This is the accessible text file for GAO report number GAO-14-450 
entitled 'Coast Guard Acquisitions: Report to Congressional 
Requesters' which was released on June 18, 2014. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

June 2014: 

Coast Guard Acquisitions: 

Better Information on Performance and Funding Needed to Address 
Shortfalls: 

GAO-14-450: 

GAO Highlights: 

Highlights of GAO-14-450, a report to congressional requesters. 

Why GAO Did This Study: 

The Coast Guard is managing a multi-billion dollar effort to modernize 
aging assets, including ships, aircraft, and information technology to 
provide new capabilities to conduct missions ranging from marine 
safety to defense readiness. GAO has reviewed the Coast Guard's 
acquisitions since 2001 and has found it faces challenges managing its 
portfolio. In 2007, the Coast Guard established a cost baseline of 
$24.2 billion for 13 assets. GAO was asked to examine the Coast 
Guard's current and planned acquisition portfolio. 

This report assesses: (1) operational performance and testing of 
selected assets; (2) the current cost of the Coast Guard's portfolio 
and funding plans; and (3) the extent to which the Coast Guard is 
experiencing capability gaps, if any, given known affordability 
issues. To conduct this work, GAO analyzed the operational performance 
and test reports for all 4 newly fielded assets that the Coast Guard 
planned to test and the costs and capabilities of its major system 
acquisition portfolio. GAO also interviewed Coast Guard, DHS, and Navy 
officials. 

What GAO Found: 

The selected Coast Guard assets that GAO reviewed are generally 
demonstrating improved performance-—according to Coast Guard 
operators—-but GAO found that they have yet to meet all key 
requirements. Specifically, two assets, the HC-144 patrol aircraft and 
Fast Response Cutter, did not meet all key requirements during 
operational testing before being approved for full-rate production, 
and Department of Homeland Security (DHS) and Coast Guard guidance do 
not clearly specify when this level of performance should be achieved. 
Additionally, the Coast Guard changed its testing strategy for the 
Command, Control, Communications, Computers, Intelligence, 
Surveillance, and Reconnaissance (C4ISR) system and, as a result, is 
no longer planning to test the system's key requirements. Completing 
operational testing for the C4ISR system would provide the Coast Guard 
with the knowledge of whether this asset meets requirements. 

As acquisition program costs increase across the portfolio, consuming 
significant amounts of funding, the Coast Guard is farther from 
fielding its planned fleet today than it was in 2009, in terms of the 
money needed to finish these programs. In 2009, GAO found that the 
Coast Guard needed $18.2 billion to finish its 2007 baseline, but now 
needs $20.7 billion to finish these assets. 

Figure: The Total Cost of and Cost to Complete the Coast Guard's 
Original 2007 Baseline in 2009 and 2014: 

[Refer to PDF for image: illustration] 

2009 (in current/then year dollars): 
Total cost of portfolio: $24.2 billion; 
Cost to complete original 2007 baseline: $18.2 billion. 

2014 (in current/then year dollars): 
Total cost of same assets: $30.5 billion; 
Cost to complete same assets: $20.7 billion. 

Source: GAO analysis of Coast Guard data. 

[End of figure] 

To inform Congress of its budget plans, the Coast Guard uses a 
statutorily required 5-year Capital Investment Plan, but the law does 
not require the Coast Guard to report the effects of actual funding 
levels on individual projects and, thus, it has not done so. For 
example, the Coast Guard has received less funding than planned in its 
annual budgets, but has not reflected the effects of this reduced 
funding in terms of increased cost or schedule for certain projects. 
Without complete information, Congress cannot know the full cost of 
the portfolio. 

The Coast Guard has repeatedly delayed and reduced its capability 
through its annual budget process and, therefore, it does not know the 
extent to which it will meet mission needs and achieve desired 
results. This is because the Coast Guard does not have a long-term 
fleet modernization plan that identifies all acquisitions needed to 
meet mission needs over the next two decades within available 
resources. Without such a plan, the Coast Guard cannot know the extent 
to which its assets are affordable and whether it can maintain service 
levels and meet mission needs. 

What GAO Recommends: 

Congress should consider requiring the Coast Guard to include 
additional information in its Capital Investment Plan. In addition, 
the Secretary of DHS should clarify when minimum performance standards 
should be achieved, conduct C4ISR testing, and develop a long-term 
modernization plan. DHS concurred with the recommendations, but its 
position on developing a long-term plan does not fully address GAO's 
concerns as discussed in the report. 

View [hyperlink, http://www.gao.gov/products/GAO-14-450]. For more 
information, contact Michele Mackin at (202) 512-4841 or 
mackinm@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Operators Extol New Assets' Performance Compared to Aging 
Counterparts, but These Assets Have Yet to Meet All Key Requirements: 

Cost Increases Are Consuming Funding and Affordability Issues Have Not 
Been Addressed or Accurately Represented: 

Future Capabilities Uncertain as Coast Guard Makes Annual Budget 
Decisions; Alternatives Could Improve Outlook: 

Conclusions: 

Matter for Congressional Consideration: 

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: Coast Guard Acquisition Portfolio Costs: 

Appendix IV: GAO Contact and Staff Acknowledgment: 

Related GAO Products: 

Tables: 

Table 1: Coast Guard Major Acquisition Portfolio as of March 2014: 

Table 2: Key Performance Parameter Test Results for the Fast Response 
Cutter: 

Table 3: Key Performance Parameter Test Results for the HC-144 
Maritime Patrol Aircraft: 

Table 4: Retrofits and Design Changes on the National Security Cutter 
Class Costing over $1 Million as of December 2013: 

Table 5: Acquisition Cost Estimates, Including Cost to Complete, for 
Coast Guard Portfolio of Major Programs as of March 2014 (dollars in 
millions): 

Figures: 

Figure 1: Planned Endurance-Related Capabilities of New Coast Guard 
Assets Compared with Assets They Are Replacing: 

Figure 2: The Total Cost of and Cost to Complete the Coast Guard's 
Original 2007 Baseline in 2009 and 2014: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

June 5, 2014: 

The Honorable Bill Shuster: 
Chairman: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

The Honorable Duncan Hunter: 
Chairman: 
Subcommittee on Coast Guard and Maritime Transportation: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

The Coast Guard is managing a multi-billion dollar acquisition 
portfolio as it seeks to modernize its aging assets, including ships, 
planes, and information technology. Since 2001, we have reviewed the 
Coast Guard's acquisition programs and reported to Congress on the 
risks and uncertainties in its acquisition portfolio.[Footnote 1] Our 
prior work has highlighted problems with the cost, management, and 
oversight of the Coast Guard's acquisition portfolio that have led to 
delivery delays and other operational challenges. For example, in a 
report issued in September 2012, we found that the cost and schedule 
of the Coast Guard's acquisition portfolio remains unknown because of 
outdated baselines and uncertainty surrounding affordability. We also 
found that opportunities exist to address affordability through the 
requirements process. Overall, we concluded that the Coast Guard had 
made strides in its efforts to improve its acquisition management 
capabilities, and the Department of Homeland Security (DHS) agreed 
with our recommendations to conduct a portfolio review and to identify 
the Executive Oversight Council as the body to oversee the Coast 
Guard's portfolio management approach.[Footnote 2] 

You asked us to review the Coast Guard's current and planned 
acquisition portfolio. We reviewed (1) how selected assets are 
performing operationally and to what extent they are achieving desired 
performance levels in testing; (2) the current cost of the Coast 
Guard's acquisition portfolio as well as plans to fund its assets; and 
(3) the extent to which the Coast Guard is experiencing capability 
gaps, if any, given known affordability issues. 

To assess the operational performance of Coast Guard assets, we 
selected all four major acquisition programs that were fielded between 
fiscal year 2007 and 2014 that the Coast Guard planned to test. These 
assets were also part of the Coast Guard's original 2007 baseline. The 
specific assets reviewed were the Maritime Patrol Aircraft (HC-144), 
Fast Response Cutter, National Security Cutter, and Command, Control, 
Communications, Computers, Intelligence, Surveillance, and 
Reconnaissance (C4ISR) systems. For each asset, we reviewed the 
operational performance through post deployment reports, test reports, 
and met with asset operators. We also interviewed officials at the 
Navy's Commander Operational Test and Evaluation Force (COTF) and DHS 
Office of Test and Evaluation to discuss observations and met with 
officials from the four programs. To assess the cost and schedule of 
the Coast Guard's portfolio and steps taken to address affordability 
concerns, we reviewed each asset's acquisition program baseline as 
well as the Coast Guard's budget and discussed the acquisition 
portfolio with Coast Guard, DHS, and Office of Management and Budget 
(OMB) officials and followed up on previous efforts to address 
affordability. We also reviewed the Coast Guard's Capital Investment 
Plan and compared it to the relevant law that specifies the contents 
of the plan.[Footnote 3] To assess what, if any, capability gaps exist 
given the Coast Guard's affordability issues, we reviewed funding 
needs, mission needs, future plans, and performance data and reviewed 
the Coast Guard's fiscal year 2014 and 2015 budgets. We reviewed the 
Coast Guard's estimates of its overall fleet performance in key areas 
and also reviewed any current or potential performance gaps. We also 
looked at the extent to which the Coast Guard is pursuing alternatives 
that could reduce costs. Appendix I contains more information 
regarding our scope and methodology. 

