Coast Guard
Challenges Affecting Deepwater Asset Deployment and Management and Efforts to Address Them Gao ID: GAO-07-874 June 18, 2007The U.S. Coast Guard's Deepwater program was designed to replace aging vessels and aircraft and information capabilities with new and upgraded assets and equipment. GAO's prior work raised concerns about the Coast Guard's efforts to upgrade or acquire assets on schedule and manage the Deepwater prime contractor. This report responds to congressional direction contained in a conference report accompanying the Department of Homeland Security (DHS) fiscal year 2007 appropriations bill. GAO addressed two objectives: (1) What is the status of key Deepwater assets and how is the Coast Guard addressing any asset-related challenges that have been encountered? (2) What is the status of the Coast Guard's overall management of the Deepwater contract? GAO's work is based on reports, memorandums, and data on the plans and management of the Deepwater program and interviews with key officials. GAO is not making any new recommendations. DHS and the Coast Guard reviewed a draft of this report and concurred with our findings.
Five years into the Deepwater contract, some assets have been delivered and are undergoing planned improvements or initial testing, but several other assets have encountered significant problems. For example, engine upgrades to the HH-65 helicopters are well under way; and the first two Maritime Patrol Aircraft and the first eight Short Range Prosecutor cutter-based small patrol boats have been delivered according to schedule. In contrast, other Deepwater assets have experienced problems, which have created a number of challenges for the Coast Guard in terms of delivery delays and loss of operational capabilities. For example, the Vertical Takeoff and Landing Unmanned Aerial Vehicle has experienced delays as the Coast Guard assesses alternatives; the Fast Response Cutter, which was to replace the Coast Guard's legacy patrol boat fleet, experienced design problems and the Coast Guard suspended all work, and the first two hulls of the National Security Cutter have structural design issues that, if not corrected, will reduce the fatigue lives of these vessels. To address these and other challenges, the Coast Guard is taking a variety of actions, such as relying more heavily on legacy assets to help address patrol hour shortages, making plans to purchase off-the-shelf assets to expedite delivery, and planning corrective structural modifications. Over the past several years, GAO has expressed concerns about the Coast Guard's ability to manage and oversee the Deepwater program. Specifically, the program has faced challenges in terms of management, contractor accountability, and cost control. While the Coast Guard has taken actions since 2004 in response to these concerns, challenges remain. As a result, the Coast Guard recently decided to become more directly involved in program management and has chosen to (1) take over the leadership of the integrated product teams--a key program management tool; (2) acquire certain Deepwater assets outside of the existing Deepwater contract; (3) use independent, third-party reviews for asset development; and (4) reorganize the Deepwater acquisition functions within the Coast Guard organization. Given the Coast Guard's increased role, having sufficient staff with the requisite skills and abilities to execute new and expanding responsibilities will be important to getting what is needed, on time, and at a fair price.
GAO-07-874, Coast Guard: Challenges Affecting Deepwater Asset Deployment and Management and Efforts to Address Them
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GAO Highlights:
Highlights of GAO-07-874, a report to Subcommittees on Homeland
Security, House and Senate Committees on Appropriations.
Why GAO Did This Study:
The U.S. Coast Guard‘s Deepwater program was designed to replace aging
vessels and aircraft and information capabilities with new and upgraded
assets and equipment. GAO‘s prior work raised concerns about the Coast
Guard‘s efforts to upgrade or acquire assets on schedule and manage the
Deepwater prime contractor.
This report responds to congressional direction contained in a
conference report accompanying the Department of Homeland Security DHS)
fiscal year 2007 appropriations bill. GAO addressed two objectives: (1)
What is the status of key Deepwater assets and how is the Coast Guard
addressing any asset-related challenges that have been encountered? (2)
What is the status of the Coast Guard‘s overall management of the
Deepwater contract?
GAO‘s work is based on reports, memorandums, and data on the plans and
management of the Deepwater program and interviews with key officials.
GAO is not making any new recommendations. DHS and the Coast Guard
reviewed a draft of this report and concurred with our findings. Their
formal comments appear in appendix IV.
What GAO Found:
Five years into the Deepwater contract, some assets have been delivered
and are undergoing planned improvements or initial testing, but several
other assets have encountered significant problems. For example, engine
upgrades to the HH-65 helicopters are well under way; and the first two
Maritime Patrol Aircraft and the first eight Short Range Prosecutor
cutterbased small patrol boats have been delivered according to
schedule. In contrast, other Deepwater assets have experienced
problems, which have created a number of challenges for the Coast Guard
in terms of delivery delays and loss of operational capabilities. For
example, the Vertical Takeoff and Landing Unmanned Aerial Vehicle has
experienced delays as the Coast Guard assesses alternatives; the Fast
Response Cutter, which was to replace the Coast Guard‘s legacy patrol
boat fleet, experienced design problems and the Coast Guard suspended
all work, and the first two hulls of the National Security Cutter have
structural design issues that, if not corrected, will reduce the
fatigue lives of these vessels. To address these and other challenges,
the Coast Guard is taking a variety of actions, such as relying more
heavily on legacy assets to help address patrol hour shortages, making
plans to purchase off-the-shelf assets to expedite delivery, and
planning corrective structural modifications.
Over the past several years, GAO has expressed concerns about the Coast
Guard‘s ability to manage and oversee the Deepwater program.
Specifically, the program has faced challenges in terms of management,
contractor accountability, and cost control. While the Coast Guard has
taken actions since 2004 in response to these concerns, challenges
remain. As a result, the Coast Guard recently decided to become more
directly involved in program management and has chosen to (1) take over
the leadership of the integrated product teams”a key program management
tool; (2) acquire certain Deepwater assets outside of the existing
Deepwater contract; (3) use independent, third-party reviews for asset
development; and (4) reorganize the Deepwater acquisition functions
within the Coast Guard organization. Given the Coast Guard‘s increased
role, having sufficient staff with the requisite skills and abilities
to execute new and expanding responsibilities will be important to
getting what is needed, on time, and at a fair price.
Figure: Deepwater Vessel and Aircraft Classes:
Pictures of the following ten vessels and aircraft:
National Security Cutter (NSC):
Offshore Patrol Cutter (OPC):
Fast Response Cutter (FRC):
Short-Range Prosecutor (SRP):
Long-Range Interceptor (LRI):
HH-65 Multi-Mission Cutter Helicopter (MCH):
HH-60 Medium-Range Recovery Helicopter (MRR):
Maritime Patrol Aircraft (MPA):
Vertical Takeoff and Landing Unmanned Aerial Vehicle (VUAV):
Long-Range Surveillance Aircraft (LRS):
Source: Photos used by permission of the U.S. Coast Guard.
[See PDF for image]
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-874].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Stephen L. Caldwell at
(202) 512-9610 or caldwells@gao.gov; or John P. Hutton at (202) 512-
7773 or huttonj@gao.gov.
[End of section]
United States Government Accountability Office:
GAO:
Report to the Subcommittees on Homeland Security, House and Senate
Committees on Appropriations:
Coast Guard:
Challenges Affecting Deepwater Asset Deployment and Management and
Efforts to Address Them:
Contents:
Letter:
Summary:
Concluding Observations:
Agency Comments:
Appendix I: Briefing Slides:
Appendix II: Status of Deepwater Vessel and Aircraft Assets:
Appendix III: Status of Prior GAO Recommendations:
Appendix IV: Comments from the Department of Homeland Security:
Appendix V: GAO Contacts and Acknowledgments;
Related GAO Products:
Abbreviations:
DHS: Department of Homeland Security:
FRC: Fast Response Cutter:
GAO: Government Accountability Office:
ICGS: Integrated Coast Guard Systems:
IPT: Integrated product team:
LRI: Long-Range Interceptor:
LRS: Long-Range Surveillance Aircraft:
MCH: Multi-Mission Cutter Helicopter:
MPA: Maritime Patrol Aircraft:
MRR: Medium-Range Recovery Helicopter:
NSC: National Security Cutter:
OPC: Offshore Patrol Cutter:
SRP: Short-Range Prosecutor:
TOC: Total ownership cost:
VUAV: Vertical Takeoff and Landing Unmanned Aerial Vehicle:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 18, 2007:
The Honorable David E. Price:
Chair:
Subcommittee on Homeland Security:
House Committee on Appropriations:
The Honorable Harold Rogers:
Ranking Member:
Subcommittee on Homeland Security:
House Committee on Appropriations:
The Honorable Robert C. Byrd:
Chair:
Subcommittee on Homeland Security:
Senate Committee on Appropriations:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Homeland Security:
Senate Committee on Appropriations:
The Coast Guard is in the midst of the largest acquisition program in
its history”one that has experienced serious performance and management
problems. The Deepwater program is a 25-year, $24 billion plan to
replace or modernize the Coast Guard‘s fleet of vessels and aircraft
(assets), and information management capabilities. The Coast Guard
chose a lead system integrator to manage a ’system-of-systems“ approach
intended to integrate the delivery of assets, sensors, and
communications links to accomplish missions more effectively. Now in
the final year of its first 5-year Deepwater contract period, the Coast
Guard is currently negotiating contract modifications for the next
performance period with the system integrator, Integrated Coast Guard
Systems (ICGS). These negotiations are to be completed by June 25,
2007. Our work reflects the status of the program before such
negotiations were finalized.
Since the Deepwater program‘s inception, we have expressed concerns
that the system-of-systems acquisition strategy was risky for a project
of this magnitude within the Coast Guard. In particular, our work
raised concerns about the Coast Guard‘s efforts to upgrade or acquire
Deepwater assets on schedule, and manage and effectively monitor the
lead system integrator, and we made several recommendations to the
Coast Guard to address these concerns. More recently, the Coast Guard
announced a number of changes that are aimed at addressing these
recommendations and other related program concerns. In addition, the
Coast Guard has begun to take actions to hold the system integrator
accountable for problems that have arisen with the design and
construction of certain Deepwater assets that will affect the lead
system integrator‘s roles and responsibilities in executing the program
moving forward.
On May 15 and May 17, 2007, in response to congressional direction
contained in a conference report accompanying the Department of
Homeland Security‘s Fiscal Year 2007 Appropriations bill,[Footnote 1]
we briefed your committees on two key objectives:
(1) What is the status of key Deepwater assets and how is the Coast
Guard addressing any asset-related challenges that have been
encountered?
(2) What is the status of the Coast Guard‘s overall management of the
Deepwater contract?
The content of our briefing, which provided examples of selected
Deepwater vessels and aircraft that illustrate progress made with
certain assets, as well as particular operational or management
challenges, is contained in appendix I. Details on the status of all 10
Deepwater asset classes are contained in appendix II. Information on
the status of prior GAO recommendations related to this work is in
appendix III. In addition, a list of related GAO products is provided
at the end of the report.
In conducting our work, we analyzed reports, memorandums, and data on
the Coast Guard‘s plans and management of the Deepwater program;
obtained information from multiple sources, including the Department of
Homeland Security (DHS); U.S. Coast Guard; Coast Guard Deepwater System
Integration Program Office; the Deepwater system integrator and its
subcontractors; and private engineering firms. We also interviewed
officials responsible for management of the Deepwater program during
site visits to Coast Guard headquarters, Coast Guard Deepwater Program
Office, Deepwater System Integration Program Office, Coast Guard
Aircraft and Supply Center, and Coast Guard Atlantic and Pacific Area
Commands and their associated Maintenance and Logistics Commands.
To assess the reliability of the data obtained from the Coast Guard and
from ICGS”including but not limited to cost, schedule, and staffing
data”we analyzed the data for errors in accuracy and completeness and
interviewed agency officials knowledgeable about these data. We
determined that the data were sufficiently reliable for the purposes of
this report. Our work was conducted between July 2006 and May 2007 in
accordance with generally accepted government auditing standards.
