Coast Guard Shore Infrastructure: Actions Needed to Better Manage Assets and Reduce Risks and Costs

The Coast Guard, within the Department of Homeland Security (DHS), owns or leases more than 20,000 shore facilities—such as piers, boat stations, air stations, runways, and housing units—at more than 2,700 locations, from which it carries out its missions. This shore infrastructure is often positioned along the nation's coastlines where it can be vulnerable to damage from extreme weather.

This statement summarizes GAO findings related to the condition of Coast Guard shore infrastructure, actions the Coast Guard has taken to improve its management of its shore infrastructure, and additional actions it needs to take. This statement is based on three GAO products issued from October 2017 through September 2019, along with selected updates on actions the Coast Guard has taken to address GAO's recommendations from these reports. GAO analyzed relevant Coast Guard documents, management processes and decisions, and interviewed Coast Guard officials. To conduct updates, GAO also reviewed information on the Coast Guard's actions to implement its prior recommendations.

In February 2019, GAO reported that the Coast Guard's $18 billion portfolio of shore infrastructure was deteriorating, and almost half of it was past its service life as of 2018. Coast Guard data showed that it would cost at least $2.6 billion to address its maintenance and recapitalization (major renovation) project backlogs at recent funding levels. Coast Guard data also showed that hundreds of projects had not been factored into the backlog costs.

GAO's prior work has shown that the Coast Guard has taken initial steps toward improving how it manages its shore infrastructure, including conducting an initial assessment of shore infrastructure vulnerabilities. However, GAO also found that the Coast Guard had not fully applied leading practices and key risk management steps in managing its shore infrastructure, and needs to take the following actions:

Employ models for predicting the outcome of investments and analyzing tradeoffs . In February 2019, GAO found that the Coast Guard had used a model to determine that it could more efficiently prioritize its investment in aviation pavement—one segment of an almost $3 billion portfolio of aviation shore infrastructure—and save about $13.8 million. However, as of February 2019, the agency had not implemented the aviation pavement study results. Moreover, according to Coast Guard officials, the agency could employ models to its entire portfolio of shore infrastructure. By not implementing the results of its aviation pavement model or employing similar models across its shore infrastructure assets, the Coast Guard is missing opportunities to potentially identify and achieve cost savings across other assets.

Dispose of unneeded assets. In October 2017, GAO found that closing boat stations that the Coast Guard had found to be unnecessarily duplicative could potentially generate $290 million in cost savings over 20 years. However, in February 2019, GAO found that instead of closures, the Coast Guard was planning recapitalization projects at 5 of the 18 stations it had recommended for closure. Given the Coast Guard's competing shore infrastructure priorities and existing project backlogs, GAO recommended disposing of unneeded assets to more efficiently manage resources and better position the Coast Guard and Congress to address shore infrastructure challenges.

Implement DHS's Critical Infrastructure Risk Management Framework. In September 2019, GAO found that DHS has recognized the importance of protecting critical infrastructure from extreme weather and other risks. However, the Coast Guard has not fully aligned its processes for improving shore infrastructure resilience with DHS's five key steps for critical infrastructure risk management. For example, when identifying and then assessing risks to its infrastructure—two of the steps in the DHS process—the Coast Guard did not identify all assets that are critical to its missions, such as aircraft runways, or screen them for all vulnerabilities, such as flooding. Aligning its processes with the DHS steps would provide greater assurance that the Coast Guard is investing its resources to minimize potential damage and expenses caused by future extreme weather events.

In the three reports, GAO made 10 recommendations to improve the Coast Guard's asset management efforts, including employing models for predicting investment outcomes, disposing of unneeded assets, and implementing DHS's critical infrastructure risk management framework to guide shore infrastructure resilience decisions. DHS concurred and generally described planned actions to address these recommendations, but has not yet fully implemented them.

I am pleased to be here today to discuss our recent work, including a  report that is being released today, on the condition of the U.S. Coast  Guard’s (Coast Guard) shore infrastructure and recommendations we  have made to improve it. The Coast Guard, within the Department of  Homeland Security (DHS), is the principal federal agency charged with  enforcing laws intended to prevent death, injury, and property loss in the  maritime environment. All Coast Guard missions begin and end at the  shore. To help carry out its missions, the Coast Guard owns or leases  more than 20,000 facilities—such as piers, boat stations, air stations,  runways, and housing units—at more than 2,700 locations. Such  infrastructure are often positioned along the nation’s coastlines where  facilities can be vulnerable to damage from extreme weather. We have  reported that some Coast Guard facilities have required repair and  recapitalization after being damaged by superstorm Sandy, and  hurricanes Harvey, Irma, Maria, and Matthew. The costs for some of  those recovery efforts, combined, were about $1 billion.

