegal drug 

interdiction performance measure—the rate at which the Coast Guard 

removes cocaine bound for the U.S. via non-commercial maritime 

transport—are not yet available, the Coast Guard anticipates exceeding 

the fiscal year 2005 target of removing 19 percent or more of cocaine

bound for the U.S. According to Coast Guard officials, in fiscal year 

2005 the Coast Guard removed a record 137.5 metric tons of cocaine

bound for the U.S. Coast Guard officials believe that this record 

amount of cocaine removed will result in exceeding the fiscal year 2005 

performance target. Final program results are due to be published in 

July 2006. 

Program Expected to Meet 

Fiscal Year 2005 Target 

Programs Not Meeting 

Targets in Fiscal Year 2005 

• Defense Readiness. Defense readiness is measured by the percent of 

time that units meet combat readiness status at a C-2 level.

35 The Coast 

Guard reported that the overall level of performance for the defense 

readiness program decreased for the second consecutive year from a 

high of 78 percent in fiscal year 2003, to 76 percent in fiscal year 2004,

and 67 percent in fiscal year 2005. According to Coast Guard officials, 

this decline in recent years was because of staffing shortages for 

certain security units within the defense readiness mission. According 

to Coast Guard officials, the agency intends to solve these staffing 

 35According to the Coast Guard, the C-2 combat readiness level is defined as the level at 

which a unit possesses the resources and is trained to undertake most of the wartime 

missions for which it is organized or designed. 

Page 35 GAO-06-448T Coast Guard 
problems by offering incentives for participation as well as making 

participation mandatory instead of voluntary, as it was previously. 

• Living marine resources. The Coast Guard reported that the

performance measure for living marine resources—defined as the 

percentage of fishermen complying with federal regulations—was 

96.4 percent, just below the target of 97 percent for fiscal year 2005.

This result is similar to the fiscal year 2004 result of 96.3 percent. 

According to Coast Guard officials, the agency missed the fiscal year 

2005 target because of a variety of economic conditions and variables 

beyond Coast Guard control, such as hurricane damage, high fuel 

costs, fewer days-at-sea allocations, and lucrative seafood prices in 

some fisheries—which created greater incentives for fishermen to 

violate fishery regulations. The Coast Guard conducted 6,076 fisheries 

boardings in fiscal year 2005, an increase of more than 30 percent since 

fiscal year 2004. However, it is important to note that the compliance 

rate is a conservative estimate of agency performance because the 

Coast Guard targets vessels for boarding, thereby making it more likely 

that they will find vessels that are not in compliance with fishery 

regulations. According to Coast Guard officials, a key contributor to 

targeting vessels is the vessel monitoring system, which has enhanced 

the agency’s ability to target vessels by providing more timely 

information. 

• Undocumented migrant interdiction. According to Coast Guard 

reports, in fiscal year 2005 the Coast Guard did not meet its 

performance target of interdicting or deterring at least 88 percent of 

undocumented aliens from Cuba, Haiti, the Dominican Republic, and 

China attempting to enter the U.S. through maritime routes. The Coast 

Guard identified 5,830 successful arrivals out of an estimated threat of 

40,500 migrants yielding an interdiction and deterrence rate of 85.5

percent, a decrease from the fiscal year 2004 result of 87.1 percent. 

According to the Coast Guard, program performance decreased 

because the flow of migrants was higher than in previous years, 

increasing from almost 22,000 in fiscal year 2002, to more than 40,000 

in fiscal year 2005. Coast Guard officials said that the agency is

developing a new measure to better account for both the Coast Guard’s 

efforts and the migrant flow to more accurately report program 

performance. This new measure will include migrants of all 

nationalities that successfully arrive in the U.S. through maritime 

routes. 

Page 36 GAO-06-448T Coast Guard 
Page 37 GAO-06-448T Coast Guard 

Related GAO Products 

United States Coast Guard: Improvements Needed in Management and 

Oversight of Rescue System Acquisition. GAO-06-623. Washington, D.C.: 

May 31, 2006. 

