Coast Guard
Observations on Acquisition Management and Efforts to Reassess the Deepwater Program Gao ID: GAO-11-535T April 13, 2011The U.S. Coast Guard manages a broad major acquisition portfolio. GAO has reported extensively on the Coast Guard's significant challenges with its major acquisition programs, including its Deepwater Program. GAO has also recognized steps the Coast Guard has taken to improve acquisition management. Additionally, GAO has recommended that the Coast Guard complete a review of the Deepwater Program to clarify the mix of assets that are needed to meet mission needs and trade-offs while considering fiscal constraints, because the program had exceeded its $24.2 billion baseline. This testimony updates (1) Coast Guard efforts to manage major acquisitions, (2) challenges programs are facing in the areas of cost and schedule, and (3) the status of the Deepwater fleet mix analysis. This statement is largely based on GAO-11-480, which is being issued today. In that report, GAO recommended that the Coast Guard formalize its database of agreements with the Department of Defense (DOD). The Department of Homeland Security agreed with the recommendation. This statement also draws from prior GAO reports and ongoing work related to Deepwater. GAO reviewed the first phase of the Coast Guard's fleet mix analysis, contract documents, and budget information. GAO also interviewed Coast Guard officials responsible for conducting the fleet mix analysis. For the new information, GAO obtained Coast Guard views and incorporated technical comments where appropriate
The Coast Guard continues to improve its acquisition management capabilities by updating policies, reducing acquisition workforce vacancies, and leveraging DOD contracts. In November 2010, the Coast Guard updated its "Major Systems Acquisition Manual" to further incorporate best practices and respond to prior GAO recommendations, such as aligning the roles and responsibilities of independent test authorities to DHS standards. Additionally, the Coast Guard reduced its acquisition workforce vacancies from about 20 to 13 percent from April through November 2010. Shortfalls in hiring staff for certain key areas persist, though, and some programs continue to be affected by unfilled positions. The Coast Guard has entered into 81 memorandums of agreement and other arrangements--primarily with DOD--to support its major acquisition programs, but program staff currently have access to only 5 of the 81 agreements. Most of the Coast Guard's 17 major acquisition programs continue to experience challenges in program execution, schedule, and resources. Furthermore, the Coast Guard's unrealistic budget planning exacerbates these challenges. When programs receive funding lower than planned, schedule breaches and other problems are more likely to occur. In fact, 4 of the major acquisition programs have reported a baseline breach caused, at least in part, by reduced projected funding levels. Additionally, projected funding levels in the Coast Guard's fiscal years 2012-2016 capital investment plan are significantly higher than budgets previously appropriated or requested and therefore may be unrealistic. This is particularly true given the rapidly building fiscal pressures facing the nation. For example, the Coast Guard plans to request $2.35 billion for acquisitions in fiscal year 2015--including funding for construction of three major Deepwater surface assets--but the agency has not received more than $1.54 billion in any recent year. The Coast Guard has developed action items to address budget planning challenges. In July 2010, GAO recommended that because of significant cost growth in the Deepwater Program, the Coast Guard should review the cost and mix of assets and identify trade-offs given fiscal constraints. The Department of Homeland Security agreed with the recommendation; however, the Coast Guard has not yet implemented it. The Coast Guard began a fleet mix analysis in 2008 that considered the current Deepwater Program to be the "floor" for asset capabilities and quantities and did not impose cost constraints on the various fleet mixes. Consequently, the results will not be used as a basis for trade-off decisions. The Coast Guard has now begun a second analysis, which includes an upper cost constraint of $1.7 billion annually--more than Congress has appropriated for the entire Coast Guard acquisition portfolio in recent years. Further, Coast Guard officials told GAO that this analysis will not assess options lower than the current program of record. It therefore will not prepare the Coast Guard to make the trade-offs that will likely be needed in the current fiscal climate. The Coast Guard expects to complete the analysis this summer.
GAO-11-535T, Coast Guard: Observations on Acquisition Management and Efforts to Reassess the Deepwater Program
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Coast Guard and Maritime Transportation,
Committee on Transportation and Infrastructure, House of
Representatives:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Wednesday, April 13, 2011:
Coast Guard:
Observations on Acquisition Management and Efforts to Reassess the
Deepwater Program:
Statement of John P. Hutton, Director:
Acquisition and Sourcing Management:
GAO-11-535T:
United States Government Accountability Office:
GAO:
GAO Highlights:
Highlights of GAO-11-535T, a testimony before the Subcommittee on
Coast Guard and Maritime Transportation, Committee on Transportation
and Infrastructure, House of Representatives.
