Testimony 

Before the Subcommittee on Oceans, 

Fisheries, and Coast Guard, Committee on 

Commerce, Science, and Transportation, 

U.S. Senate

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 2:30 p.m. EDT 

Wednesday, April 7, 2004 COAST GUARD

Key Management and 

Budget Challenges for 

Fiscal Year 2005 and 

Beyond 

Statement of Margaret T. Wrightson, Director 

Homeland Security and Justice Issues 

GAO-04-636T 
www.gao.gov/cgi-bin/getrpt?GAO-04-636T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Margaret 

Wrightson at (415) 904-2200 or 

wrightsonm@gao.gov. 

Highlights of GAO-04-636T, a report to the 

Subcommittee on Oceans, Fisheries, and 

Coast Guard, Committee on Commerce, 

Science, and Transportation, U.S. Senate 

April 2004

COAST GUARD

Key Management and Budget Challenges 

for Fiscal Year 2004 and Beyond 

Resource usage for Coast Guard assets—its cutters, boats, and aircraft—

was up almost 40 percent from the pre-September 11th baseline. Homeland 

security programs, such as the ports, waterways, and coastal security 

program, have been more likely to see increases in usage, while nonhomeland security programs, such as living marine resources, remain below 

pre-September 11th levels. Although resource usage changed substantially 

for many of these programs, performance results generally improved or 

remained largely the same. The stable or improved performance results 

were attributed mainly to operational efficiencies (e.g., improved 

technology, improved tactics, stronger partnerships, and improved 

intelligence). However, the Coast Guard has limited data and no systematic 

approach to explain or account for the effects of these factors. Without 

such an approach and supporting data to link its resources and 

performance results, the agency may be missing further opportunities to 

increase productivity and efficiency to ensure best use of its funds. 

Some of the Coast Guard’s legacy Deepwater cutters, patrol boats, and 

aircraft are increasingly unreliable and costly to maintain, and timely and 

effective implementation of the agency’s ongoing Deepwater acquisition 

program to modernize these assets is crucial in order to reverse this trend. 

However, the Coast Guard faces serious challenges to keep the Deepwater 

program on schedule and within planned budget estimates. We estimate 

that to return the program to its original 20-year completion schedule will 

cost about $2.2 billion more than the Coast Guard estimated when the 

program was implemented in 2002. Also, available program funding, which 

has been less than the Coast Guard planned, may have to be used, in part, to

address critical maintenance needs of the legacy assets, diverting funds 

otherwise intended for future Deepwater replacements and upgrades. 

Moreover, recent GAO work raised serious concerns about the management

and oversight of the program, including the quality of the Coast Guard’s 

assessment of the program contractor’s performance and the uncertainty as 

to whether the Coast Guard would be able to effectively control costs. 

The President’s fiscal year 2005 budget request of about $7.5 billion for the 

Coast Guard represents about an 8 percent increase over last year. It 

includes $5.2 billion in operating expenses and $943 million for its capital 

acquisition budget. Most of the new initiatives outlined in its operating 

expense budget are targeted for homeland security initiatives, including 

$102 million for implementation of the Maritime Transportation Security Act 

of 2002. Aside from the new initiatives, two other efforts in the budget 

request may require further attention. The Coast Guard’s multi-mission 

stations are still experiencing a heavy workload for station personnel 

because of increased homeland security responsibilities. Also, the Coast 

Guard’s Rescue 21 program, which will replace the Coast Guard’s current 

antiquated communication system, faces possible delays because of 

software system development problems. 

As the lead federal agency for 

maritime homeland security within 

the Department of Homeland 

Security, the Coast Guard is facing 

extraordinary, heightened 

responsibilities to protect 

America’s ports, waterways, and 

waterside facilities from terrorist 

attacks. At the same time, the 

Coast Guard remains responsible 

for many other programs important 

to the nation’s interests, such as 

conducting search and rescue and 

protecting important fishing 

grounds. Its expanded 

responsibilities come at a time 

when budget resources are 

increasingly constrained, making 

prioritization among competing 

agencies and programs an even 

more critical factor in 

congressional decision-making. 

This testimony specifically 

addresses (1) the most recent 

trends in both resource usage and 

performance results for the Coast 

Guard’s homeland security and 

non-homeland security programs; 

(2) challenges the agency faces as 

it proceeds with its Deepwater 

acquisition program to replace or 

modernize its key legacy cutters 

and aircraft; and (3) an overview of 

the President’s fiscal year 2005 

budget request for the Coast Guard, 

focusing on several areas of 

particular congressional interest. 
Page 1 GAO-04-636T 

Madame Chair and Members of the Subcommittee: 

I am pleased to be here today to discuss the President’s fiscal year 2005 

budget request for the Coast Guard and key management and operational 

challenges the agency faces in this and future budgets. As the lead federal 

agency for maritime homeland security within the Department of 

Homeland Security (DHS), the Coast Guard is facing extraordinary, 

heightened responsibilities to protect America’s ports, waterways, and 

waterside facilities from terrorist attacks and from becoming an avenue 

for terrorists to bring weapons of mass destruction into the country. The 

Coast Guard also remains responsible for many other programs important 

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

illegal migration, protecting important fishing grounds, and responding to 

marine pollution. These expanded responsibilities come at a time when 

budget resources are increasingly constrained, making prioritization 

among competing agencies and programs an even more critical factor in 

congressional decision-making. 

To help meet its increased homeland security responsibilities and restore 

activity levels for its traditional programs, the Coast Guard received 

substantial budget increases from fiscal years 2001 to 2004. This trend 

continued with the President’s fiscal year 2005 budget request for the 

Coast Guard of about $7.5 billion, an 8 percent increase over the previous 

year. Still, despite the large budget increases since September 11, there is 

much congressional concern about whether the Coast Guard can continue 

to meet all of its responsibilities, given both the increased emphasis on 

and additional resources required for homeland security, and the agency’s 

heavy reliance on its fleet of larger ships and mainstay aircraft, many of 

which are now aged and technologically obsolete. In addition, our past 

work1

 has shown that notwithstanding substantial increases in the Coast 

Guard’s budget to accommodate its increased responsibilities, the Coast 

Guard’s emphasis on homeland security reduced the level of resources 

devoted to non-homeland security programs. 

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

addresses three topics: (1) the most recent trends in both resource usage 

and performance results for the Coast Guard’s homeland security and non-

 1

U.S. General Accounting Office, Coast Guard: Relationship between Resources Used and 

Results Achieved Needs to be Clearer, (GAO-04-432, Washington, D.C.: Mar. 22, 2004); 

Coast Guard: Strategy Needed for Setting and Monitoring Levels of Effort for All 

Missions, (GAO-03-155, Washington, D.C.: Nov. 12, 2002). 
Page 2 GAO-04-636T 

homeland security programs; (2) challenges the agency faces as it 

proceeds with its Deepwater acquisition program to replace or modernize 

its key legacy cutters and aircraft; and (3) an overview of the President’s 

fiscal year 2005 budget request for the Coast Guard, focusing on several 

areas of particular congressional interest. We conducted our work from 

March 2004 to April 2004 in accordance with generally accepted 

government auditing standards. 

In summary, our work shows the following: 

• Resource usage—as measured by the number of hours the Coast 

Guard’s cutters, boats, and aircraft were used to perform its missions—

were up almost 40 percent from the pre-September 11 baseline. 

