Coast Guard Shore Infrastructure: Applying Leading Practices Could Help Better Manage Project Backlogs of at Least $2.6 Billion
Released: 2019-02-21T00:00:00

Letter

Background

Coast Guard’s Organizational Approach to Managing Its Shore Infrastructure Portfolio

Coast Guard shore infrastructure includes buildings and structures, which it has organized into 13 asset types, known as asset lines. Table 1 provides information on Coast Guard asset lines, including examples of assets, the number within each asset line in 2017, and the Coast Guard’s estimated replacement value of each asset line in 2017—the most recent value available at the time of our review.

The Coast Guard’s Office of Civil Engineering sets Coast Guard-wide civil engineering policy, which includes facility planning, design, construction, maintenance, and disposal. The Coast Guard’s Shore Infrastructure Logistics Center, established in 2009, is to manage and coordinate infrastructure condition assessments via six regional Civil Engineering Units (CEUs), along with other divisions and offices. The condition of individual shore infrastructure assets is determined by CEU personnel and civil engineers in the field. According to Coast Guard officials, every Coast Guard facility, such as a base or boat station, is to be inspected by a CEU representative every 3 years. The representative is to conduct a facility condition assessment of all shore infrastructure assets—buildings and structures—located at that facility. According to Coast Guard CEU officials, the representative is to identify if any new maintenance-related deficiencies exist at the facility and add them to the backlog of projects, review the previous backlog, and verify that the Coast Guard’s shore facilities’ inventory records are correct. This process is intended to help define the current conditions of assets and identify maintenance needs.

According to Coast Guard guidance, the Shore Infrastructure Logistics Center also establishes project priorities for the acquisition, programmed depot maintenance, major repair, and modification of Coast Guard shore facilities, and implements shore infrastructure policies. Among other things, the Shore Infrastructure Logistics Center is to (1) assure that all Coast Guard facilities meet their operational and functional requirements, (2) take corrective action before advanced deterioration requires major repairs, (3) ensure preventative maintenance is performed on a routine schedule, and (4) prevent over-maintenance and under-maintenance. In addition, this guidance states that all Coast Guard property must have a documented, standardized system of maintenance for facilities by designated personnel familiar with, and properly trained on, the maintenance system in place to support its shore infrastructure.

Coast Guard’s Civil Engineering Program Has a Requirements-Based Budget to Determine Funding Needs

In 2016, the Coast Guard’s civil engineering program began using requirements-based budget planning to determine shore infrastructure funding needs. According to the Coast Guard, a requirements-based budget is an estimate of the cost to operate and sustain the Coast Guard’s shore infrastructure portfolio of assets over the lifecycle of the asset, from initial construction or capital investment through divestiture or demolition. Coast Guard budgeting for shore infrastructure distinguishes between procurement and acquisitions and recurring and non-recurring maintenance, among other things. Procurement and acquisitions encompasses major projects to alter, acquire, or build new infrastructure—for example, modifying the bay doors on a boat garage so that larger boats can be accommodated. In contrast, there are two types of maintenance for shore infrastructure. Routine recurring maintenance, known as Organizational-Level Maintenance (OLM), includes tasks such as clearing moss and debris from a rooftop drain or applying caulk to seal a building. Non-recurring maintenance, known as Depot-Level Maintenance (DLM), consists of major maintenance tasks that are beyond the capability of an individual unit, such as replacing exterior doors and windows.

The Coast Guard uses three accounts for its shore infrastructure. Amounts in the Procurement, Construction and Improvements (PC&I) account are used for the acquisition, procurement, construction, rebuilding, and improvement of shore facilities and are directed to specific projects. Amounts in the shore OLM account are used for routine recurring maintenance, and amounts in the DLM account are used for major maintenance and repair of Coast Guard real property. See Table 2 for additional information about these accounts.

Coast Guard Utilizes Planning Boards to Prioritize Shore Infrastructure Projects

The Coast Guard makes decisions regarding the allotment of resources for shore infrastructure through PC&I, regional DLM, and central DLM planning boards, which meet twice annually to prioritize Coast Guard shore infrastructure needs on the basis of expected appropriations and other factors, such as damage caused by natural disasters. These boards are responsible for evaluating potential shore infrastructure projects that have been identified by managers who are responsible for evaluating, ranking, and recommending projects to the boards within their specified product line. For example, aviation asset line managers are responsible for aviation-related shore infrastructure projects, such as runways, landing areas, and hangars. Table 3 provides specific information on these planning board responsibilities and members.

Figure 1 shows how the planning boards are to prioritize shore infrastructure projects. Additional details about the planning boards’ processes, including the extent to which they are documented and align with leading practices, are described later in this report.

Coast Guard Is Required to Report Unfunded Shore Infrastructure Priorities

The Coast Guard is statutorily required to provide a list of each unfunded priority, including unfunded shore infrastructure priorities, to certain committees of Congress to support the President’s budget, and its 5- year Capital Investment Plan (CIP). The term ‘unfunded priority’ means a program or mission requirement that (1) has not been selected for funding in the applicable proposed budget, (2) is necessary to fulfill a requirement associated with an operational need, and (3) the Commandant would have recommended for inclusion in the applicable proposed budget had additional resources been available, or had the requirement emerged before the budget was submitted.

Almost Half of the Coast Guard’s Shore Infrastructure is Beyond Its Service Life, and Project Backlogs Will Cost at Least $2.6 Billion to Address

Coast Guard Reported that 45 Percent of Its Shore Infrastructure Is Beyond Its Service Life

As of 2017, the Coast Guard’s annual report on shore infrastructure stated that 45 percent of Coast Guard assets have exceeded their service lives. The Coast Guard also reported that its overall shore inventory has a 65-year service life. For example, the Coast Guard’s 2017 shore infrastructure report identified at least 65 percent of aviation pavements, 60 percent of aviation fuel facilities, and at least 53 percent of piers—all of which the Coast Guard has identified as mission-critical assets—as being past their service lives. Coast Guard officials told us that the agency had changed their service life standard from 50 years to service lives linked to each asset’s assigned category code, based on Department of Defense (DOD) standards, before they reported service life calculations in their 2017 annual report on shore infrastructure. As a result of this change, some shore infrastructure that has been in service 50 to 65 years, which would previously have been identified as past its service life, will be characterized by the Coast Guard as within its service life—a better condition than the Coast Guard would have reported under its 50-year standard.

