Semper paratus--always ready: U.S. Coast Guard Financial Management supports its world-class disaster response, displaying once again its commitment to the Coast Guard motto.

Hurricanes Katrina and Rita resulted in unimaginable natural disasters; between them, they launched one of the largest search and rescue operations in United States history. During a four-week period, Coast Guard air and boat crews from around the country converged to rescue 35,735 lives. The disasters concurrently were one of the largest pollution response events in history, with over nine million gallons of environmental contaminants released into the Gulf of Mexico from over 5,000 individual pollution cases. In addition, Coast Guard aids to navigation teams assessed, repaired, and replaced damaged and missing aids to navigation along hundreds of miles of coastline and navigable waters. Other teams coordinated salvage of more than 2,500 vessels.

Remarkably, the Coast Guard personnel who live and work in the Gulf shared in the destruction, with over 70 percent of them losing their homes; yet the Coast Guard continued to accomplish its mission in its typically superb fashion. Behind this massive operation was a logistics and finance backbone that responded with the same sense of urgency to manage $360 million in Federal Emergency Management Agency (FEMA)-assigned missions and to account for over $200 million in damage costs to Coast Guard capability.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act, Public Law 93-288, as amended (the Stafford Act), was enacted to support state and local governments and their citizens when disasters overwhelm them. This law established a process for requesting and obtaining a presidential disaster declaration, defined the type and scope of available assistance, and set the conditions for obtaining that assistance.

The Coast Guard has built on experience managing Stafford Act funds in previous emergencies. For three decades, it has responded to pollution incidents using dedicated trust funds in an interagency framework that allows discrete tracking of spending, followed by bills to the spillers to recover the incident costs. The most famous of these incidents was the Tanker/Vessel Exxon Valdez spill that occurred in 1989.

The Coast Guard's system has six key elements:

* Pre-designated field units that respond and manage the specialized funds under a single set of rules

* Pre-negotiated contract prices and established procurement vehicles for commercial support available in a matter of hours, paired with deployable contracting officers

* Rapid funding of federal and state government agencies through interagency agreements

* Centrally managed funds that are distributed in real time (24/7)

* Regular drills and exercises in which financial processes are tested alongside operations and logistics processes

* Experienced Incident Command System-trained contingency forces with fully functional "Finance Cells" deployable in advance or within 24 hours to support the field units

In the late 1990s, using decades-long experience with the six key elements, the Coast Guard's National Pollution Funds Center (NPFC) employed its oil spill response funding mechanisms to design a similar system for pollution response when disasters demanded quick action by Coast Guard units. The impetus for this expanded system was FEMA's changes to the Federal Response Plan, associated with California earthquakes and Hurricane Floyd. The major effect for the Coast Guard was developing a process to receive funding via the Stafford Act, which is provided disaster by disaster, state by state, and function by function.

The Coast Guard faced its first major test of this system after the World Trade Center attacks on September 11, 2001. The Coast Guard had Stafford Act pollution response funding and contracts in place for its New York units within a day of the attack and an operating financial system reporting costs and obligations to track approximately $32 million within three days. With the establishment of the Department of Homeland Security, the Coast Guard's disaster response role expanded under the new National Response Plan (NRP). This financial system grew to support forces deploying for National Security Special Events such as the Olympics and for national drills like the Spill of National Significance.

By far, however, the hurricane-generated pollution responses have grown the most--from none in 2001 to five storms across seven states and over $178 million of costs in 2005. Each storm resulted in new challenges, new lessons learned; expanded partnerships with more agencies; produced more robust financial systems; and developed a constantly growing nationwide cadre of trained, multi-mission Coast Guard military and civilian personnel ready to solve financial problems.