We conducted this performance audit from June 2013 to June 2014 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 the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

Background: 

The Coast Guard is a multi-mission, maritime military service within 
DHS. The Coast Guard's range of responsibilities includes maintaining 
the United States' maritime borders, facilitating the global movement 
of commerce, safeguarding marine resources, and protecting those at 
sea. To meet its statutory missions, the Coast Guard operates a number 
of vessels, aircraft, and information technology systems. Many of the 
assets that the Coast Guard operates were delivered between 1960 and 
1992 and are approaching the end of or have exceeded the period for 
which they were expected to perform--known as the assets' service 
lives. 

A Brief History of the Deepwater Program: 

The Coast Guard began a recapitalization effort in the late 1990s to 
modernize a significant portion of its entire surface and aviation 
fleet by rebuilding or replacing assets. The Coast Guard awarded a 
contract to Integrated Coast Guard Systems (ICGS) in June 2002 to be 
the systems integrator for the portfolio. The Coast Guard generally 
provided ICGS with broad, overall performance specifications--such as 
the ability to interdict illegal immigrants--and ICGS determined the 
assets needed and their specifications. A central aspect of this 
effort was to use information technology to connect its major assets 
through a single command and control architecture--C4ISR--to improve 
the accuracy and speed of conducting Coast Guard missions. This system 
of systems approach was the effort formerly known as Deepwater. In 
2002, the Coast Guard conducted an analysis that determined the fleet, 
as designed by ICGS, would have significant capability gaps in meeting 
mission requirements that emerged after the September 11, 2001, 
terrorist attacks. The Coast Guard decided, due to fiscal constraints, 
not to make significant changes to the ICGS planned fleet, but did 
approve changes to several assets' capabilities. In 2012, we reported 
on the Coast Guard's progress in achieving these capabilities, such as 
adding chemical, biological, and other decontamination capability. 
[Footnote 4] 

In 2006, the Coast Guard acknowledged that it had relied too heavily 
on contractors and, citing cost increases, took over the role of lead 
systems integrator. DHS approved a new baseline in May 2007 that 
established the total acquisition cost of the Deepwater program at 
$24.2 billion and projected the Coast Guard would complete the 
acquisition in 2027. The Coast Guard also reconsidered the planned 
fleet mix, required to meet the established mission needs, through a 
series of analyses. We reviewed these analyses in May 2012 and found 
that the Coast Guard did not consider any assets with less capability 
than the Deepwater assets and that the Coast Guard used optimistic 
cost constraints to conclude that it could afford the portfolio. 
[Footnote 5] As of the approval of the fiscal year 2012 budget, DHS 
and the Coast Guard no longer use the term "Deepwater" for the program 
aimed at recapitalizing its surface, air, and information technology 
capacity. This effort is now called Coast Guard recapitalization and 
it includes many of the assets that made up the former Deepwater 
effort as well as other major acquisitions. 

Overview of the Current Coast Guard Acquisition Portfolio: 

The Coast Guard has 11 major acquisition programs in its current 
portfolio, based on the Fiscal Years 2014 through 2018 Capital 
Investment Plan. Of these 11 programs, 8 were also a part of the 2007 
recapitalization portfolio.[Footnote 6] Over time, the composition of 
the portfolio has changed. For example, since our last review in 2012, 
the Coast Guard has added 3 programs to its acquisition portfolio and 
another 7 programs are ending and, therefore, will no longer need 
additional acquisition funding. Table 1 provides information regarding 
each major acquisition program in the portfolio as well as the 
programs that do not need additional funding. Shaded assets were a 
part of the 2007 recapitalization portfolio, formerly known as 
Deepwater. Appendix III shows the estimated cost of programs in the 
current portfolio.[Footnote 7] 

Table 1: Coast Guard Major Acquisition Portfolio as of March 2014: 

Surface: 

Name: National Security Cutter; 
Quantity delivered: 3; 
Quantity planned: 8; 
Description: The 418-foot National Security Cutter is the flagship of 
the Coast Guard's fleet, with an extended on-scene presence, long 
transits, and forward deployment. The cutter, with its aircraft and 
small-boat assets, operates worldwide. 

Name: Offshore Patrol Cutter; 
Quantity delivered: 0; 
Quantity planned: 25; 
Description: The Offshore Patrol Cutter 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 deployable aircraft 
and small boats. The first ship is expected to be delivered in 2021. 

Name: Fast Response Cutter; 
Quantity delivered: 9; 
Quantity planned: 58; 
Description: The Fast Response Cutter, also referred to as the 
Sentinel class, is a 154-foot patrol boat that operates with a small 
boat and is designed to have high readiness, speed, adaptability, and 
endurance to perform a wide range of missions. 

Name: Icebreaker (new); 
Quantity delivered: 0; 
Quantity planned: TBD; 
Description: The heavy polar icebreaker is intended to replace the 
aging Polar Star and is intended to operate in both Arctic and 
Antarctic waters. This program is in the initial acquisition stages. 

Name: In-Service Vessel Sustainment (new); 
Quantity delivered: N/A; 
Quantity planned: N/A; 
Description: New program for major operational fleet maintenance 
events, such as midlife maintenance and service life extensions. The 
Coast Guard intends for this to be a continuously funded line item in 
its acquisition budget. 

Aviation: 

Name: HC-130H/J - Long Range Surveillance Aircraft; 
Quantity delivered: 6; 
Quantity planned: 22; 
Description: The HC-130H and HC-130J are four engine turbo-prop 
aircraft that the Coast Guard has combined into one project called 
Long Range Surveillance (LRS) that will increase its capabilities. The 
Coast Guard intends to update the HC-130H in multiple segments, but 
has paused further sustainment efforts while evaluating the recent 
addition of the C-27J to the Coast Guard's aviation fleet. The HC-130J 
is a new variant that the Coast Guard has deployed with improved 
interoperability, C4ISR, and sensors. 

Name: Maritime Patrol Aircraft (HC-144); 
Quantity delivered: 17; 
Quantity planned: 36; 
Description: The HC-144 is a transport and surveillance, fixed-wing 
aircraft for search and rescue, enforcement of laws and treaties, and 
transportation of cargo and personnel. Congress recommended funding to 
the Coast Guard in fiscal year 2014 to pursue a new mission system 
that is currently in use by the U.S. Navy and DHS's Customs and Border 
Protection. Mission system refers to the hardware and software needed 
to operate equipment, such as radars and communications gear. This 
gear does not need to be replaced to operate with the new mission 
system. The recent receipt of C-27Js will likely reduce the number of 
HC-144s that the Coast Guard plans to purchase. 

Name: C-27J[A] (new); 
Quantity delivered: 0; 
Quantity planned: 14; 
Description: In 2014, the Coast Guard was authorized to receive 14 C-
27Js from the Air Force, which had purchased this two engine turbo-
prop aircraft for transporting payloads to forward-deployed forces. 
According to program officials, these aircraft need C4ISR systems 
(i.e. a mission system pallet) before they can be used for all 
intended missions. 

Name: MH-65 (quantities reflect progress implementing segment IV); 
Quantity delivered: 66; 
Quantity planned: 102; 
Description: The MH-65 Dolphin is the Coast Guard's short range 
recovery helicopter. It is being upgraded to improve its engines, 
sensors, navigation equipment, avionics, and other capabilities in 
multiple segments. 

Name: Unmanned Aircraft System; 
Quantity delivered: 0; 
Quantity planned: TBD; 
Description: The Coast Guard is exploring the use of Unmanned Aircraft 
Systems to augment cutter and land-based aviation capabilities. 

