Coast Guard
As Deepwater Systems Integrator, Coast Guard Is Reassessing Costs and Capabilities but Lags in Applying Its Disciplined Acquisition Approach Gao ID: GAO-09-682 July 14, 2009The Deepwater Program includes efforts to build or modernize ships and aircraft and to procure other capabilities. In 2002, the Coast Guard contracted with Integrated Coast Guard Systems (ICGS) to manage the acquisition as systems integrator. After a series of project failures, the Coast Guard announced in April 2007 that it would take over the lead role, with future work on individual assets bid competitively, and a program baseline of $24.2 billion was set. In June 2008, GAO reported on the Coast Guard's progress and made several recommendations, which the Coast Guard and the Department of Homeland Security (DHS) have addressed. In response to a Senate report accompanying the DHS Appropriations Bill, 2009, GAO addressed (1) efforts to manage Deepwater, (2) changes in cost and schedule of the assets, and (3) efforts to build an acquisition workforce. GAO reviewed Coast Guard and DHS documents and interviewed officials.
The Coast Guard has assumed the role of systems integrator for the overall Deepwater Program by reducing the scope of the work on contract with ICGS and assigning these functions to Coast Guard stakeholders. As part of its systems integration responsibilities, the Coast Guard has undertaken a fundamental reassessment of the capabilities, number, and mix of assets it needs and expects to complete this analysis by the summer of 2009. At the individual Deepwater asset level, the Coast Guard has improved and begun to apply the disciplined management process contained in its Major Systems Acquisition Manual (MSAM), but did not meet its goal of complete adherence to this process for all Deepwater assets by the end of March 2009. For example, key acquisition management activities--such as operational requirements documents and test plans--are not in place for assets with contracts or orders recently awarded (such as the Fast Response Cutter and C4ISR) or in production, placing the Coast Guard at risk of cost growth or schedule slips. In addition, the MSAM does not appear to be consistent with recent DHS policy that requires entities responsible for operational testing to be independent of the system's users. Due in part to the Coast Guard's increased insight into what it is buying, the anticipated cost, schedules, and capabilities of many Deepwater assets have changed since the $24.2 billion baseline was established in 2007. Coast Guard officials have stated that this baseline reflected not a traditional cost estimate, but rather the anticipated contract costs as determined by ICGS. As the Coast Guard has developed its own cost baselines for some assets, it has become apparent that some of these assets it is procuring will likely cost more than anticipated--up to $2.7 billion more based on information to date. This represents approximately 39 percent cost growth for the assets with revised cost estimates. As more cost baselines are developed and approved, further cost growth is likely. Updated baselines also indicate that schedules have slipped for several of the assets. In addition, the current structure of the Coast Guard's budget submission to Congress does not include details at the asset level, such as estimates of total costs and total numbers to be procured, as do those of the Department of Defense, which acquires similar systems. One reason the Coast Guard hired a contractor as a systems integrator was because it recognized that it lacked the experience and depth in workforce to manage the acquisition internally. The Coast Guard acknowledges that it still faces challenges in hiring and retaining qualified acquisition personnel and that this situation poses a risk to the successful execution of its acquisition programs. According to human capital officials in the acquisition directorate, as of April 2009, the acquisition branch had 16 percent of positions unfilled, including key jobs such as contracting officers and systems engineers. Even as it attempts to fill its current vacancies, the Coast Guard plans to increase the size of its acquisition workforce significantly; the fiscal year 2010 budget request includes funding for 100 new acquisition workforce positions. In the meantime, the Coast Guard has been increasing its use of support contractors.
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Director: Team: Phone:GAO-09-682, Coast Guard: As Deepwater Systems Integrator, Coast Guard Is Reassessing Costs and Capabilities but Lags in Applying Its Disciplined Acquisition Approach
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
July 2009:
Coast Guard:
As Deepwater Systems Integrator, Coast Guard Is Reassessing Costs and
Capabilities but Lags in Applying Its Disciplined Acquisition Approach:
GAO-09-682:
GAO Highlights:
Highlights of GAO-09-682, a report to congressional committees.
Why GAO Did This Study:
The Deepwater Program includes efforts to build or modernize ships and
aircraft and to procure other capabilities. In 2002, the Coast Guard
contracted with Integrated Coast Guard Systems (ICGS) to manage the
acquisition as systems integrator. After a series of project failures,
the Coast Guard announced in April 2007 that it would take over the
lead role, with future work on individual assets bid competitively, and
a program baseline of $24.2 billion was set. In June 2008, GAO reported
on the Coast Guard‘s progress and made several recommendations, which
the Coast Guard and the Department of Homeland Security (DHS) have
addressed. In response to a Senate report accompanying the DHS
Appropriations Bill, 2009, GAO addressed (1) efforts to manage
Deepwater, (2) changes in cost and schedule of the assets, and (3)
efforts to build an acquisition workforce. GAO reviewed Coast Guard and
DHS documents and interviewed officials.
What GAO Found:
The Coast Guard has assumed the role of systems integrator for the
overall Deepwater Program by reducing the scope of the work on contract
with ICGS and assigning these functions to Coast Guard stakeholders. As
part of its systems integration responsibilities, the Coast Guard has
undertaken a fundamental reassessment of the capabilities, number, and
mix of assets it needs and expects to complete this analysis by the
summer of 2009. At the individual Deepwater asset level, the Coast
Guard has improved and begun to apply the disciplined management
process contained in its Major Systems Acquisition Manual (MSAM), but
did not meet its goal of complete adherence to this process for all
Deepwater assets by the end of March 2009. For example, key acquisition
management activities”such as operational requirements documents and
test plans”are not in place for assets with contracts or orders
recently awarded (such as the Fast Response Cutter and C4ISR) or in
production, placing the Coast Guard at risk of cost growth or schedule
slips. In addition, the MSAM does not appear to be consistent with
recent DHS policy that requires entities responsible for operational
testing to be independent of the system‘s users.
Due in part to the Coast Guard‘s increased insight into what it is
buying, the anticipated cost, schedules, and capabilities of many
Deepwater assets have changed since the $24.2 billion baseline was
established in 2007. Coast Guard officials have stated that this
baseline reflected not a traditional cost estimate, but rather the
anticipated contract costs as determined by ICGS. As the Coast Guard
has developed its own cost baselines for some assets, it has become
apparent that some of these assets it is procuring will likely cost
more than anticipated”up to $2.7 billion more based on information to
date. This represents approximately 39 percent cost growth for the
assets with revised cost estimates. As more cost baselines are
developed and approved, further cost growth is likely. Updated
baselines also indicate that schedules have slipped for several of the
assets. In addition, the current structure of the Coast Guard‘s budget
submission to Congress does not include details at the asset level,
such as estimates of total costs and total numbers to be procured, as
do those of the Department of Defense, which acquires similar systems.
One reason the Coast Guard hired a contractor as a systems integrator
was because it recognized that it lacked the experience and depth in
workforce to manage the acquisition internally. The Coast Guard
acknowledges that it still faces challenges in hiring and retaining
qualified acquisition personnel and that this situation poses a risk to
the successful execution of its acquisition programs. According to
human capital officials in the acquisition directorate, as of April
2009, the acquisition branch had 16 percent of positions unfilled,
including key jobs such as contracting officers and systems engineers.
Even as it attempts to fill its current vacancies, the Coast Guard
plans to increase the size of its acquisition workforce significantly;
the fiscal year 2010 budget request includes funding for 100 new
acquisition workforce positions. In the meantime, the Coast Guard has
been increasing its use of support contractors.
What GAO Recommends:
GAO recommends that the Coast Guard bring certain assets into
compliance with its acquisition processes before exercising additional
contract options, consult with DHS regarding an apparent inconsistency
between their acquisition policies, and better present asset costs to
Congress in its budget submissions. In written comments, the Coast
Guard agreed with the first two items; DHS stated that it will take the
third under advisement.
View [hyperlink, http://www.gao.gov/products/GAO-09-682] or key
components. For more information, contact John Hutton at (202) 512-4841
or huttonj@gao.gov.
[End of section]
Contents:
Letter:
Background:
Coast Guard Has Assumed the Role of Systems Integrator but Lags in
Applying Disciplined Asset-Level Processes as It Continues with
Procurements:
Coast Guard Developing Better-Informed Cost and Schedule Estimates for
Deepwater Assets, but Reporting May Not Keep Congress Fully Informed:
Coast Guard Having Difficulty Staffing Government Acquisition Positions
but Working to Improve Processes:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Homeland Security:
Appendix III: GAO Contact and Acknowledgments:
Related GAO Products:
Tables:
Table 1: Information on Deepwater Assets:
Table 2: Ongoing Work with ICGS (Then-year dollars in millions):
Table 3: Changes in Asset Costs from 2007 Baseline as of June 2009:
Table 4: Changes in Initial Operational Capability and Final Asset
Delivery from 2007 Baseline for Selected Deepwater Assets:
Table 5: Comparison of Budget Justification Elements:
Figures:
Figure 1: Percent of Total Deepwater Costs Appropriated through Fiscal
Year 2009 and Breakout of Those Appropriations [then year dollars in
millions]
Figure 2: Directorate Relationships:
Figure 3: Major Systems Acquisition Manual (MSAM) Phases and
Acquisition Decision Events:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
July 14, 2009:
The Honorable Robert C. Byrd:
Chair:
The Honorable George Voinovich:
Ranking Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
United States Senate:
The Honorable David E. Price:
Chair:
The Honorable Harold Rogers:
Ranking Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
House of Representatives:
The Deepwater Program--the largest acquisition program in the Coast
Guard's history--began in the late 1990s as an effort to recapitalize
the Coast Guard's operational fleet. The program now includes projects
to build or modernize five classes each of ships and aircraft, and
procurement of other capabilities such as improved command, control,
communications, computers, intelligence, surveillance, and
reconnaissance (C4ISR) and unmanned aircraft. Recognizing that it did
not have in place a workforce with the experience and depth to manage
the acquisition, the Coast Guard contracted with Integrated Coast Guard
Systems (ICGS) in June 2002 as a systems integrator for Deepwater.
