1989 Report of the Auditor General of Canada

Main Points

23.1 Fleet Management. In our opinion the use of more efficient manning, maintenance and deployment practices could have a positive impact on the $183 million projected operating costs, and the $2.5 billion replacement costs, of the 46-vessel fleet. For most of its vessels used year-round to tend navigational aids and break ice, the Coast Guard uses an office-type work week rather than a system which would facilitate making the most efficient use of its ships. In our opinion overtime costs of $13.8 million could be reduced if compensation practices better matched the seasonal work patterns of its heavy icebreakers. Our analysis of fleet deployment indicated that the aids to navigation workload for 1987-88, a typical year, could have been done with at least five fewer ships, with no discernable reduction in present service. These ships have a replacement value of $169.1 million and annual operating costs of over $10 million (paragraphs 23.12 to 23.36).

23.2 Aids to Navigation. We found wide variations in the contracting out practices among regions for placing and maintaining buoys and other aids to navigation. We found examples of new technologies that had been developed in individual regions, but there was little cross-fertilization of these ideas among regions (23.47 to 23.54 and 23.65).

23.3 The Coast Guard has standardized the equipment used across the country, but we noted that few maintenance practices had been standardized. Consequently, one of the main benefits of standardization, improved efficiency, was not being achieved (23.55 to 23.58 and 23.65).

23.4 Icebreaking. The Coast Guard does not know the extent to which its existing fleet meets or exceeds program requirements. In spite of this lack of information and analysis on requirements, the Coast Guard has spent approximately $686 million in acquiring or modernizing vessels capable of undertaking icebreaking missions since our last audit in 1983 (23.72 and 23.83).

Introduction

23.5 To understand the Coast Guard, it is important to dispel some commonly held myths. The first myth is that the Coast Guard is a paramilitary body that polices the coast. In fact, Coast Guard ships are not armed and their crews are not trained in the use of firearms. The second myth is that the Coast Guard is a service much like the army or navy. In fact, the Coast Guard is a branch of the Department of Transport. The third myth about the Coast Guard is that it is heavily involved in the interdiction of illegal drugs, smugglers, illegal immigrants and other such activities. In fact, the Coast Guard has no legal mandate for such activities. The last myth about the Coast Guard is that there is one national fleet. In fact, fleet operations are highly decentralized and there are five regional fleets, each deployed, maintained and operated on a regional basis.

23.6 Two of the Coast Guard's primary functions are the aids to navigation and icebreaking programs. These programs directly and indirectly affect the lives of millions of Canadians, including remote communities in the North that rely on the annual Arctic Sealift for supplies and fuel. They also include commercial shipping companies which require assistance to navigate ice-filled waters and depend on aids to navigation to prevent marine casualties, commercial fishermen and pleasure boaters dependent on fixed and floating aids to marine navigation. A fleet of 46 ships, ranging from small buoy tenders to large Arctic class icebreakers, is used to support the aids to navigation and icebreaking programs.

23.7 The annual operating costs of the Coast Guard fleet for 1989-90 are estimated to be in excess of $183 million. At present there is no regime in place to recover these costs from users. The Department of Transport is in the midst of a major expenditure reduction exercise which has led to increased competition among the branches of the Department for capital and operating funds; every dollar allocated by the Department of Transport to the Coast Guard is a dollar that is not available for the air or surface transportation programs. We examined how the Coast Guard responds to user needs and the challenge of making the most efficient use of its resources.

Audit Scope

23.8 Exhibit 23.1 shows the scope of our examination of fleet management, as well as of the audit as a whole. The current audit excluded search and rescue, the management of harbours and ports, fleet acquisition and an examination of such major capital projects as the Polar 8 Icebreaker or the modernization of the Louis S. St. Laurent. These will be audited and reported later. The current status of the Polar 8 project is that it is not to proceed to the construction stage without reconsideration by Cabinet.

(Exhibit not available)

Fleet Management

Background

23.9 Exhibit 23.2 shows the size, location and capital cost of the fleet. The smaller, shallower draft vessels in the 700 to 900 classes are primarily used to tend aids to navigation; in the 1000 to 1100 range, they are multi-tasked vessels capable of both tending aids and breaking ice. Vessels in the 1200 and above class are heavy icebreakers used in the St. Lawrence River, the Gulf of the St. Lawrence and Arctic operations.