Summary:
Five years into the Deepwater contract, some assets have been delivered
[Footnote 2] and are undergoing planned improvements or initial
testing, but several other assets have encountered significant
problems. For example, engine upgrades to the HH-65 helicopters are
well underway, the first two Maritime Patrol Aircraft have been
delivered, and eight Short-Range Prosecutor cutter-based small patrol
boats have been delivered according to schedule. In contrast, other
Deepwater assets have experienced problems, which have created a number
of challenges for the Coast Guard in terms of delivery delays and loss
of operational capabilities. The Vertical Takeoff and Landing Unmanned
Aerial Vehicle (VUAV) has experienced delays as the Coast Guard
assesses alternatives; the 123-foot patrol boats experienced structural
problems and were eventually removed from service; and the Fast
Response Cutter (FRC), which was to replace the Coast Guard‘s legacy
patrol boat fleet, experienced design problems and the Coast Guard
suspended all work. Further, the National Security Cutter (NSC) has
structural problems with the first two hulls that, if not corrected,
will reduce the fatigue lives of these vessels. To address these and
other challenges, the Coast Guard is taking a variety of actions, such
as relying more heavily on legacy assets to help address patrol hour
shortages, making plans to purchase off-the-shelf assets to expedite
delivery, and planning corrective structural modifications.
Over the past several years, we have expressed concerns and made
recommendations regarding the Coast Guard‘s ability to manage and
oversee the Deepwater program. Our concerns have centered on three
main areas:
* Program management: The Coast Guard had not effectively
implemented key components (e.g., integrated product teams)[Footnote 3]
needed to manage the program and oversee the system integrator.
* Contractor accountability: The Coast Guard had not effectively
measured contractor performance against Deepwater program goals.
* Cost control: Control of future costs through competition remained a
risk because of weak oversight of subcontractor decisions related to
competition.
These concerns were exacerbated by staffing shortfalls and poor
communication and collaboration between Deepwater and contractor
personnel. Since 2004, the Coast Guard has taken some actions in
response to these concerns and recommendations. However, challenges,
such as inadequate staffing levels and undefined roles between the
Coast Guard and contractor regarding maintenance and logistics support,
remain. The Coast Guard recently decided to become more involved in
program management. It plans to assume the lead role as system
integrator while continuing to use the prime contractor to perform
certain functions. Furthermore, it has decided to take other steps,
including (1) changing the leadership and decision-making authority of
integrated product teams, (2) using third parties to independently
review asset development and major modifications, (3) reaffirming the
role of the Coast Guard‘s chief engineer as the technical authority for
all acquisition projects, and (4) reorganizing Deepwater program
acquisition functions within the Coast Guard organization to ensure
sufficient staff with the requisite acquisition skills and abilities
are in place. While there has been progress with the design,
acquisition, and delivery of some Deepwater assets, problems with other
assets raise questions about the Coast Guard‘s ability to maintain an
approach that fully integrates and synchronizes the retirement of
legacy assets with the introduction of new assets. As problems are
encountered and asset delivery schedules slip, the overall operational
capabilities of new Deepwater assets and the system as a whole could be
reduced, particularly in the shortterm.
Concluding Observations:
The proactive program management actions the Coast Guard recently
announced could help get the Deepwater program on track. However, how
the planned actions are implemented is important. Further, while the
Coast Guard plans to assume more direct responsibility for Deepwater
management, until it has sufficient staff with the requisite skills and
abilities to execute new and expanding responsibilities, the Deepwater
program will remain at risk in terms of getting what is needed, on
time, and at a fair price.
Agency Comments:
We requested comments on a draft of this report from the Department of
Homeland Security and the U.S. Coast Guard. The department referred the
draft to the U.S. Coast Guard, which concurred with our findings. The
agency‘s formal comments appear in appendix IV.
If you or your staff have any questions concerning this report, please
contact Stephen L. Caldwell at (202) 512-9610 or by e-mail at
caldwells@gao.gov; or John P. Hutton at (202) 512-7773 or by e-mail at
huttonj@gao.gov. Key contributors to this report were Penny Augustine,
Amy Bernstein, Virginia Chanley, Christopher Conrad, Adam Couvillion,
Kathryn Edelman, Geoffrey Hamilton, Melissa Jaynes, Crystal Jones,
Raffaele Roffo, Sylvia Schatz, and Jonathan R. Tumin.
Signed by:
Stephen L. Caldwell, Director:
Homeland Security and Justice:
Signed by:
John P. Hutton, Director:
Acquisition and Sourcing Management:
[End of section]
Appendix I: Briefing Slides:
Coast Guard: Challenges Affecting Deepwater Asset Deployment and
Management and Efforts to Address Them GAO briefing provided to the
Subcommittees on Homeland Security of the House and Senate Committees
in Appropriation.
May 2007:
Briefing Overview:
* Introduction;
* Objectives, Scope, and Methodology;
* Results in Brief;
* Status of Deepwater Assets;
* Deepwater Management Structure and Organization;
- Program Management;
- Contractor Accountability;
- Cost Control;
* Concluding Observations;
* Enclosure I: Quick Look Information on Key Deepwater Assets[a];
* Enclosure II: Status of GAO Recommendations to Coast Guard;
[a] Note: Enclosure I is appendix II in this product. Enclosure II is
appendix III in this product. This note was not in the mid-May 2007
briefing provided to congressional requesters.
Introduction: Deepwater Program Overview:
* The Coast Guard Deepwater Program is a 25-year, $24 billion plan to
replace or modernize its fleet of vessels, aircraft, and information
management capabilities.
* Rather than use a traditional acquisition approach to replace classes
of vessels or aircraft, the Coast Guard chose a lead system integrator
to manage the acquisition process, including identifying assets and
selecting subcontractors to design, build, and integrate the assets and
information management capabilities. The Coast Guard adopted this
approach at that time because it did not believe it had the technical
expertise or resources to be a systems integrator.
* This ’system-of-systems“ approach was intended to create a system
that integrates common sensors and communication links on vessels and
aircraft to accomplish missions more effectively.
* After the terrorist attacks of September 11, 2001, the Coast Guard
began taking on additional homeland security missions, and so it
revised the Deepwater implementation plan to provide a mix of assets
that could better meet these new responsibilities.
* Deepwater is to include acquisition of 10 new or upgraded classes of
assets”5 major classes each of vessels and aircraft (see tables 1 and
2).
* The Deepwater program also consists of 5 other projects, including
new or upgraded Command, Control, Communications, Computers,
Intelligence, Surveillance and Reconnaissance systems.[Footnote 4]
Introduction: Deepwater Vessels to be Acquired:
Table 1:
National Security Cutter (NSC)(photo included):
Current number of assets planned: 8;
Asset being replaced: 378-foot high-endurance cutters;
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Offshore Patrol Cutter (OPC)(photo included):
Current number of assets planned: 25;
Asset being replaced: 210-foot and 270-foot medium-endurance cutters;
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Fast Response Cutter (FRC)(photo included):
Current number of assets planned: 58;
Asset being replaced: 110-foot and 123-foot patrol boats;
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Short-Range Prosecutor (SRP)(photo included):
Current number of assets planned: 91;
Asset being replaced: Cutter-based patrol boats;
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Long-Range Interceptor (LRI)(photo included):
Current number of assets planned: 33;
Asset being replaced: Cutter-based patrol boats;
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Source: Photos used by permission of the U.S. Coast Guard.
Deepwater Aircraft to be Upgraded or Acquired:
Table 2:
HH-65 Multi-Mission Cutter Helicopter (MCH)(photo included):
Current number of assets planned: 102;
Asset being replaced: Upgraded asset (HH-65);
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
HH-60 Medium-Range Recovery Helicopter (MRR)(photo included):
Current number of assets planned: 42;
Asset being replaced: Upgraded asset (HH-60);
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Maritime Patrol Aircraft (MPA)(photo included):
Current number of assets planned: 36;
Asset being replaced: HU-25 Falcon;
Missions: Maritime safety; Maritime security; Protection of natural
resources.
Vertical Takeoff and Landing Unmanned Aerial Vehicle (VUAV)(photo
included):
Current number of assets planned: 45;
Asset being replaced: New asset;
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Long-Range Surveillance Aircraft (LRS)(photo included):
Current number of assets planned: 22;
Asset being replaced: Upgraded asset (HC-130);
Missions: Maritime safety; Maritime security; Protection of natural
resources; National defense.
Source: Photos used by permission of the U.S. Coast Guard.
GAO‘s Prior and Current Deepwater Work:
* GAO‘s prior work raised concerns about Coast Guard‘s efforts to
upgrade or acquire Deepwater assets on schedule, and manage
and effectively monitor the system integrator.[Footnote 5]
* This briefing responds to congressional direction contained in a
conference report accompanying the Department of Homeland
Security‘s Fiscal Year 2007 Appropriations bill.[Footnote 6]
Status of the Deepwater Program:
* While the Deepwater program is a 25-year plan, it is in the final
year of the original 5-year contract period. The Coast Guard is
currently negotiating contract modifications for the next
performance period with the prime contractor, Integrated Coast
Guard Systems (ICGS). These negotiations are to be completed by
June 25, 2007.
* The Deepwater program has experienced performance and
management problems, and the Coast Guard recently announced a
number of changes to address these problems.
Objectives, Scope, And Methodology:
Objectives:
This briefing addresses two key objectives:
* (1) What is the status of key Deepwater assets and how is
the Coast Guard addressing any asset-related challenges
that have been encountered?
* (2) What is the status of the Coast Guard‘s overall
management of the Deepwater contract?
Scope and Methodology:
* To address our objectives we:
- analyzed reports, memorandums, and data on the plans, planning and
management of the Deepwater program;
- obtained information from multiple sources, including the Department
of Homeland Security (DHS); U.S. Coast Guard; Coast Guard Deepwater
System Integration Program Office; Deepwater system integrator and its
subcontractors; and private engineering firms;
- interviewed officials responsible for the management of the Deepwater
program during site visits to: Coast Guard headquarters, Coast Guard
Deepwater Program Office, Deepwater System Integration Program Office,
Coast Guard Aircraft and Supply Center, and Coast Guard Atlantic and
Pacific Area Commands and their associated Maintenance and Logistics
Commands.
* This briefing provides examples of selected Deepwater vessels and
aircraft that illustrate progress made with certain assets as well as
particular operational or management challenges.
* Details on the status of all 10 Deepwater asset classes”including
those not cited as examples”are contained in enclosure I.
* Information on the status of prior GAO recommendations related to
this work is in enclosure II.
* We conducted our work between July 2006 and May 2007 in accordance
with generally accepted government auditing standards.
Results In Brief:
Status of Deepwater Assets”Examples of Progress and Setbacks:
Five years into the Deepwater contract, some assets have been
delivered,[Footnote 7] and others are undergoing planned improvements
or initial testing, but several other assets have encountered
significant problems.
* Engine upgrades to the HH-65 helicopters are well under way; the
first two Maritime Patrol Aircraft have been delivered; and 8 of 91
Short Range Prosecutors (SRP) have been delivered according to
schedule.
* In contrast, other Deepwater assets, have experienced delays, which
have created a number of challenges for the Coast Guard in terms of
delivery delays and loss of operational capabilities. For example,
- The Vertical Takeoff and Landing Unmanned Aerial Vehicle (VUAV) has
experienced delays as the Coast Guard assesses alternatives.
* The 123-foot patrol boats experienced structural problems and were
eventually removed from service. The Fast Response Cutter (FRC), which
was to replace the Coast Guard‘s legacy patrol boat fleet, experienced
design problems and the Coast Guard suspended all work.
* The delivery date for the first FRC was advanced from 2018 to 2007,
but has now slipped to 2010 at the earliest.
* The National Security Cutter (NSC) has structural problems with the
first two hulls that, if not corrected, will reduce the fatigue lives
of these vessels.
Status of Deepwater Assets”Coast Guard Challenges and Actions:
* To address these and other challenges, the Coast Guard is taking a
variety of actions, such as relying more heavily on legacy assets to
help address patrol hour shortages, purchasing off-the-shelf assets to
expedite delivery, and planning corrective structural modifications.
* These challenges are compounded, in part, due to uncertainties with
delivery dates that stem from the long-term nature of the program, on-
going technological advances, funding level changes, and changes to the
Coast Guard‘s management of the Deepwater program. These present
additional challenges to the Department of Homeland Security (DHS) and
Congress as they oversee the program and consider appropriate funding
levels.