Why GAO Did This Study:
The U.S. Coast Guard manages a broad major acquisition portfolio. GAO
has reported extensively on the Coast Guard‘s significant challenges
with its major acquisition programs, including its Deepwater Program.
GAO has also recognized steps the Coast Guard has taken to improve
acquisition management. Additionally, GAO has recommended that the
Coast Guard complete a review of the Deepwater Program to clarify the
mix of assets that are needed to meet mission needs and trade-offs
while considering fiscal constraints, because the program had exceeded
its $24.2 billion baseline. This testimony updates (1) Coast Guard
efforts to manage major acquisitions, (2) challenges programs are
facing in the areas of cost and schedule, and (3) the status of the
Deepwater fleet mix analysis.
This statement is largely based on GAO-11-480, which is being issued
today. In that report, GAO recommended that the Coast Guard formalize
its database of agreements with the Department of Defense (DOD). The
Department of Homeland Security agreed with the recommendation. This
statement also draws from prior GAO reports and ongoing work related
to Deepwater. GAO reviewed the first phase of the Coast Guard‘s fleet
mix analysis, contract documents, and budget information. GAO also
interviewed Coast Guard officials responsible for conducting the fleet
mix analysis. For the new information, GAO obtained Coast Guard views
and incorporated technical comments where appropriate.
What GAO Found:
The Coast Guard continues to improve its acquisition management
capabilities by updating policies, reducing acquisition workforce
vacancies, and leveraging DOD contracts. In November 2010, the Coast
Guard updated its Major Systems Acquisition Manual to further
incorporate best practices and respond to prior GAO recommendations,
such as aligning the roles and responsibilities of independent test
authorities to DHS standards. Additionally, the Coast Guard reduced
its acquisition workforce vacancies from about 20 to 13 percent from
April through November 2010. Shortfalls in hiring staff for certain
key areas persist, though, and some programs continue to be affected
by unfilled positions. The Coast Guard has entered into 81 memorandums
of agreement and other arrangements”-primarily with DOD”-to support
its major acquisition programs, but program staff currently have
access to only 5 of the 81 agreements.
Most of the Coast Guard‘s 17 major acquisition programs continue to
experience challenges in program execution, schedule, and resources.
Furthermore, the Coast Guard‘s unrealistic budget planning exacerbates
these challenges. When programs receive funding lower than planned,
schedule breaches and other problems are more likely to occur. In
fact, 4 of the major acquisition programs have reported a baseline
breach caused, at least in part, by reduced projected funding levels.
Additionally, projected funding levels in the Coast Guard‘s fiscal
years 2012-2016 capital investment plan are significantly higher than
budgets previously appropriated or requested and therefore may be
unrealistic. This is particularly true given the rapidly building
fiscal pressures facing the nation. For example, the Coast Guard plans
to request $2.35 billion for acquisitions in fiscal year 2015-”
including funding for construction of three major Deepwater surface
assets-”but the agency has not received more than $1.54 billion in any
recent year. The Coast Guard has developed action items to address
budget planning challenges.
In July 2010, GAO recommended that because of significant cost growth
in the Deepwater Program, the Coast Guard should review the cost and
mix of assets and identify trade-offs given fiscal constraints. The
Department of Homeland Security agreed with the recommendation;
however, the Coast Guard has not yet implemented it. The Coast Guard
began a fleet mix analysis in 2008 that considered the current
Deepwater Program to be the ’floor“ for asset capabilities and
quantities and did not impose cost constraints on the various fleet
mixes. Consequently, the results will not be used as a basis for trade-
off decisions. The Coast Guard has now begun a second analysis, which
includes an upper cost constraint of $1.7 billion annually”more than
Congress has appropriated for the entire Coast Guard acquisition
portfolio in recent years. Further, Coast Guard officials told GAO
that this analysis will not assess options lower than the current
program of record. It therefore will not prepare the Coast Guard to
make the trade-offs that will likely be needed in the current fiscal
climate. The Coast Guard expects to complete the analysis this summer.
View [hyperlink, http://www.gao.gov/products/GAO-11-535T] or key
components. For more information, contact John Hutton at (202) 512-
4841 or huttonj@gao.gov.
[End of section]
Chairman LoBiondo, Ranking Member Larsen, and Members of the
Subcommittee:
I am pleased to be here today to discuss the U.S. Coast Guard's
management and oversight of its major acquisitions. The Coast Guard
manages a broad acquisition portfolio of aviation, surface, and
information technology programs intended to acquire capabilities to
conduct missions that range from marine safety to defense readiness.