Resource hours for homeland security programs benefited most, while 

hours for non-homeland security programs generally declined. In 

contrast, performance results for both homeland and non-homeland 

security programs generally improved or remained largely unchanged. 

The Coast Guard believes that the lack of a clear relationship between 

resource use and performance results is attributable to both internally 

and externally driven factors. According to the Coast Guard, the use of 

new technologies, better operational tactics, improved intelligence, and 

stronger partnering efforts have contributed to stable or improving 

performance results despite declines in resource hours used for some 

programs. The Coast Guard also pointed to external factors beyond the 

agency’s control, such as a surge of undocumented migrants attempting 

to enter the United States by maritime routes, as affecting the results. 

Although our work lends some support to these explanations, the 

Coast Guard has limited data and no systematic approach to explain or 

account for the effects of these factors. Without such an approach and 

supporting data to link its resources and performance results, the 

agency may be missing further opportunities to increase productivity 

and efficiency to ensure the best use of its funds. 

• The most significant challenge the Coast Guard faces as it moves 

forward with its Deepwater program is keeping the program on 

schedule and within planned budget estimates through a well-managed 

and adequately funded effort. Adding to the challenge is the fact that 

key legacy assets are becoming increasingly unreliable and costly to 

maintain. This could put the Coast Guard at risk of expending funds to 

repair deteriorating legacy assets that otherwise had been planned for 

Deepwater modernization initiatives. This action could potentially 

further delay the program and increase total program costs. For 

example, the Coast Guard is using Deepwater funds to address recent 

engine system problems on mainstay helicopters used for search and 
Page 3 GAO-04-636T 

rescue, and law enforcement. More attention to contract management 

and oversight, and stable funding will be needed if the Coast Guard is 

to successfully manage these risks. During the first 2 years of the 

Deepwater program, after the contract was signed, the Coast Guard did 

not get the funding originally planned, and now the program is behind 

schedule. The Coast Guard estimates that a sustained funding level of 

$795 million over the remaining years of the program will be necessary 

to get the program back onto its original 20-year schedule. In nominal 

dollars, this amount represents about a $2.2 billion escalation in costs 

over the earlier $15 billion estimate. Aside from funding issues and 

problems with legacy assets, our recent work has also raised concerns 

about the Coast Guard’s management of the program. Among the 

issues we identified were problems with the quality of the Coast 

Guard’s assessment of the contractor’s performance and the 

uncertainty as to whether the Coast Guard would be able to effectively 

control costs. 

• The President’s fiscal year budget request for the Coast Guard 

represents an 8 percent increase over last year, and new initiatives 

continue to focus on the Coast Guard’s homeland security programs. 

Of the new initiatives outlined in its operating expense budget, for 

example, about 90 percent of the funding was for homeland security 

initiatives. The largest, totaling almost $102 million, is targeted for the 

cost of implementing the Maritime Transportation Security Act of 2002. 

This money would add about 500 new personnel (full-time-equivalent) 

to approve vessel and facility security plans, ensure plans are being 

followed, and perform various other inspection and intelligence 

activities. Aside from the new initiatives, two other efforts may require 

special attention in the budget request. One of these areas, the 

readiness of its multi-mission stations, has been a congressional 

concern in recent years. Since 2002, the Congress has earmarked 

additional funding to provide more personnel, equipment, and training 

for multi-mission stations. While personnel have increased by about 

1,100 between fiscal years 2001 and 2003, the workload of these 

stations is still a major concern. For example, station personnel are 

currently averaging an 83-hour workweek, which is virtually unchanged 

from 2001, and well beyond the Coast Guard’s standard of 68 hours per 

week. Rescue 21, the Coast Guard’s second largest procurement effort, 

will replace the Coast Guard’s current antiquated communication 

system that is key to carrying out its search and rescue functions. This 

program, which is estimated to cost $953 million, has encountered 

delays related to software integration problems. Currently, Coast 

Guard officials are unsure whether Rescue 21 will be completed on 
Page 4 GAO-04-636T 

time at the end of fiscal year 2006, but they do not anticipate any cost 

escalation in the program. 

Now a part of DHS, the Coast Guard has experienced substantial budget 

growth since the terrorist attacks of September 11. The agency’s operating 

budget in fiscal year 2004 was $4.7 billion—an increase of 31 percent in 

nominal dollars over its fiscal year 2001 operating budget. The Coast 

Guard spends the bulk of this money on 11 programs—5 related to its 

homeland security mission and 6 related to its non-homeland security 

mission. (See table 1.) 

Table 1: Homeland Security and Non-Homeland Security Programs by Mission Area (as of March 2004) 

Missions and programs Activities and functions of each program 

Homeland security mission 

Ports, waterways, and coastal 

security 

Conducting harbor patrols, vulnerability assessments, intelligence gathering and analysis, and 

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

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

the flow of illegal drugs through maritime transit routes. 

Undocumented migrant interdiction Deploying cutters and aircraft to reduce the flow of undocumented migrants entering the United 

States by maritime routes. 

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

cutters and other boats in and around harbors to protect DOD force mobilization operations. 

Other law enforcement (foreign fish 

enforcement)a

Protecting U.S. fishing grounds by ensuring that foreign fishermen do not illegally harvest United 

States fish stocks. 

Non–homeland security mission 

Search and rescue Operating multi-mission stations, and a national distress and response communication system, 

conducting search and rescue operations for mariners in distress. 

Living marine resources Enforcing domestic fishing laws and regulations through inspections and fishery patrols. 

Aids to navigation Managing U.S. waterways and providing a safe, efficient, and navigable marine transportation 

system; maintaining the extensive system of navigation aids; monitoring marine traffic through 

vessel traffic service centers 

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

of scientific and national security activity and conducting domestic and international icebreaking 

operations to facilitate year-round commerce. 

Marine environmental protection Preventing and responding to marine oil and chemical spills; preventing the illegal dumping of 

plastics and garbage in U.S. waters and preventing biological invasions by aquatic nuisance 

species. 

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

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

partnering with states and boating safety organizations to reduce recreational boating deaths. 

Source: Coast Guard. 

Background 
Page 5 GAO-04-636T 

a

Foreign fish enforcement is a key subset of the Coast Guard’s other law enforcement program. For 

this report, we consider only the resource hours and performance results associated with the foreign 

fish aspect of the other law enforcement program. We subsequently refer to this program as foreign 

fish enforcement. 

To carry out these responsibilities, , the Coast Guard had almost 44,500 

full-time military and civilian positions at the end of fiscal year 2003—

about 9 percent more than it had in fiscal year 2001.2

 Also, the Coast Guard 

operates a fleet of more than 200 cutters and patrol boats, about 1,600 

smaller boats, and almost 200 aircraft—mainly helicopters. Several efforts 

are under way to replace, modernize, or add to these assets. The major 

one, the Deepwater program, was begun in 1996, to replace or modernize 

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

innovative technology such as satellites and improved detection 

capabilities to carry out its varied mission responsibilities. Deepwater 

involves the modernization and replacement of over 90 ships and 200 

aircraft used for missions that generally occur beyond 50 miles from shore. 

The Deepwater program has been in development for a number of years. 

