he Coast Guard is a can-do organization whose "can" is dwindling while its "do" is growing. Striving to live up to its motto, Semper Paratus-Always Ready-the Coast Guard has a long, proud tradition of never turning down a call for help or an added duty. Only recently did the agency reluctantly begin asking employees to stop using their informal life-saving motto: "You have to go out, but you don't have to come back." With four wide-ranging missions-law enforcement, maritime safety, marine environmental protection and national security-and an array of boats, aircraft, facilities and people to perform them, the Coast Guard has been compared to a Swiss Army knife. But after decades of accepting new missions without receiving requested resources, the Coast Guard is losing its edge.
In his annual "State of the Coast Guard" speech in May, Coast Guard Commandant James M. Loy said the service's equipment is overworked and its staff-35,000 active-duty military, 5,700 civilians and 7,000 reserves, about the same as in 1967-is straining to keep up. They routinely perform extra duty and serve on overly long deployments with too little experience and training. "If you take a sharp knife and work it relentlessly, the blade will also become dull," Loy said. The address was one in a series of speeches he has given over the past 18 months attempting to illustrate the seriousness of the Coast Guard's predicament. In those speeches and in congressional testimony, Loy has ticked off alarming indicators that the Coast Guard isn't always ready anymore:
- Since 1995, fixed-wing aircraft deployments have more than doubled and helicopter deployments are up more than 25 percent, but the number of aircraft, pilots and aircrews has not increased.
- Availability rates have fallen 20 percent for 41-foot utility boats and 35 percent for 44-foot motor surfboats in four years.
- Thirty percent of Vessel Traffic System radarman jobs are not filled. The average time in grade for chief aviation mechanics has dropped 50 percent since 1995. More than 80 percent of small boat stations stand 24-hour duty for three days straight.
- Lost workdays from shore injuries are up 29 percent. Mishap rates for 41-foot boats and rigid-hull inflatable boats have risen. Aircraft ground mishap rates are up almost 50 percent.
Loy drives home the statistics with stories showing the effects of shortfalls. For example, in the early morning hours of Dec. 29, 1997, the Morning Dew, a 34-foot sailboat, sank after hitting a jetty at the entrance to the Charleston, S.C., harbor, killing a man, his two sons and their cousin. Shortly after 2 a.m., a watchstander at the Coast Guard Group Charleston communications center received two brief calls on the distress radio frequency. He tried three times to respond and then, believing there to be no cause for alarm, took no further action. Later analysis and audio enhancements revealed the call was actually one of the boys yelling, "Mayday! U.S. Coast Guard, come in!" A National Transportation Safety Board investigation blamed inadequate preparation by the Morning Dew's owner and "substandard performance of U.S. Coast Guard Group Charleston in initiating a search-and-rescue response" for the deaths.
In an April speech about the Morning Dew case, Loy said, "I cannot rule out the possibility that our servicewide training and staffing shortages affected our response to this case. A more experienced watchstander might have been able to pick up the word, 'Mayday.' A more experienced watchstander, who better understood how different the world looks when you're at sea on a stormy December night than it does from a cozy operations center, might have been slower to accept non-distress explanations for the two radio calls at two in the morning."
Loy likened the Coast Guard distress radio system to 1950s police and fire communications. "If you pick up the handset on your VHF-FM radio, say the word 'Mayday' and jump overboard, you could very likely drown or die of hypothermia," Loy said. The communication system is being modernized, but the replacement won't be in full operation before 2005. Until then, the Coast Guard is installing new directional equipment in stations with high levels of search-and-rescue activity, but NTSB doesn't believe the equipment will bring significant improvements.
In February 1997, three Coast Guard crew members died and one survived when their 44-foot boat capsized during a rescue attempt off the coast of Washington state. The coxswain commanding the boat "failed to recognize his own limitations regarding his qualifications and experience," according to a Coast guard report on the accident. "Many of our personnel . . . are unqualified to fill the billets to which they have been assigned," the report said. After the accident, the Coast Guard speeded up replacement of the 44-foot boats with faster, safer, 47-foot boats. But, as Loy noted in his May speech, two years after the tragedy, the Coast Guard still was unable to fill even half its surfmen jobs with certified people and the average boat crewmember had less than a year's experience.