Additionally, in 2017, the Coast Guard rated its overall shore infrastructure condition as a C- based on criteria it derived from standards developed by the American Society of Civil Engineers. Some asset lines, such as aviation, whose assets are generally mission-critical, are rated lower. For example, the Coast Guard rated its industrial asset line as a D, in part because 8 of the 9 assets which comprise the Coast Guard Yard—the only Coast Guard facility that can perform drydock maintenance on large Coast Guard ships—are more than 5 years beyond their service life. Table 4 shows additional detail about Coast Guard asset lines, including the rate at which the Coast Guard reported these assets were functioning past their service life, and the condition grades assigned by the Coast Guard for fiscal year 2017.

According to Coast Guard officials, the demand placed on the Coast Guard’s shore infrastructure in recent years has increased because of the new ships and aircraft the Coast Guard has acquired. For example, a senior Coast Guard official told us that the agency has recently needed to upgrade some of its hangars with liquid oxygen storage facilities in order to support the Coast Guard’s new HC-27A aircraft. Another official told us that because the Coast Guard’s National Security Cutters—which the Coast Guard began operating in 2010—are 40 feet longer than the High Endurance Cutters they are replacing, the Coast Guard has had to either build new piers or lengthen existing ones.

Coast Guard’s Data Indicate that Project Backlogs of Shore Infrastructure Will Cost At Least $2.6 Billion to Address, as of 2018

Coast Guard data show that it will cost at least $2.6 billion to address its two project backlogs—(1) recapitalization and new construction, and (2) deferred maintenance. Given the level at which the Coast Guard has been requesting such funding, it will take many years for the agency to address the backlogs. For example, the Coast Guard estimated that based on its fiscal year 2017 appropriation it would take 395 years to address its current $1.77 billion PC&I recapitalization and new construction backlog, assuming that funding would continue at this level. This time frame estimate does not include the Coast Guard’s deferred DLM maintenance backlog, which the Coast Guard estimated to be nearly $900 million in fiscal year 2018. Table 5 provides information on the Coast Guard’s two shore infrastructure backlogs as of August 2018.

However, the number of projects in the Coast Guard’s backlogs and the associated cost for addressing them is incomplete. In July 2018, Coast Guard officials told us that the majority of the projects on the PC&I backlog do not yet have associated cost estimates, and thus have not been factored into the backlog cost estimates they have previously reported to Congress. In November 2018, the Coast Guard told us there were 205 projects on the PC&I backlog without cost estimates. Officials explained that they have not prepared cost estimates for these projects because they are in the preliminary stage of development and cost estimates would not be accurate. Figure 2 shows the number of projects with cost estimates and the estimated value of its PC&I backlog for fiscal years 2012 through 2018. See appendix II for additional details.

In addition to the estimated $2.6 billion backlogs of PC&I recapitalization and new construction and DLM deferred maintenance projects, the Coast Guard carries out routine and recurring maintenance and repairs (maintenance) through OLM funding. However, Coast Guard officials stated that funding for maintenance projects cannot be disaggregated from overall OLM funding. The Coast Guard’s 2017 shore infrastructure annual report states that industry studies establish that the most effective maintenance organizations spend about 17 percent of their staff labor effort on corrective maintenance (i.e., repairs) and 83 percent on preventative maintenance (e.g., activities such as changing buildings systems’ filters and oil, resealing pavement surfaces, or repainting buildings). However, Coast Guard’s analysis of OLM records indicated that 66 percent of their facilities’ staff labor effort was used for corrective maintenance. This imbalance indicates that fewer funds are available for preventative maintenance than industry studies suggest, which could increase costs and affect service lives if preventative maintenance cannot be performed to the extent necessary. The annual report further stated that the significant investment needed for corrective maintenance reflects the state of the Coast Guard’s aging infrastructure and the strain it places on maintenance personnel. Moreover, Coast Guard officials testified to Congress in June 2017 that aging infrastructure adversely affects operational efficiency. Further, in July 2018 Congressional testimony by the Coast Guard Deputy Commandant for Mission Support stated that the agency needs to rebuild shore infrastructure readiness with sound investments in operations and maintenance, but budget realities result in deferred maintenance, fewer spare parts, and infrastructure reliability and security concerns.

The Coast Guard’s Process for Managing Its Shore Infrastructure Does Not Fully Meet 6 of 9 Leading Practices, Resulting in Management Challenges

The Coast Guard’s process to manage its shore infrastructure recapitalization and deferred maintenance backlogs does not fully meet 6 of 9 leading practices we have previously identified for managing public sector maintenance backlogs. Specifically, of the nine leading practices, the Coast Guard met three, partially met three, and did not meet three, as shown in Table 6. We, as well as others, have identified that deferring maintenance and repair backlogs can lead to higher costs in the long term and pose risks to safety and agencies’ missions.

Coast Guard Met 3 of 9 Leading Practices for Managing Public Maintenance Backlogs

The Coast Guard met 3 of 9 leading practices for managing public maintenance backlogs by identifying the types of risks posed by not making timely investments in its shore facilities; identifying the types of assets, such as buildings, that are mission-critical; and by establishing guidance that identifies the primary methods to be used for delivering maintenance and repair activities, among other things. We have previously found that these three practices are an important step toward increased transparency and more effective management of maintenance backlogs.