Between 1998 and 2001, three industry teams competed to identify and 

provide Deepwater assets needed to transform the Coast Guard. In June 

2002, the Coast Guard awarded a contract to Integrated Coast Guard 

Systems (ICGS) as the system integrator for the Deepwater program to 

develop and deliver an improved, integrated system of ships, aircraft, 

unmanned aerial vehicles, command, control, communications, computer, 

intelligence, surveillance, and reconnaissance, and supporting logistics. 

During the first 3 years of the program (fiscal years 2002-2004), the 

Congress appropriated about $1.5 billion for the program. 

 2

These numbers include about 38,000 military and 6,200 civilian personnel. In addition, the 

Coast Guard has about 7,900 reservists, as well as about 36,000 volunteer auxiliary 

personnel who help with activities ranging from search and rescue to boating safety 

education. 
Page 6 GAO-04-636T 

Total Coast Guard resource hours devoted to its various programs have 

increased by 39 percent since the September 11 terrorist attacks.3

 Among 

the various Coast Guard programs, however, there is a marked difference 

in the degree to which resource levels rose or declined. Of the various 

programs, the ports, waterways, and coastal security program saw by far 

the largest increase—more than 1,200 percent. Before the September 11 

attacks, this program was a small component of the Coast Guard, 

accounting for less than 4 percent of total resource hours. By the end of 

fiscal year 2003, the program accounted for 34 percent. As figure 1 shows, 

resource hours were up in 4 programs and down in 5. Homeland security 

programs have been more likely to see increases in hours, while nonhomeland security programs have been more likely to see decreases. 

 3

Resource hours, which are the number of hours that Coast Guard ships, boats, and aircraft 

are used in each Coast Guard program, provide a basis for assessing levels of effort in 9 of 

the Coast Guard’s 11 programs. We used resource hours for cutters, boats, and aircraft as 

an activity measure because the Coast Guard does not have a system that tracks how its 

personnel spend their time by program. The Coast Guard calculated a resource hour 

baseline from which the change in resource hours since the September 11 attacks can be 

estimated. This baseline is an average of the eight fiscal year quarters preceding September 

11, 2001 multiplied by four to put it in terms of a full fiscal year. For the purposes of this 

report, we refer to this calculation as the pre-September 11 baseline or as pre-September 11 

levels. According to Coast Guard officials, there is no special significance to this baseline 

period, other than it represents the historical mission activity of the Coast Guard at that 

period in time. Although the Coast Guard tracks resource hours for all 11 of its programs, 

2 of the 11 are carried out substantially without the use of cutters, boats, and aircraft. 

These two are marine safety (such as conducting ship inspections in port) and marine 

environmental protection (such as responding to oil or chemical spills). 

Resource Hours Have 

Changed Substantially for 

Many Programs, While 

Performance Results Have 

Largely Remained Stable 
Page 7 GAO-04-636T 

Figure 1: Percentage Change in Resource Hours, by Program, Pre-September 11 Baseline to Fiscal Year 2003 

While resource hours changed substantially for many of these programs, 

their corresponding performance results did not necessarily reflect the 

direction of these changes. Most Coast Guard programs have key 

indicators—such as the percentage of distressed mariners’ lives saved—

that the Coast Guard uses to report program performance. Seven of the 

9 programs we reviewed had information on these indicators over the 

3-year period.4

 Of these, only 1—defense readiness—showed a consistent 

relationship between resources and performance results. (See table 2.) For 

that program, resources increased and performance results improved. For 

 4

The Coast Guard had not yet established performance measures for the ports, waterways, 

and coastal security program, and fiscal year 2003 measures for the illegal drug interdiction 

program were not yet available at the time of our review. 

Programs with increasing

resource hours

Non–homeland security programs

Homeland security programs

Ports, waterways, and coastal security

(19,291 to 254,640 hours)

1,200

Up 518

Up 81

Up 44

Down -2

Down -16

Down -22

Down -26

Down -44

-200 0 200 400 600

Programs with decreasing

resource hours

Defense readiness

(6,446 to 39,853 hours)

Undocumented migrant interdiction

(29,642 to 53,559 hours)

Ice operations

(11,935 to 17,217 hours)

Aids to navigation

(112,148 to 110,456 hours)

Foreign fish enforcement

(7,953 to 6,712 hours)

Search and rescue

(82,689 to 64,383 hours)

Living marine resources

(91,255 to 67,576 hours)

Illegal drug interdiction

(122,694 to 69,268 hours)

Source: GAO analysis of Coast Guard resource hour data.

Up 1,220

-100 100 300 500 700 1,100 1,300

Percent change
Page 8 GAO-04-636T 

the others, performance either remained stable despite changes in 

resources, or they actually improved even though resources decreased.5

Table 2: Comparison of Trends in Resource Hours and Performance Results, by Program 

Programa

Increase or decrease in 

resource hours, pre-September 

11 baseline to fiscal year 2003 

General trend in performance 

results, comparing fiscal year 

2001 with fiscal year 2003b

Programs with an inconsistent relationship between resources and performance results 

Undocumented migrant interdiction Increase Stable 

Ice operations Increase Stable 

Search and rescue Decrease Stable 

Living marine resources Decrease Stable 

Foreign fish enforcement Decrease Improved 

Aids to navigation Stable Improved 

Program with a consistent relationship between resources and performance results 

Defense readiness Increase Improved 

Programs with incomplete information on trends 

Illegal drug interdiction Decrease Data not yet available for 2003 

Source: GAO analysis of Coast Guard resource hour and performance data. 

a

Coast Guard has not yet established performance measures for the ports, waterways, and coastal 

security program. Consequently, it is not included in this table. 

b

For this report, we were most interested in comparing performance results for fiscal year 2001 with 

the most currently available results—from fiscal year 2003. As a result, we defined programs as 

“stable” or “improved” based on the known results for these 2 years. All programs defined as “stable” 

showed a differential of less than 4 percentage points when comparing fiscal year 2001 and fiscal 

year 2003 results. 

Another way that the Coast Guard assesses its performance is by 

determining whether programs have achieved their performance targets 

each year. These targets—which represent the goals that the programs aim 

to achieve each year—were met in fiscal year 2003 by 5 of the 8 programs 

we reviewed.6

 (See app. III for a detailed summary of performance 

targets.) 

 5

For specific program indicators, as well as for results by fiscal year, see app. II. 

6

The ports, waterways, and coastal security program does not yet have established 

performance targets. In addition, the marine environmental protection program also met its 

performance target in fiscal year 2003 but was not included in our analysis. Since the 

marine safety program does not yet have performance results for fiscal year 2003, 

discussing its target is not relevant here. 
Page 9 GAO-04-636T 

Coast Guard officials acknowledged the apparent disconnect between 

resource hours expended and performance results achieved and offered 

two explanations for it. The first involved operational efficiencies—Coast 

Guard-driven strategies that essentially allowed the agency to accomplish 

the same or greater results with fewer resources. These efficiencies were 

of four main types—improved technology, improved tactics, stronger 

partnerships, and improved intelligence. Table 3 contains an example of 

each type. 

Table 3: Selected Examples of Operational Efficiencies Cited by Coast Guard Officials 

Improved technology New ships. The recapitalization of the buoy tender fleet offers a number of improvements, including 

greater transit speed, reducing travel time, and allowing more work to be done in a day; a larger buoy 

deck allowing the completion of more work during a single deployment and fewer trips back to base; and 

improved navigation systems, enabling safer navigation with fewer people. 

