Coast Guard
Progress Being Made on Addressing Deepwater Legacy Asset Condition Issues and Program Management, but Acquisition Challenges Remain Gao ID: GAO-05-757 July 22, 2005The Coast Guard has been asserting that its deepwater legacy assets are "failing at an unsustainable rate." After the events of September 11, 2001, the Coast Guard's deepwater missions expanded to include a greater emphasis on ports, waterways, and coastal security. These heightened responsibilities required changes to the Deepwater implementation plan to provide the assets with greater operational capabilities. To address these needs, in 2002, the Coast Guard began a multiyear acquisition program to replace or modernize its deepwater assets that is currently estimated to cost $19 to $24 billion. More recently, it began studying options for replacing or modernizing the assets more rapidly in an effort to avoid some of the costs that might be involved in keeping aging assets running for longer periods. This report addresses three questions related to this effort: (1) How has the condition of the Coast Guard's deepwater legacy assets changed during fiscal years 2000 through 2004? (2) What actions has the Coast Guard taken to maintain, upgrade, and better manage its deepwater legacy assets? and (3) What are the management challenges the Coast Guard faces in acquiring new assets, especially if a more aggressive acquisition schedule is adopted?
Available Coast Guard condition measures indicate that the condition of most Coast Guard legacy aircraft and cutters generally declined during fiscal years 2000-2004, but these measures are inadequate to capture the full extent of the decline in the condition with any precision. GAO's field visits and interviews with Coast Guard staff, as well as reviews of other evidence, showed significant problems in a variety of asset systems and equipment that are not currently captured in the Coast Guard's condition measures. The Coast Guard has already taken actions to help keep its deepwater legacy assets operational. For example, to help meet mission requirements, Coast Guard staff are performing more extensive maintenance between deployments, but even so, aircraft and cutters continue to lose mission capabilities. Responding to these continued concerns, as well as to matters raised during this review and in prior GAO reports, the Coast Guard has begun to explore additional strategies and approaches to better determine and improve the mission capabilities of its legacy assets. These actions include (1) developing a more proactive approach for prioritizing maintenance and capability enhancement projects needed on its legacy assets; (2) developing measures that more clearly demonstrate the extent to which assets' conditions affect mission capabilities; and (3) for one command, proposing a new strategy to sustain one of its oldest classes of cutters. These ongoing efforts, while promising, are too new to allow GAO to assess whether they will allow the Coast Guard to better determine and improve the mission capabilities of its legacy assets. If the Coast Guard adopts a more aggressive acquisition schedule, it will likely continue to face a number of challenges to effectively manage the Deepwater program. GAO has warned that the Coast Guard's acquisition strategy of relying on a prime contractor ("system integrator") to identify and deliver the assets needed carries substantial risks. GAO found that well into the contract's second year, key components for managing the program and overseeing the system integrator's performance had not been effectively implemented. While the Coast Guard has been addressing these problems--for example, putting more emphasis on competition as a means to control costs--many areas have not been fully addressed. A more aggressive acquisition schedule would only heighten the risks.
GAO-05-757, Coast Guard: Progress Being Made on Addressing Deepwater Legacy Asset Condition Issues and Program Management, but Acquisition Challenges Remain
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
July 2005:
Coast Guard:
Progress Being Made on Addressing Deepwater Legacy Asset Condition
Issues and Program Management, but Acquisition Challenges Remain:
GAO-05-757:
GAO Highlights:
Highlights of GAO-05-757, a report to congressional requesters:
Why GAO Did This Study:
The Coast Guard has been asserting that its deepwater legacy assets are
’failing at an unsustainable rate.“ After the events of September 11,
2001, the Coast Guard‘s deepwater missions expanded to include a
greater emphasis on ports, waterways, and coastal security. These
heightened responsibilities required changes to the Deepwater
implementation plan to provide the assets with greater operational
capabilities. To address these needs, in 2002, the Coast Guard began a
multiyear acquisition program to replace or modernize its deepwater
assets that is currently estimated to cost $19 to $24 billion. More
recently, it began studying options for replacing or modernizing the
assets more rapidly in an effort to avoid some of the costs that might
be involved in keeping aging assets running for longer periods.
This report addresses three questions related to this effort: (1) How
has the condition of the Coast Guard‘s deepwater legacy assets changed
during fiscal years 2000 through 2004? (2) What actions has the Coast
Guard taken to maintain, upgrade, and better manage its deepwater
legacy assets? and (3) What are the management challenges the Coast
Guard faces in acquiring new assets, especially if a more aggressive
acquisition schedule is adopted?
What GAO Found:
Available Coast Guard condition measures indicate that the condition of
most Coast Guard legacy aircraft and cutters generally declined during
fiscal years 2000-2004, but these measures are inadequate to capture
the full extent of the decline in the condition with any precision.
GAO‘s field visits and interviews with Coast Guard staff, as well as
reviews of other evidence, showed significant problems in a variety of
asset systems and equipment that are not currently captured in the
Coast Guard‘s condition measures.
The Coast Guard has already taken actions to help keep its deepwater
legacy assets operational. For example, to help meet mission
requirements, Coast Guard staff are performing more extensive
maintenance between deployments, but even so, aircraft and cutters
continue to lose mission capabilities. Responding to these continued
concerns, as well as to matters raised during this review and in prior
GAO reports, the Coast Guard has begun to explore additional strategies
and approaches to better determine and improve the mission capabilities
of its legacy assets. These actions include (1) developing a more
proactive approach for prioritizing maintenance and capability
enhancement projects needed on its legacy assets; (2) developing
measures that more clearly demonstrate the extent to which assets‘
conditions affect mission capabilities; and (3) for one command,
proposing a new strategy to sustain one of its oldest classes of
cutters. These ongoing efforts, while promising, are too new to allow
GAO to assess whether they will allow the Coast Guard to better
determine and improve the mission capabilities of its legacy assets.
If the Coast Guard adopts a more aggressive acquisition schedule, it
will likely continue to face a number of challenges to effectively
manage the Deepwater program. GAO has warned that the Coast Guard‘s
acquisition strategy of relying on a prime contractor (’system
integrator“) to identify and deliver the assets needed carries
substantial risks. GAO found that well into the contract‘s second year,
key components for managing the program and overseeing the system
integrator‘s performance had not been effectively implemented. While
the Coast Guard has been addressing these problems”for example, putting
more emphasis on competition as a means to control costs”many areas
have not been fully addressed. A more aggressive acquisition schedule
would only heighten the risks.
Two Coast Guard Deepwater Legacy Assets in Action:
[See PDF for image]
[End of figure]
www.gao.gov/cgi-bin/getrpt?GAO-05-757.
To view the full product, including the scope and methodology, click on
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(415) 904-2200 or wrightsonm@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Legacy Assets Show Declining Condition, but Measures Are Imprecise and
Fail to Capture Impact on Mission Capabilities:
Actions to Better Manage Legacy Assets Are Under Way, but Effects Will
Not Be Known for Some Time:
Management Challenges Faced in Acquiring New Assets Remain Significant:
Concluding Observations:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Information on Deepwater Legacy Aircraft and Cutters:
HC-130 Long-Range Surveillance Aircraft:
HU-25 Medium-Range Surveillance Aircraft:
HH-60 Medium-Range Recovery Helicopter:
HH-65 Short-Range Recovery Helicopter:
378-Foot High-Endurance Cutter:
270-Foot Medium-Endurance Cutter:
210-Foot Medium-Endurance Cutter:
110-Foot and 123-Foot Patrol Boats:
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Related Products:
Tables:
Table 1: Deepwater Legacy Aircraft and Cutter Fleet, as of early June
2005:
Table 2: Synopsis of Deepwater Legacy Assets' Condition:
Table 3: Estimated Costs for Deferred Maintenance of Deepwater Aircraft
and Cutters, Fiscal Years 2002-2004:
Table 4: Approved Upgrades for Deepwater Legacy Aircraft and Cutters:
Table 5: Summary of Deepwater Areas Needing Management Attention as
Reported by GAO:
Table 6: HC-130 Fleet Performance Data for Fiscal Years 2000-2004:
Table 7: HC-130 Fleet Maintenance Data forFiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Table 8: HU-25 Fleet Performance Data for Fiscal Years 2000-2004:
Table 9: HU-25 Fleet Maintenance Data for Fiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Table 10: HH-60 Fleet Performance Data for Fiscal Years 2000-2004:
Table 11: HH-60 Fleet Maintenance Data for Fiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Table 12: HH-65 Fleet Performance Data for Fiscal Years 2000-2004:
Table 13: HH-65 Fleet Maintenance Data for Fiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Table 14: 378-Foot Cutter Fleet Performance Data for Fiscal Years 2000-
2004:
Table 15: 378-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Table 16: 270-Foot Cutter Fleet Performance Data for Fiscal Years 2000-
2004:
Table 17: 270-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Table 18: 210-Foot Cutter Fleet Performance Data for Fiscal Years 2000-
2004:
Table 19: 210-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Table 20: Patrol Boat Fleet Performance Data for Fiscal Years 2000-
2004:
Table 21: Patrol Boat Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Abbreviations:
AC&I: acquisition, capital, and investment:
CAMS: Capital Asset Management Strategy:
DHS: Department of Homeland Security:
FRAM: Fleet Rehabilitation and Modernization:
HSP: Hull Sustainment Project:
ICGS: Integrated Coast Guard Systems:
IDS: Integrated Deepwater System:
IPT: integrated product team:
MCH: multimission cutter helicopter:
MEP: Mission Effectiveness Project:
POTF: percent of time free:
SINTSS: Systems Integrated Near Term Support Strategy:
United States Government Accountability Office:
Washington, DC 20548:
July 22, 2005:
The Honorable Don Young:
Chairman, Committee on Transportation and Infrastructure:
House of Representatives:
The Honorable Frank A. LoBiondo:
Chairman, Coast Guard and Maritime Transportation Subcommittee:
House of Representatives:
The Honorable Olympia J. Snowe:
Chair:
The Honorable Maria Cantwell:
Ranking Minority Member:
Subcommittee on Fisheries and the Coast Guard:
United States Senate:
The Coast Guard's Integrated Deepwater System (or Deepwater)
acquisition program has experienced several changes since its inception
in 2002. The Deepwater program is intended to be a long-term (20-year)
replacement or modernization of certain legacy assets,[Footnote 1] many
of which are at or approaching the end of their estimated service
lives. As originally conceived, Deepwater was designed around producing
aircraft and cutters that would function in the Coast Guard's
traditional at-sea roles, such as interdicting illicit drug shipments
or rescuing mariners from difficulty at sea. The events of September
11, 2001, changed all of that. Suddenly, the missions for these assets
expanded to include a greater emphasis on ports, waterways, and coastal
security. These heightened responsibilities forced the Coast Guard to
revise its Deepwater implementation plan to provide the replacement
assets with greater operational capabilities. Further change has come
more recently with the Coast Guard asserting that its deepwater legacy
assets are "failing at an unsustainable rate" and examining options for
accelerating their replacement, thereby avoiding some of the costs that
might be involved in upgrading these assets sufficiently to keep them
running for longer periods.
These changes have created some uncertainty about how the Deepwater
program is developing. In its fiscal year 2006 budget request, the
Administration is requesting $966 million for the Deepwater program--
$242 million more than Congress appropriated for the program for fiscal
year 2005. Part of this request ($239.5 million) is for maintenance and
upgrades to some deepwater legacy assets, a majority of which are
scheduled to be part of the Deepwater solution. The fiscal year 2005
Department of Homeland Security (DHS) Appropriations Act[Footnote 2]
required the Secretary of Homeland Security to submit a revised
Deepwater implementation plan in conjunction with its fiscal year 2006
budget request. However, with respect to pending fiscal year 2006
appropriations, the House Appropriations Committee considered the Coast
Guard's implementation plan submission to be incomplete and recommended
reducing the Coast Guard's fiscal year 2006 Deepwater budget request of
$966 million by nearly 50 percent.[Footnote 3] In late May 2005, the
Coast Guard submitted further documentation to the committee in an
effort to comply with the act's requirements. In June 2005, the Senate
Appropriations Committee expressed concern about the lack of
information concerning the Deepwater plan in the fiscal year 2006
budget request but recommended funding of $905.6 million for the
program for fiscal year 2006.[Footnote 4] As of early July 2005, the
Coast Guard's fiscal year 2006 appropriation was still pending.
This report, which focuses on the condition of deepwater legacy assets
and the Coast Guard's acquisition and management challenges, is aimed
at providing information about some of these issues. We presented our
preliminary observations on these matters in recent testimony.[Footnote
5] This report adds further details on the condition of the assets, as
well as updated information on Coast Guard initiatives to better
sustain these assets until they are replaced or upgraded. Specifically,
our report addresses three issues related to these considerations:
* How has the condition of the Coast Guard's deepwater legacy assets
changed during fiscal years 2000 through 2004?
* What actions has the Coast Guard taken to maintain, upgrade, and
better manage its deepwater legacy assets?
* What are the management challenges the Coast Guard faces in acquiring
new assets, especially if a more aggressive acquisition schedule is
adopted?
To address these objectives, we analyzed data and condition measures
used by the Coast Guard for determining deepwater legacy assets'
condition,[Footnote 6] reviewed Coast Guard actions to maintain and
upgrade legacy assets and their systems,[Footnote 7] and met with
operations and maintenance staff at U.S. Coast Guard headquarters and
other Coast Guard facilities selected to provide coverage of each type
of deepwater legacy aircraft and each class of deepwater legacy cutter.
In addition, we met with Deepwater program staff, performance monitors,
and contractor staff and reviewed documentation to verify the
improvements the Coast Guard is making in its management of the
Deepwater acquisition. We conducted our work between July 2004 and June
2005 in accordance with generally accepted governmental auditing
standards. Appendix I describes our objectives, scope, and methodology
in greater detail.
Results in Brief:
Coast Guard condition measures show that the condition of most
deepwater legacy assets generally declined between fiscal years 2000
and 2004, but the Coast Guard's available condition measures are
inadequate to capture the full extent of the decline in the condition
of deepwater assets with any degree of precision. While there is no
systematic, quantitative evidence sufficient to demonstrate that
deepwater legacy assets are "failing at an unsustainable rate" as the
Coast Guard has asserted, this does not mean that the assets are able
to perform their missions safely, reliably, and at levels that meet or
exceed Coast Guard standards. Evidence we gathered in ways other than
reviewing condition measures, such as interviewing Coast Guard
operations and maintenance staff, showed significant problems in a
variety of the assets' systems and equipment that will need to be
addressed if the assets are to continue performing their missions at or
near current levels until replacement assets become operational. These
problems are not necessarily reflected in the condition measures. For
example, the Coast Guard's HH-65 helicopter consistently exceeded the
Coast Guard's primary condition measure during fiscal years 2000
through 2004, yet its engines are being replaced because of safety and
reliability concerns.
The Coast Guard has taken actions to keep its legacy assets
operational. These include developing a compendium of information to
identify the maintenance and upgrade projects needed to keep legacy
assets operational and performing increasingly more maintenance on the
legacy assets than it has in the past--for example, spending additional
time on maintenance when cutters are in port between deployments. These
additional maintenance efforts are likely helping to prevent a more
rapid decline in the condition of these assets, but even with the
additional maintenance, the legacy aircraft and cutters are still
losing mission capabilities because of equipment and system failures.
Responding to these continued concerns, as well as to matters raised
during this review and in our prior reports, the Coast Guard has begun
to explore additional strategies and approaches to better determine and
improve the mission capabilities of its legacy assets. First, in an
effort to implement our 2002 recommendation for developing a longer-
term strategy for linking mission performance to measurable outputs and
goals, the Coast Guard is developing a more proactive approach for
prioritizing maintenance and capability enhancement projects needed on
its legacy assets to increase mission capabilities. Second, after we
informed the Coast Guard of our concern that existing measures of the
condition of its assets were not adequate to demonstrate the extent of
the assets' decline, the Coast Guard began to develop measures that
more clearly demonstrate the extent to which assets' conditions impact
mission capabilities. Finally, the Coast Guard's Pacific Area Command,
which is heavily dependent on the deteriorating 378-foot cutters for
certain missions, is attempting to use new strategies to help sustain
the operation of these cutters through 2016, when they are currently
scheduled to be replaced with newer cutters. These ongoing efforts,
while promising, are too new to allow us to assess whether they will
allow the Coast Guard to better determine and improve the mission
capabilities of its legacy assets.
