Coast Guard
Deepwater Program Management Initiatives and Key Homeland Security Missions Gao ID: GAO-08-531T March 5, 2008The Deepwater Program is intended to replace or modernize 15 major classes of Coast Guard assets--including vessels, aircraft, and communications systems. At the program's start, the Coast Guard chose to use a system integrator, Integrated Coast Guard Systems, to design, build, deploy, and support Deepwater in a system-of-systems approach. In a series of reports, we have noted the risks inherent in this approach. With the Deepwater program under way, the Coast Guard's priorities and focus shifted after September 11 toward homeland security missions, such as protecting the nation's ports and waterways. The 2002 Maritime Transportation Security Act and the 2006 SAFE Port Act required a wide range of security improvements. GAO is monitoring the acquisition of Deepwater and the Coast Guard's ability to carry out its numerous missions. This testimony addresses: (1) changes the Coast Guard is making as it assumes a larger role in managing the Deepwater Program and (2) challenges the Coast Guard is facing in carrying out its various missions. To conduct this work, GAO reviewed key documents, such as Deepwater acquisition program baselines, human capital plans, and Coast Guard budget and performance documents. For information on which GAO has not previously reported, GAO obtained Coast Guard views. The Coast Guard generally concurred with the information.
With a recognition that too much control had been ceded to the system integrator under the Deepwater Program, the Coast Guard began this past year to shift the way it is managing the acquisition. Significant changes pertain to: (1) increasing government management of the program as part of the Coast Guard's reorganized Acquisition Directorate; (2) acquiring Deepwater assets individually as opposed to through a system-of-systems approach; (3) improving information to analyze and evaluate progress; and (4) developing an acquisition workforce with the requisite contracting and program management skills. Many of these initiatives are just getting under way and, while they are positive steps, the extent of their impact remains to be seen. The Coast Guard will likely continue to face challenges balancing its various missions within its resources for both the short and long term. For several years, we have noted that the Coast Guard has had difficulties fully funding and executing both homeland security missions and its non-homeland security missions. GAO's recent and ongoing work has shown that the Coast Guard's requirements continue to increase in such homeland security areas as providing vessel escorts, conducting security patrols of critical infrastructure, and completing inspections of maritime facilities here and abroad. In several cases, the Coast Guard has not been able to keep up with these security demands, in that it is not meeting its own requirements for vessel escorts and other security activities at some ports. In addition, there are indications that the Coast Guard's requirements are also increasing for selected non-homeland security missions. Since 2001, we have reviewed the Deepwater Program and have informed Congress, the Department of Homeland Security, and the Coast Guard of the risks and uncertainties inherent with such a large acquisition. In March 2004, we made a series of recommendations to the Coast Guard. The Coast Guard has taken actions on many of them. Three recommendations remain open, as the actions have not yet been sufficient to allow us to close them. In past work on Coast Guard missions, GAO made recommendations related to strategic plans, human capital, performance measures, and program operations.
GAO-08-531T, Coast Guard: Deepwater Program Management Initiatives and Key Homeland Security Missions
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Testimony:
Before the Subcommittee on Homeland Security, Committee on
Appropriations, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EST:
Wednesday, March 5, 2008:
Coast Guard:
Deepwater Program Management Initiatives and Key Homeland Security
Missions:
Statement of John P. Hutton:
Director Acquisition and Sourcing Management:
and:
Stephen L. Caldwell:
Director:
Homeland Security and Justice:
GAO-08-531T:
GAO Highlights:
Highlights of GAO-08-531T, a testimony before the Subcommittee on
Homeland Security, Committee on Appropriations, House of
Representatives.
Why GAO Did This Study:
The Deepwater Program is intended to replace or modernize 15 major
classes of Coast Guard assets”including vessels, aircraft, and
communications systems. At the program‘s start, the Coast Guard chose
to use a system integrator, Integrated Coast Guard Systems, to design,
build, deploy, and support Deepwater in a system-of-systems approach.
In a series of reports, we have noted the risks inherent in this
approach.
With the Deepwater program under way, the Coast Guard‘s priorities and
focus shifted after September 11 toward homeland security missions,
such as protecting the nation‘s ports and waterways. The 2002 Maritime
Transportation Security Act and the 2006 SAFE Port Act required a wide
range of security improvements.
GAO is monitoring the acquisition of Deepwater and the Coast Guard‘s
ability to carry out its numerous missions. This testimony addresses:
(1) changes the Coast Guard is making as it assumes a larger role in
managing the Deepwater Program and (2) challenges the Coast Guard is
facing in carrying out its various missions. To conduct this work, GAO
reviewed key documents, such as Deepwater acquisition program
baselines, human capital plans, and Coast Guard budget and performance
documents. For information on which GAO has not previously reported,
GAO obtained Coast Guard views. The Coast Guard generally concurred
with the information.
What GAO Found:
With a recognition that too much control had been ceded to the system
integrator under the Deepwater Program, the Coast Guard began this past
year to shift the way it is managing the acquisition. Significant
changes pertain to:
* increasing government management of the program as part of the Coast
Guard‘s reorganized Acquisition Directorate;
*acquiring Deepwater assets individually as opposed to through a system-
of-systems approach;
* improving information to analyze and evaluate progress, and;
* developing an acquisition workforce with the requisite contracting
and program management skills.
Many of these initiatives are just getting under way and, while they
are positive steps, the extent of their impact remains to be seen.
The Coast Guard will likely continue to face challenges balancing its
various missions within its resources for both the short and long term.