Coast Guard Management of Deepwater Program is Evolving:
* The Deepwater program has faced challenges in terms of program
management, contractor accountability, and cost control. In some cases,
these challenges have affected the acquisition and delivery of
Deepwater assets. To mitigate these challenges, the Coast Guard has
become more directly involved in program management. For example, the
Coast Guard has decided to acquire certain Deepwater assets outside of
the existing Deepwater contract. The Coast Guard also has taken over
the leadership of the integrated product teams (IPT)[Footnote 8]”a key
program management tool”and has incorporated new award fee criteria to
provide an incentive for better contractor performance. Further, the
Coast Guard plans to use independent, third-party reviews for asset
development and major modifications.
Objective 1: Status Of Deepwater Assets:
Examples of Assets Making Progress:
* There has been progress in terms of design, acquisition, and delivery
for some Deepwater assets, including, for example:
- HH-65 helicopter;
- Maritime Patrol Aircraft (MPA);
- Short-Range Prosecutor (SRP) cutter-based small patrol boats;
Status Of Deepwater Assets:
HH-65 Upgrades Proceeding as Planned:
* The current HH-65 fleet will ultimately be upgraded to a fleet of
Multi-Mission Cutter Helicopters (MCHs) in three separate phases.
- Phase 1 involves installation of new engines and engine control
systems, intended to provide a 40 percent power increase;
- According to the Coast Guard, as of April 3, 2007, 75 of the 95 HH-65s
have been re-engined; an additional 9 are to be completed by June 2007,
and the remainder are to be completed by October 2007[a].
- The first-in-class Multi-Mission Cutter Helicopter is currently
scheduled for delivery in 2012.
- Phase 2, a service-life extension program, runs from fiscal years
2007 through 2014.
- Phase 3, which is to include communications upgrades, runs from
fiscal years 2008 through 2014.
[a]Note: In its June 2007 response to the draft of this product, the
Coast Guard stated that it had met these deadlines and that 84 of the
HH-65s had been re-engined. This note was not in the version of the
slides briefed in mid-May to congressional requesters.
Status Of Deepwater Assets:
Delivery of MPAs and SRPs Has Begun:
MPA:
* The first two MPAs were delivered to the Coast Guard in December 2006
and February 2007, with a third scheduled to be delivered by the end of
August 2007. Five more MPAs are on contract.
* Pilots and air crew have participated in training, and the first
aircraft delivered to the Coast Guard is undergoing integration of the
Missions System pallet at the Coast Guard‘s Aircraft Repair and Supply
Center in Elizabeth City, N.C.
SRP:
* The Coast Guard has procured 8 of 91 planned SRPs to date and is
pursuing more cost-effective means of acquiring the remaining SRPs.
Status Of Deepwater Assets:
Other Aircraft and Vessels Face Problems:
* Some Deepwater asset classes have experienced design or
technology problems that have limited their performance or
delayed production, including, for example:
- VUAV;
- 123-foot patrol boats;
* FRC;
* NSC.
Status Of Deepwater Assets:
VUAV”Acquisition Has Been Delayed:
* Acquisition of the first-in-class VUAV, originally scheduled for
delivery in 2006, has been delayed, in part, because of technological
issues and the Coast Guard is reconsidering the capabilities by which
to meet its aerial surveillance requirements.
- The Eagle Eye was the original VUAV option, but there are
technological challenges:
- Some elements of the VUAV technology are unproven and the
Coast Guard considers it a ’developmental program.“
- The Coast Guard does not plan to request funding for the VUAV
before fiscal year 2013. The Coast Guard has stated that
technological advances between now and then could affect
decisions about what kind of surveillance system to acquire. Thus,
the revised delivery date of 2013 for the first-in-class asset will
likely be revisited.
Status Of Deepwater Assets:
VUAV”Delays Could Affect Operational Capabilities:
* Delayed development of the VUAVs could affect operational
capabilities of the NSC:
- The first VUAV was to be delivered concurrent with the first NSC,
enabling the VUAV to launch from the NSC to provide surveillance
capabilities beyond the range of the NSC alone.
- Delays to the VUAV acquisition means this asset no longer aligns with
the NSC‘s planned deployment, thus diminishing planned operational
capabilities.
*Any further delays could also affect the operational capabilities of
future planned Deepwater assets, including the Offshore Patrol Cutter,
from which the VUAV is also planned to launch, unless the maritime
surveillance capability is provided by alternate means.
Status Of Deepwater Assets:
VUAV”Coast Guard Actions:
* The Coast Guard is considering alternative ways to address the
operational impact of delays in VUAV acquisition, to include:
- Increasing the use of other Deepwater assets”such as the
HH-65, SRP, and the Long-Range Interceptor”to expand the
surveillance capabilities of its large vessels.
- Developing a list of other potential unmanned aerial systems to
launch from its large vessels.
- The Coast Guard has directed an independent third party to
compare the capabilities of Fire Scout”an alternative
solution under development by the Department of
Defense”with the original VUAV.
Status Of Deepwater Assets:
123-foot Patrol Boats Removed From Service:
* The Coast Guard originally intended to convert all 49 of its 110-foot
patrol boats to 123-foot patrol boats to provide additional
capabilities.
* However, hull buckling and other structural problems among the 8
converted patrol boats led the Coast Guard to impose operating
restrictions on the converted patrol boats in April 2005.
* In June 2005, all further conversions were halted by the Coast Guard.
* A number of the converted 123-foot patrol boats continued to
experience hull and deck buckling, shaft alignment problems, and other
issues affecting operational capabilities.
* Effective November 2006, all 8 of the Coast Guard‘s 123-foot patrol
boats were removed from service due to operational and safety concerns.
* In April 2007, the Coast Guard announced that this removal from
service would be permanent.
* The Coast Guard Commandant announced that he has established a group
of legal, contracting, and engineering experts to examine problems
encountered in this program and that he will pursue all available
options for recouping any funds that may be owed to the government as a
result of the loss of these boats.
Status Of Deepwater Assets:
123-foot Patrol Boats”Coast Guard Actions:
* To help mitigate the operational impacts resulting from removal of
the 123-foot patrol boats from service, the Coast Guard has stated that
it:
- Implemented multi-crewing on 8 Florida-based 110-foot patrol boats
with crews from the 123-foot patrol boats that had been removed from
service to increase patrol hours.
- This decreased annual personnel tempo for 110-foot crews by 18
percent, but increased the annual tempo for the 8 patrol boats by 64
percent (3,600 hours per boat per year versus 2,200 hours previously).
- Because increasing the operational tempo of these aging 110-foot
patrol boats raises some concerns about increased maintenance needs,
the Coast Guard deployed additional logistics and support personnel and
spare parts to Key West in an effort to reduce repair time.
- Deployed Coast Guard vessels from other locations to assist in
missions formerly performed by the123-foot patrol boats;
- Secured permission from the U.S. Navy to continue using three 179-
foot Navy cutters on loan for an additional 5 years;
- Is examining the purchase of four additional 87-foot patrol boats;
and;
- Is examining whether to compress the schedule of maintenance and
upgrades of the 110-foot patrol boats.
Status Of Deepwater Assets:
FRC”Delayed Due to Suspension of Design Work:
* The delivery of the FRCs was accelerated to offset the failed
strategy of converting 110-foot patrol boats into more capable 123-foot
patrol boats.
* In February 2006, design work on a composite-hulled FRC was suspended
due to design risks, including excessive weight and horsepower
requirements compared with standard patrol boats.
* Also in February 2006, an independent design review confirmed the
design risks previously raised by Coast Guard technical experts.
* As a result of the suspension of work, delivery of the first-in-class
FRC has been delayed from 2007 until 2010, at the earliest.
* Additional delays in FRC deployment could further exacerbate the
patrol hour shortage brought about by the removal of the 123-foot
patrol boats from service.
Status Of Deepwater Assets:
FRC”Coast Guard Actions:
* To address FRC delays, the Coast Guard is moving ahead with a
dual-path approach:
- First, acquire a commercial ’off-the-shelf“ patrol boat design (FRC-B)
that it can modify to meet most of the Coast Guard‘s requirements.
- The Coast Guard issued a Request for Proposals for the FRC-B
design to the system integrator in November 2006.
- On March 14, 2007, the Coast Guard terminated the FRC-B
acquisition through the system integrator and reassigned it to the
Coast Guard Acquisition Directorate, which will issue a Request
for Proposals to acquire a high-performing patrol boat at less cost
and in less time, and to ensure full and open competition.
- The Coast Guard projects delivery of the first of 12 FRC-Bs by
spring 2010.
- Second, acquire a redesigned FRC (FRC-A) that will meet all of the
Coast Guard‘s requirements.
- According to the Coast Guard, design and procurement decisions for
the FRC-A depend upon its eventual assessment of results from:
- a completed third-party business case analysis of steel versus
composite hulls;
- completion of a composite patrol boat technology readiness
assessment; and;
- planned future technical testing in fiscal years 2010-2011 of
composite hull technology involving building and testing a 150-foot
prototype vessel by DHS‘s Science and Technology Directorate
(funding has not yet been provided, however).
- If funded, DHS estimates that results from these tests may be
available in December 2010.
Status Of Deepwater Assets:
NSC”First Hulls Have Design Deficiencies:
* The first two NSC hulls are known to have structural design
deficiencies requiring retrofitting, which the Coast Guard intends to
address as part of dry dock maintenance after the NSCs are delivered.
- According to the DHS Inspector General:
- The current NSC design will not meet its expected 30-year service
life.
- NSC design deficiencies will likely lead to increased maintenance
costs and reduced service life.
- NSC‘s design and performance deficiencies are the result of Coast
Guard‘s failure to exercise its technical and management oversight
authority over design and construction.
Status Of Deepwater Assets:
NSC”Coast Guard Actions:
* The Coast Guard plans to address these challenges by:
- Correcting the structural deficiencies of the first two NSC
hulls at scheduled dry docks in order to avoid the schedule and costs
risks associated with stopping the production line; and;
- Incorporating structural enhancements into the design for
NSC hulls 3 through 8 and incorporating the enhancements during
production.
Status Of Deepwater Assets:
Delivery Schedule, Summary by Key Assets:
Comparing the asset delivery dates between the 2005 and 2006 Coast
Guard Asset Introduction Schedules, figure 1 shows that:
1) Five Deepwater assets”NSC, SRP, LRI, MPA, and LRS”are on
schedule (bars are same height for 2005 and 2006);
2) Four assets”OPC, FRC, MRR, and VUAV”are behind schedule (2006 bar is
higher than for 2005); and;
3) One asset”the MCH”is ahead of schedule (2006 bar is lower than for
2005).
Note: DHS is reviewing the 2006 data, so the dates shown are subject to
change.
Figure 1: Comparison of 2005 and 2006 Estimated Delivery Dates for the
First-in-Class Deepwater Assets:
This figure is a bar graph with Year Deliverer, first in class as the
vertical axis, and Assets as the horizontal axis:
Asset: NSC;
Planned first-in-class delivery dates as of 2005: 2007;
Planned first-in-class delivery dates as of 2006: 2007;
Asset: OPC;
Planned first-in-class delivery dates as of 2005: 2010;
Planned first-in-class delivery dates as of 2006: 2015;
Asset: FRC[a];
Planned first-in-class delivery dates as of 2005: 2007;
Planned first-in-class delivery dates as of 2006: 2012;
Asset: SRP;
Planned first-in-class delivery dates as of 2005: 2003;
Planned first-in-class delivery dates as of 2006: 2003;
Asset: LRI;
Planned first-in-class delivery dates as of 2005: 2007;
Planned first-in-class delivery dates as of 2006: 2007;
Asset: MCH;
Planned first-in-class delivery dates as of 2005: 2012;
Planned first-in-class delivery dates as of 2006: 2008;
Asset: MRR;
Planned first-in-class delivery dates as of 2005: 2012;
Planned first-in-class delivery dates as of 2006: 2013;
Asset: MPA;
Planned first-in-class delivery dates as of 2005: 2007;
Planned first-in-class delivery dates as of 2006: 2007;
Asset: VUAV;
Planned first-in-class delivery dates as of 2005: 2007;
Planned first-in-class delivery dates as of 2006: 2008;
Asset: LRS;
Planned first-in-class delivery dates as of 2005: 2008;
Planned first-in-class delivery dates as of 2006: 2008;
[a] The dates shown for the FRC refer to the FRC-A, which will meet
Coast Guard requirements. The Coast Guard is also pursuing procurement
of a commercially available patrol boat design (FRC-B), which is
anticipated sooner but will not meet all requirements.
