Department of Homeland Security 

Office of Inspector General 

Independent Review of the U.S. Coast Guard’s 
 

Reporting of FY 2010 Drug Control 
 

Performance Summary Report
 


OIG-11-35 January 2011 
Office ofInspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

Homeland 

Security 

JAN 26 2011 

Preface 

The Department of Homeland Security (DHS) Office ofInspector 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 presents the results ofthe review ofthe Performance Summary Report ofthe U.S. Coast 

Guard for the fiscal year ended September 30,2010, for the Office ofNational Drug Control Policy. 

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

U.S. Coast Guard prepared the Performance Summary Report and management assertions to comply 

with 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 18,2011, and the conclusions expressed in it. We do not express an opinion on the 

Performance Summary Report and management's assertions. 

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 
 

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, 2010. We have also reviewed the accompanying management’s assertions for the year ended 

September 30, 2010. 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, 2010, 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 management of DHS and USCG, the 

DHS 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 18, 2011 

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

(“KPMG International”), a Swiss entity. 
Homeland u.s. Oepartment Security o~.

United States 

Coast Guard 

Commandant 

United Slales Coast Guard 

2100 Second Street, S,W, 

Washington, DC 20593-0001 

Staff Symbol: OCO-S1 

Phone: (202) 372-2684 

Email:morvan.h.roper@uscg.mil 

7110 

January 18,2011 

Department of Homeland Security 

Director of Financial Management 

Office of the Inspector General 

Attn: Mr. John D. Shiffer, CPA 

1120 Vermont Avenue, 10th Floor, NW 

Washington, D.C. 20005 

Dear Me. Shiffer. 

In accordance with the Office of National Drug Control Policy Circular: Annual Accounling of 

Drug Control Funds dated May 1,2007, enclosed is the Coast Guard's final FY 2010 

Performance Summary Report. 

If you require further assistance on this information, please contact T Morgan Roper, 

202-372-2684. 

Sincerely, 

V<?~rl(L

Captain, U.S. Coast Gu d 

Chief, Office of Perfo ance Management & 

Assessment 

Enclosure (1) FY 2010 Perfonnance Summary Report with Final Edits Approved 

Copy: DHS Budget Office 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enclosure (1) to letter dated January 18, 2011 

Drug Budget 
 

United States Coast Guard
 


Performance Summary Report FY 2010 
 

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Page 1 of 6
 

 

(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.1 

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 six million square mile transit zone of the 

 

1

 Requirements 1 through 4 in this section are drawn from the Office of National Drug Control Policy 

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

01/18/2011 Created by DCO-81

Enclosure (1) to letter dated January 18, 2011 

I. PERFORMANCE INFORMATION 

Decision Units: 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. This measure is the central focus of its 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 Program Assessment and Rating Tool (PART) Evaluation. In FY 

2009, the Coast Guard transitioned the methodology by which it calculates its primary 

outcome measure as recommended by the 2007 Independent Program Evaluation by the 

Center for Naval Analyses. The Coast Guard transitioned from the Interagency 

Assessment of Cocaine Movement (IACM) to the Consolidated Counter Drug Database 

(CCDB) as the authoritative source for estimating illicit drug flow through the transit zone. 

The change in methodology permits the Coast Guard to evaluate its performance on a 

quarterly basis. Historically, CCDB cocaine movement estimates are significantly higher 

than the IACM because it includes all confidence maritime flow (IACM does not count 

low confidence data), which translates to a lower perceived performance result for cocaine 

removal rate. 

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

Table 1: Cocaine Removal Rate 

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 

Actual Actual Actual Actual Actual Target Target 

16.9% 16.6% 13.2% 15.0% 13.5% 18.5% 15.5% 

Page 2 of 6 
Enclosure (1) to letter dated January 18, 2011 

Caribbean Sea, the Gulf of Mexico and the Eastern Pacific Ocean. The Coast Guard’s 

primary outcome measure, the Cocaine Removal Rate, indicates how effective the program 

is at disrupting the flow of cocaine traveling via non-commercial maritime means toward 

the United States. The more cocaine bound for the United States that the Coast Guard 

removes, the less supply of cocaine available within the United States. The cocaine 

removal rate is calculated by dividing the total amount of cocaine removed by the Coast 

Guard by the total estimated non-commercial maritime movement of cocaine towards the 

United States, both of which are captured and validated in the CCDB. 