(Exhibit not available)

23.10 The fleet is managed on a regional basis by the Fleet Systems organization, which is the largest component of the Coast Guard. At Headquarters, the Fleet Systems organization is responsible for setting national standards and providing functional direction on manning, deployment, maintenance and other logistics. The regional and district Fleet Systems organizations make the day-to-day deployment decisions.

23.11 Coast Guard vessels undertake a number of different types of missions: servicing, maintaining and constructing floating and fixed radio aids; sounding; icebreaking and escorting; ice management and flood control; Arctic resupply; Search and Rescue; pollution control and marine emergencies. The Coast Guard also supports departments and agencies such as the Canadian Hydrographic Service, the Department of the Environment, the Department of Fisheries and Oceans, Teleglobe Canada, the St. Lawrence Seaway Authority and law enforcement agencies.

Opportunities exist to improve the efficiency of fleet manning practices

23.12 Our examination focussed on whether the Coast Guard was using the most cost effective manning systems and on how overtime was managed. Given the standardization of the fleet and the increased use of multi-tasked vessels, we expected to find crewing systems that matched work requirements.

23.13 The Coast Guard uses two different systems in operating its icebreaking and navaids fleet: the conventional manning system and the lay day system. The conventional system follows normal office hours -- eight hours a day, five days a week, Monday to Friday. Time worked in excess of standard time is compensated at a higher rate of pay. Normally, Coast Guard ships return to their home ports for weekends and public holidays.

23.14 The lay day system is based on a continuous work period of 28 days followed by a leave period of 28 days. During the 28-day work period, each crew member works 12 hours each day, seven days a week. Under the lay day system, more person-years are required to operate the vessel, but the ship is available for use 24 hours a day, seven days a week. This optimizes the availability of the vessel and in the long run will reduce the number of vessels required. In normal operating conditions, overtime is not incurred. Under a conventional system, however, once a crew member works beyond his or her 40-hour work week, overtime is incurred. The Coast Guard states that a constraint it faces in implementing the lay day system is that it must obtain the agreement of the unions and that, in one region, the unions have not agreed to its implementation. To date it has converted 5 of the 36 multi-tasked ships in its aids to navigation and icebreaking fleet for which the lay day system would be appropriate.

23.15 We compared the manning systems for three navaids vessels in the Maritimes Region for 1987-88. As shown in Exhibit 23.3, the Earl Grey, operating on the lay day system, not only costs less but was used more than two conventionally crewed ships.

(Exhibit not available)

23.16 In the Newfoundland Region, use of the lay day system on the Sir Humphrey Gilbert and the Ann Harvey contributed to reducing the regional fleet by one vessel. While there are two ships on the lay day system in this region, there is only one in the Maritimes Region and none in either the Laurentian or Western regions.

23.17 We concluded that greater use of the lay day manning system would increase the availability of existing vessels, decrease the salary costs and potentially reduce the number of vessels required by a region.

23.18 Overtime makes up a large percentage of the ships' crewing costs. In 1987-88, overtime costs for the fleet totalled $13.8 million. We noted that crews receive full pay by remaining on board while a ship is not operational. They do so even though they have accumulated and retained enough compensatory leave to cover periods during which the vessel is non-operational. The Coast Guard states that cashing in of compensatory time off represents adherence to the contract negotiated for the employees. However, we note that a letter of understanding with the union recognizes that "failure to accumulate sufficient compensatory leave credits to cover the anticipated (non-operational) periods could lead to employees being placed on off-duty status, resulting in a loss of pay for all or a portion of the non-operational period". By paying cash in lieu of compensatory leave and keeping the crews on board at full pay, rather than adhering to the terms of the letter of understanding, the Coast Guard is not managing its overtime in a way that is consistent with the seasonal work patterns of its heavy icebreakers.

23.19 For example, in 1987-88 the Des Groseilliers, crewed on the conventional manning system, incurred overtime costs of $758,700. We noted that the ship was not required for any operations for the 20 weeks when it was berthed at Quebec City (13 weeks) and in the Vickers Shipyard in Montreal (7 weeks). During this period, according to the Ship Activity Report, the vessel remained fully crewed and employees received their regular pay. In addition, most of the crew chose to receive cash for overtime accumulated, rather than compensatory time off when the ship was not required for operational purposes. This payment averaged $12,645 for each of the 60 crew members. The Coast Guard informs us that often the crew is involved in self maintenance during these periods.

(Photo not available)

23.20 We also noted that the Coast Guard had recently completed an internal study on manning levels on all Coast Guard vessels. This study observed that, especially for large icebreakers, current crewing levels were in excess of levels recommended in the study.

