Department of Homeland Security 

Office of Inspector General 

United States Coast Guard's 


Internal Controls and Cost Capturing 


for the Deepwater Horizon Oil Spill 


OIG-11-115 September 2011 
Office (~f Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

Homeland 

Security 

SEP 26 2011 

Preface 

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

established by the Homeland Security Act of2002 (Public Law 107-296) by amendment 

to the Inspector General Act of1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the Department. 

This report addresses the strengths and weaknesses of the United States Coast Guard's 

ability to identify and capture costs associated with the Deepwater Horizon oil spill as 

authorized by The Oil Pollution Act of 1990 and The National Contingency Plan. It is 

based on interviews with employees and officials of the United States Coast Guard, direct 

observations, and a review of applicable documents. 

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

office, and have been discussed in draft with those responsible for implementation. We 

trust this report will result in more effective, efficient, and economical operations. We 

express our appreciation to all of those who contributed to the preparation of this report. 

Anne L. Richards 

Assistant Inspector General for Audits 
Executive Summary.............................................................................................................1 


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


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


Direct Costs ....................................................................................................................4 


Indirect Costs .................................................................................................................4 


Standard Reimbursable Rates for Indirect Costs .........................................................13 


Auxiliary ......................................................................................................................14 


Recommendations........................................................................................................16 


Management Comments and OIG Analysis ................................................................17 


Appendices 

Appendix A: Purpose, Scope, and Methodology.......................................................20 


Appendix B: Management Comments to the Draft Report .......................................22 


Appendix C: Testing Results.....................................................................................27 


Appendix D: Deepwater Horizon Oil Spill Responsible Parties ...............................28 


Appendix E: Summary of Billing Activity to Date ...................................................29 


Appendix F: Examples of Recoverable Removal Costs ...........................................30 


Appendix G: Major Contributors to this Report ........................................................31 


Appendix H: Report Distribution ..............................................................................32 


Abbreviations 

AOPS Abstract of Operations 


ALMIS Asset Logistics Management Information System
 

DHS Department of Homeland Security 


FOSC Federal On-Scene Coordinator 


GAO Government Accountability Office 


NPFC National Pollution Funds Center 


OIG Office of Inspector General 


Oil Pollution Act The Oil Pollution Act of 1990 


SONS Spill of National Significance 


UAC Unified Area Command
 

USCG United States Coast Guard 


Table of Contents/Abbreviations 

OIG
 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

On April 20, 2010, an explosion on the Deepwater Horizon Mobile 

Off-Shore Drilling Unit caused approximately 207 million gallons 

of oil to spill into the Gulf of Mexico. The United States Coast 

Guard initiated and directed the response to this oil spill as the 

Federal On-Scene Coordinator. The United States Coast Guard is 

billing the responsible parties for recoverable removal costs 

associated with this incident. 

The United States Coast Guard has adequate policies, procedures, 

and internal controls to accurately identify and bill direct costs for 

this oil spill. The unprecedented size of this oil spill challenged its 

existing processes for capturing indirect costs and revealed 

weaknesses in these processes. 

Because of these process weaknesses and inaccurate and inadequate 

supporting documentation, the United States Coast Guard may not 

be able to bill for as much as $193.7 million in indirect costs. 

Additionally, the United States Coast Guard cannot bill for as much 

as $38.7 million because its standard reimbursable rates instruction 

was not updated prior to the oil spill, as scheduled. The United 

States Coast Guard has not issued the final bill for this oil spill, and 

continues to identify and capture costs for billing to the responsible 

parties. 

We made three recommendations aimed at improving internal 

controls, processes, and systems to accurately capture and bill all 

allowable costs associated with this oil spill and future oil spills. 

The United States Coast Guard concurred with these 

recommendations. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Background 

The Oil Pollution Act of 19901 F (Oil Pollution Act) established oil 

spill liability and compensation requirements to help facilitate 

cleanup activities and compensate for damages. Under the Oil 

Pollution Act, those responsible for an oil spill are liable for all 

removal costs, which include the cost of the incident; lost revenue, 

profit, or earning capacity; and damages to natural resources, real 

or personal property, and public services. Executive Order 1277712 

F

assigned oversight and management of removal cost claims and 

payments to the United States Coast Guard (USCG). The USCG’s 

National Pollution Funds Center (NPFC) was created for this 

oversight. 

On April 20, 2010, an explosion on the Deepwater Horizon Mobile 

Off-Shore Drilling Unit caused approximately 207 million gallons 

of oil to spill into the Gulf of Mexico. The USCG initiated and 

directed the response to this oil spill as the Federal On-Scene 

Coordinator (FOSC). The USCG is billing the responsible parties 

(listed in appendix D) for recoverable removal costs associated 

with this incident, and BP is centrally processing all claims. 

0

Source: USCG. Fireboat response crews battle the blazing remnants of 

the offshore oilrig Deepwater Horizon on April 21, 2010. 

1

 33 U.S.C. §§ 2701-2761. 


2

 56 Fed. Reg. §54757 (Oct. 22, 1991). 


United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Cost Recovery Process 

The Oil Spill Liability Trust Fund, funded by the Oil Pollution Act, 

pays for removal costs and damages resulting from oil spills in the 

navigable waters, adjoining shorelines, or exclusive economic zones 

of the United States. The NPFC administers the Oil Spill Liability 

Trust Fund and replenishes it with the money it recovers from the 

responsible parties. As of May 10, 2011, the USCG issued 11 bills 

totaling $711.8 million to the parties responsible for the Deepwater 

Horizon oil spill (see appendix E, Summary of Billing Activity to 

Date). 

The FOSC and designated representatives direct oil spill response 

efforts and coordinate all other efforts at the scene of a discharge 

or release. The FOSC is required to track, maintain, review, and 

verify that costs incurred were for recoverable removal activities 

and billable to the responsible parties. Examples of recoverable 

removal costs are listed in appendix F. 

The NPFC billed the responsible parties using direct and indirect 

cost categories on the bills. The USCG defines direct costs as 

those captured using the USCG’s accounting system and charged 

directly against the Oil Spill Liability Trust Fund. Examples of 

direct cost categories include— 

Contracts, 

Charge cards, 

Delivery orders, 

Purchase orders, 

Reimbursable agreements with federal, state, and local 

agencies, and 

Travel vouchers. 

The USCG defines indirect costs as those it incurred for USCG 

assets operating in support of the response. These costs are 

recovered from the responsible parties to replenish the Oil Spill 

Liability Trust Fund. Examples of indirect cost categories include 

the use of— 

Aircraft, 

Boats, 

Cutters,3 

F

Equipment and vehicles, and 

2

3

 A cutter is any USCG vessel exceeding 65 feet in length. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Personnel. 

Results of Audit 

The USCG had adequate internal controls, policies, and procedures to accurately 

bill direct costs from the Deepwater Horizon oil spill, but the unprecedented size 

of the spill challenged its existing processes for capturing indirect costs and 

revealed weaknesses in these processes. Because of these process weaknesses 

and inaccurate and inadequate supporting documentation, the USCG may not be 

able to bill for as much as $193.7 million in indirect costs incurred through 

August 31, 2010. Additionally, the USCG cannot bill as much as $38.7 million 

because its standard reimbursable rates instruction was not updated prior to the oil 

spill, as scheduled. 

Direct Costs 

The USCG accurately billed $340.7 million in direct costs to the 

responsible parties using its official accounting system. Direct costs billed 

to the responsible parties included those from purchase orders, delivery 

orders, charge cards, contracts, and travel vouchers. Direct costs also 

included other federal and state agency costs captured on reimbursable 

agreements these agencies had with the USCG. 

The NPFC assigns a unique project number to each oil spill. The USCG 

bills only those costs charged against this project code. We used statistical 

sampling to test costs not charged against the oil spill project code and 

determined that the USCG had adequate policies and procedures to ensure 

that all direct costs associated with the oil spill, with minor exceptions, 

were properly coded and billed. (See appendix C, Testing Results.) 