The Coast Guard's fiscal year 2006 budget request of $966 million for
the Deepwater program reflects significant revisions to the program's
requirements, capabilities, and schedule in light of the homeland
security mission. However, if a more aggressive acquisition schedule is
adopted, the Coast Guard will likely continue to face a number of
management challenges that have already affected its ability to
effectively administer the Deepwater program. From the outset, we have
expressed concern about the risks involved with the Coast Guard's
acquisition strategy, which involves relying on a prime contractor (or
"system integrator") to identify the assets needed, using tiers of
subcontractors to design and build the actual assets. In 2004 we
reported that well into the contract's second year, key components
needed to manage the program and oversee the system integrator's
performance had not been effectively implemented. We made 12
recommendations in the areas of program management, contractor
accountability, and cost control through competition. While the Coast
Guard agreed with nearly all of these recommendations and has initiated
actions to address these problems, we remain concerned that the
Deepwater program still carries major risks. While the Coast Guard has
fully addressed 3 of the recommendations, the remaining recommendations
have not been fully addressed. Recent information shows continued
challenges in the areas of overall system integration, cost and
schedule management, and integrated product teams, which consist of
contractor and government personnel and are the Coast Guard's principal
tool for managing the Deepwater program. The uncertainties associated
with the proposed revisions to the Deepwater program only heighten
these risks.
We provided a draft copy of this report to the Department of Homeland
Security and the U.S. Coast Guard for review. The U.S. Coast Guard
provided technical comments, which have been incorporated where
appropriate.
Background:
As the lead federal agency for maritime homeland security within the
Department of Homeland Security, the Coast Guard is responsible for
homeland and nonhomeland security missions, including ensuring security
in ports and waterways and along coastlines, conducting search and
rescue missions, interdicting drug shipments and illegal aliens,
enforcing fisheries laws, and responding to reports of pollution. The
deepwater fleet, which consists of 186 aircraft and 88 cutters of
various sizes and capabilities, plays a critical role in all of these
missions. As shown in table 1, the fleet includes fixed-wing aircraft,
helicopters, and cutters of varying lengths.
Table 1: Deepwater Legacy Aircraft and Cutter Fleet, as of early June
2005:
[See PDF for image]
[A] Because of scheduled depot-level maintenance and upgrades that the
deepwater aircraft have received or will receive, the service lives can
be extended beyond the original estimated service lives. For the HH-65
helicopter, a Coast Guard aviation official told us that the aircraft
had no original estimated service life in terms of flight hours, but
rather can continue to be operated as long as the structure of the
aircraft is sound.
[End of table]
Some Coast Guard deepwater cutters were built in the 1960s.
Notwithstanding extensive overhauls and other upgrades, a number of the
cutters are nearing the end of their estimated service lives.
Similarly, while a number of the deepwater legacy aircraft have
received upgrades in engines, operating systems, and sensor equipment
since they were originally built, they too have limitations in their
operating capabilities.
In 1996, the Coast Guard began developing what came to be known as the
Integrated Deepwater System (IDS) acquisition program as its major
effort to replace or modernize these aircraft and cutters. This
Deepwater program is designed to replace some assets--such as
deteriorating cutters--with new cutters and upgrade other assets--such
as some types of helicopters--so they can meet new performance
requirements.[Footnote 8]
The Deepwater program represents a unique approach to a major
acquisition in that the Coast Guard is relying on a prime contractor--
the system integrator--to identify and deliver the assets needed to
meet a set of mission requirements the Coast Guard has
specified.[Footnote 9] In 2002, the Coast Guard awarded a contract to
Integrated Coast Guard Systems (ICGS) as the system integrator for the
Deepwater program. ICGS has two main subcontractors--Lockheed Martin
and Northrop Grumman--that in turn contract with other subcontractors.
Rather than using the traditional approach of replacing classes of
ships or aircraft through a series of individual acquisitions, the
Coast Guard chose to employ a "system of systems" acquisition strategy
that would replace its deteriorating deepwater assets with a single,
integrated package of new or modernized assets. This system-of-systems
approach is designed to provide an improved, integrated system of
aircraft, cutters, and unmanned aerial vehicles to be linked
effectively through systems that provide command, control,
communications, computer, intelligence, surveillance, reconnaissance,
and supporting logistics. The Deepwater program's three overarching
goals are to maximize operational effectiveness, minimize total
ownership cost,[Footnote 10] and satisfy the customer--the operational
commanders, aircraft pilots, cutter crews, maintenance personnel, and
others who will use the assets.
The revised Deepwater schedule calls for acquisition of new assets
under the Coast Guard's Deepwater program to occur over an
approximately 20-year period at an estimated cost of $19 billion to $24
billion.[Footnote 11] By 2007, for example, the Coast Guard is to
receive the first 418-foot National Security Cutter, which will have
the capability to conduct military missions related to homeland
security. Current plans call for 6 to 8 of these cutters to replace the
12 existing 378-foot cutters. However, in order to carry out its
mission effectively, the Coast Guard will also need to keep all of the
legacy assets operational until they can be replaced or upgraded.
We have been reviewing the Deepwater program for several years,
pointing out difficulties and expressing concern over a number of
facets of the program. In our 2001 report, we identified several areas
of risk for Deepwater.[Footnote 12] First, the Coast Guard faced
potential risk in the overall management and day-to-day administration
of the contract. At the time, we reported on the major challenges such
as developing and implementing plans for establishing effective human
capital practices, having key management and oversight processes and
procedures in place, and tracking data to measure system integrator
performance. In addition, we expressed concerns about the potential
lack of competition during the program's later years and the reliance
on a single system integrator for procuring the Deepwater assets. We
also reported there was little evidence that the Coast Guard had
analyzed whether the approach carried any inherent risks for ensuring
the best value to the government and, if so, what to do about them.
We reviewed the program again in 2004 and found many of the same
concerns.[Footnote 13] Specifically, we reported that key components
needed to manage the program and oversee the system integrator's
performance had not been effectively implemented. The Coast Guard's
primary tool for overseeing the system integrator, the integrated
product teams (IPTs) were struggling to effectively collaborate and
accomplish their missions because of changing membership,
understaffing, insufficient training, and inadequate communication
among members. Also, the Coast Guard had not adequately addressed the
frequent turnover of personnel in the program and the transition from
existing assets to those assets that will be part of the Deepwater
program moving forward. Further, the Coast Guard's assessment of the
system integrator's performance in the first year of the contract
lacked rigor, and the factors that formed the basis for the award fee
determination were supported only by subjective performance monitor
comments and not by quantifiable measures. This resulted in the system
integrator receiving a high performance rating and an award fee of $4.0
million out of a maximum of $4.6 million despite documented problems in
schedule, performance, cost controls, and contract administration.
At the time of our March 2004 report,[Footnote 14] the Coast Guard had
begun to develop models to measure the extent to which Deepwater was
achieving operational effectiveness and reduced total ownership cost,
but it had not made a decision as to which specific suite of models
would be used. Further, Coast Guard officials were not able to project
a time frame for when the Coast Guard would be able to hold the
contractor accountable for progress toward the goals of maximizing
operational effectiveness, minimizing total ownership cost, and
customer satisfaction. Furthermore, the Coast Guard had not measured
the extent of competition among suppliers of Deepwater assets or held
the system integrator accountable for taking steps to achieve
competition. The Coast Guard's lack of progress on these issues has
contributed to our concerns about the Coast Guard's ability to rely on
competition as a means to control future programmatic costs.
Finally, we found that the Coast Guard had not updated the Deepwater
integrated acquisition schedule despite numerous changes, making it
difficult to determine the degree to which the program was on track
with its original plan. In response to these concerns, we made a number
of recommendations to improve Deepwater management and oversight of the
system integrator. The Coast Guard welcomed our observations and
concurred with our recommendations and has begun to take actions to
address them.
Legacy Assets Show Declining Condition, but Measures Are Imprecise and
Fail to Capture Impact on Mission Capabilities:
Coast Guard condition measures show that the condition of most
deepwater legacy assets generally declined between 2000 and 2004, but
the Coast Guard's available measures are inadequate to capture the full
extent of the decline in the condition of deepwater assets with any
degree of precision and are insufficient for determining the impact on
mission capabilities. Further, other evidence we gathered, such as
information from discussions with maintenance and operations personnel,
points to conditions that may be more severe than the available
measures indicate. The Coast Guard acknowledges that it needs better
condition measures, but it has not yet finalized or implemented such
measures. The Coast Guard anticipates having the new measures finalized
by the end of 2005.
Coast Guard's Condition Measures Show General Decline in Condition of
Deepwater Assets, with Some Fluctuations:
During fiscal years 2000 through 2004, the Coast Guard's various
condition measures showed a general decline, although there were year-
to-year fluctuations (see table 2). For deepwater legacy aircraft, a
key summary measure of the condition--the availability index (the
percentage of time aircraft are available to perform their missions)--
showed that except for the HU-25 medium-range surveillance aircraft,
the assets continued to perform close to or above fleet availability
standards over the 5-year period. In contrast, other condition measures
for aircraft, such as cost per flight hour and labor hours per flight
hour, generally reflected some deterioration. For cutters, a key
summary measure of condition--percent of time free of major
casualties[Footnote 15]--fluctuated but generally remained well below
target levels. The number of major casualties generally rose from
fiscal years 2000 through 2003 and then dropped slightly in fiscal year
2004.[Footnote 16] (Appendix II provides further details on condition
measures for each of the deepwater legacy aircraft and cutters.)
Table 2: Synopsis of Deepwater Legacy Assets' Condition:
Deepwater legacy asset: HC-130 aircraft;
Synopsis of general asset condition: The percentage of time the HC-130
fleet was available to perform missions nearly met or exceeded the
Coast Guard's target level during fiscal years 2000 through 2003, but
dropped below the target level in fiscal year 2004.
Deepwater legacy asset: HU-25 aircraft;
Synopsis of general asset condition: The percentage of time the HU-25
fleet was available to perform missions varied from year to year but
was consistently below the Coast Guard's target level during fiscal
years 2000 through 2004.
Deepwater legacy asset: HH-60 aircraft;
Synopsis of general asset condition: The percentage of time the HH-60
fleet was available to perform missions met or was just below the Coast
Guard's target level during fiscal years 2000 though 2004.
Deepwater legacy asset: HH-65 aircraft;
Synopsis of general asset condition: The percentage of time the HH-65
fleet was available to perform missions consistently exceeded the Coast
Guard's target level during fiscal years 2000 through 2004.
Deepwater legacy asset: 378-foot high-; endurance cutters;
Synopsis of general asset condition: The percentage of time the 378-
foot cutter fleet has operated free of deficiencies in mission-
essential equipment remained substantially below the Coast Guard's
target level during fiscal years 2000 through 2004.
Deepwater legacy asset: 270-foot and; 210-foot medium-endurance
cutters;
Synopsis of general asset condition: The percentage of time the 210-
foot and 270-foot cutter fleets have operated free of deficiencies in
mission-essential equipment was well below the Coast Guard's target
level during fiscal years 2000 through 2004, but it showed slight
improvement in fiscal year 2004.
Deepwater legacy asset: 110-foot and 123-foot patrol boats[A];
Synopsis of general asset condition: The percentage of time the patrol
boat fleet has operated free of deficiencies in mission-essential
equipment was below but near the Coast Guard's target level during
fiscal years 2000 and 2001, but it declined in more recent years.
Source: GAO analysis of data provided by the U.S. Coast Guard.
[A] Data on the 123-foot patrol boats were not compiled until fiscal
year 2004. That year's data were added to the 110-foot patrol boat data
to arrive at totals for the patrol boat fleet.
[End of table]
Another, albeit less direct, measure of an asset's condition is
deferred maintenance--the amount of scheduled maintenance on an asset
that must be postponed in order to pay for unscheduled repairs. Such
deferrals can occur when the Coast Guard does not have enough money to
absorb unexpected maintenance expenditures and still perform all of its
scheduled maintenance, thus creating a backlog. For example, in spring
2004, while on a counterdrug mission, the 210-foot cutter Active
experienced problems in the condition of its flight deck that were to
be corrected during its scheduled depot-level maintenance. However,
because of a shortage of maintenance funds, the maintenance was
deferred and the flight deck was not repaired. As a result, the cutter
lost all shipboard helicopter capability, significantly degrading
mission readiness.
As table 3 shows, deferred maintenance does not show a clear pattern
across all classes of deepwater legacy assets. For the deepwater legacy
aircraft, the overall amount of estimated deferred maintenance
increased each year during fiscal years 2002 through 2004, from $12.3
million to about $24.6 million. However, most of the increase came for
one type of asset, the HH-60 helicopter, and the increase came mainly
from deferring maintenance past the 48-month interval requirement--
thereby increasing the scheduled maintenance workload--and not from
having to divert money to deal with unscheduled maintenance. For the
deepwater cutters, the amount of estimated deferred maintenance
increased from fiscal year 2002 to 2003, but then it dropped
significantly in fiscal year 2004. The decrease in fiscal year 2004
came mainly because the Coast Guard received supplemental funding
allowing it to address both scheduled and unscheduled maintenance.
Thus, the drop in the estimate of deferred maintenance costs for fiscal
year 2004 is not necessarily an indicator that the condition of the
legacy assets was improving; it could be the result of the Coast Guard
having more money to address the maintenance needs.
Table 3: Estimated Costs for Deferred Maintenance of Deepwater Aircraft
and Cutters, Fiscal Years 2002-2004:
Deepwater legacy asset: HC-130;
Fiscal year 2002: $4,691,000;
Fiscal year 2003: $7,016,000;
Fiscal year 2004: $5,737,000.
Deepwater legacy asset: HU-25;
Fiscal year 2002: 0;
Fiscal year 2003: $201,000;
Fiscal year 2004: 0.
Deepwater legacy asset: HH-60;
Fiscal year 2002: $7,630,000;
Fiscal year 2003: $9,436,000;
Fiscal year 2004: $18,824,000.
Deepwater legacy asset: HH-65;
Fiscal year 2002: 0;
Fiscal year 2003: 0;
Fiscal year 2004: 0.
Deepwater legacy asset: Subtotal for aircraft;
Fiscal year 2002: $12,321,000;
Fiscal year 2003: $16,653,000;
Fiscal year 2004: $24,561,000.
Deepwater legacy asset: 378-foot cutters;
Fiscal year 2002: $2,556,000;
Fiscal year 2003: $8,135,000;
Fiscal year 2004: $3,000,000.
Deepwater legacy asset: 270-foot cutters;
Fiscal year 2002: $2,070,000;
Fiscal year 2003: $870,000;
Fiscal year 2004: 0.
Deepwater legacy asset: 210-foot cutters;
Fiscal year 2002: $786,000;
Fiscal year 2003: $1,137,000;
Fiscal year 2004: 0.
Deepwater legacy asset: 110-foot patrol boats;
Fiscal year 2002: $1,618,000;
Fiscal year 2003: $1,961,000;
Fiscal year 2004: $500,000.
Deepwater legacy asset: Subtotal for cutters;
Fiscal year 2002: $7,030,000;
Fiscal year 2003: $12,103,000;
Fiscal year 2004: $3,500,000.
Deepwater legacy asset: Total for all deepwater assets;
Fiscal year 2002: $19,351,000;
Fiscal year 2003: $28,756,000;
Fiscal year 2004: $28,061,000.
Source: U.S. Coast Guard.
Note: The Coast Guard estimates the cost for aircraft deferred
maintenance by multiplying a percentage of average depot maintenance
costs by the number of aircraft overdue for depot maintenance
overhauls, plus the annual cost for extension inspections each year.
The Coast Guard generally does not track deferred maintenance costs by
cutter class but compiled these data at GAO's request for fiscal years
2002 through 2004. The Coast Guard estimated the costs of only the
planned cutter maintenance that had to be deferred to the following
year and not the amount of maintenance that should have been conducted
and was not funded.
[End of table]
Current Condition Measures Not Sufficiently Robust to Link Condition
with Impact on Mission Capabilities:
At the time we began our work, the Coast Guard's measures generated
some limited information on the condition of its legacy assets, but the
measures were not sufficiently robust to link the assets' declining
condition to degradation in mission capabilities or performance. As a
result, the picture that emerges regarding the condition of the
deepwater legacy assets based on current Coast Guard condition measures
should be viewed with some caution. While there is no systematic,
quantitative evidence sufficient to demonstrate that deepwater legacy
assets are "failing at an unsustainable rate," as the Coast Guard has
asserted, this does not mean the assets are in good condition or have
been performing their missions safely, reliably, and at levels that
meet or exceed Coast Guard standards. We identified two factors that
need to be considered to put these condition measures into proper
context.