23.21 When icebreakers and other vessels are berthed for extended periods for maintenance, or are undergoing midlife modernizations, they continue to be fully crewed. For example, the Edward Cornwallis was in port mainly because of problems with its speedcrane for 20 weeks in 1987-88. In addition, it was unassigned for 17 weeks. We noted that during this 37-week period the ship remained fully crewed at an average weekly cost of $25,775.

23.22 We concluded that the Coast Guard is not managing its use of overtime and compensatory leave in a manner consistent with the seasonal work patterns of the fleet.

Coast Guard unable to monitor the efficiency of fleet maintenance

23.23 The Coast Guard has made substantial progress in standardizing the specifications for its fleet. For example, since 1983 it has replaced older ships with six modern class 1100s. We therefore expected to find that maintenance practices that are now routine would have been standardized. However, the Coast Guard has not issued maintenance standards, and as a result individual regions have developed their own practices. As shown in Exhibit 23.4, the percentage of time spent in maintenance status by regional fleets varies significantly.

(Exhibit not available)

23.24 Out-of-pocket maintenance costs for parts and work contracted out amounted to approximately $15.8 million. In addition, because vessels in maintenance status are usually fully crewed, there are substantial payroll costs. The Coast Guard does not separately track these payroll costs.

23.25 According to the Coast Guard's records, maintenance time is lowest in the Newfoundland Region where utilization is highest, and highest in the Maritimes Region where utilization is lowest. The Coast Guard has not developed a variance reporting system which analyzes these differences, for similar ships, on a national and a regional basis. Consequently it is unable to monitor the efficiency of its maintenance practices.

23.26 We concluded that, because of the lack of standards and reporting systems, senior management of the Coast Guard does not have assurance that maintenance is being carried out with due regard to economy and efficiency.

Evidence of excess capacity in the aids to navigation fleet

23.27 In the spring and fall each year, navaid vessels place and remove floating buoys. In the summer months they do construction work on aids in more remote areas. Fleet deployment is based on annual operational plans prepared by individual regions. These plans attempt to allocate the available tasks among the ships in the regional fleet for "blocked" periods of time.

(Photo not available)

23.28 The Coast Guard has developed a Ship Activity Reporting System to capture weekly information on the hours spent by a ship on program activities such as tending aids to navigation, icebreaking, or undergoing maintenance. The input for this system is a weekly report certified by the ship's Commanding Officer. From this data the system produces monthly reports which show utilization and maintenance, by ship. The data provide a profile of the ship's activities for each week.

23.29 However, we found that the Coast Guard was putting these data to limited use. For example, there was no comparison of total hours worked with total actual capacity in a region, which would provide the Coast Guard with the information it needs to improve efficiency and plan for vessel replacements. In addition, this would identify non-essential ships or shortages in the fleet and would be an improvement over the current practice of simply comparing forecasts.

23.30 We performed a basic analysis of actual regional capability for 1986-87 and 1987-88. We analyzed the availability of vessels against the actual hours worked for navigational aid tenders on a regional basis. For example, for the Maritimes Region, Exhibit 23.5 illustrates that for 1987-88 the fleet was underutilized every month in the year for a total of 13,373 hours. We then simulated the effect of removing one ship, the William, and distributing its workload among the remaining ships in the fleet. Our simulation suggested that the region would still have had excess capacity in every month of the year for a total of 10,499 hours for the year. We made the same kind of simulations using the Alexander Mackenzie and the Thomas Carleton, withdrawing them and distributing their workload among the other ships. Except for three months of the year which showed a combined shortfall of 242 hours, the regional fleet still had significant excess capacity.

(Exhibit not available)

23.31 This analysis is based on the assumption that, because of the high investment in the fleet and the seasonal nature of the navaids business, the navaid fleet would be available seven days a week during daylight hours.

23.32 Our analysis suggested that the 1987-88 peak period workload could be done with at least five fewer ships with no discernable reduction in the present service of the navaids program. The operating and replacement costs are illustrated in Exhibit 23.6.

(Exhibit not available)

23.33 We also considered what effect the removal of these ships would have on the icebreaking program in the region. Although 1987 was a particularly bad year for ice on the east coast, the ships we identified as non-essential contributed very little to the icebreaking programs of those regions during the year.