Indirect Costs 

The USCG did not accurately capture and bill all indirect costs incurred 

for this oil spill response effort. The NPFC guidance in effect for 

Deepwater Horizon was insufficient to capture indirect costs for a spill of 

this magnitude. Indirect costs billed to the responsible parties include 

costs for the use of USCG aircraft, cutters and boats, equipment and 

vehicles, and personnel. 

The CG-5136 daily form is the official record for all indirect cost activity 

for an oil spill. Indirect costs are recorded on this form and submitted to 

the FOSC or delegate for review and submission to the NPFC, which 

compiles these records for inclusion on the bills to the responsible parties. 

The NPFC is tasked with ensuring that all submitted documentation meets 

its guidelines and adjusts the documentation as necessary. The NPFC did 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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not keep a record of these adjustments and does not have a supervisory 

review process to ensure accuracy and completeness. Table 1 summarizes 

the indirect cost discrepancies discussed in following sections. 

Table 1. Indirect Cost Discrepancies ($ million) 

Indirect Cost Total Discrepancy 

Aircraft $0.8 Not billed 

Cutters As much as $191.0 Not billed 

Boats $1.9 Not billed 

Vehicles $0.03 Not supported; billed 

Equipment $4.7 Not supported; billed 

Personnel $3.0 Not supported; billed 

Source: USCG. The USCG Cutter Aspen, home-ported in San Francisco, California, 

recovers fast sweep boom after oil skimming operations in the Gulf of Mexico less than 

one mile from the shoreline on June 28, 2010. 

Aircraft 

The USCG initially did not bill the responsible parties for 

$10.9 million for aviation costs incurred through August 31, 2010, 

because of internal control weaknesses in its cost-capturing process. 

The following issues contributed to the internal control weaknesses: 

There was no historical record of the documentation used 

by the NPFC to generate each individual bill, and 

Bills did not include all aircraft types that flew in support 

of the oil spill. 

The Asset Logistics Management Information System (ALMIS) is 

the USCG’s official system of record for flight time. We compared 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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ALMIS data with the NPFC’s CG-5136 form information submitted 

by the FOSC and determined that ALMIS contains a more accurate 

record of missions. However, the FOSC is not required to use these 

data to fill out CG-5136 forms. The process currently used to bill 

indirect aviation costs relies on manually entered data on the 

CG-5136 forms submitted to the NPFC. 

The forms also contained numerous errors and miscalculations. 

Table 2 details an example of errors in documentation from the 

FOSC and NPFC on May 5, 2010. According to the CG-5136 

record, a C-143 aircraft flew 5.7 hours on this day. However, 

according to ALMIS data, the aircraft flew only 3.6 hours. NPFC 

did not have a record of this flight and therefore did not bill the 

responsible parties for any hours. 

Table 2. Documentation Errors from FOSC and NPFC from May 5, 2010 

Aircraft FOSC CG-5136 NPFC Records ALMIS 

C-143 5.7 hours 0 hours 3.6 hours 

Source: USCG. USCG aircrew members, from a C-130 aircraft stationed at 

USCG Air Station Clearwater, Florida, prepare to drop a satellite-enabled data 

marker buoy into the Gulf of Mexico to help track the spill on May 29, 2010. 

On May 10, 2011, the USCG billed for an additional $10.1 million 

in aviation costs incurred before August 31, 2010. The NPFC used 

ALMIS to identify costs that were not accurately recorded on the 

CG-5136 forms submitted by the FOSC for this reconciliation. 

Had the NPFC required use of ALMIS information for verification 

prior to billing the responsible parties, the initial billings could 

have been more accurate and complete. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Cutters and Boats 

The USCG did not accurately bill the responsible parties for 

indirect cutter and boat costs. The current cost recovery process is 

inadequate because it relies on FOSC representatives to fill out 

forms for reporting recoverable hours without the aid of the 

USCG’s cutter and boat systems of record for documenting these 

hours. Based on our analysis— 

The USCG did not bill the responsible parties for as much 

as $191.0 million in indirect cutter costs. 

The USCG did not bill the responsible parties for 

$1.9 million of boat costs. 

Cutter Costs 

The USCG did not initially bill the responsible parties by as much 

as $242.1 million for cutter costs through August 31, 2010, 

because of internal control weaknesses in its cost capturing 

process. The following issues contributed to the internal control 

weaknesses: 

Unwritten business practices4

F were used to determine if 

specific categories of cutter hours (e.g., in-port, stand-by, 

certain missions, decontamination) are recoverable, 

The processes for verifying information submitted on CG5136 forms were inadequate, and 

No historical record of the documentation was used to 

generate each individual bill. 

The Abstract of Operations (AOPS) database was the official 

system of record for cutter mission hours during this oil spill.5

F We 

compared data in AOPS with NPFC’s CG-5136 form information 

submitted by the FOSC and determined that the AOPS database 

contains a more accurate record of missions. However, the FOSC 

is not required to use these data to fill out CG-5136 forms. The 

NPFC used unwritten business practices to determine recoverable 

costs, and did not bill for missions recorded in the cutters’ 

navigation logs that it determined were not related to oil spill 

activities. The following are examples of types of cutter hours not 

considered recoverable by the NPFC: 

3

4

4

 The USCG reported that these decisions were based on established yet unwritten practices and guidance 


that have been in place for more than 11,000 previous oil spills. We did not review the practices in place
 

during previous oil spills; therefore, we are unable to validate this statement. 
 5

 The USCG is currently transitioning its system of record for its boats and cutters from AOPS to ALMIS. 


AOPS will remain the official system of record until the transition is complete.
 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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In-port hours 

Standby hours 

Decontamination hours 

Transit hours out of the operations area 

According to the USCG, direct decontamination costs were billed 

to the responsible parties, but the in-port hours spent by the cutters 

and boats in decontamination were not. By excluding these 

categories of cutter hours, the USCG may not have billed the 

responsible parties for all of its indirect costs. 

For example, according to the USCG, the cutter Dolphin, which is 

home-ported in Miami Beach, Florida, was assigned to the oil spill 

response. Its duties involved patrolling closed fishing zones and 

serving as a radio relay for civilian vessels employed to skim oil. 

The NPFC, based on the Dolphin’s logs,5F

6

 determined that none of 

the 659.5 hours accrued while it was assigned to the oil spill were 

recoverable, despite the cutter’s employment for oil spill response. 

These logs did not specifically mention Deepwater Horizon 

missions, but these missions were coded in AOPS for the oil spill. 

Additionally, the Commanding Officer of the cutter said that these 

missions were in support of oil spill response during this period. 

This resulted in $1.7 million not being billed to the responsible 

parties for the Dolphin’s oil spill-related missions. 

As a second example, the Oil Pollution Act mandated that USCG 

buoy tenders be outfitted with an onboard spill recovery system. 

Buoy tenders skimmed oil in this spill, but the NPFC did not 

consider their in-port time recoverable despite the need to return to 

port to offload skimmed oil. The NPFC did not bill the responsible 

parties for $94.6 million for in-port hours, decontamination, and 

transit hours from the oil spill for these cutters. 

Source: USCG. Left – A USCG crewmember monitors a hose transporting an 

oil-and-water mix from the Spilled Oil Recovery System to a 4,200-gallon tank 

onboard the USCG Cutter Juniper on June 11, 2010. 

6

 Cutter logs (CG-4380A forms) record the cutter’s movements and actions during each 24-hour period. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Right – Crewmembers aboard the USCG Cutter Juniper deploy the Spilled Oil 

Recovery System pump from the buoy deck into the boom area where oil is 

collected and contained on June 11, 2010. 

Another example involved the cutter Venturous serving as an 


offshore response coordinator for vessels and aircraft during the oil 


spill response. Table 3 compares the cutter’s recorded hours, 


including—
 

Hours recorded by the FOSC on the cutter’s CG-5136 


forms,
 

Hours credited to oil spill operations by the NPFC, 


Hours recorded in AOPS with the oil spill code, and 


Hours recorded in AOPS using NPFC’s exclusion of types 


of activities as discussed above. 


