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GAO-13-511R: United States Government Accountability Office: Washington, DC 20548: May 13, 2013: Congressional Committees: Subject: Defense Logistics: The Department of Defense's Report on Strategic Seaports Addressed All Congressionally Directed Elements: Sealift is the primary means of deploying and sustaining the combat power required in major ground operations, typically accounting for upwards of 90 percent of all military cargo, and U.S. strategic seaports play an important role in ensuring that the U.S. military is able to quickly and efficiently deploy to address the country's overseas interests. The strategic seaport program--administered jointly by the Department of Defense (DOD) and the Department of Transportation (DOT)--facilitates the movement of deploying military forces through the 17 commercial and 5 military seaports designated as strategic seaports. These ports serve as significant transportation hubs and are important to DOD's readiness and cargo handling capacity. Over the past several years Congress has directed that a number of studies be conducted to ensure the readiness of the strategic seaports. Most recently, in the conference report accompanying the National Defense Authorization Act for Fiscal Year 2012, Congress directed DOD to provide an updated report on strategic seaport facilities used for military purposes, specifying that DOD must include (1) an assessment of the structural integrity and deficiencies of the port facilities and determination of the infrastructure improvements needed to directly or indirectly meet national security and readiness requirements; (2) an assessment of the impact on operational readiness if the improvements are not undertaken; (3) an identification of potential funding sources for the needed improvements from existing authorities; and (4) an opinion as to whether DOD has the necessary authority to support section 50302 of Title 46 of the United States Code.[Footnote 1] DOD issued that report in January 2013. Both the National Defense Authorization Act for Fiscal Year 2013 [Footnote 2] and the Coast Guard and Maritime Transportation Act of 2012[Footnote 3] required us to conduct a sufficiency review of DOD's report, and to report our findings to Congress within 90 days of receiving DOD's strategic seaports report. DOD's report was provided to Congress on January 7, 2013, and GAO received the report on January 9, 2013. To conduct our review, we assessed the extent to which DOD's report included each of the four elements directed by Congress. To fulfill the mandate, in April 2013 we provided a briefing and the draft report to the congressional defense committees on the results of our work. This report transmits the information provided at that time. See enclosure I for the briefing slides that contain information on the results of our work. To conduct this work, two GAO analysts independently assessed DOD's report to determine whether it contained the four congressionally directed elements. The analysts agreed on all four elements, and therefore it was not necessary for a third analyst to resolve any differences. Additionally, we reviewed previous DOD reports on strategic seaports and other documents relevant to the strategic seaports program. We also interviewed officials from DOD's Transportation Command as well as officials from the Department of Transportation, including officials from the Maritime Administration, the Federal Railroad Administration, and the Federal Highway Administration, to obtain further information about the program and clarify aspects of the report. We conducted this performance audit from February 2013 through May 2013 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 that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. In summary, we found that DOD addressed all four of the elements directed by Congress, as follows: * First, DOD provided a detailed assessment of the structural integrity and deficiencies of the port facilities and the infrastructure improvements needed to meet national security requirements, providing both an explanation of its assessment and supporting data in its response. The report rated 15 of the 22 strategic seaports as having minor deficiencies, with negligible impact; 4 as having some deficiencies, with limited impact; 1 as having significant deficiencies that impair the capability to support required missions; and 2 as having major deficiencies presenting significant obstacles to mission accomplishment. We found some areas where the report could have been more explicit, such as citing the sources of cost estimates for port improvement projects and defining "national security and readiness requirements." We also note that the report relied on self-reported information from the ports. DOD officials told us that they believe the information is reliable because it is in the ports' interests to correct any deficiencies in order to support their commercial activities, and because DOD conducts periodic visits that serve as a visual check of port infrastructure conditions. * Second, DOD included an assessment of the impact