For several years, we have noted that the Coast Guard has had
difficulties fully funding and executing both homeland security
missions and its non-homeland security missions. GAO‘s recent and
ongoing work has shown that the Coast Guard‘s requirements continue to
increase in such homeland security areas as providing vessel escorts,
conducting security patrols of critical infrastructure, and completing
inspections of maritime facilities here and abroad. In several cases,
the Coast Guard has not been able to keep up with these security
demands, in that it is not meeting its own requirements for vessel
escorts and other security activities at some ports. In addition, there
are indications that the Coast Guard's requirements are also increasing
for selected non-homeland security missions.
Since 2001, we have reviewed the Deepwater Program and have informed
Congress, the Department of Homeland Security, and the Coast Guard of
the risks and uncertainties inherent with such a large acquisition. In
March 2004, we made a series of recommendations to the Coast Guard. The
Coast Guard has taken actions on many of them. Three recommendations
remain open, as the actions have not yet been sufficient to allow us to
close them. In past work on Coast Guard missions, GAO made
recommendations related to strategic plans, human capital, performance
measures, and program operations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-531T]. For more information, contact John
Hutton, (202) 512-4841 huttonj@gao.gov or Stephen Caldwell, (202) 512-
9610 caldwells@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss the Coast Guard's management
and oversight of its Deepwater Program and its ability to carry out its
numerous homeland security missions. The Deepwater Program, ongoing
since the late 1990s, is intended to replace or modernize 15 major
classes of Coast Guard assets--5 each of vessels and aircraft, and 5
other projects, including communications systems. The Coast Guard plans
to use its Deepwater assets to help meet non-homeland security
missions, such as environmental protection, as well as new homeland
security missions in the wake of September 11. After September 11, the
Coast Guard's priorities and focus had to shift suddenly toward
protecting the nation's vast network of ports and waterways. Coast
Guard cutters, aircraft, boats, and personnel normally used for non-
homeland security missions were shifted to homeland security missions,
which previously consumed only a small portion of the agency's
operating budget. We will be issuing reports later this month related
to the Coast Guard's homeland security missions, including its
inspection of domestic maritime facilities, foreign ports, and foreign
vessels, and we plan to provide a more complete analysis of the
Deepwater issues raised in this statement in a report later this year.
Specifically, our focus today will be on:
* Coast Guard initiatives to improve its acquisition process, oversight
structure, program management information, and acquisition workforce as
it assumes a larger role in managing the Deepwater Program; and:
* Coast Guard challenges in carrying out the various homeland security
missions for which it is now responsible in the post-September 11
environment, such as conducting security patrols of critical
infrastructure and providing vessel escorts.
Our statement is based in part on ongoing work for this committee on
the Deepwater Program and recent work on the Coast Guard's homeland
security missions. To conduct our work on the Deepwater issues, we
reviewed key Coast Guard documentation such as the Major Systems
Acquisition Manual, acquisition program baselines, and human capital
plans. We also interviewed Coast Guard acquisition officials,
contracting officers, and other key staff. This work was conducted
between October 2007 and March 2008. We also relied on our past work
regarding the Deepwater Program. Appendix II lists selected reports
related to Deepwater. Our work on the Coast Guard's homeland security
missions is based on a series of reviews we have conducted in the
aftermath of September 11. This work involved discussions with Coast
Guard and other federal officials at both headquarters and field units
in domestic and international locations, reviews of related program
documents, analysis of program data bases (including reliability
assessments), and discussions with other domestic and international
stakeholders in the maritime industry. All work for this statement was
conducted in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives. For issues
where our observations are based on work that has not been previously
reported, we obtained Coast Guard views on our findings and
incorporated technical comments where appropriate. Although we are not
making recommendations as a part of this statement, we have reviewed
past GAO work and the actions the Department of Homeland Security and
Coast Guard have taken to address any open recommendations.
Summary:
The Coast Guard is currently undergoing a fundamental shift in the way
it approaches its largest acquisition program, Deepwater. Key changes
to increase Coast Guard management of the program include a reorganized
acquisition directorate, a shift to acquiring Deepwater assets
individually as opposed to through a system-of-systems approach, and
efforts to improve information to analyze and evaluate progress. In
addition, the Coast Guard has acknowledged the need for a workforce
that can effectively manage its major acquisitions, including
Deepwater, and is taking steps to develop a workforce with the
requisite acquisition and program management skills. These initiatives
are positive, but many are just getting under way as the agency begins
to assert control over selected Deepwater assets, and the extent of
their impact remains to be seen.
The Coast Guard continues to face challenges balancing its homeland and
non-homeland security missions within its finite resources. For several
years, we have noted that the Coast Guard has had difficulties fully
funding and executing both homeland security missions and its non-
homeland security missions. Our work has shown that the Coast Guard's
requirements continue to increase in such homeland security areas as
providing vessel escorts, conducting security patrols of critical
infrastructure, and completing inspections of maritime facilities here
and abroad. In several cases, the Coast Guard has not been able to keep
up with these security demands, in that it is not meeting its own
requirements for providing vessel escorts and conducting other security
activities at some ports. In addition, there are indications that the
Coast Guard's requirements are also increasing for selected non-
homeland security missions.
In March 2004, we made 11 recommendations to the Coast Guard on
management of the Deepwater Program to address three broad areas of
concern: improving program management, strengthening contractor
accountability, and promoting cost control through greater competition
among potential subcontractors. Over time, the Coast Guard has
addressed many of these recommendations.[Footnote 1] Three, pertaining
to integrated product teams, maintenance and logistics responsibilities
for Deepwater assets, and cost control under the Integrated Coast Guard
Systems contract, remain open because the Coast Guard's actions have
yet not been sufficient to allow us to close them. In our past work on
Coast Guard missions, we have made recommendations to the Department of
Homeland Security to develop strategic plans, better plan the use of
its human capital, establish performance measures, and improve program
operations. The Coast Guard generally concurred with these
recommendations and is making progress in addressing them.