Source: 2005 and 2006 Coast Guard asset introduction schedule data.
[End of figure]
Status Of Deepwater Assets:
Uncertainties Over Asset Delivery Dates Add to Oversight Challenges:
* In addition to the problems with assets already cited, several
factors add to the uncertainty about the delivery schedule of Deepwater
assets.
- First, the Coast Guard is still in the early phases of the 25-year
Deepwater acquisition program and the potential for changes in the
program over such a lengthy period of time make it difficult to
forecast the ability of the Coast Guard to acquire future Deepwater
assets according to its published schedule.
- Second, advances in technology for some assets are still being
evaluated.
- Third, changes to funding levels can affect the future delivery of
Deepwater assets.
- Finally, the Coast Guard has recently made a number of program
management changes that could affect the delivery schedules (positively
or negatively) for its Deepwater assets. Examples include the Coast
Guard‘s decision to bring all acquisition efforts under one
organization, its intent to serve as the lead Deepwater integrator, and
its use of third-party reviews.
- These uncertainties in asset delivery dates present additional
challenges to DHS and Congress as they oversee the Deepwater program
and consider appropriate funding levels.
Objective 2: Deepwater Management Structure And Organization:
Prior GAO Findings:
* The complexity of the Deepwater contract requires effective government
management and oversight to ensure that the intended results are
achieved and that taxpayer dollars are not wasted.
* GAO has previously reviewed the Deepwater program and made
recommendations (see enclosure II) on issues specifically related to:
- Program management: The Coast Guard had not effectively implemented
key components needed to manage the program and oversee the system
integrator including IPTs, adequate staffing, and defined maintenance
and logistics roles and responsibilities.
- Contractor accountability: The Coast Guard had not effectively
measured contractor performance against Deepwater program goals.
- Cost control: Control of future costs through competition remained a
risk because of weak oversight of subcontractor decisions related to
competition.
Deepwater Management Structure And Organization:
Program Management”IPT Responsibilities:
Integrated Product Teams:
* IPTs were designated as the Coast Guard‘s primary tool for managing
the Deepwater program and overseeing the contractor in the program
management plan[Footnote 9].
- IPT responsibilities included such things as guiding development;
allocating resources and budgets, measuring performance, performing
product level design/performance cost trade-offs, and delivering and
fielding tangible products and processes in accordance with the overall
Deepwater program.
Deepwater Management Structure And Organization:
Program Management”IPT Ineffectiveness:
* GAO previously reported that IPTs had not been effective due to
changing membership, understaffing, insufficient training, lack of
authority for decision making, and inadequate communication. Also, IPT
decision making was to a large extent stovepiped, and some teams lacked
adequate authority to make decisions within their area of
responsibility.
* Our work revealed that IPTs continue to be ineffective at guiding the
development and delivery of products in accordance with the overall
Deepwater program. For example:
- IPTs failed to help resolve problems with the FRC, VUAV, and NSC.
- The Coast Guard established working groups outside the IPT structure
to identify and deliver solutions to problems not resolved by the IPTs
to help ensure the delivery of quality products.
* Some IPT‘s have failed to help resolve design and delivery problems
on a timely basis. For example:
- Problems identified with FRC design issues were not resolved by the
IPT and subsequently the Coast Guard deactivated the IPT.
- Poor task order scoping related to asset requirements resulted in the
temporary suspension of the VUAV IPT.
- The NSC faced program management challenges for at least 11 months,
from February to December 2006. The NSC IPT staffing was inadequate to
address IPT workload, including contract administration and technical
issues, finalizing the engineering change proposals, and awarding the
delivery task order for the third NSC on time.
* In addition, according to the DHS Inspector General:
- The NSC IPT did not detect design deficiencies in the first two NSC
hulls.
- Coast Guard officials stated that IPTs failed to resolve NSC
structural design concerns due, in part, to breakdowns in
collaboration.
* The Coast Guard judged that the IPTs‘ performance was ’non-
problematic“ at the same time assets were experiencing cost and
schedule problems”see figures 1 and 2.
Deepwater Management Structure And Organization:
Program Management”IPT Performance Versus Program Outcomes:
Figures 1 and 2 below demonstrate the misalignment between Coast
Guard‘s assessment of IPT performance and associated program outcomes
at the asset (vessel) and, to a lesser extent, Deepwater program level.
Figure 1: Vessel Classes Cost, Schedule, and IPT Performance Evaluation:
This figure is a bar graph with the following statements on the
vertical axis: behind schedule or problematic; requires attention; on
schedule or non-problematic; exceeds requirements.
The horizontal axis depicts the months of October 2005 through
September, 2006.
The vertical bars for each month represent the following: cost
performance; schedule performance; IPT performance.
October, 2005:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
November, 2005:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
December, 2005:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
January, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
February, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
March, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
April, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
May, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
June, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
July, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
August, 2006:
Cost performance: behind schedule or problematic;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
September, 2006:
Cost performance: on schedule or non-problematic;
Schedule performance: on schedule or non-problematic;
IPT performance: on schedule or non-problematic;
Source: GAO analysis of Coast Guard data.
Note: The cost and schedule performance improvements in September 2006
for vessel classes were the result of rebaselining these measurements.
[End of figure]
Figure 2: Deepwater Program Cost, Schedule, and IPT Performance
Evaluation:
This figure is a bar graph with the following statements on the
vertical axis: behind schedule or problematic; requires attention; on
schedule or non-problematic; exceeds requirements.
The horizontal axis depicts the months of October 2005 through
September, 2006.
The vertical bars for each month represent the following: cost
performance; schedule performance; IPT performance.
October, 2005:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
November, 2005:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
December, 2005:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
January, 2006:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
February, 2006:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
March, 2006:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
April, 2006:
Cost performance: requires attention;
Schedule performance: requires attention;
IPT performance: on schedule or non-problematic;
May, 2006:
Cost performance: requires attention;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
June, 2006:
Cost performance: requires attention;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
July, 2006:
Cost performance: requires attention;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
August, 2006:
Cost performance: requires attention;
Schedule performance: behind schedule or problematic;
IPT performance: on schedule or non-problematic;
September, 2006:
Cost performance: requires attention;
Schedule performance: on schedule or non-problematic;
IPT performance: on schedule or non-problematic;
Source: GAO analysis of Coast Guard data.
Note: The cost and schedule performance improvements in September 2006
for vessel classes were the result of rebaselining these measurements.
[End of figure]
Deepwater Management Structure And Organization:
Program Management”Coast Guard Actions:
The Coast Guard is restructuring IPTs and redefining roles and
responsibilities:
* The Coast Guard has taken over the leadership of the IPTs and plans
to update the IPT charters and the program management plan to reflect
new roles. For example:
- IPTs will no longer serve as the primary decision-making or problem
resolution tool for asset design and development.
- IPTs will be involved in decisions that will not affect the overall
cost or schedule for the asset.
* The Coast Guard has reaffirmed the role of the Coast Guard‘s Chief
Engineer as the technical authority for all acquisition projects.
Therefore, the Coast Guard will be responsible for deciding how to
resolve design issues and technical problems.
* The Coast Guard plans to obtain technical assistance from outside
experts.
- The Coast Guard also plans to direct independent, third-party design
reviews for new assets as the assets are designed and as major
modifications to assets are contemplated.
Deepwater Management Structure And Organization:
Program Management”Human Capital Shortages:
Human Capital:
* In 2004, we noted a gap between the staffing needs in the Deepwater
Human Capital plan and positions filled.
- The Coast Guard had identified a need of 264 staff for 2004, but only
224 positions were funded, and only 209 positions were assigned to
the Deepwater program.
- This staffing level fell short of the Coast Guard‘s goal, identified
in the Human Capital Plan, of a 95 percent ’fill-rate.“
* For FY 2005-2007, the Deepwater program staffing information
indicates a 20 percent staffing vacancy rate compared to actual
billets.
* Based on independent analysis by Booz Allen Hamilton, under contract
to the Coast Guard, there is a need for 371 Deepwater program
management staff in fiscal 2007.
Figure 3: Reported Coast Guard Deepwater Government Staff Levels,
Fiscal Year 2005–2007, as of February 2007:
This figure is a bar graph with Number of staff on the vertical axis
and years on the horizontal axis. The vertical bars for each year
represent filled billets and allocated billets.
Year: 2005;
Number of staff, filled billets: 204;
Number of staff, allocated billets: 238;
Year: 2006;
Number of staff, filled billets: 229;
Number of staff, allocated billets: 281;
Year: 2007;
Number of staff, filled billets: 260;
Number of staff, allocated billets: 327;
Source: GAO analysis of Coast Guard data.
[End of figure]
Deepwater Management Structure And Organization:
Program Management”Human Capital Plan Revisions:
* The Coast Guard has acknowledged that Deepwater program personnel
lack adequate systems acquisition experience.
- Two independent studies directed and accepted by the Coast
Guard”including one by the Defense Acquisition University”also
identified inadequate acquisition experience within the program.
* The Coast Guard revised its Deepwater human capital plan in February
2005 to emphasize workforce planning in terms of training, leadership,
knowledge management, recruiting, and retention.
- The revised plan included annual reporting updates of key human
capital management actions.
- The majority of the objectives identified in the 2005 revised
Deepwater human capital plan have not been achieved or updated
annually as required.
Deepwater Management Structure And Organization:
Program Management”Coast Guard Actions:
* The Coast Guard is restructuring and realigning Deepwater Human
Capital. For example it has:
- Requested 43 additional Deepwater program staff for fiscal year 2007.
Subsequent to this request, the Coast Guard has decided to have
increased involvement in Deepwater program management.
- The Coast Guard announced plans for a ’Blueprint for Acquisition
Reform,“ which more broadly addresses human capital issues in the
context of acquisition reform. The Blueprint includes four sub-
component plans scheduled to occur through fiscal year 2009:
- Organizational Alignment and Leadership: Realigning acquisition
functions and leadership within the Coast Guard organization;
- Human Capital: Ensuring that the Coast Guard has the appropriate
staff to accomplish the mission effectively;
- Policies and Processes: Focusing on policies and processes to improve
acquisition outcomes; and;
- Knowledge and Information Management: Identifying opportunities to
reduce cost, improve service, measure compliance, and improve
management of service providers.
Deepwater Management Structure And Organization:
Program Management”Maintenance and Logistics Responsibilities:
Maintenance and Logistics–Roles and Responsibilities:
* According to the Deepwater Program Management Plan, ICGS is
responsible for developing maintenance and logistics support plans.
* In previous reports, GAO found that the Coast Guard had not adequately
communicated maintenance and logistics responsibilities within the Coast
Guard.
* During our current work, Coast Guard officials acknowledged the lack
of clarity in defining roles and responsibilities between the Coast
Guard and ICGS for maintenance and logistics support plans.
* Although ICGS is contractually responsible for developing key
documents related to maintenance and logistics, the support plans for
the first-in-class NSC and MPA that ICGS submitted lacked the
specificity anticipated by the Coast Guard.
Deepwater Management Structure And Organization:
Program Management”Coast Guard Actions:
* The Coast Guard is redefining logistics and maintenance roles:
- The Coast Guard is developing NSC and MPA interim maintenance and
logistics support plans in place of the plans submitted by ICGS.
- The Coast Guard has declared that it will have one logistics system
and that the government (Coast Guard) is now the default provider of
maintenance and logistics, supplemented by contractors, when necessary.
Deepwater Management Structure And Organization:
Contractor Accountability”Performance Standards and Incentives:
* According to Office of Federal Procurement Policy guidance and Federal
Acquisition Regulation 37.602 (b), a performance-based contract such as
Deepwater should have measurable performance standards and incentives
to motivate contractor performance.
* Coast Guard used award fee and award term incentives with the goal of
encouraging and rewarding contractor performance, including achieving
the goals of maximizing operational effectiveness and minimizing total
ownership cost.
* In 2004, we reported concerns and made recommendations about how the
Coast Guard held the system integrator accountable for its performance
including:
(1) the award fee rating factors lacked objective measures, and
(2) not establishing a solid baseline, critical to holding the system
integrator accountable, to measure progress in lowering total ownership
cost.