on operational readiness if the improvements were not undertaken. The report noted that available alternatives to strategic ports include alternate seaports. * Third, DOD included an identification of potential funding sources for the needed improvements from existing authorities. The report identified and discussed six primary sources of capital for U.S. commercial ports, and noted that military ports rely on military construction appropriations for large projects. * Finally, the report included an opinion as to whether DOD has the necessary authority to support section 50302 of Title 46 of the United States Code. The report stated that DOD has the necessary authority, but also recommended that Congress consider amending the law to allow U.S. Transportation Command to coordinate directly with the Secretary of Transportation on port development issues. Agency Comments and Our Evaluation: We provided a copy of a draft of this report, including the briefing slides, to DOD and DOT for comment. DOD concurred with our report; DOD's comments are reproduced in enclosure II. DOT had no comment. We are sending copies of this report to the appropriate congressional committees and to the Secretary of Defense; the Secretary of Transportation; the Commander, United States Transportation Command; the Secretary of the Army; and the Administrator, Maritime Administration. The report is also available at no charge on the GAO website at [hyperlink, http://www.gao.gov]. Should you or your staff have questions concerning this report, please contact me at (202) 512-5257 or merrittz@gao.gov. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are Marilyn Wasleski, Assistant Director; Simon Hirschfeld; Kevin Keith; Michael Silver; Cheryl Weissman; Michael Willems; and Edwin Yuen. Signed by: Zina D. Merritt: Director: Defense Capabilities and Management: Enclosures - 2: List of Committees: The Honorable Carl Levin: Chairman: The Honorable James Inhofe: Ranking Member: Committee on Armed Services: United States Senate: The Honorable Dick Durbin: Chairman: The Honorable Thad Cochran: Ranking Member: Subcommittee on Defense: Committee on Appropriations: United States Senate: The Honorable Tim Johnson: Chairman: The Honorable Mark Kirk: Ranking Member: Subcommittee on Military Construction, Veterans Affairs, and Related Agencies: Committee on Appropriations: United States Senate: The Honorable Howard P. "Buck" McKeon: Chairman: The Honorable Adam Smith: Ranking Member: Committee on Armed Services: House of Representatives: The Honorable C.W. Bill Young: Chairman: The Honorable Pete Visclosky: Ranking Member: Subcommittee on Defense: Committee on Appropriations: House of Representatives: The Honorable John Culberson: Chairman: The Honorable Sanford Bishop, Jr. Ranking Member: Subcommittee on Military Construction, Veterans Affairs, and Related Agencies: Committee on Appropriations: House of Representatives: Footnotes: [1] Section 50302 of Title 46 of the U.S. Code states that the Secretary of Transportation, in cooperation with the Secretary of the Army, shall take a number of actions with regard to ports with the objective of promoting, encouraging, and developing ports and transportation facilities in connection with water commerce. [2] Pub. L. No. 112-239, § 333 (2013). [3] Pub. L. No. 112-213, § 413 (2012). [End of section] Enclosure I: Briefing Slides: Defense Logistics: The Department of Defense’s Report on Strategic Seaports Addressed All Congressionally Directed Elements: Briefing for Congressional Committees: Table of Contents: * Background; * Objective; * Scope and Methodology; * Summary; * Report Element 1: Structural integrity of seaports and determination of needed improvements; * Report Element 2: Operational readiness impact if needed improvements are not made; * Report Element 3: Potential funding sources for needed improvements; * Report Element 4: DOD’s authority to support section 50302 of Title 46 USC. Background: The strategic seaport program was established to facilitate the movement of deploying military forces through designated U.S. commercial and military seaports while minimizing disruption to commercial activities. For the purposes of this briefing, the strategic seaports are ports designated by the Secretary of Defense as significant transportation hubs important to the readiness and cargo handling capacity of the Department of Defense (DOD).