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Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program (2021)

Chapter:3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program

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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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47 The investigations of the El Faro sinking identified a number of factors causing and contributing to the casualty and its severity. In responding to the Marine Board of Investigation’s report, the Commandant of the U.S. Coast Guard (Coast Guard) emphasized that the most prominent factor was the shipmaster’s decision to sail the ship into a hurricane.1 However, the Commandant acknowledged that the Coast Guard should have done more to ensure that minimum standards for safety had been met and followed, including those pertaining to the Alternate Compliance Program (ACP) in which the El Faro had been enrolled. In this regard, the Commandant concluded that As the lead agency of the U.S. flag administration, the Coast Guard is ultimately responsible for monitoring the performance of third parties’ delegated functions and also to guarantee the effectiveness of vessel inspec- tions and surveys. Yet, the Coast Guard failed to adequately oversee the third party in this case, and the investigation reveals that the Coast Guard has not sustained the proficiency and policy framework to do so…. The Coast Guard must, and will, develop a risk-based and enduring policy framework that is simpler to execute and enables more robust oversight of delegated functions. 1 Zukunft, ADM P. F. 2017. Steam Ship El Faro (O.N. 561732) Sinking and Loss of the Vessel with 33 Persons Missing and Presumed Deceased Northeast of Acklins and Crooked Island, Bahamas, on October 1, 2015. U.S. Coast Guard, December 19. https://media.defense.gov/2017/ Dec/21/2001859858/-1/-1/0/EL%20FARO%20FINAL%20ACTION%20MEMO.PDF. 3 Coast Guard Actions to Support and Oversee Recognized Organizations and the Alternate Compliance Program

48 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs The Statement of Task calls for the study committee to examine the actions planned and taken by the Coast Guard since the El Faro casualty in response to the findings and recommendations from the investigations per- taining to the Coast Guard’s oversight of recognized organizations (ROs) and the ACP. This chapter, therefore, presents the relevant findings of the investigations by the Marine Board of Investigation and the National Transportation Safety Board (NTSB) in greater detail than discussed in Chapter 1. This is followed by a review of the two boards’ specific recom- mendations to the Coast Guard. In the case of the Marine Board of Inves- tigation, the Commandant, in the final action memorandum, responded to each recommendation, usually by agreeing to certain actions.2 These actions are discussed. Although it enumerates many specific actions in response to each of the more than three dozen recommendations by the Marine Board of Investi- gation, the Commandant’s final action memorandum does not contain a program-level description of how the actions complement one another and fit together to strengthen the Coast Guard’s support for and oversight of ROs and the ACP. The chapter concludes, therefore, by providing such a summary, considering the many the steps taken by the Coast Guard and where progress has been fast paced, modest, or delayed. RELEVANT FINDINGS FROM THE EL FARO INVESTIGATIONS The series of findings, both by the Marine Board of Investigation and the NTSB, that prompted the Commandant’s acknowledgment of faults in the Coast Guard’s implementation of the ACP and oversight of ROs can be summarized as follows: Lack of Coast Guard Policies, Organizational Structures, and Data Tools and Metrics to Oversee Recognized Organization Performance El Faro investigators found that the Coast Guard had no formal procedures to oversee and assess the performance of the ROs with respect to their ACP- delegated functions, nor did the Coast Guard have methods in place to hold ROs accountable for substandard inspections and audits. In the case of RO audits of a vessel’s and company’s safety management system (SMS), Coast Guard marine inspectors sometimes attended the audits as observers but lacked the direct authority and capabilities to make findings or identify non- conformities. Furthermore, shortcomings (as cited below) in the completeness and accessibility of data on vessel compliance and condition history made it difficult for Coast Guard personnel to consult records to assess an RO’s 2 Zukunft, ADM P. F. 2017. Steam Ship El Faro (O.N. 561732).

