Department of Homeland Security
 

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Independent Review of U.S. Coast Guard’s 


Reporting of FY 2013 Drug Control Performance 


Summary Report
 

OIG-14-35 February 2014
 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 Washington, DC 20528 / www.oig.dhs.gov

 FEB 11 2014 

MEMORANDUM FOR: Rear Admiral Stephen P. Metruck 

Chief Financial Officer 

U.S. Coast Guard 

FROM: rk Bell

cting Assistant Inspector General for Audits 

Ma

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SUBJECT: IndependentfReviewfoffU.S.fCoastfGuard’sfReportingfoff

FYf2013fDrugfControlfPerformancefSummaryfReport

ff

Attached for your information is our final report, IndependentfReviewfoffU.S.fCoastf

Guard’sfReportingfoffFYf2013fDrugfControlfPerformancefSummaryfReport.fU.S. Coast 

Guard’s management prepared the Performance Summary Report to comply with the 

requirements of the Office of National Drug Control Policy Circular, AccountingfoffDrugf

ControlfFundingfandfPerformancefSummary, dated January 18, 2013. 

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

review. KPMG LLP is responsible for the attached independent accountants’ report, 

dated February 04, 2014, and the conclusions expressed in it. We do not express an 

opinion on the Performance Summary Report. This report contains no recommendation. 

Consistent with our responsibility under the InspectorfGeneralfAct, we are providing 

copies of our report to appropriate congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. We will post 

the report on our website for public dissemination. 

 

Please call me with any questions, or your staff may contact Sandra John, Acting Deputy 

Assistant Inspector General for Audits, at (202) 254-4100. 

Attachment 
 

 

 

 

Independent Accountants’ Report 

KPMG LLP

Suite 12000

1801 K Street, NW 

Washington, DC 20006

KPMG LLP is a Delaware limited liability partnership,

the U.S. member firm of KPMG International Cooperative

(“KPMG International”), a Swiss entity.

Deputy 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) U.S. Coast Guard (USCG) for the year ended September 30, 2013. USCG’s 

management is responsible for the Performance Summary Report. 

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. 

Accordingly, we do not express such an opinion. 

Management of USCG prepared the Performance Summary Report to comply with the requirements of the 

Office of National Drug Control Policy (ONDCP) Circular, Accounting of Drug Control Funding and 

Performance Summary, dated January 18, 2013 (the Circular). 

Based on our review, nothing came to our attention that caused us to believe that the Performance 

Summary Report for the year ended September 30, 2013, referred to above, is not fairly stated in all 

material respects, in conformity with the criteria set forth in the Circular. 

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. 

February 4, 2014 
Commandant 2703 Martin Luther King Ave SE 

United States Coast Guard Washington, DC 20593-7318 

Staff Symbol: DC0-81 

Phone: (202) 372-2684 

Emaii:Devin.L.Townsend@uscg.mil 

16012 

February 04, 2014 

Ms. Anne L. Richards 

Assistant Inspector General for Audits 

Department of Homeland Security 

Office of the Inspector General 

Dear Ms. Richards, 

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

Control Funding and Peiformance Summary, dated January 18, 2013, enclosed is the Coast 

Guard's final FY 2013 Performance Summary Report. 

If you require further assistance on this information, please contact LCDR Devin Townsend, 

202-372-2684. 

Enclosure (1) FY 2013 Performance Summary Report 

Copy: DHS Budget Office 
Enclosure (1) to letter dated February 04, 2014 

Drug Budget 

United States Department of Homeland Security 

United States Coast Guard 

Performance Summary Report FY 2013 

02/04/2014 Created by DC0-81 

Page 1 of 5 
Enclosure (1) to letter dated February 04, 2014 

I. PERFORMANCE INFORMATION 

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

lines (i.e., Acquisitions, Construction & Improvements (AC&l), Operating Expenses (OE), 

Research Development Testing and Evaluation (RDT&E), and Reserve Training (RT)), the Coast 

Guard does not manage peiformance along decision unit lines. This is impractical due to the 

multi-mission peiformance of our assets, which transcends budget decision units. 

This section is based on Coast Guard data and agency Government Performance and Results Act 

(GPRA) documents. 

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

within the United States by denying smugglers the use of air and maritime routes and by 

projecting an effective law enforcement presence in and over the six million square mile drug 

Transit Zone of the Caribbean Sea, the Gulf of Mexico and the Eastern Pacific Ocean. The 

Coast Guard deploys major cutters and aviation assets to the Transit Zone in support of Joint 

Interagency Task Force South (JIA TF-S) counterdrug efforts. In addition to its organic capacity, 

the Coast Guard leverages interagency/international partnerships to enhance presence and to 

expand interdiction opportunities by deploying LEDETs on USN and Allied (United Kingdom, 

The Netherlands, Canada) vessels. 

The Coast Guard's drug interdiction performance is best summarized by the program's primary 

outcome measure, the Cocaine Removal Rate. This measure 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 the supply of cocaine available for consumption in the United States. 

Performance Measure: Cocaine Removal Rate (Removal rate for cocaine from non-commercial 

vessels in the maritime Transit Zone). This represents the percent of Cocaine removed (seized by 

the U.S. Coast Guard, and jettisoned, scuttled, or destroyed as a result of U.S. Coast Guard law 

enforcement action) in relationship to the Non-Commercial Maritime Movement of cocaine. 

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. 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 by the transnational criminal 

organizations (TCOs) due to the Coast Guard's actions. The latter amount is, at times, 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. 