23.34 The purpose of our analysis, which was fairly basic, was to demonstrate the kind of reports senior managers and planners could be provided with, using the Coast Guard's current systems and data base. Based on the needs of management, a number of additional variables and further sophistications could be introduced. The essential point, however, is that analyses of this type would improve the information available to senior decision makers in the Coast Guard. We concluded that there is an urgent and ongoing need for the Coast Guard to strengthen its analytical capability so that it can properly analyze its regional program requirements and capacity and provide complete information to senior management for making decisions on deployment, replacement or modernization.

23.35 The Department has prepared a draft plan for fleet capital investment which states that four ships will be decommissioned without replacement by 1992.

23.36 The Coast Guard should:

• explore opportunities to increase vessel availability through implementation of the lay day manning system on appropriate vessels, as well as implementing a compensation system appropriate to both the seasonal nature of the Coast Guard's work and its demanding operational requirements;
• develop maintenance standards and monitor variances for better control over maintenance costs; and
• strengthen its ability to analyze regional program needs for the icebreaking and aids to navigation fleet and provide complete information to senior management for decisions on planned ship modernizations or replacements.

Department's response: The Department has significantly reduced the number of vessels in the Icebreaking and Navaids fleet from 52 vessels in 1983-84 to 46, and will further reduce to 42 vessels by 1993, a decrease in numbers of vessels by 18 percent in a decade. Fleet capacity is analyzed by the Department to meet regional and national transportation and safety objectives, and opportunities to utilize any excess operational capacity are explored with other government departments requiring fleet support.

The Department will further explore lay day (24 hours) manning and will examine options for compensation, noting that further implementation of the lay day system is subject to union agreement and operational considerations.

Aids to Navigation

Background

23.37 The objective of the aids to navigation program is to ensure that a national marine navigation system is provided, operated and maintained to contribute to the safe, efficient and economical movement of vessels in Canadian and designated international waters. The aids to navigation program is an essential service that the Coast Guard has provided to Canadian mariners and the international marine community for decades.

23.38 At 31 March 1988, the Coast Guard was responsible for placing and maintaining 12,649 floating aids, 2,899 of which were lighted. Floating aids are used to warn vessels of hazards such as rocks or shoals, to mark navigable channels, to indicate harbour entrances, and to mark anchorage areas. The Coast Guard was also responsible for 9,629 fixed aids situated along the mainland and island shorelines. Since our last audit there has been a five percent overall reduction in the number of aids to navigation.

23.39 The cost of acquiring these short-range aids to navigation is very small compared with their maintenance costs. The replacement value of a small steel buoy is approximately $200 and of the largest steel buoy about $13,000. The small buoy will last between 3 to 5 years, while the life expectancy of a large buoy is 30 years or more.

23.40 In 1988-89 provision of short-range aids to navigation will account for $141.4 million. Over 50 percent of that amount, or $83.1 million, relates to the operating costs of the vessels used to place the buoys and verify their position and operating condition. Each buoy is checked at least twice a year, and the operating costs of a navaids tender range from $220 an hour worked to $2,100 an hour worked.

23.41 The delivery of the Coast Guard's operational programs such as Aids to Navigation is accomplished through a decentralized framework of regional and district offices. The Department states that this decentralized approach is necessitated by Canada's vast diversity in geographic and climatic conditions. While we anticipated that this diversity would be reflected in Coast Guard operations, we also expected that Coast Guard practices would maintain a reasonable balance between regional differences and the need to standardize practices for similar activities, in similar types of environments, using similar types of equipment.

No national levels of service

23.42 In 1974, the Treasury Board identified the need for the Coast Guard to define levels of service and in 1983, we observed that little had been achieved in this area. While we recognize this is a very complex task, and the Coast Guard appears to have intensified its efforts in recent years, it still does not have defined levels of service, or a standard approach to defining the need for these short-range aids. In the absence of defined levels of service, it has implemented cyclical reviews, developed a needs determination manual and conducted pilot tests.

23.43 Cyclical reviews according to existing policy consist of desk top analysis based on professional knowledge and expertise of Marine Aids managers followed by meetings with the users to determine whether a particular aid is required. What is missing from this process is a set of criteria for retaining, deleting or enhancing aids. Criteria such as the minimum number of users, risk and danger factors, and life-cycle costs to position an aid would ensure that these reviews were consistent. This would contribute to an equitable and cost-effective service.

23.44 The Coast Guard is presently proceeding with the revision of its policy on cyclical review to include criteria such as: type, size, number of vessels, weather and sun conditions, aids characteristics, previous incidents, reviews and users' requests as well as cost comparisons. This will contribute to an equitable and cost effective level of service.