The portfolio includes 17 major acquisition programs and projects, 13
of which constitute the Deepwater Program, an ongoing effort to
recapitalize the Coast Guard's operational fleet. A contractor
originally served as the lead systems integrator for Deepwater, but in
2007, acknowledging cost, schedule, and performance problems, the
Coast Guard took over the role of systems integrator.
For several years we have reported on the Coast Guard's significant
challenges in managing its major acquisitions that have contributed to
delivery delays and other operational challenges for certain assets.
Our work also recognized several steps the Coast Guard has taken to
improve acquisition management, including actions that addressed our
past recommendations, some of which we will discuss today. Most
recently, in July 2010, we recommended that the Coast Guard complete a
comprehensive review of the Deepwater Program to clarify the overall
cost, schedule, quantities, and mix of assets that are needed to meet
mission needs and what trade-offs need to be made considering fiscal
constraints[Footnote 1]. This recommendation was based on our work
that found the Deepwater Program exceeded the $24.2 billion cost
baseline approved by the Department of Homeland Security (DHS) in May
2007 and that future cost growth was likely. DHS concurred with our
recommendation, and the Coast Guard continues to assess its fleet mix.
My statement is largely based on our report, which is being released
today in response to Section 402(a) of the Coast Guard Authorization
Act of 2010 that directed us to report on Coast Guard acquisition
management for major acquisition programs.[Footnote 2] Additionally,
my statement draws on information in our July 2010 Deepwater report
and related ongoing work that we are conducting under the Comptroller
General's authority. Our ongoing work will be issued later this year.
My focus today will be on:
* the Coast Guard's efforts to improve how it manages its major
acquisitions;
* cost and schedule challenges that its major acquisition programs
face; and:
* the status of the Coast Guard's efforts to conduct a trade-off
analysis of the costs, capabilities, and quantities of Deepwater
assets needed to meet mission needs.
In addressing the first two points listed above, we largely relied on
work conducted in support of the report we are issuing today. The
scope of this report includes all 17 major acquisition programs which
are listed in appendix I to this statement. For this report, we
reviewed key Coast Guard documentation such as the Coast Guard's Major
Systems Acquisition Manual, the October 2010 Blueprint for Continuous
Improvement, approved acquisition program baselines, acquisition
status reports, and acquisition workforce information.[Footnote 3] We
interviewed Coast Guard acquisition directorate officials, including
program managers and contracting staff, about the cost, schedule, and
performance of Coast Guard programs as well as any instances in which
the Department of Defense (DOD) or other agencies provide support. In
addition to our report, to provide more insight on acquisition budget
planning for this testimony, we reviewed Coast Guard budget documents
since 2007. In addressing the third point listed above--the status of
the Deepwater fleet mix analysis--we relied on our July 2010 Deepwater
report as well as reviewed the phase 1, December 2009, analysis.
[Footnote 4] We also reviewed the contracts and statements of work for
phase 1 and for the Coast Guard's ongoing fleet mix analysis. We also
reviewed budget information since 2007. Additionally, we interviewed
Coast Guard officials responsible for the analysis. All work for this
statement was conducted in accordance with generally accepted
government auditing standards. Additional information on our scope and
methodology is available in issued products. For new information that
was based on work not previously reported, we obtained Coast Guard
views on our findings and incorporated technical comments where
appropriate.
Continued Improvement in Acquisition Management Capabilities,
Including Leveraging DOD Expertise:
The Coast Guard has updated policies and processes for major
acquisition programs to better reflect best practices and respond to
our prior recommendations. The Coast Guard also continues to make
progress in reducing its acquisition workforce vacancies, and to some
extent is leveraging DOD contracts and expertise to support its major
acquisition programs. Some examples are below.
Updates to Policies and Processes:
We found that the Coast Guard revised its Major Systems Acquisition
Manual in November 2010 to include:
* a description of the roles and responsibilities of a flag-level
Executive Oversight Council, which was formed in 2009 to review
programs and provide oversight;
* aligning roles and responsibilities of independent test authorities
to DHS standards, which satisfied one of our prior recommendations;
[Footnote 5]
* a formal acquisition decision event before a program receives
approval for low-rate initial production, which addressed one of our
prior recommendations;[Footnote 6] and:
* a requirement to present an acquisition strategy when DHS is asked
to validate the need for a major acquisition program.
