Coast Guard: Key Budget Issues for Fiscal Years 1999 and 2000

Published by the Government Accountability Office on 1999-02-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    United States General Accounting Office

GAO                 Testimony
                    Before the Subcommittee on Coast Guard and Maritime
                    Transportation, Committee on Transportation and
                    Infrastructure, House of Representatives

For Release
on Delivery
Expected at
                    COAST GUARD
2 p.m. EST
February 11, 1999
                    Key Budget Issues for Fiscal
                    Years 1999 and 2000
                    Statement of John H. Anderson, Jr.
                    Director, Transportation Issues,
                    Resources, Community, and Economic
                    Development Division

    Mr. Chairman and Members of the Subcommittee:

    We are here today to discuss several key issues related to the Coast
    Guard’s budgets for fiscal years 1999 and 2000. The Coast Guard, an
    agency within the Department of Transportation (DOT), is responsible for
    maritime missions that range from search and rescue operations to the
    enforcement of fisheries, immigration, and drug laws. For fiscal year 1999,
    the Coast Guard initially received $3.9 billion in appropriated funds to
    carry out its missions. It received another $377 million in emergency
    funding to pay for additional equipment and operations, most of which
    was for expanding its anti-drug efforts. This increased the Coast Guard’s
    total fiscal year 1999 funding to about $4.3 billion. For fiscal year 2000, the
    Coast Guard is requesting $4.1 billion to fund its various programs. During
    the last 2 years, we have issued reports on the overall fiscal challenges
    facing the Coast Guard and the justification and the affordability
    associated with its multi-billion dollar program for replacing or
    modernizing many of its ships and aircraft.1,2 The program, called the
    Deepwater Replacement Project, may cost as much as $9.8 billion (in
    constant 1998 dollars) over the next 20 years and is potentially the largest
    acquisition project in the agency’s history.

    My testimony today, which is based on GAO’s recently completed and
    ongoing work at the Coast Guard, addresses three topics: (1) the Coast
    Guard’s progress in justifying the Deepwater Replacement Project and
    addressing our concerns about its affordability, (2) the Coast Guard’s
    plans for spending its fiscal year 1999 emergency funds, and (3) the budget
    strategies the agency may have to consider in the future to address
    continuing budget constraints.

    In summary, our work shows the following:

•   While the Coast Guard has made progress in addressing our concerns
    about the justification and the affordability of the Deepwater Project,
    additional work is needed. In our report on the Deepwater Project, we had
    two major concerns. First, the Coast Guard had not sufficiently justified
    the project, in that it lacked accurate and complete information on the
    condition and the performance shortcomings of its ships and aircraft and
    the resource hours needed to fulfill its missions. The Coast Guard and its
    contractors are currently developing this information, but some of it will

        Coast Guard: Challenges for Addressing Budget Constraints (GAO/RCED 97-110, May 14, 1997).
     Coast Guard’s Acquisition Management: Deepwater Project’s Justification and Affordability Need to
    Be Addressed More Thoroughly (GAO/RCED 99-6, Oct. 26, 1998).

    Page 1                                                                         GAO/T-RCED-99-83
    not be available until later this year. The Coast Guard will prepare a new
    project justification sometime in early 2000. In the meantime, contractors
    working on the conceptual design for the project will be assessing
    alternatives without the benefit of current data on the performance
    shortcomings of the agency’s ships and aircraft and the resource hours
    needed to fulfill its missions. The Coast Guard plans to have performance
    data on its current ships and aircraft by April 1999, and the agency plans to
    provide that information to contractors at that time. Providing this data is
    important because without it, there is increased risk that contractors
    could develop alternatives that would not be the most cost-effective to
    meet the needs of the Coast Guard’s Deepwater Project. Second, we
    reported that if the cost of the Deepwater Project approaches the agency’s
    planning estimate of $500 million annually, it would consume more than
    the agency now spends for all capital projects and leave little funding for
    other critical capital needs. Coast Guard officials said that competition
    among contractors would cut costs and more closely align the potential
    cost of the project with probable funding levels. In addition, the agency is
    developing information on the advantages and disadvantages of various
    funding options for the project. However, until the Coast Guard develops
    its new justification for the Deepwater Project in early 2000 and
    contractors provide their cost estimates for various alternatives, neither
    we nor the Coast Guard can tell whether the affordability issue has been
    adequately addressed.