Table 3. Cutter Venturous Hours from FOSC, NPFC, and AOPS 

Hours on Hours from Hours in AOPS Hours in AOPS 

the NPFC with Operations Using NPFC 

FOSC Assessment of Code Unwritten 

Cutter CG-5136 Navigation Logs “DWHorizn” Business Practices 

Venturous 922 706 875 725 

USCG personnel said that when in port, the Venturous maintained 

its duties as the offshore coordinator of the response as well as 

radio guard duties for USCG assets on the surface or in the air. 

The NPFC did not consider in-port hours recoverable, resulting in 

215.7 hours being excluded from the bill at a cost of $1.3 million. 

Source: USCG. An oily sheen on the surface of the water distorts the 

reflection cast by the hull of the USCG Cutter Resolute on July 9, 2010. The 

Resolute, home-ported in St. Petersburg, Florida, served as a search and rescue 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Cutter 

Length 

in Feet 

Hourly 

Rate 

Hours 

Billed by 

the NPFC 

Amount Billed 

to Responsible 

Parties 

Hours in 

AOPS 

Amount Not 

Billed to 

Responsible 

Parties * 

87 $2,577 5,671 $14,612,879 25,381 $50,794,448 

110 $3,452 42 $143,258 1,196 $3,985,334 

140 $7,257 703 $5,099,857 2,783 $15,098,769 

160 $4,243 465 $1,970,874 404 -$256,617 

175 $6,475 2,004 $12,972,663 5,181 $20,573,536 

210 $5,808 2,364 $13,727,208 3,166 $4,660,688 

225 $8,820 7,239 $63,850,185 17,970 $94,641,687 

270 $10,305 280 $2,880,248 428 $1,531,838 

Total $115,257,172 $191,029,683 

*Amount Not Billed = (Hours in AOPS – Hours in NPFC) x Hourly Rate 

 

guard to help support and protect people and ships involved in the Deepwater 

Horizon response efforts. 

On March 10, 2011, the USCG billed an additional $51 million in 

cutter costs incurred through August 31, 2010. According to the 

USCG, this bill was reconciled using cutter logs and AOPS. We 

did not audit the supporting documentation the USCG used to 

complete this reconciliation. 

Table 4 summarizes the cutter mission hours billed to the 

responsible parties using the NPFC’s unwritten business practices. 

It also shows Deepwater Horizon-related mission hours as 

recorded in AOPS (including the hours that the NPFC excludes) 

and the amount not billed to the responsible parties for these hours. 

Table 4 includes all costs incurred through August 31, 2010.6F

7 

Table 4. Cutter Mission Hours Billed Through August 31, 2010 

Boat Costs 

The USCG did not bill the responsible parties for $1.9 million in 

recoverable boat costs. The unbilled amount was for boat hours 

that were not captured on any CG-5136 forms submitted by the 

FOSC but were captured in ALMIS. ALMIS was the official 

system of record for boat mission hours with the exception of boats 

assigned to the Deployable Operations Group (which were 

recorded in AOPS). The USCG accurately billed the responsible 

parties for $3.8 million for the Deployable Operations Group’s 

boats through August 31, 2010. 

7

 On March 10, 2010, the USCG billed an additional $51 million in cutter costs incurred between April 20 

and August 31, 2010. We adjusted table 4 to reflect the additional amount billed. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Total Costs from Total Costs 

FOSC CG-5136 from NPFC Amount Billed to 

 Records Records Responsible Parties 

Equipment $5,121,372 $5,875,623 $4,688,952 

Vehicles $33,268 $39,119 $34,131 

Totals $5,154,640 $5,914,742 $4,723,083 

 

Equipment and Vehicles 

The USCG does not have adequate records to substantiate 

$4.7 million of equipment and vehicle costs billed to the 

responsible parties through August 31, 2010. The USCG does not 

have adequate internal control procedures in place to ensure that 

documentation is accurate and complete. Internal control 

weaknesses resulted in— 

Inconsistencies between the multiple sources of 

information that feed into the bill, 

Multiple versions of submitted CG-5136 forms with 

different cost information, 

Calculation errors not identified and corrected in CG-5136 

forms, and 

No record of the documentation used to generate each 

individual bill. 

The NPFC cannot validate the accuracy of the CG-5136 forms. It 

does not require supporting documentation, such as a CG-213 

Resource Request form, to be submitted with these forms. There is 

no official system of record for capturing this information. Table 5 

summarizes differences between vehicle and equipment costs on 

CG-5136 forms from the FOSC, NPFC records, and the bills. 

Table 5. Vehicle and Equipment Cost Discrepancies 

Additionally, hazardous waste cleanup equipment used in this spill 

was not billed to the responsible parties because there were no 

published hourly rates prior to the spill. Because there was no 

hourly rate, the USCG did not track the use of this oil spill 

equipment and therefore will not be able to quantify these costs. 

The USCG is working to establish hourly rates for this equipment 

so its use can be tracked and the cost recovered in future oil spills. 

Personnel 

The USCG does not have adequate records to substantiate 

$3.0 million of the $94.2 million in personnel costs billed to the 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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responsible parties through August 31, 2010. The USCG does not 

have internal control procedures in place to ensure that all 

documentation is accurate and complete. For example, based on 

the results of our statistical sample, $33.9 million (36%) of the 

$94.2 million in personnel costs may be incorrectly calculated. 

The USCG has also not yet billed the responsible parties for USCG 

civilian overtime costs (approximately $330,000). Civilian 

personnel costs were billed using the standard hourly rate, which 

does not include overtime costs. The USCG is in the process of 

billing these costs. The following paragraphs discuss three 

examples of deficiencies that led to inadequate capturing of 

personnel costs. 

First, the USCG tracks personnel costs for oil spills on a standard 

form but decided to rely on a pass card system owned by BP to 

track personnel hours for USCG personnel at the Unified 

Command and Incident Command Posts due to the volume of 

personnel involved in this spill. The USCG did not audit this 

system for accuracy and relied on BP to provide personnel hour 

data from this system for billing to the responsible parties. For 

example, a USCG Time Unit Leader in New Orleans noticed that 

the entire USCG Finance Section was missing from a BP daily 

report of USCG personnel. This error might not have been noticed 

if the missing information had been from another response section. 

Had the USCG conducted regular audits of the pass card system’s 

data, it might have been able to determine whether the system was 

accurate and complete. 

Second, the USCG did not accurately record personnel costs on the 

CG-5136 forms for billing purposes. The USCG selected the 

wrong pay grade 129 times (36% of our sample), resulting in 

inaccurate personnel costs being recorded. The USCG does not 

use the Employee Identification Number of each USCG employee 

to record the information on the CG-5136 forms. Use of the 

Employee Identification Number would allow the USCG to 

distinguish between USCG personnel with the same first and last 

name deployed to oil spills. 

Finally, the USCG did not have a complete list of all USCG 

military and civilian personnel who mobilized as individuals to the 

oil spill. The USCG developed the Mobilization Readiness 

Tracking Tool from lessons learned in Hurricane Katrina.7F

8 

According to the USCG, this tool was used to request and deploy 

8 Observations on the Preparation, Response, and Recovery Missions Related to Hurricane Katrina, 

Government Accountability Office (GAO) 06-903 (July 2006), p. 42 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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approximately 80% of personnel for the oil spill response. 

However, the USCG was not required to use this tool prior to April 

2011. In April 2011, the USCG issued policy that designates the 

Mobilization Readiness Tracking Tool as its “Human Resource 

Information System for requesting, sourcing, and tracking 

personnel in support of contingency and surge operations.” It is 

now required to use this tool “upon the start of a contingency”. 

Use of the system in future oil spills will allow the USCG to track 

and account for personnel costs more accurately. 

Standard Reimbursable Rates for Indirect Costs 

The USCG’s Standard Reimbursable Rate Instruction contains standard 

hourly rates for computing reimbursable costs for USCG equipment, 

assets, and personnel. This instruction includes the indirect hourly rates 

used to bill the responsible parties. 