Addressing Workforce Vacancies:
The Coast Guard has made progress in reducing its acquisition
workforce vacancies. From April through November 2010, the percentage
of vacancies for government positions dropped from about 20 percent
to13 percent. Over the past several years, we have reported on the
Coast Guard's efforts to build its in-house acquisition workforce
capacity--one of the reasons the Coast Guard initially turned to a
contractor as the Deepwater systems integrator was largely because it
did not have that in-house capacity. Acquisition workforce vacancies
have decreased, but program managers have ongoing concerns about
staffing program offices. For example, the HH-65 helicopter program
office has funded and filled 10 out of the 33 positions needed. To
help make up shortfalls in filling systems engineer and other
acquisition workforce positions, the Coast Guard uses support
contractors. As of November 2010, the Coast Guard support contractors
made up 25 percent of the Coast Guard's acquisition workforce. While
we have cited the risks in using support contractors, we previously
reported that the Coast Guard has acknowledged these risks and has
taken steps to address them, such as releasing guidance on the
appropriate oversight of contractors and the work they perform.
[Footnote 7]
Leveraging Interagency Agreements:
According to the Coast Guard, it currently has 81 interagency
agreements, memorandums of agreement, and other arrangements in place
primarily with DOD to support its major acquisition programs. Support
from DOD ranges from acquiring products and services from established
DOD contracts to using the Navy's engineering and testing expertise.
For example, the Coast Guard benefited from discounts by coordinating
C-130J aircraft contracting efforts through the Air Force acquisitions
office rather than contracting directly with the aircraft
manufacturer. To leverage Navy engineering and testing expertise, most
Coast Guard major acquisition programs use the Navy's Commander,
Operational Test and Evaluation Forces, to support test activities.
Coast Guard program managers, however, do not have a systematic way to
gain insight into the existence and details of such agreements.
According to Coast Guard contracting officials, the Coast Guard
recently began to develop a database of all interagency agreements
with DOD and other agencies, but at this point program staff have
access to only 5 of the approximately 81 agreements. Today's report
contains a recommendation that the Commandant of the Coast Guard take
steps to ensure that all interagency agreements are captured in a
database or other format and to make this information readily
accessible to program staff. DHS agreed with the recommendation.
Challenges in Major Acquisition Programs Exacerbated by Unrealistic
Budget Planning:
We have previously reported that the Coast Guard has gained insights
into the risks it faces in managing its major acquisitions. At the
same time, most major programs continue to experience challenges in
program execution, resources, and schedule. The Coast Guard assesses
program execution using a composite metric that includes the following
factors: earned value management, a performance assessment, logistics
assessment, testing status, risk assessment, and technical maturity.
It also assesses resources using a composite metric that includes
several factors, such as budgeting, funding, staffing, and contractor
health, that is, contractor personnel and facilities. These challenges
are exacerbated by the Coast Guard's budget planning, which includes
developing capital investment plans that project outyear funding
levels. The Coast Guard has reported that projected funding levels in
the fiscal years 2011-2015 capital investment plan were lower than
previously planned for some major acquisition programs.[Footnote 8]
This plan includes Deepwater Program assets as well as other
acquisitions. Figure 1 illustrates these risks for each major
acquisition program.
Figure 1: Coast Guard Programs with Program Execution, Schedule,
Resources, and Budget Planning Challenges as of December 2010:
[Refer to PDF for image: illustration]
Major programs by asset type:
Aviation:
HC-130H: HC-130H Long-Range Surveillance Aircraft.
HC-130J: HC-130J Long-Range Surveillance Aircraft.
MPA: HC-144A Maritime Patrol Aircraft.
HH-60: HH-60 Medium Range Recovery Helicopter.
HH-65: HH-65 Multi-mission Cutter Helicopter.
UAS: Unmanned Aircraft System.
Surface:
FRC: Fast Response Cutter.
MEC: Medium Endurance Cutter Sustainment.
NSC: National Security Cutter.
OPC: Offshore Patrol Cutter.
PB: Patrol Boat Sustainment.
RB-M: Response Boat-Medium.
Information Technology:
CG-LIMS: Coast Guard Logistics Information Management System.
C4ISR: Command, Control, Communications, Computer, Intelligence,
Surveillance, and Reconnaissance Suite.
IOC: Interagency Operations Center.
NAIS: Nationwide Automatic Identification System.
Rescue 21: Rescue 21.
Program risks:
Resource and Schedule risks:
HH-65;
MEC.
Schedule and Execution risks:
HH-60[A].
Execution risks:
HC-130J.
Resource and Execution risks:
CG-LIMS;
IOC;
NAIS[A];
OPC.
Resource, Schedule, and Execution risks:
PB[A];
C4ISR[A];
HC-130H[A];
HC-144A MPA[A];
NSC;
Rescue 21[A].
[A] Programs experiencing instability due to reduced projected funding
levels.
Source: GAO analysis of Coast Guard data.