[Footnote 1] After a series of programmatic failures, the Commandant
acknowledged in April 2007 that the Coast Guard had relied too heavily
on contractors to do the work of the government and that government and
industry had failed to control costs. He announced several major
changes to the acquisition approach for Deepwater, the key one being
that the Coast Guard would take over the role of systems integrator
from ICGS, with future work on individual assets to be potentially bid
competitively outside of the existing contract. In May 2007, soon after
this announcement, the Department of Homeland Security (DHS) approved
an acquisition program baseline of $24.2 billion for the Deepwater
Program.[Footnote 2]
In response to a direction in the Senate report accompanying the
Department of Homeland Security Appropriations Bill, 2009, and
discussions with your staff, we (1) evaluated Coast Guard efforts to
manage the Deepwater Program at both the overall system and asset
levels; (2) assessed changes in cost, schedules, and capabilities from
the 2007 baseline; and (3) identified Coast Guard efforts to build its
acquisition workforce to manage this multibillion dollar program. This
report updates information contained in our April 2009 testimony to the
Homeland Security Subcommittee of the House Appropriations Committee.
[Footnote 3]
To conduct our work, we reviewed key Coast Guard documentation such as
the Major Systems Acquisition Manual (MSAM), Blueprint for Acquisition
Reform, original and recently approved acquisition program baselines,
and human capital plans. We interviewed Coast Guard acquisition
directorate officials, including program managers and contracting
officers, and officials from other Coast Guard directorates such as
those responsible for human capital issues and for assessing and
developing operational requirements for Deepwater assets. We also
interviewed officials from ICGS and its first-tier subcontractors
Lockheed Martin and Northrop Grumman Shipbuilding. In addition, we
relied in part on our past work on the Deepwater Program. Appendix I
contains more information regarding our scope and methodology. We
conducted this performance audit between September 2008 and July 2009
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.
Background:
The Coast Guard is a multimission, maritime military service within
DHS. The Coast Guard's responsibilities fall into two general
categories--those related to homeland security missions, such as port
security and vessel escorts, and those related to the Coast Guard's
traditional missions, such as search and rescue 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 a number of those
assets. Since 2001, we have reviewed the Deepwater Program and have
informed Congress, DHS, and the Coast Guard of the risks and
uncertainties inherent in the acquisition. In June 2008, we reported on
our assessment of the preliminary steps the Coast Guard had taken to
revise its acquisition approach. For example, we found that the Coast
Guard had increased accountability by bringing Deepwater under a
restructured acquisition function and investing its government project
managers with management and oversight responsibilities formerly held
by ICGS. In addition, the Coast Guard had begun to manage Deepwater
under an asset-based approach, resulting in increased government
control and visibility over acquisitions. We concluded that while these
steps were beneficial, continued oversight and improvement were
necessary to further mitigate risks and made several recommendations,
which the Coast Guard and DHS have taken actions to address.[Footnote
4]
At the start of the Deepwater Program in the late 1990s, the Coast
Guard chose to use a system-of-systems acquisition strategy. A system-
of-systems is defined as the set or arrangement of assets that results
when independent assets are integrated into a larger system that
delivers unique capabilities. As the systems integrator, ICGS was
responsible for designing, constructing, deploying, supporting, and
integrating the Deepwater assets into a system-of-systems. Under this
approach, the Coast Guard provided the contractor with broad, overall
performance specifications--such as the ability to interdict illegal
immigrants--and ICGS determined the assets needed and their
specifications. According to Coast Guard officials, the ICGS proposal
was submitted and priced as a package; that is, the Coast Guard bought
the entire solution and could not reject any individual component. In
November 2006, the Coast Guard submitted a cost, schedule, and
performance baseline to DHS that established the total acquisition cost
of the ICGS solution at $24.2 billion and projected that the
acquisition would be completed in 2027. In May 2007, shortly after the
Coast Guard had announced its intention to take over the role of
systems integrator, DHS approved the baseline.
From fiscal year 2002 to fiscal year 2009, over $6 billion has been
appropriated for the Deepwater Program, about 25 percent of the total
anticipated costs of $24.2 billion. Figure 1 depicts a breakdown of how
these appropriations have been allocated as of fiscal year 2009,
including for integration and oversight functions; ongoing Deepwater
assets; and assets that the Coast Guard has canceled or restructured.
Figure 1: Percent of Total Deepwater Costs Appropriated through Fiscal
Year 2009 and Breakout of Those Appropriations (Then-year dollars in
millions):
[Refer to PDF for image: illustration]
Deepwater acquisition cost: ($24,230):
Remaining cost: 75% ($18,218);
Appropriations through fiscal year 2009: 25% ($6,012).
Breakout of appropriations through fiscal year 2009:
On-going assets: 81% ($4,849);
Integration and oversight: 15% ($876);
Canceled/restructured assets: 5% ($288).
Source: GAO analysis of Coast Guard data.
Note: Percentages may not add due to rounding.
[End of figure]
Regarding the breakout of appropriations through fiscal year 2009, the
$876 million appropriated for integration and oversight has been
allocated for activities such as planning for Deepwater logistics,
obsolescence prevention, government program management, and systems
engineering and integration. Of the $288 million allocated for canceled
or restructured assets, the Coast Guard allocated about $134 million to
ICGS for two projects that were subsequently canceled: an estimated $95
million to extend the Coast Guard's 110-foot patrol boats by an
additional 13 feet (known as the 123-foot patrol boat conversions) and
approximately $39 million for the initial design of the Fast Response
Cutter (known as FRC-A). The Coast Guard terminated the design efforts
for the FRC-A in February 2008. In addition, three projects received
significant funding before being restructured or redesigned. The Coast
Guard allocated approximately $119 million to ICGS for the Vertical
Unmanned Aerial Vehicle before stopping work on the design in 2007 due
to developmental and cost concerns. Over $27 million was allocated for
the Offshore Patrol Cutter (OPC) before design work was stopped in
2006, and over $8 million was allocated for cutter small boats before a
decision was made in 2008 to take a different acquisition approach for
those assets. The Coast Guard is now considering alternative designs
for all three of these assets.
Table 1 describes in more detail the assets the Coast Guard is planning
to procure or upgrade under the Deepwater Program according to approved
acquisition baselines.
Table 1: Information on Deepwater Assets:
Asset: National Security Cutter (NSC);
Quantity: 8 ships;
Description: The NSC is intended to be the flagship of the Coast
Guard's fleet, with an extended on-scene presence, long transits, and
forward deployment. The cutter and its aircraft and boat assets are to
operate worldwide.
Asset: Offshore Patrol Cutter (OPC);
Quantity: 25 ships;
Description: The OPC is intended to conduct patrols for homeland
security functions, law enforcement, and search and rescue operations.
It will be designed for long-distance transit, extended on-scene
presence, and operations with multiple aircraft and boats.
Asset: Fast Response Cutter (FRC);
Quantity: 58 ships;
Description: The FRC is conceived as a patrol boat with high readiness,
speed, adaptability, and endurance to perform a wide range of missions.
After terminating FRC-A design efforts, the Coast Guard pursued
acquisition of a modified commercially available patrol boat.
Asset: Medium Endurance Cutter Sustainment;
Quantity: 27 ships;
Description: The cutter sustainment project is intended to improve the
cutters' operating and cost performance by replacing obsolete,
unsupportable, or maintenance-intensive equipment.
Asset: Patrol Boat Sustainment (110' patrol boats);
Quantity: 20 boats;
Description: The patrol boat sustainment project is intended to improve
the boats' operating and cost performance by replacing obsolete,
unsupportable, or maintenance-intensive equipment.
Asset: Cutter Small Boats;
Quantity: 124 boats;
Description: Cutter small boats are an integral component of the
planned capabilities for the larger cutters and patrol boats and are
critical to achieving success in all operational missions. The Coast
Guard is currently restructuring its cutter small boat programs.
Asset: Maritime Patrol Aircraft (MPA);
Quantity: 36 aircraft;
Description: The MPA is intended to be a transport and surveillance,
fixed-wing aircraft used to perform search and rescue missions, enforce
laws and treaties, and transport cargo and personnel.
Asset: HC-130J Long-Range Surveillance Aircraft;
Quantity: 6 aircraft;
Description: The HC-130J is a four-engine turbo-prop aircraft which the
Coast Guard intends to deploy with improved interoperability, C4ISR,
and sensors to enhance surveillance, detection, classification,
identification, and prosecution.
Asset: HC-130H Long-Range Surveillance Aircraft;
Quantity: 16 aircraft;
Description: The HC-130H is the legacy Coast Guard long-range
surveillance aircraft which the Coast Guard intends to update with
structural sustainability, improved interoperability, C4ISR, and
sensors to enhance surveillance, detection, classification,
identification, and prosecution.
Asset: HH-65 Multimission Cutter Helicopter;
Quantity: 102 aircraft;
Description: The HH-65 Dolphin is the Coast Guard's short-range
recovery helicopter. It is being upgraded in phases to improve its
engines, communications equipment, avionics, and other capabilities.
