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Summary

We publicly released our audit of the National Distress and Response System Modernization Project (NDS). We found that Coast Guard’s plans to deploy a modernized NDS that eliminates current system deficiencies by 2006 may be jeopardized because higher-than-anticipated project cost estimates are prompting Coast Guard to make critical system performance and capital budget decisions. To lower costs from an estimated $1 billion to $580 million, Coast Guard has revised the system’s specifications.



While we agree with Coast Guard that the revised system’s capabilities will exceed those of the existing NDS, Coast Guard has eliminated or reduced capabilities that it originally considered essential, including eliminating all existing communications gaps. The revised performance specifications eliminate the capability to transfer classified information and significantly reduce its ability to communicate with other government agencies as part of Coast Guard’s homeland security mission. We recommended that Coast Guard develop a final NDS acquisition plan and obtain approval of the Department prior to obligating any funds for the procurement contract anticipated to be awarded in the fourth quarter of FY 2002. This report was issued to the House and Senate Transportation Appropriations Subcommittees and the Secretary and Commandant on February 4.