[End of figure]
When a capital investment plan has projected funding levels that are
lower than what a program planned to receive, the program is more
likely to have schedule breaches and other problems.[Footnote 9] Such
breaches have already occurred. Three major acquisition programs--HH-
60, HC-130H, and C4ISR--reported a baseline breach caused, at least in
part, by reduced funding projections in the fiscal years 2011-2015
capital investment plan. A fourth program, NAIS, had previously
reported a baseline breach caused in part by reduced funding
projections in the fiscal years 2009-2013 capital investment plan. DHS
acquisition oversight officials informed the Coast Guard that future
breaches in other programs would be almost inevitable as funding
resources decrease.
We reported in 2009 that the administration's budget projections
indicated that the DHS annual budget was expected to remain constant
or decrease over the next decade.[Footnote 10] When the Coast Guard
submitted its fiscal year 2012 budget request, it also released its
fiscal years 2012-2016 acquisition capital investment plan. In
reviewing this plan, we found that the Coast Guard's projected funding
levels for fiscal years 2013 through 2016 are significantly higher
than budgets previously appropriated or requested and therefore may be
unrealistic. This unrealistic acquisition budget planning exacerbates
the challenges Coast Guard acquisition programs face. As seen in
figure 2, the average annual budget plan from fiscal year 2013 through
fiscal year 2016 is about $520 million, or approximately 37 percent,
higher than the average Coast Guard acquisition budgets previously
appropriated or requested during the past 6 years.[Footnote 11]
Figure 2: Coast Guard Acquisition, Construction, and Improvements:
Appropriated and Requested Budgets from Fiscal Years 2007 through 2012
Compared to Projected Funding Levels for Fiscal Years 2013 through
2016 (Then-Year Dollars):
[Refer to PDF for image: vertical bar graph]
Fiscal year: 2007;
Appropriated: $1.33 billion.
Fiscal year: 2008;
Appropriated: $1.125 billion.
Fiscal year: 2009;
Appropriated: $1.49 billion.
Fiscal year: 2010;
Appropriated: $1.53 billion.
Fiscal year: 2011;
Requested, but not appropriated: $1.38 billion.
Fiscal year: 2012;
Requested, but not appropriated: $1.42 billion.
2007-2012 average: $1.38 billion.
Fiscal year: 2013;
Planned: $1.7 billion.
Fiscal year: 2014;
Planned: $1.77 billion.
Fiscal year: 2015;
Planned: $2.35 billion.
Fiscal year: 2016;
Planned: $1.76 billion.
2013-2016 Average: $1.09 billion.
Source: GAO analysis of budget documents and Coast Guard‘s Capital
Investment Plans.
Note: Acquisition, Construction, and Improvements includes dollars for
Deepwater assets as well as other acquisitions.
[End of figure]
To illustrate further, the Coast Guard plans to request $2.35 billion
for acquisitions in fiscal year 2015, but the Coast Guard has not
received more than $1.54 billion for its yearly acquisition budget in
recent years. In fiscal year 2015, the Coast Guard is planning to
request funding for construction of three major Deepwater surface
programs: National Security Cutter, Offshore Patrol Cutter, and Fast
Response Cutter. But the Coast Guard has never requested funding for
construction of three major Deepwater surface assets in the same year
before, and therefore this plan appears to be unrealistic. This is
particularly true given the rapidly building fiscal pressures facing
our national government.
The Coast Guard developed several action items in its October 2010
update to its Blueprint for Continuous Improvement to address budget
planning challenges. According to Coast Guard acquisition officials,
the most important step is for Coast Guard leadership to establish a
priority list for the major programs based on actual acquisition
budgets received in prior years and then to make trade-offs between
programs to fit within historical budget constraints. Our previous
work on DOD acquisitions has shown that without clear priorities, over
time, the annual competition among programs for funding forces them to
view success as the ability to secure the next funding increment
rather than delivering capabilities when and as promised.[Footnote 12]
Our DOD work further shows that when programs focus on securing
funding, it can lead to inefficient funding adjustments, like moving
money from one program to another or deferring costs to the future.
[Footnote 13]
Coast Guard Has Not Completed a Comprehensive Trade-off Analysis for
the Deepwater Assets:
To support its role as systems integrator, the Coast Guard planned to
complete a fleet mix analysis in July 2009 to eliminate uncertainty
surrounding future mission performance and to produce a baseline for
the Deepwater acquisition. We previously reported that the Coast Guard
expected this analysis to serve as one tool, among many, in making
future capability requirements determinations, including future fleet
mix decisions.[Footnote 14] The analysis, which began in October 2008
and is now termed fleet mix analysis phase 1, was led by the Coast
Guard directorate responsible for identifying and providing
capabilities. In July 2010, we reported that while the Coast Guard had
not yet released the results, officials told us that the analysis
considered the 2007 Deepwater baseline to be the "floor" for asset
capabilities and quantities and did not impose financial constraints
on the outcome.[Footnote 15] The Coast Guard initiated a second phase
of the analysis to impose cost constraints. We recommended in our July
2010 report that since the 2007 DHS-approved baseline of $24.2 billion
was no longer feasible because of cost growth, the Coast Guard should
conduct a comprehensive review of Deepwater cost, schedule,
quantities, and mix of assets needed to meet mission needs, identify
trade-offs given fiscal constraints, and report the results to
Congress.[Footnote 16] The Coast Guard's efforts to date have not
addressed this recommendation.