Asset: HH-60 Medium Range Recovery Helicopter;
Quantity: 42 aircraft;
Description: The HH-60J is a medium-range recovery helicopter designed
to perform search and rescue missions offshore in all weather
conditions. The Coast Guard intends to upgrade the helicopter's
avionics, C4ISR, and other systems.
Asset: Unmanned Aerial System;
Quantity: To be determined;
Description: The Coast Guard has deferred acquisition of this asset
because of challenges in technology maturation of the ICGS proposed
design. The Coast Guard continues its analysis of needs and
alternatives, with an acquisition plan for this asset in development.
Asset: Command, Control, Communications, Computers, Intelligence,
Surveillance, Reconnaissance (C4ISR);
Quantity: n.a.;
Description: The Coast Guard is incrementally acquiring C4ISR
capabilities including upgrades to existing cutters and shore
installations, acquisitions of new assets, and development of a common
operating picture to provide operationally relevant information and
knowledge across the full range of Coast Guard operations.
Source: GAO analysis of Coast Guard data.
[End of table]
Coast Guard Has Assumed the Role of Systems Integrator but Lags in
Applying Disciplined Asset-Level Processes as It Continues with
Procurements:
The Coast Guard has assumed the role of systems integrator for
Deepwater, concurrently downsizing the scope of systems engineering and
integration work under contract with ICGS. In conjunction with its role
as systems integrator, the Coast Guard has undertaken a fundamental
reassessment of the capabilities and mix of assets it needs to meet its
Deepwater missions. In addition, DHS and the Coast Guard have made
improvements in oversight and management of Deepwater; for example, the
Coast Guard has made progress in applying the MSAM acquisition process
to individual Deepwater assets and made improvements to the process as
a whole. However, the Coast Guard did not meet its goal of having all
assets fully compliant with the MSAM by the end of March 2009. Hence,
acquisition decisions for certain assets are being made without having
completed some key acquisition documentation in light of what the Coast
Guard views as pressing operational needs.
Coast Guard Has Assumed Key Systems Integrator Roles and
Responsibilities from ICGS and Reduced Contractor's Scope of Work:
The role of systems integrator involves determining the mix of assets
needed to fulfill mission needs, as well as designing, procuring, and
integrating those assets into a system-of-systems capability greater
than the sum of the individual parts. ICGS's role as systems integrator
for the Deepwater Program included managing requirements, determining
how assets would be acquired, defining how assets would be employed by
Coast Guard users in an operational setting, and exercising technical
authority over all asset design and configuration. In 2008, the Coast
Guard acknowledged that in order to assume the role of systems
integrator, it needed to define systems integrator functions and assign
them to Coast Guard stakeholders. As a result, the Coast Guard has
established new relationships among its directorates to assume control
of key systems integrator roles previously carried out by the
contractor. Through a series of policy changes and memoranda, the Coast
Guard formally designated certain directorates as technical authorities
responsible for establishing, monitoring, and approving technical
standards for Deepwater assets related to design, construction,
maintenance, logistics, C4ISR, and life-cycle staffing and training.
Furthermore, the Coast Guard's capabilities directorate is now
responsible for determining operational requirements and the asset mix
to satisfy those requirements. This directorate is expected to
collaborate with the technical authorities to ensure that the Coast
Guard's technical standards are incorporated during the requirements
development process. Finally, the acquisition directorate's program and
project managers are responsible for procuring the assets and are to be
held accountable for ensuring that they fulfill the operational
requirements and the technical authority standards established by the
other directorates.
The collaborative relationships among the Coast Guard directorates
discussed above are depicted in figure 2.
Figure 2: Directorate Relationships:
[Refer to PDF for image: illustration]
Technical authorities:
* Human Resources (CG-1);
* Engineering and Logistics (CG-4);
* Command, Control, Communications, Computers and Information
Technology (CG-6).
Requirements:
* Assistant Commandant for Capability (CG-7);
- Direct relationship with Human Resources;
- Direct relationship with Acquisitions.
Acquisitions:
* Assistant Commandant for Acquisitions (CG-9);
- Direct relationships with Command, Control, Communications, Computers
and Information Technology (CG-6);
- Direct relationship with Requirements.
Source: GAO analysis of Coast Guard data.
[End of figure]
When it contracted with ICGS in 2002, the Coast Guard lacked insight
into how the contractor's proposed solution for Deepwater would meet
overall mission needs. This situation limited the Coast Guard's ability
to make informed decisions about possible trade-offs between cost and
capability. As a way of improving its insight, the capabilities
directorate has initiated a fundamental reassessment of the
capabilities and mix of assets the Coast Guard needs to fulfill its
Deepwater missions. The goals of this fleet mix analysis include
validating mission performance requirements and revisiting the number
and mix of all assets that are part of the Deepwater Program. A
specific part of the study will also analyze alternatives and
quantities for the OPC, which currently accounts for a projected $8
billion--about 33 percent--of total Deepwater costs. Coast Guard
leadership intends to base future procurement decisions on the results
of this analysis, which is expected to be completed in the summer of
2009. According to a senior official in the capabilities directorate,
the directorate has recommended that this type of analysis be repeated
every 4 years, or once during each commandant's tenure.
In conjunction with assuming the role of systems integrator, the Coast
Guard has reduced the scope and volume of ICGS's systems engineering
and integration functions. For example, the most recent systems
engineering and integration task order, issued to ICGS in March 2009,
is limited to support services such as data management and quality
assurance for the assets currently on contract with ICGS, such as the
Maritime Patrol Aircraft (MPA), the National Security Cutter (NSC), and
C4ISR. By contrast, under the prior systems engineering and integration
task order, ICGS was responsible for systems integrator functions such
as developing the mix of assets to meet Coast Guard missions, the
development of operational concepts, requirements management, test and
evaluation management, and a number of other program management and
system-of-systems level functions.
While the Coast Guard does not intend to cancel ongoing orders with
ICGS for services or assets, it does not plan to acquire future assets
from ICGS. A step in this direction was the September 2008 competitive
award of the Fast Response Cutter to Bollinger Shipyards, Inc.[Footnote
5] Further, while ICGS will continue to be responsible for the
construction and delivery of the first three NSCs, the Coast Guard
intends to award contracts for construction and long-lead-time
materials for future NSCs directly to ICGS subcontractor Northrop
Grumman Shipbuilding. The Coast Guard's decision was formalized in a
March 2009 contract modification with ICGS stating that it will not
award future work to ICGS after the current award term ends in January
2011.[Footnote 6]
Table 2 shows that, as of May 2009, the Coast Guard has about $2.3
billion under contract with ICGS in ongoing work. The table does not
include the total potential value of options and modifications that
could be exercised before the current award term expires.
Table 2: Ongoing Work with ICGS (Then-year dollars in millions):
Items under contract: National Security Cutter;
Obligations as of May 2009: 1,354.8.
Items under contract: National Security Cutter 1 (Production and long
lead materials);
Obligations as of May 2009: $511.0 million.
Items under contract: National Security Cutter 2 (Production);
Obligations as of May 2009: $331.6 million.
Items under contract: National Security Cutter 3 (Long lead materials);
Obligations as of May 2009: $75.5 million.
Items under contract: National Security Cutter 3 (Production);
Obligations as of May 2009: $337.5 million.
Items under contract: National Security Cutter 4 (Long lead materials);
Obligations as of May 2009: $99.2 million.
Items under contract: HC-130J Long-Range Surveillance Aircraft;
Obligations as of May 2009: $141.7 million.
Items under contract: Maritime Patrol Aircraft;
Obligations as of May 2009: $508.2 million.
Items under contract: Aircraft 1 to 3 and Mission Equipment for 1 to 3;
Obligations as of May 2009: $171.4 million.
Items under contract: Aircraft 4 to 8;
Obligations as of May 2009: $171.8v.
Items under contract: Aircraft 9 to 11 and Mission Equipment for 4 to
12;
Obligations as of May 2009: $165.0 million.
Items under contract: C4ISR;
Obligations as of May 2009: $285.1 million.
Items under contract: Increment 1 (Concept and Preliminary Design);
Obligations as of May 2009: $73.8 million.
Items under contract: Increment 1 (Detail Design and Development);
Obligations as of May 2009: $141.3 million.
Items under contract: Increment 2 (Concept and Preliminary Design);
Obligations as of May 2009: $16.2 million.
Items under contract: Increment 2 (Detail Design and Development);
Obligations as of May 2009: $32.5v.
Items under contract: Test Center;
Obligations as of May 2009: $5.3 million.
Items under contract: Software Engineering;
Obligations as of May 2009: $16.0 million.
Items under contract: Systems Engineering and Integration;
Obligations as of May 2009: $56.9 million.
Items under contract: Total;
Obligations as of May 2009: $2,346,700,000.
Source: GAO analysis of Coast Guard data.
[End of table]
Coast Guard and DHS Have Improved Oversight of the Deepwater Program
but Gaps in Knowledge Remain Even as Production and Award of New
Contracts Proceed:
Since our June 2008 report on the Deepwater Program, and taking into
account our recommendations, the Coast Guard and DHS have taken steps
to improve management and oversight of Deepwater.[Footnote 7] We
reported, for example, that the Coast Guard had transitioned from a
system-of-systems acquisition approach to an asset-based approach that
reflects the disciplined and formalized process outlined in its MSAM.
While the introduction of this process was a significant improvement,
we found that the absence of a key milestone decision point before low-
rate initial production begins was problematic and put program outcomes
at risk. In response to our recommendation, the Coast Guard revised its
MSAM to require a formal design review, termed "acquisition decision
event 2B," to ensure that risks are appropriately addressed before low-
rate initial production is authorized. The MSAM phases and acquisition
decision events are shown in figure 3.