Coast Guard: Changes in Deepwater Acquisition Plan Appear Sound, 

and Program Management Has Improved, but Continued Monitoring Is 

Warranted. GAO-06-546. Washington, D.C.: April 28, 2006. 

Coast Guard: Progress Being Made on Addressing Deepwater Legacy 

Asset Condition Issues and Program Management, but Acquisition 

Challenges Remain. GAO-05-757. Washington, D.C.: July 22, 2005. 

Coast Guard: Preliminary Observations on the Condition of Deepwater

Legacy Assets and Acquisition Management Challenges. GAO-05-651T. 

Washington, D.C.: June 21, 2005. 

Maritime Security: Enhancements Made, but Implementation and 

Sustainability Remain Key Challenges. GAO-05-448T. Washington, D.C.: 

May 17, 2005. 

Coast Guard: Preliminary Observations on the Condition of Deepwater

Legacy Assets and Acquisition Management Challenges. GAO05-307T. 

Washington, D.C.: April 20, 2005. 

Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 

Budget Request. GAO-05-364T. Washington, D.C.: March 17, 2005. 

Coast Guard: Station Readiness Improving, but Resource Challenges and 

Management Concerns Remain. GAO-05-161. Washington, D.C.: January 

31, 2005. 

Maritime Security: Better Planning Needed to Help Ensure an Effective

Port Security Assessment Program. GAO-04-1062. Washington, D.C.: 

September 30, 2004. 

Maritime Security: Partnering Could Reduce Federal Costs and 

Facilitate Implementation of Automatic Vessel Identification System.

GAO-04-868. Washington, D.C.: July 23, 2004. 

Maritime Security: Substantial Work Remains to Translate New 

Planning Requirements into Effective Port Security. GAO-04-838. 

Washington, D.C.: June 30, 2004. 
Coast Guard: Deepwater Program Acquisition Schedule Update Needed. 

GAO-04-695. Washington, D.C.: June 14, 2004. 

Coast Guard: Station Spending Requirements Met, but Better Processes

Needed to Track Designated Funds. GAO-04-704. Washington, D.C.: May 

28, 2004. 

Coast Guard: Key Management and Budget Challenges for Fiscal Year

2005 and Beyond. GAO-04-636T. Washington, D.C.: April 7, 2004. 

Coast Guard: Relationship between Resources Used and Results Achieved 

Needs to Be Clearer. GAO-04-432. Washington, D.C.: March 22, 2004. 

Contract Management: Coast Guard’s Deepwater Program Needs 

Increased Attention to Management and Contractor Oversight. 

GAO-04-380. Washington, D.C.: March 9, 2004. 

Coast Guard: New Communication System to Support Search and 

Rescue Faces Challenges. GAO-03-1111. Washington, D.C.: September 30, 

2003. 

Maritime Security: Progress Made in Implementing Maritime 

Transportation Security Act, but Concerns Remain. GAO-03-1155T. 

Washington, D.C.: September 9, 2003. 

Coast Guard: Actions Needed to Mitigate Deepwater Project Risks. 

GAO-01-659T. Washington, D.C.: May 3, 2001. 

Coast Guard: Progress Being Made on Deepwater Project, but Risks 

Remain. GAO-01-564. Washington, D.C.: May 2, 2001. 

Coast Guard: Strategies for Procuring New Ships, Aircraft, and Other 

Assets. GAO/T-HEHS-99-116. Washington, D.C.: Mar. 16, 1999.

Coast Guard’s Acquisition Management: Deepwater Project’s 

Justification and Affordability Need to Be Addressed More Thoroughly. 

GAO/RCED-99-6. Washington, D.C.: October 26, 1998. 

Page 38 GAO-06-448T Coast Guard (440491) 
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