By 2005, the Coast Guard's pollution response community had built a flexible financial system that served as a model for other response missions. Because of the unprecedented size of the 2005 hurricane disasters, however, the NRP and agency procedures could not have foreseen every possible event. At the local level, the first responders and even state entities were frequently severely affected, making it difficult for their federal partners to respond according to the book. The logistics requirements that followed in the wake of the Katrina and Rita hurricanes challenged Coast Guard supply and contracting personnel to innovate in order to support operational units. At all levels, there were several lessons learned, and tactical adjustments made in the financial management of NRP operations:

Establishing effective communications is always a priority For all major incidents, it is normal to have daily phone conferences between NPFC, the on-scene commander, and the Joint Field Office (JFO). The NPFC established two daily voice conferences for each FEMA region two days before Katrina hit. While chaired by the pollution response community, these phone conferences were a forum for all Coast Guard missions. For several weeks, some response entities were working without computers, so teleconferences were essential, often via cell and satellite phones. Because these conferences had participation from a broad range of players across agencies and up and down the chain of command, they were successful at cutting through red tape and getting rapid answers to resource and funding questions. The NPFC was uniquely positioned to observe disconnects and helped to resolve them or quickly notify appropriate authorities. The daily conferences also built corporate knowledge as the field response personnel and JFO staff officers often were transient. Information and lessons learned that emerged during the conference calls were followed with official record message traffic or e-mails

Consistent interpretation of the NRP across states and FEMA regions is critical In the wake of Katrina, there are millions of tons of contaminated debris spread across the Gulf region. The appropriate source of funds to remove debris could be one of two NRP-classified categories. One or the other category was selected as the most appropriate funding source by different field offices. As a result, the federal on-scene commander used different types of funding in adjacent areas for the same activity. In some localized cases, the response was interpreted to be recovery rather than response and, therefore, not a candidate for Stafford Act funding. Although eventually resolved, varying interpretations created confusion as the JFO staffs tried to achieve consistency in the guidelines provided to the operational commanders on scene across four states and two FEMA regions. Having worked through other disasters in recent years, the Coast Guard's pollution response community had established relationships, lines of communication, and trust between the various agencies involved. Alignment and strategic resolution between respective agencies is a priority in preparation for next hurricane season.

A well-designed cost accounting structure is critical to procure needed items efficiently and for reporting. Urgent procurement needs and financial management policy often are at odds during a crisis. The foremost job of the procurement function is to obtain the necessary supplies and services to support the unit's mission at the best value to the taxpayer. Financial management personnel must properly manage funds and obtain additional resources. So while the Coast Guard quickly obtained critical supplies, it is not possible to report costs accurately without a comprehensive cost accounting structure of distinct accounting lines and guidance. It is extremely important for the Coast Guard to capture all costs (incremental and base consumption) for hurricane contingency operations, as well as record the impact on its assets since the Coast Guard annual budget cannot absorb these costs. The comprehensive cost collection method that was developed is critical for justifying both reimbursements from Stafford Act funding and building supplemental appropriation requests.

For most natural disaster responses, the Coast Guard directs units to use their funds and then request reimbursement of costs incurred after the operation. For Stafford Act funding, however, Coast Guard policy requires separate accounting lines to segregate FEMA costs in order to eliminate commingling with unit costs and aid in obtaining subsequent reimbursement. To comply with FEMA rules, the NPFC established reimbursable accounts in the days prior to hurricane landfall to facilitate standing up the Coast Guard presence in what would become the JFOs. When Katrina arrived, however, the volume of FEMA mission assignments was unprecedented--almost $360 million in over 40 mission assignments across six emergency support categories. To deal with this disaster, the Coast Guard Maintenance and Logistics Command Atlantic, along with NPFC, rapidly devised a chart of accounts at the field level and had local financial system managers provide access to users for purchase against these accounting lines.

Rapidly determine forensic accounting needs and establish Cost Accounting "Tiger Teams." The Coast Guard has an experienced group of contracting personnel and financial managers Procurement and small purchase authority remain decentralized while financial management and accounting expertise is centrally located at major commands. As a result, spending money for the hurricane response was easy with multiple buyers in the field, but tracking the details of the expenditures is difficult and will continue until next hurricane season.