Figure 3: Major Systems Acquisition Manual (MSAM) Phases and
Acquisition Decision Events:
[Refer to PDF for image: illustration]
Project Identification:
Need:
* 0: Acquisition decision event;
Analyze/Select:
* 1: Acquisition decision event;
* Begin acquisition:
Obtain;
* 2A: Acquisition decision event;
* 2B: Acquisition decision event;
* Approve low-rate initial production:
Produce/Deploy/Support:
* 3: Acquisition decision event;
* Approve full-rate production;
Source: Coast Guard‘s major systems acquisition manual.
[End of figure]
The Coast Guard has made other improvements to its MSAM process. For
example, the MSAM now includes standardized cost-estimating procedures
to provide an accounting of all resources required to develop, produce,
deploy, and sustain a program. Before, there was minimal guidance in
the manual about the cost-estimating process; it now includes a full
description of the process and a cost-estimating template for project
managers. The MSAM process was also revised to require acquisition
planning and an early affordability assessment prior to acquisition
decision event 1 (the "analyze/select" phase), to help inform the
budget and planning processes.
DHS has also improved its oversight and management of the Deepwater
Program by reviewing the program under its own acquisition processes.
In June 2008, we reported that DHS approval of Deepwater acquisition
decisions at key points in the program was not required, as the
department had deferred decisions on specific assets to the Coast Guard
in 2003. We recommended that DHS rescind the delegation of Deepwater
acquisition authority, and, in September 2008, the Under Secretary did
so. As a result, DHS officials are now formally involved in reviewing
and approving acquisition decisions for Deepwater assets at key points
in the program's life cycle. In November 2008, DHS issued a new interim
management directive that, if implemented as intended, should help
ensure that the department's largest acquisitions, including Deepwater,
are more effectively overseen and managed.[Footnote 8]
Because the Coast Guard had previously exempted Deepwater from its MSAM
process, assets were procured without following a disciplined program
management approach. Recognizing the importance of ensuring that each
acquisition project is managed through a sustainable and repeatable
process and wanting to adhere to proven acquisition procedures, in July
2008 the Coast Guard set a goal of completing the MSAM acquisition
management activities for all Deepwater assets by the end of March
2009. However, of the 13 Deepwater assets, 9 were behind schedule in
terms of MSAM compliance as of May 2009, as not all required documents
and processes had been completed. Not complying with the MSAM process
puts the Coast Guard at risk of buying assets that do not fully meet
its needs and that may experience cost growth and schedule slips.
Offshore Patrol Cutter and Unmanned Aerial System:
Assets that are early in the development cycle, such as the Offshore
Patrol Cutter (OPC) and the Unmanned Aerial System, are at present
compliant with the MSAM process. For example, the MSAM directs the
capabilities directorate to charter an integrated product team to
develop operational requirements for Coast Guard assets. This approach
is currently being applied to the OPC, which is in the "analyze/select"
phase of the MSAM process. In accordance with MSAM guidelines, the OPC
requirements team includes representatives from the Coast Guard's
technical authorities, acquisition project managers, test and
evaluation officials, and research and development officials. The goal
of this process is to develop operational requirements that are
specific, testable, prioritized, and defendable in order to adequately
support the acquisition process and satisfy users' needs. The Coast
Guard plans to continue to follow the MSAM process, under which the
operational requirements document and other key acquisition documents
will be approved by the Coast Guard and DHS prior to the OPC entering
the "obtain" phase, when capabilities are developed and demonstrated.
For the Unmanned Aerial System, currently in the "need" phase of the
acquisition process, the Coast Guard's Office of Research, Development,
Test and Evaluation is currently conducting preacquisition studies and
tests to identify alternative approaches to fulfilling mission
requirements for maritime surveillance and inform early cost estimates.
Through these activities, the Coast Guard intends to mitigate risks by
identifying approaches with high levels of technical and production
maturity and leveraging development efforts underway by the Department
of Defense and DHS.
Maritime Patrol Aircraft and National Security Cutter:
For assets well into production, such as the MPA and the NSC, the Coast
Guard has made some progress in the past year in retroactively
developing acquisition documentation with the intent of providing the
traceability from mission needs to operational performance that was
previously lacking. For example, the Coast Guard approved an
operational requirements document for the MPA in October 2008, to
establish a formal performance baseline and identify attributes for
testing. Through this process, the Coast Guard discovered that ICGS's
requirement for operational availability (the amount of time that an
aircraft is available to perform missions) was excessive compared to
the Coast Guard's own standards. According to a senior Coast Guard
official responsible for managing aviation assets, the ICGS requirement
would have needlessly increased costs to maintain and operate the
aircraft.
In addition to revisiting its requirements for the MPA, the Coast Guard
is also revising its plans to test and procure the asset. In February
2009, the Coast Guard submitted an MPA test plan to DHS with the intent
of obtaining approval for full-rate production based on the results of
a November 2008 operational assessment conducted by the U.S. Navy's
Commander Operational Test and Evaluation Force (COMOPTEVFOR).[Footnote
9] In April 2009, the DHS Director, Operational Test and Evaluation,
approved the plan for testing leading up to initial operational test
and evaluation, but required the Coast Guard to update and resubmit the
plan before operational testing begins. DHS and Coast Guard policy
require operational testing to be conducted before full-rate production
is approved. According to the senior official responsible for managing
aviation assets, the Coast Guard now plans to obtain DHS approval to
order further low-rate initial production aircraft at the next MPA
acquisition decision event, scheduled for the end of fiscal year 2009.
With 11 of 36 MPAs already delivered or on contract, the Coast Guard
has already made a significant investment in this program before the
testing that would demonstrate that what it is buying meets Coast Guard
needs.
DHS also required the Coast Guard to obtain concurrence with the test
plan from an operational test authority before proceeding with
operational testing of the MPA. According to DHS and Coast Guard
policy, operational testing should be conducted with the approval and
under the oversight of an independent operational test authority to
ensure that tests are clearly linked to requirements and mission needs.
However, the MSAM appears to be inconsistent with DHS policy regarding
who this test authority should be. The DHS Acquisition Guidebook states
that an operational test authority should be independent of both the
acquirer and user, which allows the test authority to present objective
and unbiased conclusions about an asset's operational effectiveness and
suitability. Further, a DHS directive on test and evaluation issued in
May 2009 distinguishes between the "sponsor" (or user of the system),
who is responsible for defining the system's operational requirements,
and the operational test agent, who plans, conducts, and reports
independent operational test and evaluation results. The MSAM, on the
other hand, assigns responsibility for planning and conducting
operational testing to the sponsor--the Coast Guard's capabilities
directorate--which represents the end user. While the Coast Guard has a
memorandum of agreement with COMOPTEVFOR to leverage the Navy's
experience and expertise in conducting operational testing for the MPA,
the Coast Guard's position is that its capabilities directorate can
function as the operational test authority, as it is independent of the
acquisition program office. The Director, DHS Test & Evaluation and
Standards said that, particularly given the recent change to the
department's test and evaluation directive, the MSAM does not appear to
be consistent with DHS policy regarding the operational test authority.
The Coast Guard has also made a significant investment in the NSC
program before completing operational testing to demonstrate that the
capabilities it is buying meet Coast Guard needs. While some testing of
the NSC has already taken place, the tests conducted to date do not
substitute for the complete scope of operational testing that should be
the basis for further investment. For example, COMOPTEVFOR completed an
operational assessment of the NSC in 2007 to identify risks to the
program's successful completion of operational testing. Before the
first NSC was delivered, it also underwent acceptance trials, conducted
by the U.S. Navy Board of Inspection and Survey, to determine
compliance with contract requirements and to test system capabilities.
Since delivery of the first NSC, the Coast Guard has also conducted
flight deck and combat system certifications with the assistance of the
Navy. While these demonstrations and certifications provide evidence
that the first NSC functions as intended, they do not fully demonstrate
the suitability and effectiveness of the ship for Coast Guard
operations. According to officials, a test plan to demonstrate these
capabilities is expected to be approved in July 2009, and COMOPTEVFOR
may begin operational testing in March 2010. However, by the time full
operational testing is scheduled to be completed in 2011, the Coast
Guard plans to have six of eight NSCs either built or under contract.
Fast Response Cutter and C4ISR:
Based on its determination that the need for the capabilities to be
provided by the Fast Response Cutter and C4ISR is pressing, the Coast
Guard has contracted for these capabilities without having in place all
acquisition documentation required by the MSAM. This situation puts the
Coast Guard at risk for cost overruns and schedule slips if it turns
out that what it is buying does not meet its requirements. For example,
in September 2008, after conducting a full and open competition, the
Coast Guard awarded an $88.2 million contract to Bollinger Shipyards,
Inc. for the design and construction of a lead Fast Response Cutter.
Prior to the award, however, the Coast Guard did not have an approved
operational requirements document or test plan for this asset as
required by the MSAM process. Recognizing the risks inherent in this
approach, the Coast Guard developed a basic requirements document and
an acquisition strategy based on procuring a proven design. These
documents were reviewed and approved by the Coast Guard's capabilities
directorate, the engineering and logistics directorate, and chief of
staff before the procurement began. The Coast Guard's next acquisition
decision event is scheduled for the first quarter of fiscal year 2010
to obtain DHS approval for low-rate initial production. According to
officials, the Coast Guard intends to submit an operational
requirements document and test plan to DHS for this acquisition
decision event. With plans to exercise contract options for hulls 2
through 8 in fiscal year 2010, the Coast Guard's aggressive schedule
leaves little room for unforeseen problems. Program risks are
compounded by the fact that the Coast Guard plans to have at least 12
cutters either delivered or under contract prior to the scheduled
completion of operational testing in fiscal year 2012, before it has
certainty that what it is buying meets Coast Guard needs.