Background:
The Coast Guard is a multi-mission, maritime military service within
the Department of Homeland Security (DHS). The Coast Guard's
responsibilities fall into two general categories--those related to
homeland security missions, such as port security, vessel escorts,
security inspections, and defense readiness; and those related to non-
homeland security missions, such as search and rescue, environmental
protection (including oil spill response), marine safety, and polar ice
operations.
To carry out these responsibilities, the Coast Guard operates a number
of vessels and aircraft and, through its Deepwater Program, is
currently modernizing or replacing those assets. At the start of
Deepwater, the Coast Guard chose to use a system-of-systems acquisition
strategy that would replace its assets with a single, integrated
package of aircraft, vessels, and communications systems[Footnote 2]
through Integrated Coast Guard Systems (ICGS), a system integrator that
was responsible for designing, constructing, deploying, supporting and
integrating the assets to meet Coast Guard requirements. The decision
to use a system integrator was driven in part because of the Coast
Guard's lack of expertise in managing and executing an acquisition of
this magnitude. In a series of reports since 2001, we have noted the
risks inherent in the systems integrator approach and have made a
number of recommendations intended to improve the Coast Guard's
management and oversight. In particular, we raised concerns about the
agency's ability to keep costs under control in future program years by
ensuring adequate competition for Deepwater assets and pointed to the
need for better oversight and management of the system integrator. We,
as well as the DHS Inspector General and others, have also noted
problems in specific acquisition efforts, notably the National Security
Cutter and the 110-Foot Patrol Boat Modernization, which the Coast
Guard Commandant permanently halted in November 2006 because of
operational and safety concerns.
Coast Guard Is Taking Steps To Increase Management Of The Deepwater
Program:
Over the past year, the Coast Guard's Deepwater Program has been in the
midst of a major shift, from heavy reliance on a system integrator to
greater government control and a greater government role in decision-
making. Coast Guard officials acknowledged that the initial approach
gave too much control to the contractor. The Coast Guard has made a
number of significant program decisions and taken actions, including:
* an increase in the Coast Guard's management role through a
reorganization of its acquisition directorate;
* a restructured approach to the review and approval of individual
Deepwater asset acquisitions;
* planned improvements to the use and quality of information on program
performance, and:
* initiatives to develop a workforce with the requisite acquisition and
program management skills.
Although many of the changes the Coast Guard has undertaken are
positive and may assist the program in meeting its goals, these
initiatives are in their preliminary stages, with many processes and
procedures yet to be implemented. Maintaining momentum will be
important in improving the Deepwater Program; we will continue to
evaluate the Coast Guard's progress in all of these areas as part of
our ongoing work.
Coast Guard Has Increased Its Program Management Role of Deepwater
under a Reorganized Acquisition Directorate:
As of July 2007, the Coast Guard began consolidating acquisition
responsibilities into a single Acquisition Directorate, known as CG-9,
and is making efforts to standardize operations within this
directorate. Previously, Deepwater acquisitions were managed
separately from other Coast Guard acquisitions by the Deepwater Program
Executive Office. The Coast Guard's goal for the reorganization is that
it will provide greater consistency in the Coast Guard's oversight and
acquisition approach by concentrating acquisition activities under a
single official and allowing greater leveraging of knowledge and
resources across programs. Figure 1 depicts the changes.
Figure 1: Reorganization of Deepwater Within the Coast Guard
Acquisition Function:
[See PDF for image]
This figure illustrates the Reorganization of Deepwater Within the
Coast Guard Acquisition Function. The following information is
depicted:
Deepwater Program under previous Coast Guard acquisition structure:
Chief of Staff of the Coast Guard:
* Deepwater Program Executive Office:
- Project Management: Aviation; Surface; C4ISR.
Chief of Staff of the Coast Guard:
* Acquisition Directorate, G-A;
- Deepwater Contract Support.
Deepwater Program under Coast Guard‘s restructured acquisition
directorate:
Chief of Staff of the Coast Guard:
* Chief Acquisition Officer, Acquisition Directorate, CG-9;
- Contracting and procurement;
- Acquisition services;
- Acquisition programs: Deepwater surface projects; Aviation
projects[A]; Deepwater C4ISR[B] projects.
Source: Coast Guard data with GAO presentation.
Note: Other organizations--such as the Engineering and Logistics
Directorate (CG-4) and the C4ISR Directorate (CG-6) or their
predecessor organizations--provided technical expertise under both
structures.
[A] This office includes aviation assets for Deepwater.
[B] C4ISR is command, control, communications, computers, and
intelligence, surveillance and reconnaissance.
[End of figure]
As part of asserting a larger management role in Deepwater, the Coast
Guard has taken additional steps, such as the following.
* Integrated product teams--a key program management tool--are in the
process of being restructured and re-chartered. In the past, the teams
were led and managed by the contractor, while government team members
acted as "customer" representatives. Now, the teams are led by Coast
Guard personnel. The teams are responsible for discussing options for
problem solving relating to cost, schedule, and performance objectives.
For example, one team oversees management of the National Security
Cutter project.