Identify the Types of Risks Posed By Lack of Timely Investment

According to leading practices, agencies should identify the types of risks posed by not investing in deteriorating facilities, systems, and components because this is important for providing more transparency in the decision-making process, and for communicating with staff at all organizational levels. The Coast Guard has a process to identify, document and report risks in its annual shore infrastructure reports for fiscal years 2015 through 2017. These reports identified the types of risks the Coast Guard faces in not investing in its facilities, including financial risk, capability risk, and operational readiness risk, but did not specifically measure these risks. The Coast Guard met this leading practice because the leading practice requires agencies to identify risk in general terms—for example, in terms of increased lifecycle costs, or risk to operations. The leading practice does not require the agency to quantify or measure this risk by, for example, calculating the probability that a building or structure will fail and impair the Coast Guard’s operations.

Identify Types of Facilities or Specific Buildings that Are Mission-Critical and Mission- Supportive

Leading practices state that agencies should identify buildings as mission-critical and mission-supportive to help establish where maintenance and repair investments should be targeted, to ensure that funds are being used effectively. Since at least 2012, the Coast Guard has documented its process to classify all of its real property under a tier system and established minimum investment targets by tier as part of its central DLM planning boards. These tiers—mission-critical versus mission-supportive—were incorporated into the guidance that Coast Guard decision-makers are to follow in their deliberations about project funding and to help them determine how to target funding more effectively. For example, the Coast Guard’s PC&I planning board guidance for fiscal years 2019 through 2023 prioritized expenditures on shore infrastructure-supporting front line operations such as piers or runways over shore infrastructure providing indirect support to front line operations such as administrative buildings.

Identify the Primary Methods to Be Used for Delivering Maintenance and Repair Activities

Identification of the primary methods of delivery for maintenance and repair activities is intended to help agencies determine the level of resources that should be allocated to each type of maintenance activity and to repair projects, according to leading practices. The Coast Guard’s Civil Engineering Manual and other guidance documents detail how the maintenance and repair program is structured and how budget accounts are to be utilized. For example, the manual defined how projects should be classified and funded—e.g., DLM or OLM—which has helped to determine the Coast Guard units responsible for carrying out these maintenance or repair activities.

Coast Guard Partially Met 3 of 9 Leading Practices for Managing Maintenance Backlogs

The Coast Guard partially met 3 of 9 leading practices for managing public sector maintenance backlogs, including conducting condition assessments, establishing performance goals and measures, and aligning property portfolios with mission needs and disposing of unnecessary assets.

Conduct Condition Assessments as a Basis for Establishing Appropriate Levels of Funding Required to Reduce, If Not Eliminate, Any Deferred Maintenance and Repair Backlog

Conducting periodic condition assessments are an effective approach for facility management as identifying condition deficiencies can inform budgeting decisions, according to leading practices. Under the Coast Guard’s process, facility condition assessments are to be used to evaluate the condition of infrastructure and identify deficiencies. These assessments are to lead to the creation of the maintenance and recapitalization projects that then compose the Coast Guard’s deferred maintenance backlogs. However, the Coast Guard partially met this leading practice because it has not issued specific guidance on how these assessments are to be conducted, nor do the six CEUs follow a standardized or consistent process for conducting their assessments, according to Coast Guard field and headquarters officials. Further, Coast Guard officials at 5 of the 6 CEUs told us that some or all of the officials who conduct facility condition assessments serve on a rotational basis. As a result, the level of familiarity inspectors have with the facilities they inspect may vary, which could lead to differences in the assessments they produce. Moreover, while inspectors at 3 of the 6 CEUs are to use checklists when conducting their inspections, all of these checklists are different, and the other three CEUs do not currently use checklists. We found that these differences have contributed to inconsistencies in the information collected. For example, assessment results we analyzed used different scales for prioritizing maintenance projects, such as letter grades or red/amber/green scales. One assessment we reviewed listed both DLM and OLM projects, and provided the unit commander with detailed instructions accompanied by pictures explaining how to address these issues, whereas other assessments only identified DLM projects or “items of concern.” One senior official acknowledged that the Coast Guard did not have standardized assessments, and that developing them had not been the highest priority among numerous guidance documents the Coast Guard is trying to complete. Without standardized assessments, the Coast Guard’s ability to systematically compare projects for prioritization is limited, and this could directly impact its ability to establish appropriate levels of funding for addressing the backlog, as identified in this leading practice.

Coast Guard officials told us they intend to issue guidance to standardize facility condition assessments, but they could not provide a date for completing the guidance that would be issued. Moreover, according to the Coast Guard, it began to modernize its shore infrastructure civil engineering management in 2006, and it has been working to develop its current asset management model, including updating guidance, since 2013. By executing plans for a standardized facility condition assessment process and developing a plan with milestones and timeframes for standardizing the process, the Coast Guard will be better positioned with more consistent data to prioritize and plan its shore infrastructure projects.

Establish Performance Goals, Baselines for Performance Outcomes, and Performance Measures

According to leading practices, establishing performance goals, baselines for performance outcomes, and performance measures allows agencies to track the effectiveness of maintenance and repair investments, provide feedback on progress, and indicate where investment objectives, outcomes, or procedures require adjustment. According to Coast Guard guidance, the Chief of the Office of Civil Engineering and the Shore Infrastructure Logistics Center are to identify and promulgate performance metrics annually. The Coast Guard partially met this leading practice by documenting and tracking facility condition information using a letter grade system and reporting this in its annual reports from 2015 through 2017. However, the Coast Guard has not set performance goals for improving an asset’s grade, or established baselines to indicate where investments require adjustment, because it continues to revise the formula it uses to calculate the letter grades. Consequently, the letter grades from fiscal years 2015 through 2017 are not comparable year to year to measure performance.