Improved tactics Use of armed helicopters. The Coast Guard reported that the Helicopter Interdiction Tactical Squadron 

(HITRON) provides personnel, training, and resources necessary to employ armed helicopters in 

support of counter drug operations. Prior to November 2002, the Coast Guard used two armed 

helicopters simultaneously with two cutters when responding to drug interdiction operations. The Coast 

Guard has since changed its tactics to use one HITRON with one cutter per operation and has seen no 

degradation in the effectiveness of this drug interdiction tactic. 

Stronger partnerships Interagency flight schedules. In Miami, the Coast Guard and another DHS agency, the Immigration and 

Customs Enforcement Office, have developed a combined flight schedule to integrate patrol schedules 

and assets, which has led to less overlap in response efforts, saving time and resources for both 

agencies. 

Improved intelligence Intelligence-sharing arrangements. In 2001, the Coast Guard joined the U.S. Intelligence Community 

(IC), a federation of executive branch agencies and organizations that work separately and together in 

intelligence-gathering activities. According to Coast Guard officials, this step greatly enhances the 

agency’s access to information. 

Source: Coast Guard. 

The Coast Guard’s second explanation involved external events or 

developments that were largely beyond the Coast Guard’s control but had 

an influence on the amount of work the Coast Guard had to confront. In 

fiscal year 2003, these events and developments included such things as 

“surge” demands related to the Iraq War, a large increase in the number of 

undocumented migrants attempting to enter the United States by maritime 

routes, and poor weather conditions that, for example, increased 

icebreaking needs. According to Coast Guard officials, these externalities 

had a negative effect on performance results—that is, they made it more 

difficult for the Coast Guard to meet its goals, even when more resources 

were added. For example, according to Coast Guard officials, while the 

percentage of migrants interdicted showed an overall increase from fiscal 

years 2002 to 2003, a large increase in illegal immigrants seeking to enter 
Page 10 GAO-04-636T 

the United States by sea during fiscal year 2003 reduced the performance 

results percentage from fiscal year 2002 levels. 

While the factors cited by the Coast Guard likely have an effect on mission 

performance, the extent of that effect is largely unknown. The Coast 

Guard does not have a mechanism in place to systematically determine the 

extent to which these factors affect performance. For instance, the Coast 

Guard does not have data on search and rescue cases handled by local 

responders; as a result, it cannot determine the extent to which this 

assistance has reduced the Coast Guard’s own search and rescue 

workload. 

Coast Guard officials agree on the value of taking a more systematic 

approach to assessing performance, including better understanding of the 

effects of internal and external factors that affect their performance, and 

they have begun a number of steps directed at improving various aspects 

of performance assessment. For example, they are developing a procedure 

for capturing operating costs on a program-by-program basis, as well as a 

system for assessing the agency’s ability to respond to mission 

requirements. These steps are still in their early stages, and while they 

represent a good beginning, it is not yet clear when they will be completed 

and whether they will tie together to address the weaknesses we have 

identified. Without a clear understanding of this linkage or a timeframe to 

ensure that it gets completed, the agency is at risk of misdirecting 

resources and missing further opportunities to increase productivity and 

efficiency to ensure the best use of its funds. A clear understanding is also 

needed to better allow the Congress to make informed budget decisions 

for the Coast Guard. 

In discussions with us, the Coast Guard has not clearly articulated a 

strategy for how these various efforts will weave together. However, Coast 

Guard officials told us that more information regarding these efforts will 

be included in the agency’s strategic blueprint, which has yet to be 

finalized. 

Under the Deepwater program, the Coast Guard’s legacy assets are 

expected to remain in service until they are replaced or modernized 

through the Deepwater acquisition program. The maintenance costs to 

keep many of these assets operational have been more than the amounts 

the Coast Guard budgeted for these repairs, and the gap between these 

two is widening. 

Reliability and Cost Issues 

Associated with Key 

Deepwater Assets 

Heighten Program Funding 

and Management 

Challenges 
Page 11 GAO-04-636T 

As early as the mid-1990s, the Coast Guard identified problems with its 

aging fleet and cited the need to upgrade or replace many of its cutters and 

aircraft. The deteriorating condition of some of its deepwater assets has 

resulted in increasing operational problems and limitations, escalating 

maintenance needs and downtime of assets, and increasing maintenance 

costs over the past few years. 

Increased Operational Problems and Limitations for Some 

Deepwater Legacy Assets 

One key indicator of the deterioration of the Coast Guard’s legacy assets is 

the increasing lost operational days—that is, days in which Coast Guard 

cutters could not conduct their normal mission activities. Although the 

Coast Guard was unable to provide complete historical data for this trend 

among all of its deepwater assets, it could provide data for some of its 

major deepwater cutters operating in the Atlantic region.7

 As figure 2 

shows, between fiscal year 2000 and fiscal year 2003, there is an increase 

in lost operational days—from 60 to 165 lost days—between fiscal year 

2002 and fiscal year 2003 for these key deepwater assets.8

 7

Only limited data were available for Pacific region deepwater assets. The data that were 

provided indicated that there were 118 lost cutter days in fiscal year 2003 for the same 

deepwater assets as identified in the Atlantic region data. In fiscal year 2004, there have 

been 137 lost cutter days as of April 2004. 

8

It is important to note, however, that 46 of these days were the result of delays at the 

Coast Guard yard. 

Coast Guard Reports 

Increasing Problems and Rising 

Costs with Assets 
Page 12 GAO-04-636T 

Figure 2: Lost Operational Days for Atlantic Region Cutters by Fiscal Year 

The Coast Guard provided the following examples of these problems and 

restrictions: 

• An increasing number of in-flight safety-related incidents for the HH-65 

helicopter.9

 These incidents have resulted in the Coast Guard placing 

increased restrictions on the HH-65’s operations, including a reduced 

flight range and a reduced passenger/crew level to help reduce safety 

risks for these assets and the personnel flying them. 

• A large number of hull incidents on a class of key Coast Guard patrol 

boats. To date, 20 of the Coast Guard’s 110-foot patrol boats have 

experienced significant levels of deterioration that have resulted in hull 

breaches requiring emergency repairs. To repair these hull breaches, 

each of these vessels were removed from service for an average of 

3 months. 

• An increasing need to implement special safety response measures 

aboard the fleet of 378-foot high endurance cutters. These ships—the 

largest of the Coast Guard’s offshore cutters—have had to regularly 

 9

A total of 32 incidents were reported in fiscal 2003; for the first 5 months of fiscal year 

2004, almost 70 incidents have been reported. 

0

20

40

60

80

100

120

140

160

180

Lost operational days

Source: GAO analysis of Coast Guard data on Atlantic Area lost operational days.

FY 2000 FY 2001 FY 2002 FY 2003
Page 13 GAO-04-636T 

implement fire team response procedures when on patrol due to 

numerous fuel or lube oil leaks. These procedures entail having the 

crew perform critical safety and fire response actions, such as 

evacuating the engineering space, donning firefighting gear, and 

investigating the cause of the engineering casualty, while the ship’s 

systems are shut down and the cutter is “dead in the water”—for a 

period of time. 