C4ISR: 

Name: Command, Control, Communications, Computers, Intelligence, 
Surveillance, and Reconnaissance (C4ISR); 
Quantity delivered: N/A; 
Quantity planned: N/A; 
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. 

Assets no longer needing acquisition funding: 

Name: Response Boat-Medium; 
Quantity delivered: 153; 
Quantity planned: 174; 
Description: The Response Boat-Medium replaces the Coast Guard's fleet 
of 41-foot utility boats as well as other nonstandard boats. The last 
of 174 boats are planned to be delivered by the end of fiscal year 
2015. 

Name: Medium Endurance Cutter Sustainment; 
Quantity delivered: 25; 
Quantity planned: 27; 
Description: This project replaces obsolete and unsupportable parts on 
aging cutters. The last of the 27 ships are planned to be completed by 
the end of fiscal year 2014. 

Name: Patrol Boat Sustainment; 
Quantity delivered: 17; 
Quantity planned: 17; 
Description: This project replaces obsolete and unsupportable parts on 
aging cutters. It has been completed. 

Name: MH-60; 
Quantity delivered: 42; 
Quantity planned: 42; 
Description: The MH-60 is a medium-range recovery helicopter designed 
to perform search and rescue missions in all weather conditions. The 
Coast Guard is not planning to fund the final two segments of the 
project, which include a surface search radar and information 
technology systems. 

Name: Nationwide Automatic Identification System; 
Quantity delivered: 8; 
Quantity planned: 58; 
Description: This data collection, processing and distribution system 
provides information to enhance safety of navigation and improve 
awareness. The project is scheduled to complete deployment to 58 ports 
by the end of fiscal year 2014. 

Name: Interagency Operations Centers; 
Quantity delivered: 22; 
Quantity planned: 35; 
Description: The Interagency Operations Centers are intended to 
improve joint coordinated emergency responses among other coordinated 
activities. The project is scheduled to complete deployment to 35 
locations by the end of fiscal year 2017. This project was downgraded 
to a non-major acquisition in March 2013. 

Name: Rescue 21; 
Quantity delivered: 32; 
Quantity planned: 37; 
Description: Rescue 21 is intended to improve legacy search and rescue 
capability by increasing system coverage and operational availability, 
and by providing and integrating additional communications, 
interoperability, position location, and recording/archiving/ 
retrieving capabilities. The Rescue 21 project is planned to provide 
the full capability to all planned areas by the end of fiscal year 
2017. 

Source: GAO presentation of Coast Guard data. 

[A] We added the C-27J to the Coast Guard's acquisition portfolio 
since this asset is planned to be transferred to the Coast Guard 
pursuant to the National Defense Authorization Act for Fiscal Year 
2014, Pub. L. No 113-66, § 1098(e) (2013). 

[End of table] 

Coast Guard Acquisition Management: 

The Coast Guard has continued to strengthen its acquisition management 
capabilities when purchasing individual assets. For example, in 
response to one of our prior recommendations, the Coast Guard released 
a January 2013 update to its Major Systems Acquisition Manual to, 
among other things, better reflect cost and schedule estimation best 
practices and to clarify the roles and responsibilities of the 
Executive Oversight Council. The Executive Oversight Council is 
comprised of admirals and senior executives who regularly conduct 
oversight meetings to govern the acquisition process. As part of the 
budget process, the Executive Oversight Council provides 
recommendations to the Investment Board, which are presented to the 
Investment Review Board--a higher level group--and ultimately the 
Commandant for final investment decisions. 

In addition, the Coast Guard has sought to maximize competition in its 
acquisitions and to buy commercial products when available. For 
example, the Coast Guard purchased a "reprocurement data licensing 
package" from Bollinger Shipyards, Inc. that contains the technical 
specifications and licenses necessary to build the Fast Response 
Cutter. The Coast Guard is planning to use this information to conduct 
a full and open competition for the remaining vessels. Our previous 
work has shown that when the government owns technical data rights, it 
does not need to rely on only one contractor to meet 
requirements.[Footnote 8] Further, the Coast Guard has developed a 
warranty provision under its contract with Bollinger Shipyards that 
has held the contractor responsible for production deficiencies. While 
the Coast Guard does not always have insight into how much it costs 
the contractor to fix these issues, after multiple deficiencies 
interrupted production, officials noted they are confident that the 
Coast Guard has received value from this warranty. The Coast Guard 
plans to use these strategies when purchasing the Offshore Patrol 
Cutter. 

Operational Testing: 

DHS and Coast Guard acquisition guidelines provide that representative 
units of major acquisition assets should be operationally tested by an 
independent test agency before they are approved for full-rate 
production. The Coast Guard uses the Navy's Commander Operational Test 
and Evaluation Force (COTF) to conduct operational tests and other 
evaluations for its major acquisition assets. COTF serves as an 
independent evaluator of an asset's capabilities and has experience 
testing Navy assets. Operational testing characterizes the performance 
of an asset during a discrete period of time but testers may also use 
actual mission performance data when available. In conducting 
operational testing, COTF evaluates an asset's operational 
effectiveness and suitability: 

* For operational effectiveness, testers determine whether or not an 
asset can meet its missions. 

* For operational suitability, testers determine whether or not the 
agency can logistically support the asset to an acceptable standard, 
such as having the asset available for operations 80 percent of the 
year. 

According to DHS and Coast Guard acquisition guidance, results of 
operational tests are used to evaluate the degree to which the 
capability or system being acquired meets its requirements and is able 
to operate in its intended environment, both before and often after 
full-rate production commences. 

In addition to verifying that an asset is operationally effective and 
suitable, operational testing also tests key performance parameters, 
which are the capabilities considered essential for mission success. 
For example, a key performance parameter for the Fast Response Cutter 
is being able to reach a top speed of at least 28 knots. According to 
DHS and Coast Guard acquisition guidance, when programs fail to meet 
key performance parameters, program managers are required to file 
breach memorandums stating that the program failed to demonstrate the 
required performance threshold. Program managers are also required to 
formally notify Coast Guard leadership, DHS, and certain congressional 
committees and file a remediation plan within 30 days that proposes 
corrective actions to mitigate the issues that resulted in the breach. 
Within 90 days of filing the breach notification the program should 
have accomplished one of the following three actions: (1) re-validate 
the original baseline parameters, (2) have a new baseline approved 
that revises the parameters that were breached, or (3) conduct a 
program review that evaluates the proposed baseline revisions and 
makes recommendations to the acquisition decision authority. 

Operators Extol New Assets' Performance Compared to Aging 
Counterparts, but These Assets Have Yet to Meet All Key Requirements: 

The Coast Guard's new asset classes that we reviewed--the National 
Security Cutter, Fast Response Cutter, HC-144, and the C4ISR 
information technology system--are generally demonstrating improved 
mission performance over the assets they are replacing, according to 
Coast Guard officials who operate these assets. For example, these new 
assets have greater fuel and food capacity, automation, and handling/ 
sea-keeping, all of which increase endurance and effectiveness. 
[Footnote 9] However, the Coast Guard has not been able to prove that 
assets meet key requirements through operational testing. Of these 
four newly fielded asset classes, the Fast Response Cutter and the HC-
144 completed initial operational testing, but did not successfully 
demonstrate many key requirements during these tests. For example, the 
Fast Response Cutter did not meet its operational availability 
requirement due to a key engine part that failed during testing. DHS 
and the Coast Guard approved both assets for full-rate production 
noting planned improvements, but DHS and Coast Guard acquisition 
guidance is not clear as to when a program needs to meet minimum 
performance standards. For example, the guidance does not specify 
whether the performance standards must be met before entering full-
rate production. The National Security Cutter and C4ISR programs have 
not completed operational testing. The Coast Guard recently conducted 
testing on the National Security Cutter although seven of eight 
vessels are completed or currently under construction. Based on early 
assessments and mission performance of the first three National 
Security Cutters, the Coast Guard has determined that design changes 
costing at least $140 million are necessary to meet requirements. 
Lastly, due to performance, maintenance, and obsolescence issues, the 
Coast Guard is replacing its initial C4ISR software, which cost about 
$413 million to develop and field, on the National Security Cutter, HC-
144, and HC-130J. 