Definitions of Performance Management Common Terms Performance goal - a target level of performance expressed as a tangible, measurable objective against which actual achievement can be compared, including a goal expressed as a quantitative standard, value, or rate. A performance goal is comprised of a measure, a time frame, and a target. Performance measure - a tabulation, calculation, recording of activity or effort, or assessment of results compared to intended purpose, that can be expressed quantitatively or in another way that indicates a level or degree of performance. Performance target - quantifiable or otherwise measurable characteristic typically expressed as a number that tells how well or at what level an agency or one of its components aspires to perform. Baselines for Performance Outcomes- a quantifiable point at which an effort began and from which a change in outcomes can be measured and documented.

In 2017, the Coast Guard reported a new performance measure for its maintenance efforts, called Average Condition Index, which reflects the average condition of the assets weighted by their replacement value. The Coast Guard set targets for this measure, but it did not establish what actions it would take to meet these targets. Limitations with the Coast Guard’s performance measures for its shore infrastructure are not a new issue, as they were also identified in 2015 by an external study commissioned by the Coast Guard. Specifically, the study reported that the Coast Guard’s condition index, which was more than 15 years old at the time, was not defensible because it lacked trend data and analysis capabilities. This study recommended that the Coast Guard develop key performance measures, among other things, for managing its shore infrastructure.

Coast Guard officials told us that it has collected data and drafted some performance measures, but they have not yet implemented the recommendations from the 2015 study or set a time frame for doing so because they had not identified it as a priority. Establishing goals, measures, and baselines would better position the Coast Guard to assess their effectiveness and take appropriate actions to improve the condition of its shore infrastructure.

Align Real Property Portfolios with Mission Needs and Dispose of Unneeded Assets

Leading practices state that agencies should efficiently employ available resources, limit construction of new facilities, adapt existing buildings to new uses, and transfer ownership of unneeded buildings to other public or private organizations to align real property with mission needs. In addition, facilities that are functionally obsolete, not needed to support an agency’s mission, not historically significant, or not suitable for transfer or adaptive reuse should be demolished whenever it is cost effective to do so, under this leading practice. We have previously reported that the eventual need to address deferred maintenance and repair could significantly affect an agency’s future budget resources. The Coast Guard has made limited progress and partially met this leading practice by disposing of some unneeded assets, but it has not consistently or extensively aligned its property and mission needs. For example, in 2017, the Coast Guard’s Civil Engineering Units and facility engineers reviewed all projects on its $1.77 billion PC&I project backlog and removed 132 projects from it because, according to officials, they were either no longer valid as a result of mission changes, a non-PC&I alternative/solution was found to be more beneficial, or the need was met through another project. This validation effort was a positive step toward aligning property and mission needs, but it raises questions about whether and to what extent the PC&I backlog is routinely and consistently managed to ensure that projects reflect mission needs.

The Coast Guard made some progress aligning property and mission needs through the sale of some assets. For example, in 2017, it sold 189 of its 2,961 housing assets through use of an initiative to divest itself of some housing assets—an effort which garnered $26.8 million in total sales proceeds over the life of the program. However, the Coast Guard’s ability to dispose of unneeded assets has been limited in some instances. For example, in 2013, the Coast Guard identified 18 multimission stations with duplicative coverage that could be permanently closed, using a process based on criteria that reflected mission needs. In October 2017, we reported that closing these stations could potentially generate $290 million in cost savings over 20 years; however, as of September 2018, the Coast Guard had taken no action to close these stations or establish time frames for their closure, although Coast Guard agreed with our recommendation that they do so. Moreover, our analysis of Coast Guard planning documents found that 5 of the 18 multimission stations recommended for closure in 2013 have projects on the Coast Guard’s current PC&I backlog. For example, Station Shark River, in New Jersey, was recommended for recapitalization in fiscal year 2017, despite Coast Guard recommendations to close the station in 1988, 1996, 2007, and 2013. Notably, the Coast Guard has made multiple attempts in previous years to close stations that it deemed suitable for closure but was unable to close them due to congressional intervention, and subsequent legislation prohibiting closures. Given the Coast Guard’s competing acquisition, operational, and maintenance needs, and PC&I backlog that will cost at least $1.77 billion to address, difficult trade- off decisions to align real property needs by disposing of unneeded assets may help to mitigate some resource challenges.

Coast Guard Did Not Meet 3 of 9 Leading Practices for Managing Shore Infrastructure Backlogs

The Coast Guard did not meet 3 of 9 leading practices for managing shore infrastructure backlogs, including establishing clear maintenance and repair investment objectives, employing models for predicting the outcomes of investments and analyzing trade-offs, and structuring budgets and related information to address maintenance backlogs.

Establish Clear Maintenance and Repair Investment Objectives and Set Priorities among Outcomes to Be Achieved

Agencies with maintenance and repair responsibilities should determine what outcomes are most important to achieve and set priorities among them, according to leading practices. Coast Guard provided guidance for central DLM planning boards, which calls for stakeholders to identify which projects will be reviewed by the planning boards, for board members to consider project trade-offs and to make recommendations on which projects to fund, and for stakeholders to then review the results. However, Coast Guard headquarters did not provide documented guidance to the six CEUs responsible for administering regional DLM planning boards—a process intended to establish clear objectives or priorities among outcomes to be achieved for approximately 70 percent of the Coast Guard’s DLM funds. Coast Guard headquarters officials told us that they instead rely on each CEU to hold their respective regional planning boards in accordance with locally established practices. However, only 1 of the 6 CEUs has developed and implemented written guidance for its DLM planning board process, and it is not clear how these boards set objectives or priorities among outcomes to be achieved.