Deepwater Management Structure And Organization:
Contractor Accountability”Award Fee:
Award Fee (a fee to motivate a contractor for excellent performance):
* To date, the award fee determination has not been related to asset
performance.
- Despite concerns expressed in award letters regarding cost controls
and schedule performance, ICGS has received award fees ranging from 82
to 92 percent of the total it could have received.
- Contractor earned about $18 million (88 percent of about $20 million
available award fees) related to system integrator role.
- Over the six performance periods, the award fee results correspond to
a ’very good“ rating overall.
* The contractor earned an additional $3.5 million for its Command,
Control, Communications, Computers, Intelligence, Surveillance, and
Reconnaissance efforts and for leasing 8 helicopters.
* The current award fee criteria do not include measures of IPT
effectiveness or competition.
Deepwater Management Structure And Organization:
Contractor Accountability”Coast Guard Actions to Address Award Fee
Criteria:
The Coast Guard revised the award fee criteria to:
* Provide an incentive for better performance;
* Ensure the contractor is responsive to criteria;
* Incorporate 24 specific milestones in the criteria for the next
evaluation period to measure the contractor‘s ability to maintain
schedule.
* Coast Guard is considering alternative incentive structures”such
as fixed fees”for the future.
Deepwater Management Structure And Organization:
Contractor Accountability”Award Term Evaluation:
Award Term (contract performance period extension earned by a
contractor for performance):
* The first award term evaluation resulted in an award to the
contractor of an additional 43 of a possible 60 months.
- The Coast Guard and ICGS are negotiating the contract
modification for the first award term planned for June 25, 2007.
* The award term evaluation was subjective and based on criteria for
overall program goals:
- operational effectiveness;
- total ownership cost, and;
- customer satisfaction (e.g., satisfaction of the personnel in the
Coast Guard who are to use the Deepwater assets).
Deepwater Management Structure And Organization:
Contractor Accountability”Operational Effectiveness and Total Ownership
Cost:
* Operational effectiveness was measured using modeling.
- The models measured planned asset capabilities and presence, not
actual asset performance because most assets were not available at
the time of the evaluation.
* Total ownership cost (TOC) increased to $304 billion from the original
$78 billion.
- The Coast Guard attributed this increase to the addition of post 9/11
mission requirements and adjustments for inflation.
- In evaluating TOC performance, the Coast Guard made allowances for
factors beyond contractor control, such as additional mission
requirements.
- Also, the Coast Guard evaluation of TOC indicated that ICGS cost
control measures did not appear to be in place.
- While the Coast Guard had difficulty in measuring the contractor‘s
impact on TOC, the contractor received a ’good“ rating.
Deepwater Management Structure And Organization:
Contractor Accountability”Coast Guard Actions to Address Award Term
Evaluation:
The Coast Guard has revised the award term plan for evaluating
contractor performance during the next award term. For example:
* More objective criteria have been added”including asset-specific Key
Performance Parameters, however, they cannot be evaluated until
assets are delivered.
* The emphasis has shifted from total ownership cost to cost control.
* Operational effectiveness will continue to be measured with the same
models.
* The effectiveness of the revised criteria cannot be evaluated until
at least mid-2010.
Deepwater Management Structure And Organization:
Cost Control”Competition Is Key for Controlling Costs:
* Competition is a key component for controlling costs in the
Deepwater program.
* In 2004, we reported that although competition among subcontracts was
a key mechanism for controlling costs, the Coast Guard had neither
measured the extent of competition among the suppliers of Deepwater
assets nor held ICGS accountable for taking steps to achieve
competition.
- The two first-tier subcontractors, Lockheed Martin and Northrop
Grumman, had sole responsibility for determining whether to compete
assets or to provide the assets themselves.
Deepwater Management Structure And Organization:
Cost Control”Information on Competition Obtained:
* The Coast Guard requested additional information from ICGS on
competition, but in December 2006, the Coast Guard reported
that ICGS data on Deepwater competition did not provide the
minimum information needed to determine whether an
appropriate level of competition had been achieved.
* Based on ICGS information, first-tier subcontractors have
performed about half of all work in-house (see table 3).
Deepwater Management Structure And Organization:
Cost Control”ICGS Affiliates Awarded Large Portion of Deepwater
Contracts:
During September 2003-December 2006, about half of the $1.6 billion
funds obligated to Lockheed Martin and Northrop Grumman (LM and NGSS)
have either remained with those companies or been awarded to their
affiliates. While the Coast Guard has not established a goal for in-
house work, the first-tier subcontractors retained higher percentages
of in-house work than we reported in 2004 (50 percent compared to 45
percent).
Table 3: Breakdown of the Percentage of ICGS Obligations to First-Tier
Subcontractors (Includes Planned Subcontracts):
First-tier subcontractors: Lockheed Martin;
In-house work (including affiliates) for September 2003-December 2006:
42%;
Previously reported percentage of in-house work, as of September 30,
2003[a]: 42%;
First-tier subcontractors: Northrop Grumman Ship Systems;
In-house work (including affiliates) for September 2003-December 2006:
64%;
Previously reported percentage of in-house work, as of September 30,
2003[a]: 51%;
First-tier subcontractors: Lockheed Martin and Northrop Grumman Ship
Systems;
In-house work (including affiliates) for September 2003-December 2006:
50%;
Previously reported percentage of in-house work, as of September 30,
2003[a]: 45%;
Source: GAO analysis of ICGS data.
[a] GAO, Contract Management: Coast Guard‘s Deepwater Program Needs
Increased Attention to Management and Contractor Oversight, GAO-04-380
(Washington, D.C.: Mar. 9, 2004).
[End of table]
Deepwater Management Structure And Organization:
Cost Control”Coast Guard Actions:
* To ensure the best value to the government, the Coast Guard is
seeking competition and is acquiring some assets directly rather than
through ICGS.
- A July 2006 Coast Guard-directed business case analysis of the SRP
showed a cost savings of between $78,000 and $108,000 per SRP if the
Coast Guard were to procure the remaining 82 SRPs directly”a total
program savings of about $6.4 million to $8.9 million.
- On March 14, 2007, the Coast Guard terminated the FRC-B acquisition
through ICGS and will issue a request for proposals to:
- acquire a high-performing patrol boat at less cost and in less time
than an ICGS-led acquisition, and;
- ensure full and open competition.
* The Coast Guard recently articulated a new strategy to conduct
similar business case analyses in the future.
* The Coast Guard has included competition among the integrator‘s
subcontractors as one of the criteria under the next award term plan.
Concluding Observations:
Status of Deepwater Assets:
* While the Coast Guard has made progress with the design, acquisition,
and delivery of some Deepwater assets, ongoing problems with other
assets raise questions about the execution of the Coast Guard‘s
original approach. As a result, the ability to maintain a system-of-
systems approach that is fully integrated and synchronized with the
retirement of legacy assets and the introduction of new assets is at
risk. As problems are encountered and schedules slip on
individual aircraft or vessels, the overall operational capabilities of
assets and the system as a whole could be reduced, particularly in the
shortterm.
Concluding Observations:
Deepwater Management Structure and Organization:
* The Deepwater program is at a crossroads. Because of problems with
program management, contractor accountability, and cost controls, the
Coast Guard has decided to take on more direct responsibility for the
acquisition management and support of key Deepwater assets. However,
until the Coast Guard has sufficient staff with the requisite skills
and abilities and the contract management tools to carry out these new
and expanding responsibilities, the Deepwater program will remain at
risk in terms of getting what is needed, on time, and at a fair price.
[End of section]
Appendix II: Status of Deepwater Vessel and Aircraft Assets:
National Security Cutter (NSC):
[See PDF for image]
Quick look:
* Replaces the 378-foot H Endurance Cutter;
* Total number planned: 8;
* Length: 418 feet;
* Maximum speed: 28 knots;
* Operating range: 12,000 nautical miles;
* Underway endurance: 60 days;
* Days operational away from home port: 230;
* Crew size: 16 officers, 97 enlisted personnel (typical); maximum crew
size is 148;
* Can carry and deploy small patrol boats”the over-the-horizon Long-
Range Interceptor, and the Short-Range Prosecutor”as well as the Multi-
Mission Cutter Helicopter and/or the Vertical Takeoff and Landing
Unmanned Aerial Vehicle.
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $359.4;
Current projected per unit cost[b]: $431.3;
Actual funding available[c]: $1,519.7;
Additional funding needed to complete[d]: $1,930.3.
First asset delivery date:
2005 Asset Introduction Schedule: 2007;
2006 Asset Introduction Schedule: 2017;
Current[e]: 2007.
Last asset delivery date:
2005 Asset Introduction Schedule: 2017;
2006 Asset Introduction Schedule: 2015;
Current[e]: 2015.
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans called for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Other upgrades
included installing equipment to detect chemical, biological, and
radiological dangers; enhancing and increasing the flight deck to
accommodate DOD and DHS helicopters; upgrading weapons systems;
improving classified communication capabilities; and enhancing
underwater detection capabilities.
Current Status:
The Commandant of the Coast Guard recently stated that internal reviews
by Coast Guard engineers, as well as by independent analysts, have
concluded that the NSC, as designed, will need structural reinforcement
to meet its expected 30-year fatigue life. The Coast Guard is pursuing
two strategies to address the structural modifications. NSC hulls #1
and #2 will both receive structural bolstering as part of depot-level
maintenance (dry dock) after they are delivered. Coast Guard officials
stated that this will not impact missions since the cutters should be
able to operate safely for several years until the first scheduled dry
dock. The Coast Guard is currently working with naval engineers and
contractors to incorporate the required structural bolstering in the
production of the remaining NSC hulls as they are being built.
While the Coast Guard had originally planned to rely on the system
integrator for maintenance and logistics support, the Coast Guard will
be taking responsibility for the development and implementation of
maintenance and logistics for the NSC. The NSC will utilize a crew
rotation concept, in which four crews rotate among three NSCs, once
deployed, with each crew spending no more than 185 days away from home
port.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Offshore Patrol Cutter (OPC):
[See PDF for image]
Quick look:
* Replaces the 210-foot and 270-foot Medium-Endurance Cutters;
* Total number planned: 25;
* Length: 360 feet;
* Maximum speed: 28 knots;
* Operating range: 9,000 nautical miles;
* Underway endurance: 45 days;
* Crew size: 91”16 officers, 75 enlisted personnel;
* Can carry and deploy multiple over-the-horizon boats including the
Long-Range Interceptor and/or Short-Range Prosecutor as well as two
Multi-Mission Cutter Helicopters or four Vertical Unmanned Aerial
Vehicles;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $282.2;
Current projected per unit cost[b]: $323.9;
Actual funding available[c]: $126.0;
Additional funding needed to complete[d]: $7,972.0.
First asset delivery date:
2005 Asset Introduction Schedule: 2010;
2006 Asset Introduction Schedule: 2015;
Current[e]: 2014.
Last asset delivery date:
2005 Asset Introduction Schedule: 2027;
2006 Asset Introduction Schedule: 2027;
Current[e]: 2027.
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans called for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Other upgrades
included installing equipment to detect chemical, biological, and
radiological dangers; enhancing and increasing the flight deck to
accommodate DOD and DHS helicopters; upgrading weapons systems;
improving classified communication capabilities; and increasing the
cruising speed from 22 to 28 knots.
Current Status:
Funding changes have delayed the delivery of the first OPC from 2010 to
2015. Coast Guard officials have stated that further work on the
development of the OPC is on hold. Funding was not requested for the
OPC in fiscal year 2007 or fiscal year 2008. The Coast Guard is
studying the possible use of the Navy's Littoral Combat Ship as an
alternative for the OPC. The Coast Guard Engineering Logistics Center
is conducting this analysis, to be completed in spring 2007.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Fast Response Cutter (FRC):
[See PDF for image]
Quick look:
* A single version of the FRC was originally intended to replace the
Coast Guard's aging fleet of 110-foot patrol boats and its now out-of-
service 123-foot patrol boats;
* There are now two versions: (1) FRC-B, an off-the shelf, commercial
patrol boat, with a traditional steel hull, is intended to fill the gap
in patrol boat numbers until an entirely new boat, (2) the FRC-A, is
developed and produced, possibly with a composite material hull;
* Total number planned: 58 total: 12 FRC-Bs; 46 FRC-A;
* Length: 140 feet;
* Maximum speed: 30 knots;
* Operating range: 1,200 nautical miles;
* Underway endurance: 7 days;
* Crew size: 20”2 officers, 18 enlisted personnel;
* Carries and deploys Short-Range Prosecutor;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $255.6;
Current projected per unit cost[b]: $56.8 (FRC-A); $49.4 (FRC-B);
Actual funding available[c]: $80.8 (A); $1266.7 (B);
Additional funding needed to complete[d]: $2,532 (A); $466.3 (B).