The first factor deals with limitations in the measures themselves.
Simply put, the Coast Guard's measures of asset condition do not fully
capture the extent of the problems. As such, they may understate the
decline in the legacy assets' condition. More specifically, the Coast
Guard measures we assessed focus on events, such as equipment
casualties or flight mishaps, but do not measure the extent to which
these and other incidents degrade mission capabilities. The following
is an example in which Coast Guard measures we assessed are not
sufficiently robust to systematically capture degradation in mission
capabilities:
* The 378-foot cutter Jarvis recently experienced a failure in one of
its two main gas turbines shortly after embarking on a living marine
resources and search and rescue mission. While Jarvis was able to
accomplish its given mission, albeit at reduced speed, this casualty
rendered the cutter unable to respond to any emergency request it might
have received--but did not in this case--to undertake a mission
requiring higher speeds, such as drug interdiction. The Coast Guard
condition measures are not robust enough to capture these distinctions
in mission capability.
The second factor that needs to be kept in mind is the compelling
nature of the other evidence we gathered outside of the Coast Guard's
condition measures. This evidence, gleaned from information collected
during our site visits and discussions with maintenance personnel,
indicated deteriorating and obsolete systems and equipment as a major
cause of the reduction in mission capabilities for a number of
deepwater legacy aircraft and cutters. Such problems, however, are not
captured by the Coast Guard's condition measures. One example of this
involves the HH-65 short-range recovery helicopter. While this
helicopter consistently exceeded availability standards established by
the Coast Guard over the 5-year period we examined, it is currently
operating with engines that have become increasingly subject to power
failures, which may potentially render the fleet unable to meet mission
requirements. As a result, Coast Guard pilots employ a number of work-
arounds, such as dumping fuel or occasionally leaving the rescue
swimmer on scene if the load becomes too heavy. Further, because of
increasing safety and reliability problems, the Coast Guard has also
implemented a number of operational restrictions--such as not allowing
the helicopter to land on helipads--to safeguard crew and passengers
and prevent mishaps until all of the fleet's engines can be replaced.
Actions to Better Manage Legacy Assets Are Under Way, but Effects Will
Not Be Known for Some Time:
The Coast Guard has already undertaken two main types of actions to
keep its legacy assets operational: developing a compendium of
information for making decisions regarding maintenance and upgrades
needed, and performing increasingly more maintenance on these assets
between deployments. These efforts are likely helping to prevent a more
rapid decline in the condition of the assets, but the condition of
these assets has nonetheless generally continued to worsen. In response
to both the continued decline in the condition of its legacy assets, as
well as to various observations we have made to the Coast Guard about
its need to develop more objective information on mission capability
needs and more precise condition measures, the Coast Guard has begun to
undertake additional efforts. These additional efforts include
developing a knowledge-based model to provide more objective data on
where to best spend budget dollars to achieve the greatest enhancements
in mission capabilities, improving the condition measures it uses to
more clearly quantify the impact declining conditions have on mission
capabilities, and, at the Pacific Area Command, applying new business
rules and strategies to better sustain the 378-foot high-endurance
cutters through 2016. These ongoing efforts, while promising, are
largely untested, and so it is too soon to tell whether they will allow
the Coast Guard to better determine and improve the mission
capabilities of its legacy assets.
Coast Guard Has Developed and Is Using a Compendium of Needs:
Since 2002, the Coast Guard has annually issued a Systems Integrated
Near Term Support Strategy compendium. Among other things, this
compendium consolidates information needed to make planning and
budgeting decisions regarding maintenance and upgrades to sustain
legacy assets. Its purpose is to serve as a tool for senior Coast Guard
management in setting priorities and planning budgets. From this
strategic document, the Coast Guard has identified a number of upgrades
to improve the capabilities of the deepwater legacy aircraft and
cutters. The most recent compendium (for fiscal year 2006) lists more
than $1 billion worth of upgrades to the deepwater legacy assets. The
planned upgrades identified in the compendium that have been approved
and received initial funding account for an estimated $856 million the
Coast Guard anticipates it will need to complete those projects. The
approved upgrades for deepwater legacy assets are shown in table 4.
Table 4: Approved Upgrades for Deepwater Legacy Aircraft and Cutters:
Deepwater legacy asset: HC-130 aircraft;
Synopsis of planned upgrades: The Coast Guard is beginning to replace
aircraft's dated and difficult-to-support surface search radar system;
Estimated costs and time frames of upgrades: The radar system
replacement is projected to cost $78 million and be completed in fiscal
year 2008. A total of $9 million has been allocated through fiscal year
2005.
Deepwater legacy asset: HH-60 aircraft;
Synopsis of planned upgrades: The Coast Guard has begun a service life
extension plan and a replacement of the obsolete avionics suite;
Estimated costs and time frames of upgrades: The service life extension
program is estimated to cost $16 million and be completed by fiscal
year 2009. The avionics replacement program is projected to cost $121
million and be completed by fiscal year 2010. A total of $32.8 million
has been allocated through fiscal year 2005 for these upgrades.
Deepwater legacy asset: HH-65 aircraft;
Synopsis of planned upgrades: Serious safety and reliability problems
with the engine led the Coast Guard to place operational restrictions
on the HH-65 fleet in October 2003;
Estimated costs and time frames of upgrades: The Coast Guard plans to
re-engine 84 HH-65 aircraft at a projected cost of $349 million, now
estimated to be completed by February 2007. A total of $160.7 million
has been allocated through fiscal year 2005.
Deepwater legacy asset: 270-foot and 210-foot medium-endurance cutters;
Synopsis of planned upgrades: During fiscal year 2005 these cutters are
to enter a legacy asset sustainment project known as the Mission
Effectiveness Project (MEP) aimed at increasing their service lives
until their replacement by a new cutter. The MEP includes upgrading
major engineering subsystems such as evaporators, sewage systems, and
gyrocompasses;
Estimated costs and time frames of upgrades: The MEP is projected to
cost a total of $292 million and be completed by fiscal year 2015. The
medium-endurance cutters will ultimately be replaced by the Offshore
Patrol Cutter. A total of $12.5 million has been allocated through
fiscal year 2005.
Deepwater legacy asset: Total;
Estimated costs and time frames of upgrades: A total of $856 million is
needed to fund these projects, of which $215 million has been allocated
through fiscal year 2005.
Source: GAO analysis of data provided by the U.S. Coast Guard.
Note: While no funds have been allocated for upgrades to the HU-25
aircraft, the 378-foot cutters, or the 110-foot and 123-foot patrol
boats, since all of these deepwater legacy assets are scheduled to be
replaced, each of these assets has upgrades listed in the Systems
Integrated Near Term Support Strategy compendium. The HU-25 aircraft
has an engine replacement project estimated to cost $78.1 million; the
378-foot cutter has an MEP estimated to cost $137.8 million; and the
patrol boats have three projects--replacement of the fin stabilizer
system that is estimated to cost $10.4 million, an MEP that is
estimated to cost $162 million, and replacement of the ship service
generators that is estimated to cost $20.7 million. If the Coast Guard
were to request funding for all of these sustainment projects, it would
cost an additional $409 million.
[End of table]
Among the projects already begun is the re-engining of the HH-65
helicopters to address safety and reliability concerns. The Coast Guard
is also upgrading several other aviation systems in an effort to
improve aircraft capabilities. Enhancements are also planned for
certain classes of deepwater cutters. For example, during fiscal year
2005, the Coast Guard is beginning a maintenance effectiveness project
on the 210-foot and 270-foot cutters. This project includes replacing
major engineering subsystems with the goal of extending the cutters'
service lives until their replacement by the Offshore Patrol Cutter. Of
the $856 million total estimated costs needed for the planned upgrades
to the deepwater legacy assets listed above, $215 million has been
allocated through fiscal year 2005, and the Coast Guard has requested
another $217.3 million in its fiscal year 2006 budget. The remaining
estimated costs of $423.7 million would have to be funded beyond fiscal
year 2006.
Increasing Amounts of Maintenance Are Being Performed, but Loss of
Mission Capabilities Continues:
Coast Guard personnel consistently reported to us that crew members
have to spend increasingly more time between missions to prepare for
the next deployment. For example, due to the aging main landing gear on
the HH-65 helicopter, Coast Guard official stated that maintenance
crews spend extensive time servicing, troubleshooting and fixing them
in pre-deployment maintenance. Comparable accounts were given by
personnel working on cutters. For example, officers of the 270-foot
cutter Northland told us that because of dated equipment and the
deteriorating condition of its piping and other subsystems, crew
members have to spend increasingly more time and resources while in
port to prepare for their next deployment. While we could not verify
these increases in time and resources because the Coast Guard does not
capture data on these additional maintenance efforts, the need for
increasing amounts of maintenance was a message we consistently heard
from the operations and maintenance personnel with whom we met.
Such efforts are likely helping to prevent a more rapid decline in the
condition of these deepwater legacy assets, but it is important to note
that even with the increasing amounts of maintenance, these assets are
still losing mission capabilities because of deteriorating equipment
and system failures. For example, in fiscal year 2004, the 378-foot
cutter Chase lost 98 counterdrug mission days because of a number of
patrol-ending casualties--including the loss of ability to raise and
lower boats and run major electrical equipment--requiring $1.2 million
in emergency maintenance. In addition, the 378-foot cutter Hamilton
lost 27 counterdrug mission days in the fall of 2004 when it required
emergency dry dock maintenance because of hydraulic oil leaking into
the reduction gear.
Coast Guard Is Developing a Strategy to Better Prioritize Upgrades and
Maximize Asset Capabilities:
In the past, we have recommended that the Coast Guard develop a long-
term strategy to set and assess levels of mission performance.[Footnote
17] We found this was an important step for the Coast Guard to take
because it links legacy asset investments to asset capabilities,
mission priorities, and goals so that the Coast Guard can better decide
how limited budget dollars should be spent. The Coast Guard has
recently begun to apply the principles behind such a strategy to (1)
better prioritize the projects needed to upgrade legacy assets that
will be part of the Deepwater program and (2) obtain the greatest
overall mix of capabilities for its assets within its budget in order
to maximize mission performance. The tool it is developing is called
the Capital Asset Management Strategy (CAMS).
CAMS, once fully implemented, is expected to help the Coast Guard to
better manage its assets by linking funding decisions to asset
condition. Unlike the Coast Guard's current compendium, CAMS is
designed to provide analyses on the capability trade-offs for upgrades
and maintenance projects across asset classes, thereby allowing the
Coast Guard to determine which combination of projects will provide the
most capability for the dollars invested. For example, when Coast Guard
officials are trying to decide among potential project upgrades such as
an HC-130 weather radar replacement, an HH-65 sliding cabin door
replacement, or a 110-foot patrol boat fin stabilizer replacement,
CAMS, once fully implemented, could provide the officials with a
recommended mix of project upgrades that would achieve the greatest
capability enhancements based on the available budget.
CAMS analyses are to be based on legacy asset condition and readiness
data, asset retirement and replacement timelines, asset degradation
estimates, project production rates, cost data, and mission utility
rankings. Mission utility rankings will grade an asset's importance to
specific missions, such as search and rescue or counterdrug operations.
Rankings may also be assigned to an asset's critical subsystems or may
be altered based on an asset's geographic location. For example, a 378-
foot cutter may be critical to the success of fisheries patrols in the
Pacific but may not be as important for alien/migrant interdiction
operations in the Caribbean. However, according to Coast Guard
headquarters officials, the Coast Guard remains cautious about
employing such a strategy because an investment strategy of this nature
could lead to cutters that are no longer multmission capable and are
unable to respond to an emergency due to reduced capabilities. In
addition, the Coast Guard plans to rank its missions within CAMS based
on their relative importance.[Footnote 18] Each of these elements is to
form the basis for recommendations regarding which combination of
upgrade and maintenance projects will provide the greatest enhancements
to fleet capabilities.
According to Coast Guard staff, CAMS recommendations are not a
replacement for the existing budget development process, but rather are
to augment and make more consistent the information currently provided
to decision makers. Because the recommendations are to be based, in
part, on user assumptions, CAMS recommendations are to be reviewed by
several internal Coast Guard officials before any final funding
requests are made. Further, in order to prevent user "gaming"--making
assumptions in such a way as to ensure a positive recommendation or
outcome for a particular project--the Coast Guard is developing a
series of job aids, manuals, and training courses to ensure data
integrity and consistency.
Coast Guard officials expect to have CAMS fully implemented by
September 2005 and intend to use it while developing the Coast Guard's
fiscal year 2008 budget submission. Although it is too soon to assess
the effectiveness of CAMS, we view this approach as a good faith effort
toward knowledge-based budgeting for legacy asset sustainment.
Coast Guard is Developing More Robust Condition Measures:
At the time we began our work, in August 2004, the majority of the
Coast Guard's condition measures were not sufficiently robust to link
an asset's condition with its impact on mission capabilities. As we
discussed with Coast Guard officials, without such condition measures,
the extent and severity of the decline in the existing deepwater legacy
assets and their true condition cannot be fully determined. On the
basis of our inquiries and a series of discussions we held with
cognizant Coast Guard officials, the Coast Guard has begun developing
improved measures to more accurately capture data on the extent to
which its deepwater legacy assets are degraded in their mission
capabilities. However, because these measures have not been finalized
or fully implemented, we were unable to assess their effectiveness. The
Coast Guard anticipates having the new measures finalized by the end of
2005.
Coast Guard naval engineers told us that they had begun developing a
"percent of time fully mission capable" measure to reflect the degree
of mission capability, as well as measures to track cutter readiness.
As part of this measure, the Coast Guard is developing mission
criticality codes, which would rank the degree of importance of each
piece of a cutter's equipment to each possible mission that the cutter
could perform. These codes would then be linked to electronic casualty
reports for each cutter, which would provide the cutter engineers and
operators with information on the impact that the equipment casualties
would have on each possible mission. This casualty report/mission
criticality linkage will then be factored into the calculation of the
percent of time fully mission capable measure for each cutter class and
mission type. Coast Guard officials could then review this measure to
determine, for example, the degree of capability that its 270-foot
medium endurance cutter fleet has to conduct search and rescue missions
at any given time. We agree that measures like this are needed--and as
soon as possible.
According to Coast Guard officials, while the availability index will
remain the Coast Guard's primary measure for aircraft condition and
operational readiness, the Coast Guard is working to improve its
dispatch reliability index measure, which provides causal information
on delayed, aborted, or canceled missions.[Footnote 19] The Coast Guard
can use the dispatch reliability index--in conjunction with data
captured by unit-level and depot-level maintenance staff and entered
into the Coast Guard's Electronic Aircraft Logbook and Aviation
Logistics Management Information System, respectively--to determine
which components and systems are failing most frequently and thus
causing degradation in aircraft availability and mission performance.
According to Coast Guard officials, data provided from these systems
rival the information that will be produced by the cutter community's
proposed percent of time fully mission capable measure. Because the
dispatch reliability index measure and the electronic aircraft logbook
are relatively new and have only recently been fully implemented Coast
Guard-wide, we have not assessed their effectiveness. However, we view
these tools as a positive step toward providing Coast Guard decision
makers with more detailed information on the primary factors leading to
mission degradation.
New Initiative for Maintaining 378-Foot Cutters Is Under Way:
One effort is under way at the Coast Guard's Pacific Area Command to
improve maintenance practices for its 378-foot cutters, which are among
the oldest cutters in its fleet.[Footnote 20] Pacific Area officials
have recognized that a different approach to maintaining and sustaining
legacy cutters may be needed since they are dependent on 378-foot
cutters for meeting missions, such as defense operations and fisheries
patrols. As a first step, Pacific Area officials have undertaken an
initiative applying what they refer to as "new business rules and
strategies" to better maintain the 378-foot high-endurance cutters
through 2016, when they are scheduled to be fully replaced by National
Security Cutters. Under the original Deepwater proposal, the final 378-
foot cutter was to be decommissioned in 2013, but by 2005, that date
had slipped to 2016. To help keep these cutters running through this
date, Pacific Area officials are applying such rules and strategies as
(1) ensuring that operations and maintenance staffs work closely
together to determine priorities, (2) recognizing that maintaining or
enhancing cutter capabilities will involve trade-off determinations,
and (3) accepting the proposition that with limited funding not all
cutters will be fully capable to perform all types of missions as they
near the end of their useful lives. Pacific Area officials believe that
in combination, these rules and strategies will result in more cost-
effective maintenance and resource allocation decisions--recognizing
that difficult decisions will still have to be made to balance
maintenance and operations. However, according to Coast Guard
headquarters officials, if such strategies are employed, careful
planning must occur to avoid placing a cutter in an operational
emergency where it is incapable of adequately responding.