The Coast Guard provided some documentation detailing how regional DLM planning board inputs and subsequent decisions were linked to decision-making criteria for one regional DLM planning board meeting hosted by one of its nine Districts. Table 7, among other things, shows the limited extent of documentation to substantiate Coast Guard decisions. However, the Coast Guard did not meet this leading practice because it could not demonstrate, with documentation, how decisions were linked to criteria for its PC&I planning board meetings, central DLM planning board meetings, or any other regional DLM planning board meeting. Without the full range of information on which planning board decisions were made, neither we, nor the Coast Guard, could substantiate the extent to which the Coast Guard followed its processes or evaluate whether its processes for managing shore infrastructure projects were sound.

OMB guidance calls for agencies to use information to support decision- making, such as whether an asset is continuing to meet business needs and contribute to goals, and whether there are smarter or more cost effective ways to deliver the function. This guidance is comparable to the leading practice discussed above, which calls for agencies to establish clear maintenance and repair investment objectives and set priorities among outcomes to be achieved. Additionally, according to OMB, agencies are to have a plan for periodic, results-oriented evaluations of program effectiveness, and agencies should discuss the results of these evaluations when proposing reauthorizations. Establishing guidance for planning boards to document project prioritization decision-making, as well as the impact of trade-off decisions, would allow agency decision makers, and Congress, to better understand Coast Guard priorities and how shore infrastructure project priorities might potentially affect other priorities. The Coast Guard was unable to provide documentation showing how it prioritized projects for a number of reasons, including that they didn’t have written guidance, documentation to verify the use of standardized meeting inputs such as presentations, and meeting minutes. Furthermore, officials could not explain why certain documentation was not maintained to demonstrate how the Coast Guard had made and prioritized funding decisions. Such documentation may allow the Coast Guard to show, for example, why repairing a station they previously wanted to close is a higher priority than fixing a station they appear to need to perform maintenance on certain assets (see fig. 3).

To ensure that investment decisions are aligned with agency missions and goals, agencies should employ models to predict the future condition and performance of its facilities as a portfolio, according to leading practices. Performance-prediction models predict the deterioration of building components over time and are important because certain facility components are particularly prone to deterioration or failure, thus requiring more frequent maintenance or repairs. A 2015 review of the Coast Guard’s asset management framework identified the benefit of analyzing tradeoffs between reactive and preventative maintenance and described how preventative maintenance efforts could translate into cost savings.

Coast Guard officials provided one example of its efforts to model outcomes, but it did not meet this leading practice because it has not properly used the results of this model to optimize competing investments for that asset line or any other asset line or provided documentary evidence verifying that it properly applied it. In December 2017, a Coast Guard Aviation Pavement Study employed a model that found that the Coast Guard could more efficiently prioritize investment in aviation pavement. It also identified strategies to achieve a long-term sustainable pavement condition. A proposed fiscal year 2018 to 2020 Coast Guard aviation pavement maintenance and recapitalization plan proposed using the study results and recommended actions that it said could save the Coast Guard $13.8 million by accelerating investment in aviation pavement sooner rather than deferring such maintenance and recapitalization. According to Coast Guard officials, the analytical approach outlined in its 2017 study could be applied to all 13 of its shore infrastructure asset lines. However, the Coast Guard has not properly implemented a maintenance and recapitalization strategy based on the results of its aviation pavement plan, nor has it applied the analytical approach from this plan to other asset lines. Coast Guard officials told us they have not fully acted on the aviation pavement plan nor developed models for other asset lines. Specifically, a Coast Guard official described actions the agency is taking as piecemeal; 1 of 5 PC&I projects identified by their plan has been prioritized and funded. According to Coast Guard officials, the other pavement projects continue to be a priority for the asset line, but funding decisions have been deferred due to resource constraints and other competing priorities. As a result of not properly implementing its plan, it is unclear if the Coast Guard will achieve the cost savings it projected. By not employing similar models across its asset lines for predicting the outcome of investments, analyzing trade-offs, and optimizing decisions among competing investments, the Coast Guard is missing opportunities to potentially identify and achieve cost savings across other asset lines.

Structure Budgets to Identify Funding Allotted (1) for Routine Maintenance and Repair and (2) to Address Any Backlog of Deferred Maintenance and Repair Deficiencies Because Insufficient Levels of Such Funding Can Cause Agencies’ Backlogs to Increase

According to leading practices, agencies should structure maintenance and repair budgets to differentiate between funding allotted for routine maintenance and repairs, and funding allotted to addressing maintenance and repair backlogs, to help ensure that underfunding does not affect the health and safety or reduce the productivity of employees, among other things. We found that Coast Guard budget requests did not provide Congress with accurate information about its funding needs. Specifically, we found that the Coast Guard did not meet this leading practice as its budget requests (1) have not clearly identified funding allotted for routine shore infrastructure maintenance needs, and (2) have not generally addressed deferred maintenance and repair deficiencies, resulting in increases to its backlogs. In addition, the Coast Guard has not included information in its Unfunded Priorities Lists and other related reports that clearly articulated trade-offs, or aligned with its requirements-based budget targets for shore infrastructure. Coast Guard officials were not able tell us why they have not requested maintenance and repair funding to adequately address their shore infrastructure backlog of deferred maintenance and repair deficiencies.

First, we found that Coast Guard budget requests did not clearly identify funding allotted for routine shore infrastructure maintenance needs to address backlogs. Specifically, we found that budget requests related to shore infrastructure for fiscal years 2012 through 2019 did not provide Congress with required and complete information, as previously noted, necessary to inform decision-makers of the risks posed by untimely investments in maintenance and repair backlogs. While major maintenance and repair funding can be tracked within the Coast Guard’s budget, funding for routine recurring maintenance for shore infrastructure is embedded in a budget account that is used for both maintenance and operational expenses. As a result, the Coast Guard could not disaggregate expenditures from this account or determine how much funding goes towards routine maintenance.