The USCG’s instruction, in place at the time of the oil spill, had not been 

updated as scheduled. The instruction should have been published in early 

2010 but was not published until February 28, 2011. According to the 

USCG, this instruction is updated every 2 years, or sooner9

8F if necessary.

The instruction was not updated in 2010 because the USCG implemented 

advanced activity-based costing software and realigned its contract 

support for the standard reimbursable rate process. The USCG said that it 

would continue to modify selected standard rates based on the results of 

this audit. 

The rates in the instruction are valid only from the date of publication until 

a new instruction is published. Therefore, the USCG cannot retroactively 

bill the responsible parties using the current rates. Table 6 compares the 

2008 and current rates for indirect costs through August 31, 2010, reflecting 

our estimates based on the best available information during this audit.9F

10 

9 Office of Management and Budget Circular Number A-25 (Revised), July 8, 1993. 
 10 The USCG updated its current standard reimbursable rates on May 17, 2011; these totals reflect the 


updates. 


United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Table 6. Comparison of Standard Reimbursable Rates ($ millions) 

Indirect Cost Totals Using 2008 Rates Totals Using Current Rates Difference 

Aircraft $45.861 $51.52 $5.66 

Cutters As much as $306.292 As much as $330.94 $24.65 

Boats $5.803 $6.24 $0.44 

Vehicles $0.034 $0.04 $0.01 

Equipment $4.694 $4.91 $0.22 

Personnel $91.845 $99.58 $7.74 

Total As much as $38.72 

1. ALMIS data for Deepwater Horizon coded flights, excluding search and rescue missions, for 

April 21, 22, and 23. 

2. AOPS data for Deepwater Horizon related missions, including missions that NPFC excluded 

from bills 1–10. 

3. ALMIS data for Deepwater Horizon coded missions and NPFC summary spreadsheet for boats. 

4. Bill 8 was issued on November 18, 2010. We used updated cost information on this bill for 

April 20 through August 31, 2010. 

5. NPFC CG-5136 data. 

The USCG has adequate controls in place to ensure that its standard 

reimbursable rates include all relevant cost components for military and 

civilian personnel, aircraft, cutters, and boats. For example, the military 

personnel rate includes base pay and allowances, retirement, and health 

care benefits. 

For vehicle reimbursements, the USCG uses standard vehicle rates 

established by the General Services Administration. The USCG provided 

a link to the General Services Administration’s 2008 vehicle rates in its 

Standard Reimbursable Rate Instruction for 2008. This link expired in 

2010, and the USCG did not include guidance to use the current year’s 

rates. As a result, the USCG did not bill the responsible parties using 

2010 rates. We notified the USCG about the expired link, and an active 

link is now included in its current instruction, as well as guidance to use 

the relevant year’s General Services Administration vehicle rates. 

Auxiliary 

The USCG provides oversight and funding to the USCG Auxiliary, a 

volunteer organization of more than 30,000 personnel who assist the USCG 

in carrying out its missions. The USCG billed direct Auxiliary costs for 

travel expenditures and air and surface patrols to the responsible parties. 

However, because the USCG Auxiliary is a volunteer organization, the 

USCG did not incur any costs for auxiliary personnel efforts. We estimated 

that Auxiliary personnel efforts during this oil spill were valued at 

$370,00011

F10 through August 31, 2010. 

11 According to the USCG, an Auxiliary member’s hourly rate is valued at $19.92 (equivalent to GS-09, 

Step 1). 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

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Conclusion 

The USCG accurately billed the responsible parties for all direct costs 

related to this oil spill but did not accurately bill the responsible parties for 

all indirect costs related to this oil spill. The USCG does not have 

adequate policies, procedures, and internal controls to ensure that— 

Indirect costs are verified using USCG official systems of record 

(AOPS, ALMIS, Mobilization Readiness Tracking Tool), and 

Documents are submitted with correct hourly rates, correct types of 

assets (e.g., aircraft, boats, cutters), and correct employee names. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

During the Deepwater Horizon oil spill, Auxiliary members performed 

duties at many locations, including— 

Incident command posts and emergency operations centers, 

Vessel decontamination sites, 

Equipment and personnel staging areas,
 

Safety zone enforcement, 


Vessel inspections for civilian skimming vessels, and 


Public affairs liaisons. 


Source: USCG Auxiliary. A USCG 

Auxiliary member conducts a vessel safety 

check for a boat on standby for opportunity 

work during the oil spill. 

Travel costs for USCG Auxiliary members were billed to the responsible 

parties because the NPFC considers auxiliaries’ orders a recoverable 

removal cost. Auxiliary air and surface patrols costs initially were not 

billed to the responsible parties because they could not be coded as 

Deepwater Horizon in the patrol system of record. According to the 

USCG, this issue was resolved in August 2010, and the patrol costs are 

now being billed to the responsible parties. 

Page 15 
The USCG’s delay in issuance of its Standard Reimbursable Rates 

instruction prevented it from billing the responsible parties for as much as 

$38.7 million in indirect costs. The USCG did not bill the responsible 

parties for as much as $193.7 million because of weak internal controls, 

policies, and procedures. Table 7 summarizes these costs. 

Table 7. Unbilled Indirect Costs Summary 

Costs Not Billed to Responsible Parties ($ millions) 

Aircraft $0.8 

Boats $1.9 

Costs Excluded by NPFC Policies and Processes 

Cutters As much as $191.0 

Costs Not Billed Because of Delay in Standard Reimbursable Rates 

Standard Rates Difference As much as $38.7 

Total As much as $232.4 

Based on information we shared during the course of the audit, the USCG 

immediately started taking corrective action on issues identified in this 

report. The USCG is reconciling its records with AOPS and ALMIS 

information. As a result, these additional amounts have been billed for 

costs incurred through August 31, 2010, and are included in the costs 

discussed throughout this report: 

Aircraft – $10.1 million 


Cutters – $51.0 million 


According to the USCG, it could take up to a decade to issue the final bill 

to the responsible parties. The USCG will continue to identify and capture 

costs as well as issue bills to the responsible parties for all recoverable 

costs. 

Recommendations 

We recommend that the Assistant Commandant for Resources and 

Chief Financial Officer of the United States Coast Guard: 

Recommendation #1: Direct the NPFC to reconcile the bills sent 

to the responsible parties with the amounts identified in this report 

as potentially incorrect or not billed, and revise the bills as 

appropriate. 

Recommendation #2: Revise existing policies, procedures, and 

internal controls to require the FOSC to verify collected indirect 

cost information using the USCG’s official systems of record for 

aircraft, boat, and cutter hours and to require the NPFC to verify 

submitted FOSC information using these systems during a spill 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 16 
classified as a Spill of National Significance (SONS) or when a 

Unified Area Command (UAC) is established. 

Recommendation #3: Implement an appropriate system to collect 

data for indirect costs, including— 

Internal controls that ensure that data are entered and 

summed correctly at the FOSC level, 

Segregation of duties between preparation and approval of 

manual entries or adjustments to indirect cost data, 

Verification of all manual entries or adjustments for 

validity and accuracy, 

A record of changes that documents and justifies any 

adjustments to information after it is recorded and 

submitted to the NPFC, 

Submission of CG-213 Resource Request forms for 

equipment and vehicles during a spill classified as a SONS 

or when a UAC is established, and 

A field for the Employee Identification Number for USCG 

personnel. 

Management Comments and OIG Analysis 

Management Comments to Recommendation #1 

Concur. The period under review ended on August 31, 2010, but 

the FOSC response is ongoing. The NPFC will continue to review, 

update, reconcile, and bill to the responsible parties federal oil 

removal costs resulting from the Deepwater Horizon incident using 

additional financial information provided by the responding and 

supporting agencies. 

OIG Analysis 

We consider the USCG’s proposed corrective actions to be 

responsive to the recommendation. However, the recommendation 

will remain open and unresolved until the USCG provides 

evidence that it has reconciled its bills to the responsible parties 

with appropriate supporting documentation. 

