Department of Homeland Security

Office of Inspector General 

Independent Review of the 


U.S. Coast Guard's 


Reporting of the FY 2008 Drug Control Performance 


Summary Report
 

OIG-09-27 February 2009 
 

Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

February 12, 2009 

Preface 

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

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

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

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

This report presents the results of the review of the Performance Summary Report of the U.S. Coast 

Guard for the fiscal year ended September 30, 2008, for the Office of National Drug Control Policy. 

We contracted with the independent public accounting firm KPMG LLP to perform the review. U.S. 

Coast Guard’s management prepared the Performance Summary Report and management assertions 

to comply with the requirements of the Office of National Drug Control Policy Circular, Drug 

Control Accounting, dated May 1, 2007. KPMG LLP is responsible for the attached independent 

accountants’ report dated January 26, 2009, and the conclusions expressed in the report. We do not 

express an opinion on the Performance Summary Report and management’s assertions. 

We trust the information in this report will continue to result in effective, efficient, and economical 

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

report. 

Richard L. Skinner 

Inspector General 
KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

Independent Accountants’ Report 

Inspector General 

U.S. Department of Homeland Security 

We have reviewed the accompanying Performance Summary Report of the U.S. Department of 

Homeland Security’s (DHS) United States Coast Guard (USCG) for the year ended September 

30, 2008. We have also reviewed the accompanying management’s assertions for the year ended 

September 30, 2008. USCG’s management is responsible for the Performance Summary Report 

and the assertions. 

Our review was conducted in accordance with attestation standards established by the American 

Institute of Certified Public Accountants, and applicable standards contained in Government 

Auditing Standards, issued by the Comptroller General of the United States. A review is 

substantially less in scope than an examination, the objective of which is the expression of an 

opinion on the Performance Summary Report and management’s assertions. Accordingly, we do 

not express such an opinion. 

Management of USCG prepared the Performance Summary Report and management’s assertions 

to comply with the requirements of the Office of National Drug Control Policy (ONDCP) 

Circular, Drug Control Accounting, dated May 1, 2007. 

Based on our review, nothing came to our attention that caused us to believe that (1) the 

Performance Summary Report for the year ended September 30, 2008 is not presented, in all 

material respects, in conformity with ONDCP’s Circular, Drug Control Accounting (May 1, 

2007), or that (2) management’s assertions referred to above are not fairly stated, in all material 

respects, based on the criteria set forth in ONDCP’s Circular, Drug Control Accounting (May 1, 

2007). 

This report is intended solely for the information and use of the management of DHS and USCG, 

the Inspector General, the ONDCP, and the U.S. Congress, and is not intended to be and should 

not be used by anyone other than these specified parties. 

January 26, 2009 

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 

 

Enclosure (1) to letter dated January 26, 2009 

United States Coast Guard
 

Performance Summary Report
 

01/26/2009 12:26:13 PM Created by CG-512 
 

Enclosure (1) to letter dated January 26, 2009 

I. PERFORMANCE INFORMATION 

Decision Unit 1: Primary Outcome Measure 

NOTE: Although the Coast Guard appropriation is apportioned along budget decision 

unit lines (i.e. Acquisitions, Construction & Improvements (AC&I), Operating Expenses 

(OE), Research Development Testing and Evaluation (RDT&E), and Reserve Training 

(RT)), the Coast Guard does not manage performance along decision unit lines. This is 

impractical due to the multi-mission performance of our assets, which transcends budget 

decision units. 

The Coast Guard’s drug interdiction performance is best summarized by the lead outcome 

measure of the program. That measure is the central focus of our Performance Summary 

Report. The Coast Guard Drug Interdiction Program has a suite of metrics that support 

the lead outcome measure. The lead outcome measure and its supporting metrics suite 

were validated during a 2007 PART Evaluation. 

Measure: Cocaine Removal Rate (Removal rate for cocaine that is shipped via noncommercial maritime means.) 

Table 1: Cocaine Removal Rate 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Target 

FY 2008 

Actual 

FY 2009 

Target 

30.7% 27.3% 25.3% 32.6% 28.0% 33.8% (est.)1

 23.8% 

(1) Describe the measure. In doing so, provide an explanation of how the measure (a) reflects the purpose of 

the program, (b) contributes to the National Drug Control Strategy, and (c) is used by management of the 

program. This description should include sufficient detail to permit non-experts to understand what is being 

measured and why it is relevant to the agency’s drug control activities.2 

The goal of the Coast Guard’s Drug Interdiction program is to reduce the supply of illegal 

drugs by denying smugglers the use of air and maritime routes by projecting an effective 

law enforcement presence in and over the Caribbean Sea, the Gulf of Mexico and the 

Eastern Pacific Ocean. The Coast Guard’s primary outcome measure, the Cocaine 

Removal Rate, tells the program how effective it is at disrupting the flow of cocaine that is 

traveling via non-commercial maritime means toward the United States. The more cocaine 

bound for the U.S. that the Coast Guard removes, the less supply of cocaine will be 

available within the U.S. The cocaine removal rate is calculated by dividing the total 

amount of cocaine removed by the Coast Guard by the non-commercial maritime 

movement of cocaine towards the U.S. 