Second, we found that Coast Guard budget requests did not generally identify funding to address any backlogs of deferred maintenance or recapitalization, except for one fiscal year—2012—when the Coast Guard requested $93 million to recapitalize deteriorated/obsolete facilities and address the highest priority Shore Facilities Requirements List backlog items. The 2012 budget request also noted that the health and maintenance of its shore facilities are foundational for the safe and effective execution of Coast Guard missions. However, the Coast Guard reported on some challenges to completing maintenance projects. For example, Coast Guard officials we interviewed stated that the annual Congressional Budget cycle has contributed to infrastructure management challenges because they are prohibited from signing contracts for maintenance projects during continuing resolutions. For example, since the fiscal year 2018 budget was not passed until March 2018, they had to rush during the summer, their busiest time of year, to establish contracts and work orders to ensure projects were funded before the end of the fiscal year on September 30th.

Third, we found that the Coast Guard’s annual Unfunded Priorities Lists and other reports, including their 5-Year CIP, did not clearly describe trade-offs. In July 2018, we reported that by continuing to manage its operational asset acquisitions through its annual budget process and 5- year CIP, the Coast Guard creates constant churn as program baselines must continually realign with budget realities, instead of budgets being formulated to support program baselines. Coast Guard officials said that prioritization and trade-off decisions are made as part of the annual budget cycle, and that the shore infrastructure projects on its Unfunded Priorities List reflect the highest priorities for the department within the given top level funding. However, the annual Unfunded Priorities List does not clearly articulate prioritization decisions, including information about trade-offs among competing project alternatives, as well as the impacts on missions conducted from shore facilities in disrepair that had not been prioritized in previous years. According to Coast Guard officials, and as we previously reported, such information is not included in the 5- Year CIP or Unfunded Priorities List because it is not statutorily required. These information shortcomings are consistent with previous findings and recommendations that the DHS Office of Inspector General has made.

Finally, we found that Coast Guard budget requests have not been aligned with its requirements-based budget targets for shore infrastructure. For example, we found that Coast Guard budget requests have not identified appropriations sufficient to meet its DLM maintenance and repair targets, which call for annual expenditures equal to two percent of plant replacement value. According to the Coast Guard, meeting its target for DLM would require allocating about $260 to $392 million annually for these repairs. Coast Guard officials told us that they have made difficult decisions to postpone necessary facility maintenance and construction projects in order to address other competing priorities related to mission execution, such as maintaining, operating, and recapitalizing its aging surface and air fleets. Between fiscal years 2012 and 2017, the Coast Guard reported that it expended an average of $208 million per year on DLM, and officials stated that the Coast Guard never met its target during this time period. Similarly, Coast Guard budget requests have not been in alignment with its PC&I targets for recapitalization. For example, Coast Guard recapitalization targets show a far greater need for funding than the allotments from the appropriations it requested between fiscal years 2012 and 2019. Specifically, Coast Guard targets for recapitalization of shore assets indicate that $290 to $392 million in PC&I funding is needed annually. However, the Coast Guard budget requests for fiscal years 2012 through 2018 have ranged between about $5 million and about $99 million annually, as shown in Table 8.

Notwithstanding the mismatch between Coast Guard budget requests and its requirements-based budget targets, allotments for Coast Guard shore PC&I from its appropriations in fiscal years 2016 through 2018 exceeded the Coast Guard’s requests. For example, in fiscal year 2016, the Coast Guard’s allotment of $130 million was almost three times the nearly $47 million requested. In 2018, the almost $45 million allotted was more than four times the $10 million requested. Explanatory materials on the annual appropriations act for fiscal year 2018 indicated that the appropriated funding above requested amounts was to be used for modernization and recapitalization of facilities, and facility improvements, among other things. Without accurate and transparent information about the Coast Guard’s budgetary requirements, Congress will lack critical information that could help to prioritize funding to address the Coast Guard’s shore infrastructure backlogs.

Conclusions

The Coast Guard’s inventory of shore infrastructure assets is vast, aging, and vulnerable to damage from extreme weather. Many of these assets are also critical to the Coast Guard’s operational mission performance. The Coast Guard has taken some steps to manage this infrastructure by implementing 3 of 9 leading practices for managing public sector maintenance backlogs—including identifying assets that are mission- critical, identifying risks posed by untimely investments, and identifying the primary methods for delivering maintenance and repair activities. However, significant work remains if the Coast Guard is going to make headway on reducing its backlog of at least $2.6 billion. Fully implementing the three leading practices that the Coast Guard now partially meets could help ensure that it benefits from establishing timeframes for and enhancing its guidance, establishing its performance metrics, baselines, and targets, and shedding unneeded assets. Additionally, fully implementing the leading practices that it does not meet—including implementing new approaches for documenting its project prioritization decisions, developing models that could help identify cost savings, and providing Congress with transparent and requirements- based budget requests that clearly identify alternatives and trade-offs— could help the Coast Guard more efficiently manage existing resources and better position the Coast Guard and Congress to address the shore infrastructure challenges.

Recommendations for Executive Action

We are recommending the following six actions to the Coast Guard:

The Commandant of the Coast Guard should direct the program managers to develop a plan with milestones and time frames for standardizing Coast Guard’s facility condition assessments. (Recommendation 1)

The Commandant of the Coast Guard should direct program managers to establish shore infrastructure performance goals, measures, and baselines to track the effectiveness of maintenance and repair investments and provide feedback on progress made. (Recommendation 2)

The Commandant of the Coast Guard should work with Congress to develop and implement a process to routinely align Coast Guard’s shore infrastructure portfolio with mission needs, including by disposing of all unneeded assets. (Recommendation 3)

The Commandant of the Coast Guard should establish guidance for planning boards to document inputs, deliberations, and project prioritization decisions for infrastructure maintenance projects. (Recommendation 4)

The Commandant of the Coast Guard should employ models for its asset lines for predicting the outcome of investments, analyzing trade- offs, and optimizing decisions among competing investments. (Recommendation 5)

The Commandant of the Coast Guard should include supporting details about competing project alternatives and report trade-offs in Congressional budget requests and related reports. (Recommendation 6)

Agency Comments and Our Evaluation

We provided a draft of this report to DHS for review and comment. In its comments, reproduced in appendix III, DHS concurred with our recommendations. DHS, through the Coast Guard, also provided technical comments, which we incorporated as appropriate.