In  my  testimony  today,  I  will  discuss  (1)  the  condition  of  the  Coast  Guard’s  shore infrastructure, (2) actions the Coast Guard has taken to  improve  its  management  of  shore  infrastructure,  and  (3)  key  actions  needed for the  Coast Guard to better align its management of shore infrastructure with  leading practices and key risk management steps.

This statement is based on three reports we issued from October 2017 to  September 2019 on Coast Guard shore infrastructure, including  management of its boat stations, overall shore infrastructure, and shore  infrastructure resilience, as well as selected updates we conducted in  September 2019 on Coast Guard efforts to address our previous  recommendations. To perform our work for the previous reports, we  analyzed relevant Coast Guard documents, management processes, as  well as applicable laws, regulations, and data for managing Coast Guard  shore infrastructure. We also interviewed Coast Guard officials  responsible for managing shore infrastructure. Further details on the  scope and methodology for these reports are available within each of the  published products. In addition, to conduct our selected updates, we  reviewed Coast Guard information about actions taken to address  recommendations we had made in our previous reports.

We conducted the work on which this statement is based in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe the evidence obtained provides  a reasonable basis for our findings and conclusions based on our audit  objectives.

The Coast Guard owns or leases more than 20,000 facilities consisting of  various types of buildings and structures. The Coast Guard’s shore  infrastructure is organized into five product lines and 13 asset types,  known as asset lines. For example, within its shore operations asset line,  the Coast Guard maintains over 200 stations along U.S. coasts and  inland waterways to carry out its search and rescue operations, as well as  other missions such as maritime security.

Much of the Coast Guard’s infrastructure is vulnerable to the effects of  extreme weather and can be costly to repair or replace after major  storms. From December 2005 through June 2019, the Coast Guard  received about $2 billion in supplemental appropriation funds to, among  other things, rebuild or relocate 15 facilities damaged by hurricanes.  During this time, the Coast Guard relocated facilities further inland or to  higher ground, upgraded facilities to be more resilient, and designed new  facilities with features to protect them from natural disasters. For  example, after being damaged by Hurricane Ike in 2008, the Coast Guard  relocated a regional facility in Houston, Texas further inland to help  protect the new facility from extreme weather. The facility was also  designed to withstand wind speeds of up to 115 miles per hour. In  February 2017, the Coast Guard’s Civil Engineering program also issued  guidance intended to increase the likelihood that new or recapitalized  buildings would be designed to withstand natural disasters, and to enable  the Coast Guard to better manage risks to its operations and personnel,  among other things.

Almost Half of the Coast Guard’s Shore Infrastructure is Beyond Its Service Life, and Project Backlogs Will Cost at Least $2.6 Billion to Address

We found in February 2019 that the condition of the Coast Guard’s shore  infrastructure was deteriorating and almost half of it was past its service  life—resulting in (1) recapitalization and new construction and (2)  deferred maintenance backlogs of at least $2.6 billion as of 2018. In  2018, the Coast Guard graded its overall shore infrastructure condition  as a C minus based on criteria it derived from standards developed by  the American Society of Civil Engineers. Table 1 shows information about  the number of assets, replacement value, service life of, and condition  grades assigned by the Coast Guard for each of its asset lines for fiscal  year 2018.

The aging and deteriorating condition of the Coast Guard’s shore  infrastructure has led to at least $2.6 billion in deferred construction  projects and maintenance backlogs. With almost half of its infrastructure  past its service life, and given recent Coast Guard funding requests for its  shore infrastructure, it will take many years for the agency to address  these backlogs. For example, in 2018 the Coast Guard estimated that it  would take almost 400 years to address just the $1.774 billion  recapitalization and new construction backlog—assuming an overall 65- year service life and that funding would continue at the fiscal year 2017  appropriations level. This time frame estimate excludes the Coast  Guard’s $900 million deferred depot-level maintenance backlog. Table 2  provides information on the Coast Guard’s two shore infrastructure  backlogs as of August 2018.

