The key dates in the process established by the Coast Guard included the  following:    By December 31, 2003, those facilities and vessels subject to MTSA’s  security plan requirements had to submit security plans to the Coast  Guard for review or self-certify that their plans would be developed and  implemented by July 1. By July 1, 2005, the Coast Guard intends to complete the remaining on-site  compliance inspections for vessels it is not able to inspect by January 1,  2005. However, the bulk of the cost  burden is likely to be borne by facility and vessel owners and operators. Extent of Coast Guard Review and Approval of Individual Plans Varies Widely

While the Coast Guard expects owners and operators to implement the  approximately 12,300 facility and vessel plans by July 1, 2004, the extent it  will have reviewed and approved these plans varies widely, for two main  reasons. First, about 5,900 of these plans were developed under an option  that essentially deferred Coast Guard review of individual plans until after  July 1. Under this option, owners and operators self-certified that their  plans would be based on industry-developed, Coast Guard-approved  standards and templates. 3.) The Coast Guard was to check to ensure that the owners or operators  were members of the organization that developed the program. As table 1 shows, of the 2,913 facility plans and 3,505 vessel plans  submitted under option A, more than half were still undergoing the  detailed review as of June 2004. Anticipating that plans for some facilities and vessels would still be in  process on July 1, the Coast Guard also took steps to allow most of them  to continue operating as allowed by MTSA and the regulations. Strategy for Monitoring and Oversight of Plan Implementation Faces Numerous Challenges

In late May 2004, the Coast Guard issued its strategy for monitoring and  overseeing the implementation of security plans after July 1. Cost to Comply with MTSA Is Uncertain

Although the Coast Guard made a good-faith effort in preparing its  estimate of $7.3 billion for maritime industry compliance with MTSA  security-related requirements, the estimate needs to be viewed with some  caution, because (1) the Coast Guard had to assume values for a number  of cost factors for which there was incomplete data and (2) it had limited  time to prepare the estimate. The uncertainty about whether the Coast Guard will be able to meet its  timeframes for conducting on-site compliance inspections of the more  than 12,300 facilities and vessels and questions about whether it will have  enough staff and a sufficient experience base to handle so many  inspections will undoubtedly challenge management and staff to  effectively implement the strategy. Second, the long-term strategy also needs to reflect a way to ensure that  the security inspections assess conditions that represent the normal  course of business at facilities and aboard vessels. Specifically,     assessing the progress made to develop, review, and approve the security  plans for facilities and vessels by July 1, 2004.   assessing the U.S. Coast Guard’s monitoring and oversight strategy for  ensuring that all necessary port security improvements are implemented. level. cargo. Appendix III: Analysis of Coast Guard’s Compliance Cost Estimates

The Coast Guard estimated the maritime transportation industry will  spend $7.3 billion to develop and implement security plans through the  year 2012.
Why GAO Did This Study

The Maritime Transportation Security Act of 2002, as implemented by the Coast Guard, calls for owners and operators of about 3,150 port facilities (such as shipping terminals or factories with hazardous materials) and about 9,200 vessels (such as cargo ships, ferries, and tugs and barges) to develop and implement security plans by July 1, 2004. The Coast Guard intends to conduct on-site compliance inspections of all facilities by January 1, 2005, and all vessels by July 1, 2005, to ensure plans are adequately implemented. The Coast Guard estimated the act's security improvements would cost $7.3 billion over 10 years--most of it borne by facility and vessel owners and operators. GAO was asked to assess (1) the progress towards developing, reviewing, and approving plans by July 1, 2004, (2) the Coast Guard's monitoring and oversight strategy for ensuring that plans are implemented, and (3) the accuracy of the Coast Guard's cost estimate.

What GAO Found

Owners and operators have made progress in developing security plans for their port facilities and vessels. However, the extent to which the Coast Guard will have reviewed and approved the approximately 12,300 individual plans by July 1, 2004, varies considerably. About 5,900 plans were being developed under an option allowing owners and operators to self-certify that they would develop and implement plans by July 1, using industry-developed, Coast Guard-approved standards and templates. These individual plans will not be reviewed before July 1 unless owners or operators choose to submit them for review. The remaining 6,400 plans went through a review process established by the Coast Guard. Every plan required revisions, some of which were significant. As of June 2004--1 month before the deadline for implementation--more than half of the 6,400 plans were still in process. The Coast Guard took steps to speed up the process and to allow facilities and vessels to continue operating with less than full plan approval after July 1, as long as the Coast Guard was satisfied with their progress. The Coast Guard's strategy for monitoring and overseeing security plan implementation will face numerous challenges. Whether the Coast Guard will be able to conduct timely on-site compliance inspections of all facilities and vessels is uncertain because questions remain about whether the Coast Guard will have enough inspectors; a training program sufficient to overcome major differences in experience levels; and adequate guidance to help inspectors conduct thorough, consistent reviews. Another challenge is to ensure inspections reflect assessments of the normal course of business at facilities and aboard vessels. The accuracy of the Coast Guard's $7.3 billion estimate for implementing security improvements is likewise uncertain. The estimate, while a goodfaith effort on the Coast Guard's part, is based on limited data and on assumptions that are subject to error. The estimate should be viewed more as a rough indicator than a precise measure of costs.