23.45 In its current expense reduction exercise, the Department of Transport has to make resource allocation decisions among competing demands. Clearly defined levels of service and consistent application of cyclical reviews will make such decisions easier.

23.46 We also looked at current maintenance practices, focussing on how well cost-effective alternatives are considered for delivering the existing program.

Alternative methods of program delivery not fully exploited

23.47 In a time of restraint and cost reductions, we expected to find an emphasis on exploring economic and efficient methods of program delivery. The Coast Guard has made some efforts and achieved some success in a few areas, but it does not have either a formal process or criteria for assessing alternatives.

23.48 For example, there is no overall Coast Guard policy on when and how contractors should be used for placing and maintaining aids to navigation and no formal guidelines on contracting out. There is a wide variation in the use of contractors.

23.49 In the six districts we reviewed, of the 5,590 small and medium sized buoys, 2,873 are serviced by contractors and 2,717 are serviced by the Coast Guard. (Exhibit 23.7) A change in these contracting arrangements would have a significant impact on future regional ship requirements. No cost-benefit analysis has been done to determine the best mix between the Coast Guard and the private sector. The Coast Guard has not analyzed the wide variations in the contracting-out practices among the regions.

(Exhibit not available)

23.50 For the 1,260 large buoys in the six districts, no deployment and maintenance was contracted out. We were informed that limitations include the number of commercial fishermen interested in contracting and the lack of large ships in the private sector capable of handling the large buoys. However, we saw no evidence that the Coast Guard had attempted to formally solicit expressions of interest in this work from the private sector.

23.51 There is no reliable unit cost data on which to base a comparison of in-house and contract costs for similar activities. Our analysis shows that the average annual charge per buoy for maintenance by contractors is $200. While there are no precise cost figures available for in-house work, the average hourly cost for operating a Coast Guard vessel varies from $220 for a small vessel to $2,100 for a large vessel.

23.52 We found that the Coast Guard has conducted research on new technologies to reduce the cost of maintaining aids to navigation. There has been some implementation of these innovations, such as solar panels on fixed aids, low maintenance buildings, power generation, etc. However, although there are examples of innovations in individual regions, we found a number of situations where these innovations were not transferred to other regions.

23.53 An example of this is an innovative buoy mooring attachment that was designed and developed by the Laurentian Region in the early 1980s. At 31 March 1989, there were 1,234 electric buoys of the 6 and 9.5-foot size that could benefit from the new mooring attachment. An additional 708 electric buoys of the 4.5-foot size could be converted if trials prove successful. However, only 164 of all three sizes had been converted.

(Photo not available)

23.54 The Coast Guard has been investigating using solar panels to recharge batteries since 1981. It reports that land-based solar conversion has progressed almost according to the original target dates. By 1990, the Coast Guard projects that 3,200 land-based minor aids will be on solar powered batteries. However, it has been slower to solarize floating buoys. The Coast Guard informs us that sealed batteries for floating aids have only been available for the past two years. Changing batteries can require the deployment of a vessel, so increasing their life from one year to as much as five to eight years could require fewer maintenance visits.

(Photo not available)

Lack of uniformity in maintenance standards

23.55 The Coast Guard has made an effort to standardize equipment across the country, using standard diesel engines, buoy designs and drycell batteries, for example.

23.56 However, few standard maintenance practices have been developed. For example, except for diesel engines, there is no uniform preventive maintenance system for standard equipment used under similar conditions. Guidelines for checking the operating conditions of fixed aids are general and incomplete. As a result, maintenance practices in different districts varied quite significantly for the same type of equipment. For example, the Saint John District has developed and uses a detailed inspection checklist for lighthouses, while the Newfoundland Region follows no specific maintenance instructions. Generally, there was no consistency among regions about timing and procedures for inspecting equipment.

23.57 A good example of the lack of uniformity of maintenance practices is the painting of steel buoys. Although we understand that buoys in operation in an ice-infested environment will require different maintenance than buoys operating in milder climates, we expected that standard buoy painting practices could be developed for ice-infested, and non-ice environments. In the Newfoundland Region, steel buoys are painted with a high performance coating system which lasts at least three years. In Dartmouth and Charlottetown districts, they are sand blasted and painted annually. Buoys in the Charlottetown District, maintained by contractors, are scraped and hand painted yearly but not sandblasted. In Saint John District and the Laurentian Region, they are brought to shore yearly and also scraped and hand painted but not sandblasted. In Victoria District, they are cleaned, scraped and spot-painted yearly on board a vessel and put back into service. The buoys are brought to the base on a five year rotational basis for a complete sandblasting and painting job.