One example of the bridging strategies Pacific Area officials are
exploring is the development of what Pacific Area officials refer to as
a "class within a class" approach. Under this strategy, the individual
cutters within the 378-foot high-endurance cutter fleet would be
designated to perform specific mission types based on an assessment of
their condition and mission capabilities.[Footnote 21] Cutters
possessing full mission capabilities could be assigned to the more
demanding defensive operations, while cutters in poorer condition and
less than fully capable would be assigned to less demanding missions,
such as fisheries enforcement. According to Pacific Area officials,
this strategy is designed to more effectively spend the maintenance
funds available for the 378-foot cutters, since current funding levels
for the 378-foot cutters make it very difficult for Pacific Area to
maintain all 10 of its 378-foot cutters as fully mission capable.
Pacific Area Command's new initiative has the potential for assisting
the Coast Guard in making more informed choices regarding the best use
of their resources, but according to Pacific Area officials, the
approach will likely require that the Coast Guard allocate additional
maintenance funds. Further, because the approach has not been fully
implemented, it is too soon to tell whether the approach will provide
the results intended. Coast Guard headquarters officials stated that
before such a strategy can be implemented further analysis is required,
to include: (1) determining the estimated savings associated with
creating multiple 378-foot cutter classes; (2) analyzing other cost
saving concepts, such as decommissioning cutters or rotating crews; (3)
obtaining further information on the effect on Coast Guard mission
readiness; and (4) assessing the operational risk associated with
operating cutters that are no longer multimission capable. Officials
from Coast Guard headquarters officials further stated that they are
exploring the possibility of increasing the funds available for
operating expenses for the 378-foot high-endurance cutters in fiscal
year 2007.
Management Challenges Faced in Acquiring New Assets Remain Significant:
In its fiscal year 2006 budget request, the Administration requested
$966 million for the Deepwater program---$242 million more than
Congress appropriated for the program in fiscal year 2005. This request
reflects significant revisions to the Deepwater program's requirements,
capabilities, and schedule necessitated by the Coast Guard's new
homeland security mission. Recently, the House Appropriations Committee
recommended $500 million for the Deepwater program, $466 million less
than the Administration requested.[Footnote 22] The committee expressed
concern about the path the program has taken and the lack of
information provided to Congress as the primary reasons for this
recommendation. Specifically, the committee did not believe that the
Coast Guard's revised implementation plan provided enough programmatic
information such as asset delivery timelines and funding projections
for each year through the program's completion.
In late May 2005, the Coast Guard submitted documentation to the
committee in response to the committee's request. In June 2005, the
Senate Appropriations Committee expressed concern about the lack of
information concerning the Deepwater plan in the fiscal year 2006
budget request but recommended funding of $905.6 million for the
program for fiscal year 2006.[Footnote 23] As of early July 2005, the
fiscal year 2006 appropriation for the Deepwater program was still
pending, and so the funding level is still not known. Since the
inception of the Deepwater program, we have expressed concerns about
the degree of risk in the acquisition approach and the Coast Guard's
ability to manage and oversee the program. In 2004 we reported that,
well into the contract's second year, key components needed to manage
the program and oversee the system integrator's performance had not
been effectively implemented.[Footnote 24] We also reported that the
degree to which the program was on track could not be determined
because the Coast Guard was not updating its schedule.[Footnote 25] We
detailed improvements needed in a number of areas, shown in table 5.
These concerns have a direct bearing on any consideration to increase
the program's pace. Because the Coast Guard was having difficulty
managing the Deepwater program at the pace it had anticipated,
increasing the pace by expediting the acquisitions would only
complicate the problem.
Table 5: Summary of Deepwater Areas Needing Management Attention as
Reported by GAO:
Area of concern: Key components of management and oversight are not
effectively implemented:
Recommendations to the U.S. Coast Guard: Improve integrated product
teams responsible for managing the program by providing better
training, approving charters, and improving systems for sharing
information between teams;
Ensure adequate staffing of the Deepwater program;
Provide field personnel with guidance and training on transitioning to
new Deepwater assets;
Update the original acquisition schedule to support future budget
requests, starting with the fiscal year 2006 request.
Area of concern: Procedures for ensuring contractor accountability are
inadequate:
Recommendations to the U.S. Coast Guard:
Develop measurable award fee criteria consistent with guidance from the
Office of Federal Procurement Policy;
Provide for better input from U.S. Coast Guard technical
representatives;
Hold system integrator accountable for improving effectiveness of
integrated product teams;
Establish a time frame for putting steps in place to measure
contractor's progress toward improving operational effectiveness;
Establish a baseline for determining whether the acquisition approach
is costing the government more than a traditional asset replacement
approach;
Establish criteria to determine when to adjust the project baseline and
document the reasons for change.
Area of concern: Control of future costs through competition remains at
risk because of weak oversight:
Recommendations to the U.S. Coast Guard:
Develop a comprehensive plan for holding the system integrator
accountable for ensuring adequate competition among suppliers;
For subcontracts over $5 million awarded by the system integrator to
the two major subcontractors, require notification to the Coast Guard
about decisions to perform the work in- house rather than contracting
it out.
Source: GAO.
[End of table]
The Coast Guard agreed with nearly all of our recommendations and has
made progress in implementing them. Specifically, the Coast Guard has
fully addressed three of the recommendations and has actions under way
on others. However, in light of continuing management challenges, it
will likely take some time for the Coast Guard to fully address the
remaining recommendations. While actions are under way, management
challenges remain that are likely to take some time for the Coast Guard
to fully address.
Improvement of Program Management and Contractor Oversight Is Mixed:
We have seen mixed success in the Coast Guard's efforts to improve
management of the program and contractor oversight. Three of the four
areas of concern--improving integrated project teams (IPT), ensuring
adequate staff for the program, and planning for human capital
requirements for field units receiving new assets--have yet to be fully
addressed.
Strengthening Integrated Product Teams:
Although the Deepwater program has made some efforts to improve the
effectiveness of IPTs, we continue to see evidence that more
improvements are needed--such as greater coordination--for the teams to
effectively do their jobs. These teams, the Coast Guard's primary tool
for managing the program and overseeing the contractor, are generally
chaired by a subcontractor representative and consist of members from
subcontractors and the Coast Guard. The teams are responsible for
overall program planning and management, asset integration, and
overseeing delivery of specific Deepwater assets. Since our March 2004
report, the teams have been restructured, and 20 teams have charters
setting forth their purpose, authority, and performance goals. And new,
entry-level training is being provided to team members.
Despite this progress, however, the needed changes are not yet
sufficiently in place. A recent assessment by the Coast Guard of the
system integrator's performance found that roles and responsibilities
in some teams continue to be unclear. Decision making is to a large
extent stovepiped, and some teams still lack adequate authority to make
decisions within their realm of responsibility. One source of
difficulty for some team members has been the fact that each of the two
major subcontractors has used its own databases and processes to manage
different segments of the program. Decisions on air assets are made by
Lockheed Martin, while decisions regarding surface assets are made by
Northrop Grumman. This approach can lessen the likelihood that a system-
of-systems outcome will be achieved if decisions affecting the entire
program are made without the full consultation of all parties involved.
Deepwater program officials told us that more attention is being paid
to taking a system-wide approach and that the Coast Guard has
emphasized the need to ensure that the two major subcontractors
integrate their management systems. We will continue to monitor the
Coast Guard's progress in implementing this recommendation during our
pending review of the revised Deepwater plan.
Ensuring Adequate Staffing for the Deepwater Program:
The Coast Guard has taken steps to more fully staff the Deepwater
program, with mixed effects. In February 2005, the Deepwater program
executive officer approved a revised human capital plan. The plan
emphasizes workforce planning, including determining needed knowledge,
skills, and abilities and developing ways to leverage institutional
knowledge as staff rotate out of the program. This analysis is intended
to help determine what gaps exist between needed skills and existing
skills and to develop a plan to bridge these gaps. The Coast Guard has
also taken some short-term steps to improve Deepwater program staffing,
hiring contractors to assist with program support functions, shifting
some positions from military to civilian to mitigate turnover risk, and
identifying hard-to-fill positions and developing recruitment plans
specifically for them. Finally, the Deepwater program and the Coast
Guard's acquisition branch have begun using an automated system for
forecasting military rotation cycles, a step Deepwater officials
believe will help with long-range strategic workforce planning and
analysis.
Despite these actions, however, vacancies remain in the program, and
some measures that may have highlighted the need for more stability in
the program's staff have been removed from the new human capital plan.
As of January 2005, 244 positions were assigned to the program, with
206 of these filled, resulting in a 16 percent vacancy rate. A year
ago, 209 staff were assigned to the program. Further, the new human
capital plan removes a performance goal that measured the percentage of
billets filled at any given time. Coast Guard officials stated that the
prior plan's goal of a 95 percent or higher fill rate was unduly
optimistic and was a poor measure of the Coast Guard's ability to meet
its hiring goals. For example, billets for military personnel who plan
to rotate into the program in the summer are created at the beginning
of the budget year, leading the measure to count those positions as
vacant from the beginning of the budget year until summer. Other
performance measures that were included in the prior plan to measure
progress in human capital issues have also been removed. For example,
to help ensure that incoming personnel received acquisition training
and on-the-job training, a billet was included in the prior plan to
serve as a floating training position that replacement personnel could
use for a year before the departure of military incumbents. The Coast
Guard did not fund this position, and the new plan removes the billet.
According to the Coast Guard, these measures were removed because the
revised Deepwater plan focuses on the long-range strategic human
capital issues associated with the execution of the acquisition over
the entire period, whereas the prior plan had a short-term operational
focus. We will continue to monitor the Coast Guard's progress in
implementing this recommendation during our pending review of the
revised Deepwater plan.
Improving Communication with Personnel Who Will Use the New Assets:
The Coast Guard recognizes the critical need to inform the operators
who are to use the Deepwater assets of progress in the program, and
officials stated that on the basis of our recommendations, they have
made a number of improvements in this area. A November 2004 analysis of
the Deepwater program's communication process, conducted in
coordination with the National Graduate School, found that the
communication and feedback processes were inadequate. Emphasis has now
been placed on outreach to field personnel, with a multipronged
approach involving customer surveys, face-to-face meetings, and
presentations. We have not yet evaluated the effectiveness of the new
approach.
Human capital requirements for the Deepwater program--such as crew
numbers and schedules, training, and support personnel--will have an
increasing impact on the program's ability to meet its goals as the
pace at which assets are delivered to field units picks up. Recent
assessments by Coast Guard performance monitors show this to be an area
of concern.[Footnote 26] Coast Guard officials have expressed concern
about whether the system integrator is appropriately considering human
capital in systems engineering decisions. The system integrator is
required to develop a workforce management plan for Deepwater, as well
as "human factors engineering" plans for each Deepwater asset and for
the overall system of systems. The Coast Guard rejected the
contractor's workforce management plan and several of the proposed
human factors engineering plans as being inadequate. The rejections
were due, in part, to the lack of an established and integrated system-
level engineering approach that shows how issues relating to human
capabilities and limitations of actually performing with the system
will be approached. One performance monitor noted that as of late 2004,
requirements for staffing and training of maintenance facilities and
organizations had yet to be determined. According to the Coast Guard,
emphasis on a system integrator for addressing human capital
considerations is necessary to ensure that Deepwater goals are met,
especially as they pertain to operational effectiveness and total
ownership cost. We will continue to monitor the Coast Guard's progress
in implementing this recommendation during our pending review of the
revised Deepwater plan.
Updating the Acquisition Schedule:
The Coast Guard has recently undertaken efforts to update the original
2002 Deepwater acquisition schedule--an action that we suggested in our
June 2004 report.[Footnote 27] The original schedule had milestone
dates showing when work on an asset would begin and when delivery would
be expected, as well as the integrated schedules of critical linkages
between assets, but we found that the Coast Guard was not maintaining
an updated and integrated version of the schedule.[Footnote 28] As a
result, the Coast Guard could not demonstrate whether individual
components and assets were being integrated and delivered on schedule
and in critical sequence. As recently as October 2004, Deepwater
performance monitors likewise expressed concern that the Coast Guard
lacked adequate visibility into the program's status and that lack of
visibility into the schedules for component-level items prevented
reliable forecasting and risk analysis. The Coast Guard has since taken
steps to update the outdated schedule and has indicated that it plans
to continue to update the schedule each month for internal management
purposes, and semiannually to support its budget planning efforts. We
think this is an important step toward improving the Coast Guard's
management of the program because it provides a more tangible picture
of progress, as well as a baseline for holding contractors accountable.
We will continue our oversight of the Coast Guard to ensure progress is
made and to monitor how risks are mitigated.
Procedures for Ensuring System Integrator Accountability Are More
Rigorous, but Concerns Remain:
We have seen progress in terms of the rigor with which the Coast Guard
is periodically assessing the system integrator's performance, but
concerns remain about the broader issues of accountability for
achieving the overarching goals of minimizing total ownership cost and
maximizing operational effectiveness.
Improving Criteria for Assessing Performance:
Improvements continue to be made to the criteria for assessing the
system integrator's performance. In March 2004, we reported that the
process for assessing performance against specific contract tasks
lacked rigor. The criteria for doing so have since been revised to more
clearly reflect those that are objective, (that is, measured through
automated tools against established measures) and those that are
subjective, meaning the narrative comments by Coast Guard performance
monitors. Weights have been assigned to each set of evaluation factors,
and the Coast Guard continues to refine the distribution of the weights
to reach an appropriate balance between automated results and the
eyewitness observations of the performance monitors. Coast Guard
officials told us that they have also provided additional guidance and
training to performance monitors. We found that efforts have been made
to improve the consistency of the format used for their input in
assessments of the system integrator's performance. Coast Guard
officials said that they are continuing to make improvements to ensure
that performance monitors' relevant observations are appropriately
considered in making award fee determinations.
It is important to note that although performance monitor comments are
considered subjective, they are valuable inputs to assessing the system
integrator's performance, particularly when they are tied to measurable
outcomes. According to Coast Guard officials, the Coast Guard will
continue to refine the award fee factors as the program progresses. In
some cases, we noted that the performance monitors' assessments
differed vastly from the results of automated, data-driven assessments.
For example, while schedule management is discussed in the Coast
Guard's midterm assessment of the system integrator's performance as a
major area of challenge and risk, the objective measure showed 100
percent compliance in this area. Another measure assesses the extent to
which integrated product teams consider the impact of their decisions
on the overall cost and effectiveness of the Deepwater program.
Performance monitors reported that because system-level guidance had
not been provided to the teams responsible for specific assets, they
had a limited ability to see the whole picture and understand the
impact of decisions on total ownership cost and operational
effectiveness. However, the automated measure was again 100 percent
compliance. Coast Guard officials said that, in some cases, the data-
driven measures do not accurately reflect the contractor's performance.
We will continue to monitor changes to the Coast Guard's measures for
assessing the system integrator's performance.
Holding the System Integrator Accountable for Effectiveness of Product
Teams:
Changes have been made to the award fee measures that place additional
emphasis on the system integrator's responsibility for making
integrated product teams effective. Award fee criteria now incorporate
specific aspects of how the integrator is managing the program,
including administration, management commitment, collaboration,
training, and empowerment of these teams. However, as discussed above,
concerns remain about whether the teams are effectively accomplishing
their goals.
Evaluation of Operational Effectiveness and Total Ownership Cost:
While the Coast Guard has developed models to measure the system
integrator's performance in operational effectiveness and total
ownership cost, concrete results have not yet emerged. Minimizing total
ownership cost and maximizing operational effectiveness are two of the
overarching goals of the Deepwater program. The system integrator's
performance in these two areas will be a critical piece of information
when the Coast Guard makes a decision about whether to award the
contractor the first contract option period of 5 years. Initial
decision making is to start in June 2006.