•   By the end of fiscal year 1999, the Coast Guard plans to spend about 78
    percent of the $377 million in emergency funds that it received, primarily
    to expand its anti-drug efforts. As directed by the Congress, it has begun
    buying more patrol boats; reactivating its surveillance aircraft and ships;
    and obtaining additional equipment, such as sensors and communications
    systems, to improve its ability to detect drug smugglers and to coordinate
    its anti-drug activities. The Coast Guard is also using a portion of the funds
    for maintaining operational readiness, repairing equipment and facilities
    that were damaged by Hurricane Georges in the southeastern United
    States, and ensuring that its Year 2000 computer problems are resolved.

•   The additional funding that will likely be needed to modernize and acquire
    deepwater aircraft, ships, and equipment and to sustain the newly
    expanded anti-drug efforts will increase the budget pressures on the Coast
    Guard. In the future, the agency might have to develop different budget
    strategies and approaches to live within its budget. Typically, the Coast
    Guard has adopted a budget strategy that relies heavily on cost-cutting
    initiatives to improve operating efficiency. Our work has shown that

    Page 2                                                       GAO/T-RCED-99-83
                            additional cost-cutting measures to improve efficiency are possible, and
                            the Coast Guard should renew its efforts in this area. For example, using
                            civilian personnel rather than military personnel in administrative support
                            positions could achieve significant cost-savings. However, given the
                            potential size of the increased funding requirements, the adequacy of this
                            approach to meet the sterner budget challenges is highly uncertain. The
                            agency might have to look for other cost-cutting options, including
                            rethinking its missions and services performed, which is likely to be
                            controversial, given past opposition to reductions in this agency’s services.

                            In October 1998, we issued a report that raised concerns about the
Work Remains to Be          justification and the affordability of the Deepwater Replacement Project.
Done Regarding the          Our major findings are summarized as follows:
Justification and the
                        •   We found that the Coast Guard had understated the remaining useful life
Affordability of the        of its aircraft, and to a lesser extent, its ships. For example, the Coast
Deepwater                   Guard’s justification that was prepared in late 1995 estimated that its
                            aircraft would need to be phased out starting in 1998. However, last year,
Replacement Project         the Coast Guard issued a study showing that its aircraft, with appropriate
                            maintenance and upgrades, would be capable of operating until at least
                            2010 and likely beyond.3 The study’s findings suggest that in upgrading or
                            replacing its deepwater ships and aircraft, the Coast Guard should give a
                            relatively low priority to modernizing or replacing its aircraft. Also, since
                            our report was issued, the Coast Guard has taken additional steps to
                            assess the condition and the remaining useful life of its ships, including
                            hiring naval architects to evaluate the condition of its deepwater ships and
                            completing studies on two 378-foot cutters. According to a Deepwater
                            Project official, contractors have also conducted their own evaluations of
                            the condition of deepwater ships and aircraft to validate their condition.

                        •   We found that the Coast Guard had not conducted a rigorous analysis
                            comparing the current capabilities of its aircraft and ships with current
                            and future requirements, as required by DOT’s and the Coast Guard’s own
                            guidance. Although, the Coast Guard asserted that its current deepwater
                            ships and aircraft were incapable of effectively performing future missions
                            or meeting the future demand for its services, we were unable to validate
                            these assertions. The Coast Guard had originally planned to complete a
                            comparative assessment of the current capabilities and the functional
                            needs of the future deepwater system by November 1998, but work on that

                             Aviation Near-Term Support Strategy, Office of Aeronautical Engineering, U.S. Coast Guard, Sept. 4,

                            Page 3                                                                          GAO/T-RCED-99-83
    assessment has slipped. The Coast Guard now plans to complete a
    baseline study of the capabilities of its existing fleet of ships and aircraft
    later this month; a comparative assessment is planned for completion in
    April 1999.