We recently obtained and analyzed the phase 1 fleet mix analysis. We
found that to conduct this analysis, the Coast Guard assessed asset
capabilities and mission demands to identify a fleet mix--referred to
as the objective fleet mix--that would meet long-term strategic goals.
Given the significant increase in the number of assets needed for this
objective fleet mix from the approved Deepwater program of record--the
$24.2 billion baseline--the Coast Guard developed, based on risk
metrics, incremental fleet mixes to bridge the two.[Footnote 17] Table
1 shows the quantities of assets for each incremental mix, according
to the Coast Guard's analysis.
Table 1: Alternative Fleet Mix Asset Quantities According to Coast
Guard's Phase 1 Fleet Mix Analysis:
Surface/aviation platforms: NSC;
Program of record: 8;
Fleet mix 1: 9;
Fleet mix 2: 9;
Fleet mix 3: 9;
Fleet mix 4 (objective): 9.
Surface/aviation platforms: OPC;
Program of record: 25;
Fleet mix 1: 32;
Fleet mix 2: 43;
Fleet mix 3: 50;
Fleet mix 4 (objective): 57.
Surface/aviation platforms: FRC;
Program of record: 58;
Fleet mix 1: 63;
Fleet mix 2: 75;
Fleet mix 3: 80;
Fleet mix 4 (objective): 91.
Surface/aviation platforms: HC-130;
Program of record: 22;
Fleet mix 1: 32;
Fleet mix 2: 35;
Fleet mix 3: 44;
Fleet mix 4 (objective): 44.
Surface/aviation platforms: MPA HC-144A;
Program of record: 36;
Fleet mix 1: 37;
Fleet mix 2: 38;
Fleet mix 3: 40;
Fleet mix 4 (objective): 65.
Surface/aviation platforms: HH-60;
Program of record: 42;
Fleet mix 1: 80;
Fleet mix 2: 86;
Fleet mix 3: 99;
Fleet mix 4 (objective): 106.
Surface/aviation platforms: HH-65;
Program of record: 102;
Fleet mix 1: 140;
Fleet mix 2: 159;
Fleet mix 3: 188;
Fleet mix 4 (objective): 223.
Surface/aviation platforms: UAS, Land-Based;
Program of record: 12;
Fleet mix 1: 19;
Fleet mix 2: 21;
Fleet mix 3: 21;
Fleet mix 4 (objective): 22.
Surface/aviation platforms: UAS, Cutter-Based;
Program of record: 18;
Fleet mix 1: 15;
Fleet mix 2: 19;
Fleet mix 3: 19;
Fleet mix 4 (objective): 19.
Source: December 2009 Coast Guard data.
[End of table]
Phase 1 also analyzed the performance of these fleet mixes to gain
insight into mission performance gaps. However, the analysis was not
cost constrained, as noted above. For instance, the Coast Guard
estimated that the costs associated with the objective fleet mix could
be as much as $65 billion. This is approximately $40 billion higher
than the DHS-approved $24.2 billion baseline. As a result, as we
reported last year, Coast Guard officials stated that they do not
consider the results to be feasible because of cost and do not plan to
use them to provide recommendations on a baseline for fleet mix
decisions.[Footnote 18]
In May 2010, the Coast Guard undertook phase 2, a cost-constrained
fleet mix analysis. Officials responsible for the analysis explained
that it will primarily assess the rate at which the Coast Guard could
acquire the Deepwater program of record within a high and low bound of
annual acquisition cost constraints. They told us that the lower-and
upper-bound constraints are, respectively, $1.2 billion and $1.7
billion annually; however, the basis for selecting these cost
constraints is not documented. Based on our review of recent budget
data, this upper bound for Deepwater is more than Congress has
appropriated for the Coast Guard's entire acquisition portfolio in
recent years. Moreover, the Coast Guard officials stated that this
analysis will not reassess whether the current program of record is
the appropriate mix of assets to pursue and will not assess any mixes
smaller than the current program of record. Alternative fleet mixes
will be assessed, but these mixes are based on purchasing additional
assets after the program of record is acquired, if funding remains
within the yearly cost constraints. Coast Guard officials stated that
they are only analyzing the program of record or a larger fleet mix
because they found that the first phase of the analysis validated
pursuing, at the minimum, the program of record. The Coast Guard
expects to complete its phase 2 analysis in the summer of 2011.