High Management Marks
Such serious equipment, staffing and training problems would appear to indicate management failings. But the Coast Guard consistently receives high marks for planning, husbanding its resources, maintaining esprit de corps, operating efficiently and effectively, and learning the lessons of its mistakes. It engages in extensive strategic planning. The service provided much of the staffing and intellectual underpinning for the Transportation Department's top-rated strategic and performance plans required by the 1993 Government Performance and Results Act (GPRA). The Coast Guard's Marine Safety and Security and Marine Environmental Protection programs were among the first and most successful testbeds for GPRA performance measurement.
The service also has won plaudits for human resource management-especially for valuing diversity and making family-friendly accommodations. It recognizes and plans for the special characteristics of all four of its workforces (active-duty military, military reserves, civilians and auxiliary members), is dedicated to comprehensive and innovative training-especially in leadership skills-and encourages career development. The Coast Guard also is overhauling its evaluation systems to match more closely with organizational goals, and it doesn't hesitate to improve or remove poor performers.
The Coast Guard is retooling information technology systems to help leaders manage, installing an executive information system using activity-based costing that will improve allocation of people and equipment. Its chief information officer, one of the first in government, exercises increasing control of IT architecture, standards and purchases and could soon control all IT funds.
Coast Guard financial management, recently scored by auditors for "material discrepancies in the areas of real property and personal property," has been scrubbed and repaired. "If Transportation does not get a clean  audit, it won't be because of the Coast Guard," says Gerald L. Dillingham, General Accounting Office associate director for transportation issues. "They've done a wall-to-wall [property] inventory and fixed the other things." Since the early 1990s, Coast Guard finance offices have reduced staff, but still managed to improve on-time bill payments from 81 percent in 1993 to 95 percent in 1999 and begin installing a new, agencywide financial management system.
Duties Mount, Equipment Ages
The Coast Guard's inventory of aging assets bears witness to its ability to squeeze every drop of performance from equipment. Military lore is rife with tales of Coast Guard officers scrounging Navy garbage dumps for discarded equipment to repair and reuse. A Senate staffer who works on Coast Guard issues says the service once requested $4 million to buy a new engine for an older vessel in Alaska, but didn't spend the money over several funding cycles. When legislators asked why, the Coast Guard explained it had found a substitute engine the Navy was throwing away and hoped Congress would let it use the money for something else.
Beyond using its equipment long and hard, the Coast Guard also has put in place one of government's most exhaustive and innovative plans for managing boats, planes and other key assets. An integrated system for operating at sea, known simply as Deepwater, is the most visible product of that plan. It's designed to upgrade the equipment used for missions 50 miles or more offshore, including interdicting undocumented immigrants and illegal drugs, as well as enforcing laws protecting U.S. fishing grounds. Instead of merely replacing the current equipment as it wears out, the Coast Guard created a new approach based on "Coast Guard 2020," a painstaking study of the likely maritime environment of the future. The service compared its equipment with what would be needed to accomplish its missions in the future, identified gaps in existing capability, and crafted a proposal for contractors that outlined not the specific equipment it wanted to buy, but the performance goals it needed to meet and the capabilities needed to meet them.
The Coast Guard's current fleet is the 39th oldest of the world's 41 major naval fleets. Its planes are newer, but are aging quickly as a result of hard use. Coast Guard officials hope Deepwater will allow the agency to take advantage of technological advances and smaller crew sizes in newer ships-a critical factor since the agency spends two-thirds of its funding on human resources. Three teams of ship, aircraft and communications technology contractors are competing to mix old and new equipment to meet the Coast Guard's needs. The design phase began in August 1998 and proposals were due in January 2000. The companies then will spend 16 months plugging actual assets into their proposals and estimating costs. In May 2001, the Coast Guard will issue a formal request for proposals. The contract or contracts will be awarded in January 2002. The service estimates that a straight one-for-one replacement of all its deepwater assets-approximately 90 ships and 200 aircraft-would cost $7 billion to $15 billion. Preliminary estimates for Deepwater are in the $9 billion to $14 billion range over 20 years.