[Footnote 1] U.S. forces in the United States often deploy through seaports to respond to conflicts overseas. Also, in major ground operations more than 90 percent of U.S. warfighters' equipment and supplies (tanks, helicopters, trucks, etc.) travels by sea. Currently 22 strategic seaports (17 commercial and 5 military) are designated to handle these deployments. Figure 1: Strategic Seaport Locations: [Refer to PDF for image: Illustrated map] Commercial Ports: Port of Anchorage, Alaska; Port of Beaumont, Texas; Port of Charleston; Joint Base Charleston; South Carolina; Port of Corpus Christi, Texas; Port of Guam, Guam; Port of Jacksonville, Florida; Port of Long Beach, California; Port of Morehead City, North Carolina; Port of New York and New Jersey, New York/New Jersey; Port of Oakland, California; Port of Philadelphia, Pennsylvania; Port of Port Arthur, Texas; Port of San Diego, California; Port of Savannah, Georgia; Port of Tacoma, Washington; Port of Virginia, Virginia; Port of Wilmington, North Carolina. Military Ports: Military Ocean Terminal Concord, California; Military Ocean Terminal Sunny Point, North Carolina; Naval Magazine Indian Island, Washington; Port Hueneme, California. Source: GAO analysis of DOD data; Map Resources (map). [End of figure] The Maritime Administration (MARAD) of the Department of Transportation (DOT), in partnership with DOD, administers the strategic seaport program. Within DOD, the Military Surface Deployment and Distribution Command (SDDC) serves as the surface transportation component to United States Transportation Command (USTRANSCOM) and executes the strategic seaport program for DOD. MARAD and DOD use Port Planning Orders (PPOs) to identify and coordinate DOD’s needs in advance with each commercial strategic port. These orders specify which port facilities, staging areas, and berthing space DOD will require in the event of a deployment, and they establish timelines for access. MARAD also coordinates with the commercial ports to maintain operational readiness reports that outline each port’s ability to meet the PPO requirements. The National Port Readiness Network, chaired by MARAD, provides for the establishment of port readiness committees at each commercial strategic port to, among other things, provide training and conduct exercises at the ports to facilitate handling DOD cargo movement requirements. Over the past several years SDDC has produced a series of reports on the strategic ports program: * The conference report accompanying the National Defense Authorization Act (NDAA) for fiscal year (FY) 2008 directed SDDC to develop a plan to optimize the use of strategic ports. In response, SDDC conducted and issued the Port Look 2008 Strategic Seaports Study, which reviewed DOD requirements for the number and location of strategic seaports. * In June 2010 SDDC produced the Port Look Relook Study(classified secret), which focused on the movement of cargo through the commercial seaports in the event of a deployment. * The NDAA for FY 2011 required DOD to update the Port Look 2008 Strategic Seaports Study and specifically directed DOD to review the infrastructure in the vicinity of each seaport, including bridges, roads, and railroads. In January 2012, SDDC completed the Update to Port Look 2008 Strategic Seaports Study,which focused on the overall capacity of strategic seaports and their surrounding access infrastructure to meet DOD’s deployment needs. This report also contains a classified annex related to the military ammunition ports. The December 2011 conference report accompanying the NDAA for FY 2012 directed the issuance of another report on the strategic seaports and specified four elements that the report should address. Both section 333 of the NDAA for FY 2013 and section 413 of the Coast Guard and Maritime Transportation Act of 2012 required GAO to conduct a sufficiency review of DOD’s report and submit the results of our review to Congress within 90 days of receiving the report. DOD submitted its report, entitled Update to Port Look 2008: Strategic Seaport Assessment and Report, to Congress on January 7, 2013, and we received it on January 9, 2013. [End of section] Objective: We assessed the extent to which DOD’s report addressed the four elements directed by Congress. These elements were: * to assess the structural integrity and deficiencies of the port facilities and determine what infrastructure improvements are needed to meet national security and readiness requirements; * to assess the potential impact on operational readiness if the infrastructure improvements are not undertaken; * to identify potential funding sources from existing authorities for the infrastructure improvements; and; * to provide an opinion as to whether DOD has the necessary authority to support section 50302 of Title 46 of the U.S. Code.[Footnote 2] [End of section] Scope and Methodology: To determine the extent to which DOD’s most recent report on strategic seaports included the four directed elements: * Two GAO analysts independently reviewed the report to determine whether each directed element had been addressed. They agreed on all four elements. Each analyst also documented additional observations about the report. * We interviewed officials at SDDC and MARAD who oversee the strategic seaports program and who produced and reviewed the report, respectively, to obtain further information about the program and clarify aspects of the report. * We obtained and reviewed documents pertaining to the strategic seaports program in order to better understand the report’s conclusions. * We discussed our preliminary analyses with SDDC and MARAD officials to obtain their perspectives. We also shared the information in this briefing with DOD and DOT officials, and incorporated their technical comments as appropriate. [End of section] Summary: Table: Report Elements Directed by Congress: To assess the structural