Because fleet mix analysis phase 2 will not assess options lower than
the program of record, it will not prepare the Coast Guard to make the
trade-offs that will likely be needed in the current fiscal climate.
Furthermore, it is our understanding that DHS is conducting a study
examining the mix of surface assets, which is expected to be completed
later this year. As part of our ongoing work, we will continue to
monitor these efforts as they relate to the fleet mix analysis.
Concluding Observations:
In conclusion, I would like to emphasize several key points as we
continue to review the Coast Guard's management of acquisitions. It is
important to recognize that the Coast Guard continues to make progress
in strengthening its capabilities to manage its acquisition portfolio
by updating acquisition policies and practices, reducing vacancies in
the acquisition workforce, and leveraging DOD contracts and resources
to help support its major acquisitions. Nevertheless, the Coast Guard
still faces significant challenges in carrying out these major
acquisitions within a fiscally constrained environment, especially
given continued cost growth and schedule delays that are exacerbated
in part by unrealistic budget plans. Additionally, as costs continue
to grow and capabilities are delayed, the Coast Guard has yet to
consider the trade-offs in capabilities, quantities, and costs of the
Deepwater assets--a significant portion of its major acquisition
portfolio--in order to identify an affordable fleet. We expect to
continue reviewing and reporting on its progress in this regard.
Chairman LoBiondo, Ranking Member Larsen, this concludes my prepared
statement. I would be happy to respond to any questions you or other
members of the subcommittee may have at this time.
Contacts and Acknowledgments:
If you have any questions on matters discussed in this statement,
please contact John P. Hutton 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 statement. Other
individuals making key contributions to this testimony include Michele
Mackin, Assistant Director; John Neumann, Assistant Director; Jessica
Drucker; Laurier Fish; Carlos Gomez; Kristine Hassinger; Morgan
Delaney Ramaker; William Russell; Molly Traci; and Rebecca Wilson.
[End of section]
Appendix I: Information on Coast Guard Major Acquisition Programs:
Asset: National Security Cutter (NSC);
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 small boat assets
are to operate worldwide.
Asset: Offshore Patrol Cutter (OPC);
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 small boats.
Asset: Fast Response Cutter (FRC);
Description: The FRC, also referred to as the Sentinel class, is
conceived as a patrol boat with high readiness, speed, adaptability,
and endurance to perform a wide range of missions.
Asset: Medium Endurance Cutter (MEC) sustainment;
Description: The MEC sustainment project is intended to improve the
cutters' operating and cost performance by replacing obsolete,
unsupportable, or maintenance-intensive equipment.
Asset: Patrol Boat (PB) sustainment;
Description: The PB sustainment project is intended to improve the
boats' operating and cost performance by replacing obsolete,
unsupportable, or maintenance-intensive equipment.
Asset: HC-144A Maritime Patrol Aircraft (MPA);
Description: The MPA is a transport and surveillance, fixed-wing
aircraft intended to be used to perform search and rescue missions,
enforce laws and treaties, and transport cargo and personnel.
Asset: HC-130J Long-Range Surveillance Aircraft;
Description: The HC-130J is a four-engine turbo-prop aircraft that the
Coast Guard has deployed with improved interoperability, Command,
Control, Communications, Computer, Intelligence, Surveillance, and
Reconnaissance (C4ISR), and sensors to enhance surveillance,
detection, classification, identification, and prosecution.
Asset: HC-130H Long-Range Surveillance Aircraft;
Description: The HC-130H is the legacy Coast Guard long-range
surveillance aircraft, which the Coast Guard intends to update in
multiple segments.
Asset: HH-65 Multi-mission Cutter Helicopter;
Description: The HH-65 Dolphin is the Coast Guard's short-range
recovery helicopter. It is being upgraded to improve its engines,
sensors, navigation equipment, avionics, ability to land on the NSC,
and other capabilities in multiple segments.
Asset: HH-60 Medium Range Recovery Helicopter;
Description: The HH-60 is a medium-range recovery helicopter designed
to perform search and rescue missions offshore in all weather
conditions. The Coast Guard has planned upgrades to the helicopter's
avionics, sensors, radars, and C4ISR systems in multiple segments.