* The Coast Guard has formally established a technical authority for
engineering to oversee issues related to Deepwater; Coast Guard
officials told us a similar authority for C4ISR is pending. The role of
the technical authority in program acquisition is to review, approve,
and monitor technical standards and ensure that assets meet these
standards, among other duties. Previously the contractor had some
decision making power and the Coast Guard held an advisory role. In
some cases this led to bad outcomes. For example, Coast Guard officials
told us their engineering experts had raised concerns during the
National Security Cutter's design phase about its ability to meet
service life requirements and recommended design changes, but they were
ignored. If the recommendations had been heeded, changes to the ship's
design could have been made earlier and some additional costs may have
been avoided.[Footnote 3]
* Coast Guard project managers, who manage individual Deepwater assets,
now have increased responsibility and accountability for acquisition
outcomes. Previously, the project managers' role was less significant.
For example, the contractor, not the project manager, provided Coast
Guard management with quarterly updates on the status of assets. Now,
project manager charters for individual assets outline project
managers' responsibilities and authorities, including ensuring
projects are on time and within budget.
Coast Guard has Restructured Review Process for Deepwater Assets:
The Coast Guard is moving away from the ICGS contract and the systems-
of-systems model to a more traditional acquisition strategy, where the
Coast Guard will manage the acquisition of each asset separately.
Agency officials told us that they are in the process of re-evaluating
their long term relationship with ICGS, including an assessment of the
value of continuing this contractual relationship. The government is
under no further obligation to acquire services under this contract, as
the minimum specified quantity of services was met during the 5-year
base term. However, Coast Guard officials told us they may continue to
issue task orders under the contract for specific efforts, such as
logistics, or for assets that are already well under way. The Coast
Guard recently demonstrated this new approach by holding its own
competition for the Fast Response Cutter-B (FRC-B),[Footnote 4] in lieu
of obtaining the asset through the ICGS contract. The Coast Guard
issued a request for proposals in June 2007 for the design,
construction, and delivery of a modified commercially available patrol
boat. Coast Guard officials told us they are currently evaluating
proposals and expect to award the contract by the third quarter of
fiscal year 2008, with the lead cutter expected for delivery in 2010.
The Coast Guard plans to hold other competitions outside of the ICGS
contract for additional assets in the future, including the Offshore
Patrol Cutter.
The Coast Guard's transition to an asset-by-asset acquisition strategy
is enabling increased government visibility and control over its
acquisitions. Cost and schedule information are now captured at the
individual asset level rather than at the overall, system-of-systems
program level. For example, while cost and schedule breaches in the
past were to be reported at the Deepwater system-of-systems level only,
the Coast Guard is now reporting breaches by asset, as occurred
recently with the cost increase on the C-130J long range surveillance
aircraft and the first National Security Cutter.[Footnote 5]
In implementing this new acquisition approach, the Coast Guard also
plans to start following the processes set forth in its Major Systems
Acquisition Manual (MSAM), which include acquisition milestones,
documentation requirements, and cost estimates for individual assets.
Previously, the Coast Guard was authorized to deviate from the MSAM
requirements for the Deepwater Program. Reviews were required on a
schedule-driven basis--planned quarterly or annually--as opposed to the
more disciplined, event-driven process outlined in the MSAM. In
addition, the Coast Guard scheduled key decision points only
occasionally and focused primarily at the Deepwater Program as a whole,
as opposed to at an individual asset level. Coast Guard officials told
us that little, if any, documentation of key decisions was maintained.
The MSAM process requires reports on specific elements of program
knowledge at milestones in the acquisition process, supplemented by
annual briefings. For example, reports on the maturity of technology
and estimates of an asset's life cycle cost are required at Milestone
2, before an asset enters the capability development and demonstration
phase. Figure 2 depicts the key phases and milestones of the MSAM
process.
Figure 2: Key Phases and Milestones of the Coast Guard's MSAM process:
[See PDF for image]
This figure is an illustration of Key Phases and Milestones of the
Coast Guard's MSAM process. The following information is depicted:
Project identification;
Project initiation: Milestone 0;
Concept and technology development: Milestone 1, Begin acquisition;
Capability development and demonstration: Milestone 2, Approve low-rate
initial production;
Production and deployment: Milestone 3, Approve full-rate production;
Operations and support.
Source: Coast Guard's Major Systems Acquisition Manual.
Note: Black diamonds denote milestones.
[End of figure]
Although the Coast Guard's decision to follow a more formalized and
asset-driven acquisition process is a positive step, the Coast Guard
faces challenges in implementing the process. The transition to the
MSAM process is estimated to take at least 2 years to complete, as the
Coast Guard is determining where Deepwater assets are in the process
and is having to create basic documentation that was not required under
the prior process--such as statements of requirements and technology
assessments--to bring assets into compliance. For example, the National
Security Cutter is in the production phase, but the Coast Guard is
reviewing what documentation should be completed for milestones that
already passed. Coast Guard officials also acknowledged the hurdles
they face in bringing C4ISR efforts under the MSAM process, as this
asset may require a broader Deepwater-level approach to tie individual
assets together.
GAO's work on best practices for major acquisitions has demonstrated
that a knowledge-based approach to decision making, where specific
knowledge is gathered and measured against standards at key points in
the acquisition process to inform decisions about the path forward, can
significantly improve program outcomes. While the MSAM process contains
some characteristics of a knowledge-based approach, there are key
differences that could affect acquisition outcomes. For example, the
Milestone 2 decision to approve low-rate initial production precedes
the majority of the design activities in the capability development and
demonstration phase. We will continue to evaluate the Coast Guard's
process as compared to established commercial best practices in our
ongoing work.