Nevertheless, the size and estimated costs of the Coast Guard’s backlogs  may be understated. We found in February 2019 that the Coast Guard’s  estimated costs did not include hundreds—or the majority—of the  projects on the recapitalization and new construction backlog. For  example, we reported that there were 205 projects on the backlog without  cost estimates. Officials explained that they had not prepared cost  estimates for these projects because they were in the preliminary stages  of development.

Coast Guard Has Taken Initial Steps toward Improving Its Management of Its Shore Infrastructure

Our previous reports have identified various steps the Coast Guard has  taken to begin to improve how it manages its shore infrastructure. Some  of the steps the Coast Guard has taken align with leading practices for  managing public sector backlogs and key practices for managing risks to  critical infrastructure, including identifying risks posed by the lack of timely  investment, identifying mission-critical facilities, disposing of unneeded  assets, and beginning an assessment of shore infrastructure  vulnerabilities. Specifically, the Coast Guard has:  Identified risks posed by lack of timely investment. In February  2019, we found that the Coast Guard had a process to identify,  document, and report risks to its shore infrastructure in its annual  shore infrastructure reports for fiscal years 2015 through 2018.  These reports identified the types of risks the Coast Guard faces in  not investing in its facilities, including financial risk, capability risk, and  operational readiness risk. The Coast Guard met this leading practice  to identify risk in general terms—for example, in terms of increased  lifecycle costs, or risk to operations.

Identified mission-critical and mission-supportive shore  infrastructure. In February 2019, we found that since at least 2012,  the Coast Guard had documented its process to classify all of its real  property under a tier system and established minimum investment  targets by tier as part of its central depot level maintenance  expenditure decisions. These tiers—which range from mission- critical to mission-supportive assets—were incorporated into guidance  that Coast Guard decision makers are to follow in their deliberations  about project funding, and to help them determine how to target  funding more effectively. For example, Coast Guard guidance for  fiscal years 2019 through 2023 prioritized expenditures on shore  infrastructure supporting front line operations, such as piers or  runways, over shore infrastructure providing indirect support to front  line operations, such as administrative buildings.

Assessed selected buildings for vulnerabilities. We issued a  report today that discusses the Coast Guard Civil Engineering  program’s efforts to conduct a vulnerability assessment of its owned  and occupied buildings, which the Coast Guard initiated in 2015 and  aims to complete in 2025. The Coast Guard calls this infrastructure  review the Shore Infrastructure Vulnerability Assessment. The focus  of Phase I of this assessment, completed in 2019, was to determine  the vulnerability of certain occupied buildings to 10 natural disasters.  Further, the assessment results are intended to assist with  contingency planning by identifying which Coast Guard facilities are  likely to remain operational after a natural disaster.

During Phase I of this assessment, completed in 2019, the Coast  Guard analyzed 3,214 buildings, almost 16 percent of its  infrastructure, for vulnerabilities to disasters such as floods,  earthquakes, and hurricanes. The analysis identified Coast Guard- wide infrastructure vulnerabilities to coastal risks such as shoreline  loss, coastal erosion and earthquakes, as well as tsunami risks on the  West Coast of the United States, Alaska, Guam, and Hawaii, and  immediate and serious flood risks in Puerto Rico and the Gulf and  East Coasts. The Phase I report recommended that Coast Guard  units and contingency planners consider these vulnerabilities when  preparing contingency plans or making capital investments. The  Coast Guard has also initiated a follow up effort involving structural  analyses for buildings it believes to be more susceptible to damage  from earthquakes and wind. Officials involved said their aim is to  complete this effort in 2025.

Coast Guard Has Not Fully Applied Leading Practices and Key Risk Management Steps in Managing its Shore Infrastructure

The Coast Guard has taken actions to begin to improve its shore  infrastructure management. However, as we previously reported, the  Coast Guard has not fully applied leading practices and key risk  management steps to improve its shore infrastructure management.  Specifically, we found, among other things, that the following actions  could help improve the Coast Guard’s shore infrastructure management  efforts:

Employ models for predicting the outcome of investments and  analyzing tradeoffs. In February 2019, we found that a 2017 Coast  Guard Aviation Pavement Study employed a model that found that the  Coast Guard could more efficiently prioritize investment in aviation  pavement. A subsequent Coast Guard aviation pavement plan  recommended actions to use the study results and potentially save  $13.8 million. However, we found that the Coast Guard had not fully  implemented its own recommended actions to achieve the cost  savings.

