The Coast Guard’s fiscal year 2007 budget request shows continued growth but at a more moderate pace than that of the past 2 years. The current budget request reflects a proposed increase of about $328 million, compared to increases for each of the past 2 budget years that exceeded $500 million for each year. (See fig. 1.) About $5.5 billion, or more than 65 percent of the total funding request of $8.4 billion, is for operating expenditures. The acquisition, construction, and improvements (AC&I) account amounts to another $1.2 billion, or about 14 percent, and the remainder is primarily for retiree pay and healthcare fund contributions. (See app. II for more detail on the Coast Guard’s fiscal years 2002-2007 budget accounts.) If the Coast Guard’s total budget request is granted, overall funding will have increased by more than 50 percent since fiscal year 2002, an increase of $2.82 billion. According to Coast Guard officials, much of the additional $328 million in this fiscal year’s budget request, which is about 4 percent over and above the fiscal year 2006 budget of $8.1 billion, covers such things as salary and benefit increases and maintenance. In addition, more than $57 million of this increase is to establish a permanent National Capital Region Air Defense program to enforce the National Capital Region no-fly zone, a program previously conducted by U.S. Customs and Border Protection (CBP). By comparison, the increases for the AC&I account for this time period have been even greater than the overall funding increase, growing by 66 percent since fiscal year 2002. However, the fiscal year 2007 AC&I budget request of almost $1.2 billion represents little change in funding from the Coast Guard’s fiscal year 2006 enacted AC&I budget. Even with sustained homeland security responsibilities, aging assets, and a particularly destructive hurricane season stretching resources across the agency, in fiscal year 2005 the Coast Guard reported that 7 of its 11 programs met or exceeded program performance targets. In addition, the agency reported that it anticipates meeting the target for 1 additional program when final results become available in July 2006, potentially bringing the total met targets to 8 out of 11 programs. According to Coast Guard documents, the agency missed targets for three programs— undocumented migrant interdiction, defense readiness, and living marine resources—in fiscal year 2005, as it had in some previous years. Coast Guard officials attributed these missed targets to, among other factors, the increased flow of migrants and staffing shortages for certain security units within the defense readiness program. (See app. III for more detailed information on each program.) If the Coast Guard meets 8 performance targets as it predicts, the results would represent the greatest number of performance targets met in the last 4 years. (See fig. 2.) The preliminary results of our ongoing work reviewing the Coast Guard’s six non- homeland security performance measures suggests that, for the most part, the data used for the measures are reliable and the measures themselves are sound. That is, they are objective, measurable, and quantifiable as well as cover key program activities. However, given the DHS policy of reporting only one main performance measure per program and the limits on how comprehensive a single measure is likely to be, there may be opportunities to provide additional context and information to decisionmakers about Coast Guard performance results. We will provide final results on this work in a report to be published later this summer. This overall progress came in a year when the Coast Guard faced significant additional demands brought on by Hurricane Katrina. As it had to do when it implemented MTSA and when it conducted heightened port security patrols immediately after the September 2001 terrorist attacks, the Coast Guard found itself operating at an increased operational tempo for part of fiscal year 2005. Although the Hurricane Katrina response period was relatively brief for some missions, such as search and rescue, Coast Guard officials told us that the sheer magnitude of the response made it unique, and responding to it tested the agency’s preparedness and ability to mobilize large numbers of personnel and assets within a short time. In this effort, the Coast Guard had several responsibilities during and immediately following the hurricane: to conduct search and rescue; to direct the closing and re-opening of ports in cooperation with stakeholders,(such as shipping companies, harbor police, DHS, CBP, and local fire and police departments), to ensure safety and facilitate commerce, thereby lessening the economic impact of the storm on the nation; and to monitor pollution clean up of the many oil spills that occurred in the wake of the flooding. For the purposes of this testimony, I would like to focus on the Coast Guard’s search and rescue response. We are conducting a more complete review of the Coast Guard’s role and response to Hurricane Katrina across several mission areas under the authority of the Comptroller General, and expect to provide additional information later this summer. So far, however, this work is showing that three factors appear to have been key to the Coast Guard’s response to Hurricane Katrina: The Coast Guard was prepared to respond to