DHS concurred with our first recommendation that the Commandant of the Coast Guard direct program managers to develop a plan with milestones and time frames for standardizing the Coast Guard’s facility condition assessments. DHS stated that the Coast Guard plans to complete a standardized facility condition assessment by December 2019. However, to fully implement the recommendation, the Coast Guard needs to ensure that it standardizes the process for conducting facility assessments—action that goes beyond completing a singular standardized facility assessment.

DHS concurred with our second recommendation that the Commandant of the Coast Guard direct program managers to establish shore infrastructure performance goals, measures, and baselines to track the effectiveness of maintenance and repair investments and provide feedback on progress made. DHS stated that the Coast Guard plans to develop initial shore infrastructure measures with associated goals and baselines during its annual strategic planning process and expects to complete this process in March 2020.

DHS concurred with our third recommendation that the Commandant of the Coast Guard work with Congress to develop and implement a process to routinely align the Coast Guard’s shore infrastructure portfolio with mission needs, including by disposing of all unneeded assets. DHS stated that the Coast Guard plans to establish, by June 2020, a process to assess current and projected operational and mission support needs to identify and recommend disposal of unneeded land, buildings, and structures. The Coast Guard reported that in the interim it will continue to communicate with Congress about unneeded assets through its required annual Conveyance of Coast Guard Real Property Report. The Coast Guard reported that in the interim it will continue to communicate with Congress about unneeded assets through its required annual Conveyance of Coast Guard Real Property Report.

DHS concurred with our fourth recommendation that the Commandant of the Coast Guard establish guidance for planning boards to document inputs, deliberations, and project prioritization decisions for infrastructure maintenance projects. DHS stated that the Coast Guard plans to review existing guidance and issue updates as necessary and that promulgation of this guidance for its next planning boards will be completed by December 2019. To fully implement this recommendation, the Coast Guard needs to ensure that its guidance requires that inputs, deliberations, and project prioritization decisions for these boards are all fully documented.

DHS concurred with our fifth recommendation that the Commandant of the Coast Guard employ models for its asset lines for predicting the outcome of investments, analyzing trade-offs, and optimizing decisions among competing investments. DHS stated that the Coast Guard plans to assess the use of modeling tools used by the Department of Defense as well as other alternatives to enhance its real property asset management capability. DHS stated that the Coast Guard expects to complete its initial identification of alternatives in December 2019 and complete its examination of alternatives in December 2020.

DHS concurred with our sixth recommendation that the Commandant of the Coast Guard include supporting details about competing project alternatives and report trade-offs in Congressional budget requests and related reports. DHS stated that the Coast Guard plans to submit future budget proposals based on OMB guidance and will include additional information in its Congressionally-mandated future Unfunded Priorities Lists. To fully implement this recommendation, the Coast Guard needs to ensure it includes supporting details about competing project alternatives and report on trade-offs, as appropriate.

We are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3841 or AndersonN@gao.gov. GAO staff who made key contributions to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

The objectives of this report are to evaluate (1) what is known about the condition and costs of managing the Coast Guard’s shore infrastructure, and (2) the extent to which the Coast Guard’s process for managing its shore infrastructure meets leading practices for managing public maintenance backlogs.

To identify what is known about the condition and costs of managing the Coast Guard’s shore infrastructure, we reviewed three Coast Guard annual reports on shore infrastructure, issued for 2015 through 2017. We also reviewed Coast Guard documentation and data on its shore infrastructure inventory to describe the condition and costs of managing these assets. To measure the size of the Coast Guard’s total backlog, we examined the Coast Guard’s shore Acquisition, Construction, & Improvements (AC&I) backlog of projects the Coast Guard has identified as necessary to fulfill its missions (i.e., its Shore Facilities Requirements List) from fiscal years 2012 through 2018, as well as its depot-level maintenance backlog as of March 2018. We also reviewed planning and budget documents to determine how the backlog has changed over time. To identify the appropriation targets the Coast Guard identified as needed to address these backlogs, we reviewed guidance and budget data for the three appropriations related to shore infrastructure, reviewed planning and budget documents such as Coast Guard’s annual Unfunded Priorities List—which are lists of projects the Coast Guard would undertake if funding were available—and the Coast Guard’s annual Congressional Budget Justifications for fiscal years 2012 through 2019, to demonstrate how the backlog has changed over time relative to budgeted funds. We also interviewed Coast Guard officials at headquarters and in the field to obtain their perspectives on the appropriation targets and budget formulation process.

To obtain additional information about the condition of the Coast Guard’s infrastructure in different parts of the country, we interviewed officials from each of the Coast Guard’s six geographically-organized Civil Engineering Units (CEUs), which are responsible for implementing both District and Headquarters directives. We also interviewed officials from the Coast Guard’s two geographically-defined Area Commands—Pacific Area (PACAREA) and Atlantic Area (LANTAREA), who vote on the Procurement, Construction and Improvements (PC&I) and central DLM planning boards. To review the Coast Guard’s longer-term planning process for its shore infrastructure, we reviewed the Coast Guard’s 5-year Capital Investment Plan and interviewed agency officials.