Asset: Unmanned Aircraft System (UAS);
Description: The land-based and cutter-based UASs are in the Need
phase. The UAS strategy is to range UASs and low altitude cutter-based
tactical UASs to fulfill mission requirements while emphasizing (1)
commonality with existing Department of Homeland Security and
Department of Defense programs, (2) ensuring that projects mature, and
(3) where possible, leveraging other government organizations' UAS
development and nonrecurring engineering costs.
Asset: Response-Boat Medium (RB-M);
Description: The RB-M is intended to replace the aging 41-foot utility
boats and other medium nonstandard boats.
Asset: C4ISR Suite;
Description: The Coast Guard is incrementally acquiring C4ISR
capabilities, including upgrades to existing cutters and shore
installations, acquisitions of new capabilities, and development of a
common operating picture to provide operationally relevant information
and knowledge across the full range of Coast Guard operations.
Asset: Coast Guard Logistics Information Management System (CG-LIMS);
Description: CG-LIMS will replace or integrate legacy logistics
business processes and their supporting information systems.
Asset: Nationwide Automatic Identification System (NAIS);
Description: NAIS is a data collection, processing, and distribution
system that provides information to enhance safety of navigation and
improve Maritime Domain Awareness.
Asset: Interagency Operations Center (IOC);
Description: IOC is intended to improve operational capabilities,
situational awareness, tactical decision making and joint, coordinated
emergency response.
Asset: Rescue 21;
Description: Rescue 21 is an advanced command, control, and
communications system intended to improve the Coast Guard's search and
rescue mission by leveraging direction-finding technology to more
accurately locate the source of distress calls.
Source: GAO analysis of Coast Guard information.
[End of table]
[End of section]
Footnotes:
[1] GAO, Coast Guard: Deepwater Requirements, Quantities, and Cost
Require Revalidation to Reflect Knowledge Gained, [hyperlink,
http://www.gao.gov/products/GAO-10-790] (Washington, D.C.: July 27,
2010).
[2] GAO, Coast Guard: Opportunities Exist to Further Improve
Acquisition Management Capabilities, [hyperlink,
http://www.gao.gov/products/GAO-11-480] (Washington, D.C.: Apr. 13,
2011).
[3] The Coast Guard's Major Systems Acquisition Manual articulates its
acquisition objectives for planning, coordinating, and executing its
major programs.
[4] [hyperlink, http://www.gao.gov/products/GAO-10-790].
[5] GAO, Coast Guard: As Deepwater Systems Integrator, Coast Guard Is
Reassessing Costs and Capabilities but Lags in Applying Its
Disciplined Acquisition Approach, [hyperlink,
http://www.gao.gov/products/GAO-09-682] (Washington, D.C.: July 14,
2009).
[6] 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).
[7] See [hyperlink, http://www.gao.gov/products/GAO-10-790].
[8] The Coast Guard's capital investment plan is a 5-year plan that
includes Acquisition, Construction and Improvements. The Coast Guard
updates the capital investment plan annually, and it represents the
Coast Guard's submission for the President's Budget in any given year.
[9] An acquisition program baseline breach of cost, schedule, or
performance is an inability to meet the threshold value of the
specific parameter.
[10] GAO, Coast Guard: Observations on the Fiscal Year 2010 Budget and
Related Performance and Management Challenges, [hyperlink,
http://www.gao.gov/products/GAO-09-810T] (Washington, D.C.: July 7,
2009).
[11] We used fiscal year 2007 as a starting point for this analysis
because that is the year the Coast Guard took over as the lead systems
integrator for Deepwater.
[12] GAO, DOD Acquisition Outcomes: A Case for Change, [hyperlink,
http://www.gao.gov/products/GAO-06-257T] (Washington, D.C.: Nov. 15,
2005).
[13] 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 2,
2008).
[14] GAO, Coast Guard: Efforts to Identify Arctic Requirements Are
Ongoing, but More Communication about Agency Planning Efforts Would Be
Beneficial, [hyperlink, http://www.gao.gov/products/GAO-10-870]
(Washington, D.C.: Sept. 15, 2010).
[15] [hyperlink, http://www.gao.gov/products/GAO-10-790].
[16] [hyperlink, http://www.gao.gov/products/GAO-10-790].
[17] For fleet mix analysis phase 1, the Coast Guard adjusted the
$24.2 billion program of record to account for changes in
characteristics and requirements for several of the Deepwater assets
that had occurred since the last performance gap analysis. For
example, in this analysis, the per-flight hours for the HC-144A were
reduced from 1,200 to 800 based on an initial capabilities assessment
and the number of unmanned aircraft systems was reduced. Officials
stated that these adjustments did not result in significant changes to
the program of record.
[18] [hyperlink, http://www.gao.gov/products/GAO-10-790].
[End of section]
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