integrity and deficiencies of the port facilities and determine what infrastructure improvements are needed to meet national security and readiness requirements; GAO Assessment: Addressed. Report Elements Directed by Congress: To assess the potential impact on operational readiness if the infrastructure improvements are not undertaken; GAO Assessment: Addressed. Report Elements Directed by Congress: To identify potential funding sources from existing authorities for the infrastructure improvements; GAO Assessment: Addressed. Report Elements Directed by Congress: To provide an opinion as to whether DOD has the necessary authority to support section 50302 of Title 46 of the U.S. Code; GAO Assessment: Addressed. [End of table] [End of section] Element 1: Structural Integrity of Seaports and Needed Improvements - Addressed: * The report provided an assessment of the condition of the landside port infrastructure for each of the 22 strategic seaports. * For the report, DOD defined the port infrastructure as roads, bridges, staging areas, rail infrastructure, and berths within port boundaries. * The report also provided an overall rating of the capability of each seaport’s landside infrastructure to support DOD’s required missions. * Of the 22 strategic seaports, 15 were rated as having minor deficiencies, with negligible impact; 4 as having some deficiencies, with limited impact; 1 as having significant deficiencies that impair capability to support required missions; and 2 as having major deficiencies presenting significant obstacles to mission accomplishment. We found some areas where DOD’s report could have been more explicit. For example, * The report included a listing of infrastructure improvement projects identified by either the port authority or DOD. The projects ranged from requiring the replacement of wharves to routine maintenance. The report also provided cost estimates for the projects, where available. * However, the report did not cite the source of these estimates or identify how they were prepared. SDDC officials said these estimates were provided by the port authorities and DOD, but SDDC did not independently validate the cost estimates. The report did not explicitly define “national security and readiness requirements.” * However, a key assumption of the report was that the PPO facilities at the strategic seaports provide sufficient capacity to meet the DOD cargo requirements identified in the Mobility Capabilities and Requirements Study-2016 and operations plans, as determined in the 2010 Port Look Relook Study. * SDDC officials told us that these cargo shipping requirements constitute the “national security and readiness requirements” for the purposes of the January 2013 report. Finally, we note that the report relied on self-reported information from the ports. * For the piers and wharves, DOD relied primarily on engineering assessments provided by the ports. SDDC officials told us they believe the information provided by the reports is reliable because it is in the ports’ interest to correct any structural deficiencies in order to support their commercial activities. * Two of the assessments were based on inspections conducted in 2000 and 2003--12 and 9 years, respectively, before the report was prepared. SDDC officials said these intervals are not significant because it is in ports’ interests to avoid infrastructure failures and thus to keep infrastructure inspections up to date. * An assessment performed in 2006 of the pilings and piers at one port estimated that they had a remaining service life of 5 years. Thus, the service life should have expired in 2011--2 years ago. SDDC officials told us they were following up with the port officials to determine if the service life had truly expired. The officials also said that their periodic port visits, while not structural integrity assessments, serve as a visual check of port infrastructure condition. DOD officials last visited this port in 2010; the next visit is scheduled for FY 2013. [End of section] Element 2: Readiness Impact if Needed Improvements Are Not Made - Addressed: * The report included an assessment of the potential impact on operational readiness if needed seaport infrastructure improvements were not made. This assessment was provided by area (West coast, East coast, Gulf coast, Alaska, and Guam) and by individual seaport. * The report stated that in general, in the event that PPO berths at a particular strategic seaport were unusable, available alternatives would include the use of non-PPO berths, PPO facilities at other strategic seaports, or alternate seaports. * SDDC identifies alternate seaports; however, these ports do not receive PPOs and do not have port readiness committees. According to the report, use of alternate seaports could result in a moderate delay to DOD’s cargo movement. * The report stated that the military can use commercial rail to redirect deployment cargo to other strategic or alternate seaports anywhere in the United States, with the exception of geographically isolated ports. [End of section] Element 3: Potential Funding Sources for Needed Improvements - Addressed: * The report