Concerns about Unscheduled Maintenance 

In addition to lost operational days, unscheduled maintenance days are 

also a concern. That is, when a cutter is undergoing unscheduled 

maintenance, it is also likely to be out of operation as well. However, 

Coast Guard officials noted that unscheduled maintenance days do not 

always result in lost operational days because they are sometimes able to 

schedule additional operational days for another cutter to make up for lost 

days from the cutter undergoing unscheduled maintenance. As figure 3 

shows, the cumulative number of unscheduled maintenance days for the 

Coast Guard’s mainstay cutters and a key patrol boat (the 210-foot, 270-

foot, and 378-foot cutters and the 110-foot patrol boat)—have increased 

since fiscal year 2002.10

 10The increase in overall unscheduled maintenance days is being driven by unscheduled 

maintenance days for the 110-foot patrol boats. 
Page 14 GAO-04-636T 

Figure 3: Unscheduled Maintenance Days for Selected Coast Guard Cutter Assets, 

Fiscal Years 2000-2003 

The Coast Guard provided us with examples of some of the more 

significant unscheduled maintenance events that its legacy cutters have 

experienced in recent years that resulted in lost operational days for the 

affected cutters. Because these cutters are typically scheduled to operate 

on average about 175 to185 days per year, a loss of 20 or more days in a 

year can be significant. These examples included: 

• Twenty-eight lost operational days in fiscal year 2003 for the 36-year 

old high endurance cutter, Chase, due to main engine and boiler 

casualties; 84 lost operational days so far in fiscal year 2004 due to 

additional mechanical problems. 

• Twenty-four lost operational days in fiscal year 2003 for the 36-year old 

high endurance cutter, Gallatin, due to a shaft coupling failure. 

Increasing Maintenance Costs for Cutters and Patrol Boats 

Unscheduled maintenance costs have also increased significantly over the 

past few years. According to our analysis of Coast Guard data on some of 

its major cutters and patrol boats, these maintenance expenditures have 

increased 79 percent—from about $522,000 to almost $934,000 per 

vessel—between fiscal year 2000 and fiscal year 2003. As a result, the 

0

100

200

300

400

500

600

700

Number of unscheduled maintenance days

Source: GAO analysis of Coast Guard data on unscheduled maintenance days.

FY 2000 FY 2001 FY 2002 FY 2003
Page 15 GAO-04-636T 

Coast Guard is finding that in recent years it has spent much more on 

maintaining its aging assets, than it had planned. To determine how much 

to budget for asset maintenance, the Coast Guard determines what is 

known as the “standard support level” (SSL) for each of its vessels when 

they are commissioned. This budgetary estimate is equal to the amount of 

funding provided each year for vessel casualty support and maintenance 

needs, according to a Coast Guard official. The estimate is increased each 

year based on certain cost of living adjustments, and the support level can 

vary according to the estimated operating days for the class of the vessel. 

According to the Coast Guard, when maintenance expenditures exceed 

the SSL for a class of vessels, a budget deficit is created that must be filled 

with funds from other vessels, or from outside sources. In fiscal year 2003, 

the gap between the Coast Guard’s planned and actual maintenance 

expenditures for key legacy assets was about almost $500,000 per vessel. 

(See fig. 4.) 
Page 16 GAO-04-636T 

Figure 4: Actual Maintenance Expenditures (EXP) over Budgeted Standard Support Level (SSL) 

Note: This figure includes expenditures for four classes of cutters: the 378-foot high endurance 

cutters, the 270-foot medium endurance cutters; the 210-foot medium endurance cutters, and the 

110-foot patrol boats. 

Escalating maintenance costs and their effects are evident in the following 

examples: 

• In fiscal year 2002, the Coast Guard removed from service two of its 

210-foot medium endurance cutters because, according to Coast Guard 

officials, they had become too costly to maintain. According to a 

knowledgeable Coast Guard official, these two cutters were both over 

35 years old, and the Coast Guard estimated that it would have cost 

about $1 million per year, per vessel to keep them in service, if they had 

not been decommissioned. 

• Returning from a 2-month patrol on a 20-year old 270-foot medium 

endurance cutter, the ship’s commander reported that even after 

completing $1 million in repairs and maintenance in the past year, the 

vessel still had a tremendous backlog of critical maintenance that 

continued to grow exponentially. In addition, the commander reported 

that during this particular patrol, the cutter had experienced numerous 

debilitating vessel maintenance problems—or casualties—resulting in 

5 lost cutter days. He also noted that the cutter would require 30 or 

more days of repair upon its return. The commander further reported 

2003

100,000

0

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Constant dollars

Source: Coast Guard.

1985

Fiscal year

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

In fiscal year 

2003, EXP 

exceeded SSL

by almost

$500,000

per vessel.

SSL

EXP
Page 17 GAO-04-636T 

that he believed the vessel casualties encountered on this patrol 

foreshadowed the long-term impact that continued deferral of major 

maintenance actions would have on overall operational readiness. 

The Coast Guard was unable to attribute specific mission performance 

deterioration to these types of incidents; however, reduced operating 

availability time and increasing maintenance downtime for these assets 

would likely adversely affect mission performance results in the future. 

Given these maintenance costs and reliability problems, it is unclear what 

the actual service life might be for some of these assets, particularly the 

cutters and the HU-25 fixed wing aircraft, according to Coast Guard 

officials. And certainly, decisions to overhaul or upgrade assets would 

affect their longevity as well. However, Coast Guard officials said that it is 

unclear at this time as to when these Deepwater assets will become so 

costly to maintain that the Coast Guard would have no other logical choice 

but to retire them. This type of analysis would be valuable to the Coast 

Guard and the Congress in determining the priority order for future asset 

replacements and upgrades. 

The Coast Guard’s Deepwater program—which uses a unique contracting 

approach requiring steady funding over 20 years—is facing serious 

challenges to keep the program on schedule and within budget estimates. 

Now, almost 2 years after the contract for the Deepwater program was 

awarded, cost estimates to complete the program have increased by about 

$2.2 billion in nominal terms, and key components necessary to manage 

the program effectively have not been rigorously implemented. In addition, 

new homeland security requirements, which have not yet been defined or 

approved, and necessary major modifications to key legacy assets make 

keeping the program on track that much harder. 

Under current funding plans, the Coast Guard continues to face potential 

cost increases in its $17 billion Deepwater program. The Coast Guard 

chose a unique contracting approach that requires steady funding for the 

program over its 20-year life. Under this approach, the Coast Guard has 

started on a course potentially expensive to alter and one that carries 

some risks. In a 2001 report11, we expressed concern that the Coast Guard 

risked schedule slippages and cost escalation if project funding fell short 

 11U.S. General Accounting Office, Coast Guard: Progress Being Made on Deepwater 

Project, but Risks Remain (GAO-01-564, May 2, 2001). 

Coast Guard Is Facing Serious 

Challenges to Keep the 

Program on Schedule and 

within Budget Projections 
Page 18 GAO-04-636T 

of planned funding levels.12 Now, very early in the program our concerns 

are being realized. Program funding in the first 2 years was less than the 

agency planned by about $125 million. This resulted in delays in the 

scheduled delivery of key deepwater assets, such as the maritime patrol 

aircraft. The Congress appropriated more than the requested funding in 

fiscal year 2004, and if the agency receives the $678 million funding level 

requested in the fiscal 2005 budget proposal, the Deepwater program will 

have cumulatively received $46 million more than planned levels for the 

first 4 years. However, according to the Coast Guard, the program’s 

acquisition schedule has been lengthened and higher funding levels, ($795 

million per year over the remaining years of the program), will be needed 

to restore this schedule to its original 20-year completion pace. 