(Photo not available)

23.58 The Coast Guard has developed national standards for frequency of buoy checking. However it does not have a quality control program to ensure that they are being properly applied. In the Laurentian and Newfoundland regions, for example, the frequency of inspections continues to be based on historical precedent, local practice and available resources rather than the national criteria, even though standards in their present form have been in place since 1985. We believe that the absence of strong quality control mechanisms leads to inconsistent application of the national standards. Managers in the regions need more information to ensure that maintenance operations are being carried out with due regard to economy and efficiency.

Need for information systems

23.59 The Coast Guard's objective is to contribute to a safe and efficient marine transportation system. On a day-to-day basis managers must make decisions on where and how to respond to equipment outages, position navigational aids, etc. To respond in the most effective and efficient manner, they not only need a response capability, but they also need a reliable information system to direct it. Such a system would provide an accurate and timely set of integrated financial and operating reports, so that management at each level would have the information to take corrective action if required.

23.60 The Coast Guard has been working on developing such a system since 1983. However, the system is still not fully operational. One region, on its own initiative, has developed a management information system that includes data on all fixed and floating aids to navigation and service records for the past three years. Using the data in this regional system we produced some basic analysis, for illustrative purposes only, to demonstrate the kind of information that could be made available to managers. It could be used to make decisions on frequency of maintenance, to highlight problem areas by showing where there are high outages or high out-of-position rates, etc.

23.61 For example, our analysis showed that

• of the 220 outages reported, 33 percent were false alarms;
• 52 percent of the outages could be attributed to 7 percent of the buoys;
• one buoy received 17 service calls between September 1986 and September 1988.

23.62 Clearly this is the type of information a good manager would be interested in, and may be receiving by less formal means. Exhibit 23.8 provides another illustration of the type of report that could be made available. In this district all buoys are scheduled for at least two inspections a year, and every time there is a visit to a buoy, scheduled or unscheduled, a buoy service report has to be prepared.

(Exhibit not available)

23.63 There may, or may not, be good reasons for the above occurrences. This is not the issue. The real issue is that, in the absence of such a report, managers' attention might not be drawn to these exceptions and, consequently, there might not be an investigation of their causes. A problem could thus fester for a long time and create a drain on resources.

23.64 Because managers in the regions we visited were not receiving exception reports highlighting the number and frequency of service visits, they may not have adequate information to investigate the causes of potential problems or to ensure that they were carrying out servicing operations in the most appropriate and efficient manner.

23.65 For the aids to navigation program, the Coast Guard should:

• develop a formal process and criteria for assessing alternatives for delivery of the program such as contracting out for aids maintenance;
• provide a national focal point for dissemination and implementation of new technologies offering cost saving opportunities;
• standardize maintenance practices for fixed and floating aids for similar types of environments and ensure that national standards on the frequency of buoy maintenance are applied consistently in all regions; and
• complete the development of systems to provide line managers with the information required for day-to-day decisions on maintenance intervals.

Department's response : The Department will further examine alternatives for program delivery through application of the Treasury Board's Guide on the approach to the most effective organization. Initiatives are under way to develop additional maintenance standards, and a more comprehensive information management system is under development.

The Department has assigned the responsibility to Coast Guard headquarters to provide a national focal point for new technologies and to promulgate these technologies throughout the Coast Guard.

Icebreaking

Background

23.66 The mission of the icebreaking program is 1) to facilitate the safe and efficient movement of marine traffic through or around ice-infested waters; 2) to support marine related activities and other government objectives, including sovereignty in the Canadian Arctic; and 3) to minimize the effects of flooding caused by ice jams in the upper St. Lawrence River.

23.67 Icebreaking is a major activity of the Coast Guard that has evolved over the years. The biggest component of this program is route assistance for commercial shipping through ice-infested waters. The Coast Guard estimates that the program will consume $79.9 million and 866 person-years in 1989-90.

23.68 The Coast Guard's icebreaking activity takes place in three areas -- the Gulf of St. Lawrence, the Eastern Arctic and the Western Arctic. In the Gulf of St. Lawrence, it provides escorts and keeps major shipping lanes open for navigation from the Maritimes to Montreal during the winter months. It also opens harbours to expedite the movement of cargo and fishing vessels. Ice in the Gulf of St. Lawrence typically starts forming in early December and spreads eastward toward the Magdalen Islands. The peak of the icebreaking season in the Laurentian Region is in January and February, with demand typically diminishing in March. The peak in the Maritimes Region is normally in late February and March. These different peaks provide opportunities for staggered deployment.