To complicate matters, a large portion of the fiscal response took place during the fourth quarter of the fiscal year--on top of a busy fiscal year-end closeout With an audit of the Coast Guard's financial records on the horizon, the resources at the major commands were already committed to reconciling fiscal year 2005 accounts. The Coast Guard quickly realized that help was needed. As with operational assets and personnel, the Coast Guard brought in experts from commands outside the affected areas to help in analyzing, reporting, and projecting hurricane-related costs. Their focus was rapid analysis of the cost accounting needs and development of a cost accounting structure for FEMA reimbursement requests and supplemental budget justification.

The Core Accounting System could not easily support accurate cost accounting. The Coast Guard's Core Accounting System (CAS) did not adequately support the FEMA reimbursement and reporting process. Hurricane Katrina cost information is stored in the local unit ledger system, the Finance and Procurement Desktop (FPD), and in CAS. On an agency level, the Coast Guard uses CAS to track all hurricane costs through a service-wide Cost Center. Reports on costs incurred against the various Emergency Support Functions, however, are determined by querying a unique field in the accounting line called the Program Element Both of these fields are part of the accounting line used when charging purchases to a FEMA mission assignment; however, sorting FEMA mission assignment cost by region or state currently is not possible in CAS. Since Stafford Act funding is based on state-specific cost accounting, accurate cost accounting is critical for reimbursement. A change to the financial system could enable this capability for the future. As an interim solution, the Coast Guard cost collection tool is the ledger system, FPD, which segregates costs associated with the supported state and FEMA region through use of the project field (which is not available in CAS).

Ensure proper tracking of operating asset hours. In addition to tracking purchases made in support of FEMA missions, the Coast Guard also had to take early action to ensure that it could accurately track the reimbursable costs of cutters, boats, and aircraft, as well as any incremental costs not covered in base appropriations. Asset utilization hours drive the reimbursement for wear-and-tear cost calculations on assets and other incremental costs such as fuel. Accurately tracking operating hours involved coordination with the managers of the aircraft and surface asset tracking systems. Managers of both systems were extremely responsive to requests, understood the level of detail needed, and took action to implement system changes within 24 hours of the requests. As a result, the changes and implementation policy was immediately communicated to the field. Since there were no FEMA mission assignments prior to commencing operations, it was critical that the tracking systems and policy were rapidly put in place to maximize accuracy of the data and to prevent future rework.

The Coast Guard received positive press during its hurricane response because they were quickly on scene making visible contributions in people's lives. Whether airlifting survivors from rooftops, restoring aids to navigation in order to facilitate commerce, clearing debris from city streets, or cleaning up the environment, the Katrina-Rita catastrophe highlighted Coast Guard core values. None of this response could have happened, however, without an equally responsive, cohesive, and prepared financial management structure.

The Coast Guard continues to work in the Gulf Coast region, cleaning up thousands of oil and hazardous waste spills and recovering debris and restoring navigational infrastructure. The work will continue for many more months. With another hurricane season on the way, Coast Guard financial managers will take the lessons learned from hurricanes Katrina and Rita and will, once again, prove worthy of its motto: Semper Paratus--Always Ready.

The views expressed in this article are those of the authors and are not to be construed as official or reflecting views of the Commandant or of the U.S. Coast Guard.

Allen Thuring is a senior financial analyst at the NPFC. He received the ASMC Meritorious Performance Award in Accounting and Finance in 2002.

Frank Capitano is the chief of the Planning and Budget Branch at the Maintenance and Logistics Command Atlantic. He is a member of ASMC's Hampton Roads Chapter.

Commander Paul Baca, CDFM, is the chief of the Coast Guard Financial Policy Division of Coast Guard Headquarters. He is a member of ASMC's Washington Chapter.

Craig Bennett, CGFM, is the chief of the Financial Management Division at the Coast Guard's NPFC. He is a member of ASMC's Washington Chapter.

Lieutenant Commander August Martin is the USCG Atlantic Area Comptroller for Contingency Operations. He is a member of the Hampton Roads Chapter.