Currently, Coast Guard officials believe that a continuing stream of 

funding at $795 million (adjusted for inflation) would put the project back 

onto its original 20-year time schedule. However, on this funding schedule, 

total costs for the Deepwater program, assuming no additional changes, 

would reach $17 billion—in nominal terms—about $2.2 billion more than 

the Coast Guard’s earlier estimate.13 Because of time constraints for 

completing work for this statement, we could not assess the reasons for 

the cost escalation. Coast Guard officials attributed the increased costs, so 

early in the program, to the following factors. 

• Under-funding in the first 2 years put the program behind schedule and 

resulted in lost efficiency and flexibility that they believe would have 

been realized by acquiring multiple assets in a more coordinated way. 

They believe that this coordinated approach would have offered 

efficiencies. For example, they said that acquiring multiple assets 

simultaneously or in their planned sequence would allow for more 

efficient logistical support with respect to training, and infrastructure 

planning for such things as facility and pier space for personnel and 

assets. However, they believe that these efficiencies were lost when 

these assets could not be purchased simultaneously. 

• The maintenance costs associated with sustaining legacy assets have 

increased more than anticipated as these assets deteriorated faster 

than expected. As a result, available future funding may have to be 

 12This $2.2 billion estimate assumes completion of the Deepwater contract in a total of 

20 years. 

13The earlier estimate called for completing the Deepwater program in 22 years with a 

continuing stream of funding at $530 million (adjusted for inflation). 
Page 19 GAO-04-636T 

used, in part, to address critical maintenance needs of the legacy 

Deepwater assets, diverting funds otherwise intended for future 

Deepwater replacements and upgrades. In addition, Coast Guard 

officials indicated that maintenance schedules for some vessels were 

perhaps not kept according to plan in anticipation of these assets being 

replaced or overhauled through the Deepwater program. 

• Delays have resulted in increased costs due to normal price inflation. 

Because the contract for acquiring Deepwater assets has a price 

adjustment factor that allows asset prices to be adjusted for inflation, 

costs for these assets have increased over time. 

• Due to revised homeland security requirements, some redesign of the 

national security cutter has occurred. These modifications, made to 

ensure the vessel would accommodate DHS needs included such things 

as lengthening the vessel to accommodate DHS aircraft, installing an 

onboard intelligence center, and making modifications to allow 

sustainability in an environment tainted by chemical, biological and 

radiological agents. According to Coast Guard officials, these 

modifications resulted in additional costs for the Deepwater program. 

In recent discussions with Coast Guard officials about the Deepwater 

program, they were not able to explain in more detail the reasons for the 

escalation in the program costs and did not provide additional information 

to us before we completed our work. However, officials indicated that 

they would provide additional information in the future. 

While expeditiously completing the Deepwater program is important to 

the ability of the Coast Guard to effectively fulfill its responsibilities in the 

future, the agency must also be diligent in managing the contract, and 

ensuring necessary competition among contractors to prevent additional 

cost increases in the program. As we have recently reported we have 

concerns regarding the management and oversight of the project to date.14

Almost 2 years after the contract was awarded for implementation of the 

Deepwater program, the key components needed to manage the program 

 14U.S. General Accounting Office, Contract Management: Coast Guard’s Deepwater 

Program Needs Increased Attention to Management and Contractor Oversight 

(GAO-04-380, Mar. 9, 2004). 

Increased Management and 

Oversight Attention Needed to 

Successfully Complete the 

Deepwater Program 
Page 20 GAO-04-636T 

and oversee the system integrator’s performance15 have not been 

effectively implemented in the following areas: 

• The effectiveness of the Integrated Project Teams—established as the 

main tool for managing the program and overseeing the contractor—

has been weakened due to changing membership, understaffing, 

insufficient training, lack of authority for decision making, and 

inadequate communication among members. 

• Although delivery of some of the first assets is imminent, the Coast 

Guard has not effectively communicated to its operational personnel 

decisions on how new and old assets will be integrated and how 

maintenance responsibilities will be divided between government and 

contractor personnel. 

• The Coast Guard has not developed quantifiable metrics or adhered to 

effective procedures for holding the system integrator accountable for 

its ongoing performance, resulting in a process for assessing 

performance that lacked rigor. 

• The Coast Guard has not yet begun to measure the system integrator’s 

performance on the three overarching goals of the Deepwater 

program—operational effectiveness, minimizing total ownership cost, 

and customer satisfaction. This information will be essential to the 

Coast Guard’s decision about whether to extend the system integrator’s 

contract after the first 5 years. 

• We have concerns about the Coast Guard’s efforts to measure the 

extent of competition among the suppliers of Deepwater assets, or hold 

the system integrator accountable for doing so to achieve this 

competition. The Coast Guard’s “hands-off” approach in this area raises 

questions about whether the government will be able to control costs 

in the Deepwater program. Concerns about the Coast Guard’s ability to 

rely on competition as a means to control future costs contributed to 

our description of the Deepwater program in 2001 as “risky.” Three 

years later, these concerns remain. 

 15The prime contractor, known as the “system integrator,” is responsible for overall 

program planning and management, asset integration, and overseeing the delivery of 

specific Deepwater assets. 
Page 21 GAO-04-636T 

In addition to funding and contract management concerns, there are other, 

as yet relatively unknown, but potentially significant factors that could 

affect the Coast Guard’s Deepwater program. Recent discoveries about the 

condition of some legacy assets, and corresponding actions taken, 

combined with anticipated updates in the Coast Guard’s mission 

requirements, may give the Coast Guard additional reasons to re-think its 

prioritization for obtaining or upgrading certain Deepwater assets. 

In recent years, the Coast Guard has had to make major unplanned 

upgrades on some of its Deepwater assets. Most recently, the Coast Guard 

decided to replace its HH-65 helicopter engines because of serious safety 

and reliability issues with that aircraft. Modernization of this helicopter is 

planned as part of the Deepwater program beginning in 2007, but for safety 

and reliability reasons, the existing engine on this helicopter needed to be 

replaced much sooner.16 The HH-65 is the Coast Guard’s mainstay 

helicopter, serving such missions as search and rescue, drug and migrant 

interdiction, and homeland security. Problems with the current engine and 

related components have been occurring for a number of years, affecting 

the amount of power available for hovering, lifting, and other operations. 

To address these problems, the Coast Guard plans to take action along 

two tracks. First, until the replacement engines are installed, they plan to 

upgrade the existing engines. Second, they plan to install new engines in 

the entire HH-65 fleet within 24 months. However, there are potential 

consequences for the Deepwater acquisition process associated with this 

early replacement decision. Funds to pay for the replacement engine are 

to be diverted from other Deepwater projects—a factor that could 

exacerbate further schedule delays. Also, the alignment between 

deepwater requirements—which have not yet been finalized—and those 

for the replacement engine cannot be determined. If the requirements are 

not in alignment, the Coast Guard faces significant cost and schedule risks 

because another engine replacement could be required to meet new 

mission requirements. Irrespective of these concerns, the Coast Guard’s 

decision to re-engine these helicopters, in and of itself, provides reason for 

the agency to reassess its planned schedule for upgrading this asset under 

the Deepwater program. 

 16U.S. General Accounting Office, Coast Guard: Replacement of HH-65 Helicopter Engine 

(GAO-04-595, Mar. 24, 2004). 