The MSAM requires, as part of the acquisition approval process, the
Coast Guard to report to DHS on all major program decisions beginning
with the start of an acquisition program. Coast Guard and DHS officials
told us that the processes and procedures for coordinating acquisitions
with DHS's Investment Review Board, which is tasked with reviewing
major acquisition programs, are currently undergoing revision.
According to the Coast Guard, DHS approval of acquisition decisions is
not technically necessary because the department delegated oversight
responsibility for the Deepwater Program to the Coast Guard in 2003.
Recently, however, the Coast Guard has increased communication and
coordination through good will and informal procedures such as personal
working relationships. We are currently conducting work on DHS's
investment review process for this committee and will release our
findings later this year.
Coast Guard is Working to Improve the Use and Quality of Program
Information:
The proper functioning of an acquisition organization and the viability
of the decisions made through its acquisition process are only as good
as the information it receives. In the past, much of the Deepwater
Program information was collected on an ad-hoc basis and focused more
at the Deepwater Program level, as opposed to the individual asset
level. The Coast Guard is now putting processes in place to improve the
use and quality of its information on program performance through a
number of different efforts.
* The Coast Guard recently developed Quarterly Project Reports, a
compilation of cost and schedule information that summarizes the status
of each acquisition for reporting through the Coast Guard chain of
command as well as to DHS and the Congress.
* The Coast Guard also plans to analyze program information using the
"probability of project success" tool. Coast Guard acquisition
officials told us they will use this tool to grade each asset on 19
different elements, including acquisition process compliance and
progress and earned value management data,[Footnote 6] to assess the
risk of assets failing to meet their goals. This information is
intended to enable senior Coast Guard management officials to review
project risks and status at a glance. At this time, the Coast Guard has
completed reports on ten Deepwater assets.
* The Coast Guard is working to improve the quality and reporting of
earned value management data. For example, officials have developed
standard operating procedures for earned value reporting and analysis
to create consistency among Deepwater assets. As part of these
procedures, Coast Guard analysts have begun to review the earned value
management data provided by contractors and provide the results to
project managers. The Coast Guard is also exploring how it can use the
Defense Contract Management Agency to validate contractor earned value
systems. Certification would provide the Coast Guard greater assurance
that contractor data are accurate.
Actions Underway to Hire and Develop an Acquisition Workforce for
Deepwater and Other Major Coast Guard Programs:
The Coast Guard has acknowledged the need for a workforce that can
effectively manage its major acquisitions--including Deepwater--a
challenge common within the federal government. With the July 2007
creation of the Acquisition Directorate, the Coast Guard has taken
steps to develop a workforce with the requisite acquisition and program
management skills, while trying to reduce reliance on support
contractors.
The Coast Guard's 2008 acquisition human capital strategic plan sets
forth a number of acquisition workforce challenges, including:
* a shortage of civilian acquisition staff,
* lack of an acquisition career path for Coast Guard military
personnel,
* difficulty in tracking acquisition certifications, and:
* absence of policy guidance on the use of support contractors in the
acquisition process.
To address these challenges, the Coast Guard has begun initiatives that
leverage expertise and best practices from other organizations,
including use of GAO's Framework for Assessing the Acquisition Function
at Federal Agencies.[Footnote 7] These initiatives include:
* establishing an Office of Acquisition Workforce Management to oversee
workforce issues;
* contracting for development of a strategic tool to forecast
acquisition workforce needs in terms of numbers and skill sets;
* utilizing hiring flexibilities such as reemployed annuitants,
relocation bonuses, and direct hire authority; and:
* developing certification requirements for the entire Acquisition
Directorate (not just for project managers) to help develop what it
calls "bench strength" in the acquisition workforce.
Some of these initiatives have begun to see concrete results; for
example, key Acquisition Directorate leadership positions have been
filled and, through use of hiring flexibilities, over 100 vacant
civilian acquisition positions have been filled, 40 of them using
direct hire authority. However, as Table 1 shows, the Acquisition
Directorate still has not fully staffed its billets, including a range
of positions--such as contract specialists, financial analysts, systems
engineers, and program management staff--that the directorate has
designated as "hard-to-fill."
Table 1: Overall vacancy rates in the CG-9 Acquisition Directorate as
of January 2008:
Military:
Billets: 431;
Vacancies: 56;
Vacancy Rate: 13.0%.
Civilian:
Billets: 488;
Vacancies: 115;
Vacancy Rate: 23.6%.
Source: Coast Guard data.
[End of table]
The Acquisition Directorate has also identified a need for about 189
contractor billets for fiscal year 2008. These support contractors fill
a range of positions, such as contracting support and logisticians.
Despite the Coast Guard's stated goal of reducing its reliance on
support contractors, acquisition management officials told us that use
of contractors will likely continue for the foreseeable future and is
contingent upon the Coast Guard's ability to build its core staff.
Other initiatives are still in the early stages, and it is too soon to
evaluate their outcomes. For example, the Coast Guard is developing a
workforce forecasting tool, which it plans to use to answer key
questions about its strategic acquisition workforce needs. This tool
requires significant up-front data collection and management training
efforts to be used effectively. The Coast Guard is also evaluating a
similar tool developed by the Air Force and will determine which tool
best suits their needs in the future.