Management’s Comments to Recommendation #2 

Concur. The USCG concurs with this recommendation for spills 

that involve a significant amount of indirect costs, defined as a 

SONS or a spill in which a UAC is established. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 17 
The NPFC relies on the FOSC’s certification of costs and 

resources used based on the CG-5136 collection system (as 

directed by the NPFC User Resource Guide), which the auditors 

noted is a USCG system of record. During the vast majority of 

spills, only a small number of USCG assets generating indirect 

costs are used. These responses are efficiently and effectively 

documented using existing procedures, including the CG-5136. In 

cases where a UAC is required and established, additional 

resources are usually mobilized to augment the FOSC’s local 

response capacity. Incidents that are designated as a SONS or that 

require a UAC frequently have subordinate Incident Command 

Posts and are inherently more complex organizationally. We agree 

that indirect costs generated under an incident that requires a UAC 

should be reconciled against other USCG systems of record, such 

as the ALMIS and AOPS, when those systems can provide discrete 

spill-specific data. USCG policies and procedures will be updated 

to reflect this requirement. 

OIG Analysis 

We consider the USCG’s proposed corrective actions to be 

responsive to the recommendation. However, the recommendation 

will remain open and unresolved until the USCG provides us with 

final revised policies and procedures that adequately address our 

recommendation. 

Management’s Comments to Recommendation #3 

Concur. FOSC certification of indirect costs is critical to resource 

tracking and supports cost recovery where responsible parties can 

be identified. The USCG concurs with the recommendations to 

implement an appropriate system to collect data for indirect costs 

that includes the following: 

Internal controls that ensure that data are entered and 

summed correctly at the FOSC level, 

Segregation of duties between preparation and approval of 

manual entries or adjustments to indirect cost data, 

Verification of all manual entries or adjustments for 

validity and accuracy, 

A record of changes that documents and justifies any 

adjustments to information after it is recorded and 

submitted to the NPFC, 

Submission of CG-213 Resource Request forms for 

equipment and vehicles, and 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 18 
A field for the Employee Identification Number for USCG 

personnel. 

NPFC will amend internal controls for all adjustments to manual 

entry transactions. This will include a requirement for improved 

documentation of any adjustments and notations in the file during 

the reconciliation process. NPFC has added the Employee 

Identification Number data field to all CG-5136 spreadsheets. 

For spills that involve a significant amount of additional assets 

being brought in to assist the FOSC, as defined as any SONS or a 

spill during which a UAC is established, the USCG agreed with the 

OIG recommendation to formally use the ICS-213RR CG 

Resource Request Form. USCG policies and procedures will be 

updated to reflect this requirement. 

OIG Analysis 

We consider the USCG’s proposed corrective actions to be 

responsive to the recommendation. However, the recommendation 

will remain open and unresolved until the USCG provides the 

following: 

A revised CG-5136 form that includes a field for the 

Employee Identification Number for USCG personnel. 

Revised policies and procedures indicating that for a spill 

defined as a SONS or when a UAC is established, the 

FOSC must submit the ICS-213RR CG Resource Request 

Form for equipment and vehicle costs to the NPFC with the 

CG-5136 form. 

Revised policies and procedures that include— 

Internal controls that ensure that data are entered and 

summed correctly at the FOSC level, 

Segregation of duties between preparation and approval 

of manual entries or adjustments to indirect cost data, 

Verification of all manual entries or adjustments for 

validity and accuracy, and 

A record of changes that documents and justifies any 

adjustments to information after it is recorded and 

submitted to the NPFC. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 19 
Appendix A 

Purpose, Scope, and Methodology 

This report provides the results of our work to determine whether 

the USCG has adequate policies, procedures, and internal controls to 

accurately capture all direct and indirect costs associated with the 

Deepwater Horizon oil spill from April 20 through August 31, 2010. 

We tested the USCG’s direct and indirect cost-capturing processes 

for accuracy and completeness for costs incurred through 

August 31, 2010. Bills 1 through 7 generally covered the audit’s 

scope; however, the NPFC has begun to reconcile the bills with 

supporting documentation. We used this information, included in 

bills 8–11, to update totals billed to the responsible parties. 

Accuracy was determined by analyzing the documents and data 

that the USCG used to bill the responsible parties. The bills were 

accurate if the totals in the documents and data were equal to the 

amounts in the bills to the responsible parties through September 7, 

2010 (date of bill that included August 31, 2010). Completeness 

was determined by statistically sampling the relevant population of 

all non-Deepwater Horizon coded transactions (for example, 

USCG contracts issued is one population) during the scope of the 

audit. The bills were considered complete if miscoded transactions 

were not identified and were not considered material if they were 

less than 1% of the sample. 

We conducted statistical sampling using a 95% confidence interval 

and a 5% sampling error. Samples were drawn for each population 

using IDEA software, except for travel vouchers. Because of the 

limitations of the travel voucher system, the USCG extracted 

random samples based on information we provided. Appendix C 

contains the testing results for accuracy and completeness for 

direct and indirect costs for the Deepwater Horizon oil spill 

through August 31, 2010. 

We conducted the following site visits: 

Aviation Logistics Command – Elizabeth City, North 

Carolina 

National Pollution Funds Center – Washington, DC 

Shore Infrastructure Logistics Center – Norfolk, Virginia 

Unified Command for the Deepwater Horizon oil spill – 

New Orleans, Louisiana 

USCG Financial Center – Chesapeake, Virginia 

USCG Headquarters – Washington, DC 

USCG Personnel and Pay Center – Topeka, Kansas 

USCG Telecommunication and Information Systems – 

Alexandria, Virginia 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 20 
We assessed compliance with federal and USCG policies, 

procedures, and internal controls for capturing costs for recovery 

from an oil spill’s responsible party, including— 

The Clean Water Act, 


The National Contingency Plan, 


The Oil Pollution Act of 1990, 


Standard Reimbursable Rate Instruction, and 


NPFC User Reference Guide. 


We conducted this performance audit between July 2010 and May 

2011 pursuant to the Inspector General Act of 1978, as amended, 

and according to generally accepted government auditing 

standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based upon our 

audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based upon our 

audit objectives. 

We would like to thank the USCG for the cooperation and 

courtesies extended to our staff during this review. 

Appendix A 

Purpose, Scope, and Methodology 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 21 
 

Appendix B 

Management Comments to the Draft Report 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 22 
WolTED STATES COAST GUARD 

STATDfEXr 0:"1" DEPARTML,\'T or H01II.1A"D SECURIn ' ornCE or 

V,SPECTOR GL'T.RA.L REPORT 

WolTED STATf.S COAST GUARD'S [\O'TERI~AL CO:''TROLS A.'\l) COST 

CAPTURL'\'G fOR TIlE DEEPWATER HOR1W:S OIL SPILL (1II-I S2-AUD-USCG) 

L''TRODUcnO:S 

Thaok you fur Ibe oppoIIIIIIityto "'~ md...,.,...- <III Doponmrnt ofHomdmd s.cmiIy 

(DHS) Offi« ofinsp<ctm Gmon)' , (lOG', ) Ilnft Rq>cn lll-m_AUD-USCG 0D!itI0d, "United 

S,., .. Coast Guard', Internal CootrnIs.IId Cos! CIOpIIIrinf; fur Ibe o..pw_ Horimn Oil Spill" 

'l"bt United Sa,.,. Cont Guard (USCG).~ Ibe .!T0rtI oflbe OIG to docummt <mImI 

polici<s, prnc:.wre. mol m..m.l COII!roIs to ocanteIy idmtify md bill dir<ct com f<ll this oil 

spill 'l"bt OIG "'~ '"'w t 7lM wonh ofUSCGpurclw<s. COII!Ial"b, tm,.] ordon, r= .. 