23.69 Eastern Arctic operations involve co-ordination and icebreaker support for the sealift which provides food, materials, fuel and equipment to northern settlements and defence sites. Typically, the Eastern Arctic operations deploy six icebreakers. Unlike the Gulf, where it is difficult to anticipate vessel traffic in advance, much of the demand for Arctic escorts is identified by users each spring in an annual planning meeting. In the Western Arctic, one 1100 class vessel is deployed, principally to maintain aids to navigation and support shipment of supplies from Hay River to northern communities. The total cost of Eastern and Western Arctic operations for the 1987 season was approximately $30 million.

23.70 Icebreaking is an inherently expensive business. A heavy icebreaker has a crew of 60 or 70 -- its annual operating and maintenance costs generally average $5.5 million -- and its replacement cost is around $110 million.

23.71 It should be noted that there are various levels of icebreaking capability within the Coast Guard fleet. The following list gives the number of vessels in each type category, according to icebreaking capability:

(a)	8	ICEBREAKERS (Class 1200 and 1300) - large, powerful vessels with thick hulls which are designed and built solely for the purpose of icebreaking.
(b)	11	BUOY TENDERS/LIGHT ICEBREAKERS (Class 1100) - designed and built primarily to tend navigational aids, but have the capability to be multi-tasked and thereby perform light icebreaking duties, as a secondary function, in all areas including the sub-arctic.
(c)	13	BUOY TENDERS/LIGHT ICEBREAKERS (Class 1000 and 1050) - designed and built to tend buoys but are ice-capable or ice-strengthened; these vessels are lower powered, with shallow drafts and their capability in ice is severely limited.
	32	Vessels capable of working in ice.

No national levels of service

23.72 In 1983 we noted that the need to provide icebreaker escort services had not been analyzed relative to either economic benefits or meeting other government objectives. While efforts are underway, levels of service have yet to be defined.

23.73 There are few natural limits to the icebreaking program. The Coast Guard states that all requests for service are considered valid. In theory, the Coast Guard could set a level of service objective of building a large enough fleet to escort every ship in Canadian waters during the ice season. Whether a ship does or does not need an escort largely depends on the judgment of the commanding officer or the ice officer. Also, there are large differences in ice conditions among regions and from year to year. There are no set workload factors as there are for the aids to navigation program. Icebreakers spend a high proportion of their time standing by, and the Coast Guard has not determined how much standby time is reasonable. Control is further complicated by the different icebreaking capabilities of the various ships and the year-to-year unpredictability of ice conditions.

23.74 The Coast Guard states that, in the absence of extensive planning systems, it depends heavily on the experienced professionalism and commitment to service of key managers. Considerable effort is expended to receive the views and criticisms of the marine industry.

23.75 Since there were no defined levels of service, we examined actual deployment practices to observe how deployment was controlled for the Gulf operations and the Eastern and Western Arctic.

Lack of cost-benefit analysis in Gulf operations

23.76 The Coast Guard has divided the area from Montreal to Newfoundland into three ice zones, each serviced by a separate region. The Laurentian, Maritimes and Newfoundland regions each have their own icebreaking fleets which they deploy according to the demands of vessels operating in regional waters. Typically, within a region, an icebreaker may be assigned to a specific geographic sector. However, the Coast Guard was unable to provide us with a national strategy for the three contiguous regions serving the Gulf, or a plan which treated the icebreaking fleet as one Eastern fleet whose deployment could take advantage of the differing regional peak periods.

23.77 In the Laurentian Region, for example, a 1200 class heavy icebreaker is stationed at Quebec from December to March primarily for flood control, a 1200 class vessel is deployed off Matane-Baie Comeau primarily to support a local ferry, and a new 1100 class vessel is deployed primarily in the Saguenay River area to support marine navigation in the winter. Deployment was largely based on ship availability. The Coast Guard was unable to provide us with an analysis which identified the minimum number of vessels necessary to provide the existing service, matched proposed deployment to anticipated ice conditions and vessel traffic patterns, analyzed alternatives to deploying Coast Guard vessels or compared the costs of providing the services with the benefits of year-round access to a given geographic area.