Unplanned Legacy Asset 

Modifications and Updated 

Deepwater Requirements Pose 

Potential Additional Challenges 
Page 22 GAO-04-636T 

Coast Guard officials also anticipate that updated agency requirements—

engendered by homeland security needs that were not known and, 

therefore, not factored into the original mission requirements developed 

prior to the September 11 attacks—also need to be considered. According 

to Coast Guard officials, they are currently in the process of re-examining 

the agency’s Deepwater mission requirements to ensure that they align 

with DHS’ strategic goals, and that the agency is able to meet increased 

mission demands and higher performance targets in a post September 11 

environment. The Coast Guard’s review of its Deepwater mission needs 

statement is expected to be completed by April or May 2004 and submitted 

to DHS for approval at that time. 

This continually evolving information flow challenges the Coast Guard 

even further to ensure that funds are wisely spent. As a result, as interim 

asset decisions, discoveries, and evolving mission priorities are identified, 

it becomes even more imperative that the Coast Guard continually updates 

its acquisition schedule and decision making to ensure that choices are 

made based on timely and accurate information. 

The President’s fiscal year budget request for the Coast Guard of nearly 

$7.5 billion represents an increase of about $534 million, or about 

8 percent in nominal dollars over the enacted budget for fiscal year 2004.17

It includes almost $5.2 billion in operating expenses and $943 million for 

its capital acquisition budget. The majority of the increase covers pay 

increases for current and retired employees or continues certain programs 

already underway, such as follow-on funding for construction projects at 

Coast Guard shore-side facilities, the Great Lakes Icebreaker construction, 

and information technology projects. About $115 million of the increase 

would fund new initiatives, about 90 percent of which relate to homeland 

security. The most significant new initiative at $102 million would be used 

to implement the Maritime Transportation Security Act (MTSA) of 2002.18 

 17This calculation does not include supplemental appropriations but does include the 

fiscal year 2004 rescissions. 

18The Maritime Transportation Security Act is comprehensive legislation that implements 

security standards that would apply to all foreign vessels seeking to enter the United 

States. 

Overview of Fiscal Year 

2005 Budget and Funding 

for Several Areas of 

Particular Congressional 

Interest 
Page 23 GAO-04-636T 

This funding would be used to add about 500 new personnel (full-timeequivalent) who will perform various security-related and other 

functions.19 An additional $2.2 million is being requested to fund a new 

initiative for increasing maritime domain awareness—another homeland 

security function.20

One area of particular interest to the Congress over the last several years 

is the readiness of its multi-mission stations. In September 2001, the 

Department of Transportation, Office of Inspector General, reported that 

readiness at multi-mission stations was deteriorating.21 For example, staff 

shortages at most stations required crews to work an average of 84 hours 

per week, well above the standard (68 hours maximum) established to 

limit fatigue and stress among personnel. Subsequently, the Congress 

appropriated funding totaling about $50 million for fiscal years 2002-2004 

specifically to pay for increased staff, training, and equipment at stations 

and command centers. However, the degree that readiness has improved, 

if any, is unclear. For example, according to the Coast Guard, the average 

workweek at the multi-mission stations is still about 83 hours per week, 

even though about 1,100 personnel were added between fiscal years 2001 

and 2003. According to a Coast Guard official, one main reason for this 

high work week, is that these stations have taken on a major homeland 

security role since September 11, resulting in a heavier workload for 

station personnel carrying out functions, such as vessel escorts and port 

security patrols. 

 19Prior to fiscal year 2005, 480 Coast Guard reservists were handling MTSA implementation. 

The Coast Guard reported that authority to call up reservists will expire in fiscal year 2005; 

therefore it has requested almost 500 active duty personnel (full-time-equivalent) to take 

over these activities. Rather than approving implementation plans as was done by the 

reservists in fiscal year 2004, the new personnel in fiscal year 2005 will, for example, 

approve vessel and facility security plans, ensure operators are in compliance with their 

plans, and perform inspection activities on foreign vessels. 

20According to the Coast Guard, Maritime Domain Awareness is an initiative that will 

provide visibility into events, conditions, and trends in the maritime domain to give 

national leaders, operational commanders, and maritime stakeholders the information and 

knowledge they need for both operational and policy decisions. Coast Guard information 

explains that this will help offset the physical impossibility of patrolling the entire U.S. 

maritime domain simultaneously or inspecting, certifying, and validating all travelers and 

cargoes. 

21Audit of the Small Boat Station Search and Rescue Program. MH-2001-94 (Washington, 

D.C., Sept. 14, 2001). 
Page 24 GAO-04-636T 

Of the $943 million requested for capital projects, $839 million, or 89 

percent, would be dedicated to two projects—the Deepwater program 

($678 million) and Rescue 21 ($161 million). Rescue 21, the Coast Guard’s 

second largest acquisition program, provides for the modernization of the 

command, control, and communication infrastructure of the National 

Distress and Response System. The current system suffers from aging 

equipment, limited spare parts, and limited interoperability with other 

agencies. Of particular concern to the Coast Guard and the maritime 

community are the current system’s coverage gaps, which can result in 

missed maritime distress calls. The Congress mandated the completion of 

the new system by the end of fiscal year 2006. The fiscal year 2005 request 

for $161 million is aimed to keep the project progressing; however, 

technical problems with software development have delayed 

implementation of the first elements of the system that were scheduled for 

last summer, and it is unclear to agency officials whether these issues will 

prevent the agency from completing implementation of the program on 

time. In recent discussions with Coast Guard officials, they said that they 

do not yet know whether Rescue 21 will be completed on time at the end 

of fiscal year 2006, but they currently do not anticipate any cost escalation 

in the program, which is presently estimated to cost $953 million. 

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 Margaret Wrightson, 

Director, Homeland Security and Justice Issues, at (415) 904-2200, or 

wrightsonm@gao.gov. Other individuals making key contributions to this 

testimony include Dawn Hoff, Joseph Kile, Dawn Locke, Stan Stenersen, 

and Randall Williamson. 

Contacts and 

Acknowledgments 
Page 25 GAO-04-636T 

To determine the most recent trends in both resource usage and 

performance results for the Coast Guard’s homeland security and nonhomeland security programs and the implication of these trends for Coast 

Guard management and accountability, we summarized findings from a 

recent GAO report.1

To determine the challenges the agency faces as it proceeds with its 

program to modernize its Deepwater cutters and aircraft, we summarized 

briefings prepared in 2004 by the Coast Guard for the Congress and for 

internal use on the Deepwater program and the HH-65 helicopters. We also 

interviewed Coast Guard staff at headquarters to determine the potential 

impacts of deteriorating Deepwater assets. In addition, we used current 

maintenance expenditure data provided by the Coast Guard to perform an 

historical analysis of maintenance costs. To assess the reliability of these 

data, we interviewed knowledgeable Coast Guard officials and reviewed 

existing documentation about the data and the systems that produced 

them. We determined that the data were sufficiently reliable for the 

purposes of this report. 

To give an overview of the President’s fiscal year 2005 budget request for 

the Coast Guard, focusing on several areas of particular congressional 

interest, we obtained information on the average workweek of personnel 

at the Coast Guard’s multi-mission stations and interviewed Coast Guard 

headquarters staff to determine how the fiscal year 2005 budget will 

address MTSA implementation, Rescue 21, and multi-mission stations. We 

also reviewed the Coast Guard’s C-stage budget and other financial 

documentation provided by the Coast Guard. 