_ mol _ dir<ct npooditur<s from Ibe Fuod mol ,",w t323M in im<ng<ll<}"~ 

... ith 126 di_ portn<r "Y"";'" mmywith ....... 1 ao.:.,., ...-..... In both >reulbe 

OIG f<llllld that Ibe USCG 1m ooi<quat< policioo. procedure<, mil m..m.J 00Dtrn1s to O<CIDt<ly 

idontily.IId bill costs fur this."..., 

'l"bt ~t<d 

=-

m. oflbe spilL~, did <halImg< uistin,o; JI1<I«SS<" [(If c~ 

iodira1 'l"bt o..pw.,.,-Horimn Oil Spill """in< ~ in Ibe mm.y oflJlill Inpom< 

ill its _ magn.: ..... ;., tbo lI<iy. oftbo spill th<n W<R moJ< , ..... 1.< iIIvoh'M thm " .... usod 

ill tbo D-Doy lmo:Iinp" Nonmndy. Simihrly, withiD . fol\- ,,-..n tbo Unifi<d Command had 

scolod to on orgoniw.., C<IDlJ>UIbi< in m. to MX:mooI\ USA. Hntorically, tbo USCG 1m 

iD<urr<d lou thon S2M p<r j_ in USCG iodira1 com fm .U spills which """,U lOO p<ryn> 

ill 1IWIlbtr. AI of3[ MJy 2011 !be oo!l'inl: o..pw_ Horimn iDc:idtm.torr bad iDnmtd 

iodira1 costs oU3UM, Il7 limos that hislori<.nnual " .... ~ 

'l"bt of6cial USCG HCtI<d fur.u iodira1 ro<I octn;.y io tbo CG_ll36 doily fOJDl "'" tbo NPFC 

UO<[ ~ Guici< (URG) 'l"bt URG io . __ to tbo Mum. SaC;,ty M..w, Volumo 

IX, d=ribiJql;""" to obtain. """"" documml. mol J<CO\'<I pollitioo '""""'"" Iimds. 'l"bt ooJy 

""""" who CUI op<IId OSLTF luDik fur , ... 0 .... 1 octn;ti<s is tbo Fodonl On X-Comdinatm 

(fOSC) mol tbo OO_l136 it, __ thinp, tbo rose', =tificatioo. oftbo IIDOUII! of_ 

• porticuW-lIIIit or iDdivilbol wu dovokd spKif>cally to , .... .",al.cti,-itieo. Odoor USCG 

oysI ..... of=oro. mdt u Ibe As .. t ~1Itico MIIl&-' lnfOJm>tioo. Sys-. (ALMIS) md 

Abstn<1 ofOpontiom (AOps).,. US<d to ob...-t USCG mUllioa rni,;.y. 'l"bt JlIDl!"m mol 

="' misrioD boun a..;~ to be coptmM by AOPS mol ALWS .... do _ -mJy~ to bl< a- W.,.,- A<1 r<mO'."[ "",ts. It is iIq>ortmt to ~y. tbat Ibe OO_lU6.".. . __ lin< thm AIMIS md AOPS. AlldIS mol AOPS.,. _IOIIINS of 

infOJDlltioo. tbat obould be usod ,,'boci 1JIIIIDIIIist< to ,'Ih<b1. mol J<CODcilo tbo infonnation 

CODtaiD<d in OO_l136o, .IId CUrI<IIl policy ~ that rose, iDcble official ""oro. mol ~ 

fur USCG =<lIlfCft ill Ibe rose', fi",,,,cial sumnwy.-.port. GmonIIy, Ibe stmdml fur 

<ha~ iodira1 costs io drn .... by ho ... __ """w. was 'I-' "" actual r<mO'."[ octn;.;... 

eun.m writt<n policy in tbo URG <1000 _ disc_ dofinitioIII of. """".,.[ boor; 

mbor, iI _ out mWtipI< <D~ of how tbo Fuod m.:y. II< usod by .. rose fur ruDO\-.J 

 

Appendix B 

Management Comments to the Draft Report 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 23 
octn;brs. This " imm<I<d to "",,;do!"icb""" witbo", lmitin,I; tbt scope oftbt FOSC' , 

wtbority in ~. =pom<. Tho Cont Gum! wi:! "';.,:, thio ~ ODd tbt I=om 

J 

u._toFOSCs. 

.. , ,,.,j fimn tbt o.q,w.,., Horiz.on IDcidom and "' . ... II<C=>ry ~ to tbt ~ 

Bas<d 00 ntablisbrd y" uowritten p:nctice and~" tbt Coast Gum! comioi!n """,..,.bIe 

boon .. _ boon op<nt 0D--SCme ... ~ged in """"..:] opomi""" \\Di1< tbt o.q,w.,., 

lloriDoo hwoMkm .<Dr! iuvi .. """ '" 'i"".tiooo thio polKy. rt boo 1><=. tb< .... blUh<d p<<<ti<< roc 

0\..,- 11.000 pw.""" oil spills; tbrr.ror. tbt t-1'FC did m1 bill roc ID-J""1 ~ swdby boun. 

in_pon boon op<DI in ~ and tnmit boon Th<R ... rNS<ID< for thio policy and 

hntorical ~ ~ tb< .mdard bourly .... fOJ • = ..... is.r.~ by dividio,o; tbt 

full IIIDlIl cost of that ..... by tho pIam><d op<I>tioml l"'Ul'" boon of that ..... (lIDdonny 

boon). ~!be cOS! ofiD-port _ trainiII~ and ,'ftSd rnointeo.""" yu-d p<riooh (indudio,o; 

swdby OJ -'mioatioD) is fOe tmm """ tbo _ ro .. p<f IIBIIonvay hom porlmnlDj! 

""""..:] op<Htions. With Jnp<ct to traoYt _ USCG , ..... h and.innfI im.,,1wd in. 

"""""" lin .. bisrorically """'" from tbt 51"'" ~ locale .. tbo spill Those.....,....,. 

" .... IW'cally _!be rommmd and <OD!roI. oftbt FOSC orw..-e ...... opemiD,o; in. tho 

~~ arN that could reodi/y shift to ,,'<lIl fo<!be FOSC. This ,,!be finI mojO< oil spill 

"""""" Wrio,o; w!Deh USCG , ..... 1> ODd aircafllrami!<d SIlCh km,o; distan<n. Indudio,o;""" 

km,o; tnosiu .. """"..:] com JIO'<S umq... ~ that IIOI5I be <..-.fully COIIJIidoIM-. 

maI:~ ~ policy ~ Cut!<.-. in.lramit rnnain ..... ibble to 0X<Qtte otbor 

~ SIlCh .. s..ru. and It....... (SAR) and Maritime Law Eof"""""", (MLE), while m 

route ODd fury em accomplillh somo ninin,o; and routir>omaint"""",, duriII~ tbt traoYt that 

would lin .. O!bem;", beeci <1000 at UlOIbor tir:oo. 0... oftbo cutten that InMited fimn <Ms"" 

to tbo Gulflasl ...",.,... ""as _ mWiOll capable 00 uriwl em. to. rudder CHIIIlty .. The>< 

<D~ hi~yn some oftbt ~ In ....... 1lIining what boon _ of_ boon 00_ 

""""" 0CIp~ in """"..:] op«atiOllS may be .ppropriat~ biII<d to. InJI<IIWble pony. Tho 

a..<rminItiOll ofwh<tbeJ an ..... bom <qUIt .. to. ,"""""I bom is. fOe"",1 a..<rminItioa that 

r<qIIires IDIIysis .Dd di=<ti.oo 

Tho 

~ 

USCG C<U"lIn with tbo iot ... oftbo OIG' , ="""""""'ticm to impRr. .. !be accuncy and 

of!be documon!atioo for indirHt costs. Artiom ha,.., beeci tak ... or ... t"IIIT<IIIIy 

in prn<= to addr=!bose ~ In .... ~ octiom to addr-<u ...... 

=~ticm. tbo USCG must """" furw.,d a.Jib<Dtely ODd _oily to......,., that 

OIIJ' policy.Dd process ~ InIIitio,o; fimn!be chalIe:!gn pr...med by thio uop"udmted 

... _ ... babmcod by what ..... wmbd for 1l.000+ 0IbeJ spills. Tho USCG """ ...... tho 

fuIlowiJql; 00DlIIl<D!> in =pom< 10 !be fmdin~ of tho ,.".,.,. 