•   We found that the Coast Guard lacked support for its estimates of the
    resource hours needed for its deepwater ships and aircraft to perform
    required missions. We attempted to verify the Coast Guard’s estimates of
    surface and aviation hours needed for deepwater law enforcement
    missions, which constitute over 95 percent of the total estimated
    mission-related hours for its ships and about 90 percent of the total
    estimated mission-related hours for its aircraft. We could not verify the
    reasonableness of these estimates because the sources for the data were
    not documented or available. An independent Presidential Roles and
    Missions Commission will study the Coast Guard’s roles and missions. The
    Commission plans to issue a report by October 1999 that will be used to
    gauge the demand for the Coast Guard’s services. The Coast Guard plans
    to use this study to recalculate the operating levels needed to meet the
    requirements of its missions when it issues a revised mission analysis that
    is scheduled for completion in January 2000.

    In our report on the Deepwater Project, we acknowledged that the Coast
    Guard is correct in starting now to explore alternative ways to modernize
    its deepwater ships and aircraft. However, we expressed concerns about
    proceeding with the project without a clear understanding of the current
    condition of its ships and aircraft and whether they are deficient in their
    capabilities and service demands. We recommended that the Coast Guard
    expedite the development and issuance of updated information from
    internal studies to the contractors involved in developing proposals for the
    project. The Coast Guard agreed with our recommendation and has made
    progress in developing data on the condition of its ships and aircraft;
    however, other data on its roles and missions and any shortfalls in its
    performance capabilities will not be available until later this year or early
    next year. Contractors, however, are now evaluating deepwater
    alternatives without such data, and they are scheduled to provide the
    Coast Guard with an analysis of alternatives for the Deepwater Project in
    March 1999 and conceptual designs for the system in December 1999.
    Without basic data on the needs of its deepwater ships and aircraft, there
    is increased risk that the contractors could develop alternatives or designs
    that would not be the most cost-effective to meet the Coast Guard’s needs
    for the Deepwater Project. The Coast Guard agreed with the importance of
    providing contractors with accurate and complete data as soon as

    Page 4                                                         GAO/T-RCED-99-83
possible; however, it also noted the importance of starting now due to the
long lead times associated with a project of this magnitude. The agency
has plans to provide the contractors with data on its roles and missions
and performance shortfalls as soon as the information becomes available.
Coast Guard officials believe that they will have data in enough time so as
not to adversely affect the contractors’ proposals. We believe that this is a
concern that requires close oversight.

Our report also raised concerns about the project’s affordability. The
estimated cost of the Deepwater Project could consume nearly all of the
agency’s projected spending for its capital projects. By fiscal year 2002,
when capital spending for the project could reach as much as $500 million
a year, the project could consume 97 percent of the Coast Guard’s total
projected capital budget, leaving little for other capital projects and
expenditures. Unless the Congress grants additional funds, which under
current budget laws could mean reducing funding for other agencies or
programs, the Coast Guard’s other capital projects could be severely

In January 1999, Coast Guard officials told us that they plan to address the
Deepwater Project’s affordability issue in two ways. First, they believe that
competition among three teams of contractors to develop alternative
deepwater systems will help minimize the project’s life-cycle costs
because the proposed costs will be one key factor in the selection of the
winning proposal. Second, they said that the agency’s independent
evaluation group will analyze various funding alternatives to determine
what impact they would have on the project. The group will examine the
most cost-effective funding amounts for the project as well as the
minimum amount that is needed each year. However, until the Coast
Guard develops its revised mission analysis in early 2000 and the
contractors provide their cost estimates for various alternatives, it will not
be known whether the affordability issue has been adequately addressed.

