Department of Homeland Security
 

Independent Review of U.S. Coast Guard's Reporting 


of FY 2012 Drug Control Performance Summary Report 


OIG-13-27 January 2013
 
'.~" , OF.FICE OF INSPECTOR GEI\I£RAL 

Department of Homeland S~~uri(y 

JAN 2 9 2013 

MEMORANDUM FOR: Rear Admiral Stephen P. Metruck 

Chief Financial Officer 

U.S. Coast Guard 

FROM: Anne l. Richards eM.L;l.UJ 

Assistant Inspector General f or Audits 

SUBJECT: Independent Review of u.s. Coost Guard', RI!pGrtinr; of 

FY 1012 Drug Control Performance Summary Report 

Attached for your information is our final report, Independent Review of u.s. Coost 

Guard's Reporting of FY 2012 Drug Control Performonce Summary Report. U.s. Coast 

Guard's management pr~pared the Performance Summary Report and management 

assertions to comply with the requirements afthe Office of National Drug Control Policy 

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

We contracted with the independent public "ccounting firm KPMG LLP to perform the 

review. KPMG LLP is responsible for the ~tt~ched independent accountants' report, 

dated January 18, 2013, and the conclusions eKpressed in it. We do not eKpress an 

opinion on the Performance Summary Report and management's assertions. This 

report contains no recommendations. 

Consistent with our responsibility under the Inspector General Act, 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 Mark Bell, Deputy Assistant 

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

Attachment 
 

 

 

KPMG LLP 

Suite 12000 

1801 K Street, NW 

Washington, DC 20006 

Independent Accountants’ Report 

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) United States Coast Guard (USCG) for the year ended September 30, 2012. We have 

also reviewed the accompanying management’s assertions for the year ended September 30, 2012. 

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 (the Circular). 

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, 2012, is not presented, in all material respects, in 

conformity with the Circular, or that (2) management’s assertions referred to above are not fairly stated, in 

all material respects, based on 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. 

January 18, 2013 


KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

(“KPMG International”), a Swiss entity. 
U.S. Department of Commandant 2100 Second Street. S.W. 

Homeland Security United States Coast Guard Washington, DC 20593-7681 

Staff Symbol: DC0-81 

Phone: (202) 372-1340 United States Email:timothy.g.meyers@uscg.mil 

Coast Guard 

7110 

January 18,2013 

Ms. Sandra John 

Department of Homeland Security 

Director of Financial Management 

Office of the Inspector General 

Dear Ms. John, 

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

Drug Conlrol Funds dated May 1,2007, enclosed is the Coast Guard's final FY 2012 

Performance Summary Report. 

If you require further assistance on this information, please contact LCDR Timothy Meyers, 

202-372-1340. 

Sincerely, 

rtc~ , c.. ofl. U5-( cr 

H. L. MORRlSON 

Commander, U.S. Coast Guard 

Acting Chief, Office of Performance Management 

& Assessment 

Enclosure (I) FY 2012 Performance Summary Report 

Copy: DHS Budget Office 
Enclosure (1) to letter dated January 18, 2013 


Drug Budget
 

United States Department of Homeland Security
 

United States Coast Guard
 

Performance Summary Report FY 2012 


01/17/2013 Created by DCO-81
 

Page 1 of 6
 
Enclosure (1) to letter dated January 18, 2013 


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 Maritime Law Enforcement 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 Office of Management and Budget (OMB) Program 

Assessment and Rating Tool (PART) Evaluation. The Coast Guard uses the Consolidated 

Counterdrug Database (CCDB) as the authoritative source for estimating illicit drug flow 

through the transit zone. Use of the CCDB permits the Coast Guard to evaluate its 

performance on a quarterly basis. It should be noted that CCDB cocaine movement 

estimates include all confidence maritime flow, which translates to a lower performance 

result for cocaine removal rate. DHS leadership reviewed and approved this metric as a 

Coast Guard Management metric in 2010. This metric is included as part of the Coast 

Guard’s annual budget submission. 

