The report you have heard is incorrect. What this is probably related to is the Government Accountability Office in the US stating that in their opinion the progress on launching more Block IIF and Block IIIA SVs is behind where it should be due in part to changes in project management.
At present there are 31 SVs in orbit, of which 24 are required for a full constellation so there are in-orbit spares.
Provided that the launch schedule does not slip further, it is unlikely that significant degradation of coverage will occur.
There is no intention to turn on the Selective Availability feature, it was turned off for good in May 2000 because ways of denying GPS usage in a given area have been developed.
Last edited by Feathers McGraw; 21st May 2009 at 11:55.
Reason: Correct GAO wording