The Coast Guard’s draft Agency Capital Plan, issued in January 1999, also
identifies strategies for dealing with the affordability of the Deepwater
Project. The plan describes the agency’s long-term capital requirements
and identifies strategies for dealing with affordability issues, such as
extending the service life of the Coast Guard’s ships and aircraft and
replacing equipment with fewer, more capable assets. As an example,
extending the service life of its aircraft could result in significant cost
savings. A Coast Guard study estimates that between $257 million and
$297 million in upgrades and maintenance could extend the service lives of

Page 5                                                       GAO/T-RCED-99-83
                           current deepwater aircraft by 11 to 28 years longer than the Coast Guard’s
                           initial estimate of when these aircraft would need to be phased out.4
                           However, the estimated cost to upgrade does not include the increased
                           cost of operating older aircraft. The Coast Guard estimates that a
                           one-for-one replacement would cost $3.8 billion to replace the same
                           aircraft, or about $3.5 billion more than the option to extend the aircraft’s
                           service life. In addition, the Coast Guard’s Director of Resources told us
                           that, as part of the capital planning process, the agency will prioritize
                           projects rather than give them the equal priority that it had previously
                           done. This strategy would involve making trade-offs between projects. For
                           example, the Coast Guard could concentrate its resources on buying more
                           ships over 2 to 3 years and buying fewer aircraft or other equipment. After
                           the ships have been bought, the agency could then focus its resources on
                           buying the aircraft or other equipment and reducing the amount of
                           resources used to buy ships. The Coast Guard believes that this approach
                           could help it deal with “spikes” in the agency’s capital needs during a
                           period of fiscal constraint. While these strategies will help the Coast Guard
                           deal with affordability issues, it is uncertain whether they will fully
                           address the affordability issues raised by the Deepwater Project.

                           The Coast Guard received about $377 million in emergency funds for fiscal
Most of the                year 1999, most of which are aimed at reducing the use of illegal drugs in
Emergency Funds Will       the United States. The Congress directed that these funds be used in the
Be Spent in Fiscal         following ways:
Year 1999              •   About $271.7 million was provided for expanding the Coast Guard’s
                           anti-drug program. The Congress directed the Coast Guard to use
                           $217.4 million to buy new equipment; $44.3 million to operate the new
                           equipment and expand drug interdiction activities; and $10 million for
                           training Coast Guard reservists and for research, development, test, and
                           evaluation. The Coast Guard plans to obligate about $195 million of these
                           funds in fiscal year 1999, with the balance to be obligated in fiscal year

                       •   Another $72 million was provided for maintaining the overall military
                           readiness of the Coast Guard. According to a Coast Guard official, the
                           funds will allow the agency to carry out its basic missions and
                           responsibilities, such as law enforcement and search and rescue activities.

                            See footnote 3.

                           Page 6                                                      GAO/T-RCED-99-83
                             All of these funds will be expended in fiscal year 1999.5

                         •   Another $12.6 million was provided for repairing damage to equipment and
                             facilities caused by Hurricane Georges. The Coast Guard plans to spend
                             about $7.5 million of these funds in fiscal year 1999 and the remaining
                             $5.1 million the following year.6

                         •   Finally, $20.5 million was provided for ensuring that the Coast Guard’s
                             computer systems do not have Year 2000 computer problems. The agency
                             intends to expend all of these funds in fiscal year 1999.

Spending for Anti-Drug       The Coast Guard plans to acquire a variety of new equipment to help
Efforts                      expand its anti-drug program. For example, it plans to purchase 15 new
                             87-foot patrol boats at a cost of $66.1 million. This purchase will allow it to
                             deploy some of its larger 110-foot patrol boats in the Caribbean for
                             counter-narcotics operations. The Coast Guard also plans to spend
                             $29.3 million to purchase new sensors and communications systems for its
                             cutters and patrol boats, and it plans to reactivate two ships for $20 million
                             to provide command and control and logistics support for its drug-fighting
                             efforts. In addition, the Coast Guard plans to spend $3.5 million to
                             purchase eight high-speed boats to help it pursue the high-speed boats
                             used by drug smugglers.

