	Funding Has Escalated in Recent Years, but Is Difficult to Link to Performance Results

The Coast Guard’s 2006 budget request continues a trend of increasing  budgets that began in fiscal year 2002, as figure 1 shows. The fiscal year 2006 budget request shows a $570 million increase to   $8.1 billion, which is an increase of about 11 percent in its discretionary  funding over the enacted budget for fiscal year 2005. 2). Efforts Made on Coast Guard’s Maritime Security Strategy Show Promise, but Concerns Remain

One of the Coast Guard’s fiscal year 2006 priorities involves implementing  a maritime strategy for homeland security. Major portions of this endeavor  are heavily influenced by the requirements of the Maritime Transportation  Security Act (MTSA) of 2002. Since MTSA was enacted, the Coast Guard  has worked to address vulnerabilities by spurring the development of  meaningful security plans for thousands of facilities and vessels in the  nation’s ports. These are a new coastal communication system, called Rescue 21; a new  field command structure, called Sectors; and efforts to improve readiness  at multimission stations that conduct search and rescue as well as other  missions. All three efforts carry some risk and will merit close attention. The Coast Guard has resolved some initial development  problems that delayed the implementation of this new coastal command  and control communication system and is now poised to move forward  again, with a fiscal year 2006 budget request of $101 million. While the establishment of Sectors appears to be an important step that  could positively affect the Coast Guard’s mission performance, the Coast  Guard is likely to face a number of implementation challenges that it will  need to overcome to help ensure success. Important but Costly Programs for Maintaining and Recapitalizing Deepwater Assets Need Careful Monitoring

The third Coast Guard priority involves the single largest and most  complex acquisition program in the agency’s history—a project designed  to improve the mission performance of the range of cutters and aircraft  that currently conduct the agency’s offshore missions. As it undergoes a transformation to these new or upgraded  assets, the Coast Guard is also faced with sustaining its legacy assets to  ensure that they can continue to perform the Coast Guard’s missions until  new or upgraded assets are in place. And, although funding in the fourth  year of the program (fiscal year 2005) exceeded the Coast Guard’s request  by about $46 million, the early shortfalls, according to the Coast Guard,  resulted in schedule slippage and led to increases in the total projected  costs for the program. In most cases,  however, while actions are under way to address these concerns,  management challenges remain that may take some time to fully address. According to the Coast Guard, some of the functional capabilities now  deemed to be required include the following:    Rotary wing airborne use of force and vertical insertion/vertical delivery    Greater speed, a larger flight deck, and automated defensive and weapons  systems for the National Security Cutter and Offshore Patrol Cutter  classes;   A common operating picture (COP) for the entire Coast Guard (and  maritime ports of a unified Department of Homeland Security COP), an  interoperable network to improve performance in all mission areas, and a  Secure Compartmentalized Information Facility for improved intelligence  capabilities; and   Chemical, biological, radiological defense and decontamination capability  While we have not conducted an analysis of the likely cost and schedule  impact of the revised MNS requirements, they undoubtedly will have an  effect on cost and schedule. So far, the Coast Guard’s budget plans and requests do not address this  potential need. We think the issues we have highlighted are  potential areas for ongoing congressional attention, and we will continue  to work with the Coast Guard on them. Marine environmental protection.
Why GAO Did This Study

The Coast Guard's budget has steadily increased in recent years, reflecting the agency's need to address heightened homeland security responsibilities while also addressing traditional programs such as rescuing mariners in distress and protecting important fishing grounds. The fiscal year 2006 budget request, which totals $8.1 billion, reflects an increase of $570 million over the previous year. GAO has conducted reviews of many of the Coast Guard's programs in recent years, and this testimony synthesizes the results of these reviews as they pertain to three priority areas in the Coast Guard's budget: (1) implementing a maritime strategy for homeland security, (2) enhancing performance across missions, and (3) recapitalizing the Coast Guard, especially the Deepwater program--an acquisition that involves replacing or upgrading cutters and aircraft that are capable of performing missions far out at sea. GAO's observations are aimed at highlighting potential areas for ongoing congressional attention.

What GAO Found

The Maritime Transportation Security Act of 2002 charged the Coast Guard with many maritime homeland security responsibilities, such as assessing port vulnerabilities and ensuring that vessels and port facilities have adequate security plans, and the Coast Guard has worked hard to meet these requirements. GAO's reviews of these efforts have disclosed some areas for attention as well, such as developing ways to ensure that security plans are carried out with vigilance. The Coast Guard has taken steps to deal with some of these areas, but opportunities for improvement remain. The Coast Guard has three efforts under way that hold promise for enhancing mission performance but also merit ongoing attention. One is a new coastal communication system. The fiscal year 2006 budget request includes $101 million to move the system forward. A successful system would help almost all Coast Guard missions, but to develop it the Coast Guard must build more than 300 towers along the nation's coasts, some of them in environmentally sensitive areas. The second effort involves restructuring the Coast Guard's field units--tying resources and command authority closer together. This effort represents a major organizational change, and as such, it may be challenging to implement successfully. The third effort, enhancing readiness at the Coast Guard's stations for search and rescue and other missions, remains a work in process. The Deepwater program, which would receive $966 million under the budget request, appears to merit the most ongoing attention. GAO reviews of this program have shown that the Coast Guard clearly needs new or upgraded assets, but the Coast Guard's contracting approach carries a number of inherent risks that, left unaddressed, could lead to spiraling costs and slipped schedules. The Coast Guard is taking some action in this regard, but GAO continues to regard this approach as carrying substantial risk. Some expansion of cost and slippage in schedule has already occurred.