The 2010 National Drug Control Strategy maintains the interagency, transit zone removal 

rate goal for cocaine at 40% by 2015; a goal originally set in the 2007 National Drug 

Control Strategy. With over 80% of the cocaine moving through the transit zone via noncommercial maritime means, the higher the Coast Guard’s cocaine removal rate, the less 

cocaine that needs to be removed by our domestic and international partner agencies to 

achieve that 40% goal. 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 modes, 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; new or upgraded diplomatic and legal tools; and the implementation of new 

capabilities (National Security Cutter and HC-144A aircraft, for example). 

(2) Provide narrative that examines the FY 2010 actual performance results with the FY 2010 target, as well 

as prior year actual results. If the performance target was not achieved for FY 2010, 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. 

In FY 2010, the Coast Guard removed 91.8 Metric Tons (MT) of cocaine. Relative to the 

total estimated movement of non-commercial cocaine destined to the United States in FY 

2010, captured in the CCDB, the Coast Guard removed 13.5% of this estimated flow, 

below its target of 18.5%. Comparatively, in FY 2010 the Coast Guard removed 1.5% less 

cocaine than from the FY 2009 total (15.0% removed). However, the number of Coast 

Guard interdiction and disruption events remained nearly the same for each fiscal year (123 

in FY 2009 and 122 in FY 2010), indicating that the amount removed for each event 

dropped from a 1,301kg average per event in FY 2009 to 753kg average per event in FY 

2010. The total cocaine removed by the Coast Guard in the transit zone declined from 160 

MT in FY 2009 to nearly 92 MT in FY 2010. The Coast Guard may have been able to 

increase its number of interdiction events, however, asset/resource availability and 

unanticipated major response operations, diverting surface and air (detection and 

interdiction) assets from the counter-drug mission (earthquake in Haiti and the Deepwater 

Horizon oil spill in the Gulf of Mexico), hindered performance. The advancing age of the 

Coast Guard’s cutter fleet has caused an increase in unscheduled maintenance days and 

casualties; this coupled with emergency response operations reduced the available 

deployable assets (both maritime patrol aircraft (MPA) and major cutters) operating in the 

drug transit zone in support to Joint Interagency Task Force South (JIATF-S). Through the 

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Enclosure (1) to letter dated January 18, 2011 

2010 Department of Homeland Security (DHS) Statement of Intent, the Coast Guard 

planned to provide 2,190 cutter days and 4,700 Maritime Patrol Aircraft (MPA) hours to 

JIATF-S, but was only able to provide 1,486 cutter days and 3,590.9 MPA hours for FY 

2010 or approximately 66% of intended cutter days and 76% of intended MPA hours. 

Lastly, there was a reduction in the estimate of cocaine being smuggled through the transit 

zone in FY 2010 (1067 MT via non-commercial means in FY 2009 to 682 MT in FY 

2010). 

(3) The agency should describe the performance target for FY 2011 and how the agency plans to meet this 

target. If the target in FY 2010 was not achieved, this explanation should detail how the agency plans to 

overcome prior year challenges to meet targets in FY 2011. 