Coast Guard Continues to Face Challenges in Balancing Its Homeland
Security and Non-Homeland Security Missions:
The new and modernized assets the Coast Guard expects to acquire under
the Deepwater Program are intended to be used to help meet a wide range
of missions. After the September 11, 2001, terrorist attacks, the Coast
Guard's priorities and focus had to shift suddenly and dramatically
toward protecting the nation's vast and sprawling network of ports and
waterways. Coast Guard cutters, aircraft, boats, and personnel normally
used for non-homeland security missions were shifted to homeland
security missions, which previously consumed only a small portion of
the agency's operating resources. Although we have previously reported
that the Coast Guard is restoring activity levels for many of its non-
homeland security missions, the Coast Guard continues to face
challenges in balancing its resources between the homeland and non-
homeland security missions. In addition to the growing demands for
homeland security missions, there are indications that the Coast
Guard's requirements are also increasing for selected non-homeland
security missions.
Homeland Security Mission Requirements Continue to Increase:
The Coast Guard's heightened responsibilities to protect America's
ports, waterways, and waterside facilities from terrorist attacks owe
much of their origin to the Maritime Transportation Security Act of
2002 (MTSA).[Footnote 8] This legislation, enacted in November 2002,
established a port security framework that was designed, in part, to
protect the nation's ports and waterways from terrorist attacks by
requiring a wide range of security improvements. The SAFE Port Act,
which was enacted in October 2006, made a number of adjustments to
programs within the MTSA-established framework, creating additional
programs or lines of efforts and altering others.[Footnote 9] The
additional requirements found in the SAFE Port Act have added to the
resource challenges already faced by the Coast Guard, some of which are
described below:
* Inspecting domestic maritime facilities: Pursuant to Coast Guard
guidance, the Coast Guard has conducted annual inspections of domestic
maritime facilities to ensure that they are in compliance with their
security plans. The SAFE Port Act added additional requirements that
inspections be conducted at least twice per year and that one of these
inspections be conducted unannounced. More recently, the Coast Guard
has recently issued guidance requiring that unannounced inspections be
more rigorous than before. Fulfilling the requirement of additional
inspections and potentially more rigorous inspections, may require
additional resources in terms of Coast Guard inspectors.[Footnote 10]
* Inspecting foreign ports: In response to a MTSA requirement, the
Coast Guard established the International Port Security Program to
assess and, if appropriate, make recommendations to improve security in
foreign ports. Congressional directives have called for the Coast Guard
to increase the pace of its assessments of foreign ports. However, to
increase its pace, the Coast Guard may have to hire and train new
staff, in part because a number of experienced personnel are rotating
to other positions as part of the Coast Guard's standard personnel
rotation policy. Coast Guard officials also said that they have limited
ability to help countries build on or enhance their own capacity to
implement security requirements because the program does not currently
have the resources or authority to directly assist countries with more
in-depth training or technical assistance.[Footnote 11]
* Fulfilling port security operational requirements: The Coast Guard
conducts a number of operations at U.S. ports to deter and prevent
terrorist attacks. Operation Neptune Shield, first released in 2003, is
the Coast Guard's operations order that sets specific security
activities (such as harbor patrols and vessel escorts) for each port
and specifies the level of security activities to be conducted at each
port. As individual port security concerns change, the level of
security activities also change, which affects the resources required
to complete the activities. Many ports are having difficulty meeting
their port security requirements, with resource constraints being a
major factor.[Footnote 12]
* Meeting security requirements for additional Liquified Natural Gas
(LNG) terminals: The Coast Guard is also faced with providing security
for vessels arriving at four domestic onshore LNG import facilities.
However, the number of LNG tankers bringing shipments to these
facilities will increase considerably because of expansions that are
planned or under way. As a result of these changes, Coast Guard field
units will likely be required to significantly expand their security
workloads to conduct new LNG security missions.[Footnote 13]
* Boarding and inspecting foreign vessels: Security compliance
examinations and boardings, which include identifying vessels that pose
either a high risk for noncompliance with international and domestic
regulations or a high relative security risk to the port, are a key
component in the Coast Guard's layered security strategy. An increasing
number of vessel arrivals in U.S. ports may impact the pace of
operations for conducting security compliance examinations and
boardings in the future. For example, in the 3-year period from 2004
through 2006, vessel arrivals rose by nearly 13 percent and, according
to the Coast Guard, this increase is likely to continue. Moreover,
officials anticipate that the increase in arrivals will also likely
include larger vessels, such as tankers, that require more time and
resources to examine. At present, it is unclear to what extent
increased demands on resources may impact the ability of Coast Guard
field units to complete these activities on vessels selected for
boarding.[Footnote 14]
* Establishing interagency operational centers: The SAFE Port Act
called for establishment of interagency operational centers, directing
the Secretary of DHS to establish such centers at all high-priority
ports no later than 3 years after the Act's enactment. The Coast Guard
estimates the total acquisition cost of upgrading 24 sectors that
encompass the nation's high priority ports into interagency operations
centers will be approximately $260 million. Congress funded a total of
$60 million for the construction of interagency operational centers for
fiscal year 2008. The Coast Guard has not requested any additional
funding for the construction of these centers as part of its fiscal
year 2009 budget request. However, as part of its fiscal year 2009
budget request, the Coast Guard is requesting $1 million to support its
Command 21 acquisition project (which includes the continued
development of its information management and sharing technology in
command centers).[Footnote 15] So, while the Coast Guard's estimates
indicate that it will need additional financial resources to establish
the interagency operational centers required by law, its current budget
and longer term plans do not include all of the necessary funding.