With regard to the operational effectiveness of the program, measuring
the system integrator's impact has yielded limited results to date
because few of the new assets are operational. The Coast Guard has
developed modeling capabilities to simulate the effect of the new
capabilities on its ability to meet its missions. However, until
additional assets become operational, progress toward this goal will be
difficult to determine.
With regard to total ownership cost, the Coast Guard does not plan to
implement our recommendation, despite concurring with it at the time of
our March 2004 report. The Coast Guard has not adhered to its original
plan, set forth in the Deepwater program management plan, of
establishing as its baseline a cost not to exceed the dollar value of
replacing the assets under a traditional approach (e.g., on an asset-
by-asset basis rather than a system-of-systems approach). In addition
to providing for greater synergies between air, sea, sensor and
communications assets and equipment, the system-of-systems approach was
to yield cost savings when compared with a traditional acquisition
approach. Although the Coast Guard initially established a cost
baseline consistent with the program management plan's approach, the
Coast Guard has not updated it to reflect changes made to the system
integrator's cost estimate baseline, and therefore is not being used to
evaluate the contractor's progress in holding down total ownership
cost. As a result, the cost baseline being used to measure total
ownership cost is not the Coast Guard's, but rather is the system
integrator's own cost estimate. As we reported in March 2004, we
believe that measuring the system integrator's cost growth compared
with its own cost proposal will tell the government nothing about
whether it is gaining efficiencies by turning to the system-of-systems
concept rather than the traditional asset-by-asset approach. Although
the Deepwater program has undergone a number of alterations since the
contract was awarded in 2002, the Coast Guard has not studied whether
the system-of-systems approach is still more cost effective as opposed
to a traditional acquisition approach. Thus, the Coast Guard will lack
this information as it prepares to decide whether to award the first
contract option beginning in June 2006.
Establishing Criteria and Documenting Changes to the Baseline:
Coast Guard officials stated that the contract total ownership cost and
operational effectiveness baseline is adjusted based on approved
decision memorandums from the Agency Acquisition Executive, the Vice
Commandant of the Coast Guard. Such memorandums were originally
approved by the program executive officer on a case-by-case basis. As
we reported in March 2004,[Footnote 29] establishing a solid baseline
against which to measure progress in lowering total ownership cost is
critical to holding the contractor accountable.
Coast Guard Reports Taking Steps to Hold the System Integrator
Accountable for Competition:
The Coast Guard reported that it is taking steps to address our
recommendations concerning cost control through competition among
second-tier suppliers and notification of "make" decisions.[Footnote
30] While we have not assessed the effectiveness of the Coast Guard's
actions regarding competition among second-tier suppliers, we are
satisfied with its efforts regarding notification of make decisions. It
should be noted, though, that we have not assessed the effectiveness of
the following actions.
* Competition among second-tier suppliers. Coast Guard officials told
us that in making the decision about whether to award the first
contract option, the government will specifically examine the system
integrator's ability to control costs by assessing the degree to which
competition is fostered at the major subcontractor level. The
evaluation will consider the subcontractors' project management
structure and processes to control costs, as well as how market surveys
of similar assets and major subsystems are implemented. The Coast Guard
is focusing its attention on those areas that were priced after the
initial competition for the Deepwater contract was completed, such as
the HH-65 re-engining and the C-130J missionization.[Footnote 31] For
example, a new process implemented for the C-130J missionization was a
requirement for competition in subcontracting and government approval
of all subcontracts exceeding $2 million in order for the Coast Guard
to monitor the integrator's competition efforts.
* Notification of make decisions. According to the Federal Acquisition
Regulation, the prime contractor is responsible for managing contract
performance, including planning, placing, and administering
subcontracts as necessary to ensure the lowest overall cost and
technical risk to the government.[Footnote 32] The Federal Acquisition
Regulation further provides that when "make-or-buy programs" are
required, the government may reserve the right to review and agree on
the contractor's make-or-buy program when necessary to ensure
negotiation of reasonable contract prices, among other things. We
recommended that the Coast Guard be notified of make-or-buy decisions
over $5 million in order to facilitate controlling costs through
competition. We suggested the $5 million threshold because Lockheed
Martin, one of the major subcontractors, considers that amount to be
the threshold for considering its suppliers major. The Coast Guard has
asked the system integrator, on a voluntary basis, to provide
notification 1 week in advance of a make decision of $10 million or
more based on the criteria in the make-or-buy program provisions of the
Federal Acquisition Regulation. According to Coast Guard officials, to
date, no make decision has exceeded $10 million since the request was
made. The details implementing this recommendation have not yet been
worked out, such as specifically who in the Coast Guard will monitor
the subcontractors' make decisions to ensure that the voluntary
agreement is complied with. We will continue to monitor the Coast
Guard's progress in implementing this recommendation during our pending
review of the revised Deepwater plan.
Concluding Observations:
Our work suggests the costly and important Deepwater program will need
constant monitoring and management attention to successfully accomplish
its goals. In this respect, we identified three points that should be
kept in mind in considering how to proceed with the program.
* First, the need to replace or upgrade deteriorating legacy assets is
considerable. While the Coast Guard currently lacks measures that
clearly demonstrate how this deterioration affects its ability to
perform deepwater-related missions, it is clear that the deepwater
legacy assets are insufficient for the task. As the Coast Guard
continues to develop condition measures that are more robust and able
to link the assets' condition with mission capabilities, and as it
further develops and implements its Capital Asset Management System, it
will be in a better position to make more informed decisions regarding
where its budget should be spent to maximize the capabilities of its
legacy assets as the Coast Guard transitions to the Integrated
Deepwater System.
* Second, there are signs that as the Deepwater program moves ahead,
the Coast Guard will continue to report more problems with sustaining
existing assets, together with the attendant need for additional
infusions of funding to deal with them. Some of these problems, such as
those on the 378-foot cutters, are included in the compendium the Coast
Guard uses to set sustainment priorities and plan budgets, but the
Coast Guard has not allocated funds because the problems pertain to
assets that are among the first to be replaced. However, projects to
address these problems are nevertheless likely to be needed. While the
Coast Guard is moving to improve the information it uses to set budget
priorities through development of CAMS, the system has not been
implemented, and therefore, it is too soon to tell how effective the
system will be. We will continue to work with the Coast Guard to
monitor its progress on CAMS as a means for ensuring that there is a
more systematic and comprehensive approach to keeping Congress abreast
of the potential bill for sustaining these assets.
* Third, although the need to replace and upgrade assets is strong,
there still are major risks in the Coast Guard's acquisition approach.
The cost increases and schedule slippages that have already occurred
are warning signs. While the Coast Guard has initiated actions to
address problems we have raised involving system integration, cost and
schedule management, and integrated product teams, we remain concerned
that the program still carries major risks. We will continue to work
with the Coast Guard to determine how best to manage these risks so
that the Deepwater missions can be accomplished in the most cost-
effective way.
Agency Comments:
We requested comments on a draft of this report from the Department of
Homeland Security and the U.S. Coast Guard. The U.S. Coast Guard
provided technical comments, which have been incorporated into the
report where appropriate.
We are providing copies of this report to the Secretary of the
Department of Homeland Security, the Commandant of the U.S. Coast
Guard, and interested congressional committees. The report will also be
made available to others upon request. In addition, the report will be
available at no charge on GAO's Web site at http//www.gao.gov.
For information about this report, please contact me at (415) 904-2200,
or wrightsonm@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Individuals making key contributions to this report are listed
in appendix III.
Signed by:
Margaret T. Wrightson:
Director, Homeland Security and Justice Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
This report examines the condition of the U. S. Coast Guard's Deepwater
legacy assets and the acquisition management challenges the Coast Guard
faces. Our work focused on three key questions: (1) How has the
condition of the Coast Guard's deepwater legacy assets changed during
fiscal years 2000 through 2004? (2) What actions has the Coast Guard
taken to maintain, upgrade, and better manage its deepwater legacy
assets? (3) What are the management challenges the Coast Guard faces in
acquiring new assets, especially if a more aggressive schedule is
adopted?
In assessing how the condition of the deepwater legacy assets has
changed during fiscal years 2000 through 2004, we analyzed what Coast
Guard officials told us were the best available condition measures. For
deepwater aircraft, we obtained concurrence from Coast Guard Office of
Aeronautical Engineering officials that the appropriate measures to use
for aircraft condition included the availability index (percentage of
time aircraft were available to complete missions), cost per flight
hour, labor hours per flight hour, programmed flight hours per year,
scheduled versus unscheduled maintenance expenditures, and estimated
deferred maintenance. For cutters, we obtained concurrence from the
Office of Naval Engineering and the Office of Cutter Forces that the
appropriate measures to use for cutter condition were the number of
major (category 3 and 4) casualties, the percent of time free of major
casualties, scheduled versus unscheduled maintenance, and estimated
deferred maintenance. We also reviewed data on mishaps and the dispatch
reliability index for aircraft, and lost cutter days and unscheduled
maintenance days for cutters, but we did not use these measures because
the data were either not relevant to our analysis, incomplete, not
available for the entire time period covered by our review, or not
sufficiently reliable for our purposes. We supplemented our analyses of
these measures with documentation from relevant reports and studies, as
well as from interviews of asset program managers and crews for each
type of deepwater legacy aircraft and cutter. For aircraft, we
collected data from the Aircraft Repair and Supply Center in Elizabeth
City, North Carolina; and visited selected air stations in Kodiak,
Alaska; Miami, Florida; and Elizabeth City, North Carolina; to provide
coverage of each of the four types of Deepwater aircraft--HC-130 and HU-
25 fixed wing aircraft, and the HH-60 and HH-65 rotary aircraft. For
cutters, we collected data at the Maintenance and Logistics Commands in
Alameda, California; and Norfolk, Virginia; and visited selected Coast
Guard facilities in Kodiak, Alaska; Portsmouth, Virginia; and Miami,
Florida; to provide coverage of each of the three types of Deepwater
vessels--high-endurance cutters, medium-endurance cutters, and patrol
boats. We also reviewed Coast Guard policies and standards, including
the Coast Guard Cutter Employment Standards, Coast Guard Aircraft
Employment Standards for Days Employed Aboard Ship and Days Away from
Home Station, and the Coast Guard Environmental Health and Safety
Manual. In addition, to assess the reliability of the Coast Guard's
data and condition measures, we questioned knowledgeable officials and
reviewed existing documentation about the data and the systems that
produced the data. On the basis of our assessments, we determined that
the data were sufficiently reliable for the purposes of this report.
To determine the actions that the Coast Guard has undertaken to
maintain, upgrade, and better manage its deepwater legacy assets, we
reviewed documentation such as the Systems Integrated Near Term Support
Strategy (SINTSS), which is a compendium of information on proposed
asset sustainment projects, and spoke with various Coast Guard program
officials from the Offices of Naval and Aeronautical Engineering, as
well as the Atlantic Area Maintenance and Logistics Command, regarding
the need to perform increasing maintenance on assets between
deployments. To determine additional efforts that Coast Guard plans to
undertake to better manage these assets, we met with Coast Guard
officials from the Office of Naval Engineering to discuss the
development of measures that the Coast Guard hopes will more accurately
measure the impact that the declining condition of its legacy assets
has on mission capabilities and reviewed documentation relevant to
these measures. We also reviewed plans and guidance for the newly
developed Capital Asset Management Strategy (CAMS), which the Coast
Guard intends to use in establishing priorities for determining which
Deepwater asset maintenance and sustainment projects to fund. In
addition, we also met with officials at the Pacific Area Command and
Maintenance and Logistics Command to discuss their fleet sustainment
initiative for keeping the high-endurance cutters operational until
their replacement by the National Security Cutter.
To determine what management challenges the Coast Guard faces in
acquiring new assets, we followed up on actions the Coast Guard has
taken to implement the 11 recommendations in our report Contract
Management: Coast Guard's Deepwater Program Needs Increased Attention
to Management and Contractor Oversight (GAO-04-380), of March 9, 2004;
and the 1 recommendation from our report Coast Guard: Deepwater Program
Acquisition Schedule Update Needed, (GAO-04-695), of June 14, 2004. We
received briefings and held several meetings with the Deepwater Program
Executive Officer, the Deputy Program Executive Officer, and a number
of Deepwater staff, including contracting officers. We also held a
discussion with representatives of the system integrator to get their
views on progress made in implementing the recommendations. We analyzed
documentation supporting the Coast Guard's midterm assessment of the
contractor's system integration and management performance in the third
year of the contract, including written comments by the performance
monitors. We also held discussions with Deepwater program performance
monitors. We recently began an assessment of the third year of
performance. However, we were not able to thoroughly review the
documentation in time to include our observations in this report. We
reviewed information on Deepwater integrated product teams, including
membership lists and briefings provided by the Coast Guard on measures
of effectiveness for the teams. We analyzed the Coast Guard's plans to
increase communications to field operators, including its August 2004
Integrated Deepwater Systems Internal Communications Plan, and received
a briefing on how the plan is being implemented. We compared the
September 2003 Deepwater Human Capital Plan with the February 2005
revised plan to identify changes that had been made and discussed
Deepwater program office staffing numbers and plans with Coast Guard
officials. Finally, we discussed with Coast Guard officials steps the
Coast Guard has taken to hold the system integrator accountable for
"make" versus "buy" decisions by the two major subcontractors and
reviewed a January 2005 letter on this subject from the Director of
Subcontracts for Integrated Coast Guard Systems to the subcontractors.
We performed our review from July 2004 to June 2005 in accordance with
generally accepted government auditing standards at various Coast Guard
offices and facilities.
[End of section]
Appendix II: Information on Deepwater Legacy Aircraft and Cutters:
HC-130 Long-Range Surveillance Aircraft:
HC-130 Fleet Overview:
The HC-130 is a long-range, fixed-wing, multimission aircraft used for
search and rescue, drug interdiction, alien and migrant interdiction,
living marine resources, and defense readiness and logistics missions.
Manufactured by Lockheed Martin Aero, the HC-130 aircraft entered Coast
Guard service beginning in 1972. There are currently 27 HC-130 aircraft
within the Coast Guard. The estimated service life is approximately 30
years or 40,000 flight hours.
Performance Trends:
The HC-130 fleet's performance data show that while there was a decline
in fiscal year 2004, fleet availability has steadily improved since
2000 and remains near the Coast Guard's 71 percent availability
standard. Similarly, the number of labor hours per flight hour remained
fairly stable from fiscal year 2000 to 2003 but increased slightly in
fiscal year 2004. Programmed flight hours have also remained reasonably
stable, with some year-to-year fluctuations after a decline in fiscal
year 2001. These performance measures are summarized in table 6.
Table 6: HC-130 Fleet Performance Data for Fiscal Years 2000-2004:
Fiscal year: 2000;
Availability index[A]: 63.5%;
Programmed flight hours[B]: 20,805;
Labor hours per flight hour[C]: 15.3.
Fiscal year: 2001;
Availability index[A]: 65.9%;
Programmed flight hours[B]: 19,027;
Labor hours per flight hour[C]: 16.0.
Fiscal year: 2002;
Availability index[A]: 71.0%;
Programmed flight hours[B]: 18,824;
Labor hours per flight hour[C]: 16.7.
Fiscal year: 2003;
Availability index[A]: 73.3%;
Programmed flight hours[B]: 19,006;
Labor hours per flight hour[C]: 16.9.
Fiscal year: 2004;
Availability index[A]: 68.6%;
Programmed flight hours[B]: 18,800;
Labor hours per flight hour[C]: 20.0.
Source: U.S. Coast Guard.
[A] The availability index indicates the percentage of time that
aircraft assigned to Coast Guard air stations are available to perform
Coast Guard missions. The historical availability standard is 71
percent, driven in part by the Coast Guard's goal of each air station
with at least three aircraft having at least one aircraft ready to
launch within 30 minutes of a distress signal.
[B] Programmed flight hours are the number of hours per year assigned
to a particular type of aircraft based on budget considerations for
operation and maintenance costs.
[C] Labor hours per flight hour represent the average of the number of
maintenance labor hours expended by field units versus the number of
flight hours produced by those units, for each asset class.
[End of table]
Maintenance Trends:
The HC-130 fleet's maintenance costs have generally increased during
fiscal years 2000 through 2004. Overall, the fleet's cost per flight
hour and scheduled maintenance expenditures have risen, driven by an
increase in the scope of depot-level maintenance to improve the fleet's
material condition. Also, depot-level maintenance schedule delays have
led to a backlog, thereby increasing the amount of fleet deferred
maintenance, as shown in table 7.
