Under the authority of the Ports and Waterways Safety Act of 1972, as amended, the Coast Guard operates VTS systems in eight ports. Operations and maintenance costs for these systems, which totaled about $19 million in fiscal year 1995, are borne by the Coast Guard and are not passed on to the ports or the shipping industry. Two other ports, Los Angeles/Long Beach and Philadelphia/Delaware Bay, have user-funded systems. Study of VTS systems was prompted by the Oil Pollution Act of 1990 (P.L. 101-380), passed after the 1989 Exxon Valdez oil spill and other accidents in various ports. The Act directed the Secretary of Transportation to prioritize U.S. ports and channels in need of new, expanded, or improved VTS systems. The resulting report, called the Port Needs Study, was submitted to the Congress in March 1992. This study laid much of the groundwork for the proposal for VTS 2000. Making funding decisions today about VTS 2000 is complicated by several as-yet-unanswered questions regarding the need for the system in certain ports, the system’s cost, and available alternatives to VTS 2000. Having more complete, up-to-date information on these questions is critical to deciding whether to move forward with the program. One uncertainty relates to which ports will receive VTS 2000 systems. Most of the 17 candidate ports were identified in the 1991 Port Needs Study, which quantified (in dollar terms) the benefits of building new VTS systems at port areas nationwide. The Coast Guard is not scheduled to make a final decision on which ports to include in the program until fiscal year 2000, but the information developed to date suggests that the number of ports ultimately selected could be much less than 17. The Port Needs Study and the follow-on studies completed so far show that a new system would produce little or no added benefit at about two-thirds of the ports being considered. Budget information the Coast Guard has provided to the Congress thus far has not fully reflected the limited benefits of installing VTS 2000 systems in many of the ports being considered. For example, the Coast Guard should provide to the Congress updated information on the added benefits, if any, that would be achieved by installing VTS 2000 at various ports, especially for those that already have VTS systems. In our view, this information, coupled with the Coast Guard’s current thinking on the high and low priority locations for VTS 2000, is critical to assist the Congress in deciding on whether a development effort for 17 ports is warranted. We realize that the Coast Guard is not in a position to make a final decision on all ports at this time, because it is still gathering information and conducting follow-on studies to reassess some ports on the list. However, having the most current and complete data will allow the Congress to better decide on funding levels for the VTS 2000 program and provide direction to the Coast Guard. A second major area of uncertainty is the cost to develop VTS 2000. This cost is considerable, regardless of whether it is installed at a few ports or all 17. The Coast Guard initially estimated that development costs alone (exclusive of installation costs at most sites) would total $69 million to $145 million, depending on the number of sites that receive VTS 2000 and the extent of software development. The estimated costs to install equipment and build facilities at each site ranged from $5 million to $30 million, bringing the program’s total costs to between $260 million and $310 million. The Coast Guard’s updated estimate of annual operating costs for a 17-site system is $42 million. At present, the Coast Guard plans to pay for all of these costs from its budget instead of passing them on to users. A few days ago, the Coast Guard awarded contracts for initial development of the VTS 2000 system. The bids from three vendors currently competing for the contract to design the system were substantially lower than earlier estimates. Further refinements to the Coast Guard cost estimates will be made in early 1997 when the Coast Guard plans to select a single contractor to build the VTS 2000 system. The system’s costs will also depend on the Coast Guard’s decision about how sophisticated the system should be. VTS 2000 can be developed in four phases; and additional capability can be added at each phase. For example, phase 1, originally estimated to cost $69 million, would create a system with operational capabilities that are about on a par with upgraded VTS systems currently being installed at some ports. The Coast Guard’s development plan allows for stopping after phase 1 (or any other phase) if cost or other considerations preclude further development. To date, the Coast Guard’s approach has not involved much consideration of whether feasible alternatives exist to VTS 2000 at individual ports under consideration. I want to emphasize that we did not attempt to assess whether other alternatives were preferable, but many would appear to merit