The Coast Guard has also continued its procurement of C4ISR
capabilities without an approved operational requirements document as
required by the MSAM. C4ISR encompasses the connections between
surface, aircraft, and shore-based assets and is intended to provide
operationally relevant information to Coast Guard field commanders.
Design and development costs for the first increment of C4ISR have
increased significantly, from $55.5 million to $141.3 million.
According to Coast Guard officials, this increase was due in part to
the structure of the ICGS contract, under which the Coast Guard lacked
visibility into the contractor's software development processes and
requirements. In addition, the ICGS C4ISR solution developed under the
first increment contained Lockheed Martin-proprietary software, making
the Coast Guard reliant on the contractor for maintenance and support.
In February 2009, the Coast Guard issued a task order to ICGS, with a
total potential value of $77.7 million, for a second increment of C4ISR
design and development.[Footnote 10] It was not until May 2009,
however, that the capabilities directorate reviewed and concurred with
the capabilities identified in the acquisition plan. Coast Guard
officials stated that the Coast Guard's technical authority for C4ISR
reviewed the acquisition plan and statement of work to ensure
conformance with Coast Guard technical standards, but the officials
said there is no operational requirements document for this increment.
The lack of operational requirements may put the program at continued
risk of cost increases if the Coast Guard determines that what it is
buying does not meet its needs. Through the award of the second C4ISR
increment, the Coast Guard has acquired some of the data rights to the
proprietary software developed under the first increment. The Coast
Guard's goal is to gain greater visibility into the software in order
to compete future increments. According to officials, future decisions
about the C4ISR acquisition rest on the Coast Guard's ability to
affordably maintain and support the C4ISR software and ensure
interoperability between Deepwater assets and the Coast Guard as a
whole; however, the Coast Guard has not yet determined how it will do
so. According to officials, acquisition of the third C4ISR increment
will adhere to the MSAM process, and documents critical to determining
and testing requirements and capabilities will be completed and
approved by DHS before the Coast Guard proceeds with a contract award
in about 2 years.
Coast Guard Developing Better-Informed Cost and Schedule Estimates for
Deepwater Assets, but Reporting May Not Keep Congress Fully Informed:
Due in part to the Coast Guard's increased insight into what it is
buying, the anticipated cost, schedules, and capabilities of many of
the Deepwater assets have changed since the establishment of the $24.2
billion baseline in 2007. Coast Guard officials have stated that this
baseline reflected not a traditional cost estimate, but rather the
anticipated contract costs as determined by ICGS. As the Coast Guard
has developed its own cost baselines, it has become apparent that some
of the assets will likely cost more than anticipated. Information to
date shows that the total cost of the program will likely grow by at
least $2.7 billion. This represents growth of approximately 39 percent
for those assets with revised cost estimates. Furthermore, assets may
be ready for operational use later than anticipated in the 2007
baseline and, at least initially, lack some of the capabilities
envisioned. As the Coast Guard develops more baselines, further cost
and schedule growth is likely to become apparent. While the Coast Guard
plans to update its annual budget requests with this new information,
the current structure of its budget submission to Congress does not
include details at the asset level, such as estimates of total costs
and total numbers to be procured.
Better-Informed Baselines Suggest Deepwater Costs Could Exceed $24.2
Billion:
The $24.2 billion baseline for the Deepwater Program established cost,
schedule, and operational requirements for the Deepwater system as a
whole; these were then allocated to the major assets. Coast Guard
officials have stated that this baseline reflected not a traditional
cost estimate but ICGS's anticipated contract costs. Furthermore, the
Coast Guard lacked insight into how ICGS arrived at some of the costs
for Deepwater assets. As the Coast Guard has assumed greater
responsibility for management of the Deepwater Program, it has begun to
improve its understanding of costs by establishing new baselines for
individual assets based on its own cost estimates. These baselines
begin at the asset level and are developed by Coast Guard project
managers, validated by a separate office conducting independent cost
estimates within the acquisition branch and, in most cases, are
reviewed and approved by DHS. The estimates use common cost-estimating
procedures and assumptions and account for costs not previously
captured. As of June 2009, the Coast Guard had prepared 10 revised
asset baselines. Two were approved by the Coast Guard (for the
sustainment projects for the medium endurance cutter and the patrol
boats) and 8 had been submitted to DHS, which had approved 5 of them.
These new baselines are formulated using various sources of
information, depending on the acquisition phase of the asset. For
example, the baseline for the NSC was updated using the actual costs of
material, labor, and other considerations already in effect at the
shipyards. The baselines for other assets, like the MPA, were updated
using independent cost estimates. As the Coast Guard approaches major
milestones on Deepwater assets, such as the decision to enter low-rate
initial production or to begin system development, officials have
stated that the cost estimates for all assets will be reassessed and
revalidated.
In developing its own asset baselines, the Coast Guard has found that
some of the assets will likely cost more than anticipated. As of June
2009, with 7 of the 10 baselines approved, the total cost of the
program will likely exceed $24.2 billion, with potential cost growth of
approximately $2.7 billion. For the assets with revised cost estimates,
this represents cost growth of approximately 39 percent. As baselines
for the additional assets are approved, further cost growth will likely
become apparent. Table 3 provides the revised estimates of asset costs
available as of June 2009. It does not reflect the roughly $3.6 billion
in other Deepwater costs, such as program management, that the Coast
Guard states do not require a new baseline.
Table 3: Changes in Asset Costs from 2007 Baseline as of June 2009
(Dollars in millions):
Asset: National Security Cutter;
2007 Baseline: $3,450;
Current estimate: $4,749;
Change: $1,299.
Asset: Offshore Patrol Cutter;
2007 Baseline: $8,098;
Current estimate: Baseline in development, due November 2009.
Asset: Fast Response Cutter[A];
2007 Baseline: $3,206;
Current estimate: Baseline submitted to DHS February 2009.
Asset: Medium Endurance Cutter Sustainment;
2007 Baseline: $317;
Current estimate: $321[B];
Change: $4.
Asset: Patrol Boat Sustainment (110' patrol boats);
2007 Baseline: $117;
Current estimate: $194[B];
Change: $77.
Asset: Maritime Patrol Aircraft;
2007 Baseline: $1,706;
Current estimate: $2,400;
Change: $694.
Asset: HC-130J Long-Range Surveillance Aircraft;
2007 Baseline: $11;
Current estimate: $176;
Change: $165.
Asset: HC-130H Long-Range Surveillance Aircraft;
2007 Baseline: $610;
Current estimate: $745;
Change: $135.
Asset: HH-65 Multimission Cutter Helicopter;
2007 Baseline: $741;
Current estimate: $1,041[C];
Change: $300.
Asset: HH-60 Medium Range Recovery Helicopter;
2007 Baseline: $451;
Current estimate: Baseline submitted to DHS December 2008.
Asset: Cutter Small Boats; 2007
Baseline: $110;
Current estimate: Baseline in development, due June 2009.
Asset: Unmanned Aerial System;
2007 Baseline: $503;
Current estimate: Baseline in development.
Asset: C4ISR; 2007
Baseline: $1,353;
Current estimate: Baseline submitted to DHS January 2009.
Source: GAO analysis of Coast Guard data.
Note: If the approved baselines present both threshold and objective
costs, threshold costs (which are the maximum allowable costs) are
used.
[A] In the 2007 baseline, costs for two variants of the Fast Response
Cutter were presented. The new baseline will present the total costs
for the recently awarded design.
[B] The baselines for these assets were approved within the Coast
Guard.
[C] Reflects only the cost of upgrades planned under the 2007 Deepwater
baseline and does not include certain other capabilities now included
in the revised baseline. A detailed cost estimate for portions of the
planned upgrades has not been completed, so additional revisions may
occur in the future.
[End of table]
The Coast Guard's new baselines provide not only a better understanding
of the costs of Deepwater assets, but also insight into the drivers of
any cost growth. For example, the new NSC baseline attributes a $1.3
billion rise in cost to a range of factors, from the additional costs
to correct fatigue issues on the first three cutters--estimated by the
Coast Guard to add an additional $86 million--to changes in economic
factors such as labor and commodity prices that add an additional $434
million to the cost of the first four ships. The $517 million rise in
cost for the MPA is attributed primarily to items that were not
previously accounted for, including $36 million for a training
simulator, $30.6 million in facility improvements, and $124 million for
sufficient spare parts. An additional $115.9 million is attributable to
cost growth for the aircraft and engineering changes.
The Coast Guard has structured some of the new baselines to indicate
how cost growth could be controlled by making trade-offs in asset
quantities and/or capabilities. For example, the new MPA baseline
includes cost increments that show the acquisition may be able to
remain within the $1.7 billion estimate established in the 2007
baseline if 8 fewer aircraft than the planned 36 are acquired. Coast
Guard officials have stated that other baselines currently under review
by DHS present similar cost increments. This information, if combined
with data from the fleet mix study to show the effect of quantity or
capability reductions on the system-of-systems as a whole, offers an
opportunity to the Coast Guard for serious discussions of cost and
capability trade-offs. Given the approximately 39 percent cost growth
for the Deepwater assets that have revised cost estimates, the trade-
off assessment is critical--particularly with regard to the OPC, which
currently represents a substantial portion of the planned Deepwater
investment.