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 49 performance and to make appropriate changes to the frequency and scope of oversight examinations of ACP vessels. Investigators noted that the Coast Guard had estab lished a process for targeting certain ACP vessels for more frequent and extensive oversight examinations. While this process could have been used to target RO oversight (i.e., by giving extra attention to the perfor- mance of ROs responsible for surveying the riskiest vessels), it was not being used for this purpose. Updates to vessel records in the Coast Guard’s Marine Information for Safety and Law Enforcement (MISLE) database3 were not being made in a timely and accurate manner. Moreover, many discrepancies and nonconformities with regulatory requirements that were observed by the RO during surveys and audits were not being recorded in the database. Insufficient Recording of and Access to Data on Vessel Condition, Compliance, and Casualty Histories to Support Recognized Organization Surveyors and Coast Guard Inspectors in Verifying Vessel Compliance The El Faro investigators found that records of ACP vessel condition and compliance histories were dispersed among multiple databases, making it difficult for Coast Guard inspectors and RO surveyors to obtain a complete picture of a vessel’s condition and compliance history. Coast Guard inspec- tors routinely use MISLE to search for vessels that have pending inspection dates. The database generates a “Vessel Critical Profile” that also contains information on an inspected vessel’s characteristics, investigations, and certificates issued and their status. Prior to an oversight examination, the Coast Guard inspector will consult MISLE for the vessel’s inspection his- tory, including records of deficiencies. Upon completion of the examination, the inspector will then log the results in the database.4 The findings then become part of the vessel’s history. However, in the case of ACP vessels, the deficiencies identified by field inspectors were being reported to the RO but not logged into MISLE. Consequently, Coast Guard inspectors conducting subsequent oversight examinations had to take the extra step of consulting 3 MISLE is the Coast Guard’s primary information system used to collect, store, and report operational information across all of the Coast Guard’s 11 statutory missions except Ice Operations and Defense Readiness. The system, released in 2001, is the result of merging the Marine Safety Information System (MSIS) and the Law Enforcement Information System (LEIS). The Search and Rescue Management Information System (SARMIS) was subsequently added to MISLE in 2003. Today, MISLE contains more than 4 million records of vessels, facilities, organizations, and people, and it supports more than 11,000 users. MISLE contains information on about 650,000 domestic and foreign-flagged vessels, including nearly 80,000 commercial fishing vessels and about 3,400 shore facilities regulated under the Maritime Transportation Security Act of 2002, among other information. 4 The inspector categorizes the inspection for each of 18 categories, such as certificates and documentation, structural, or fire safety. For each system, the marine inspector identifies the in- spection results as “Inspected Satisfactory,” “Inspected with Deficiencies,” or “Not Inspected.”

50 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs two data systems, MISLE and the RO’s records. Not only did this extra step add more work and complexity to the process, but it also depended on the RO’s diligence in recording and retaining information from Coast Guard reports of vessel condition and compliance. While Coast Guard inspectors can access RO databases, investiga- tors questioned whether field inspectors were regularly doing so prior to examinations, pointing to a lack of written guidance to do so. Meanwhile, the investigators raised concern about ROs not having sufficient informa- tion to inform their own work. The Coast Guard restricts access to MISLE records by outside parties, including ROs. Therefore, unlike Coast Guard field inspectors, RO surveyors must use the publicly available information in the Maritime Information Exchange, Port State Information Exchange (PSIX). PSIX has only a limited number of data fields that do not provide details on the types of deficiencies recorded. Shortcomings in the Guidance, Competencies, and Qualifications of Recognized Organization Surveyors and Coast Guard Marine Inspectors and Their Communications for Verifying Vessel Compliance During their investigations of the El Faro, Marine Board of Investigation and NTSB investigators learned that several ACP vessels that had success- fully completed RO surveys and Coast Guard oversight examinations had serious safety deficiencies that had gone undetected. These deficiencies were found later during special inspections conducted by experienced Coast Guard traveling inspectors. In the case of El Faro, investigators concluded that several factors contributing to its loss were related to the vessel’s physical and mechanical condition that may have been detected during a thorough survey, or potentially observed during an oversight examination. Furthermore, inadequacies in the SMS of the El Faro’s operator and limita- tions in the crew’s understanding of the SMS were not flagged by the RO when verifying conformity with the requirements of the International Safety Management (ISM) Code. On the basis of these findings that brought into question both the quality of the RO’s performance and the Coast Guard oversight, investiga- tors raised concerns about the qualifications, knowledge, and training of inspectors, surveyors, and auditors. They pointed to the challenges asso- ciated with surveyors and inspectors having to be familiar with RO U.S. Supplements that were not being kept up to date in a timely manner, a particular challenge for Coast Guard inspectors requiring familiarity with multiple supplements. They also pointed to the challenges arising for older ACP vessels that had legacy technologies (e.g., steam propulsion) and that were not always subject to the most recent regulatory requirement due to the grandfathering allowances discussed in Chapter 2.

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 51 The investigators also found shortcomings in coordination among Coast Guard marine safety personnel and the ROs. According to Coast Guard policy, a Coast Guard officer was supposed to serve as a liaison to each RO, thereby providing a centralized point of contact for RO surveyors and Coast Guard inspectors. The liaison’s role, for instance, involved coordi nating joint inspections where circumstances warranted. However, it was determined that the Coast Guard had not been assigning liaison officers for a number of years because the billet had been eliminated in 2012. In addition, because vessel owners were often providing ROs with short notice for the conduct of surveys, Coast Guard inspectors often had little or no advance notice of them, further reducing the potential for consultations before surveys or for the arrangement of joint inspections. INVESTIGATION RECOMMENDATIONS AND THE COAST GUARD’S RESPONSES Based on its findings from the El Faro, the Coast Guard’s Marine Board of Investigation issued more than three dozen recommendations, including a number pertaining directly to the Coast Guard’s support for and oversight of the ACP and the vessels and ROs in the program. The relevant recom- mendations are paraphrased next, followed by the Commandant’s agreed to actions in response to each. Policies, Organizational Structures, and Data Tools and Metrics to Oversee Recognized Organization Performance Three key recommendations from the Coast Guard’s Marine Board of Investi gation follow: • The Coast Guard should conduct quality audits of ROs regarding their performance, and the marine safety personnel conducting them should be fully trained and certified to conduct such audits (part of Safety Recommendation 21). • The Coast Guard, to increase RO performance and oversight trans- parency, should publish an annual report of U.S. flag vessel com- pliance that includes no-sail rates for each type of inspected vessel and a methodology for associating a no-sail control action with an RO for vessels found to have deficiencies or major nonconformities that were not previously identified during an RO survey (Safety Recommendation 23). • The Coast Guard should consider creating a Third-Party Over- sight National Center of Expertise or Third-Party Oversight Office within Coast Guard Headquarters to conduct comprehensive and