The 2007 National Drug Control Strategy set an interagency, Transit Zone removal rate 

1

 The Cocaine Removal Rate estimate for FY 2008 is based on the actual quantity of cocaine removed in FY 

2008 and the non-commercial maritime cocaine flow towards the U.S. from 2007. The non-commercial 

maritime flow towards the U.S. for 2008 will be available following the publication of the Interagency 

Assessment of Cocaine Movement in July 2009. 2

 Requirements 1 through 4 in this section are drawn from the ONDCP Drug Accounting Circular. 

01/26/2009 12:26:13 PM Created by CG-512 
 

 

Enclosure (1) to letter dated January 26, 2009 

goal for cocaine of 40%. With over 80% of the cocaine moving through the Transit Zone 

via non-commercial maritime means, the higher that Coast Guard’s cocaine removal rate, 

the less cocaine needs to be removed by our partner agencies to achieve that 40% target. 

The Drug Interdiction program managers monitor the cocaine removal rate, watching for 

both changes in Coast Guard removals as well as increases or decreases in flow. Any 

changes are then diagnosed to determine the cause and to develop strategies to continue to 

increase the removal rate. Factors that can impact the removal rate include, but are not 

limited to, changing tactics and routes by the drug trafficking organizations, increased or 

decreased patrol effort by the Coast Guard or its drug interdiction partner agencies/nations, 

the availability, quality and timeliness of tactical intelligence, and the implementation of 

new capabilities (Airborne Use of Force, for example). 

(2) Provide narrative that examines the FY 2008 actual performance results with the FY 2008 target, as well 

as prior year actuals. If the performance target was not achieved for FY 2008, the agency should explain why 

this is the case. If the agency has concluded it is not possible to achieve the established target with available 

resources, the agency should include recommendations on revising or eliminating the target.3 

In FY 2008, the Coast Guard set a new record with 367,926 pounds (166.9 Metric Tons) of 

cocaine removed, up 3.4 % from our previous record of 355,754 pounds in FY 2007. 

Based on the 2007 cocaine movement, the Coast Guard expects to exceed its 28 percent 

target by as much as 3-5 percent. That would make FY 2008 the fifth consecutive year in 

which the Coast Guard exceeded its annual target. 

Critical to the Coast Guard’s successful drug interdiction efforts were the numerous 

enforcement partnerships, such as the deployment of Coast Guard Law Enforcement 

Detachments aboard U.S. Navy and allied warships, and increased international, interdepartment and inter-agency cooperation/coordination. 

(3) The agency should describe the performance target for FY 2009 and how the agency plans to meet this 

target. If the target in FY 2008 was not achieved, this explanation should detail how the agency plans to 

overcome prior year challenges to meet targets in FY 2009. 

The Coast Guard’s target for FY 2009 is to remove 23.8 percent of the cocaine moving via 

non-commercial maritime means towards the U.S. To meet this target, the Coast Guard 

will continue to source major cutters, airborne use of force capable helicopters, long range 

maritime patrol aircraft, and law enforcement detachments to drug detection, monitoring 

and interdiction operations in the Transit Zone, and push further expansion of the airborne 

use of force program with our U.S. and Allied Naval partners. 

(4) The agency should describe the procedures used to ensure performance data for this measure are accurate, 

complete, and unbiased in presentation and substance. The agency should also describe the methodology used 

to establish targets and actuals, as well as the data source(s) used to collect information. 

As stated previously, the cocaine removal rate is calculated by dividing the total amount of 

cocaine removed by the Coast Guard by the non-commercial maritime movement of 

3

 If FY 2008 actuals are not available by the recommended deadline for agencies to submit materials to the st 

OIG (December 31 ), the most recently available actuals can be used as an acceptable substitute. Agencies 

need only provide actuals starting in FY 2004. 

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Enclosure (1) to letter dated January 26, 2009 

cocaine towards the U.S. The data that are used to calculate the Coast Guard’s cocaine 

removal rate is drawn from two independent sources. The amount of cocaine removed by 

the Coast Guard is the sum of all the cocaine that is physically seized by Coast Guard 

personnel and all the cocaine lost to the drug trafficking organizations due to the Coast 

Guard’s efforts. This latter amount is often an intelligence-based estimate of the quantity 

of cocaine onboard a given vessel that is burned, jettisoned, or scuttled in an attempt to 

destroy evidence when Coast Guard presence is detected. Cocaine removals are drawn 

from the Consolidated Counterdrug Database (CCDB). The data entered into the CCDB is 

approved through an interagency vetting process. Although the cocaine removals are 

originally reported in pounds, the Coast Guard converts the removal to metric tons to 

compute the cocaine removal rate. The non-commercial maritime flow of cocaine towards 

the U.S. is extracted from the Interagency Assessment of Cocaine Movement (IACM). The 

IACM is prepared for ONDCP by the Defense Intelligence Agency. All data that are 

contained within these two sources are deemed to be accurate, complete, and unbiased in 

presentation and substance. 