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

in the maritime transit zone (CCDB)). 

Table 1: Cocaine Removal Rate 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Actual 

FY 2012 

Actual 

FY 2012 

Target 

FY 2013 

Target 

13.2% 15.0% 13.5% 11.6% 13.4% 16.5% 14.1% 

(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 within the United States 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 Caribbean Sea, the Gulf of Mexico and the Eastern Pacific Ocean. The 

Coast Guard’s primary outcome measure, the Cocaine Removal Rate, indicates how 

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. 

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Page 2 of 6
 
Enclosure (1) to letter dated January 18, 2013 


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 

(drugs interdicted, jettisoned, scuttled) by the Coast Guard by the total estimated noncommercial maritime movement of cocaine towards the United States. Both of these 

assessments are captured and validated in the CCDB. 

The 2012 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 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 removal rate include, but are not limited to, changing modes, tactics and 

routes by the transnational criminal organizations (TCOs); 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 fielding of new capabilities (National Security Cutter, Fast Response Cutter and 

HC-144A aircraft, for example). 

(2) Provide narrative that examines the FY 2012 actual performance results with the FY 2012 target, as well 

as prior year actual results. If the performance target was not achieved for FY 2012, 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 2012, there was an observed increase in cocaine flow being smuggled through the 

transit zone via non-commercial maritime means—796 Metric Tons (MT) in FY 2012 

compared to 652 MT in FY 2011. Of the FY 2012 non-commercial maritime flow, the 

Coast Guard removed 107 MT of cocaine, up from its FY 2011 total of 75.5 MT. Relative 

to the total estimated movement of non-commercial maritime cocaine destined for the 

United States in FY 2012 captured in the CCDB, the Coast Guard removed 13.4% of this 

estimated flow, falling short of its target of 16.5%. Comparatively, the Coast Guard’s 

cocaine removal rate was 11.6% in FY 2011. The total number of Coast Guard removal 

events increased in FY 2012 (129 in FY 2011 to 162 in FY 2012), as did the number of 

Coast Guard cocaine removal events in FY 2012 (90 in FY 2011 to 108 in FY 2012). 

Reduced availability and reliability of air and surface (detection and interdiction) assets 

continued to hinder counter-drug mission performance in the drug transit zone. The 

advancing age of the Coast Guard’s cutter fleet led to increased unscheduled maintenance 

days and casualties, reducing the number of deployable assets available to support Joint 

Interagency Task Force South (JIATF-S). Through the 2012 Department of Homeland 

Security (DHS) Statement of Intent, the Coast Guard planned to provide 2,190 cutter days, 

1,460 Aviation Use of Force (AUF) deployed days at seas (DDAS), and 4,700 Maritime 

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Page 3 of 6
 
Enclosure (1) to letter dated January 18, 2013 


Patrol Aircraft (MPA) hours to JIATF-S, but was only able to provide 1,947 cutter days, 

1,046 AUF DDAS, and 3,834 MPA hours for FY 2012 or approximately 89% of intended 

cutter days, 72% of AUF days, and 82% of intended MPA hours. 

Since FY 2011, the Coast Guard has decommissioned four of its twelve 378’ high 

endurance cutters (WHEC), yet only two operational national security cutters (NSC) and 

less capable medium endurance cutters are available to fill the resulting transit zone patrol 

hour gap. Prior to the NSC, WHECs were historically the Coast Guard’s most effective 

surface asset for cocaine removals due to their greater endurance and more robust 

command and control suite compared to other Coast Guard surface platforms. Cutter 

endurance is a key contributor to countering the maritime cocaine threat in the remote, vast 

Eastern Pacific transit zone vector. The reduction in WHEC available cutter days reduced 

the opportunity for additional cocaine removals and may have contributed to the Coast 

Guard missing its FY 2012 Cocaine Removal Rate target. As more capable NSCs continue 

to replace the aging WHEC fleet and close the major cutter patrol hour gap, it is expected 

that cocaine removal rate performance will increase. 