Operators Report That New Assets Have Improved the Coast Guard's 
Capabilities Compared to Legacy Assets: 

Coast Guard operators and commanding officers in several locations 
told us that the National Security Cutter, Fast Response Cutter, and 
HC-144 are performing well during missions and are an improvement over 
the vessels and aircraft they are replacing. Operators primarily 
attribute the performance improvements to better endurance and 
communication capabilities, which help to position and keep these 
assets in high threat areas. Specifically, these new assets have 
greater fuel capacity and efficiency, engine room and boat launch 
automation, handling/sea-keeping, and food capacity, all of which 
increase endurance and effectiveness. Operators stated that these new 
assets, using information technology systems, can also share pictures 
and locations of vessels, and communicate more frequently and 
accurately with shore-based operational commanders than the legacy 
vessels being replaced. For example, operators said they now use chat 
rooms on secure networks in addition to radios. These chat rooms 
improve communication because multiple parties can communicate at the 
same time and messages remain available on the screen for reference. 
Figure 1 below compares endurance-related capabilities of the National 
Security Cutter, Fast Response Cutter, and HC-144 with the assets they 
are replacing. 

Figure 1: Planned Endurance-Related Capabilities of New Coast Guard 
Assets Compared with Assets They Are Replacing: 

[Refer to PDF for image: 6 illustrations] 

National Security Cutter (new): 
Endurance (without refueling): 60 days; 
Range (nautical miles): 12,000; 
Seakeeping: All operations in sea state: 5 of 6. 

compared to: 

High Endurance Cutter (aged): 
Endurance (without refueling): 45 days; 
Range (nautical miles)[A]: 9,600; 
Seakeeping: All operations in sea state: 5. 

Fast Response Cutter (new): 
Endurance (without refueling): 5–7 days[B]; 
Range (nautical miles): 2,500; 
Seakeeping: All operations in sea state: 4 of 5. 

compared to: 

110' Island Class (aged): 
Endurance (without refueling): 5 days; 
Range (nautical miles)[A]: 1,900; 
Seakeeping: All operations in sea state: 4. 

HC-144 (new): 
Endurance (without refueling): maximum flight time of 11 hours; 
Range (nautical miles)[A]: 1,900. 

compared to: 

HU-25 (aged): 
Endurance (without refueling): maximum flight time of 4 hours; 
Range (nautical miles)[A]: 1,400. 

Source: GAO analysis of Coast Guard data (data); ArtExplosion (images). 

[A] According to the Coast Guard, High Endurance Cutters have a range 
of 9,600 nautical miles under normal circumstances. The High Endurance 
Cutters can achieve a 14,000 nautical mile range if they ballast their 
fuel tanks once the tanks are depleted, a procedure that is rarely 
undertaken. 

[B] The seakeeping parameter for the National Security Cutter as well 
as the seakeeping and endurance values for the Fast Response Cutter 
are expressed in terms of threshold and objective values. The Coast 
Guard has yet to fully test the new assets. 

[End of figure] 

According to operators of the National Security Cutter and the Fast 
Response Cutter, other new capabilities are also increasing 
operational effectiveness. For example, the Fast Response Cutter has a 
stern launch and recovery ramp--a space at the end of the vessel that 
stores and deploys the cutter's small boat and is open to the water. 
Using this ramp, according to operators, they launch the cutter's 
small boat in 10 to 15 seconds while the ship is actively pursuing a 
target. By comparison, the legacy 110' patrol boat requires a 
significant number of personnel to launch the cutter's small boat 
using a crane attached to the center of the vessel--a complex process 
that takes significantly longer and has potential safety risks. The 
National Security Cutter also has a stern launch ramp, which, in 
addition to launching and recovering small boats, was used by the 
ship's crew to hold a seized boat while they dismantled it to find 
drugs hidden in hard-to-reach compartments. In addition, operators 
told us that the larger flight deck on the National Security Cutter 
allows the Coast Guard to more safely operate the helicopter in 
rougher seas than the legacy vessel and, based upon early 
demonstrations, conduct unmanned aircraft system operations in 
conjunction with the helicopter.[Footnote 10] These and other 
capability improvements allow Coast Guard operators to more 
effectively accomplish their missions. 

To date, the improved capabilities of the four newly fielded assets 
have led to mission-related successes, according to Coast Guard asset 
commanders. For example, officials from Air Station Miami reported 
that since they began regularly operating the HC-144 in fiscal year 
2011, the aircraft has had a significant role in improving the 
effectiveness of the Coast Guard's counterdrug and alien migrant 
interdiction operations in this area. In addition, one National 
Security Cutter completed a 160-day deployment in fiscal year 2013 
during which it performed 6 drug interdictions totaling 570 kilograms 
of cocaine. Cutter officers stated that the ship's intelligence 
capabilities and the small unmanned aircraft system, which are both 
new capabilities that are not on the 378' High Endurance Cutter, were 
crucial to these drug interdictions. In addition, Coast Guard 
operators stated that the ability to interoperate with foreign navies 
during joint exercises was greatly enhanced by the communication 
features on the National Security Cutter. 

Guidance Unclear As to When Minimum Performance Requirements Must be 
Demonstrated: 

DHS approved the Fast Response Cutter and HC-144 for full-rate 
production in September 2013 and October 2012, respectively. However, 
neither asset met all key requirements during initial operational 
testing. The Fast Response Cutter partially met one of six key 
requirements while the HC-144 met or partially met four of seven. The 
Fast Response Cutter was found to be operationally effective (with the 
exception of its cutter boat) though not operationally suitable, and 
the HC-144 was found to be operationally effective and suitable. As we 
have previously found for Department of Defense (DOD) programs, 
continuing with full-rate production before ensuring that assets meet 
key requirements risks replicating problems in each new asset until 
such problems are corrected.[Footnote 11] DHS officials stated that 
they approved both assets for full-rate production because the 
programs had plans in place to address most major issues identified 
during testing, such as supplying the Fast Response Cutter with a 
small boat developed for the National Security Cutter. However, DHS 
and Coast Guard acquisition guidance are not clear regarding when the 
minimum performance standards should be met, such as prior to entering 
full-rate production. For example, DHS and Coast Guard guidance 
provide that the Coast Guard should determine if the capability meets 
the established minimum performance standards, but do not specify when 
this determination should be made. By comparison, DOD acquisition 
guidance requires that specific minimum performance standards, which 
are defined at the time assets are approved for system development, be 
met prior to entering full-rate production. 

In addition, DHS and Coast Guard acquisition guidance do not clearly 
specify how agency officials determine when a breach occurs and what 
triggers the need for a program manager to submit a performance breach 
memo. According to DHS and Coast Guard acquisition guidance, when 
programs fail to meet key performance parameters, program managers are 
required to file breach memorandums stating that the program did not 
demonstrate the required capability. Even though threshold key 
performance parameters on the HC-144 and Fast Response Cutter were not 
met during operational testing, the Coast Guard did not report that a 
breach had occurred. Acquisition guidance is unclear as to whether or 
not failing to meet key requirements during operational testing 
constitutes a breach. According to Coast Guard officials, if the Coast 
Guard plans to re-test or re-design a deficiency in order to meet the 
threshold value, then a breach has not yet occurred. For example, the 
Fast Response Cutter small boat did not meet the threshold seakeeping 
requirement, but a new cutter small boat has since been tested on its 
own and fielded to all Fast Response Cutters. The Coast Guard plans to 
test this new cutter small boat with the Fast Response Cutter during 
follow on testing. Program officials are confident that the cutter's 
new small boat meets this requirement and that--therefore--a breach 
has not occurred. DHS acquisition guidance specifies the performance 
criteria used to determine whether or not a breach has occurred, but 
does not identify a triggering event for determining when a breach 
occurs. DHS's Program Accountability and Risk Management officials 
stated that a program breach is not necessarily related to its 
performance during initial operational testing, which they state is a 
snapshot of a single asset's performance during a defined test period. 
Without clear acquisition guidance, it is difficult to determine when 
or by what measure an asset has breached the threshold values of its 
key performance parameters and--therefore--when to notify DHS and 
certain congressional committees. 

Specific information on testing outcomes for each asset follows. 

Fast Response Cutter: 

COTF determined in July 2013 that the Fast Response Cutter, without 
the cutter's small boat, is operationally effective--meaning that 
testers determined that the asset enables mission success. The 
cutter's small boat was determined to not be seaworthy in minimally 
acceptable sea conditions and--therefore--could not support the 
cutter's mission set. Further, COTF determined that the Fast Response 
Cutter is not operationally suitable because a key engine part failed, 
which lowered the amount of time the ship was available for missions 
to an unacceptable level. Despite the mixed test results, COTF and DHS 
testers as well as Coast Guard program officials all agree that the 
Fast Response Cutter is a capable vessel. Ultimately, COTF recommended 
that the Coast Guard proceed to field the vessel, but also recommended 
that the issues with the cutter's small boat be remedied expeditiously 
and that follow-on operational testing be conducted once corrective 
actions have been implemented. Since the test, the Coast Guard has 
delivered a new small boat that meets the Fast Response Cutter's needs 
and determined that the engine part failure was an isolated event. 