52 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs targeted oversight of ROs and other third-party organizations (TPOs). The new unit should be staffed with highly trained in- spectors with subject-matter expertise, investigators, and other personnel with the capability and authority to audit all functions delegated to ROs and other TPOs (Safety Recommendation 30). To inform decisions about the frequency and scope of vessel oversight exams and the Coast Guard’s attendance at SMS audits by ROs, the Com- mandant agreed to employ risk-based and data-driven methods. These methods would be enabled through enhancements to MISLE, refinements to existing risk models, and the establishment of key performance indicators (KPIs). The KPIs would be used along with trend analyses to direct addi- tional oversight of ROs. Relevant vessel compliance and RO performance statistics would be published in an annual flag-state vessel compliance report to increase transparency of Coast Guard oversight activities. Additionally, the Commandant agreed to establish a process for verify- ing ROs’ quality management system (QMS) for the proper execution of delegated functions through the use of vertical contract audits conducted by Coast Guard personnel trained and certified to conduct such audits. With regard to establishing a unit responsible for RO and third-party oversight, the Commandant agreed to consider the idea of a Headquarters office and other organizational options. Complete, Accurate, and Accessible Vessel Records To support the planning and work of field inspectors and other marine safety personnel, the Marine Board of Investigation recommended the following: • The Coast Guard should add data fields to MISLE for document- ing deficiencies that marine inspectors refer to the RO for inclusion in its database to ensure that vessel compliance history is fully documented and accessible to Coast Guard marine inspectors and investigators (Administrative Recommendation 4). In response to this recommendation, the Commandant agreed to up- grade and enhance MISLE to support the capture, tracking, and analysis of key data, including deficiencies issued by field inspectors for ACP vessels. In addition, the Commandant expected that these upgrades would support the Coast Guard’s development of KPIs for monitoring ROs, as noted above.

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 53 Marine Inspector and Recognized Organization Surveyor Guidance, Competencies, Qualifications, and Communications The Marine Board of Investigation made the following five additional rec- ommendations pertaining to workforce and communication issues: • The Coast Guard should require RO surveyors to complete an assess ment process for each type of delegated activity to ensure that surveys and audits meet Coast Guard standards (Safety Recom- mendation 24). • The Coast Guard should add an Advanced Journeyman Inspector course to cover RO oversight, auditing responsibilities, and the inspection of unique vessel types. The course should be required for senior Coast Guard marine inspectors and made available to RO surveyors (Safety Recommendation 26). • The Coast Guard should eliminate the use of multiple U.S. Supple- ments (Safety Recommendation 22). • The Coast Guard should develop and implement policies (including in NVIC 2-95 and Marine Safety Manual Volume II) to make clear that it has a shared responsibility to assess the adequacy of a com- pany’s SMS and its implementation (Safety Recommendation 15). • Marine inspectors should attend audits conducted by ROs verifying vessel and company SMSs and their implementation (i.e., Safety Management Certificates and Documents of Compliance) (part of Safety Recommendation 21). In response to these recommendations, the Commandant agreed to work with ROs to create a single U.S. Supplement focused on critical safety systems, acknowledging that multiple supplements created confusion. The Commandant also stated that the Coast Guard would establish a new Advanced Journeyman Inspector course to provide advanced training on alternative inspection programs, third-party oversight, auditing principles, and other advanced and contemporary topics (alternative fuels, ballast water management systems, dynamic positioning systems, etc.). To fur- ther improve knowledge, communication, and coordination among Coast Guard marine inspectors and ROs, the course would be made available to RO surveyors and other third-party representatives. Regarding inspector knowledge of SMS, the Commandant agreed to provide supplemental guidance on the development, implementation, and verification of SMSs; ensure that Coast Guard marine safety personnel are trained to perform SMS audits; and create a process for marine inspectors to attend SMS verification audits and identify potential nonconformities for referral to the RO for resolution.