At least annually, the Coast Guard’s Office of Law Enforcement and Office of 

Performance Management Assessment review all the assumptions that factor into the 

setting of its out-year targets, makes adjustments as necessary, and forwards the new target 

recommendations to the Deputy Commandant for Operations for final review and approval. 

The key factors that drive the target setting process are the estimated out-year cocaine 

flow, the availability of Coast Guard resources (mainly major cutters and long range 

maritime patrol aircraft), and any changes in Coast Guard capabilities, authorities, or 

partnerships that may impact cocaine removals. 

II. MANAGEMENT’S ASSERTIONS 

The Report should include a letter in which an accountable agency official makes the 

following assertions regarding the information presented above: 

(1) Performance reporting system is appropriate and applied – The agency has a 

system to capture performance information accurately and that system was properly 

applied to generate the performance data. 

Yes. The Coast Guard performance reporting system was reviewed in a 2007 Independent 

Program Evaluation by the Center for Naval Analyses and a 2007 OMB PART evaluation. 

All reviews supported reasonable assurance on the appropriateness and application of the 

performance reporting system. 

(2) Explanations for not meeting performance targets are reasonable – The 

explanation(s) offered for failing to meet a performance target and for any 

recommendations concerning plans and schedules for meeting future targets or for 

revising or eliminating performance targets are reasonable. 

N/A. The Coast Guard’s achieved its target for FY 2008. 

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Enclosure (1) to letter dated January 26, 2009 

(3) Methodology to establish performance targets is reasonable and applied – The 

methodology described above to establish performance targets for the current year is 

reasonable given past performance and available resources. 

Yes. A quantitative and qualitative process that reviews intelligence, logistics, strategic 

and operational policy, capability, emerging trends, past performance, and capacity 

variables impacting mission performance is used to establish performance targets. Targets 

generated by the program manager are reviewed independently by performance and budget 

oversight offices at Coast Guard Headquarters, as well as the DHS Office of Program 

Analysis and Evaluation, prior to entry into budget documents and the DHS Future Year 

Homeland Security Program. 

(4) Adequate performance measures exist for all significant drug control activities 

Yes. This was validated in the 2007 OMB PART of the Coast Guard Drug Interdiction 

Program. 

- The agency has established one acceptable performance measure that covers all 

four budget decision units for which a significant amount of obligations ($1,000,000 or 50 

percent of the agency drug budget, whichever is less) were incurred in the previous fiscal 

year. 

Management should take the following criteria into account when making assertions: 

(a) Data – If workload, participant, or other quantitative information supports these 

 assertions, the sources of these data should be well documented. If these data are

 periodically collected, the data used in the report must be clearly identified and will

 be the most recently available. 

(b) Other Estimation Methods – If professional judgment or other estimation methods are 

used to make these assertions, the objectivity and strength of these estimation 

 methods must be thoroughly explained and documented. These estimation methods 

should be subjected to periodic review to confirm their continued validity. 

(c) Reporting Systems – Reporting systems supporting the assertions should be 

current, reliable, and an integral part of the agency’s budget and management 

processes. 

III. INSPECTOR GENERAL AUTHENTICATION 

Agency performance information and management’s assertions should be provided to the 

agency’s Inspector General (IG) for the purpose of expressing a conclusion about the 

reliability of each assertion made in the report. ONDCP anticipates that this engagement 

will be an attestation review, consistent with the Statements for Standards of Attestation 

Engagements, promulgated by the American Institute of Certified Public Accountants. 

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Report Distribution 

Department of Homeland Security 

Secretary
 

Deputy Secretary
 

Chief of Staff 


Deputy Chief of Staff 


General Counsel 


Executive Secretary 


Director, GAO/OIG Liaison Office
 

Assistant Secretary for Policy 


Assistant Secretary for Public Affairs 


Assistant Secretary for Legislative Affairs 


Under Secretary, Management 


Chief Financial Officer 


Deputy Chief Financial Officer 


Acting Director Office of Financial Management 


Chief Information Officer 


Chief Security Officer
 

Chief Privacy Officer
 

Office of National Drug and Control Policy 

Associate Director for Planning and Budget 

U.S Coast Guard 

Commandant 

Chief Financial Officer 

Chief Information Officer 

Office of Management and Budget 

Chief, Homeland Security Branch 


DHS OIG Program Examiner 


Congress 

Congressional Oversight and Appropriations Committees, as appropriate 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4199, 

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

OIG HOTLINE 

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misconduct relative to department programs or operations: 

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DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

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