Coast Guard's Acquisition Management

The Coast Guard is now planning the potentially largest acquisition project in its history. Called the Deepwater Capability Replacement Project, this effort involves replacing or modernizing many of the Coast Guard's 92 ships and 209 airplanes and helicopters used in search and rescue, drug interdiction, the interception of illegal immigrants, fisheries regulation, defense operations, and other at-sea operations. Teams of contractors are developing competing proposals for the Coast Guard's consideration. For initial planning purposes, the Coast Guard estimates the project's cost at $9.8 billion over 20 years. This report reviews the project's justification and the planning process being followed by the Coast Guard and answers the following questions: To what extent does the current justification for the Deepwater Project accurately depict the Coast Guard's need to modernize or replace ships and aircraft? To what extent are projected costs for the Deepwater Project consistent with the Coast Guard's overall budget for its capital projects?

GAO noted that: (1) although the Coast Guard is correct in starting now to explore how best to modernize or replace its deepwater ships and aircraft, the Deepwater Project's only formal justification developed to date does not accurately or fully depict the need for replacement or modernization; (2) this justification concluded that most deepwater ships and aircraft would need to be phased out starting in the next 2 to 9 years; (3) however, subsequent analyses by the Coast Guard and others have shown that deepwater aircraft likely have a much longer life; (4) the justification asserted that these ships and aircraft were incapable of performing future missions or meeting future demand, but GAO was unable to validate these assertions from the information available; (5) the Coast Guard withdrew the justification on the basis of concerns expressed by the Office of Management and Budget and is now developing more accurate and updated information; (6) several of these studies are still under way, even as contracting teams have already begun work on developing their initial deepwater proposals; (7) any delays in communicating this updated information to the contractors could adversely affect the quality of the proposals submitted; (8) while the Coast Guard's acquisition approach seems an appropriate way to avoid a costly one-for-one replacement of ships and aircraft, the agency could face major financial obstacles in proceeding with a Deepwater Project costing as much as initially proposed for planning purposes; (9) at a projected $500 million a year, expenditures for the project would take virtually all of the Coast Guard's projected spending for all capital projects, which currently include the construction of new buoy tenders and motorized lifeboats; (10) the Coast Guard expects more than $165 million of the annual funding to come from new user fees for domestic ice-breaking and navigational services that the Coast Guard currently provides; (11) however, the congressional subcommittees with jurisdiction over the Coast Guard's budget have expressed opposition to such fees, and the House and Senate have prohibited the Coast Guard from planning or implementing any new user fees; (12) if hoped-for funding does not occur, the Coast Guard may be left having either to reduce the scope of the project or to stretch out the procurement period; and (13) many other government procurement projects have demonstrated that when agencies attempt to address a problem by stretching out the procurement period, administrative and other costs increase, resulting in lower value for the amount of money spent.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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