The Coast Guard's reevaluation of baselines has also improved insight
into the schedules for when assets will first be available for
operations and when final assets will be delivered. For example, the
initial operating capability of the first NSC has been delayed by a
year as compared to the schedule in the 2007 baseline, and the MPA has
been delayed by 21 months. Table 4 provides more information on initial
operational capability and final asset delivery schedules for Deepwater
assets that have had revised baselines approved. Other assets have
baselines either with DHS for approval or are in development.
Table 4: Changes in Initial Operational Capability and Final Asset
Delivery from 2007 Baseline for Selected Deepwater Assets:
Asset: National Security Cutter;
Initial operational capability: 2007 Baseline: FY 2008;
Initial operational capability: Current estimate: FY 2009;
Initial operational capability: Change: 12 months;
Final asset delivery: 2007 Baseline: FY 2014;
Final asset delivery: Current estimate: FY 2016;
Final asset delivery: Change: 24 months.
Asset: Medium Endurance Cutter Sustainment;
Initial operational capability: 2007 Baseline: FY 2006;
Initial operational capability: Current estimate: FY 2006;
Initial operational capability: Change: 0 months;
Final asset delivery: 2007 Baseline: FY 2016;
Final asset delivery: Current estimate: FY 2017;
Final asset delivery: Change: 17 months.
Asset: Patrol Boat Sustainment (110' patrol boats);
Initial operational capability: 2007 Baseline: FY 2009;
Initial operational capability: Current estimate: FY 2007;
Initial operational capability: Change: (18 months);
Final asset delivery: 2007 Baseline: FY 2013;
Final asset delivery: Current estimate: FY 2014;
Final asset delivery: Change: 17 months.
Asset: Maritime Patrol Aircraft;
Initial operational capability: 2007 Baseline: FY 2008;
Initial operational capability: Current estimate: FY 2009;
Initial operational capability: Change: 21 months;
Final asset delivery: 2007 Baseline: FY 2016;
Final asset delivery: Current estimate: FY 2020;
Final asset delivery: Change: 57 months.
Asset: HC-130J Long-Range Surveillance Aircraft;
Initial operational capability: 2007 Baseline: FY 2008;
Initial operational capability: Current estimate: FY 2009;
Initial operational capability: Change: 3 months;
Final asset delivery: 2007 Baseline: FY 2009;
Final asset delivery: Current estimate: FY 2011;
Final asset delivery: Change: 21 months.
Asset: HC-130H Long-Range Surveillance Aircraft;
Initial operational capability: 2007 Baseline: FY 2013;
Initial operational capability: Current estimate: To be determined;
Final asset delivery: 2007 Baseline: FY 2017;
Final asset delivery: Current estimate: To be determined.
Asset: HH-65 Multimission Cutter Helicopter;
Initial operational capability: 2007 Baseline: FY 2009;
Initial operational capability: Current estimate: To be determined;
Final asset delivery: 2007 Baseline: FY 2013;
Final asset delivery: Current estimate: To be determined.
Source: GAO analysis of Coast Guard data.
Note: If the approved baselines present both threshold and objective
dates, threshold dates (which are the latest allowable dates) are used.
[End of table]
Since many Deepwater assets are intended to replace older Coast Guard
assets, delays in their introduction and final deliveries could have an
effect beyond the Deepwater Program. For example, the NSC--together
with the OPC--is intended to replace older High Endurance and Medium
Endurance Cutters, some of which have been in service for over 40
years. According to Coast Guard officials, the longer these older
cutters remain in service--due to a delay in the introduction of the
NSC or the OPC to the fleet or delays in delivering all of the assets-
-the more funding will be required for maintenance of assets that are
being replaced. According to a senior official in the Coast Guard's
acquisition directorate, additional, unplanned funding will be required
for a sustainment project to keep the High Endurance Cutters in service
longer than anticipated. An acquisition strategy to achieve this
project is currently in development.
The Coast Guard's reevaluation of baselines has also changed its
understanding of the capabilities of Deepwater assets. For example,
Coast Guard officials stated that the restructuring of the unmanned
aircraft and small boat projects has delayed the deployment of these
assets with the first NSC and reduces the ship's anticipated
capabilities in the near term. We plan to report this summer on the
operational effect of these delays on the NSC.
Current Budget Reporting Lacks Detail at Asset Level and Limits
Congressional Insight:
The Coast Guard's budget submission, as currently structured, limits
Congress's understanding of details at the asset level in so far as it
does not include key information such as assets' total acquisition
costs or, for the majority of assets, the total quantities planned. For
example, while the justification of the NSC request includes a detailed
description of expected capabilities and how these capabilities link to
the Coast Guard's missions and activities funded by past
appropriations, it does not include estimates of total program cost,
future award or delivery dates of remaining assets, or even the total
number of assets to be procured.
Our past work has emphasized that one key to a successful capital
acquisition, such as the multibillion-dollar ships and aircraft the
Coast Guard is procuring, is budget submissions that clearly
communicate needs.[Footnote 11] An important part of this communication
is to provide decision makers with information about cost estimates,
risks, and the scope of a planned project before substantial resources
are committed. Good budgeting also requires that the full costs of a
project be considered upfront when decisions are made. Other federal
agencies that acquire systems similar to those of the Coast Guard, such
as the Department of Defense, capture these elements in justifications
of their budget requests. To illustrate, table 5 provides a comparison
of the information found in the NSC budget justification with that the
Navy is required to use in the Department of Defense regulations for
its shipbuilding programs.
Table 5: Comparison of Budget Justification Elements:
Coast Guard (NSC):
Prior-year allocation: [Check];
Current request: [Check];
5-year outlook: [Check];
Future contract awards: [Empty];
Total acquisition cost: [Empty];
Total asset quantities: [Empty].
Navy:
Prior-year allocation: [Check];
Current request: [Check];
5-year outlook: [Check];
Future contract awards: [Check];
Total acquisition cost: [Check];
Total asset quantities: [Check].
Source: GAO analysis.
[End of table]
While the Coast Guard's asset-level Quarterly Acquisition Reports to
Congress and the annual Deepwater Program Expenditure Report include
some information on total costs and quantities, these documents are
provided only to the appropriations committees, and they contain
selected information that is restricted due to acquisition sensitive
material. The budget justification prepared by the Coast Guard is a
tool that Congress uses in its budget and appropriations deliberations.
Presentation of information on the full costs and quantities of
Deepwater assets in the Coast Guard's budget submission can provide
Congress greater insights in fulfilling its roles of providing funding
and conducting oversight.
Coast Guard Having Difficulty Staffing Government Acquisition Positions
but Working to Improve Processes:
The Coast Guard sought a systems integrator at the outset of the
Deepwater Program in part because its workforce lacked the experience
and depth to manage the acquisition internally. The Coast Guard
acknowledges that it still faces challenges in hiring and retaining
qualified acquisition personnel and that this situation poses a risk to
the successful execution of its acquisition programs. According to
human capital officials in the acquisition directorate, as of April
2009 the acquisition branch had funding for 855 military and civilian
personnel and had filled 717 of these positions--leaving 16 percent
unfilled. The Coast Guard has identified some of these unfilled
positions as core to the acquisition workforce, such as contracting
officers and specialists, program management support staff, and
engineering and technical specialists. Even as it attempts to fill its
current vacancies, the Coast Guard plans to increase the size of its
acquisition workforce significantly by the end of fiscal year 2011. For
example, the Coast Guard's fiscal year 2010 budget request includes
funding for 100 new acquisition workforce positions, and the Coast
Guard anticipates requesting funding for additional positions in future
budget requests.
Coast Guard Has Expanded Collaboration with Independent Third Parties
and Increased Use of Support Contractors to Assist with Acquisitions:
To supplement and enhance its internal expertise, the Coast Guard has
increased its use of third-party, independent experts from outside both
the Coast Guard and existing Deepwater contractors. For example, a
number of organizations within the Navy have provided views and
expertise on a wide range of issues, including testing and safety. In
addition, the Coast Guard plans to use the American Bureau of Shipping,
an organization that establishes and applies standards for the design
and construction of ship and other marine equipment, as an advisor and
independent reviewer on the design and construction of the Fast
Response Cutter. The Coast Guard has also begun a relationship with a
university-affiliated research center to supplement its expertise as it
executes its fleet-mix analysis.
In addition to third-party experts, the Coast Guard has been increasing
its use of support contractors. As of fiscal year 2009, approximately
170 contractor employees supported the acquisition directorate, a
number that has steadily increased in recent years. These contractors
are performing a variety of services--some of which support functions
the Coast Guard has identified as core to the government acquisition
workforce--including project management support, engineering, contract
administration, and business analysis and management. While support
contractors can provide a variety of essential services, their use must
be carefully overseen to ensure that they do not perform inherently
governmental roles.[Footnote 12] The Coast Guard, acknowledging this
risk, is monitoring its use of support contractors to properly identify
the functions they perform and has developed a policy to define what is
and what is not inherently governmental.