search and rescue needs. Although the magnitude of Hurricane Katrina required substantial response and relief efforts, the Coast Guard was well prepared to act since it places a priority on training and contingency planning. First and foremost, the missions the Coast Guard performed during Hurricane Katrina were the same missions that the Coast Guard trains for and typically performs on a day-to-day basis. The Coast Guard’s mission areas include, among others, search and rescue, law enforcement, regulatory functions, and, most recently, homeland security responsibilities, allowing the Coast Guard to respond and act in a myriad of situations. However, with regard to Hurricane Katrina, the magnitude of the Coast Guard’s mission activity appears noteworthy. For example, for all of 2004, according to the Coast Guard’s Fiscal Year 2005 Report, the Coast Guard responded to more than 32,000 calls for rescue assistance and saved nearly 5,500 lives. By comparison, in 17 days of Hurricane Katrina response, Coast Guard officials reported conducting over 33,500 rescues, including rescuing 24,135 people by boat and helicopter and evacuating 9,409 people from hospitals. Coast Guard officials we spoke to underscored the importance of the planning, preparation, and training that they regularly conduct that allowed them to complete the many challenging missions presented by Katrina. The Coast Guard’s organizational structure and practices facilitated the agency’s response. In terms of the Coast Guard’s organizational structure, the Coast Guard has personnel and assets throughout the United States, which allows for more flexible response to threats. In terms of Coast Guard practices, according to the hurricane and severe weather plans we reviewed for Coast Guard Districts 7 (Florida region) and 8 (Gulf region), and discussions we had in Washington, D.C., Virginia, Florida, Alabama, and Louisiana with Coast Guard officials responsible for implementing those plans, the Coast Guard tracks the likely path of an approaching storm, anticipates the necessary assets to address the storm’s impact, and repositions personnel and aircraft out of harm’s way, with a focus on reconstituting assets to respond to local needs once it is safe to do so. Given the magnitude of Hurricane Katrina, the Coast Guard took a more centralized approach to prioritize personnel and assets to respond, but the operational command decisions remained at the local level. That is, the Coast Guard’s Atlantic Area Command played a key role in identifying additional Coast Guard resources, and worked with District Commands to quickly move those resources to the affected Gulf region, while local operational commanders directed personnel and assets to priority missions based on their on-scene knowledge. The Coast Guard’s operational principles facilitated the agency’s actions. Throughout our field work, Coast Guard officials referred to the principles of Coast Guard operations that guide the agency’s actions. Coast Guard officials identified these principles, which ranged from the importance of having clear objectives and flexibility to managing risks and exercising restraint, as instrumental in their preparation for Hurricane Katrina. The Coast Guard prides itself on these operational principles that collectively form the foundation of Coast Guard culture and actions during operations. These principles set an expectation for individual leadership in crisis, and personnel are trained to take responsibility and action as needed based on relevant authorities and guidance. For example, during the initial response to Hurricane Katrina, a junior-level pilot, who first arrived on-scene in New Orleans with the planned mission of conducting an environmental inspection flight, recognized that search and rescue helicopters in the area could not communicate with officials on the ground, including those located at hospitals and at safe landing areas. This pilot took the initiative while on-scene—an operational principle—to redirect her planned mission, changing it from an environmental flight to creating the first airborne communication platform in the area. Doing so helped ensure that critical information was relayed to and from helicopter pilots conducting search and rescue so that they could more safely and efficiently continue their vital mission. When we consulted her commanding officer about these actions, he supported her decision and actions and noted that Coast Guard personnel generally have the flexibility to divert from their intended mission to accomplish a more important mission, without obtaining advance supervisory approval. He indicated that this was not only common practice, but it was supported by a written directive at his unit. While acknowledging the importance of these operational principles, it is equally important to note that the response to Hurricane Katrina also hinged on discipline and adherence to critical plans. For example, multiple aircraft were operating in a confined space with little separation, thus adhering to critical search and rescue plans, as well as using experience and judgment, resulted in numerous rescues despite these difficult circumstances. While the Hurricane Katrina search and rescue effort was unprecedented, sustaining this effort might have been much more difficult if it had gone on for a much longer period.