23.78 We analyzed the use of the icebreaker provided to support the ferry in the Matane-Baie Comeau area from the beginning of January to the end of March 1988. Our analysis indicated that the deployment was continuous, but out of an ice season of 1,994 hours, the icebreaker spent 1,470 hours in standby status. In 1987-88 the cost of this level of service decision, using the daily rate for icebreakers deployed at Matane, was $2.7 million for the standby time alone. There was no formal process or rationale for selecting this, or any other site, over other sites in contiguous areas. The Coast Guard was unable to provide us with a front-end analysis of the costs and benefits of providing the service or an analysis of alternatives to the full-time deployment of an icebreaker.

23.79 The situation was similar in the Maritimes Region. There was no documented analysis which identified the minimum number of vessels necessary to provide the existing level of service. The Maritimes fleet contains 11 vessels capable of working in ice -- 3 icebreakers, 4 Navaid tenders with limited icebreaking capability, one ice strengthened vessel and 3 vessels restricted to open water unless absolutely necessary. Only 5 made a major contribution to the 1987-88 icebreaking season; yet, according to the Coast Guard's long term investment plan, all 11 are scheduled to be eventually modernized or replaced with vessels with enhanced icebreaking capability.

Alternative deployment strategies for the Arctic not explored

23.80 In the Eastern Arctic program in 1987, we found that seven ships were deployed for a total of 652 days. Exhibit 23.9 sets out the tasks the ships performed during the season.

(Exhibit not available)

23.81 We were informed that the Coast Guard's main objective is to maximize vessel availability in the Eastern Arctic. The Coast Guard continues to follow historic patterns of sending all available icebreakers to the Arctic every summer. As a result, they report that high standby time is an inherent cost of the program. However, without any obvious natural limits to possible service, a strong analytical capability is important if significant variable costs such as fuel and overtime are to be adequately controlled. The Coast Guard could not provide us with an analysis of whether its Arctic icebreakers on standby might be gainfully employed in such activities as Arctic hydrography or whether, through better scheduling, the number of vessels deployed could be reduced.

23.82 Each year, one of the Western Region's two 1100 class medium icebreakers is deployed in the Western Arctic, primarily to support the aids to navigation program, with incidental icebreaking assistance. The Coast Guard states that, with respect to Western Arctic tasking, the assigned ship's duties remain predominantly related to aids to navigation. The western ships are light icebreakers only and therefore are limited in the amount of ice escort duties they can perform in the severe conditions of the Arctic. Consequently, one 1100 is not available in the south for aids to navigation work during that period. When we reviewed the utilization of the Western Region's Navaids and icebreaking fleet, we found evidence of significant excess capacity. The prospect of leasing icebreakers has been looked at a number of times by the Coast Guard, on both a short- and long-term basis, though not specifically for the western aids to navigation and icebreaking roles. The downturn in oil exploration in the early 1980s resulted in less activity for private icebreakers; they are available for tasks currently performed by the Coast Guard in the Western Arctic. We noted that the Coast Guard has not fully explored this possibility. Exploring this alternative could be timely, given the planned replacement by the Western Region in 1990 of the Class 1000 Douglas at a projected cost of at least $33.4 million.

Fleet replacement needs are not clearly defined

23.83 The Coast Guard has spent about $686 million on the acquisition and modernization of vessels in the 1000-1300 classes since 1983. Currently, it is projecting an expenditure of $95 million on modernizing the Class 1300 Louis S. St. Laurent and $10.1 million on the Class 1100 Bernier, neither of which have played a major role in the icebreaking programs of their regions in the past five years. In the absence of defined costs, benefits and levels of service, we concluded that it is impossible to determine the impact on the icebreaking program of including or excluding these vessels. At present the Coast Guard has 32 vessels capable of working in ice. Yet when we looked at regional utilization for 1987-88, which was a heavy ice season, we found that only 13 out of 28 vessels in the regions we examined made a substantial contribution to the icebreaking program. The Coast Guard states that to provide icebreaking assistance, eight heavy icebreaking vessels are employed and complemented by those aids-to-navigation vessels that have icebreaking capability.

(Photo not available)

23.84 In summary, we concluded that the Coast Guard does not know precisely enough what its needs are for icebreakers. Given that each has a replacement value of up to $110 million and an annual operating cost of over $5 million, an overstatement of need by only one vessel would be costly.

23.85 The Coast Guard should develop criteria and procedures for analyzing competing demands for icebreaker deployment and setting priorities to ensure that its vessels are deployed where needed most.

Department's response : The Levels of Service Framework, presently under development, will address the Auditor General's concerns. The Department notes that this has been a complex task due to variability of service demands, annual weather/ice conditions, and geographic diversity.