First asset delivery date:
2005 Asset Introduction Schedule: 2007;
2006 Asset Introduction Schedule: 2012 (A); 2010 (B);
Current[e]: 2010 (A); 2009/2010 (B).
Last asset delivery date:
2005 Asset Introduction Schedule: 2027;
2006 Asset Introduction Schedule: 2025 (A); 2013 (B);
Current[e]: 2025 (A); 2012 (B).
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans called for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all its missions”including search and
rescue, marine safety, and law enforcement. Other upgrades included
installing equipment to detect chemical, biological, and radiological
dangers; enhancing underwater detection capabilities; and increasing
transit speed from 28 to 30 knots. The revised 2005 and 2006 Deepwater
implementation plans introduced the use of a composite, rather than
steel, hull.
Current Status:
The Coast Guard suspended FRC design work in late February 2006 because
of design risks. Currently, the Coast Guard is pursuing the purchase of
design plans for 12 commercial off-the-shelf patrol boats, the FRC-B.
On March 14, 2007, the Coast Guard terminated FRC-B acquisition through
the system integrator and reassigned it to the Coast Guard Acquisition
Directorate. Coast Guard officials stated that they expect the FRC-B to
have a steel hull and plan to release a new request for proposal in May
2007. The Coast Guard expects delivery of the first FRC-B in 2010.
The FRC-A is intended to be a long-term solution that would meet all
identified Coast Guard requirements. A Coast Guard decision on the
design of the FRC-A will be based on further data and analysis,
including a business case analysis by a private engineering firm
comparing composite hulls to steel. In addition, the DHS Science and
Technology Directorate is planning to conduct tests on a 150-foot
prototype FRC with a composite material hull, but as of May 2007, the
tests had not been funded. The tests are currently scheduled for 2010,
with results analyzed by about the end of 2010. The decisions to not
request funding for the FRC-A in fiscal year 2008, and to wait for the
results of both studies before moving forward, will likely further
delay delivery of the FRC-A. The FRC-B is supposed to mitigate this
delay; however, it will not meet all USCG requirements.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Short-Range Prosecutor (SRP):
[See PDF for image]
Quick look:
* New asset. The SRP is a rigid-hull inflatable small boat intended to
be deployed by the larger Deepwater cutters”the FRC, NSC, and the OPC.
The FRC can deploy one SRP, while the NSC and the OPC will be able to
carry either two SRPs, or one SRP and one of the larger Long Range
Interceptor small boats;
* Total number planned: 91;
* Length: 25 feet;
* Maximum speed: 32 knots;
* Operating range: 200 nautical miles;
* Underway endurance: 4 hours;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $0.5;
Current projected per unit cost[b]: $0.6;
Actual funding available[c]: $6.0;
Additional funding needed to complete[d]: $48.0.
First asset delivery date:
2005 Asset Introduction Schedule: 2004[f];
2006 Asset Introduction Schedule: 2004;
Current[e]: 2004.
Last asset delivery date:
2005 Asset Introduction Schedule: 2027;
2006 Asset Introduction Schedule: 2027;
Current[e]: 2024.
Performance capability changes in the Revised Deepwater implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans railed for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. In addition, the
number of planned SRPs increased from 82 in the original 2002 Deepwater
implementation Plan to 91m the revised 2005 and 2006 Deepwater
implementation plans.
Current status:
There are no known delays at this time. According to the Coast Guard,
the system integrator has provided 8 SRPs to date. The Coast Guard
conducted a business case analysis in July 2006 that showed the Coast
Guard could achieve a cost savings of between $78,000 and $108,000 per
asset, or a total cost savings between $6.4 million and $8.9 million
for the remaining 83 SRPs by procuring them directly, and not using the
system integrator. The Coast Guard is currently planning to pursue
construction and delivery of the remaining SRPs via a separate
contractual arrangement outside of the system integrator framework.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[f] The 2006 Asset Introduction Schedule begins at 2007, and the first
SRPs were delivered in 2004 to match delivery of the 123-foot patrol
boats, upon which the SRP was to operate.
[End of section]
Long-Range Interceptor (LRI):
[See PDF for image]
Quick look:
* New asset. The LRI is a rigid-hull inflatable small boat being
introduced for deployment from two much larger Deepwater cutters, the
National Security Cutter and the Offshore Patrol Cutter.
* Total number planned: 33;
* Length: 35 feet;
* Maximum speed: 45 knots;
* Operating range: 400 nautical miles;
* Underway endurance: 10 hours;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $1.0;
Current projected per unit cost[b]: $1.7;
Actual funding available[c]: $3.2;
Additional funding needed to complete[d]: $52.8.
First asset delivery date:
2005 Asset Introduction Schedule: 2007;
2006 Asset Introduction Schedule: 2007;
Current[e]: 2007.
Last asset delivery date:
2005 Asset Introduction Schedule: 2027;
2006 Asset Introduction Schedule: 2027;
Current[e]: 2024.
Performance Capability Changes in the Revised Deepwater Implementation
Plans;
The revised 2005 and 2006 Deepwater implementation plans called for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Further, the
number of planned Lolls was reduced from 42 in the original 2002
Deepwater implementation plan to 33 in the revised 2005 and 2006
Deepwater implementation plans.
Current Status:
The Coast Guard has one LRI under contract for delivery in August 2007,
to match delivery of the first NSC. The LRI is currently undergoing
acceptance trials by the contractor to determine performance
characteristics.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Multi-Mission Cutter Helicopter (MCH):
[See PDF for image]
Quick look:
* Upgrade of the HH-65 legacy helicopter;
* Total number planned: 102;
* Short-range recovery helicopter;
* Maximum speed: 160 knots;
* Operating range: 400 nautical miles;
* Underway endurance: 4 hours;
* Crew size: 3”2 officers, 1 enlisted person;
* Asset may be launched from the National Security Cutter or Offshore
Patrol Cutter;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $5.7;
Current projected per unit cost[b]: $7.3;
Actual funding available[c]: $373.6;
Additional funding needed to complete[d]: $367.4.
First asset delivery date:
2005 Asset Introduction Schedule: 2012;
2006 Asset Introduction Schedule: 2009;
Current[e]: 2012.
Last asset delivery date:
2005 Asset Introduction Schedule: 2016;
2006 Asset Introduction Schedule: 2014;
Current[e]: 2016.
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans called for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Other upgrades
included installing equipment to detect chemical, biological, and
radiological danger; and equipment for enhancing maritime patrol
surveillance capabilities. In addition, added capabilities included
airborne use of force and vertical insertion and delivery. Also, the
number of planned MCHs increased from 93 in the original 2002 Deepwater
implementation plan to 95 in the revised 2005 and 2006 Deepwater
implementation Plans. More recently, the Coast Guard increased the
number of planned MCHs by 7 to 102; these additional 7 will perform
security missions in the National Capital Region.
Current Status:
The MCH is an upgraded legacy HH-65 helicopter. According to Coast
Guard officials, the MCH assets will not have a single delivery date,
as the process involves three phases of upgrades. Phase I is the
purchase, delivery, and installation of new engines and engine control
systems, intended to provide a 40-percent power growth. Phase II is a
service-life extension program, and Phase III includes communications
upgrades. As of April 3, 2007, the Coast Guard stated that phase I was
nearing completion, with 75 helicopters having been delivered,
following installation of the new engines, and that another nine were
scheduled to be delivered ahead of the published delivery date of late
June 2007. The remainder were to be finished by October 2007. The
fiscal year 2008 congressional justification states that Phase II began
in fiscal year 2007 and will end in fiscal year 2014, and that Phase
III is to begin in fiscal year 2008 and is to end in fiscal year 2014.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Medium-Range Recovery Helicopter (MRR):
[See PDF for image]
Quick look:
* Total number planned: 42;
* Medium-range recovery helicopter;
* Maximum speed: 170 knots;
* Operating range: 600 nautical miles;
* Underway endurance: 6 hours;
* Crew size: 4”2 officers, 2 enlisted personnel;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $10.4;
Current projected per unit cost[b]: $10.7;
Actual funding available[c]: $100.9;
Additional funding needed to complete[d]: $350.1.
First asset delivery date:
2005 Asset Introduction Schedule: 2012;
2006 Asset Introduction Schedule: 2013;
Current[e]: 2008.
Last asset delivery date:
2005 Asset Introduction Schedule: 2016;
2006 Asset Introduction Schedule: 2019;
Current[e]: 2019.
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The original 2002 Deepwater implementation plan proposed retiring the
HH-60 and introducing a new fleet of helicopters. However, the revised
2005 and 2006 Deepwater implementation plans included the MRR and
called for providing communications equipment upgrades to make the
equipment interoperable with other DHS entities, DOD assets, and local
first responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Other upgrades
included installing equipment to detect chemical, biological, and
radiological dangers; and equipment for enhancing maritime patrol
surveillance capabilities. In addition, added capabilities included
airborne use of force and vertical insertion and delivery.
Current Status:
The MRR is an upgraded legacy HI-60 helicopter. It began receiving a
series of upgrades in fiscal year 2006 and these will continue into
fiscal year 2012. The upgrades include the service life extension
program, radar replacement, engine sustainment, fleet replacement, and
avionics enhancements. According to the Coast Guard, the MRR is a non-
contract government-incurred (NCGI) project. Thus, the Coast Guard will
assume primary program management responsibility for NCGI portions of
the program. The Coast Guard's Aircraft Repair and Supply Center will
manage the engine sustainment and service life extension projects,
while the Coast Guard and ICGS will jointly manage other aspects of the
program, such as the radar replacement.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Maritime Patrol Aircraft (MPA):
[See PDF for image]
Quick look:
* Replaces the HU-25 Falcon;
* Total number planned: 36;
* Fixed-wing aircraft;
* Maximum speed: 236 knots;
* Operating range: 2,117 nautical miles;
* Underway endurance: 8.7 hours;
* Crew size: 5”2 officers, 3 enlisted personnel;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $44.2;
Current projected per unit cost[b]: $47.4;
Actual funding available[c]: $399.5;
Additional funding needed to complete[d]: $1,306.5.
First asset delivery date:
2005 Asset Introduction Schedule: 2008;
2006 Asset Introduction Schedule: 2008;
Current[e]: 2006.
Last asset delivery date:
2005 Asset Introduction Schedule: 2017;
2006 Asset Introduction Schedule: 2022;
Current[e]: 2022.
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans called for
providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Additional
upgrades include installing equipment to detect chemical, biological,
and radiological dangers; and for enhancing maritime patrol
surveillance capabilities. In addition, the number of planned MPAs
increased from 35 in the original 2002 Deepwater implementation plan to
36 in the revised 2005 and 2006 Deepwater implementation plans.
Current Status:
The MPA is a commercial aircraft produced in Spain that. is being
upgraded with equipment intended to permit the Coast Guard to carry out
its missions. The first MPA was delivered to the Coast Guard in
December 2006, the second was delivered in February 2007, and a third
is due in August 2007. Five more are on contract. Pilots and aircrew
participated in training classes in Spain, and Coast Guard is to take
responsibility for the development and implementation of maintenance
and logistics support for the MPA.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Vertical Takeoff and Landing Unmanned Aerial Vehicle (VUAV):
[See PDF for image]
Quick look:
* New asset;
* Total number planned: 45;
* Shipboard-deployable vertical takeoff and landing unmanned aircraft;
* Maximum speed: 211 knots;
* Operating range: 100 nautical miles;
* Underway endurance: 6 hours;
* Used to surveil, detect, classify, and identify targets of interest
beyond a cutter's visual range or sensors;
* Planned to be deployed from the National Security Cutter and Offshore
Patrol Cutter;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense.