Coast Guard Has Made Progress in Identifying and Mitigating Acquisition
Workforce Challenges:
While the Coast Guard may be hard-pressed to fill the government
acquisition positions it has identified both now and in the future, it
has made progress in identifying the broader challenges it faces and is
working to mitigate them. The Coast Guard has updated two documents key
to this effort, the Blueprint for Acquisition Reform, now in its third
iteration, and the Acquisition Human Capital Strategic Plan, which is
in its second iteration. Each document identifies challenges the Coast
Guard faces in developing and managing its acquisition workforce and
outlines initiatives and policies to meet these challenges. For
example, the Acquisition Human Capital Strategic Plan sets forth three
overall challenges and outlines over a dozen strategies for addressing
them in building and maintaining an acquisition workforce. The
discussion of strategies includes status indicators and milestones for
monitoring progress, as well as supporting actions such as the
formation of partnerships with the Defense Acquisition University and
continually monitoring turnover in critical occupations. The Blueprint
for Acquisition Reform supports many of these initiatives and provides
deadlines for their completion. In fact, the Coast Guard has already
completed a number of initiatives including:
* achieving and maintaining Level III program manager certifications,
* adopting a model to assess future workforce needs,
* incorporating requests for additional staff into the budget cycle,
* initiating tracking of workforce trends and metrics,
* expanding use of merit-based rewards and recognitions, and:
* initiating training on interactions and relationships with
contractors.
Conclusions:
In assuming the role of systems integrator, the Coast Guard has made a
major change in its management of the Deepwater Program, one that has
increased its insight into the capabilities needed to fulfill Coast
Guard missions, the costs and capabilities of what it is currently
procuring, and what resources are needed to complete the acquisition.
The continued application and improvement of the disciplined management
processes inherent in the MSAM are also beneficial in helping to ensure
that Deepwater assets are designed and delivered to meet mission needs.
While these changes, as well as the additional oversight gained by
DHS's participation in acquisition decisions, do not eliminate the
risks associated with this multibillion-dollar acquisition, they do
help ensure that program risks are more fully considered. However, the
Coast Guard has not applied the disciplined acquisition process to the
FRC and the second increment of C4ISR, recent contract actions that
will involve additional investments of taxpayer dollars over time.
Further, as operational testing proceeds for Deepwater assets, the MSAM
appears to be inconsistent with DHS policy and the recent directive on
test and evaluation, which require operational test authorities to be
independent of the system's user. Finally, in light of the sheer size
and scope of the Deepwater Program and Congress's role in providing
funds, the Coast Guard's budget submissions do not provide a complete
picture of the planned costs of Deepwater assets that would help inform
the decision-making process.
Recommendations for Executive Action:
We recommend that the Commandant of the Coast Guard take the following
three actions:
* Do not exercise further options under the Fast Response Cutter
contract and under the task order for the second increment of C4ISR
until these projects are brought into full compliance with the MSAM and
DHS acquisition directives.
* Consult with the DHS Office of Test & Evaluation and Standards to
determine whether the MSAM conflicts with DHS's directive regarding the
entity named as the independent operational test authority and, if so,
take steps to reconcile the inconsistency.
* As the Coast Guard prepares future budget submissions for Deepwater,
include the total acquisition costs for the assets and total quantities
planned.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, the Coast Guard
concurred with our findings. The agency also stated that it concurred
with our recommendation to not exercise further contract options on the
Fast Response Cutter and the second increment of C4ISR until these
projects are brought into full compliance with the MSAM and DHS
acquisition directives, as well as our recommendation to consult with
DHS on policies regarding the independent operational test authority.
DHS intends to take our final recommendation, to provide total
acquisition costs and quantities in future budget submissions, under
advisement. DHS noted that the proposed changes could result in the
Coast Guard failing to comply with DHS budget submission guidelines and
that Congress currently receives long-term acquisition project
information through the Quarterly Acquisition Report to Congress. While
we agree that this report includes some information on total costs and
quantities, as we state in the report, it is provided only to the
appropriations committees and contains other information that is
restricted and limits its distribution, and therefore its utility, to
decision makers. Presentation of information on the full costs and
quantities of Deepwater assets in the Coast Guard's budget submission
can provide the information to a wider audience and better assist
Congress in providing funding and conducting oversight.
The comments from DHS are included in their entirety in appendix II.
Technical comments were also provided and incorporated into the report
as appropriate.
We are sending copies of this report to interested congressional
committees, the Secretary of Homeland Security, and the Commandant of
the Coast Guard. This report will also be available at no charge on
GAO's Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report or need
additional information, please contact me at (202) 512-4841 or
huttonj@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Staff
acknowledgements are provided in appendix III.
John P. Hutton Director Acquisition and Sourcing Management:
[End of section]
Appendix I: Scope and Methodology:
Overall, in conducting this review, we relied in part on the
information and analysis in our April 2009 testimony, Update on
Deepwater Program Management, Cost, and Acquisition Workforce[Footnote
13] and our June 2008 report, Change in Course Improves Deepwater
Management and Oversight, but Outcome Still Uncertain.[Footnote 14]
Additional scope and methodology information on each objective of this
report follows.
To assess the Coast Guard's efforts to manage the Deepwater Program at
the overall system-of-systems level, we reviewed the Coast Guard's July
2008 Blueprint for Acquisition Reform, work group charters, and plans
and actions the Coast Guard has taken to assume the role of systems
integrator. To understand how the Coast Guard defined and assigned
systems integrator roles and responsibilities, we reviewed the Coast
Guard's Major Systems Acquisition Manual (MSAM) and technical authority
instructions. We also interviewed senior acquisition directorate
officials, representatives of the Coast Guard's capabilities
directorate, and representatives of Coast Guard's technical
authorities. To analyze the scope and volume of work currently under
contract with Integrated Coast Guard Systems (ICGS) and the Coast
Guard's plans to end its contractual relationship with ICGS, we
reviewed task orders, contract statements of work, and acquisition
plans and interviewed senior acquisition directorate officials and
contracting officials. To assess the Coast Guard's implementation of a
disciplined, project management process for Deepwater acquisitions, we
reviewed the most recent update to Coast Guard's MSAM and the
Department of Homeland Security's (DHS) November 2008 Interim
Acquisition Directive 102-01 as well as how individual assets were
complying with both sets of guidance. We compared these policies with
best practices reflected in previous GAO work on major acquisitions.
[Footnote 15] We also interviewed acquisition directorate officials and
program and project managers to discuss ongoing efforts to transition
the acquisition of Deepwater assets to the MSAM process and spoke with
DHS officials about the department's major acquisition review process
and reporting requirements. We also interviewed Coast Guard officials
and analyzed documentation for the fleet-mix analysis currently being
conducted by the capabilities directorate. We conducted case studies of
selected assets, representing some that are in production as well as
some with recent contract awards. This analysis included reviews of
acquisition program baselines, operational requirements documents, test
plans, and other key acquisition documentation and interviews with
program and project managers and independent test authority officials.
In addition, we met with contractor and Coast Guard officials at
Lockheed Martin's facilities in Moorestown, New Jersey and ICGS's
offices in Arlington, Virginia to discuss the transition of systems
integrator functions and current work on C4ISR capabilities. We also
met with Coast Guard officials at the Aviation Logistics Center in
Elizabeth City, North Carolina to discuss their role in upgrading and
maintaining Deepwater assets, and the U.S. Navy's Commander Operational
Test and Evaluation Force in Norfolk, Virginia to discuss their role in
conducting operational testing. Finally we met with Coast Guard
officials and toured facilities and ships, including the National
Security Cutter Bertholf in Alameda, California.
To assess how cost, schedules, and capabilities have changed from the
2007 Deepwater Acquisition Program Baseline approved by DHS, we
reviewed that baseline and compared it to the revised baselines for
individual assets that have been approved to date. We also interviewed
senior acquisition directorate officials and program and project
managers to discuss how the Coast Guard is developing new acquisition
program baselines for individual assets and how the process used
differs from that in the 2007 baseline, such as the basis for cost
estimates. We reviewed the Coast Guard's guidance and policy on cost
estimating in the MSAM and compared it to GAO best practices, including
our Cost Assessment Guide: Best Practices for Estimating and Managing
Program Costs.[Footnote 16] We also reviewed operational requirements
documents and project reports for selected assets in various stages of
the development and production processes to understand the major
drivers of cost growth, schedule delays, and capability changes. We
interviewed acquisition directorate officials and program and project
managers to discuss options for controlling cost growth by making trade-
offs in asset quantities and/or capabilities, as well as some of the
potential implications of unplanned schedule delays. To assess how well
costs are communicated to Congress, we reviewed the Office of
Management and Budget's guidance on budget justifications, the Coast
Guard's 2009 and 2010 budget justifications, the Coast Guard's 2008
Deepwater Expenditure Plan, and the Coast Guard's Quarterly Acquisition
Reports to Congress. We compared the Coast Guard's budget submissions
to those prepared by the Navy.
To assess the Coast Guard's efforts to manage and build its acquisition
workforce, we reviewed Coast Guard organization charts for aviation,
surface, and C4ISR components showing government, contractor, and
vacant positions. We supplemented this analysis with interviews of
acquisition directorate officials, including contracting and Office of
Acquisition Workforce Management officials and program and project
managers to discuss current vacancy rates--especially for key
acquisition positions such as contracting officials and systems
engineers--and the Coast Guard's plans to increase the size of the
acquisition workforce. We also reviewed documentation and interviewed
senior acquisition directorate officials about the Coast Guard's use of
third parties and independent experts outside of the Coast Guard such
as the U.S. Navy and the American Bureau of Shipping, as well as
increased use of support contractors and oversight to prevent
contractors from performing inherently governmental functions. We
reviewed documentation such as the July 2008 Blueprint for Acquisition
Reform and the updated Acquisition Human Capital Strategic Plan and
discussed workforce initiatives, challenges, and obstacles to building
an acquisition workforce, including recruitment and difficulty in
filling key positions.
We conducted this performance audit from September 2008 to July 2009 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.