identified and discussed six primary sources of capital for U.S. commercial ports: port revenues, general obligation bonds, revenue bonds, loans, grants, and other miscellaneous sources. * The report did not identify specific funding sources for each infrastructure project identified for a given port. SDDC officials told us it is the ports’ responsibility to identify project funding. * The report stated that military ports rely on military construction authorities and appropriations for large projects. The report did not discuss funding sources for anything less than large project undertakings. For example, operation and maintenance funds can be used to perform minor construction when the cost of the complete project is under $750,000. [End of section] Element 4: DOD’s Authority to Support Section 50302 of Title 46 USC - Addressed: * The report addressed DOD’s authority regarding 46 U.S.C. §50302, which states that the Secretary of Transportation, in coordination with the Secretary of the Army, shall take a number of actions with regard to ports—such as investigating the practicability and advantages of certain port improvements—with the objective of developing ports and transportation facilities in connection with water commerce. * The report concluded that the department has the necessary authority to support the law based on its involvement with MARAD in managing the strategic seaport program and its use of other authorities and programs, such as the Defense Critical Infrastructure Program, a risk management program designed to secure critical assets and infrastructure. * Although the report concluded that DOD has the necessary authority, it also stated that Congress may wish to consider modifying the language of 46 U.S.C. §50302(a) to provide authority and responsibilities over port development to the Secretary of Transportation in cooperation with the Secretary of the Army (through the U.S. Army Corps of Engineers’ civil works program) and USTRANSCOM (through the strategic seaport program and ports for national defense program). Both the Army and USTRANSCOM would thus be able to coordinate directly with DOT on port development issues. * The report stated that with this revision, both the Army and USTRANSCOM would have equal legal authority to coordinate directly with the DOT on port development issues. The report noted that the U.S. Army Corps of Engineers has responsibility for waterborne transportation but does not focus on landside seaport infrastructure, and that SDDC acting on behalf of USTRANSCOM is the “single port manager” under DOD policy. * According to SDDC officials, the current language assigning those responsibilities in 46 U.S.C. §50302 predates USTRANSCOM’s establishment in 1987. At that time, SDDC (then called Military Traffic Management Command) was a direct reporting unit under the Department of the Army. Today, SDDC operates under USTRANSCOM. Briefing Slides Footnotes: [1] According to a letter of instruction from the Military Surface Deployment and Distribution Command (SDDC) of U.S. Transportation Command, in practice the commanding general of SDDC designates the strategic seaports. [2] Section 50302 of Title 46 of the U.S. Code, states that the Secretary of Transportation, in cooperation with the Secretary of the Army, shall take a number of actions with regard to ports with the objective of promoting, encouraging, and developing ports and transportation facilities in connection with water commerce. [End of Briefing Slides] Enclosure II: Comments from the Department of Defense: Department of Defense: United States Transportation Command: 508 Scott Drive: Scott Air Force Base, Illinois 62225-5357: 29 April 2013: Ms. Zina D. Merritt: Director, Defense Capabilities and Management: U.S. Government Accountability Office: 441 G Street, NW: Washington DC 20548: Dear Ms. Merritt: This is the Department of Defense (DoD) response to the Government Accountability Office Draft Report, GA0-13-511 RSU, "Defense Logistics: The Department of Defense's Report on Strategic Seaports Addressed all Congressionally Directed Elements," dated May, 2013 (GAO Code 351777). The United States Transportation Command reviewed subject report and concurs with the GAO Report with the recommendation that appropriate dissemination controls be applied to areas of the report that list individual port names. The DoD is committed to proactively and transparently supporting GAO's assessment process to provide Congress the needed program insight to fulfill their oversight role, and appreciates the opportunity to provide comments to this report. We will continue to provide our best effort to support GAO's continued assessment of the Strategic Seaports program. If you need any additional information or assistance, please contact Ms. Deborah Anthony, TCIG, at 618-220-6631 (DSN) or email: deborah.anthony@ustranscom.mil. Signed by: Kathleen M. Gainey: Lieutenant General, U. S. Army: Deputy Commander: [End of section] GAO’s Mission: The Government Accountability Office, the audit, evaluation, and investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. 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