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $11.2;
Current projected per unit cost[b]: $11.2;
Actual funding available[c]: $152.4;
Additional funding needed to complete[d]: $350.6.
First asset delivery date:
2005 Asset Introduction Schedule: 2007;
2006 Asset Introduction Schedule: 2008;
Current[e]: 2015.
Last asset delivery date:
2005 Asset Introduction Schedule: 2022;
2006 Asset Introduction Schedule: 2025;
Current[e]: 2025.
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans' changes for
the VUAV included installing equipment for detecting chemical,
biological, and radiological dangers. In addition, the number of
planned number of VUAVs was reduced from 69 in the original 2002
Deepwater implementation plan to 45 in the revised 2005 and 2006
Deepwater implementation plans.
Current Status:
Changes in funding levels and evolving technological developments have
delayed the delivery of the VUAV. Coast Guard officials explained that
since the time of the original contract award, the DOD has progressed
in developing a different unmanned aerial vehicle”the Fire Scout”that
Coast Guard officials say is more closely aligned with Coast Guard
needs. Coast Guard has directed an independent third party to compare
the capabilities of its planned VUAV to the Fire Scout. In addition,
the Coast Guard is currently reviewing potential alternative unmanned
aerial systems in lieu of the VUAV. The fiscal year 2008 DHS
congressional budget. justification indicates that the Coast Guard does
not plan to request funding for the VUAV through fiscal year 2012. The
Coast Guard originally intended to match the NSC and VUAV delivery
dates so that the VUAV could launch from the NSC to provide
surveillance capabilities beyond the cutter's visual range or sensors.
However, with the delay in the VUAV's development schedule, it no
longer aligns with the NSC's initial deployment schedule. Coast Guard
officials state that they now do not expect the VUAV first-in-class to
be produced earlier than 2015, 8 years later than planned, and that
they are examining how to address the operational impacts of having the
NSC operate without the VUAV. The Coast Guard is looking at the
potential use of other assets, such as the HH-65 helicopter, the MPA,
the SRP, and the LRI, and possibly unmanned aerial vehicles (UAVs), to
provide surveillance capabilities for the NSC.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Long-Range Search Aircraft (LRS):
[See PDF for image]
Quick look:
* Two versions of the LRS are planned: (1) 16 upgraded HC-130Hs, and
(2) 6HC-130Js. The latter are new aircraft intended to be acquired and
then missionized to meet Coast Guard requirements.
* Total number planned: 22”16 HC-130Hs and 6 HC-130Js;
* Fixed-wing aircraft;
* Maximum speed: 330 knots;
• Operating range:
- HC-130Hs: 4,100 nautical miles;
- HC-130Js: 5,500 nautical miles;
* Underway endurance:
- HC-130Hs: 14 hours;
- HC-130Js: 21 hours;
* Crew size: 7”2 officers, 5 enlisted personnel;
* Missions:
- Maritime safety;
- Maritime security;
- Protection of natural resources;
- National defense;
Cost/schedule update (in millions):
FY 2005 projected per unit cost[a]: $23.9[a] (HC-130Hs); $0.0 (HC-
130Js);
Current projected per unit cost[b]: $38.1 (H); $1.8 (J);
Actual funding available[c]: $68.8 (H); $4.9 (J);
Additional funding needed to complete[d]: $541.2 (H); $6.1 (J).
First asset delivery date:
2005 Asset Introduction Schedule: 2012 (H); 2008 (J);
2006 Asset Introduction Schedule: 2011 (H); 2008 (J);
Current[e]: 2012 (H); 2006 (J)[f].
Last asset delivery date:
2005 Asset Introduction Schedule: 2015 (H); 2008 (J);
2006 Asset Introduction Schedule: 2016 (H); 2008 (J);
Current[e]: 2016 (H); 2008 (J).
Performance Capability Changes in the Revised Deepwater Implementation
Plans:
The revised 2005 and 2006 Deepwater implementation plans include
converting 16 HC-130Hs already in the Coast Guard's inventory, and 6 HC-
130Js, into the LRS. The latter are intended to supplement the aging
fleet of HC-130Hs, according to the Coast Guard. The plans also called
for providing communications equipment upgrades to make the equipment
interoperable with other DHS entities, DOD assets, and local first
responders. In addition, the communications capabilities were to
include Rescue-21 assets”the Coast. Guard's command and control
communication infrastructure for all Coast Guard missions”including
search and rescue, marine safety, and law enforcement. Additional
upgrades included installing equipment to detect chemical, biological,
and radiological dangers; and equipment for enhancing maritime patrol
surveillance capabilities. Also, the revised 2005 and 2006 Deepwater
implementation plans increased the LRS' ability to provide nationwide
strategic airlift capabilities.
Current Status:
The LRS is comprised of two fixed-wing aircraft classes: (1) 16
upgraded IIC-130Hs and (2) 6 HC-130Js, missionized to meet Coast Guard
requirements. The first aircraft entered the modification process in
December 2006, and five additional aircraft are to be modified by July
2008. In fiscal year 2008, funding has been requested to upgrade the HC-
130H radar and avionics, and for the HC-130J fleet introduction.
[a] Based on projected budgeted/procurement costs divided by the
projected number to be acquired in the FY 2005 Deepwater implementation
plan.
[b] Based on projected budgeted/procurement costs divided by the
projected number as of February 7, 2007.
[c] As of January 31, 2007.
[d] Based on the FY 2008 Plan Update submitted to the Congress, in
conjunction with submission of the February 2007 FY 2008 President's
budget request, minus the actual funding available as of January 31,
2007.
[e] "Current" date is as of March 2007 and derives from asset delivery
dates provided by the Coast Guard to GAO outside of the Asset
Introduction Schedules.
[End of section]
Appendix III: Status of Prior GAO Recommendations:
GAO Recommendation 2004, Program Management: Follow the procedures
outlined in the human capital plan to ensure that adequate staffing is
in place and turnover among Deepwater personnel is proactively
addressed;
GAO 2006 Status: Implemented;
GAO 2007 Status:
GAO Recommendation 2004, Program Management: In collaboration with the
system integrator, take the necessary steps to make IPTs effective
including: (1) training IPT members in a timely manner, (2) chartering
the sub-IPTs, (3) making improvements to the electronic information
system that would result in better information sharing among IPT
members who are geographically dispersed;
GAO 2006 Status: Partially Implemented;
GAO 2007 Status: Partially Implemented: The Coast Guard has taken over
IPT leadership and plans to update the program management plan to
reflect changing roles and responsibilities between the Coast Guard and
ICGS. It is too early to assess the impact of these planned changes at
this time.
GAO Recommendation 2004, Program Management: As Deepwater assets begin
to be delivered to operational units, ensure that field operators and
maintenance personnel are provided with timely information and training
on how the transition will occur and how maintenance responsibilities
are to be divided between system integrator and Coast Guard personnel;
GAO 2006 Status: Partially Implemented;
GAO 2007 Status: Partially Implemented: The Coast Guard has announced
they are reaffirming the role of the Coast Guard‘s chief engineer as
the technical authority for all acquisition projects. In addition, the
Coast Guard is now the default provider of maintenance and logistics
and is responsible for ensuring that logistics products are developed,
implemented, and delivered. Given these recent decisions, time is
needed to evaluate the implementation.
GAO Recommendation 2004, Contractor Accountability: Develop and adhere
to measurable award fee criteria consistent with the Office of Federal
Procurement Policy‘s guidance.
GAO 2006 Status: Implemented;
GAO 2007 Status:
GAO Recommendation 2004, Contractor Accountability: In all future award
fee assessments, ensure that the input of contracting officers‘
technical representatives COTR) are considered and set forth in a more
rigorous manner.
GAO 2006 Status: Implemented;
GAO 2007 Status:
GAO Recommendation 2004, Contractor Accountability: Hold the system
integrator accountable in future award fee determinations for improving
the effectiveness of IPTs.
GAO 2006 Status: Implemented[a];
GAO 2007 Status:
GAO Recommendation 2004, Contractor Accountability: Establish a TOC
baseline that can be used to measure whether the Deepwater acquisition
approach is providing the government with increased efficiencies
compared to what it would have cost without this approach.
GAO 2006 Status: USCG will not Implement;
GAO 2007 Status: Closed: Although set forth in its program management
plan, the Coast Guard does not intend to establish a baseline cost for
replacing the assets under a traditional approach which could be used
as a comparison to the Deepwater system of systems acquisition
approach.
GAO Recommendation 2004, Contractor Accountability: Based on the
current schedule for delivery of Deepwater assets, establish a time
frame for when the models and metrics will be in place with the
appropriate degree of fidelity to be able to measure the contractor‘s
progress toward improving operational effectiveness.
GAO 2006 Status: Partially Implemented;
GAO 2007 Status: Partially Implemented: Key performance parameters have
been added to criteria for measuring operational effectiveness;
however, the models still lack the fidelity to attribute improvements
to the contractor or the Coast Guard.
GAO Recommendation 2004, Contractor Accountability: Establish criteria
to determine when the TOC baseline should be adjusted and ensure that
the reasons for any changes are documented.
GAO 2006 Status: Partially Implemented;
GAO 2007 Status: Partially Implemented: DHS‘s oversight requirements
include an annual review of the Deepwater program baseline and
submission of quarterly reports. The most recent baseline update (Nov.
2006) has yet to be approved by DHS. The Coast Guard has provided DHS
with quarterly program reports. Further, according to a Coast Guard
official, DHS approval is pending on shifting the baseline against
which the systems integrator is measured to an asset basis.
GAO Recommendation 2004, Cost Control Through Competition: For
subcontracts over $5 million awarded by ICGS to Lockheed Martin and
Northrop Grumman, require Lockheed Martin and Northrop Grumman to
notify the Coast Guard of a decision to perform the work themselves
rather than contracting it out. The documentation should include an
evaluation of the alternatives considered.
GAO 2006 Status: Implemented;
GAO 2007 Status:
GAO Recommendation 2004, Cost Control Through Competition: Develop a
comprehensive plan for holding the system integrator accountable for
ensuring an adequate degree of competition among second-tier suppliers
in future program years. This plan should include metrics to measure
outcomes and consideration of how these outcomes will be taken into
account in future award fee decisions.
GAO 2006 Status: Partially Implemented;
GAO 2007 Status: Partially Implemented: Although the Coast Guard had
requested additional information from ICGS on competition, it does not
have the information to determine the level of competition achieved.
Further, they have not included metrics to measure competition outcomes
in the award fee decisions. In the mean time, the Coast Guard business
case analyses demonstrated that ICGS did not leverage competition to
deliver the best value for certain Deepwater assets. The Coast Guard
plans to gain insight into competition by performing additional
business case analyses and if necessary re-competing assets.
Source: GAO-04-380, GAO-06-546, and GAO analysis of Coast Guard data.
[a] IPT performance was included in the award fee criteria for the
February 2005-December 2006 performance evaluation periods, but was
removed from the award fee criteria for the January 2007-June 2007
performance evaluation period.
[End of section]
Appendix IV: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
Homeland Security:
[hyperlink, http://www.dhs.gov]:
June 13, 2007:
Mr. Stephen L. Caldwell:
Director, Homeland Security and Justice:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Caldwell:
RE: Draft Report GAO-07-874, Coast Guard: Challenges Affecting
Deepwater Asset Deployment and Management and Efforts to Address Them
(GAO Job Code 440533).
The Department of Homeland Security (DHS) appreciates the opportunity
to review and comment on the draft report referenced above. While the
Government Accountability Office (GAO) makes no new recommendations, we
recognize that numerous challenges remain.
The Coast Guard remains grateful for all that the Government
Accountability Office has done to bring attention to issues relating to
the Deepwater Program's challenges and concurs with the report's
findings. The Department and, in particular, the Coast Guard
appreciates the commitment the GAO has made towards making the
Deepwater Program successful and values the constructive and candid
criticism. Coast Guard benefits from the oversight and is prudently
implementing existing recommendations to ensure improvement to its
acquisition program.