The Navy also examined the extent to which the Fast Response Cutter 
meets key requirements. The test demonstrated that it partially met 
only one out of its six key requirements; the other five requirements 
did not meet minimum performance levels or were not tested. Table 2 
displays each key performance parameter for the Fast Response Cutter, 
the test results, and a discussion of these results. 

Table 2: Key Performance Parameter Test Results for the Fast Response 
Cutter: 

Key performance parameter (threshold requirement): Top speed (28 
knots); 
Was KPP tested? No; 
KPP met? N/A; 
Test result: N/A; 
Discussion: Speed was not tested during initial operational testing 
due to a fuel oil leak. Speed has been assessed during preliminary 
acceptance trials and the vessel has reached top speed following the 
replacement of the original propeller. Since this change, all 9 FRCs 
have demonstrated at least 28 knots during other test events. 

Key performance parameter (threshold requirement): Fuel endurance (5 
Days); 
Was KPP tested? No; 
KPP met? N/A; 
Test result: N/A; 
Discussion: Not assessed due to inaccurate fuel level indicators. 

Key performance parameter (threshold requirement): Independent 
operations duration (5 days); 
Was KPP tested? No; 
KPP met? N/A; 
Test result: N/A; 
Discussion: The Coast Guard's ability to independently operate the 
vessel was not tested. The cutter was still under warranty; 
thus, all maintenance was the responsibility of the shipbuilder at the 
time of the test. 

Key performance parameter (threshold requirement): Sea-keeping 
(conduct all operations in sea state 4); 
Was KPP tested? Yes; 
KPP met? No; 
Test result: The cutter small boat could not conduct operations in sea 
state 4; 
Discussion: Since the test, the Coast Guard has purchased new cutter 
small boats that are performing well according to crews. These boats 
have gone through their own testing and will be tested with the Fast 
Response Cutter during follow-on operational testing, which is 
scheduled to commence by the end of fiscal year 2015. 

Key performance parameter (threshold requirement): Interoperability 
(share information with internal and external partners); 
Was KPP tested? Partial; 
KPP met? Partial; 
Test result: Radios and some data transfers were successfully tested; 
Discussion: Communication with operational headquarters, intelligence 
units, external DHS, DOD and local assets, as well as other shore 
installations, were not tested. 

Key performance parameter (threshold requirement): Operational 
availability; 
(85 percent); 
Was KPP tested? Yes; 
KPP met? No; 
Test result: 47 percent; 
Discussion: A key engine part failed during testing and it took 11 
days to receive the part and conduct repairs, resulting in significant 
downtime during testing. Thus, the ship's availability to conduct 
missions during the test period was limited. Since testing was 
completed the FRC has experienced additional engine issues, including 
at least two generations of faulty cylinder head gaskets. 

Source: GAO analysis of Navy and Coast Guard data. 

[End of table] 

The Coast Guard proactively sought to test the Fast Response Cutter 
early in the acquisition process, but early testing limited the 
ability to fully examine the vessel. For example, the Coast Guard did 
not test the top speed of the vessel due to a fuel oil leak. As noted 
above, DHS approved the Fast Response Cutter for full-rate production, 
but directed the program to develop corrections for the issues 
identified during operational testing and to verify those corrections 
through follow-on operational testing by the end of fiscal year 2015. 

Maritime Patrol Aircraft (HC-144): 

In July 2012, COTF determined the HC-144 to be operationally effective 
and operationally suitable and recommended that the Coast Guard 
continue to field the aircraft. Even though testers expressed 
confidence in the aircraft to meet its missions, the test also showed 
that the HC-144 achieved--or partially achieved--four out of seven key 
requirements. Table 3 contains each key performance parameter for the 
HC-144, the test results, and a discussion of these results. 

Table 3: Key Performance Parameter Test Results for the HC-144 
Maritime Patrol Aircraft: 

Key performance parameter (threshold requirement): Search and rescue 
(arrive on scene 300 nautical miles away within 120 minutes of 
notification); 
Was KPP tested? Yes; 
KPP met? No; 
Test result: 133.8 minutes; 
Discussion: Coast Guard officials stated that they have amended 
operational tactics, such as prepositioning the plane for quicker 
launch. 

Key performance parameter (threshold requirement): Availability (71 
percent); 
Was KPP tested? Yes; 
KPP met? No; 
Test result: 65.1 percent; 
Discussion: Due to a lack of spare parts, crews stated they have been 
forced to take parts from operational aircraft in order to keep other 
aircraft operating. The Coast Guard has recently taken steps to 
improve this problem, such as creating a parts catalog with the 
primary contractor, but the results are not yet known. 

Key performance parameter (threshold requirement): Detection (main 
detection target is 75 percent of close targets); 
Was KPP tested? Yes; 
KPP met? No; 
Test result: 62.5 percent probability of detection; 
Discussion: We have previously reported on the problems with the 
mission system.[A] The Coast Guard is planning to replace the mission 
system with a system used on Navy and Customs and Border Protection 
aircraft. The Coast Guard has accepted this limitation based upon 
other available sensors. 

Key performance parameter (threshold requirement): On scene time 
(minimum 3 hours); 
Was KPP tested? Yes; 
KPP met? Yes; 
Test result: 3.95 hours; 
Discussion: The HC-144 met the requirement. 

Key performance parameter (threshold requirement): Transportation 
(load and unload a standard pallet with mission system on board); 
Was KPP tested? Yes; 
KPP met? Partial; 
Test result: The HC-144 met range and passenger thresholds; 
Discussion: The HC-144 met range and passenger thresholds. However, 
the maximum cargo and passenger loads were not tested because fully 
testing this parameter was not in the test plan. 

Key performance parameter (threshold requirement): Clean wing low 
altitude patrol speed (maximum of 180 knots when flying below 1,000 
feet); 
Was KPP tested? Yes; 
KPP met? Yes; 
Test result: 162.4 knots; 
Discussion: The HC-144 met the requirement. 

Key performance parameter (threshold requirement): Interoperability 
(share information with internal and external partners); 
Was KPP tested? Partial; 
KPP met? Partial; 
Test result: Radios and other tools were successful but the mission 
system was inconsistent; 
Discussion: The HC-144 was able to regularly communicate with other 
aircraft, surface vessels, and shore installations using multiple 
frequencies. However, the ability to transmit data from the mission 
system to other Coast Guard assets and facilities was hindered by a 
satellite receiver that operated inconsistently. 

Source: GAO analysis of Navy and Coast Guard data. 

[A] GAO, Coast Guard: Action Needed as Approved Deepwater Program 
Remains Unachievable, [hyperlink, 
http://www.gao.gov/products/GAO-11-743] (Washington, D.C.: July 28, 
2011). 

[End of table] 

The Coast Guard did not test all key performance parameters, but is 
pursuing corrections following approval for production. The HC-144 did 
not meet the minimum performance level for detecting targets at sea 
with its radar and C4ISR mission system. While the mission system did 
not meet requirements, the aircraft was considered operationally 
effective because operators can supplement these systems by looking 
out of the windows of the aircraft. DHS approved the HC-144 for full-
rate production, but directed the program to develop a plan to correct 
deficiencies. Coast Guard program officials told us that they are 
addressing the deficiencies discovered through the test as funding 
becomes available and through changes in operational tactics. 
According to the officials, the HC-144 program will likely be 
truncated because the Coast Guard is receiving similar assets (C-27 
aircraft) from the Air Force at no cost, which would render the 
production decision of the HC-144 inconsequential. 