54 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs IMPLEMENTATION OF AGREED-TO OVERSIGHT ACTIONS The Commandant’s final action memorandum was issued on December 19, 2017, shortly after the Marine Board of Investigation and the NTSB issued their recommendations. It spawned a number of changes, or plans for changes, in Coast Guard policies, procedures, and programs. Based on information provided by the Coast Guard and document reviews, these changes are summarized next, grouped according to the main categories of investigation findings as referenced above. The changes are described, including clarifications provided by the Coast Guard in briefings and writ- ten replies to committee questions. More detailed assessments of several of them are provided in later chapters. It merits noting that some of the changes were made in response to mandates by Congress following the El Faro investigation findings. Ad- ditionally, some changes were at least partly in response to other external considerations such as that the Coast Guard take further steps to imple- ment International Maritime Organization (IMO) guidance for conformity to the RO Code. Policy, Organizational Structures, and Data Tools and Metrics to Oversee Recognized Organization Performance In the final action memo, the Commandant agreed to consider the establish- ment of a Third-Party Oversight Office, introduce a process for verifying the ROs’ QMS for the proper execution of delegated functions through ver- tical contract audits by Coast Guard personnel, employ risk-based methods and KPIs for oversight of vessel compliance and RO performance, and pub- lish an annual flag-state vessel compliance report for increased transparency of Coast Guard oversight activities. The following steps have been taken in fulfillment of these agreements. New Organizational Structures, Personnel, and Policies and Processes for Oversight In July 2018, the Coast Guard created the Flag State Control Division (CVC-4) in the Office of Commercial Vessel Compliance. CVC-4’s role is to • Monitor and assess U.S. flag-state performance for vessels enrolled in alternate inspection programs; • Maintain policy, procedures, and guidance to ensure that ROs comply with IMO and Coast Guard requirements through over- sight, auditing, and monitoring; and

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 55 • Provide liaison direction to all ROs in support of the ACP and other vessel compliance programs that require oversight of TPOs (in ad- dition to providing oversight of ACP, CVC-4 provides oversight of other programs in which TPOs perform delegated functions). In support of this role, the Coast Guard created the new civilian posi- tion of TPO coordinator. According to the position’s job description, the coordi nator is responsible for leading inspection teams during complex exams, serving as a subject-matter expert for oversight of third parties fulfill- ing delegated functions pertaining to international requirements (including observation of ISM Code audits), leading vertical contract audits (explained below), and conducting trend analyses and quality reviews of MISLE data. The Coast Guard indicated that its plan is for every OCMI zone to have a coordinator, with early hires (19 billets) deployed on the basis of ACP/MSP and Subchapter M workloads along with how well the sector was currently staffed with respect to the Coast Guard’s Sector Staffing Model. According to the Coast Guard in its briefings and written submissions to the study committee, the creation of the CVC-4 and the dedicated staff of TPO coordinators that liaison and work with ROs is the most signifi- cant step that has been taken in response to the El Faro findings. CVC-4 personnel and TPO coordinators are said to engage in direct and regular communications with the Coast Guard inspection offices and with ROs and operating companies to identify, resolve, and prevent issues. Additionally, the committee was informed that field inspection activities are routinely reviewed by the TPO coordinators for accuracy, and when discrepancies are found, the coordinator will initiate a process to document and ensure that appropriate corrective actions are taken. In response to concerns about the Coast Guard not having a formal policy for ACP and RO oversight, the Coast Guard issued a third update to NVIC 02-95 shortly after creating CVC-4. The update further defined the responsibilities of vessel owners and operators enrolled in the ACP, ROs that perform delegated functions, and the CVC-4 and other Coast Guard organizational units (e.g., traveling inspectors, districts, and OCMI) in managing, overseeing, and monitoring the program. The updated NVIC advises on the use of new documents and products for ACP policy guidance and processes, including a series of new work instructions created under the Mission Management System (MMS).5 The work instructions, which provide ACP-related written guidance for Coast Guard field inspectors and for RO surveyors and auditors, are described below. The NVIC also refer- ences a new “ACP Tactics, Techniques, and Procedures (TTP) publication, 5 See https://www.dco.uscg.mil/Our-Organization/Assistant-Commandant-for-Prevention- Policy-CG-5P/Inspections-Compliance-CG-5PC-/Commercial-Vessel-Compliance/CVCMMS.