The Coast Guard's equipment isn't just aging, it's being used in ways never intended or imagined by its builders or the service. In recent years, the Coast Guard has taken on new duties and seen old assignments change form and expand. In 1976, the amount of territory the Coast Guard was required to protect from foreign fishing was extended from 12 miles offshore to 200 miles, swelling the area in which the agency operates to 3.3 million square miles. The service had no drug interdiction mission before 1975; now, counter-narcotics work accounts for 17 percent of its operating budget. While there were no mass migrations to the United States for many decades leading up to 1979, there have been at least four since then, and illegal immigration is growing. Recent passage of major fisheries legislation, as well as the 1990 Oil Pollution Act, also added to the Coast Guard's duties.
For some years up until the mid-1990s, Coast Guard budgets more or less covered the agency's missions and the service was able to add new helicopters, patrol boats and other equipment as well as refurbish older assets. Indeed, as long-term contracts are completed in the next three to five years, the service will have replaced 70 percent to 80 percent of the boats used by its coastal stations. So when President Clinton called in 1993 for reinvention and downsizing, the ever-dutiful Coast Guard felt it could vigorously comply. First as chief of staff and then as commandant, Adm. Richard Kramek made streamlining his focus. On his watch, from 1994 to 1998, the service cut 4,000 jobs and $400 million.
Unfortunately, those years coincided with mounting missions as well as belt-tightening resulting from the 1997 Balanced Budget Act. A good chunk of streamlining savings came from deferring maintenance at a time when Congress was providing less than the service's annual requests for funds to repair and replace equipment. "You need about $700 to $800 million a year to recapitalize your fleet of ships and planes and command and control systems," Kramek said when he left the service in June 1998. "But I was only able to get, because of this balanced budget pressure these last four years, about $400 million, a little more than half of what I needed."
Most Coast Guard leaders now concede they approached streamlining overzealously and naively, more in the manner of a search-and-rescue operation than a long-term management campaign. "Was that the classic Coast Guard good guy standing up and at the same time as the arrow was entering his heart saluting smartly and saying, 'Boy, do I like this'? There was certainly a little bit of that going on, sure," Loy says. Staffing and budget reductions were taken quickly, without enough attention to their effects on capability and not enough foresight to recognize that conditions might change. Sure enough, soon after the Coast Guard enthusiastically encouraged retirements and nearly stopped recruiting, it found itself short of people in a tight labor market.
"We said we have to get down by 4,000 and we must do it quickly because if we don't, our funding will have gone down and we'll still have to pay [the excess people we hadn't cut]," says Rear Adm. David R. Nicholson, director of Coast Guard resources. "We cut back recruiting, let people who wanted to go [leave]. There was no thought to middle management capacities. The analysis was not done. We have found we hurt ourselves a lot. We got to the point where we were 1,700 people short." And, he adds, "when you turn it off, [the recruiting spigot] is very hard to turn back on again."
Streamlining's blows to staffing, equipment and morale led Loy to renounce it after he took the helm in May 1998. "Streamlining should not be a continuous activity," he said in his May 1999 "State of the Coast Guard" speech. "Streamline too much, and the Coast Guard begins to consume itself, degrade its readiness, and endanger both its own people and the American people. . . . The logical extension of doing more with less is doing everything with nothing." Now Loy faces the daunting task of regenerating Coast Guard muscle and bone lost to underfunding and the self-inflicted wounds of streamlining. That's shaping up to be a tough task, in part because the service comes to bat for funding with two strikes against it. First, it is a multi-mission, military agency nearly hidden within a massive civilian department focused on politically visible transportation issues. Second, the can-do culture continually compels it to bite off more than it can chew, yet limits the Coast Guard's ability to play the Washington funding game.