* Updating area maritime security plans: MTSA, as amended, required
that the Coast Guard develop, in conjunction with local public and
private port stakeholders, Area Maritime Security Plans. The plans
describe how port stakeholders will deter a terrorist attack or other
transportation security incident or secure the port in the event such
an attack occurs. These plans were initially developed and approved by
the Coast Guard by June 2004. MTSA also requires that the plans be
updated at least every 5 years. The SAFE Port Act added a requirement
to the plans that specified that they identify salvage equipment able
to restore operational trade capacity. The Coast Guard, working with
local public and private port stakeholders, is required to revise its
plans and have them completed and approved by June 2009. This planning
process may require a significant investment of Coast Guard resources,
in the form of time and human capital at the local port level for
existing plan revision and salvage recovery development as well as at
the national level for the review and approval of all the plans by
Coast Guard headquarters.[Footnote 16]
Non-Homeland Security Mission Requirements also Continue to Increase:
While the Coast Guard continues to be in the center of the nation's
response to maritime-related homeland security concerns, it is still
responsible for rescuing those in distress, protecting the nation's
fisheries, keeping vital marine highways operating efficiently, and
responding effectively to marine accidents and natural disasters. Some
of the Coast Guard's non-homeland security missions are facing the same
challenges faced by its homeland security missions with regard to
increased mission requirements. Examples of these additional
requirements include (1) revising Area Maritime Security Plans so they
also cover natural disasters, (2) revising oil spill regulations to
better protect the Oil Spill Liability Trust Fund from risks related to
certain vessels with disproportionately low limits of liability, (3)
patrolling and enforcing a Presidential declaration regarding new
protected areas such as the Northwestern Hawaiian Islands Coral Reef
Ecosystem Reserve, and (4) increasing polar activities commensurate
with increased resource exploitation and vessel traffic in the arctic.
Concluding Observations:
In closing, we would like to emphasize several key points as we
continue to oversee the various Coast Guard initiatives discussed
today. First, now that the Coast Guard has made the decision to assume
a greater management and oversight role of the Deepwater Program,
sustained effort on a number of fronts will be needed for some time to
come. Whether the Coast Guard will achieve its goals is largely
contingent on continued strong leadership and a commitment to adhering
to a knowledge-based acquisition approach that was lacking in the past.
In addition, the Coast Guard originally turned to the private sector to
manage Deepwater, in part, because the government lacked requisite
expertise. Thus, the Coast Guard's ability to build an adequate
acquisition workforce is critical, and over time the right balance must
be struck between numbers of government and contractor personnel.
Similarly, the right balance must be struck between homeland and non-
homeland security missions. In the aftermath of the September 11, 2001
terrorist attacks, the Coast Guard understandably shifted its focus to
homeland security missions at the expense of non-homeland security
missions. Congress passed and the President signed legislation that
supported and reinforced this shift that further increased Coast Guard
missions related to security. Our recent work on the Coast Guard's
homeland security programs has indicated that these missions continue
to increase demands on resources. To further complicate the Coast
Guard's resource and mission balancing act, unexpected events such as
terrorist attacks or natural disasters could result in major shifts in
resources and operations. Thus, the Coast Guard will continue to face
the challenge inherent in being a multi-mission force.
Mr. Chairman, this concludes our testimony. We would be happy to
respond to any questions Members of the Committee may have.
GAO Contacts and Acknowledgments:
For further information about this testimony, please contact John P.
Hutton, Director, Acquisition and Sourcing Management, at (202) 512-
4841, huttonj@gao.gov or Stephen L. Caldwell, Director, Homeland
Security and Justice, (202) 512-9610, caldwells@gao.gov.
Other individuals making key contributions to this testimony include
Michele Mackin, Assistant Director; Greg Campbell, Wayne Ekblad,
Jessica Gerrard-Gough, Maura K. Hardy, Dawn Hoff, J. Kristopher Keener,
Angie Nichols-Friedman, Scott Purdy, Ralph Roffo, Sylvia Schatz, April
Thompson, and Tatiana Winger.
[End of section]
Appendix I: Deepwater:
In 2005, the Coast Guard revised its Deepwater acquisition program
baseline to reflect updated cost, schedule, and performance measures.
The revised baseline accounted for, among other things, new
requirements imposed by the events of September 11. The initially
envisioned designs for some assets, such as the Offshore Patrol Cutter
and Vertical Unmanned Aerial Vehicle, are being rethought. Other
assets, such as the National Security Cutter and Maritime Patrol
Aircraft, are in production.
Table 2 shows the 2005 baseline and current status of selected
Deepwater assets.
Table 2: Progress of Selected Deepwater Assets:
[See PDF for image]
This table includes a photograph of each Deepwater asset.
Deepwater asset: Fast Response Cutter;
2005 baseline:
* 58 ships;
* new design with composite hull;
* cost $3.2 billion or $55.6 million per ship;
* first asset delivers in 2007;
Current Status:
* original procurement halted because of design concerns;
* new competition for up to 34 ships based on a commercially available
design;
* Coast Guard intends to acquire 12 ships by 2012 for a cost of $593.0
million, or $49.4 million per ship;
* first asset delivers in 2010.
Deepwater asset: National Security Cutter;
2005 baseline:
* 8 ships;
* cost of $2.9 billion or $359.4 million per ship;
* first asset delivers in 2007;
Current Status:
* 8 ships;
* problems in design and construction will delay first asset delivery
to 2008;
* cost has increased to $3.5 billion or $431.3 million per ship.
Deepwater asset: Offshore Patrol Cutter;
2005 baseline:
* 25 ships;
* cost of $7.1 billion or $282.2 million per ship;
* first asset delivers in 2010;
Current Status:
* re-competing asset with new design will delay first asset delivery
until fiscal year 2015;
* 25 ships;
* cost is uncertain because of new design; however, 2007 expenditure
plan shows cost increase to $8.1 billion or $323.9 million per ship.