Table 7: HC-130 Fleet Maintenance Data forFiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Cost per flight hour[A]: $1,347;
Estimated scheduled maintenance expenditures: $8,415,000;
Estimated unscheduled maintenance expenditures[B]: $9,051,000;
Estimated deferred maintenance costs: $4,549,000.
Fiscal year: 2001;
Cost per flight hour[A]: $1,637;
Estimated scheduled maintenance expenditures: $9,769,000;
Estimated unscheduled maintenance expenditures[B]: $7,226,000;
Estimated deferred maintenance costs: $14,295,000.
Fiscal year: 2002;
Cost per flight hour[A]: $2,202;
Estimated scheduled maintenance expenditures: $9,309,000;
Estimated unscheduled maintenance expenditures[B]: $6,354,000;
Estimated deferred maintenance costs: $4,976,000.
Fiscal year: 2003;
Cost per flight hour[A]: $2,077;
Estimated scheduled maintenance expenditures: $12,891,000;
Estimated unscheduled maintenance expenditures[B]: $7,593,000;
Estimated deferred maintenance costs: $7,223,000.
Fiscal year: 2004;
Cost per flight hour[A]: $2,357;
Estimated scheduled maintenance expenditures: $18,641,000;
Estimated unscheduled maintenance expenditures[B]: $10,142,000;
Estimated deferred maintenance costs: $5,737,000.
Source: GAO analysis of U.S. Coast Guard data.
Note: Cost per flight hour, estimated maintenance expenditures and
deferred maintenance cost data in this and other aircraft fleet
maintenance data tables were adjusted for inflation using U.S.
Department of Labor producer price indices for aircraft maintenance and
repair, and are presented in fiscal year 2004 dollars.
[A] The cost per flight hour measure represents the variable costs of
spare parts and depot-level maintenance associated with operating each
aircraft type. This figure is derived by dividing historical aircraft
part demand data by the number of hours flown during the same period.
The current year data are combined with that of the 2 previous fiscal
years, adjusted for inflation, to calculate a weighted average. The
model does not address deferred maintenance or inventory holes but
reports how much it costs to operate each fleet for a given number of
hours in a given fiscal year.
[B] The Coast Guard does not normally track aviation unscheduled
maintenance expenditures in relation to scheduled maintenance
expenditures. However, at GAO's request, Coast Guard officials
estimated the unscheduled maintenance expenditures for each type of
deepwater aircraft based on the classification of air station requests
for certain spare parts.
[End of table]
Sustainment Issues:
Obsolescence of the HC-130's Surface Search Radar System:
According to Coast Guard officials, there is an urgent need to replace
the HC-130's APS-137 surface search radar system. The radar system--
part of the aircraft's original configuration--is subject to frequent
failures and is quickly becoming unsupportable, according to the Coast
Guard officials. Replacement parts are very difficult to locate. While
HC-130 flight crews will work around any failures, without the system,
the flight crews are reduced to looking out windows for targets,
thereby greatly reducing mission capabilities for performing search and
rescue, alien-migrant interdiction, and drug interdiction missions. In
the conference report accompanying the Coast Guard's fiscal year 2005
appropriation, the conferees directed $9 million for the radar
system.[Footnote 33] Total system replacement costs are estimated to be
$78 million and are to be completed in fiscal year 2008.
Avionics Modernization and Wing-Rewiring Projects:
The Coast Guard has identified several additional HC-130 sustainment
projects in its latest Systems Integrated Near Term Support Strategy.
Included in these projects are an avionics modernization and a related
wing-rewiring project. According to the Coast Guard, the HC-130's
avionics suite utilizes 1960s technology that is costly to maintain and
will soon be unsupportable because of a lack of spare and repair parts.
This cockpit modernization project is aimed at enabling the HC-130
aircraft to better support maritime safety and security and national
defense and logistics missions. The Coast Guard estimates this project
will cost $305 million and take 4 years to complete. The wing-rewiring
project is designed to provide more power to an upgraded avionics suite
and to ward off potential safety issues due to deteriorating wiring,
such as electrical shorts and probability of fire. Coast Guard
officials estimate the project will cost nearly $11 million and will
take 5 years to complete.
HC-130 Center Wing Box Structural Issues:
Five of the 27 operational HC-130s have recently been placed under
operational restrictions at the request of the aircraft's manufacturer,
Lockheed Martin Aero, because of a problem associated with the
aircraft's center wing box. The restrictions include limitations on
weight, airspeeds, maneuvering, and mission endurance. As of early June
2005, the Coast Guard was awaiting the release of inspection criteria
from Lockheed Martin. Nevertheless, the Coast Guard estimates that the
inspections will cost $2 million for the 5 aircraft. This problem is
not limited to Coast Guard aircraft, but is affecting HC-130s
worldwide. The remaining Coast Guard HC-130s are not subject to the
operational restrictions but will likely have to undergo similar
limitations and inspections beginning in fiscal year 2006.
HU-25 Medium-Range Surveillance Aircraft:
HU-25 Fleet Overview:
The HU-25 is a medium-range, fixed-wing, multimission aircraft used for
search and rescue, drug interdiction, alien/migrant interdiction,
fisheries law enforcement, defense readiness, and essential logistics
missions. Manufactured by Falcon Jet, the HU-25 entered the Coast Guard
aviation fleet in 1982. The Coast Guard's fleet contains 23 aircraft.
The Coast Guard maintained a fleet of 26 operational HU-25 aircraft in
fiscal year 2000 but reduced the fleet because of budgetary constraints
in fiscal year 2002. The original estimated service life was 20 years
or 20,000 flights (landings) or 30,000 flight hours.
Performance Trends:
The HU-25 fleet's programmed flight hours have fluctuated during fiscal
years 2000 through 2004 with changes in fleet size. In fiscal year
2004, the fleet flew 86 percent of the fiscal year 2001 programmed
flight hours with 29 percent fewer aircraft. Moreover, the fleet's
availability index has generally improved during fiscal years 2000
through 2003, in large part because of the enhanced reliability of the
HU-25's ATF-3 engine. Though it consistently remained below the Coast
Guard's 71 percent availability standard, it has improved from fiscal
year 2000 levels. The fleet's labor hours per flight hour have also
remained fairly consistent since fleet reduction. Table 8 provides a
summary of the HU-25's key performance measures.
Table 8: HU-25 Fleet Performance Data for Fiscal Years 2000-2004:
Fiscal year: 2000;
Availability index: 59.0%;
Programmed flight hours: 16,322;
Labor hours per flight hour: 10.9.
Fiscal year: 2001;
Availability index: 57.4%;
Programmed flight hours: 15,616;
Labor hours per flight hour: 13.4.
Fiscal year: 2002;
Availability index: 62.4%;
Programmed flight hours: 11,200;
Labor hours per flight hour: 12.9.
Fiscal year: 2003;
Availability index: 67.2%;
Programmed flight hours: 14,122;
Labor hours per flight hour: 12.9.
Fiscal year: 2004;
Availability index: 65.8%;
Programmed flight hours: 13,500;
Labor hours per flight hour: 13.5.
Source: U.S. Coast Guard.
[End of table]
Maintenance Trends:
The maintenance measures for the HU-25 show varied results. During
fiscal years 2000 through 2004, the fleet's cost per flight hour has
generally declined, scheduled and unscheduled maintenance expenditures
fluctuated, and the amount of deferred maintenance dropped
significantly. Table 9 provides a summary of the key maintenance
measures.
Table 9: HU-25 Fleet Maintenance Data for Fiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Cost per flight hour: $1,980;
Estimated scheduled maintenance expenditures: $17,616,000;
Estimated unscheduled maintenance expenditures: $16,572,000;
Estimated deferred maintenance costs: $12,338,000.
Fiscal year: 2001;
Cost per flight hour: $1,979;
Estimated scheduled maintenance expenditures: $15,184,000;
Estimated unscheduled maintenance expenditures: $18,979,000;
Estimated deferred maintenance costs: $4,230,000.
Fiscal year: 2002;
Cost per flight hour: $1,917;
Estimated scheduled maintenance expenditures: $13,264,000;
Estimated unscheduled maintenance expenditures: $11,065,000;
Estimated deferred maintenance costs: 0.
Fiscal year: 2003;
Cost per flight hour: $1,833;
Estimated scheduled maintenance expenditures: $18,447,000;
Estimated unscheduled maintenance expenditures: $9,868,000;
Estimated deferred maintenance costs: $207,000.
Fiscal year: 2004;
Cost per flight hour: $1,897;
Estimated scheduled maintenance expenditures: $16,524,000;
Estimated unscheduled maintenance expenditures: $11,961,000;
Estimated deferred maintenance costs: 0.
Source: GAO analysis of U.S. Coast Guard data.
[End of table]
Sustainment Issues:
Engines:
According to Coast Guard officials, the HU-25's Honeywell ATF-3 engines
are complex, have been historically unreliable, and are time-consuming
to maintain--requiring as long as 4 days to re-install a repaired
engine. Some of the engine problems have been mitigated by improvements
in sensor capabilities that allow the aircraft to fly at higher
altitudes for longer periods of time during surveillance missions.
Flying at higher altitudes reduces the amount of saltwater introduced
into the engines, thereby reducing corrosion and placing less stress on
the engines. According to Coast Guard officials, this has contributed
to increasing engine reliability and improvements in HU-25 fleet
availability.
Sensors:
The sensors on the six HU-25D models were recently upgraded at a cost
of $43 million in acquisition, capital, and investment (AC&I) funding.
Five of the six upgraded HU-25D aircraft are stationed at air station
Miami. According to the air station's commanding officer, the upgraded
sensors, while critical to mission success, also have a relatively high
rate of inoperability. Sensor inoperability is a function of the
aircraft's poor air conditioning system. When the cabin becomes too
warm, the sensors fail. Air conditioning system and sensor failure does
not present a safety of flight issue but does degrade mission
capability. According to Coast Guard officials this problem is limited
to the HU-25D models.
HH-60 Medium-Range Recovery Helicopter:
HH-60 Fleet Overview:
The HH-60 helicopter is used for ports, waterways, and coastal
security; drug interdiction; alien/migrant interdiction; defense
readiness; search and rescue; ice operations; living marine resources;
and marine environmental protection missions. Manufactured by Sikorsky
Aircraft Corporation, the HH-60 entered into the Coast Guard fleet in
1990. The Coast Guard has a total of 41 HH-60 aircraft. The original
estimated service life was approximately 20 years.
Performance Trends:
The HH-60's deteriorating subsystems, such as the avionics suite, are
requiring increasing amounts of maintenance and thereby reducing fleet
performance. Nevertheless, the HH-60 fleet has maintained a relatively
high availability level, remaining close to or exceeding the Coast
Guard's 71 percent availability standard since fiscal year 2000. The
fleet's number of programmed flight hours has experienced some year-to-
year fluctuations but has been relatively stable. At the same time,
increasing subsystem failures are requiring more unit-level
maintenance, as reflected by the fleet's general rise in the number of
labor hours per flight hour. Further, Coast Guard officials have told
us that flight crews and maintenance personnel have to work harder and
longer to maintain the fleet's high availability levels. Table 10
provides a summary of the key performance measures.
Table 10: HH-60 Fleet Performance Data for Fiscal Years 2000-2004:
Fiscal year: 2000;
Availability index: 71.4%;
Programmed flight hours: 24,109;
Labor hours per flight hour: 16.5.
Fiscal year: 2001;
Availability index: 70.8%;
Programmed flight hours: 22,115;
Labor hours per flight hour: 18.6.
Fiscal year: 2002;
Availability index: 68.1%;
Programmed flight hours: 24,915;
Labor hours per flight hour: 20.2.
Fiscal year: 2003;
Availability index: 72.4%;
Programmed flight hours: 26,014;
Labor hours per flight hour: 19.8.
Fiscal year: 2004;
Availability index: 69.8%;
Programmed flight hours: 24,832;
Labor hours per flight hour: 21.5.
Source: U.S. Coast Guard.
[End of table]
Maintenance Trends:
In constant dollars, the HH-60 fleet's estimated scheduled and
unscheduled maintenance expenditures generally trended downward during
fiscal years 2000 through 2004, while the cost per flight hour has
fluctuated. In contrast, the amount of HH-60 deferred maintenance
incurred by the Coast Guard has nearly doubled since fiscal year 2000.
HH-60 fleet product line managers attribute this increase to budget
constraints and an expansion in the scope of the HH-60 overhauls
without a corresponding increase in the number of maintenance
personnel. Table 11 provides a summary of the key maintenance measures.
Table 11: HH-60 Fleet Maintenance Data for Fiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Cost per flight hour: $1,062;
Estimated scheduled maintenance expenditures: $18,968,000;
Estimated unscheduled maintenance expenditures: $17,897,000;
Estimated deferred maintenance costs: $10,067,000.
Fiscal year: 2001;
Cost per flight hour: $1,294;
Estimated scheduled maintenance expenditures: $20,787,000;
Estimated unscheduled maintenance expenditures: $15,450,000;
Estimated deferred maintenance costs: $11,374,000.
Fiscal year: 2002;
Cost per flight hour: $1,568;
Estimated scheduled maintenance expenditures: $17,848,000;
Estimated unscheduled maintenance expenditures: $15,845,000;
Estimated deferred maintenance costs: $8,094,000.
Fiscal year: 2003;
Cost per flight hour: $1,516;
Estimated scheduled maintenance expenditures: $17,189,000;
Estimated unscheduled maintenance expenditures: $12,017,000;
Estimated deferred maintenance costs: $9,715,000.
Fiscal year: 2004;
Cost per flight hour: $1,387;
Estimated scheduled maintenance expenditures: $17,254,000;
Estimated unscheduled maintenance expenditures: $12,596,000;
Estimated deferred maintenance costs: $18,824,000.
Source: GAO analysis of U.S. Coast Guard data.
[End of table]
Sustainment Issues:
HH-60 Avionics Replacement:
According to HH-60 flight crews and maintenance staff, the reliability
of the aircraft's 1970s era avionics system is steadily declining. The
system's increasing failure rate is directly affecting the HH-60
fleet's mission capabilities, as avionics system failures are occurring
every 11 flight hours, on average. Further, according to the Coast
Guard, HH-60 avionics repair vendors will phase out system component
repairs in fiscal year 2007. For these reasons, the Coast Guard has
implemented an HH-60 avionics upgrade to replace the current system
with a state-of-the-art open architecture system that Coast Guard
officials claim will meet the future needs of HH-60 missions. The Coast
Guard estimates that this program will cost about $84 million and will
be completed in fiscal year 2010. The Coast Guard has allocated $30.8
million through fiscal year 2005 for the program.
The HH-60 Service Life Extension Program:
The Coast Guard has developed a service life extension program for the
HH-60 fleet to upgrade structural components such as beams, fittings,
and frames, and will increase depot-level maintenance production to
nine aircraft per year. According to the Coast Guard, the program will
extend the service life of the HH-60 fleet through 2022.
HH-65 Short-Range Recovery Helicopter:
HH-65 Fleet Overview:
The HH-65 is a twin-engine, short-range recovery helicopter used for
ports, waterways and coastal security; drug interdiction; alien-migrant
interdiction; defense readiness; search and rescue; ice operations; and
marine environmental missions. The HH-65 entered Coast Guard service
beginning in 1984. The helicopter's airframe is manufactured by
Eurocopter, and most HH-65s are equipped with Honeywell-manufactured
LTS-101-750 engines. However, these engines are currently being
replaced (see details below). The Coast Guard maintains 95 aircraft in
the fleet. The original estimated service life for the HH-65 aircraft
was 20 years, but according to Coast Guard aviation staff, the engine
replacement program should extend the service live beyond that
estimate.
Performance Trends:
Despite safety and reliability concerns related to its engines, the HH-
65 fleet has consistently maintained an availability level above the 71
percent Coast Guard standard during fiscal years 2000 through 2004.
Moreover, the number of fleet programmed flight hours has steadily
increased since fiscal year 2000. The fleet's labor hours per flight
hour have remained stable since fiscal year 2001. However, it should be
noted that the number of fleet mishaps, particularly engine-related
mishaps, increased sharply in 2004, primarily because of the engine and
engine control system's poor reliability. Table 12 provides a summary
of the key performance measures.
Table 12: HH-65 Fleet Performance Data for Fiscal Years 2000-2004:
Fiscal year: 2000;
Availability index: 76.6%;
Programmed flight hours: 46,451;
Labor hours per flight hour: 11.4.