Additionally, we found that while a similar analytical approach to  efficiently prioritizing investments in aviation pavement could be  applied to all of the shore infrastructure asset lines, the Coast Guard  had not applied the approach to other asset lines. By not employing  similar models across its asset lines for predicting the outcome of  investments, analyzing tradeoffs, and optimizing decisions among  competing investments, the Coast Guard is missing opportunities to  potentially identify and achieve cost savings across other asset lines.  We recommended that the Coast Guard employ models for its asset  lines that would predict the investment outcomes, analyze tradeoffs,  and optimize decisions among competing investments. The Coast  Guard agreed with our recommendation but as of August 2019 had  not addressed it. The Coast Guard stated that it plans to assess the  use of modeling tools used by the Department of Defense as well as  other alternatives to enhance its real property asset management  capability. We will continue to monitor its actions.

Dispose of unneeded assets. In October 2017, we found that  disposing of unneeded assets, such as closing unnecessarily  duplicative boat stations, based on a sound analytical process,  could potentially generate $290 million in cost savings over 20  years. Specifically, the Coast Guard identified 18 unnecessarily  duplicative boat stations with overlapping coverage that could be  permanently closed without negatively affecting the Coast Guard’s  ability to meet its mission requirements, including its 2-hour search  and rescue response standard. In 2017, the Coast Guard affirmed  that its leadership believes the study remains valid, but as of  September 2019 it has not closed any stations. Figure 1 depicts the  extent of the Coast Guard’s overlapping boat and air station search  and rescue coverage, as identified by the Coast Guard, some of  which the Coast Guard determined to be unnecessarily duplicative.

In February 2019, we found that 5 of the 18 boat stations  recommended for closure had projects listed on the Coast Guard’s  current project backlog. For example, Station Shark River, in New  Jersey, was recommended for recapitalization in fiscal year 2017,  despite Coast Guard recommendations to close the station in 1988,  1996, 2007, and 2013. Notably, the Coast Guard has made multiple  attempts in previous years to close such stations but was unable to  due to congressional intervention, and subsequent legislation  prohibiting closures.

In October 2017, we recommended that the Coast Guard establish  and implement a plan with target dates and milestones for closing  boat stations that it has determined provide overlapping search and  rescue coverage and are unnecessarily duplicative. In February 2019,  we further recommended disposing of unneeded assets to more  efficiently manage resources and better position the Coast Guard and  Congress to address shore infrastructure challenges. The Coast  Guard agreed with our recommendations. As of September 2019, the  Coast Guard reported that it was considering changes in the  operational status of several stations, such as closing the stations  during the winter months when they conduct few, if any, search and  rescue cases. The Coast Guard estimated that it will continue to  consider changes until March 2020. These are positive steps, but we  continue to believe that it is important for the Coast Guard to dispose  of unneeded assets. Given the Coast Guard’s competing acquisition,  operational, and maintenance needs, and its existing $1.774 billion  project backlog of recapitalization and new construction projects,  these actions may help to mitigate some of its resource challenges.  We will continue to monitor the Coast Guard’s efforts to implement  these recommendations.

Report shore infrastructure project backlogs accurately. In  February 2019, we found areas in which the Coast Guard could  increase budget transparency for shore infrastructure by accurately  reporting project backlogs and costs in Congressionally-required  plans. Specifically, we found that the Coast Guard had not provided  accurate information to Congress necessary to inform decision- makers of the risks posed by untimely investments in maintenance  and repair backlogs. For example, the Coast Guard had not  provided complete information to Congress in its Unfunded Priorities  Lists of shore infrastructure projects, including information about  tradeoffs among competing project alternatives, as well as the  impacts on missions conducted from shore facilities in disrepair. We  also found that Coast Guard budget requests related to shore  infrastructure for fiscal years 2012 through 2019 generally did not  identify funding to address any backlogs of deferred maintenance or  recapitalization, except for one fiscal year—2012—when the Coast  Guard requested $93 million to recapitalize deteriorated/obsolete  facilities.

We also found that the Coast Guard had not provided accurate  information about its requirements-based budget targets for shore  infrastructure in its budget requests. According to Coast Guard  officials, a requirements-based budget is an estimate of the cost to  operate and sustain its shore infrastructure portfolio of assets over the  lifecycle of the asset, from initial construction or capital investment  through divestiture or demolition. Further, we found that Coast  Guard recapitalization targets showed a far greater need than was  reflected in the appropriations it requested from fiscal years 2012  through 2019. Specifically, Coast Guard targets for recapitalization of  shore assets indicated the Coast Guard needs $290 to $390 million  annually for its recapitalization efforts. However, its budget requests  for fiscal years 2012 through 2018 have ranged from about $5 million  to about $99 million annually.