REC01BIL..,n.U1 !lo~ A>..,l> USCG RESPO:;"SES 

Pog<!ofS 

 

Appendix B 

Management Comments to the Draft Report 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 24 
Appendix B 

Management Comments to the Draft Report 

.... poriod undor audit <Dd<d =!""'" 

"iD C<Uinoo to =i<w, ~ ""..rue. OIl A~" 31, 2010, .... FOSC is oo~_ NPFC mol bill to .... RnpoIWb\e l'anift, F«I<nl oil 

mno",] costJI InIIltio,o; from .... o.q,w. ... Horiz.on iocidoot, mio,o; .dditiooal rm.rial 

infOJIWltiOll f'W'idod by .... r<>p""din,o; .od ~ .-=iro_ 

USCG R<>po ... : n.. USCG C<U"Un "ith!his ~ ro. spills which im.,J"e 

sip>i6com _ ofiDdirect costs, d<fiD<d H. Spill ofN.n.oo.J S~..,. (SONS) 01 • spill 

in which. Uaifiod AIM Commmd (UAC) is _ blisb<d 

n.. NPFC ",]iro "" the FOSC', cenificoti.oo:> of """ mol JftOIIINS usod bu<d OIl the CG ~Il6 

collKti"" IIJ"IeII1 (H direct«! by .... NPf'C URG), which the .uditon _ is. USCG syst= 

of""ord. the ,_ majority of spills- on... 

._..:ty 

DmiIqI; just .-<r "'-0 c..td ~ ~ 

,..ro.lly dispatcb<d OIl OC_, quickly ......m~ the situatioo mol 1<'<JI"'di"~ "I'I'"'!'ria'" - <lilly • 

small,."w",,- of USCG ...... ~tio,o: u.wr..:t """ OJ<.....t, no... Inpom<> OJ< .r6cim!ly 

mol docummted mio,o;.mtio,o; ~ iD<ludio,o; .... 

,,-b<re. CG ~136_ In'- curs UAC is .. "bJjobod, .dditiooal .-..ourceo are ~ ~ in to -' .... FOSC', 

capacity. lDc:i_ r<qlDriD~. UAC ~ 1>0' .... __ lI>cidont Commmd Posts .M 

OJ< inh=ntly """" «>DIple>; OIpIIizationally_ W"Y"" that iDdirect costs ~t«! __ In 

iD<i.d<nl ~ _blishmon! of a UAC II< rK<ID<il<d ~ otheJ USCG 'J""'IWI ofHCOCd 

ouch .. the ALMIS mol AOPS ,,-bocIthose 'J""'IWI CHI prm_ dix_IjliD-<p<cifi< data 

Cont Gum! polici .. ODd pr<>«du= will II< updated to ",flKt this ~ 

"""" 

RKG .. _..tatio.o: 1mpImng ... >p!lIOIlriJ!< tyJIem to roIIe<1 ""II fOJ ine! com that 

USCG ~ .. : n.. USCG 000l"III"I "ith the .b<r. .. ~ with <...,.,...... FOSC 

cenificoti.oo:> of iDdirect costs is aitical to "'""""" tIKl:iD,o; ODd rIIJIIIOIIlI cost rec<r."'Y wJ..re 

R"'I"""ible J'>nirs CK! II< id<mifi«l NPFC will amecwI iotemal cootrnh fOJ .U adjllSlmmlslo 

J:IlDIIIOl ..my tnIISacti"",,_ This will iDch>:I< • ~ fur imp-cwd documrntatioo of my 

odjustmomo.M IlOt>ti.om in the file durin~ the .-.ooD<iliatiao. p-oc .... 

Pag<30fS 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 25 
Pll" 4 0fS 

OIG Note: Page 5 of this document contained technical comments that were incorporated 

into the report, as appropriate. 

Appendix B 

Management Comments to the Draft Report 

USCG R<>po ... : Tho: USCG C<U"Un with !hi< ~ fOJ spills which ;",;oh." . 

sip>iCtcam """"'" of oilditi.ocW ...... bHI,o; ~ iD to ...... !he FOSC," d<:m..d .. any 

SO:.s or IJlill <IDrinf: which. UAC .. .... bIiWd ~!he , .... mljority of~ ooJy. 

smoIl ,."w",,- of.,.... lIe mod, oft ... ju" ono: or two 6dd =p<>B<Ion b<io,o; ,'ftbaDY di>potcb<d 

"" scm<, quiclIy......m,.;!he sitwotioto and ~ apprnpriat<:ly. Throo:...,.,.,..... or • 

• flici<ntly .M .tr..::,;.. .. ly documrnt<d usinf; e:mlinf; p:om:Iw ... iDcIIIdinf; !he 00_11 J 6. In 

--

those c .... wbrr<. UAC .. _bIioh<d. aclditioml =<lOfCn.." ~ ill to ~ !he 

FOSCo copocity __ ~. UAC ~ ba\ .. A>bordinate Jncia.nl Commmd 

Posts.M are inb<r<n!ly mon: C<lCIlJd<:>: orpDizati.oD>II. w •• u« tlII1 uso: of!he ICS-lllRR 

00 Resource ~ forms <bio,o;. SONS 01 ... iDcid<ot I«[Uiriojo; ntablishmrDt UAC 

should be fOJ1lll!ly .dopI:.... of. Col<! Guard potioiH md ~ lIill be upcbt<d ttl .-.110<1 this 

• \ fid d fur !be F rppIgyrr !dcmjfigtjllll T1mbn fOJ !!SCG pm FllIIlC! 

USCG ~ .. : Tho: USCGCOD<\IDw:idtthi ~OIL /O;PFC baoOililod .... 

F.mpIoy..: l<I<otificatioto N!lDlb<o- dltlli6I to all 00_5116 1JIffiI--

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 26 
Appendix C 

Testing Results 

Random statistical samples were drawn using IDEA software, a 95% Confidence 

Interval, and a 5% sampling error. 

Accuracy and Completeness – Direct Costs 

Transaction Type Population Sample Results 

Purchase Orders and 

Delivery Orders 

68 (Deepwater Horizon coded) 

4,516 (non-Deepwater Horizon) 

68 

354 

Bills 1–7 are accurate based on testing 

Bills 1–7 are complete based on testing 

Purchase Cards 1,735 (Deepwater Horizon coded) 

276,869 (non-Deepwater Horizon) 

1,735 

384 

Bills 1–7 are accurate based on testing 

Bills 1–7 are complete based on testing 

3 purchases (0.8%) may be 

recoverable 

Contracts 24 (Deepwater Horizon coded) 

2,989 (non-Deepwater Horizon) 

24 

340 

Bills 1–7 are accurate based on testing 

Bills 1–7 are complete based on testing 

Pollution Removal 

Funding Requests 

38 (Deepwater Horizon coded) 

0 (non-Deepwater Horizon) 

38 

0 

Bills 1–7 are accurate based on testing 

Bills 1–7 are complete based on testing 

Military Interdepartmental 

Purchase Requests 

64 (Deepwater Horizon coded) 

1,117 (non-Deepwater Horizon) 

64 

286 

Bills 1–7 are accurate based on testing 

Bills 1–7 are complete based on testing 

Travel Vouchers 17,879 (Deepwater Horizon coded) 

16,017 (non-Deepwater Horizon) 

17,879 

375 

Bills 1–7 are accurate based on testing 

Bills 1–7 are complete based on testing 

1 travel voucher (0.3%) may be 

recoverable 

Accuracy and Completeness – Indirect Costs 

Transaction 

Type 

Population Sample Results 

Aircraft 1,060 Missions (Deepwater Horizon coded) 

22,764 Missions (non-Deepwater Horizon) 

1,060 

378 

Bills 1–7 are not accurate based on testing 

Bills 1–7 are not complete based on testing 

Cutters 506 Missions (Deepwater Horizon coded) 