[End of section]
Appendix II: Comments from the Department of Homeland Security:
US. Department of Homeland Security:
Washington, DC 20528:
July 9 2009:
Mr. John P. Hutton:
Director:
Acquisition and Souring Management:
United States Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Button:
Thank you for the opportunity to review and comment on the Government
Accountability Office's (GAO's) Draft Report GAO-09-682 entitled, Coast
Guard: As Deepwater Systems Integrator, Coast Guard Is Reassessing
Costs and Capabilities but Lags in Applying Its Disciplined Acquisition
Approach.
The United States Coast Guard remains grateful for the work GAO has
done to bring attention to issues within the Deepwater acquisition
program and concurs with the findings of this report. The commitment
the GAO has towards making the Deepwater program successful is
appreciated and the Coast Guard values the opinion of the GAO. The
Coast Guard benefits from this oversight and will use it to ensure
improvement to our acquisition program in the future. Thank you for
considering the Coast Guard's comments on these very important issues.
While the Coast Guard concurs with recommendations 1 and 2, we
recommend that DHS take recommendation 3 under advisement.
"We recommend that the Commandant of the Coast Guard take the following
three actions:"
Recommendation 1: Do not exercise further options under the Fast
Response Cutter contract and under the task order for the second
increment of C41SR until these projects are brought into full
compliance with the MSAM and DHS acquisition directives.
Response: Concur. The USCG agrees with Recommendation 1 and is in the
process of completing appropriate Major Systems Acquisition Manual
(MSAM) documentation before each project's next Acquisition Decision
Event that would authorize contract options.
Recommendation 2: Consult with the DHS office of Test & Evaluation and
Standards to determine whether the MSAM conflicts with DHS 's directive
regarding the entity named as the independent operational test
authority and, if so, take steps to reconcile the inconsistency.
Response: Concur. The USCG agrees with Recommendation 2 and is in the
process of updating the MSAM to comply with DHS's new Interim Policy on
Testing and Evaluation standards. The last revision to the MSAM was on
April 16, 2009, and this new policy was published by DHS on May 29,
2009. The Coast Guard will incorporate these standards as part of the
next revision to the MSAM to align with applicable DHS directives.
Recommendation 3: As the Coast Guard prepares future budget submissions
for Deepwater, include the total acquisition costs for the assets and
total quantities planned.
Response: DHS intends to take this Recommendation under advisement. The
Coast Guard is currently in compliance with DBS Policy that governs
budget submission format. These proposed changes to the Coast Guard's
budget submission format could result with not complying with DBS
submission guidelines. Congress currently receives long term
acquisition project information such as total acquisition costs and
total quantities planned through the Quarterly Acquisition Report to
Congress. This information includes Future Contract Awards, Total
Acquisition Cost, Total Asset Quantities, Lifecycle Cost Estimates
Project Risks, and Project Scope.
Thank you again for the opportunity to comment on this Draft Report and
we look forward to working with you on future Homeland Security issues.
Sincerely,
Jerald E. Levine:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix III: GAO Contact and Acknowledgments:
For further information about this report, please contact John P.
Hutton, Director, Acquisition and Sourcing Management, at (202) 512-
4841 or huttonj@gao.gov. Other individuals making key contributions to
this report include Michele Mackin, Assistant Director; Greg Campbell;
Carolynn Cavanaugh; J. Kristopher Keener; Angie Nichols-Friedman; and
Sylvia Schatz.
[End of section]
Related GAO Products:
Coast Guard: Update on Deepwater Program Management, Cost, and
Acquisition Workforce. [hyperlink,
http://www.gao.gov/products/GAO-09-620T]. Washington, D.C.: April 22,
2009.
Coast Guard: Change in Course Improves Deepwater Management and
Oversight, but Outcome Still Uncertain. [hyperlink,
http://www.gao.gov/products/GAO-08-745]. Washington, D.C.: June 24,
2008.
Coast Guard: Observations on Changes to Management and Oversight of the
Deepwater Program. [hyperlink,
http://www.gao.gov/products/GAO-09-462T]. Washington, D.C.: March 24,
2009.
Status of Selected Assets of the Coast Guard's Deepwater Program.
[hyperlink, http://www.gao.gov/products/GAO-08-270R]. Washington, D.C.:
March 11, 2008.
Coast Guard: Deepwater Program Management Initiatives and Key Homeland
Security Missions. [hyperlink,
http://www.gao.gov/products/GAO-08-531T]. Washington, D.C.: March 5,
2008.
Coast Guard: Status of Efforts to Improve Deepwater Program Management
and Address Operational Challenges. [hyperlink,
http://www.gao.gov/products/GAO-07-575T]. Washington, D.C.: March 8,
2007.
Coast Guard: Status of Deepwater Fast Response Cutter Design Efforts.
[hyperlink, http://www.gao.gov/products/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.
[hyperlink, http://www.gao.gov/products/GAO-06-546]. Washington, D.C.:
April 28, 2006.
Coast Guard: Progress Being Made on Addressing Deepwater Legacy Asset
Condition Issues and Program Management, but Acquisition Challenges
Remain. [hyperlink, http://www.gao.gov/products/GAO-05-757].
Washington, D.C.: July 22, 2005.
Coast Guard: Preliminary Observations on the Condition of Deepwater
Legacy Assets and Acquisition Management Challenges. [hyperlink,
http://www.gao.gov/products/GAO-05-651T]. Washington, D.C.: June 21,
2005.
Coast Guard: Deepwater Program Acquisition Schedule Update Needed.
[hyperlink, http://www.gao.gov/products/GAO-04-695]. Washington, D.C.:
June 14, 2004.
Contract Management: Coast Guard's Deepwater Program Needs Increased
Attention to Management and Contractor Oversight. [hyperlink,
http://www.gao.gov/products/GAO-04-380]. Washington, D.C.: March 9,
2004.
Coast Guard: Actions Needed to Mitigate Deepwater Project Risks.
[hyperlink, http://www.gao.gov/products/GAO-01-659T]. Washington, D.C.:
May 3, 2001.
[End of section]
Footnotes:
[1] ICGS is a business entity jointly owned by Northrop Grumman and
Lockheed Martin. These companies are first-tier subcontractors to ICGS
and under the ICGS contract provide Deepwater assets or award second-
tier subcontracts.
[2] The Deepwater Program originally had an estimated cost of $17
billion. The May 2007 baseline of $24.2 billion reflects changes to the
program to reflect the Coast Guard's post-September 11, 2001, missions.
[3] GAO, Coast Guard: Update on Deepwater Program Management, Cost, and
Acquisition Workforce, [hyperlink,
http://www.gao.gov/products/GAO-09-620T] (Washington, D.C.: Apr. 22,
2009).
[4] GAO, Coast Guard: Change in Course Improves Deepwater Management
and Oversight, but Outcome Still Uncertain, [hyperlink,
http://www.gao.gov/products/GAO-08-745] (Washington, D.C.: June 24,
2008).
[5] This contract was for the design, construction, and delivery of a
modified commercially available patrol boat.
[6] In June 2002, the Coast Guard awarded the Deepwater contract to
ICGS. The award was an indefinite delivery, indefinite quantity
contract with a 5-year base period and five potential extensions of the
contract (award terms) of up to 5 years each. Based on the Coast
Guard's assessment of its performance, ICGS earned one award term of 43
months. The contract's scope of work included not only the procurement
of individual assets but also significant systems engineering,
integration, and logistics functions.
[7] [hyperlink, http://www.gao.gov/products/GAO-08-745].
[8] We recently reported on DHS's oversight of its major investments.
See GAO, Department of Homeland Security: Billions Invested in Major
Programs Lack Appropriate Oversight, [hyperlink,
http://www.gao.gov/products/GAO-09-29] (Washington, D.C.: Nov. 18,
2008).
[9] An operational assessment focuses on significant trends noted in
development efforts, programmatic voids, risk areas, adequacy of
requirements, and the ability of the program to support operational
testing. An operational assessment may be conducted at any time using
technology demonstrators, prototypes, mock-ups, engineering development
models, or simulations, but is not to substitute for initial
operational testing and evaluation. COMOPTEVFOR's operational
assessment report for the MPA highlighted several areas of risk that
the Coast Guard plans to address as the program evolves.
[10] The task order includes options that have not yet been exercised.
[11] GAO, Executive Guide: Leading Practices in Capital Decision-
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32]
(Washington, D.C.: December 1998).
[12] Federal acquisition policy requires enhanced oversight of
contractors providing professional and management support services that
can affect government decision making, support or influence policy
development, or affect program management. Our past work at DHS found
that the level of contractor oversight provided by DHS did not always
ensure accountability for decisions or the ability to judge whether the
contractor was performing as required. Failure to ensure appropriate
oversight increases the potential for a loss of management control and
ability to ensure that intended outcomes are achieved. GAO, Department
of Homeland Security: Improved Assessment and Oversight Needed to
Manage Risk of Contracting for Selected Services, [hyperlink,
http://www.gao.gov/products/GAO-07-990] (Washington, D.C.: Sept. 17,
2007).
[13] GAO, Update on Deepwater Program Management, Cost, and Acquisition
Workforce, [hyperlink, http://www.gao.gov/products/GAO-09-620T]
(Washington, D.C.: Apr. 22, 2009).
[14] GAO, Change in Course Improves Deepwater Management and Oversight,
but Outcome Still Uncertain, [hyperlink,
http://www.gao.gov/products/GAO-08-745] (Washington, D.C.: June 24,
2008).
[15] GAO, Defense Acquisitions: A Knowledge-Based Funding Approach
Could Improve Major Weapon System Program Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-08-619] (Washington, D.C.: July 2008).
[16] GAO, Cost Assessment Guide: Best Practices for Estimating and
Managing Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-07-1134SP] (Washington, D.C.: July
2007).
[End of section]
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