                             The Coast Guard also plans to upgrade and expand its drug interdiction
                             efforts by spending about $52 million to reactivate six HU-25 jet aircraft
                             used for surveillance and to buy other aircraft equipment. It will also
                             spend about $44 million to buy sensors for its aircraft, which will improve
                             its ability to detect and classify suspected drug smugglers at sea, and to
                             upgrade engines for its C-130 surveillance aircraft. (See the appendix for
                             more details on the status of the Coast Guard’s acquisition of equipment
                             from emergency funding.)

                             The Office of National Drug Control Policy has set a national goal of
                             reducing the flow of drugs entering the United States from maritime routes

                              According to congressional budget documents and a Coast Guard budget official, the $72 million in
                             emergency funding will be used to offset a $72 million budget cut that the Coast Guard received in its
                             fiscal year 1999 appropriation.
                              The Coast Guard plans to spend $2.5 million to repair aids to navigation and other equipment in
                             southern Florida, Puerto Rico, Alabama, and Louisiana and another $200,000 to repair damage to sites
                             and equipment used for communications. The remaining $9.9 million will be used to repair the Coast
                             Guard’s offices, air stations, search and rescue stations, and other facilities in southern and western
                             Florida, Alabama, Louisiana, Mississippi, and Puerto Rico. Repairs will be made to the piers, roofs,
                             windows, and fences.

                             Page 7                                                                            GAO/T-RCED-99-83
by 10 percent by 2002 and 20 percent by 2007. The Coast Guard and other
federal agencies will be involved in achieving this goal. The additional
emergency funds should aid the Coast Guard in its anti-drug efforts;
however, currently, there is no effective way of knowing the true impact of
increased funding provided to the Coast Guard or any other law
enforcement agencies. Similar to what we found 2 years ago, it is difficult
for the Coast Guard or any other agency to effectively measure the results
of its anti-drug program.7,8 For example, it is inherently difficult to
develop accurate data on the quantity of illegal drugs entering the country.
Moreover, it is difficult to distinguish the impact that the Coast Guard’s
anti-drug actions are having from those of other agencies. However,
progress is being made—the Office of National Drug Control Policy’s
Interagency Assessment of Cocaine Movement has developed estimates of
the amount of cocaine shipped from foreign countries. If reasonably
accurate, this information could aid the Coast Guard in measuring the
results of its cocaine interdiction program.

The Coast Guard plans to use the entire $44.3 million appropriated for
operating expenses by the end of this year to operate new equipment and
continue intensified anti-drug initiatives begun last year in the Caribbean.
In fiscal year 1999, the Coast Guard also plans to use $5 million to train
reservists in counter-narcotics operations, hire more reservists and
recruiters, and buy new law enforcement equipment. Also, the Coast
Guard plans to spend $4 million of the $5 million it received for research,
development, test, and evaluation of counter-narcotics strategies by the
end of fiscal year 1999.

  The Coast Guard’s performance goal in 1998 was to reduce the flow of illegal drugs by denying
maritime smuggling routes as part of the interagency effort to reduce the supply below the national
demand level. By fiscal year 2002, the agency’s goal is to reduce the smugglers’ success rate from the
fiscal year 1995 baseline of 71 percent to 38 percent.
 Drug Control: Observations on Elements of the Federal Drug Control Strategy (GAO/GGD 97-42,
Mar. 14, 1997).