8,975 Missions (non-Deepwater Horizon) 

506 

368 

Bills 1–7 are not accurate based on testing 

Bills 1–7 are not complete based on testing 

Boats 304 Missions (Deepwater Horizon coded) 

51,414 Missions (non-Deepwater Horizon) 

304 

381 

Bills 1–7 are not accurate based on testing 

Bills 1–7 are not complete based on testing 

Equipment All CG-5136 forms received from the USCG for 

Deepwater Horizon 

Bills 1–7 are not accurate based on testing 

Bills 1–7 are not complete based on testing 

Vehicles All CG-5136 forms received from the USCG for 

Deepwater Horizon 

Bills 1–7 are not accurate based on testing 

Bills 1–7 may not be complete based on testing 

Personnel 6,368 deployments (Deepwater Horizon 

coded) 

362 Bills 1–7 are not accurate based on testing 

Bills 1–7 may not be complete based on testing 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill
 

Page 27
 
 

 

Appendix D 

Deepwater Horizon Oil Spill Responsible Parties 

BP Exploration and Production, Incorporated 

New Orleans, Louisiana 

BP Corporation North America, Incorporated 

Houston, Texas 

Anadarko E and P Company, Limited Partnership 

Houston, Texas 

Anadarko Petroleum Corporation 

Houston, Texas 

MOEX Offshore 2007, Limited Liability Corporation 

Houston, Texas 

Transocean Holdings, Incorporated 

Houston, Texas 

QBE Underwriting, Limited 

Lloyds Syndicate 1036 

New York, New York 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 28 
 

Indirect Costs Billed to Responsible Parties 

Bills Date of 

Bill Aviation Cutters and Boats Equipment Vehicles Personnel 

1 27-May $692,232.36 $0.00 $0.00 $0.00 $1,128,493.00 

2 2-Jun $0.00 $0.00 $0.00 $0.00 $0.00 

3 21-Jun $4,758,015.00 $3,520,020.00 $195,698.00 $0.00 $8,724,979.00 

4 13-Jul $13,014,387.20 $19,960,534.00 $1,339,498.00 $0.00 $20,279,293.30 

5 10-Aug $13,708,121.30 $34,836,255.70 $1,768,077.00 $2,667.33 $28,789,331.77 

6 7-Sep $1,879,430.40 $8,936,155.42 $1,385,679.00 $31,463.73 $24,135,761.74 

7 12-Oct $63,057.50 $878,348.40 $493,591.00 $23,032.21 $23,129,115.62 

8 18-Nov $0.00 $0.00 -$98,647.00 $28,603.40 $14,539,873.13 

9 11-Jan $982,518.40 $0.00 $0.00 $43,484.92 $9,774,378.85 

10 10-Mar $0.00 $52,604,496.00 $0.00 $44,249.10 $6,536,647.00 

11 10-May $10,264,332.40 $0.00 $0.00 $36,459.35 $4,617,700.91 

Subtotals $45,362,094.56 $120,735,809.52 $5,083,896.00 $209,960.04 $141,655,574.32 

TOTAL INDIRECT COSTS (Bills #1–11): $313,047,334.44 

 

Appendix E 

Summary of Billing Activity to Date 

Direct Costs Billed to Responsible Parties 

Bills Date of 

Bill Purchases Contracts Travel MIPRs and PRFAs12 

1 27-May $0.00 $0.00 $0.00 $0.00 

2 2-Jun $0.00 $0.00 $0.00 $69,090,958.57 

3 21-Jun $0.00 $0.00 $0.00 $34,236,836.27 

4 13-Jul $732,163.83 $149,180.72 $3,405,394.74 $40,780,907.55 

5 10-Aug $1,773,084.27 $3,146,398.10 $8,043,375.00 $75,829,183.80 

6 7-Sep $379,464.85 $3,853,432.69 $10,152,038.65 $77,696,901.12 

7 12-Oct $124,401.00 $3,121,446.81 $9,087,813.34 $25,701,240.83 

8 18-Nov $253,425.63 $5,444,741.22 $5,208,842.12 $0.00 

9 11-Jan $571,433.96 $9,965,415.83 $4,911,783.73 $0.00 

10 10-Mar $237,563.39 $442,483.23 $2,138,617.92 $0.00 

11 10-May $357,310.75 $514,924.66 $1,359,736.54 $0.00 

Subtotals $4,428,847.68 $26,638,023.26 $44,307,602.04 $323,336,028.14 

TOTAL DIRECT COSTS (Bills #1–11): $398,710,501.12 

Total Costs Billed to the Responsible Parties through May 10, 2011: 

$711,757,835.56 

12 A MIPR is a Military Interdepartmental Purchase Request. A PRFA is a Pollution Removal Funding 

Authorization. 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 29 
Appendix F 

Examples of Recoverable Removal Costs 

Auxiliarist orders 

Consumables or services specifically purchased during the response, such as sorbent supplies, incidentspecific vehicle and equipment lease or rentals 

Contract clerical services 

Contract documentation services 

Contract for capturing, cleaning, and emergency care for oiled animals, such as costs to capture, clean, 

temporarily care for, and release birds oiled by spill, or dispose of dead animals 

Contract for cleanup labor 

Contract for diving when necessary to control the source or spread of oil, salvage operations 

Contract for disposal 

Contract for temporary feeding for evacuees 

Contract for temporary lodging for evacuees 

Contractor costs such as contract cleanup expertise 

Costs of transporting and staging of required supplies and equipment 

Decontamination of oiled equipment 

Government equipment inventory use at standard cost, such as boom, skimmers, transfer systems, 

pumping systems, dracones, vapor analyzers, gas indicators, and protective gear 

Government or contract laboratory sample analysis, such as Coast Guard Marine Safety Lab services, 

at standard costs 

Government or leased communications systems, such as paging systems, cellular phones, and facsimile 

equipment, normally charged at standard rates plus any identifiable direct costs 

Government or leased facility use, such as office space at standard cost or mobile command post lease 

Government personnel assigned, such as scientific support, FOSC personnel, strike personnel, or legal 

support for administrative orders, at standard costs 

Government systems use, such as telecommunications systems or computer systems 

Government vehicles, boats, aircraft use at standard costs 

In special circumstances, contract for temporary docking of salvaged vessel 

Local and temporary duty travel, transportation, and any per diem 

Long distance telephone charges 

Overnight or express delivery services 

Purchase of equipment, such as boom, skimmers, transfer systems, pumping systems, dracones, vapor 

analyzers, gas indicators, and protective gear 

Purchase of nonexpendable equipment (generally those items, of value greater than $1,000, with useful 

life greater than 1 year) 

Purchase of water as alternative drinking water 

Rental or purchase of fencing, barricades, and security material 

Repair of damages caused by cleanup activities, such as damage to lawns by vehicles 

Replacement of excavated soils 

Replacement of oiled equipment and property that cannot be cleaned cost-effectively 

Replacement, repair, renovation, or cleaning of equipment to the extent that the damage is due to the 

specific response and not the result of improper maintenance, improper use of the equipment, or the 

actions of others unrelated to the removal 

Reservist orders 


Traffic control 


Warehousing or storage services, such as costs to store records and samples 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 30 
Appendix G 

Major Contributors to this Report 

Brooke Bebow, Coast Guard Division Director 

Lorinda Couch, Audit Manager 

Holly Snow, Auditor-in-Charge 

Priscilla Cast, Program Analyst 

Ebenezer Jackson, Program Analyst 

Tessa May-Fraser, Program Analyst 

Amy Nase, Program Analyst 

Vicky Phan, Program Analyst 

Eliece Pizarro, Auditor 

Nachama Rosen, Program Analyst 

Roger Thoet, Auditor 

Kendra Loper, Independent Referencer 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 31 
 

Appendix H 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

United States Coast Guard 

Audit Liaison 

United States Coast Guard’s Internal Controls and Cost Capturing for the Deepwater Horizon Oil Spill 

Page 32 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

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

misconduct relative to department programs or operations: 

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

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

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

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