The Coast Guard's overarching goal is to recapitalize its aging fleet
of cutters, aircraft and sensors and the actions taken by its
leadership have been dedicated to that purpose. Agency officials
appreciate GAO's recognition that the recapitalization must occur
simultaneously with acquisition reform. The GAO's continuing interest
in Deepwater has served as a catalyst for the kind of real change
needed to promote sound stewardship and effective program management at
all levels.
Five years into this 25-year acquisition, the Coast Guard has achieved
several notable successes, but also learned some hard lessons. As a
result of those lessons learned, Coast Guard is taking aggressive
action every day to strengthen program management and execution and to
ensure past mistakes will not be repeated.
Coast Guard is making the changes necessary to propel the program to
ultimate success and provide the critical cutters, aircraft and sensors
needed to meet its dynamic mission requirements. The Department,
particularly the Coast Guard, is anxious for positive results.
Acquisition success is dependent upon the proper organizational
structure and alignment within Coast Guard's acquisition community with
the stand up of its new Acquisition Directorate (CG-9).
The initial operation of this new directorate will begin officially on
July 13, 2007. As part of this consolidation, the Acquisition
Directorate, the Deepwater Program Office, the Office of Procurement
Management, the Office of Research, Development, and Technical
Management, the Research and Development Center, and the Head
Contracting Authority are being brought together under one roof, led by
an Assistant Commandant for Acquisition. This means that Coast Guard
will be better able to allocate its contracting and acquisition
professionals and resources to focus on excellence in program
management and execution. Coast Guard expects this change to create
efficiencies and more consistent and coherent processes, leading
ultimately to a more effective acquisition organization. However,
despite efficiency gains, Coast Guard officials are addressing
personnel shortfalls in several areas and/or building further into
governmental partnerships to reach full directorate capability.
Coast Guard senior officials also redefined the role of the Coast
Guard's chief engineer (CG-4) as the lead technical authority for all
designs and design changes and the operational community for definition
of asset performance requirements. This means that project and program
managers, as well as associated contracting and acquisition
professionals, have a direct link back to Coast Guard technical and
operational experts to ensure that designs meet requirements. Agency
officials are also further defining the role of the Coast Guard's Chief
information Officer as the technical expert for all C4ISR systems and
equipment.
In order to strengthen government management and oversight of the
Deepwater program as well as to better position the Coast Guard to
fully oversee the contractor and effectively adjudicate technical
concerns, senior officials have mandated that all Integrated Product
Teams (IPT) be chaired by an officer or employee of the Coast Guard.
That change happened in March 2007. Previously, IPTs were chaired by
representatives from Integrated Coast Guard Systems (ICGS).
Additionally, all IPT charters have been re-examined to determine where
other changes might be made if needed. Coast Guard leadership of IPTs
means the agency is better able to resolve non-major technical concerns
or, where concerns persist, raise them to the appropriate management
and contracting levels for adjudication.
Change within Deepwater and the Coast Guard acquisition community
required agency senior officials to take a hard look at workforce needs
moving forward. Deepwater was initially envisioned and developed as a
way to acquire needed assets while maintaining minimal government
program management staff: Five years later, the Department and Coast
Guard know that method didn't deliver the desired results. In order to
support the Coast Guard taking on more appropriate program and contract
management responsibilities, senior officials are keenly focused on
building out the workforce to achieve required bench depth in such
professional areas as program management, systems engineering, cost
estimating, and contracting. They are dedicated to creating a certified
corps of professionals with the required experience to compliment the
existing dedicated contracting and acquisition staffs.
Along with the Coast Guard analysis to right-size staffing levels,
officials have reinvigorated the acquisition training and certification
process to ensure that all technical and support staff, program
managers and contracting officers have the requisite skills and
education needed to manage complex acquisitions. Coast Guard's desired
end state is to become the model for mid-sized federal agency
acquisition and procurement, in full alignment with the Department of
Homeland Security acquisition objectives.
Coast Guard officials are also currently negotiating to modify the
Deepwater contract for the first award term. While the new award term
does establish ICGS as a possible sole-source option, it does not
obligate the government nor guarantee award of any work to ICGS. This
new contract represents a significant change to the Deepwater
enterprise and demonstrates the Coast Guard's commitment to robust
oversight. The scope of the new award term contract is fully one-third
less than the original base contract, and positions the Coast Guard
with more favorable terms and conditions.
The complexity of the Deepwater program and the diverse missions of
planned assets make design review a crucial element of the successful
execution of this program. To ensure that designs and assets will meet
Coast Guard needs, the agency has increased its use of independent,
third-party review and analysis (in concert with the USCG technical
authorities) for all new starts or substantial design changes. Inherent
in this initiative is a renewed commitment to utilize full business
case analyses for all new acquisition decisions to instill confidence
that Coast Guard is building and buying the right tools for our Coast
Guard men and women and at the best value for taxpayers.
Coast Guard's partnerships and cooperative relationships with the U.S.
Navy and others extend beyond third party assessments. The Coast Guard
is leveraging sound principles of systems engineering and integration
to derive high levels of sub-system and component commonality, improve
interoperability with the U.S. Navy and other agencies, and achieve
significant cost avoidances and savings. This approach conforms with
and directly supports the National Fleet Policy.
While acknowledging lessons learned from past mistakes, Coast Guard
also needs and intends to capitalize on significant recent
accomplishments. With 84 re-engined HH-65C helicopters flying, two
National Security Cutters under construction, Coast Guard's first Long
Range Interceptor in the water, eight CASA maritime patrol aircraft on
contract, and C4ISR upgrades completed on 39 legacy cutters and three
Communications and Command Centers, Deepwater is moving in the right
direction as agency officials inject robust government oversight and
systems integrator skills into this acquisition.
Furthermore, Deepwater assets are in the fleet today, contributing to
the successful execution of an array of Coast Guard missions
including:
- With a 40 percent power increase and greater reliability, the HH-65C
has re-established itself as the deployable mainstay of the Coast Guard
helicopter fleet and played an invaluable part during the Coast Guard's
response to Hurricane Katrina. And, just last July, a hiker in the
Olympic National Forest fell 6,500 feet down the side of a mountain and
owes his life to a daring rescue by a well-trained Coast Guard aircrew,
flying a newly delivered HH-65C helicopter”recently re-engined as part
of the Deepwater program. This hoist would have been impossible to
accomplish with the previous HH-65 model helicopter.
- A training facility in Petaluma, CA has opened and houses high-tech
shipboard operation simulators and state-of-the-art radar and
electronics systems and will provide critical command, control,
communications, computers, intelligence, surveillance, and
reconnaissance (C4ISR) training for Coast Guard and U.S. Navy crews.
- Deepwater upgrades to legacy cutters are also contributing to mission
success. In March 2007, the crew of the CGC SHERMAN executed the
largest drug bust in the Coast Guard's history”19.5 metric tons of
cocaine from the Motor Vessel GATUN off the coast of Panama”which would
not have been possible without the Deepwater installed C4ISR systems.
These operational successes just begin to illustrate the tremendous
potential for Deepwater to greatly enhance the Coast Guard's ability to
perform its missions. As Deepwater's system of assets continues to be
delivered, Coast Guard senior officials are confident that they will
meet or exceed not just capability requirements, but patrol and
response capacity needs as well. The soon to he aligned acquisition
organization, along with the other program management initiatives
discussed here, will enable the Coast Guard to take the steps that the
GAO and others have recommended.
Much work still lies ahead, but the Coast Guard is better positioned,
organized and empowered to execute acquisitions effectively. Open and
honest dialogue between the Department/Coast Guard and GAO is
essential. Coast Guard will continue to advise you of its challenges
and successes, make additional changes where needed and fully support
the GAO's efforts in helping Coast Guard make Deepwater a success.
Sincerely,
Signed by:
Steven J. Pecinovsky:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix V: GAO Contacts and Acknowledgments:
GAO Contacts:
Stephen L. Caldwell at (202) 512-9610 or by e-mail at caldwells@gao.gov;
or John P. Hutton at (202) 512-7773 or by e-mail at huttonj@gao.gov.
Acknowledgments:
In addition to the above, key contributors to this report were Penny
Augustine, Amy Bernstein, Virginia Chanley, Christopher Conrad, Adam
Couvillion, Kathryn Edelman, Geoffrey Hamilton, Melissa Jaynes, Crystal
Jones, Raffaele Roffo, Sylvia Schatz, and Jonathan R. Tumin.
Related GAO Products:
Coast Guard: Status of Efforts to Improve Deepwater Program Management
and Address Operational Challenges, GAO-07-575T (Washington, D.C.: Mar.
8, 2007).
Coast Guard: Preliminary Observations on Deepwater Program Assets and
Management Challenges, GAO-07-446T (Washington, D.C.: Feb. 15, 2007).
Coast Guard: Coast Guard Efforts to Improve Management and Address
Operational Challenges in the Deepwater Program, GAO-07-460T
(Washington, D.C.: Feb. 14, 2007).
Homeland Security: Observations on the Department of Homeland
Security‘s Acquisition Organization and on the Coast Guard‘s Deepwater
Program, GAO-07-453T (Washington, D.C.: Feb. 8, 2007).
Coast Guard: Status of Deepwater Fast Response Cutter Design Efforts,
GAO-06-764 (Washington, D.C.: June 23, 2006).
Coast Guard: Changes to Deepwater Plan Appear Sound, and Program
Management Has Improved, but Continued Monitoring Is Warranted, GAO-06-
546 (Washington, D.C.: Apr. 28, 2006).
Coast Guard: Progress Being Made on Addressing Deepwater Legacy Asset
Condition Issues and Program Management, but Acquisition Challenges
Remain, GAO-05-757 (Washington, D.C.: July 22, 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).
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges, GAO-05-307T
(Washington, D.C.: Apr. 20, 2005).
Coast Guard: Deepwater Program Acquisition Schedule Update Needed,
GAO-04-695 (Washington, D.C.: June 14, 2004).
Contract Management: Coast Guard‘s Deepwater Program Needs Increased
Attention to Management and Contractor Oversight, GAO-04-380
(Washington, D.C.: Mar. 9, 2004).
Coast Guard: Actions Needed to Mitigate Deepwater Project Risks,
GAO-01-659T (Washington, D.C.: May 3, 2001).
Coast Guard: Progress Being Made on Deepwater Project, but Risks
Remain, GAO-01-564 (Washington, D.C.: May 2, 2001).
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).
[End of section]
FOOTNOTES:
[1]H.R. Conf. Rep. No. 109-699 (2006), incorporating GAO reporting
provisions contained in H.R. Rep. No. 109-476 (2006).
[2]For purposes of this report, we are using the term ’delivery“ to
refer to the date when the Coast Guard takes possession of the asset
from the contractor. This does not correspond to the date the asset is
operational, because the asset will generally still require further
evaluation and testing before it is deployed.
[3]Integrated product teams are composed of members representing the
Coast Guard, the contractor, and subcontractors.
[4]Based on an agreement with the committees‘ staff, our work focused
on the 10 classes of vessels and aircraft within the Deepwater
program.
[5]GAO, Contract Management: Coast Guard‘s Deepwater Program Needs
Increased Attention to Management and Contractor Oversight , GAO-04-380
(Washington, D.C.: Mar. 9, 2004); Coast Guard: Deepwater Program
Acquisition Schedule Update Needed, GAO-04-695 (Washington, D.C.: June
2004); Coast Guard: Status of Efforts to Improve Deepwater Program
Management and Address Operational Challenges, GAO-07-575T (Washington,
D.C.: Mar. 8, 2007); Coast Guard: Preliminary Observations on Deepwater
Program Assets and Management Challenges, GAO-07-446T (Washington,
D.C.: Feb. 15, 2007).
[6]H.R. Conf. Rep. No. 109-699 (2006), incorporating GAO reporting
provisions contained in H.R. Rep. No. 109-476 (2006).
[7]For purposes of this report, we are using the term "delivery" to
refer to the date when the Coast Guard takes possession of the asset
from the contractor. This does not correspond to the date the asset is
operational, because the asset will generally still require further
evaluation and testing before it is deployed.
[8]IPTs are composed of members representing the Coast Guard, ICGS, and
subcontractors.
[9] Within Deepwater, 14 chartered IPTs are responsible for managing
different groups of assets.
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