56 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs intended to be a consolidated source of guidance for Coast Guard personnel conducting ACP examinations, to promote understanding and consistency of interpretation and implementation.6 Notably, the TPP provides guidance on the following activities for compliance verifications and oversight by marine inspectors with respect to vessels enrolled in ACP: • Preexamination activities, including vessel record reviews (consult- ing compliance history in MISLE, RO findings and observations from surveys, and RO records related to ISM audits), review of certificates, and composition of the inspection team to ensure that members have the appropriate competencies for the vessel type; • Examination activities, including items that should be within the scope of the annual oversight examination and reasons for an ex- panded examination, documenting and reporting deficiencies (in Form CG-835V) to the RO to oversee the corrective action, and using the inspection as an opportunity to evaluate the effectiveness and implementation of the SMS; • Postexamination activities, including reporting deficiencies and other observations and findings in MISLE (including narrative content and information captured from SMS evaluations) and, if warranted, to initiate a “quality case,” as discussed below. CVC-4 introduced the following ACP-relevant processes along with written work instructions (WI) to guide Coast Guard marine safety person- nel and ROs, as well as compliance by vessel owners and operators: • CVC-WI-003: “Oversight of Safety Management Systems on U.S. Flag Vessels.” This instruction provides guidance for assessing the effectiveness of a company’s SMS through evaluation of materiel, SMS documentation, and internal and external SMS audits. • CVC-WI-004: “Interpretations on the ISM Code.” This instruc- tion provides guidance on the application and implementation of the ISM Code, including Coast Guard monitoring of compliance during regular vessel inspections, the establishment of objective evidence of nonconformities, and the major elements and require- ments of the ISM Code. • CVC-WI-005: “Quality Case.” This instruction provides guidance about when the Coast Guard, based on observations suggesting that an RO is not adequately performing required functions, can 6 See https://www.dco.uscg.mil/Portals/9/DCO%20Documents/5p/CG-5PC/CG-CVC/MIR/ JobAids/Domestic/ACPMSP/ACPTTP.pdf.

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 57 require the RO to conduct an internal review of its QMS to deter- mine appropriate corrective action. • CVC-WI-008: “Vertical Contract Audits.” This instruction sets up the protocols and criteria for Coast Guard personnel to conduct audits to independently verify that ROs have established and are faithfully following a QMS when performing functions on behalf of the Coast Guard. CVC-4 is responsible for requesting a quality case, requiring any addi- tional ISM audits and verifications by the RO if there is evidence of SMS failure, and initiating and conducting vertical contract audits. Asked by the study committee for more details on implementation of these new policies and processes, the Coast Guard reported that from 2018 to 2020, it aver- aged about six quality cases per year. With respect to oversight of SMS, the Coast Guard emphasized that field inspectors do not conduct ISM audits and they continue to attend RO-led audits as observers. The committee was informed that, in general, marine safety personnel will only attend audits “for cause,” such as when SMS-related deficiencies are identified during a Coast Guard safety inspection or if the vessel or a company is listed on the annual fleet risk index for additional oversight (discussed below). The Coast Guard reported that CVC-4 has not established explicit criteria to trigger an audit, but that that four vertical contract audits have been conducted since 2018, impacted in part by limitations on travel due to the pandemic. These quality case audits, as well as ISM audits attended by Coast Guard personnel and vertical contract audits conducted by the Coast Guard, are recorded in the MISLE database in a newly created Management System Oversight (MSO) activity module (discussed later). In addition to issuing these new policies, processes, and associated guidance, CVC-4 maintains an ACP Vessel Group list, which it consults to verify that annual inspections have been performed on vessels in the fleet. To support marine inspectors and ROs, CVC-4 convenes an annual conference for inspectors to provide more information on programs that involve third party delegations. And to increase inspector awareness of policies and procedures related to ACP (and other inspection programs that delegate services to third parties), CVC-4 convenes quarterly meetings and an annual summit with ROs for discussions and the exchange of ideas. CVC will circulate a monthly note and hosts telephone calls with the Chief, Inspections Division (CID) to discuss any new policies and interpretations and to allow CIDs to ask questions when further clarifications of policy and requirements are needed.

58 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs New Data Tools and Metrics for Recognized Organization Oversight CVC-4 has many responsibilities related to data metrics and tools, includ- ing the publication of the annual report containing flag-state control per- formance statistics, the development of KPIs for RO performance, and the establishment of the fleet risk index for the prioritization of inspections and to determine whether special inspection campaigns are warranted. The annual report Flag State Control in the United States7 contains several statistics that CVC-4 characterizes as being KPIs for vessel safety and compliance and RO performance. In addition to these publicly reported statistics, the Coast Guard informed the study committee that it has devel- oped six other KPIs that it does not report publicly but uses internally. Be- cause Chapter 4 discusses these statistics and KPIs, they are not listed here. CVC-4 has also established requirements for ROs to generate quarterly reports (not reported publicly) that list statutory survey findings for U.S. vessels (deficiencies and conditions of classification and surveyor observa- tions) and audit findings to include all nonconformities and observations. However, the Coast Guard informed the committee that it has encountered challenges in integrating and comparing data fields provided by each RO; for example, because findings are in narrative format, they can be difficult to search and categorize with consistency. The Coast Guard stated it is working with ROs on seeing if more consistent, detailed data can be pro- vided to use in developing KPIs to assess vessel risk and RO performance. The Coast Guard also indicated that it is working on developing new and more substantive KPIs, but that it needs more time to do so in collaboration with ROs. The long-term goal of the collaboration is to be able to provide ROs, as well as vessel companies, with trend analyses of their performance and to increase the amount and quality of the public-facing information in the annual report. CVC-4 is responsible for developing a “Fleet Risk Assessment List” that contains 10 percent of the ACP fleet. The list, which is not made public, is developed through a prioritization process that identifies vessels considered to pose a greater risk warranting more scrutiny for inspections and evaluations of RO performance. Listed vessels are attended by traveling inspectors and local field inspectors for additional oversight. CVC-4 also observes annual Document of Compliance (DOC) audits of companies that operate vessels on the list and that are selected for additional oversight of compliance with the ISM Code. CVC-4 applies a “lookout” marker to the vessel’s MISLE record that marine inspectors will notice when preparing for inspections. The Coast Guard emphasized, however, that the presence 7 See https://www.dco.uscg.mil/Our-Organization/Assistant-Commandant-for-Prevention- Policy-CG-5P/Inspections-Compliance-CG-5PC-/Commercial-Vessel-Compliance/Domestic- Compliance-Division/CVC1AnnualReport.