Fiscal year: 2001;
Availability index: 75.0%;
Programmed flight hours: 45,212;
Labor hours per flight hour: 13.0.
Fiscal year: 2002;
Availability index: 73.4%;
Programmed flight hours: 50,840;
Labor hours per flight hour: 13.0.
Fiscal year: 2003;
Availability index: 75.5%;
Programmed flight hours: 51,380;
Labor hours per flight hour: 13.6.
Fiscal year: 2004;
Availability index: 80.9%;
Programmed flight hours: 51,745;
Labor hours per flight hour: 13.3.
Source: U.S. Coast Guard.
[End of table]
Maintenance Trends:
The HH-65 fleet has sustained a comparatively high level of
availability even though maintenance data show that the fleet has had
challenges related to poor engine performance. Fleet cost per flight
hour steadily increased during fiscal years 2000 through 2004. The
Coast Guard has not deferred any maintenance for the HH-65 fleet from
fiscal year 2000 through 2004. Table 13 provides a summary of the key
maintenance measures.
Table 13: HH-65 Fleet Maintenance Data for Fiscal Years 2000-2004, in
Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Cost per flight hour: $908;
Estimated scheduled maintenance expenditures: $36,034,000;
Estimated unscheduled maintenance expenditures: $18,377,000;
Estimated deferred maintenance costs: 0.
Fiscal year: 2001;
Cost per flight hour: $976;
Estimated scheduled maintenance expenditures: $31,793,000;
Estimated unscheduled maintenance expenditures: $17,690,000;
Estimated deferred maintenance costs: 0.
Fiscal year: 2002;
Cost per flight hour: $1,089;
Estimated scheduled maintenance expenditures: $33,296,000;
Estimated unscheduled maintenance expenditures: $21,458,000;
Estimated deferred maintenance costs: 0.
Fiscal year: 2003;
Cost per flight hour: $1,107;
Estimated scheduled maintenance expenditures: $36,623,000;
Estimated unscheduled maintenance expenditures: $22,388,000;
Estimated deferred maintenance costs: 0.
Fiscal year: 2004;
Cost per flight hour: $1,312;
Estimated scheduled maintenance expenditures: $31,431,000;
Estimated unscheduled maintenance expenditures: $22,815,000;
Estimated deferred maintenance costs: 0.
Source: GAO analysis of U.S. Coast Guard data.
[End of table]
Sustainment Issues:
The HH-65 Re-engining Program:
The increasing trend in the number and seriousness of safety-related HH-
65 incidents prompted a Coast Guard decision in January 2004 to replace
the existing engines and the associated engine control systems within
24 months. However, the Coast Guard now anticipates that the re-
engining of all 84 operational HH-65 helicopters will take until
February 2007. Total program costs are estimated to be nearly $350
million, or about $3.7 million per helicopter.
As of June 7, 2005, 5 HH-65 aircraft have been successfully re-engined,
14 are under production at the Coast Guard's Aircraft Repair and Supply
Center, and an additional aircraft is under production at the American
Eurocopter's facility in Columbus, Mississippi. Upon completion of this
test case, the Coast Guard will determine if the American Eurocopter
facility is suitable to serve as the site for a second re-engining
production line.
Other Multimission Cutter Helicopter Conversion Elements:
According to the Coast Guard, the HH-65 was selected for conversion to
the Deepwater program's multimission cutter helicopter (MCH) beginning
in fiscal year 2007. As such, the converted HH-65 helicopters will be
part of the Deepwater program moving forward. There are several steps
constituting the full MCH conversion, of which the current HH-65 re-
engining program is one element. Other elements include the replacement
of the HH-65's landing gear and tail rotors. The HH-65's new engine
should allow the helicopter to support an increase in maximum gross
weight. However, the current landing gear cannot support such an
increase. The current tail rotors also need to be replaced because the
product manufacturer is discontinuing production of the rotors, though
supplies on hand should last until May 2005.
Other elements of the MCH conversion, such as an upgrade of the
avionics, will increase the aircraft's service life and capabilities.
These conversion elements are scheduled for integration beginning in
fiscal year 2007.
378-Foot High-Endurance Cutter:
378-foot High-Endurance Cutter Fleet Overview:
The 378-foot cutters are the largest cutters in the deepwater fleet,
with a crew size of 19 officers and 147 enlisted. The Coast Guard has
12 of the 378-foot cutters in its deepwater fleet, with 10 of these
stationed in the Pacific Area Command and the remaining 2 in the
Atlantic Area Command. The 378-foot cutters typically operate 185 days
away from home port per year. The 378-foot cutters are used in a number
of missions, such as defense operations; maritime security/law
enforcement; search and rescue; living marine resources; ports,
waterway, and coastal security; alien-migrant interdiction; and drug
interdiction. These cutters were commissioned by the Coast Guard during
1967 to 1972 and have an estimated service life of about 40 years,
affected in part by the Fleet Rehabilitation and Modernization (FRAM)
program, which is discussed in further detail below.
Performance Trends:
The 378-foot cutters are considered by the Coast Guard to generally be
deteriorating in condition, and this assertion is supported by the
Coast Guard's data measures. Major casualties[Footnote 34] per cutter
have increased from fiscal year 2000 through 2004, and the percent of
time free (POTF) of major casualties has fluctuated, but it has
remained well below the target of 72 percent. Table 14 provides a
summary of the key performance measures.
Table 14: 378-Foot Cutter Fleet Performance Data for Fiscal Years 2000-
2004:
Fiscal year: 2000;
Major casualties per cutter: 10.7;
POTF of major casualties: 30%.
Fiscal year: 2001;
Major casualties per cutter: 15.3;
POTF of major casualties: 22%.
Fiscal year: 2002;
Major casualties per cutter: 15.3;
POTF of major casualties: 38%.
Fiscal year: 2003;
Major casualties per cutter: 17.1;
POTF of major casualties: 26%.
Fiscal year: 2004;
Major casualties per cutter: 17.3;
POTF of major casualties: 7%.
Source: U.S. Coast Guard.
[End of table]
Maintenance Trends:
Both scheduled and unscheduled maintenance expenditures for the 378-
foot cutters have been on a general upward trend during fiscal years
2000 through 2004, with some fluctuations. The increasing age of these
cutters, along with equipment obsolescence, appears to be driving these
costs. Table 15 provides a summary of the key maintenance measures.
Table 15: 378-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Fiscal year: 2000; Scheduled maintenance costs: $13,376,901;
Unscheduled maintenance costs: $2,641,025;
Total maintenance costs: $16,017,925.
Fiscal year: 2001;
Scheduled maintenance costs: $19,842,996;
Unscheduled maintenance costs: $4,230,497;
Total maintenance costs: $24,073,493.
Fiscal year: 2002;
Scheduled maintenance costs: $15,109,120;
Unscheduled maintenance costs: $3,416,032;
Total maintenance costs: $18,525,152.
Fiscal year: 2003;
Scheduled maintenance costs: $15,523,775;
Unscheduled maintenance costs: $6,487,666;
Total maintenance costs: $22,011,440.
Fiscal year: 2004;
Scheduled maintenance costs: $17,131,625;
Unscheduled maintenance costs: $4,686,052;
Total maintenance costs: $21,817,677.
Source: GAO analysis of U.S. Coast Guard data.
Note: The data in this and other cutter maintenance expenditure tables
are adjusted for inflation using U.S. Department of Labor producer
price indexes for ship repair, conversion, reconversion, and the U.S.
military.
[End of table]
Sustainment Issues:
The average age of the 378-foot cutters is 36.3 years. Each 378-foot
cutter underwent the FRAM at approximately 20 years of age, beginning
in the late 1980s and ending in 1992. As part of the FRAM, each cutter
received an overhaul, costing anywhere from $70 million to $90 million,
that Pacific Area Command officials estimated would add about 15
additional years of service--a mark that many of the cutters are
beginning to reach. Many major propulsion and hull systems, however,
were merely overhauled but not upgraded or replaced, and these systems
are now at or near the end of their useful service life. In addition,
the Coast Guard regularly compiles a list of the top 10 maintenance
issues affecting each cutter class. The most recent top 10 list has
identified service boilers, the gyrocompass navigation system, and
propulsion shafting and shaft bearings, among other things, as the most
critical sustainment issues for the 378-foot cutters.
270-Foot Medium-Endurance Cutter:
270-Foot Medium-Endurance Cutter Fleet Overview:
The Coast Guard's 270-foot cutter fleet consists of 13 cutters, all of
which are stationed in the Atlantic Area Command. These cutters were
commissioned between 1983 and 1991, have an estimated service life of
30 years, and operate with a crew of 13 officers and 85 enlisted
personnel. The 270-foot cutters typically operate 185 days away from
home port each year and are used for maritime security/law enforcement;
search and rescue; living marine resources; ports, waterway, and
coastal security; alien-migrant interdiction; drug interdiction; and
defense missions.
Performance Trends:
Officials at Coast Guard headquarters stated that the condition of the
270-foot medium endurance cutters is generally worsening, and key
condition measures seem to bear this out, though there were some
improvements in fiscal year 2004. Major casualties per cutter saw a
major increase from fiscal year 2000 to 2001, remained fairly steady
during fiscal years 2002 and 2003, and then decreased in fiscal year
2004. The POTF of major casualties fluctuated during fiscal years 2000
through 2004 but remained well below the POTF target rate of 72
percent. Table 16 provides a summary of the key performance measures.
Table 16: 270-Foot Cutter Fleet Performance Data for Fiscal Years 2000-
2004:
Fiscal year: 2000;
Major casualties per cutter: 11.7;
POTF of major casualties: 38%.
Fiscal year: 2001;
Major casualties per cutter: 15.1;
POTF of major casualties: 35%.
Fiscal year: 2002;
Major casualties per cutter: 14.2;
POTF of major casualties: 47%.
Fiscal year: 2003;
Major casualties per cutter: 14.7;
POTF of major casualties: 32%.
Fiscal year: 2004;
Major casualties per cutter: 11.9;
POTF of major casualties: 42%.
Source: U.S. Coast Guard.
[End of table]
Maintenance Trends:
Scheduled maintenance expenditures fluctuated for the 270-foot medium-
endurance cutters from fiscal years 2000 to 2004, with a major increase
in fiscal year 2003. Coast Guard officials attribute this increase in
expenditures to the age and poor structural condition of the cutters,
the replacement of obsolete equipment, and upgrades. The increased
cutter maintenance that occurred in fiscal year 2003 was sourced from
supplemental appropriations. Unscheduled maintenance expenditures saw a
small amount of fluctuation for the 270-foot cutters during fiscal
years 2000 through 2004. Table 17 provides a summary of the key
maintenance measures.
Table 17: 270-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Scheduled maintenance costs: $9,175,918;
Unscheduled maintenance costs: $1,419,443;
Total maintenance costs: $10,595,360.
Fiscal year: 2001;
Scheduled maintenance costs: $10,253,382;
Unscheduled maintenance costs: $1,365,576;
Total maintenance costs: $11,618,957.
Fiscal year: 2002;
Scheduled maintenance costs: $8,814,319;
Unscheduled maintenance costs: $1,527,919;
Total maintenance costs: $10,342,238.
Fiscal year: 2003;
Scheduled maintenance costs: $15,744,978;
Unscheduled maintenance costs: $1,690,038;
Total maintenance costs: $17,435,015.
Fiscal year: 2004;
Scheduled maintenance costs: $6,098,884;
Unscheduled maintenance costs: $1,620,839;
Total maintenance costs: $7,719,723.
Source: GAO analysis of U.S. Coast Guard data.
[End of table]
Sustainment Issues:
The average age of the 270-foot cutters is 18.0 years. During fiscal
year 2005, the Coast Guard began a Mission Effectiveness Project (MEP)
on the medium-endurance cutters (270-foot and 210-foot) in order to
extend their service lives. The MEP includes replacement of the major
systems, such as evaporators and gyrocompasses, as well as other
auxiliary systems. The first 270-foot cutter entered the MEP in May
2005 at a cost of $7.5 million, funded from the Deepwater program's
acquisition, construction, and improvement account. Overall, the 270-
foot cutter MEP is projected to cost $193.5 million, and the work will
extend 10 years, into fiscal year 2015. In addition, regularly
scheduled maintenance should continue to address the principal
maintenance problems for the 270-foot cutters as identified in the top
10 list, including the air conditioning and refrigeration systems, the
main propulsion control and monitoring system, and the auxiliary
saltwater and sewage piping systems.
210-Foot Medium-Endurance Cutter:
210-Foot Medium-Endurance Cutter Fleet Overview:
The Coast Guard's 210-foot cutter fleet consists of 14 cutters, 11 of
which are stationed in the Atlantic Area Command, and the remaining 3
are based in the Pacific Area Command. These cutters were commissioned
between 1964 and 1969, have an estimated service life of 43 to 49 years
and operate with a crew of 12 officers and 63 enlisted personnel. The
210-foot cutters typically operate 185 days away from home port each
year, during which time they perform missions such as maritime
security/law enforcement; search and rescue; living marine resources;
ports, waterway, and coastal security; alien-migrant interdiction; and
drug interdiction.
Performance Trends:
Officials at Coast Guard headquarters stated that the condition of the
210-foot medium endurance cutters is generally worsening, and key
condition measures seem to bear this out, though there were some
improvements in fiscal year 2004. Major casualties per cutter saw a
major increase from fiscal year 2000 to 2001, a smaller increase during
fiscal years 2002 and 2003, and then a decrease in fiscal year 2004.
The POTF of major casualties has generally declined for the 210-foot
cutters during fiscal years 2000 through 2004, and consistently
remained well below the POTF target rate of 72 percent. Table 18
provides a summary of the key performance measures.
Table 18: 210-Foot Cutter Fleet Performance Data for Fiscal Years 2000-
2004:
Fiscal year: 2000;
Major casualties per cutter: 7.1;
POTF of major casualties: 52%.
Fiscal year: 2001;
Major casualties per cutter: 11.1;
POTF of major casualties: 48%.
Fiscal year: 2002;
Major casualties per cutter: 12.1;
POTF of major casualties: 40%.
Fiscal year: 2003;
Major casualties per cutter: 12.6;
POTF of major casualties: 37%.
Fiscal year: 2004;
Major casualties per cutter: 11.1;
POTF of major casualties: 41%.
Source: U.S. Coast Guard.
[End of table]
Maintenance Trends:
Scheduled maintenance expenditures fluctuated for the 210-foot medium-
endurance cutters from fiscal years 2000 to 2004, with a major increase
in fiscal year 2003. Coast Guard officials attribute this increase in
expenditures to the age and poor structural condition of the cutters,
the replacement of obsolete equipment, and upgrades. The increased
cutter maintenance that occurred in fiscal year 2003 was sourced from
supplemental appropriations. Unscheduled maintenance expenditures saw a
small amount of fluctuation during fiscal years 2000 through 2004.
Table 19 provides a summary of the key maintenance measures.
Table 19: 210-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Scheduled maintenance costs: $9,994,463;
Unscheduled maintenance costs: $1,899,895;
Total maintenance costs: $11,894,358.
Fiscal year: 2001;
Scheduled maintenance costs: $8,801,109;
Unscheduled maintenance costs: $1,783,393;
Total maintenance costs: $10,584,502.
Fiscal year: 2002;
Scheduled maintenance costs: $6,168,837;
Unscheduled maintenance costs: $1,443,401;
Total maintenance costs: $7,612,238.
Fiscal year: 2003;
Scheduled maintenance costs: $15,209,055;
Unscheduled maintenance costs: $1,541,610;
Total maintenance costs: $16,750,666.
Fiscal year: 2004;
Scheduled maintenance costs: $6,362,468;
Unscheduled maintenance costs: $1,176,492;
Total maintenance costs: $7,538,960.
Source: GAO analysis of U.S. Coast Guard data.
[End of table]
Sustainment Issues:
The average age of the 210-foot cutters is 38.3 years. The first 210-
foot cutter will enter the MEP beginning in September 2005 at a
projected cost of $5 million, funded from the Deepwater program's
acquisition, construction, and improvement account. Overall, the 210-
foot cutter MEP is projected to cost a total of $98.5 million, and the
work will extend into fiscal year 2009. In addition, regularly
scheduled maintenance should continue to address the principal
maintenance problems for the 210-foot cutters as identified in the top
10 list, such as the air conditioning system, refrigeration system,
oily water separators, and supportability of the emergency diesel
generators.