Page 8                                                                            GAO/T-RCED-99-83
                    While the Coast Guard received a sizable emergency appropriation for
The Deepwater       fiscal year 1999, which was largely to expand its anti-drug efforts, the
Project and the     agency will need additional funding to sustain these higher operating
Expansion of        levels in future years. Last month, legislation was introduced in the Senate
                    to authorize additional funding for the Coast Guard for anti-drug
Anti-Drug Efforts   operations in fiscal years 2000 and 2001; however, there is no guarantee
Heighten the        that these funds will ultimately be appropriated. In addition, if the
                    Deepwater Project moves forward as planned, the Coast Guard would
Challenges for      likely need hundreds of millions of dollars each year for the next 20 years
Addressing Budget   to complete the project.
                    In our May 1997 report to this Subcommittee, we discussed the challenges
                    the Coast Guard faces as it operates within a constrained fiscal
                    environment. While the Coast Guard had taken a number of steps to
                    reduce its costs, we suggested that the Coast Guard look toward several
                    budget strategies to further cut costs. Given the continuing budget
                    pressures that currently exist for the Coast Guard, much of the message of
                    our 1997 report is still relevant today.

                    Our report concluded that the agency could renew efforts to improve its
                    operating efficiency by delivering services at a lower cost. For example, in
                    our earlier report, we identified cost-cutting options that had been
                    identified by a number of studies on the Coast Guard that have been
                    conducted since 1981. The agency has not implemented many of these
                    options. For example, past studies by groups outside the Coast Guard have
                    pointed out that lengthening periods between assignment rotations for
                    military personnel could substantially reduce transfer costs, which now
                    amount to more than $60 million a year. The Coast Guard thinks its
                    current rotation policies are best and does not plan to study the issue
                    further. In addition, using civilian personnel rather than military personnel
                    in administrative support positions could achieve significant cost savings.
                    Soon, we will be reporting to this Subcommittee on other administrative
                    and support functions that have potential for cost savings. Achieving some
                    of these cost-cutting measures will be controversial and difficult, either
                    because they involve a change in the agency’s organizational culture or
                    they are not popular with the public.

                    Consolidating functions or closing facilities have been identified by
                    previous studies as another option to reduce expenditures. For example,
                    several years ago, the Coast Guard identified a cost-cutting option
                    involving the consolidation of its training facilities, a move that would
                    have resulted in annual savings of $15 million by closing the facility at

                    Page 9                                                      GAO/T-RCED-99-83
Petaluma, California. Fearing a public outcry by the local community,
especially because of the numerous recent closures of military bases in
California, the Coast Guard postponed taking this step. To address
situations like this, we recommended that the Congress may wish to
consider a facility closure approach for the Coast Guard that is similar to
the one the Department of Defense has used to evaluate base closures.
Under this approach, an independent commission would be established
and given authority to recommend the closure of some of the Coast
Guard’s facilities. To date, such a commission has not been established.

Even if the Coast Guard is successful in achieving significant cost savings
by improving its operating efficiency, the adequacy of this approach alone
to meet budget challenges is highly uncertain. As we pointed out in our
1997 report, the agency may have to look beyond efficiency measures for
cost-cutting options. Our past work examining a cross section of
private-sector and public organizations that have faced fiscal constraints
similar to the Coast Guard’s has shown that a much broader approach for
evaluating potential cost-cutting options is often needed. Frequently, these
broader assessments have involved a fundamental rethinking of the
missions and services performed by the organizations and the sources of
their funding.

Driven largely by the potential magnitude and the impact of the Deepwater
Project on future budgets, the administration has renewed efforts to
evaluate the roles and the missions of the Coast Guard and to push for
additional user fees. The independent Presidential Commission, which is
about to begin studying the agency’s roles and missions, could identify
areas or functions that could be (1) added or enhanced, (2) maintained at
current levels of performance, or (3) reduced or eliminated. Also, in its
fiscal year 2000 budget request, the Coast Guard is proposing a user fee on
commercial cargo and cruise vessels for navigation services provided by
the Coast Guard that could add revenues of $41 million each year if it is
fully implemented. The administration favors earmarking the proposed
user fees as a means of giving agencies an incentive to collect fees.
Earmarking would allow the agency to keep all or significant portions of
the fees collected to pay for providing the services rather than the current
practice of returning the bulk of the revenues to the Treasury. We are not
taking a position on whether such fees, including the proposed fees on
navigation services, should be established or on whether such fees should
be earmarked for the Coast Guard rather than returned to the Treasury’s
general fund. This is a policy question that the Congress must ultimately
decide after considering a number of issues and trade-offs.