In addition to reduced asset and resource availability, the following also contributed to the 

Coast Guard missing its FY 2012 Cocaine Removal Rate target: 

•	 Increased flow of cocaine smuggled through the transit zone with no corresponding 

increase in Coast Guard assets on scene for detection and interdiction; 

•	 Reduced maritime domain awareness throughout the JIATF-S operating area; and 

•	 Increasingly sophisticated and evolving Transnational Criminal Organization 

tactics (e.g. greater use of self-propelled semi- and fully-submersibles). 

(3) The agency should describe the performance target for FY 2013 and how the agency plans to meet this 

target. If the target in FY 2012 was not achieved, this explanation should detail how the agency plans to 

overcome prior year challenges to meet targets in FY 2013. 

The Coast Guard’s target for FY 2013 is to remove 14.1% percent of the cocaine moving 

via non-commercial maritime means towards the United States. This target was developed 

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 detection and monitoring mission. To increase interdiction capacity 

and capability, the Coast Guard has several initiatives which are expected to come to 

fruition in FY 2013. A third National Security Cutter (STRATTON) will be available for 

deployment to the JIATF-S Area of Responsibility. The Coast Guard will continue to 

deploy surface and aviation assets and law enforcement teams in support of 

SOUTHCOM’s OP MARTILLO, designed to push drug traffickers out of the littorals and 

farther off shore where they are more vulnerable to interdiction and prosecution in the 

United States. The Coast Guard and the U.S. Navy (USN) will continue to pursue 

expansion of Airborne Use of Force capability with the USN expecting to deploy AUF 

helicopters capable of nighttime operations in FY 2013 to improve the interdiction and 

“end game” prosecution of drug traffickers using go-fast vessels. The Coast Guard will 

continue its counter drug hidden compartment detection course at the Maritime Law 

Enforcement Academy in FY 2013, increasing the number of specially trained boarding 

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Page 4 of 6
 
Enclosure (1) to letter dated January 18, 2013 


team personnel able to investigate, search, locate and access hidden compartments on 

suspect vessels. With go-fast type vessels remaining the primary means of conveyance by 

TCOs operating in and around the littorals, the Coast Guard will continue to strengthen 

international partnerships through bilateral agreements, as well as provide training 

programs and engage in professional exchanges 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 and the expanded capabilities mentioned, the Coast Guard expects that it can 

achieve its FY 2013 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 Cocaine Removal Rate is drawn from the interagencyvalidated CCDB. The amount of cocaine removed by the Coast Guard is the sum of all 

cocaine that is physically seized by Coast Guard personnel2

 and all cocaine lost to the 

TCOs due to the Coast Guard’s actions. The latter amount is, at times, an intelligencebased 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 is validated 

through a quarterly, interagency vetting process. The estimated non-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 Maritime Law Enforcement Program and Deputy 

Commandant for Operations’ Office of Performance Management and Assessment review 

all the assumptions that factor into the setting of its out-year targets, and make adjustments 

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

Security’s Future Year Homeland Security Program database. 

The Maritime Law Enforcement Program last updated its out-year performance targets in 

March 2012 in conjunction with normal target setting timelines. The key factors that drive 

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

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

(LEDET) and Airborne Use of Force (AUF) helicopters), and any anticipated changes in 

Coast Guard capabilities, authorities, or partnerships that may impact cocaine removals. 

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 Drug Budget Accounting Circular dated May 1, 2007: 

2

 The final amount is determined by the receiving Organized Crime Drug Enforcement Task Forces agency. 

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Page 5 of 6
 
Enclosure (1) to letter dated 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 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 did not meet its FY12 performance target. The explanations offered for 

failing to meet the target are reasonable. The Coast Guard’s FY 2012 performance target 

satisfied OMB Circular A-11 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. 

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. The metric was also reviewed and approved by DHS leadership in 2010. 

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Page 6 of 6
 
 

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 

Acting 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-13-27
 
 

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