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 59 of such a marker does not necessarily mean a vessel is not in compliance or substandard. Although all of the risk criteria and weightings used to develop the Fleet Risk Assessment List could not be verified by the committee due to certain sensitive information, they are known to include vessel age and records of deficiencies, marine casualties, and port-state control deten- tions. The Coast Guard noted that its development of the list is compli- cated by the need to obtain data from multiple sources, including MISLE and major nonconformities and detentions recorded in foreign port-state control data systems. Factors complicating the list’s development are discussed below. Complete, Accurate, and Accessible Vessel Records The Commandant agreed to upgrade and enhance MISLE to support the capture, tracking, and analysis of vessel histories to support ACP vessel in- spection and compliance activities. The actions were agreed to in response to investigator recommendations for sharing of data by field inspectors and RO surveyors, including adding more data fields to MISLE for document- ing nonconformities and deficiencies that Coast Guard marine inspectors usually refer to the RO. As noted above, one specific response by CVC-4 intended to implement the actions was the new MSO module in MISLE that documents all quality cases, ISM audits attended by Coast Guard personnel, and vertical contract audits. The kinds of management system activities that are recorded in the MSO module are listed in Box 3-1. Note, however, that any activity the Coast Guard does not observe is not automatically entered into the MSO because MISLE does not have a means for external access. As a result, activ- ity reports provided by an RO, such as on SMS audit results, would need to be manually entered by Coast Guard personnel to develop a complete picture of the vessel’s compliance history. Apart from the new MSO module in MISLE, few other improvements to data records and their integration, sharing, and ease of access could be identified by the committee. Data entry into MISLE can be cumbersome for inspectors, including the entry of detailed narratives to adequately docu- ment a vessel’s compliance. The committee was informed by CVC-4 that it is working with the Coast Guard’s Operations Systems Center unit to make data entry more efficient through means such as drop-down menus, but funding constraints and system limitations persist. Indeed, the Coast Guard reported to the committee that for these and other reasons it has not made progress in improving MISLE. The dispersion of vessel data across multiple data systems remains prob- lematic. While the Coast Guard continues to have access to RO databases

60 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs for reviewing U.S. vessel information,8 some steps have been taken to facili- tate access by marine inspectors in the field. Meanwhile, ROs continue to have limited access to certain MISLE fields, because they still must obtain information from the database’s public version (PSIX). Hence, if a Coast Guard marine inspector issues a deficiency during an inspection, particu- larly if that deficiency affects a certificate issued by the RO, it is incumbent on the marine inspector to notify the RO and provide the relevant details. Likewise, if deficiencies relating to possible SMS failures are identified by the RO surveyor (and recorded by the RO in an International Associa- tion of Classification Societies [IACS] PR-17 form), they are validated and shared with CVC-4 through other means such as e-mail exchanges. CVC-4 will then manually enter the PR-17 in MISLE via a Management System Oversight activity. Incompatibilities among databases and their structures persist, including variability in how data are recorded and categorized. For example, a failure on a generator may be categorized by one RO as an equipment failure and another as an electrical failure, while the Coast Guard’s system- and subsystem-based categorization can differ as well. 8 Approximately 90 percent of the U.S. fleet is classed with ABS and a small percentage with DNV. Field inspectors have access to both of these RO databases to retrieve vessel data. BOX 3-1 Activities Recorded in MISLE Management Oversight Module • Additional Document of Compliance (DOC) verification, • Annual DOC verification, • Initial/renewal DOC verification, • Additional Safety Management Certificate (SMC) verification, • Intermediate SMC verification, • Initial/renewal SMC verification, • QMS oversight (ACS, RO, and TPO), • Vertical contract audit, • Quality case, • Member-state audit scheme, • International Association of Classification Societies (IACS) PR-17 tracking, • Delegations, • TPO (Subchapter M) application, • TPO compliance audit, • Towing Safety Management System (TSMS) management audit, • TSMS vessel audit, and • Targeted TSMS audit.