National Security Cutter: 

The Coast Guard has some knowledge about the performance of the 
National Security Cutter, gained through operational deployments and 
preliminary test events, and the field portion of operational testing 
was recently conducted. The Coast Guard has been operating the vessel 
since 2008, conducted a preliminary operational test in 2011, and has 
received certifications to fully operate and maintain helicopters as 
well as, according to officials, to use the cutter's information 
technology systems on protected networks. In addition, Coast Guard 
program officials stated that the National Security Cutter has 
demonstrated most of its key performance parameters through a myriad 
of non-operational tests and assessments, but a few key performance 
parameters, such as those relating to the endurance of the vessel and 
its self-defense systems have yet to be assessed. Verification of an 
asset's ability prior to operational testing may be beneficial, but, 
as we have previously found, only operational testing can ensure that 
an asset is ready to meet its missions.[Footnote 12] 

Prior to testing, the Coast Guard encountered several issues that 
require retrofits or design changes to meet mission needs based upon 
operations, certifications, and non-operational testing. The total 
cost of these changes is not yet known, but changes identified to date 
have totaled approximately $140 million, about one-third of the 
production cost of a single National Security Cutter. The Coast Guard 
must pay for all of these and future changes due to the contract terms 
under which the first three ships were constructed and because the 
warranty on the remaining ships does not protect the Coast Guard 
against defects costing more than $1 million. Table 4 lists the 
retrofits and design changes costing more than $1 million. The table 
does not include all changes because the Coast Guard did not have data 
for some of the modifications. In addition to the $140 million in 
identified changes, the Coast Guard has established a program to 
supply the National Security Cutter with cutter small boats for an 
additional $52.1 million because the small boats originally planned to 
be delivered with the vessel did not meet requirements. 

Table 4: Retrofits and Design Changes on the National Security Cutter 
Class Costing over $1 Million as of December 2013: 

Retrofits and design changes: Primary information system replacement; 
Cost: $88.5 million. 

Retrofits and design changes: Structural enhancements; 
Cost: to be determined[A]. 

Retrofits and design changes: Remove Aircraft Ship Integrated Secure 
and Traverse tracks in flight deck[B]; 
Cost: to be determined. 

Retrofits and design changes: Gantry crane that aids in launching 
small boats from stern ramp; 
Cost: $31 million. 

Retrofits and design changes: Side davit crane for small boat 
operations; 
Cost: $12.5 million. 

Retrofits and design changes: Two ammunition hoists; 
Cost: $6.3 million. 

Retrofits and design changes: Breathing apparatus replacement; 
Cost: $1.6 million. 

Retrofits and design changes: Total cost; 
Cost: $140 million[C]. 

Source: GAO presentation of Coast Guard data. 

Notes: The Coast Guard reported these numbers for all eight hulls. 
However, for some items, such as the information system replacement, 
the costs primarily cover retrofitting some or all of the first four 
hulls. 

[A] The work package is being developed and, according to program 
officials, initial estimates are about $19 million per vessel. 

[B] In January 2011, Coast Guard officials canceled the Aircraft Ship 
Integrated Secure and Traverse--a system intended to automate the 
procedure to land, lock down, and move the HH-65 helicopter from the 
deck to the hangar on the National Security Cutter--after significant 
deficiencies were identified during testing conducted by the U.S. 
Naval Air Warfare Center. The Coast Guard invested approximately $27 
million to install the system on three National Security Cutters, 
including putting tracks in the flight deck that must now be removed. 

[C] Several funding accounts, including acquisition funding and 
operations and maintenance funding, are being used for these 
corrections. 

[End of table] 

Additional changes may be needed because the Coast Guard has not fully 
validated the capabilities of the National Security Cutter, though 
seven vessels have been delivered or are in production. This situation 
could result in the Coast Guard having to spend even more money in the 
future, beyond the current changes, to ensure the National Security 
Cutter fleet meets requirements and is logistically supportable. For 
example, the cutter is experiencing problems operating in all intended 
environments. The National Security Cutter requirements document 
states that the cutter will conduct assigned missions in a full 
spectrum of climate and maritime weather conditions, to include 
tropical, dry, temperate, and arctic climates. This document adds that 
although the National Security Cutter will operate in regions in which 
ice is frequently encountered, it will not have an ice-breaking 
mission. However, Coast Guard engineering reports from December 2012 
discuss problems operating in both warm and cold climates. These 
reports discuss several warm weather problems, including cooling 
system failures, excessive condensation forming "considerable" puddles 
on the deck of the ship, and limited redundancy in its air 
conditioning system--which, among other things, prevents the use of 
information technology systems when the air conditioning system needs 
to be serviced or repaired. In addition, according to operational 
reports, during a recent deployment, the Commanding Officer of a 
National Security Cutter had to impose speed restrictions on the 
vessel because of engine overheating when the seawater temperature was 
greater than 77 degrees. Cold climate issues include the National 
Security Cutter not having heaters to keep oil and other fluids warm 
during operations in cold climates, such as the arctic. Further, Coast 
Guard operators state that operating near ice must be done with 
extreme caution since the ice can move quickly and can "spell 
disaster" if the National Security Cutter comes in contact with it. 
Senior Coast Guard officials acknowledged that there are issues to 
address and stated that the Coast Guard has not yet determined what, 
if any, fixes are necessary and that it depends on where the cutter 
ultimately operates. 

C4ISR Information Technology Systems: 

The Coast Guard does not plan to operationally test the C4ISR system's 
key performance parameters. The Coast Guard initially planned to test 
the C4ISR system separately from the operational testing of its planes 
and vessels, such as the HC-144 and Fast Response Cutter. Coast Guard 
officials then decided to test the C4ISR system in conjunction with 
the planes and vessels to save money and avoid duplication. However, 
the C4ISR system was not specifically evaluated during the HC-144 and 
Fast Response Cutter tests because testing the effectiveness and 
suitability of the C4ISR system was not fully integrated into the 
assets' test plans. For example, the HC-144 was unable to meet its key 
requirement for detection, which uses the C4ISR software in 
conjunction with the HC-144's radar and other sensors. In addition, 
COTF found that the HC-144's ability to detect and share target data 
was cumbersome and time-consuming.[Footnote 13] These results were not 
evaluated against the C4ISR system's requirements. While testing the 
C4ISR system at the same time as the assets can work, this strategy is 
not consistent with Coast Guard acquisition guidance if the C4ISR 
system's key performance parameters are not tested. Acquisition 
guidance states that the Coast Guard should test the C4ISR system, as 
it does with all major acquisitions, to ensure it is operationally 
effective, operationally suitable, and meets its basic requirements. 
By not testing the system, the Coast Guard has no assurance that it is 
purchasing a system that meets its operational needs. In responding to 
a draft of this report, the Coast Guard stated that it now plans on 
testing the C4ISR system's key performance parameters during follow on 
testing for the National Security Cutter. 

The Coast Guard has also encountered several issues with the C4ISR 
system that have required significant and costly changes, including 
replacing the original system. The original C4ISR system, which cost 
$413 million to develop and field, was designed and built as a tightly 
integrated system bundling large commercial and government software 
programs with contractor-proprietary software, which made it difficult 
and costly to maintain--primarily due to its unique characteristics 
and large size. For example, according to program officials, the Coast 
Guard relied on the contractor to conduct even basic system updates, 
which required new software code because of how the system was 
integrated. 

As a result, in 2010, the Coast Guard began replacing the C4ISR 
software in two steps. First, to address immediate issues, the Coast 
Guard separated the weapons and command and control/navigation 
portions of the software but maintained the ability to share data 
between these portions of the system. Second, the Coast Guard has 
developed and is now installing a new software package that shares 
data between proven systems, which makes the system easier to 
maintain. For example, the communication/navigation system is largely 
based upon the Navy's Global Command and Control System, a long-
standing system maintained by DOD. In addition, the combat system is 
adapted from the Navy's Aegis system. While the previous version of 
the C4ISR system also contained this software, the Coast Guard's new 
configuration keeps these systems independent to improve performance 
and maintenance, while still allowing data to be passed back and forth 
between the software packages within the system. 

The Coast Guard has spent nearly $2 million to develop this new 
system, called Seawatch, which will have to be further developed for 
each asset on which it is fielded. For example, it will cost an 
additional $88.5 million in acquisition funds to purchase the software 
and hardware needed to field the system on the National Security 
Cutters. In addition, the Coast Guard is replacing the mission systems 
on the HC-144 and HC-130J airframes with a proven Navy system to 
address obsolescence, maintenance, and performance issues. Initial 
cost estimates are being developed for this project. 