The Coast Guard’s target for FY 2011 is to remove 15.5% percent of the cocaine moving 

via non-commercial maritime means towards the United States. This target is reached by 

examining historical trends, as well as forecasting asset and resource availability along 

with the estimated flow of cocaine. The Coast Guard works cooperatively with other 

Federal agencies to carry out the National Drug Control Strategy, including support for the 

JIATF-S counter drug mission. To increase interdiction capability and capacity, the Coast 

Guard has several initiatives, which will come to fruition in FY 2011. The third National 

Security Cutter (Coast Guard Cutter STRATTON) will be commissioned and available for 

deployment to the JIATF-S Area Of Responsibility (AOR). Additionally, the Coast Guard 

brought online a new Counter Drug hidden compartment detection course at the Maritime 

Law Enforcement Academy (MLEA) in FY 2010 that will improve boarding teams’ ability 

to investigate, search, locate, and access hidden compartments on suspect vessels. With 

go-fast type vessels remaining the primary means of conveyance by Drug Trafficking 

Organizations (DTOs) operating in and around the littorals, the Coast Guard plans to 

continue seeking expanded bilateral agreements, as well as providing international training 

programs to enhance partner nation capability and to support Theater Security Cooperation 

initiatives. Such engagement strengthens ties with source and transit zone partner nations 

and increases their maritime law enforcement competency and capability throughout the 

transit zone. Based on its baseline of performance, the expanded capabilities mentioned, 

and anticipated intelligence gains in FY 2011 to focus detection and monitoring efforts, the 

Coast Guard expects that it can achieve its FY 2011 target. 

(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 actual results, as well as the data source(s) used to collect information. 

The data used to calculate the Coast Guard’s Cocaine Removal Rate is drawn from the 

interagency-validated CCDB. The amount of cocaine removed by the Coast Guard is the 

sum of all cocaine that is physically seized by Coast Guard personnel and all 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 CCDB. Data entered into the 

CCDB are approved through a quarterly, interagency vetting process. Although the 

cocaine removals are originally reported in kilograms, the Coast Guard converts the 

removal to metric tons to compute the Cocaine Removal Rate. The estimated non01/18/2011 Created by DCO-81

Page 4 of 6 
Enclosure (1) to letter dated January 18, 2011 

commercial maritime flow of cocaine towards the United States is extracted from the 

CCDB. All data contained in the CCDB are deemed to be as accurate, complete and 

unbiased in presentation and substance as possible. 

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

Performance Management and Assessment review all the assumptions that factor into the 

setting of its out-year targets, and makes adjustments as necessary. Revisions to the targets 

are reported via the Department of Homeland Security’s Future Year Homeland Security 

Program database. 

The Coast Guard Office of Law Enforcement has recently updated its out-year 

performance targets to be reviewed and finalized January 2011. The key factors that drive 

the target setting process are the estimated out-year cocaine flow, the projected availability 

of Coast Guard resources (mainly major cutters, long range MPA, Law Enforcement 

Detachment Team (LEDET) and Airborne Use of Force (AUF)), and any anticipated 

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. 

The Coast Guard performance reporting system is appropriate and applied. It was 

reviewed in a 2007 Independent Program Evaluation by the Center for Naval Analyses and 

a 2007 Office of Management and Budget (OMB) PART evaluation. Both reviews 

verified the appropriateness and application of the performance reporting system, and the 

Coast Guard has made all significant changes recommended to ensure continued validity. 

(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 are 
 

reasonable. 
 

The Coast Guard was not within the DHS allowable deviation of 1% from its target, and 

the explanations offered for failing to meet the target are reasonable. The Coast Guard’s 

FY 2011 target satisfies OMB Circular A-11’s guidance for establishing targets. 

(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. 

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Enclosure (1) to letter dated January 18, 2011 

The Coast Guard methodology to establish performance targets is reasonable and applied. 

The Coast Guard uses a quantitative and qualitative process that reviews intelligence, 

logistics, strategic and operational policy, capability, emerging trends, past performance, 

and capacity variables impacting mission performance 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 database. 

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

The 2007 OMB PART of the Coast Guard Drug Interdiction Program and 2007 

Independent Program Evaluation by the Center for Naval Analyses validated the adequacy 

of Coast Guard performance measures. 

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. 

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Page 6 of 6 
 

 

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 Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Chief Financial Officer 

Chief Information Officer 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Office of National Drug and Control Policy 

Associate Director for Planning and Budget 

United States Coast Guard 

Commandant 

Chief Financial Officer 

Chief Information Officer 

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) 254-4100, 

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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Attention: Office of Investigations - Hotline, 

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