consideration or study. Here are a few of these alternatives: Reliance on existing VTS systems. The systems in place at seven locations may be sufficient. For example, the port of Los Angeles/Long Beach, which is on the Coast Guard’s “short list” for the first round of VTS 2000 systems, now has a VTS system, which cost about $1 million to build and meets nearly all of VTS 2000’s operational requirements, according to a Coast Guard study. The Coast Guard is reconsidering its decision to keep the port on the “short list” but is still evaluating it for VTS 2000. Other VTS systems in Houston/Galveston, Puget Sound, Philadelphia/Delaware Bay, New York, San Francisco, and Valdez all have been recently upgraded or enhanced or are scheduled to be upgraded in the near future irrespective of VTS 2000. Therefore, these systems may provide protection similar to that of VTS 2000 now and into the future. VTS systems with smaller scope than proposed thus far under VTS 2000. The Port Needs Study and follow-on studies have proposed blanketing an entire port area with VTS coverage, but less comprehensive VTS coverage might be sufficient. For example, some key stakeholders at Port Arthur/Lake Charles, which has no radar-based VTS coverage, said such coverage was needed at only a few key locations, instead of portwide. A group is studying the feasibility of a more limited, privately-funded system. One vendor estimated that a system to cover key locations at Port Arthur/Lake Charles would cost $2 million to $3 million. Coast Guard officials told us that reduced coverage is an option they could consider when site-specific plans are established for VTS 2000. Non-VTS approaches. In some cases, improvements have been proposed that are not as extensive as installing a VTS system. For example, several years ago in Mobile/Pascagoula, the Coast Guard Captain of the Port proposed a means to enhance port safety at two locations where the deep ship channels (for ocean-going ships) intersect the Intracoastal Waterway (which mainly has barge traffic and small vessels). The proposal involved establishing “regulated navigation areas” that would require vessels from both directions to radio their approach and location to all other vessels in the vicinity. This proposal may merit further consideration before a decision is made on the need for a VTS in this port area. At the ports we visited, few stakeholders said they had been involved with the Coast Guard in discussing whether such alternatives are a viable alternative to VTS 2000 systems in their port. In discussions with us, Coast Guard officials agreed that greater communication with key stakeholders is an essential step in making decisions about VTS 2000. An additional study currently being conducted by the Marine Board of the National Research Council may provide additional information that will be useful in assessing VTS 2000. Among other things, this study will address the role of the public and private sectors in developing and operating VTS systems in the United States. An interim report is due to be completed in June 1996. Most of the stakeholders we interviewed did not support installing a VTS 2000 system at their port. Their opinions were predominantly negative at five ports, about evenly split at two, and uncertain at one. Many who opposed VTS 2000 perceived the proposed system as being more expensive than needed. Support for VTS 2000 was even less when we asked if stakeholders would be willing to pay for the system, perhaps through fees levied on vessels. A clear majority of the stakeholders was not willing to fund VTS 2000 at six of the ports; at the other two, support was mixed. The stakeholders interviewed at six ports generally supported some form of VTS system that they perceived to be less expensive than VTS 2000. However, at the four ports with VTS systems, this support did not reflect a belief that a new system was needed; most stakeholders said that existing systems were sufficient. The two locations without a VTS system (New Orleans and Tampa) supported an alternative VTS system. In contrast, at Mobile/Pascagoula, most stakeholders were opposed to a VTS system, saying that the low volume of ocean-going vessels did not warrant such a system. At Port Arthur/Lake Charles, views were evenly mixed as to whether a system was needed. In general, because stakeholders perceived that other alternative VTS systems could be less costly than VTS 2000, they were somewhat more disposed to consider paying for them. At two locations with existing private VTS systems, they are already doing so. At the remaining six ports, the stakeholders had the following views on paying for alternative VTS systems: stakeholders’ views were generally supportive at three, opposed at one, and mixed at the other two. In discussions with key stakeholders at each of the eight ports we visited, three main concerns emerged that could impede private-sector involvement in building and operating VTS systems. Obtaining funding for construction.