Cost Increases Are Consuming Funding and Affordability Issues Have Not 
Been Addressed or Accurately Represented: 

As acquisition program costs increase across the portfolio, consuming 
significant amounts of funding, the Coast Guard is farther from 
fielding its planned fleet today than it was in 2009, in terms of the 
money needed to finish these programs. In 2009, we found that the 
Coast Guard needed $18.2 billion to field its original baseline, 
[Footnote 14] but it now needs $20.7 billion to finish fielding these 
same assets. For example, the estimated funding needed to complete the 
National Security Cutter increased by $2.2 billion since original 
estimates. Given these cost increases and funding constraints, the 
Coast Guard and key stakeholders have acknowledged that the Coast 
Guard's acquisition portfolio is not affordable but, thus far, efforts 
to address this issue have not led to the significant trade-off 
decisions needed to improve its affordability. To balance its 
portfolio, Coast Guard budget officials stated that they use the 5-
year Capital Investment Plan. However, this plan presents data in a 
manner that makes the portfolio appear more affordable than it really 
is. For example, in the Fiscal Years 2014 through 2018 Capital 
Investment Plan, the Coast Guard proposed purchasing two Fast Response 
Cutters per year, instead of four or six per year, but did not capture 
the up to $800 million in total cost increases associated with this 
reduced quantity. 

Cost Increases Are Consuming Funding: 

As program cost increases consume significant amounts of funding, the 
Coast Guard is farther from fielding its planned fleet today than it 
was in 2009, in terms of the money needed to finish these programs. 
Figure 2 shows the total cost of and cost to complete the Coast 
Guard's original 2007 baseline in 2009 and 2014. 

Figure 2: The Total Cost of and Cost to Complete the Coast Guard's 
Original 2007 Baseline in 2009 and 2014: 

[Refer to PDF for image: illustration] 

2009 (in current/then year dollars): 
Total cost of portfolio: $24.2 billion; 
Cost to complete original 2007 baseline: $18.2 billion. 

2014 (in current/then year dollars): 
Total cost of same assets: $30.5 billion; 
Cost to complete same assets: $20.7 billion. 

Source: GAO analysis of Coast Guard data. 

Note: In current/then-year dollars. This means that numbers have not 
been normalized for inflation. 

[End of figure] 

This is the result of $11.3 billion in cost increases realized since 
2007 for these programs, according to the most recent program 
baselines. For example, the Coast Guard experienced a $2.2 billion 
cost increase to the National Security Cutter project since the 2007 
estimate. In addition, the anticipated cost to complete the Offshore 
Patrol Cutter has increased by $4 billion since 2007 and, therefore, 
will also consume a significant portion of future funding. Since our 
last review, the Coast Guard, in conjunction with DHS, has updated 
many of its cost estimates.[Footnote 15] Senior Coast Guard 
acquisition officials told us that many of the cost increases are due 
to changes from preliminary initial estimates and that they expect to 
meet their current cost estimates. However, the Coast Guard has yet to 
construct the largest asset in the portfolio--the Offshore Patrol 
Cutter--and if the planned costs for this program increase, 
difficulties in executing the portfolio as planned will be further 
exacerbated. 

Decision Makers Have Yet to Address Ongoing Affordability Concerns: 

Coast Guard, DHS, and OMB officials have acknowledged that the Coast 
Guard cannot afford to recapitalize and modernize its assets in 
accordance with the current plan at current funding levels. According 
to budget documents, Coast Guard acquisition funding levels have been 
about $1.5 billion for each of the past 5 years and the President's 
budget requests $1.1 billion for fiscal year 2015. At the same time, 
DHS is struggling to match acquisition needs with available resources 
across all of its component agencies, including the Coast Guard. Coast 
Guard acquisitions comprise about 16 percent of the total DHS 
acquisition budget. In a December 2012 memo signed by the Chief 
Financial Officer, DHS estimated that funding requirements for all of 
its major acquisitions exceed available resources by 30 percent. 
[Footnote 16] OMB officials have also told us that they recognize that 
the Coast Guard's acquisition portfolio is not affordable at current 
funding levels given the fiscal constraints faced by all federal 
agencies. 

Efforts are underway to address this issue, but, so far, these efforts 
have not led to the significant trade-off decisions needed to improve 
the affordability of the Coast Guard's portfolio. A senior Coast Guard 
official recently stated that external reviews of the Coast Guard's 
planned acquisitions have been conducted by DHS and White House 
organizations, such as the President's Policy Councils, and, often, 
additional demand for Coast Guard missions is identified, rather than 
deciding upon reductions. OMB officials stated that these reviews are 
not conducted in conjunction with budget policy and do not incorporate 
capital investment strategies. Examples of the steps OMB, DHS, and the 
Coast Guard have taken to address the affordability of the Coast 
Guard's acquisition portfolio are described below: 

* OMB conducts annual performance and mission based reviews of the 
Coast Guard, in conjunction with other White House staff, as part of 
the annual budget process. OMB officials told us that there has been 
little progress in efforts to identify the trade-offs that would make 
the recapitalization portfolio more affordable, such as adjusting the 
quantities or capabilities of assets needed to meet mission needs. The 
officials stated that reviews regarding the fiscal year 2015 budget 
process were focused heavily on the sequestration funding caps and, 
therefore, did not focus on long term issues. 

* DHS has conducted two annual Coast Guard acquisition portfolio 
reviews, but according to DHS program reviewers, the most recent 
review--scheduled for September 2013--was canceled as a result of the 
lapse in federal government appropriations. According to a DHS 
official who led the reviews, the earlier reviews provided updates to 
DHS leadership on the status of the Coast Guard's acquisitions and 
efforts to address affordability, but no trade-off decisions were made 
to reduce planned quantity or capability. DHS officials told us that 
the Secretary recently directed a review of the Coast Guard's 
acquisition portfolio over the next 20 years. We have previously 
reported that DHS has taken steps to address affordability issues at 
acquisition decision events, but it has rarely directed affordability 
trade-offs.[Footnote 17] In the case of the Fast Response Cutter, DHS 
approved the vessel for full-rate production in September 2013 even 
while acknowledging that the cutter faces affordability challenges and 
that the program did not meet DHS's requirement to verify that 
sufficient funding is available. DHS has proposed two consecutive 
budgets, one before and one after the production decision, with a 
funding level for the Fast Response Cutter that supports purchasing 
two cutters per year rather than the four cutters per year that form 
the basis for the cost and schedule estimates in the asset's 
acquisition program baseline. 

* We have previously reported on the Coast Guard's efforts to address 
affordability and recommended that the Coast Guard develop a plan to 
match needs and resources.[Footnote 18] In response to our 
recommendation in September 2012, DHS stated that the Coast Guard is 
developing a process to make trade-off decisions that will result in a 
portfolio that contains a balanced mix of assets that meets mission 
needs within affordability constraints. However, the Coast Guard has 
yet to document how this new process will work and it is not clear who 
in the Coast Guard has the authority to make trade-off decisions. 
Officials who support the Executive Oversight Council stated that the 
goal is to better inform Council members so that they understand the 
full consequences of annual budget decisions. These officials told us 
that they are striving to establish this process in time to inform the 
fiscal year 2016 budget. While the Coast Guard continues to concur 
with our previous recommendation that the Executive Oversight Council 
should be closely involved in making trade-off decisions to balance 
the portfolio, the Coast Guard could not provide documentation that 
this group has made any decisions to balance needs and funding as of 
May 2013. In addition, Coast Guard budget officials told us that the 
Executive Oversight Council does not have full authority to make these 
decisions, as final decisions are made by the Commandant, in 
conjunction with the Investment Review Board. 

Capital Investment Plan Does Not Capture the Full Effect of Annual 
Budget Decisions: 

The Coast Guard's Fiscal Years 2014 through 2018 Capital Investment 
Plan complies with the law specifying its contents.[Footnote 19] Each 
year, the Coast Guard is required to submit a 5-year Capital 
Investment Plan to certain congressional committees when the 
President's budget is submitted. This plan is required to include, 
among other things, the appropriations in the current budget, 
projected funding levels for each of the next five fiscal years, and 
estimated total cost and schedule in current program baselines. To 
date, the Coast Guard has not submitted the Fiscal Years 2015 through 
2019 plan, which was due in conjunction with the President's Budget 
delivered in March 2014. 

The law does not require the Coast Guard to include total cost of its 
projects at planned funding levels. In the Fiscal Years 2014 through 
2018 Capital Investment Plan, cost and schedule totals did not match 
the funding levels presented for many programs. For example, the plan 
proposed lowering the Fast Response Cutter procurement to two per year 
but still showed the total cost and schedule estimates for purchasing 
three or six per year--suggesting that this reduced quantity would 
have no effect on the program's total cost and schedule. Given that 
decreasing the quantity purchased per year would increase the unit and 
total acquisition cost, the Coast Guard estimated that the decision to 
order fewer ships will likely add $600 million to $800 million in cost 
and 5 years to the cutter's final delivery date, but this was absent 
from the plan. Coast Guard officials stated that they are required to 
report the assets' cost and schedule per the acquisition program 
baseline. However, these officials also acknowledged that this plan 
does not consistently reflect current cost and schedule estimates or 
the effects of the trade-offs that are made as part of the annual 
budget cycle. Reporting total cost and delivery dates that do not 
reflect funding levels could lead to incorrect conclusions about the 
effect of these decisions on the program's total cost and schedule. 
That is, Congress may conclude that the Coast Guard's acquisition 
portfolio is more affordable than it actually is. 