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 61 MISLE’s shortcomings also hinder the Coast Guard’s oversight of vessel compliance and RO performance in other ways. For instance, because of their absence from MISLE, records of vessel compliance from foreign port-state control inspections must be obtained by Coast Guard personnel on external data systems (e.g., the Paris Memorandum of Understanding [MOU] Equasis database). The data in MISLE are also difficult to extract and manipulate. The ACP vessel group list, for example, is maintained manually by CVC-4 as vessels are enrolled, reflagged, or scrapped. As a result, maintaining the list for reference by Coast Guard inspectors and ROs is labor intensive and subject to errors if proper notifications are not made. In another example of this problem, when the ROs supply their requested quarterly performance reports, as discussed above, they do so in different formats due to vagaries of their own databases, and these data are not entered into MISLE. When asked to describe ongoing efforts and plans to address many of the persistent issues identified above, the Coast Guard pointed to sev- eral relevant initiatives. Regarding field inspectors having easier access to MISLE, the Coast Guard noted that while all inspectors have access to com- puters, it has begun deployment of the MISLE Mobility App (INSPECT). The app is being made available to all marine inspectors. Equipped with cellular-connected mobile devices, the inspectors can use the app to access vessel records in the field rather than only at a work station. When asked to estimate a timeline for integrating Coast Guard and RO databases, or to permit their respective software to interact, the Coast Guard responded that this is expected to be a high priority for its compre- hensive, multi-year review of operational and mission support requirements and capability gaps. Still in its early stages, this review is expected to inform the development of a modernized data system to replace MISLE as well as other legacy data systems. Marine Inspector and Recognized Organization Surveyor Competencies, Guidance, Qualifications, and Communications The Commandant agreed to enhance inspector training on alternative inspec- tion programs, third-party oversight, and auditing principles; to ensure that Coast Guard marine inspectors attend more SMS audits and are instructed and able to identify potential nonconformities for referral to the RO for reso- lution; and to create a single U.S. Supplement focused on critical safety sys- tems to facilitate appropriate Coast Guard field examinations of ACP vessels. As noted above, several work instructions were created by CVC-4 for field inspectors to apply more consistent interpretations of the ISM Code, to require the RO to conduct a review of its QMS, and to establish when a vertical contract audit is warranted. Additionally, the MSO module

62 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs was added to MISLE, and in March 2021, the Coast Guard established a single U.S. Supplement focused on critical safety systems. Collectively, these steps—all agreed to in the final action memorandum—were intended to bring about more effective field inspections and compliance verifica- tions through a combination of more consistent and clearer guidance on procedures and requirements (e.g., relevant work instructions, the single supplement), more readily available information sources (MSO module), and better communications (CVC-4 hosted conferences and workshops for inspectors and supervisors). The study committee, therefore, asked the Coast Guard to explain how its inspector workforce, including training programs and qualification requirements, had been changed to support the effective implementation of these actions. According to information provided by the Coast Guard, about two dozen new marine inspector billets have been added since the El Faro investi gations. Nevertheless, the Coast Guard indicated that there remains a need for more inspectors, especially Advanced Journeymen inspectors. In 2018, the Coast Guard established an Enlisted Marine Inspector Training Program, which is aimed at developing enlisted members with inspector training and promotion opportunities to Chief Warrant Officer. The train- ing has been modified to address the new policy and guidance from CVC-4, while new performance qualification standards are being added to outline the on-the-job training requirements. The committee was reminded that ACP vessels (as well as those in MSP Select) account for only a small percentage of an inspector’s assignments, and therefore that training programs must also meet broader requirements for needed inspector skills, knowledge, and competencies. To this end, a new project on the Marine Inspector Performance Support Architecture (MIPSA) has been tasked with undertaking a holistic analysis of the exist- ing inspection workforce and future learning and training requirements. The committee was informed that an Advanced Journeyman continuing education program is under development as part of MIPSA. This program will include a self-paced e-learning course to assist marine inspectors in understanding their role in oversight. Another relevant course under devel- opment is an e-learning course on SMS that will address the ISM Code for ACP oversight and other applications. With regard to developing auditing proficiencies, the Coast Guard indicated that because field inspectors are not expected to be auditors, there is no plan for them to receive audit train- ing. However, procedures for attending and conducting oversight during SMS-related audits by ROs are under development in CVC-4. Finally, the Coast Guard reported the addition of a Sector Commander/ OCMI course with more content related to the ACP and oversight of functions delegated to third parties. In its 2018 inaugural year, the 10-day Sector Commander course devoted 1 day to discussing OCMI and vessel