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

additional audit work that were conducted in accordance with generally 

accepted government auditing standards. 

 1

U.S General Accounting Office, Coast Guard: Relationship between Resources Used and 

Results Achieved Needs to Be Clearer (GAO-04-432, Mar. 22, 2004). 

Appendix I: Scope and Methodology 
Page 26 GAO-04-636T 

Table 4 shows a detailed list of performance results for the 8 programs for 

which we obtained data. In a recent report, we compared performance 

results for our baseline year—fiscal year 2001—with the most currently 

available results—fiscal year 2003.1

 As a result, we defined programs as 

“stable” or “improved” based on the known results for these 2 years. All 

programs defined as stable showed a differential of less than 4 percentage 

points when comparing fiscal year 2001 and fiscal year 2003 results. 

Table 4: Performance Results, by Program, from Fiscal Years 2001 through 2003 

Program Performance measure 

Performance results by 

fiscal year 

 2001 2002 2003

Stable results 

Undocumented migrant 

interdiction 

Percentage of interdicted illegal migrants entering the United States 

through maritime means. 82.5% 88.3% 85.3%

Ice operations Number of waterway closure days 7 7 7

Living marine resources Percentage of fishermen found in compliance with regulations. 98.6% 97.3% 97.1%

Search and rescue Percentage of mariners’ lives saved. 84.2% 84.4% 87.7%

Improving results 

Foreign fish enforcement Number of detected Exclusive Economic Zone (EEZ)a incursions by 

foreign fishing vessels. 219 250 153

Aids to navigation Number of collisions, allisions,b and groundings. 1,677 1,936 1,523

Defense readiness Percentage of time units meet combat readiness status at C-2 level.c 67% 70% 78%

Pending results 

Illegal drug interdiction Percentage of cocaine seized out of total estimated cocaine entering the 

United States through maritime means.d

 11.7% 10.6% N/Ae

Source: GAO analysis of Coast Guard performance data. 

a

The EEZ is defined by the 1976 Magnuson-Stevens Fishery Conservation and Management Act as 

an area within 200 miles of U.S. shores in which U.S. citizens have primary harvesting rights to fish 

stocks. 

b

The Coast Guard defines an “allision” as a vessel collision with a fixed object. 

c

According to Coast Guard information, the C-2 level is defined as the level at which each unit 

possesses the resources and is trained to undertake most of the wartime missions for which it is 

organized or designed. 

 1

For complete information, see U.S. General Accounting Office, Coast Guard: Relationship 

between Resources Used and Results Achieved Needs to Be Clearer (GAO-04-432, Mar. 22, 

2004). 

Appendix II: Coast Guard Performance 

Results, Fiscal Years 2001-2003 
Page 27 GAO-04-636T 

d

The illegal drug interdiction performance measure only includes cocaine as cocaine has an analyzed 

flow rate, and it constitutes the preponderance of illegal drugs entering the United States through 

maritime means (i.e., cocaine shipments are measured in tons while heroin, marijuana, and other 

illegal drugs are measured in pounds). 

e

The illegal drug interdiction performance result for fiscal year 2003 will not be calculated until the 

Interagency Assessment of Cocaine Movement (IACM) publishes its flow rate in spring of 2004. 
Page 28 GAO-04-636T 

In a recent report, we showed that another way that the Coast Guard 

assesses its performance is by determining whether programs have 

achieved their performance targets each year.1

 These targets—which 

represent the goals that the programs aim to achieve each year—were met 

in fiscal year 2003 by 5 of the 8 programs we reviewed.2

 (See table 5.) Two 

of the programs that did not meet their performance targets were defense 

readiness and undocumented migrant interdiction. Coast Guard officials 

reported that the defense readiness program did not meet its target, in 

part, because of equipment problems associated with operating aging 

ships and unit training deficiencies, such as cutters not having sufficient 

training time to perform gunnery exercises.3

 As for the undocumented 

migrant interdiction program, Coast Guard officials reported that they 

consider their results to be a minimal decline, given the substantial 

increase in the number of migrants they successfully interdicted during the 

year.4

 For example, of the key migrant populations tracked by the Coast 

Guard, about 5,300 illegal migrants were interdicted in fiscal year 2003 

compared with about 2,400 in fiscal year 2002, an increase of 120 percent.5

We could not determine whether the remaining program, illegal drug 

interdiction, met its performance target because the performance results 

 1

For complete information, see U.S. General Accounting Office, Coast Guard: Relationship 

between Resources Used and Results Achieved Needs to Be Clearer (GAO-04-432, Mar. 22, 

2004). 

2

The marine environmental protection program also met its performance target in fiscal 

year 2003 but was not included in our analysis. Also, since the marine safety program does 

not yet have performance results for fiscal year 2003, discussing its target is not relevant 

here. 

3

According to Coast Guard information, the C-2 level is defined as the level at which each 

unit possesses the resources and is trained to undertake most of the wartime missions for 

which it is organized or designed. 

4

The undocumented migrant interdiction performance measure indicates the percentage of 

migrants interdicted or deterred from entering the United States via maritime routes. 

Specifically, it is the number of interdicted migrants divided by the estimated flow of 

undocumented migrants (which includes the number of law enforcement interdictions, 

known successful migrant arrivals, and the estimated number of migrants deterred from 

leaving their countries of origin). This estimate is prepared annually by the Coast Guard’s 

Intelligence Coordination Center. 

5

According to the Coast Guard, the 2002 and 2003 illegal migrant numbers stated here 

include only those counted in the undocumented migrant performance measure, which 

uses the following four migrant populations: Haiti, Cuba, the Dominican Republic, and the 

People’s Republic of China. The total number of all migrants interdicted in fiscal years 2002 

and 2003 were 4,104 and 6,054, respectively. 

Appendix III: Performance Targets for Fiscal 

Year 2003 
Page 29 GAO-04-636T 

for fiscal year 2003 were not yet available at the time we conducted our 

work. 

Table 5: Performance Targets by Program for Fiscal Year 2003 

Program Fiscal year 2003 performance targets Fiscal year 2003 result 

Target met in fiscal year 

2003? 

Undocumented migrant 

interdiction 

Interdict or deter at least 87 percent of illegal 

migrants entering the United States through 

maritime means. 

85.3% No 

Illegal drug interdiction Seize 20.7 percent or more of cocaine entering 

the United States through maritime means. 

To be determineda To be determineda

Ice operations Limit waterway closures to 8 days during 

severe winters. 

7 days Yes 

Living marine resources Raise percent of fishermen found in compliance 

with regulations to 97 percent or above. 

97.1% Yes 

Search and rescue Save at least 85 percent of all mariners in 

distress. 

87.7% Yes 

Foreign fish enforcement Reduce number of detected EEZ incursions by 

foreign fishing vessels to 202 or less. 

153 incursions Yes 

Aids to navigation Reduce 5-year average of collisions, allisions, 

and groundings (CAGs) to 2,010 or less. 

1,523 CAGs Yes 

Defense readiness Maintain an overall combat readiness status at 

C-2 level or better for 100 percent of assets. 

78% No 

Source: GAO analysis of Coast Guard performance data. 

a

The illegal drug interdiction performance result for fiscal year 2003 will not be available until spring of 

2004. 

(440308) 
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