Deepwater asset: HH-65 Multi-Mission Cutter Helicopter;
2005 baseline:
* upgrade of 95 helicopters;
* cost of $575.0 million or $6.1 million per helicopter;
* first asset delivers in 2012;
Current Status:
* upgrade of 102 helicopters in three phases;
* total cost of $741.0 million or $7.3 million per helicopter;
* first asset of third and final phase delivers in 2008.
Deepwater asset: Maritime Patrol Aircraft;
2005 baseline:
* 36 aircraft;
* cost of $1.6 billion or $44.2 million per aircraft;
* first asset delivers in 2008;
Current Status:
* 36 aircraft;
* cost of $1.7 billion or $47.4 million per aircraft;
* first asset delivers in 2008.
Deepwater asset: Vertical Unmanned Aerial Vehicle;
2005 baseline:
* 45 aircraft;
* cost of $503.3 million or $11.2 million per aircraft;
* first asset delivers in 2007;
Current Status:
* Coast Guard has deferred acquisition of this asset because of
challenges in technology maturation;
* the fiscal year 2009 budget requests funding for continued analysis
but the acquisition plan has not yet been determined.
Deepwater asset: C4ISR;
2005 baseline:
* cost $1.9 billion;
* includes upgrades to cutters and shore installations, as well as
development of a common operating picture;
Current Status:
* cost $1.4 billion;
* capability will be introduced in four increments beginning in 2007
and completing in fiscal year 2014.
Source: GO analysis of Coast Guard documents.
[End of table]
[End of section]
Appendix II: GAO Products Related to the Deepwater Program:
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.: February 15,
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.: Jul. 22, 2005).
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges. GAO-05-651T
(Washington, D.C.: Jun. 21, 2005).
Coast Guard: Deepwater Program Acquisition Schedule Update Needed. GAO-
04-695 (Washington, D.C.: Jun. 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).
[End of section]
Footnotes:
[1] The Coast Guard did not intend to implement one of the
recommendations, that the Coast Guard establish a baseline for
determining whether the system of systems acquisition approach was
costing the government more than a traditional asset replacement
approach.
[2] Appendix I lists the assets currently being planned and procured
for Deepwater as well as their status as of February 2008.
[3] The issue pertained to the ship's expected 30-year service life as
it related to fatigue. Fatigue is physical weakening because of age,
stress, or vibration. A U.S. Navy analysis done for the Coast Guard
determined that the ship's design was unlikely to meet fatigue life
expectations. The Coast Guard ultimately decided to correct the
structural deficiencies for the first two National Security Cutters at
scheduled points after construction is completed to avoid stopping the
production lines, and to incorporate structural enhancements into the
design and production for future ships.
[4] The Fast Response Cutter (FRC) was conceived as a patrol boat with
high readiness, speed, adaptability, and endurance. ICGS proposed
constructing the FRC (later termed the FRC-A) with composite materials,
but the Coast Guard suspended the contractor's design effort in
February 2006 in order to assess and mitigate technical risks. The
Coast Guard subsequently decided to hold its own competition for
commercially available FRCs (termed the FRC-B).
[5] We reported in 2007 that the Coast Guard was required to provide
information to DHS on total program cost breaches of 8 percent or more.
However, this threshold had not been breached because it was measured
against system-of-system Deepwater Program costs and not on an asset
basis. Coast Guard officials acknowledged to us that only a
catastrophic event would ever trigger a threshold breach under this
approach. GAO, Coast Guard: Status of Efforts to Improve Deepwater
Program Management and Address Operational Challenges, GAO-07-575T
(Washington, D.C.: Mar. 8, 2007).
[6] Earned value management data include cost and schedule data
reported by the contractor and are used to evaluate contractor
management systems and progress toward program goals.
[7] GAO, Framework for Assessing the Acquisition Function at Federal
Agencies, GAO-05-218G (Washington, D.C.: Sept. 2005).
[8] Pub. L. No. 107-295, 116 Stat. 2064 (2002).
[9] Pub. L. No. 109-347, 120 Stat. 1884 (2006).
[10] We will be issuing a report on the Coast Guard's inspections of
domestic maritime facilities later this month.
[11] See GAO, Maritime Security: The SAFE Port Act: Status and
Implementation One Year Later, GAO-08-126T (Washington, D.C.: Oct. 30,
2007). In addition, we will be issuing a report on the Coast Guard's
program to inspect foreign ports later this month.
[12] See GAO-08-126T.
[13] For additional information on the challenges the Coast Guard faces
with regard to energy commodity shipments, see GAO, Maritime Security:
Federal Efforts Needed to Address Challenges in Responding to Terrorist
Attacks on Energy Commodity Tankers, GAO-08-141 (Washington, D.C.: Dec.
10, 2007) and GAO, Maritime Security: Public Consequences of a
Terrorist Attack on a Tanker Carrying Liquefied Natural Gas Need
Clarification, GAO-07-316 (Washington, D.C.: Feb. 22, 2007).
[14] See GAO-08-126T. In addition, we will be issuing a report on the
Coast Guard's program to inspect foreign vessels later this month.
[15] The Coast Guard's fiscal year 2009-2013 Five Year Capital
Investment Plan does not include funds for the construction of these
interagency operational centers, but the plan does include a total of
$40 million in future requests to support the Command 21 acquisition
project. According to the Coast Guard, it is using the Command 21
effort as the vehicle to deliver interagency operational capacity to
its existing command centers.
[16] GAO-08-141.
[End of section]
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