110-Foot and 123-Foot Patrol Boats:
110-Foot and 123-Foot Patrol Boat Fleet Overview:
Overall, there are currently 49 patrol boats in the Coast Guard
Deepwater fleet. Of these, 41 are 110 feet long, with 29 of those
stationed in the Atlantic Area Command and the remaining 12 stationed
in the Pacific Area Command. Six of the Atlantic Area Command's 110-
foot patrol boats are currently serving in the Persian Gulf. These 110-
foot patrol boats were acquired between 1986 and 1992, have estimated
service lives of 14 to 20 years, and operate with a crew of 2 officers
and 14 enlisted personnel. The patrol boats generally operate at 1,800
hours per year. The 110-foot patrol boats are used in a variety of
missions, such as defense operations; maritime security/law
enforcement; search and rescue; living marine resources; ports,
waterway, and coastal security; alien-migrant interdiction; and drug
interdiction.
The remaining 8 patrol boats either have undergone or are in the
process of being converted into 123-foot patrol boats. These patrol
boats are to be stationed in the Atlantic Area Command and, like the
110-foot patrol boats, are to operate with a crew of 2 officers and 14
enlisted personnel. The 123-foot patrol boats are slated to perform the
same missions as the 110-foot patrol boats but will have the capability
to generally operate 2,500 hours per year. The first converted 123-foot
patrol boat (Matagorda) became operational in February 2005, and as of
early June 2005, 4 additional 123-foot patrol boats are operational,
with restrictions.[Footnote 35]
Performance Trends:
During fiscal years 2000 through 2004, the 110-foot patrol boats have
experienced many problems, especially hull corrosion issues, which led
to a worsening condition. However, the Coast Guard began addressing the
hull condition issues (see details below), which likely contributed to
the decreases in the major casualties in fiscal years 2003 and 2004.
Table 20 provides a summary of the key performance measures.
Table 20: Patrol Boat Fleet Performance Data for Fiscal Years 2000-
2004:
Fiscal year: 2000;
Major casualties per patrol boat: 6.2;
POTF of major casualties: 67%.
Fiscal year: 2001;
Major casualties per patrol boat: 9.9;
POTF of major casualties: 57%.
Fiscal year: 2002;
Major casualties per patrol boat: 12.9;
POTF of major casualties: 47%.
Fiscal year: 2003;
Major casualties per patrol boat: 9.7;
POTF of major casualties: 48%.
Fiscal year: 2004[A];
Major casualties per patrol boat: 7.7;
POTF of major casualties: 44%.
Source: U.S. Coast Guard.
[A] Fiscal year 2004 data include major casualties and POTF data from
the newly converted 123-foot patrol boats.
[End of table]
Maintenance Trends:
Scheduled and unscheduled maintenance expenditures saw large increases
in fiscal years 2002 and 2003. These increases appear to be closely
related to increased major casualties, deteriorating hull conditions,
and an increase in operational tempo. In addition, increased cutter
maintenance occurred during this time period due to supplemental
appropriations. Table 21 provides a summary of the key maintenance
measures.
Table 21: Patrol Boat Fleet Maintenance Data for Fiscal Years 2000-
2004, in Fiscal Year 2004 Dollars:
Fiscal year: 2000;
Scheduled maintenance costs: $12,713,001;
Unscheduled maintenance costs: $1,650,862;
Total maintenance costs: $14,363,864.
Fiscal year: 2001;
Scheduled maintenance costs: $12,891,098;
Unscheduled maintenance costs: $2,445,161;
Total maintenance costs: $15,336,258.
Fiscal year: 2002;
Scheduled maintenance costs: $21,406,754;
Unscheduled maintenance costs: $3,439,798;
Total maintenance costs: $24,846,551.
Fiscal year: 2003;
Scheduled maintenance costs: $23,713,280;
Unscheduled maintenance costs: $5,149,335;
Total maintenance costs: $28,862,615.
Fiscal year: 2004[A];
Scheduled maintenance costs: $18,850,450;
Unscheduled maintenance costs: $3,625,459;
Total maintenance costs: $22,475,909.
Source: GAO analysis of U.S. Coast Guard data.
[A] Fiscal year 2004 expenditure data also include maintenance
expenditures for the newly-converted 123-foot patrol boats.
[End of table]
Sustainment Issues:
The average age of the patrol boats is 16.4 years. A number of the 110-
foot patrol boats have experienced significant hull deterioration. To
combat these corrosion problems and add other capabilities to the 110-
foot patrol boats, the Coast Guard developed the Hull Sustainment
Project (HSP) and the 123-foot patrol boat conversion program.
The HSP was implemented to replace all deteriorated hull plates and
structural members. The selected patrol boats were gutted, sandblasted,
and thoroughly inspected, and all metal wasted beyond 15 percent was
renewed. As of early June 2005, 9 of the original 49 110-foot patrol
boats had completed the HSP. The Coast Guard believes that all
remaining 110-foot patrol boats that have not had their hulls
strengthened or replaced will eventually require such work. The Coast
Guard is currently preparing a business case analysis in order to use
$49.2 million in fiscal year 2005 supplemental appropriations[Footnote
36] for a 110-foot patrol boat MEP. This project would include hull
sustainment work.
In addition to the HSP, 8 patrol boats deemed to be among those in the
worst condition were placed in the 123-foot conversion program. The
Coast Guard had the option to place an additional 4 patrol boats (for a
total of 12) in the 123-foot conversion program but has decided not to
exercise this option. This program was implemented to renew the
deteriorated hull structure and to add additional capability. Among the
expected capability improvements are:
* enhanced and improved command, control, communications, computer,
intelligence, surveillance, and reconnaissance capabilities;
* stern launch/recovery capability for the Short Range Prosecutor;
* renovation of some berthing areas, including relocation of aft
berthing to a location forward and nonadjacent to the engine room; and:
* renewing the pilot house to include a 360-degree bridge.
As of early June 2005, 7 of the 8 patrol boats have completed the
conversion, and 5 converted patrol boats are operational (Matagorda,
Metompkin, Padre, Attu, and Vashon, with all patrol boats currently
under operating restrictions). The first patrol boat to come out of the
conversion process, the Matagorda, was delivered to the Coast Guard in
March 2004 but experienced a number of problems that prevented it from
becoming operational until February 2005. Specifically, upon delivery,
the Coast Guard identified several discrepancies with the original
performance specifications. One such discrepancy was the inability of
the patrol boat to simultaneously launch or recover the short-range
prosecutor while towing another vessel. In September 2004, Matagorda
experienced hull buckling, and repairs were completed in December 2004.
However, while en route from the shipyard to Key West, Florida,
Matagorda encountered a storm, causing damage to the primary radar
system and new cracks in the hull. These problems were resolved, and
Matagorda began patrols in early February 2005. Additionally, the
contractor that performed the work is applying lessons learned from the
Matagorda conversion to the other patrol boats still undergoing
conversion. Further, the contractor has increased the number of quality
assurance personnel from one to four to improve oversight of the
conversion process.
The Coast Guard top 10 list mentions several maintenance concerns, in
addition to hull corrosion, that have negatively affected the condition
of the 110-foot patrol boats. These include difficulties in obtaining
parts for the fin stabilizer system, steering spaces holding moisture
(which leads to rust and corrosion), and exhaust piping leaks. In
addition, the Coast Guard has stated that mechanical and electrical
subsystems need to be upgraded or replaced if the patrol boats are to
operate for another 10 to 15 years, even the newly converted 123-foot
patrol boats.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
Staff Contact:
Margaret Wrightson, Director (415) 904-2200.
Acknowledgment:
Steven Calvo, Christopher Conrad, Adam Couvillion, Michele Fejfar,
Geoffrey Hamilton, Julie Leetch, Michele Mackin, Stan Stenersen, and
Linda Kay Willard.
[End of section]
GAO Related Products:
Coast Guard's Acquisition Management: Deepwater Project's Justification
and Affordability Need to Be Addressed More Thoroughly, GAO/RCED-99-6
(Washington, D.C.: Oct. 26, 1998):
Coast Guard: Budget Challenges for 2001 and Beyond, GAO/T-RCED-00-103
(Washington, D.C.: March 15, 2000):
Coast Guard: Progress Being Made on Deepwater Project, but Risks
Remain, GAO-01-564 (Washington, D.C.: May 2, 2001):
Coast Guard: Actions Needed to Mitigate Deepwater Project Risks, GAO-
01-659T (Washington, D.C.: May 3, 2001):
Coast Guard: Strategy Needed for Setting and Monitoring Levels of
Effort for All Missions, GAO-03-155 (Washington, D.C.: Nov. 12, 2002):
Coast Guard: Comprehensive Blueprint Needed to Balance and Monitor
Resource Use and Measure Performance for All Missions, GAO-03-544T
(Washington, D.C.: March 12, 2003):
Contract Management: Coast Guard's Deepwater Program Needs Increased
Attention to Management and Contractor Oversight, GAO-04-380
(Washington, D.C.: March 9, 2004):
Coast Guard: Replacement of HH-65 Helicopter Engine, GAO-04-595
(Washington, D.C.: March 24, 2004):
Coast Guard: Key Management and Budget Challenges for Fiscal Year 2005
and Beyond, GAO-04-636T (Washington, D.C.: April 7, 2004):
Coast Guard: Deepwater Program Acquisition Schedule Update Needed, GAO-
04-695 (Washington, D.C.: June 14, 2004):
Coast Guard: Observations and Agency Priorities in Fiscal Year 2006
Budget Request, GAO-05-364T (Washington, D.C.: March 17, 2005):
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges, GAO-05-307T
(Washington, D.C.: April 20, 2005):
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges, GAO-05-651T
(Washington, D.C.: June 21, 2005):
FOOTNOTES
[1] For purposes of this report, we use the term "legacy assets" to
refer to the existing fleet of deepwater aircraft and cutters. These
legacy assets include the HC-130 (H models only), HU-25, HH-60, and HH-
65 aircraft and the 378-foot high-endurance cutters, the 210-foot and
270-foot medium-endurance cutters, and the 110-foot and 123-foot patrol
boats. We did not include the 213-foot Acushnet, the 230-foot Storis,
or the 282-foot Alex Haley as part of our analyses of the deepwater
legacy assets because they are one-of-a-kind cutters.
[2] Pub. L. No. 108-334, 118 Stat. 1298, 1306 (2004).
[3] H.R. Rep. No. 109-79, at 63 (2005).
[4] S. Rep. No. 109-83, at 60 (2005).
[5] GAO, Coast Guard: Preliminary Observations on the Condition of
Deepwater Legacy Assets and Acquisition Management Challenges, GAO-05-
307T (Washington, D.C.: April 20, 2005); and GAO, Coast Guard:
Preliminary Observations on the Condition of Deepwater Legacy Assets
and Acquisition Management Challenges, GAO-05-651T (Washington, D.C.:
June 21, 2005).
[6] In assessing the condition of deepwater aircraft and cutters for
this report, we analyzed what Coast Guard officials told us were the
best available condition measures. For deepwater aircraft, we reviewed
the availability index (percentage of time aircraft were available to
complete missions), cost per flight hour, labor hours per flight hour,
programmed flight hours per year, scheduled versus unscheduled
maintenance expenditures, and estimated deferred maintenance. For
cutters, we reviewed the number of major casualties, the percent of
time free of major casualties, scheduled versus unscheduled
maintenance, and estimated deferred maintenance. To assess the
reliability of the Coast Guard's data and condition measures, we
questioned knowledgeable officials and reviewed existing documentation
about the data and the systems that produced the data. We determined
that the data were sufficiently reliable for the purposes of this
report.
[7] For purposes of this report, we use the term "systems" to include
all the electrical, mechanical, heating, ventilation, and air
conditioning, and other systems on the deepwater assets.
[8] Current plans call for the Coast Guard to replace all of its
deepwater legacy cutters and patrol boats, beginning with the 378-foot
cutters. The Coast Guard also plans to replace the HU-25 aircraft, but
it will upgrade the existing HC-130 aircraft and HH-60 and HH-65
helicopters to extend their service lives.
[9] The mission requirements include such things as the ability to (1)
respond to 90 percent of all distress incidents within 2 hours; (2)
detect and track targets of any material such that the probability of
detection is at least 90 percent for small targets, such as a person in
the water or a single-engine civil aircraft; and (3) respond to
National Emergency Response Operations within 48 hours.
[10] Total ownership cost is the sum of all costs associated with the
research, development, procurement, personnel, training, operation,
logistical support, and disposal of the entire Deepwater system.
[11] The original Deepwater plan had an estimated cost of $17 billion.
[12] GAO, Coast Guard: Progress Being Made on Deepwater Project, but
Risks Remain, GAO-01-564 (Washington, D.C.: May 2, 2001).
[13] GAO, Coast Guard: Deepwater Program Acquisition Schedule Update
Needed, GAO-04-695 (Washington, D.C.: June 14, 2004); GAO, Coast Guard:
Key Management and Budget Challenges for Fiscal Year 2005 and Beyond,
GAO-04-636T (Washington, D.C.: April 7, 2004); and GAO, Contract
Management: Coast Guard's Deepwater Program Needs Increased Attention
to Management and Contractor Oversight, GAO-04-380 (Washington, D.C.:
March 9, 2004).
[14] GAO-04-380.
[15] A casualty is a deficiency in mission essential equipment; a major
casualty causes the major degradation or loss of at least one primary
mission.
[16] However, major casualties for the 378-foot high-endurance cutters
continued to increase in 2004.
[17] GAO, Coast Guard: Comprehensive Blueprint Needed to Balance and
Monitor Resource Use and Measure Performance for All Missions, GAO-03-
544T (Washington, D.C.: March 12, 2003); and GAO, Coast Guard: Strategy
Needed for Setting and Monitoring Levels of Effort for All Missions,
GAO-03-155 (Washington, D.C.: Nov. 12, 2002).
[18] A mission's relative importance will be determined by Coast Guard
operational decision makers. These determinations will not be static,
but rather will be reviewed and revised to reflect changing priorities.
[19] Because this measure was not in use during the full period covered
by our review (fiscal years 2000 through 2004), we did not include it
as one of the measures we used for assessing the condition of deepwater
legacy aircraft; see appendix II.
[20] The Pacific Area Command is responsible for operations covering 74
million square miles, ranging from South America to the Arctic Circle
and west to the Far East.
[21] Pacific Area officials have developed a "report card" to assist in
assigning cutters to specific missions by collecting a variety of data
and condition assessments from its cutter crews from which it prepares
a color-coded assessment of (1) the condition of each cutter's critical
systems (e.g., propulsion, electrical) to meet its current mission, and
(2) the ability of each cutter to meet each possible future mission.
[22] H.R. Rep. No. 109-79, at 63 (2005).
[23] S. Rep. No. 109-83, at 60 (2005).
[24] GAO-04-380.
[25] GAO-04-695.
[26] Performance monitors are contracting officers' technical
representatives, who represent the contracting officer in monitoring
the contractor's performance.
[27] GAO-04-695.
[28] Not maintaining a current and integrated schedule lessens the
Coast Guard's ability to monitor the system integrator's performance
and take early action to resolve risks that could become problems
later. Maintaining such a schedule is an industry best practice; the
Department of Defense is required to do so in order to be able to
report any breaches in cost, schedule, or performance targets.
[29] GAO-04-380.
[30] A "make item" means an item or work effort to be produced or
performed by the prime contractor or its affiliates, subsidiaries, or
divisions.
[31] The C-130J missionization, planned for the Coast Guard's six C-
130J aircraft, is intended to modify and install mission-essential
equipment to convert the aircraft into C-130J long-range surveillance
maritime patrol aircraft.
[32] Federal Acquisition Regulation §15.407-2, "Make or Buy Programs."
[33] H.R. Conf. Rep. No. 108-774, at 57 (2004).
[34] A major casualty is a deficiency in mission-essential equipment
that causes the major degradation of a primary mission or loss of at
least one primary mission.
[35] The patrol boats' operational restrictions require a reduction in
speed based upon significant wave heights that might be encountered at
sea.
[36] Emergency Supplemental Appropriations Act for Defense, the Global
War on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13, 119 Stat.
231, 270 (2005). In the conference report accompanying the bill that
was enacted into law as Public Law 109-13, the conferees agreed that
such funds may be used for procurement of new U.S. Coast Guard 110-foot
patrol boats or major refits, renovation, and subsystem replacement.
H.R. Conf. Rep. No. 109-72, at 138 (2005).
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