To assess the reliability of the Coast Guard’s data discussed in this report, we interviewed knowledgeable agency officials, reviewed documentation, and electronically tested the data for obvious errors and anomalies. Specifically, we interviewed Coast Guard officials and discussed the mechanisms they use to assess the quality of their data and the extent to which Coast Guard employs quality control mechanisms, such as automated edit checks. Additionally, in August 2018, the Coast Guard informed us that its data on its shore infrastructure may not be complete if field inspectors did not identify problems at the facilities they inspected. Coast Guard officials also told us in July 2018 that not all projects on the Coast Guard’s PC&I backlog have cost estimates. As a result, the amount of funding needed to address the Coast Guard’s backlog of shore infrastructure projects could be understated because the Coast Guard has not identified all deficiencies that exist at its facilities nor estimated the cost to fix all of the deficiencies it knows about. Despite these limitations, we determined that the Coast Guard’s data are sufficiently reliable for the purposes of reporting on the Coast Guard’s overall portfolio of shore infrastructure assets and the minimum amount of money the Coast Guard identified as needed to complete deferred repair and PC&I projects.

To identify leading practices for managing backlogs of deferred maintenance projects, we reviewed our prior work and the literature on deferred maintenance and repair as it pertains to federal real property portfolios. In our prior work, we identified nine leading practices based on studies conducted by the National Research Council (NRC) of the National Academy of Sciences between 1998 and 2012. These studies were (1) Stewardship of Federal Facilities: A Proactive Strategy for Managing the Nation’s Public Assets (1998); (2) Investments in Federal Facilities: Asset Management Strategies for the 21st Century (2004); (3) Predicting Outcomes from Investments in Maintenance and Repair for Federal Facilities (2012). As we previously reported, the nine leading practices we employed were the ones we identified as being the most relevant and appropriate to federal agencies managing their deferred maintenance and repair backlogs, however these practices do not represent all actions that federal agencies can employ to improve management of their real property to include their real property maintenance and repair backlogs.

To evaluate the extent to which the Coast Guard’s process for managing its shore infrastructure met leading practices for managing public maintenance backlogs, we analyzed Coast Guard plans, policies, procedures, and related laws for managing, maintaining and repairing shore infrastructure. We identified and analyzed Coast Guard guidance on its decision-making process for determining maintenance and repair decisions, and assessed Coast Guard practices against our main criteria, the leading practice discussed above. We also compared Coast Guard practices with the Office of Management and Budget’s (OMB) program evaluation and capital programming guidance.

We used the following scale to evaluate the Coast Guard’s management of its shore infrastructure deferred maintenance and repair:

Met—The Coast Guard properly considered the leading practice and demonstrated with documentary evidence that it had fully applied it.

Partially Met—The Coast Guard properly considered and demonstrated with some documentary evidence that it had applied the leading practice to some extent.

Not Met—The Coast Guard did not properly consider or apply the leading practice and had no documentary evidence verifying that it had applied it.

To further our understanding of the Coast Guard’s process for prioritizing PC&I and deferred maintenance projects and the extent to which Coast Guard actions aligned with the aforementioned leading practices, we interviewed knowledgeable Coast Guard officials with a role in making or implementing decisions related to shore infrastructure to obtain their perspectives. Specifically, we interviewed officials from Coast Guard units to (1) obtain information about local conditions and maintenance practices, and/or to (2) obtain information on the experiences these officials had pertaining to the PC&I planning board, central DLM planning board, and/or regional DLM planning board processes. We interviewed officials from all six of the Coast Guard’s regional Civil Engineering Units (CEU) which are responsible for assessing the condition of Coast Guard’s shore infrastructure to obtain their perspectives on this topic and to determine the extent to which data from one CEU is comparable to data from another. We also interviewed officials from the Atlantic and Pacific Areas in order to obtain a high-level regional perspective on requirements, conditions, and planning efforts. To evaluate how Coast Guard leadership assesses the condition of its infrastructure and makes trade-offs between competing projects, we also interviewed officials from Coast Guard headquarters units which oversee Coast Guard’s shore infrastructure. These interviews included officials from the Office of Civil Engineering, the Shore Infrastructure Logistics Center, the Facilities Operations & Support Division, and the Office of the Assistant Commandant for Capability.

To identify examples of (1) what is known about the condition and costs of managing the Coast Guard’s shore infrastructure, and (2) obtain information about the Coast Guard’s process for managing its shore infrastructure, we conducted a site visit to Coast Guard Base Alameda in Alameda, CA. The selection of Base Alameda for our site visit was based on the concentration there of regional Coast Guard leadership and Coast Guard facilities. Our findings from our Base Alameda site visit are not generalizable to other Coast Guard facilities. Additionally, because the Coast Guard personnel we interviewed were not necessarily performing the same function or role, or even stationed in Alameda, for all years covered by our review (2012-2018), our findings from these interviews are not necessarily generalizable across time. Taken as a whole, however, our site visit provided us with insights into the condition of the Coast Guard’s shore infrastructure and into the processes the Coast Guard uses to maintain, repair, and replace these assets.

We conducted this performance audit from November 2017 to February 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Characteristics of Coast Guard’s Shore Infrastructure Procurement, Construction, and Improvements Backlog

This appendix provides summary statistics for the Coast Guard’s Procurement, Construction, and Improvements (PC&I) backlog as of June, for 2012 through 2018. Table 9 provides details of individual shore infrastructure projects on the PC&I backlog, table 10 provides details of aids to navigation and projects that were grouped together by the Coast Guard for planning purposes, and table 11 sums values in tables 9 and 10.

Appendix III: Comments from the Department of Homeland Security

Appendix IV: GAO Contact and Staff Acknowledgements

GAO Contact

Nathan J. Anderson, (202) 512-3841 or andersonn@gao.gov.

Staff Acknowledgements

In addition to the contact above, Dawn Hoff (Assistant Director), Andrew Curry (Analyst-in-Charge), Michael Armes, John Bauckman, Chuck Bausell, Rick Cederholm, Billy Commons, John Crawford, Michele Fejfar, Peter Haderlein, Eric Hauswirth, Landis Lindsey, Michael Pinkham, Maria Mercado, Jan Montgomery, Forrest Rule, Christine San, and Adam Vogt made key contributions to this report.