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 63 inspection content to include the ACP. In 2019, the course added 2 addi- tional days to discuss OCMI and vessel inspection content that included third-party oversight and risk-based inspection prioritization. The course also included a case study on the El Faro. In 2020 and 2021, because of the pandemic, the course had to be condensed when converted to an online course, resulting in the loss of some of this content. However, the Coast Guard indicated that it plans to resume the full offerings when the course resumes in 2022. SUMMARY Figure 3-1 summarizes the Coast Guard’s response to the findings and recommendations from the El Faro investigations with respect to the three main areas of concern detailed in this chapter—(a) ACP and RO oversight policies, organizational capabilities, and metrics; (b) data on ACP vessel compliance histories and RO performance; and (c) inspector and surveyor competencies for verifying regulatory compliance by ACP vessels and their operators. It is apparent from the summary that the Coast Guard’s response has centered largely on addressing the shortage of Coast Guard policies, organi- zational structures, and processes to support the ACP and its oversight. In this regard, the Coast Guard’s progress has been noteworthy but uneven. Over a relatively short period of time, the Coast Guard has made significant strides in creating a Flag State Control Division (CVC-4), new TPO coor- dinator positions, and the introduction of new work instructions. Progress to date in developing a suite of RO oversight metrics and a fleet risk assess- ment model, however, has been relatively slow and inconsistent with the actions agreed to by the Commandant after the El Faro investigations. There are, of course, many interconnections and synergies among the measures taken—for instance, inspector training in SMS enables more effec- tive implementation of the SMS work instructions, while the data contained in the new MSO module of MISLE may also facilitate more effective SMS oversight by Coast Guard field inspectors and other marine safety person- nel. However, in comparison to the accomplishments made in creating the CVC-4 and introducing new oversight policy and guidance documents, the Coast Guard has made limited headway in building the competencies and qualifications of field inspectors, in verifying competencies and compliance with newly created policy and guidance documents, and in improving the completeness, accuracy, and accessibility of the data used for ACP vessel inspections and surveys. There are many potential reasons for these dis- parities, including vexing issues associated with MISLE record security, incompatibilities in the structure and platforms of the databases of multiple organizations, and the expense and time required to replace legacy data

64 FI G U R E 3 -1 C oa st G ua rd a ct io ns i n re sp on se t o fin di ng s an d re co m m en da ti on s fr om E l Fa ro i nv es ti ga ti on s pe rt ai ni ng t o th e A l- te rn at e C om pl ia nc e Pr og ra m a nd t hi rd -p ar ty o ve rs ig ht . N O T E : A C P = A lt er na te C om pl ia nc e Pr og ra m ; C V C -4 = C oa st G ua rd F la g St at e C on tr ol D iv is io n; M IS L E = M ar in e In fo rm at io n fo r Sa fe ty a nd L aw E nf or ce m en t da ta ba se ; K PI = k ey in di ca to r of p er fo rm an ce ; N V IC = N av ig at io n an d V es se l I ns pe ct io n C ir cu la r; R O = r ec og ni ze d or ga ni za ti on ; SM S = sa fe ty m an ag em en t sy st em .

COAST GUARD ACTIONS TO SUPPORT AND OVERSEE ROs AND ACP 65 systems. The Coast Guard’s marine inspection workforce is large and has a varied set of responsibilities that requires balancing inspector deployments and investments in their training and competency development. The Coast Guard appears to be well aware of the inconsistency in its recent efforts to strengthen its support for and oversight of the ACP and the third-party delegations. As noted above, the Coast Guard indicated to the study committee that the creation of CVC-4 and the new and antici- pated staff of TPO coordinators may be the most significant step taken so far in response to the El Faro investigations. In apparent recognition of the need for comparable progress elsewhere, the study’s Statement of Task asks the committee to give special consideration to some of these other areas, including data analysis and sharing among the Coast Guard and ROs, the functionality and utility of MISLE for overseeing vessel compliance and RO performance, the prospects for introducing a more automated risk- based program for RO oversight, and the marine inspection workforce’s size, training, and competency levels. Hence, in the next two chapters these topics are considered in greater depth and are the subject of several study committee recommendations intended to help the Coast Guard make the progress it desires.

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Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program Get This Book
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Partly in response to a 2015 cargo ship sinking, the U.S. Coast Guard has put in place and proceeded to implement a well-conceived organizational and procedural framework for supporting and overseeing “recognized organizations,” particularly those in the Coast Guard’s Alternative Compliance Program.

TRB Special Report 343: Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program recommends a series of steps the Coast Guard should take to strengthen its support for and monitoring of third-party organizations that conduct vessel inspections on its behalf. The study committee concluded that Coast Guard has made significant strides in introducing a comprehensive oversight framework, but that its long-term effectiveness will depend on more pronounced and sustained progress in improving data systems and communications and coordination among Coast Guard and third-party inspection personnel.

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