Though the Coast Guard lives in the Transportation Department, only about a third of its work involves transportation-maintaining aids to navigation, guiding vessel traffic, inspecting ships, etc. Another third is in maritime law enforcement-drug and immigrant interdiction, fisheries law enforcement and other activities more in the province of the Justice Department. The final third of the Coast Guard's work is in national security-assisting with military operations, training foreign navies and the like-tasks commonly associated with the Defense Department. Being a jack of so many trades leaves the Coast Guard without a single, savvy, powerful advocate to fight for it within the executive branch and Congress. DoD military services all have secretaries and a Defense Secretary devoted to thinking about and advancing their interests, but the Coast Guard must vie with air traffic control, highway funding and other politically lucrative programs for the attention of the Transportation Secretary.
What's more, the Coast Guard's constituencies are unlikely to be vocal supporters. Recreational boaters are notoriously unwilling to band together for any cause; commercial fishing and shipping businesses resent the service's regulations; environmentalists believe it does too little; and to the defense industry, the Coast Guard is merely a blip on the screen. If members of Congress hear at all about the Coast Guard, it's usually from constituents objecting to plans to close a facility, not pleading the service's case for funding.
This lack of powerful advocates leaves the Coast Guard at the mercy of the annual appropriations process in which, both in the White House and on the Hill, military funding is handled utterly separate from that of civilian agencies. Because it is both military and civilian, the Coast Guard suffers. For example, all through 1999, Loy sat with the military service chiefs in meetings with the Clinton administration and Congress decrying severe military readiness shortfalls. Yet when the Office of Management and Budget drafted a readiness supplemental spending bill, the Coast Guard was not mentioned.
"There is a firewall [in OMB] from floor to ceiling and wall to wall between national security and domestic spending on the other side," says Loy. "Inasmuch as we are in the Department of Transportation, we are on the domestic side of that firewall. I have watched very closely for four or five years how almost impossible it is to breach that firewall in the interests of almost anything." Ultimately friendly legislators added the Coast Guard to the readiness supplemental, winning it $200 million-$40 million to address fiscal 1999 personnel shortages and $160 million to be applied this year.
'Ham-Handed' on the Hill
The Coast Guard also has been less than politically adept on its own behalf. For example, the service sensed an opportunity in a GOP-led fiscal 1999 effort to augment anti-drug efforts in the Western Hemisphere. Invited by Republican legislators to present a wish list, the Coast Guard eagerly complied, a move seen as stepping out of bounds by the Clinton administration, whose drug interdiction plans didn't include the additional funds.
"People in OMB were frosted over the Coast Guard's conversations with Congress on drug interdiction," says a Senate staffer. The Coast Guard ultimately won $134 million in supplemental funding, which it used to add equipment to expand drug interdiction in the Caribbean. But it was a Pyrrhic victory: Follow-on funds to staff and maintain the new equipment haven't been forthcoming. "As part of the fiscal 2000 budget-a steady-state budget-they had to argue they could continue those activities within their budget, but they were hoping they would get hundreds of millions again," the staffer says. "The Coast Guard thinks it has the skill to work the congressional game, but they are pretty ham-handed about it."
Even the wiliest, most wired agency would have a hard time overcoming the politics that have stymied the Coast Guard's efforts to shed facilities in order to save money. Again and again, OMB has allowed or even encouraged the service to include in its budget requests anticipated savings from closing boat stations, training centers, air facilities and the like, knowing full well Congress never would approve the shutdowns. Each time, the Coast Guard has been forced to keep the targeted facilities open and even add additional unwanted ones. In fiscal 2000, for example the Coast Guard reduced its request by $3.1 million in anticipation of closing two air facilities. Congress refused the closures, but approved the requested budget, leaving the service in the red.
Coast Guard culture plays a role in the service's lack of political finesse. On Capitol Hill, the Coast Guard is jeeringly referred to as the "Sea Scouts" because of its knee-jerk proclivity for marching into the breach, sometimes right off a cliff. But this bravery and derring-do is oddly unaccompanied by braggadocio. "The Coast Guard just isn't used to tooting its own horn," says an official at a company competing for the Deepwater contract. "They're like the silent service; they don't talk about what they do." Until recently, failing to publicize their contributions has robbed the Coast Guard of congressional support broad enough to overcome bullying by members defending parochial interests. But the service is on a campaign to tilt the power balance in its favor.