Page 10                                                     GAO/T-RCED-99-83
Mr. Chairman, this concludes my testimony. I will be happy to respond to
any questions you or other Members may have.

Page 11                                                   GAO/T-RCED-99-83
Appendix I

The Coast Guard’s Acquisition of Equipment
From Emergency Funding to Expand Its
Drug Interdiction Activities, Fiscal Years
1999 and 2000
Dollars in millions
Planned equipment purchases or
leases                                  Cost Applicability to anti-drug program                Status of acquisition
Purchase 15 new 87-foot patrol                These boats will allow the Coast Guard to        Have two of these boats in operation and
boats                                         deploy larger 110-foot patrol boats to the       obligate $66.1 million by the end of the
                                              Caribbean for counter-narcotics operations,      fiscal year. The Coast Guard plans to have
                                              resulting in 1,440 more operating hours to       four more boats in operation by the end of
                                              support its anti-drug program per patrol         fiscal year 2000.
                                        $66.1 boat.
Purchase sensors and                          The sensors will improve the Coast Guard’s Begin to receive much of this equipment
communications systems for cutters            ability to detect and classify targets. The and obligate $20 million this fiscal year.
                                              communications equipment will improve
                                              interagency communications and
                                              communications capabilities on cutters,
                                         29.3 boats, and shore facilities.
Reactivate two ships for command                These ships will provide command and           Pay the Military Sealift Command to
and control platforms                           control and logistical support for ships and   operate and maintain the platforms. Coast
                                                fast-pursuit boats. The ships will provide     Guard personnel will be on the ships to
                                                3,600 operating hours per ship for anti-drug   carry out law enforcement responsibilities.
                                                activities.                                    The first vessel will be available in the last
                                                                                               quarter of fiscal year 1999 and the second
                                                                                               in the second quarter of fiscal year 2000.
                                                                                               The Coast Guard plans to obligate all
                                         20.0                                                  funds this fiscal year.
Purchase eight high-speed pursuit             These boats will provide the capability to       Operate at least two boats by the fourth
boats                                         interdict high-speed boats used by               quarter of fiscal year 1999 and obligate all
                                              smugglers. Four will be deployed to the          funds in this fiscal year. The Coast Guard
                                              reactivated command and control platforms        anticipates all eight boats will be in
                                              and four will be deployed to shore-based         operation in fiscal year 2000.
                                          3.5 units.
Reactivate six HU-25 jets, buy other            The jets will increase surveillance and will   Deploy three aircraft by the last quarter of
equipment, and improve                          provide 600 hours per aircraft to support      this fiscal year and obligate $21 million this
surveillance capability                         the anti-drug effort. The use of unmanned      year. The remaining three aircraft will be
                                                airborne vehicles to help classify and         available by the last quarter of fiscal year
                                                detect targets at sea will also be examined.   2000 and the Coast Guard plans to
                                         52.0                                                  obligate the balance in fiscal year 2000.
Lease aircraft to conduct                       The aircraft will help the Coast Guard         Lease aircraft to develop and test tactics
operational testing and use of force            evaluate the potential use of force from       that include the use of force. The Coast
                                                aircraft to interdict smugglers at sea.        Guard plans to obligate all funds and
                                          2.5                                                  complete the testing this fiscal year.
Purchase aircraft sensors and                 This equipment will improve the Coast            Complete the engine upgrades in fiscal
upgrade C-130 engines                         Guard’s ability to detect and classify           year 1999 and install the sensors starting
                                              targets at sea. In addition, the C-130           in the third quarter of fiscal year 1999. The
                                              upgrade will provide maintenance and fuel        Coast Guard plans to obligate $9.3 million
                                         44.0 savings in future years.                         this fiscal year.
Total                                  $217.4

(348147)                                        Page 12                                                                  GAO/T-RCED-99-83
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