The estimated non-commercial maritime flow of cocaine towards the United States is extracted 

from the interagency-validated Consolidated Counter Drug Database (CCDB). 

p er ~ ormance T arge ts an d R esu Its (C ocame R emova I R a t) e : 

Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY2014 

Target: 15.7% 18.5% 15.5% 16.5% 14.1% 13.9% 

Actual: 15% 13.5% 11.6% 13.4% 15.3% N/A 

02/04/2014 Created by DC0-81 

Page 2 of 5 
Enclosure (1) to letter dated February 04, 2014 

The 2012 National Drug Control Strategy maintains the interagency, Transit Zone removal rate 

goal for cocaine of 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 non-commercial 

maritime means, the national goal is achievable with a higher Coast Guard cocaine removal rate, 

assuming no decrease in domestic and international partner agency performance to achieve that 

40% goal. Maritime Law Enforcement 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 diagnosed to determine the cause and to develop strategies and tactics to 

continue to increase the removal rate. Factors that can impact the Coast Guard's removal rate 

include, but are not limited to: 

• Continuously changing modes, tactics and routes by TCOs (e.g. use of submersible type 

vessels and logistic support vessels); 

• The advancing age and deteriorating condition of the Coast Guard's cutter fleet; 

• The availability of surface assets from the U.S. Navy (USN) and Allied nations to support 

Detection and Monitoring in the Transit Zone; 

• Sufficient Coast Guard Law Enforcement Detachments (LEDETs) capacity to perform 

Interdiction and Apprehension activities from USN and Allied surface assets; 

• The availability, quality and timeliness of tactical intelligence; new or upgraded 

diplomatic and legal tools; 

• The fielding of new capabilities (e.g. National Security Cutter., Fast Response Cutter, and 

Maritime Patrol Aircraft). 

As a result of sequestration, the Coast Guard reduced its strategic commitment to supporting 

Detection and Monitoring (D&M) on behalf of JIA TF-S. Specifically, planned ship deployments 

fell by more than 30%, from an original FY 2013 target of 1,460 major cutter days to 986. The 

Coast Guard also reduced planned Maritime Patrol Aircraft (MPA) support to JIATF-S to 3,207 

hours, from a FY 2013 target of 4,700 hours. USN surface combatants, with embarked Coast 

Guard LEDETs, stopped nearly all surface ship deployments in the last half of FY 2013 when 

sequestration was in effect. 

Quality of Performance Data: The Coast Guard continues to use the CCDB as its source for 

tracking cocaine movement estimates. Data entered into the CCDB is validated through a 

quarterly, interagency vetting process. The CCDB event-based estimates are the best available 

authoritative source for estimating illicit drug flow through the Transit Zone. These estimates 

permit the Coast Guard to objectively evaluate its performance. All data contained in the CCDB 

are deemed to be as accurate, complete and unbiased in presentation and substance as possible. 

According to CCDB, the known cocaine flow through the Transit Zone via non-commercial 

means decreased in FY 2013 to 577 MT from 796 MT in FY 2012. The Coast Guard removed 

88.4 MT of cocaine from the Transit Zone in FY 2013 and had a 15.3% removal rate for noncommercial maritime cocaine flow. This constitutes a 17% reduction from the 106.9 MT of 

cocaine the Coast Guard removed in FY 2012. While the Coast Guard exceeded its performance 

target of removing 14.1% of non-commercial maritime cocaine flow, overall awareness of 

known non-commercial maritime flow was down compared to FY 2012). 

02/04/2014 Created by DC0-81 

Page 3 of 5 
Enclosure (1) to letter dated February 04, 2014 

At least annually, the Coast Guard's Maritime Law Enforcement Program and Deputy 

Commandant for Operations' Office of Performance Management and Assessment review 

assumptions that factor into the establishment of out-year drug interdiction targets, making 

adjustments as necessary. Revisions to the targets are reported via the Department of Homeland 

Security's Future Year Homeland Security Program (FYHSP) database. The Maritime Law 

Enforcement Program last updated its out-year performance targets in May 2013 in conjunction 

with normal target setting timelines. 

Due to a forecasted reduction in the level of ship and aircraft support provided to JIA TF-S by the 

Coast Guard and its partners in the near future, the Coast Guard's removal rate target for FY 

2014 has been lowered to 13.9%. This represents an aggressive, yet achievable, performance 

target with available resources. 

II. MANAGEMENT'S ASSERTIONS 

The following assertions, supported by the information presented above, satisfy the data, 

estimation methods, and reporting systems criteria outlined in paragraph 7 .b. of the ONDCP 

Circular: Accounting of Drug Control Funding and Performance Summary (January 18, 2013): 

(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 

OMB Program Assessment Rating Tool (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 - An assertion shall be 

made regarding the reasonableness of any explanation offered for failing to meet a performance 

target and for any recommendations concerning plans and schedules for meeting future targets or 

for revising targets or eliminating performance measures. 

The Coast Guard met its FY13 performance target. The Coast Guard's FY 2013 

performance target satisfied OMB Circular A-ll guidance for establishing targets. 

(3) Methodology to establish performance targets is reasonable and consistently appliedThe methodology described above to establish performance targets for the current year is 

reasonable given past performance and available resources. 

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 

02/04/2014 Created by DC0-81 

Page4of5 
Enclosure (1) to letter dated February 04, 2014 

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- Each 

Report shall include an assertion that the agency has established at least one acceptable 

performance measure for each Drug Control Budget Decision Unit identified in reports required 

by section 6a(l)(A) 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. Each 

performance measure must reflect the intended purpose of the relevant National Drug Control 

Program activity. 

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. The metric 

was also reviewed and approved by DHS leadership in 2010. 

02/04/2014 Created by DC0-81 

Page 5 of5 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

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 

DHS Component Liaison

Chief Privacy Officer 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Office of National Drug Control Policy

Associate Director for Planning and Budget 

U.S. Coast Guard

Commandant 

Chief Financial Officer 

Chief Information Officer 

Congress

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov OIG-14-35
 
 

 

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