We recommended that the Coast Guard include supporting details  about competing project alternatives and report tradeoffs in  Congressional budget requests and related reports. Without such  information about the Coast Guard’s budgetary requirements, the  Congress will lack critical information that could help to prioritize  funding to address the Coast Guard’s shore infrastructure backlogs.  While the Coast Guard agreed with our recommendation, in August  2019 officials reported that they will continue to develop budgets as  the agency has done but will include additional information in future  required reports to Congress. We will continue to monitor these  actions.

Fully implement DHS’s Critical Infrastructure Risk Management  Framework. In September 2019, we found that the Coast Guard has  taken some steps to improve the resilience of its shore infrastructure  by rebuilding storm-damaged facilities and initiating a vulnerability  assessment, but its processes to improve shore infrastructure  resilience are not fully aligned with the five steps DHS has identified  for critical infrastructure risk management (DHS Critical Infrastructure  Risk Management Framework). The five steps include: (1) setting  goals and objectives, (2) identifying critical infrastructure, (3)  assessing and analyzing risks and costs, (4) implementing risk  management activities, and (5) measuring the effectiveness of actions  taken.

We found that the Coast Guard is not positioned to provide decision  makers with complete details of which infrastructure facilities are  critical, and the type of information the DHS Critical Infrastructure Risk  Management Framework recommends for making cost effective risk  management decisions. The Coast Guard identified occupied  buildings that may be important to operations and assessed their  vulnerability through its Shore Infrastructure Vulnerability Assessment  process, but this process did not identify all shore infrastructure  assets that are critical to its missions—such as aircraft runways—or  screen them for all vulnerabilities, such as flooding. Similarly, we  found that while the Coast Guard identified almost 800 buildings that  may be vulnerable to tornadoes and another 1,000 buildings  vulnerable to hurricanes, it has not analyzed the potential  consequences, such as economic losses, costs for rebuilding, and  impact on mission, should this infrastructure suffer damage from  those vulnerabilities.

Without a complete understanding of both the vulnerabilities of its  infrastructure and the consequences to its mission operations if its  infrastructure is damaged, the Coast Guard risks questionable  recapitalization investments for improving resilience when selecting  projects to fund. Such an understanding is especially important given  its existing project backlogs of at least $2.6 billion. The five steps of  the DHS Critical Infrastructure Risk Management Framework are  intended to guide decision making and prioritize actions to more  effectively achieve desired outcomes. Therefore, in September 2019  we recommended that the Coast Guard implement risk management  processes that more fully align with the five key steps outlined in  DHS’s Critical Infrastructure Risk Management Framework to better  guide its shore infrastructure investment decisions. The Coast Guard  agreed with our recommendation. It stated that it plans to make  progress towards implementing the recommendation while developing  and implementing its Component Resilience Plan, in accordance with  the recently mandated DHS Resilience Framework. It intends to  complete these efforts by the end of 2021. The Coast Guard also  intends to develop, by July 2020, goals and objectives for measuring  the effectiveness of actions taken to identify resilience readiness gaps  and resource needs. We will continue to monitor these efforts.

Chairman Maloney, Ranking Member Gibbs, and Members of the  Subcommittee, this completes my prepared statement. I would be happy  to respond to any questions you may have at this time.

If you or your staff members have any questions about this testimony,  please contact me at (202) 512-3841 or andersonn@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this statement. In addition to the contact  above, Dawn Hoff, Assistant Director; Andrew Curry, Analyst-in-Charge;  Peter Haderlein; Landis Lindsey; Calaera Powroznik, and Molly Ryan  made key contributions to this testimony. Other staff who made key  contributions to the reports cited in the testimony are identified in the  source products.

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The Coast Guard has more than 20,000 shore facilities such as boat and air stations, and piers at over 2,700 locations.

We testified about the deteriorating condition of these facilities and the Coast Guard’s management of them, including its approach to better preparing them to withstand extreme weather.

The Coast Guard has a backlog of at least $2.6 billion in maintenance as of 2018. It also has identified 18 unnecessarily duplicative boat stations but has not closed any.

Among other things, we recommended that the Coast Guard close duplicative boat stations and better prioritize its efforts to improve its facilities.