For the first time in its history, the Coast Guard has a chance to win the backing of the big guns of industry-defense contractors. With a potential price tag of as much as $14 billion and a list of bidders that reads like a "Who's Who" of military manufacturers, the Deepwater acquisition could put the Coast Guard on the radar screens of a whole new group of legislators. Coast Guard leaders expect relatively smooth sailing now that a presidential commission unanimously has reaffirmed the service's commitment to deep-sea missions and its Deepwater approach. GAO and the Transportation inspector general continue to suggest the agency has underestimated the useful lives of existing equipment and question how it can possibly win the extra billions to accomplish the project in competition with other Transportation priorities in an era of budget caps. But Coast Guard leaders are confidently moving forward.
Further, in Loy, the service has a leader willing to play hardball with legislators and even with OMB. More than any commandant in recent memory, Loy has proved himself willing to say "No" when the Coast Guard runs short of capability. In response to legislators' refusal to provide follow-on funding for assets purchased with supplemental drug interdiction funds, Loy is ready to pull back in the Caribbean. "Am I man enough, if we don't get the recurring operating expenses to hire to put people on them and to maintain them and to buy parts for them, to pull that thing that I've just acquired to the pier? Yes," he says.
Further, Loy has ordered all Coast Guard commanders to stop overworking people and equipment-in other words, to slow the pace of operations-in light of legislators' failure to provide extra funds when necessary. "We have to be enormously honest and aggressive about citing those occasions where a death spiral is apparent to us because of people or hardware limitations that have been cast upon us by underfunding. And I have every intention of being precisely that honest when given the opportunity in the last two years that I have this job," Loy says.
"This year my field commanders, when they run up against things that would cause us to shortchange people, parts, maintenance and what have you, will say very publicly that our limits have been reached and we can't do that," he continues.
Loy has demonstrated unprecedented boldness in making costs visible to legislators and OMB. But he and most Coast Guard leaders retain just enough cockeyed optimism to get them in trouble. For example, Loy admits that in Washington, agencies that fail usually are the ones that reap the biggest funding rewards. But he still professes a deep belief that strategic planning and performance measurement will enable the Coast Guard to prove its value and get adequately funded. Faith in numbers pervades the service.
"Now that we know the hours we're putting in on various things, we have to tie the costs to them," says Capt. Charles Miller, commander of Coast Guard Activities Baltimore, of the new activity-based costing system. "The intent of using it is to find out what my people are doing and to get the cost per activity. If you overlay the costs, it is a good defense tool if we are under [budget] attack."
But all the numbers in the world won't change the fact that the Coast Guard has neither a dedicated, powerful sponsor nor a united, determined constituency to fight for it. Despite Coast Guard hopes, the Deepwater acquisition isn't likely to solve that problem. While the bidding war involves a broad range of corporate competitors, once a winning team is selected, Deepwater support will narrow. And once the contract is awarded, what looked enticing as a $14 billion deal likely will lose its gloss as a 20-year purchase at just $700 million, probably less, per year, even if the new Coast Guard equipment eventually proves saleable overseas. What's more, the presidential panel studiously avoided committing to help win resources for Deepwater.
That leaves the Coast Guard, with wobbly administration support and elections looming, to convince Congress to cough up, for the next 20 years, two times more money than it now provides annually for all the service's equipment purchases.
In the end, given the political obstacles, the Coast Guard's can-do culture may serve it well. The confidence, courage and optimism that inspire young men and women to brave killer seas to accomplish apparently impossible rescues may appear naive or even arrogant inside the Beltway. But what's the alternative? If Coast Guard commandants simply gave up and stopped attempting one scheme after another to win support, the service's position would remain just as tenuous. And venturing nothing, the Coast Guard never would have made its obvious and significant performance gains.
As Loy says, "You can whine about why you found yourself where you find yourself, or you can attempt to, with a bit of vision, an awful lot of strategic analysis and an enduring set of qualities that are part and parcel of an organization, tackle what is on your plate."GPP report card
|Managing for Results||A|
U.S. Coast Guard
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