Future Capabilities Uncertain as Coast Guard Makes Annual Budget 
Decisions; Alternatives Could Improve Outlook: 

The Coast Guard is repeatedly delaying and reducing its capability 
through its annual budget process, but does not know the extent to 
which its mission needs can be tailored and still achieve desired 
results. Thus, its ability to meet future needs is uncertain. For 
example, the Coast Guard has already experienced a gap in heavy 
icebreaking capability and is falling short of meeting current and 
future major cutter operational hours. These capability gaps may 
persist as funding replacement assets will remain difficult at current 
funding levels. A key indication of this situation is that several 
current and additional acquisitions will have to compete for a small 
percentage of the Coast Guard's acquisition funding between 2018 and 
2032 while the Offshore Patrol Cutter is being built. This asset will 
likely absorb about two-thirds of the Coast Guard's acquisition 
funding during this timeframe. The Coast Guard does not have a long 
term plan that demonstrates how it will maintain today's service level 
and meet identified needs. While making annual budget decisions, the 
Coast Guard is pursuing some cost effective means of providing 
specific capabilities, though it has yet to fully realize potential 
savings. 

Gaps Are Materializing as the Coast Guard Shapes Its Capability 
through the Budget Process: 

As the Coast Guard continues to make decisions through the budget 
process, it is experiencing capability gaps in the following areas: 

* Icebreakers--According to program officials, due to funding 
constraints, the Coast Guard chose not to invest in either of its 
heavy icebreakers as they approached the end of their service lives. 
Thus, both heavy icebreakers were out of service from 2010 to 2013 and 
the Coast Guard could not complete missions, such as resupplying a 
science laboratory in Antarctica. The Coast Guard has recently 
returned one of these heavy icebreakers back to service, but still has 
one fewer heavy icebreaker than it has historically operated and 
several fewer than it needs, according to the Coast Guard's June 2013 
heavy icebreaker mission need statement. 

* River Buoy Tenders--The Coast Guard is also facing a gap in its 
river buoy tender fleet and the Coast Guard has yet to formalize an 
acquisition project to replace this fleet, which is estimated to cost 
over $1.5 billion. 

* Drug Interdiction Performance--The Coast Guard and DHS Inspector 
General recently reported that the Coast Guard was not able to meet 
the target for its drug interdiction mission performance measure for 
four of the last five years because of potential factors including the 
advancing age and deteriorating condition of the Coast Guard's cutter 
fleet. [Footnote 20] For more information, we will be issuing a report 
this spring that discusses the resources provided by the Coast Guard 
for drug interdiction operations. 

* 2013 Major Cutter and Patrol Boat Hours--The Coast Guard is also 
currently experiencing a performance gap in its major cutter and 
patrol boat fleets. The Coast Guard's major cutter fleet--comprised of 
the National Security Cutter and the in-service high and medium 
endurance cutters--must operate 136,620 hours per year to meet its 
missions. In fiscal year 2013, partly due to sequestration, the Coast 
Guard's major cutter fleet operated 99,342 hours--falling 27 percent 
short of its goal. The Coast Guard estimates that it would have been 
6,078 hours short of its needs even if sequestration was not in 
effect. The Coast Guard's patrol boat fleet operated for 178,000 hours 
last year, falling short of its 247,000 hour goal. The Coast Guard 
would have also fallen short of this goal even if sequestration were 
not in effect. 

In addition, there is little room in its budget to deal with 
unexpected developments in operations. For example, in 2012, the 
Commandant wrote about the emerging need for established forces in the 
Arctic, but the Coast Guard's major cutters may need additional 
equipment to operate in these areas. 

The Coast Guard may fall even further below its operational hour goal 
for major cutters as the Offshore Patrol Cutter is being built. The 
Coast Guard has stated that delays in the delivery of the Offshore 
Patrol Cutter will lead to greater operational capacity shortfalls due 
to increased downtime for maintenance and other issues that reduce the 
current medium endurance cutters' operational availability.[Footnote 
21] For example, in 2013, three 210' medium endurance cutters had to 
be put in a dry dock for emergency hull repairs. Coast Guard engineers 
stated that repairs like these are likely to become more frequent as 
these assets age. 

Even after the Coast Guard builds the Offshore Patrol Cutter, it may 
not achieve the 136,620 hour goal. To meet this goal, the Coast Guard 
needs the National Security Cutter and the Offshore Patrol Cutter to 
operate for a total of 4,140 hours each year. The National Security 
Cutter is currently operating 3,330 hours per year and the Coast Guard 
has a plan to increase this to 3,830 per year by fiscal year 2017. 
However, Coast Guard operators have significant concerns about 
maintaining the vessel at this high tempo, primarily due to logistics 
and personnel concerns. According to officials, the Coast Guard is 
still planning to operate the National Security Cutter and Offshore 
Patrol Cutter 4,140 hours per year by using a crew rotation concept. 
We are currently conducting a review of National Security Cutter 
operations, including the status of implementing rotational crewing. 

As the budget process takes the place of a knowledge-based acquisition 
process, the Coast Guard is repeatedly delaying and reducing its 
portfolio on an annual basis to address budget constraints, rather 
than pursuing an affordable set of long-term needs.[Footnote 22] This 
approach puts pressure on future budgets and delays fielding 
capability, which may reduce planned performance. Despite these 
delays, the Coast Guard continues to follow its current plan, but does 
not know the extent to which this plan can be tailored through the 
budget process and still achieve desired results. Thus, the Coast 
Guard does not know what capability it will be able to provide and 
whether or not this capability will meet mission needs. We have 
previously found that by continuing to pursue only a portion of 
planned capability without re-evaluating the portfolio as a whole, the 
Coast Guard further increases the risk that it may not accomplish its 
mission needs.[Footnote 23] According to best practices, agencies 
should implement a knowledge-based acquisition approach to pursue a 
long term set of affordable needs. We have previously found that 
acquisitions that continue without this knowledge frequently 
experience poor outcomes.[Footnote 24] Without such an approach, the 
Coast Guard does not have reasonable assurance that its assets are 
planned to meet established cost, schedule, and performance baselines, 
in turn leading to sound investment decisions.[Footnote 25] 

The Coast Guard Has No Long-Term Plan as Cutter Delays Bring About an 
Era of Continuous Acquisition: 

If funding levels remain constant, several current and additional 
acquisitions will have to compete for a small percentage of the Coast 
Guard's acquisition funding between 2018 and 2032 while the Offshore 
Patrol Cutter is being built. According to current funding levels and 
cost and schedule estimates, the Offshore Patrol Cutter will absorb 
about two-thirds of the Coast Guard's acquisition funding during this 
timeframe. Primarily due to a 14 year delay to the Offshore Patrol 
Cutter and a 10 year delay to the Fast Response Cutter realized since 
2007, the Coast Guard is now in the position of having to continually 
rebuild its assets rather than rapidly modernize as was originally 
planned. Thus, the Coast Guard has a number of significant additional 
programs that will require funding while the Offshore Patrol Cutter, 
Fast Response Cutter, and other assets in the current portfolio are 
still being built. The Coast Guard is in the process of assessing its 
needs in many of these areas. These potential acquisitions fit into 
three categories: 

* Surface Fleet Recapitalization--This project includes conducting a 
service life extension program for the 13 270' medium endurance 
cutters, replacing or extending the Coast Guard's 87' coastal patrol 
boat fleet (73 cutters), and funding other sustainment projects for 
vessels that are in-service, such as the Coast Guard's large fleet of 
river buoy tenders. As discussed earlier, the Coast Guard is also 
looking into additional icebreaker investments beyond the current 
single heavy icebreaker program, as the medium icebreaker will also 
need to be replaced or extended during this period. 

* Aircraft Recapitalization--The primary aircraft need will be 
replacing or extending the MH-60 and MH-65 helicopter fleets, which 
approach a life-limiting milestone between 2022 and 2026. Regardless 
of the future path, significant acquisition dollars will be required 
to maintain annual flight hours for the next 20 years, according to 
Coast Guard program officials. Another significant project, these 
officials added, will be replacing the C4ISR system on the Coast 
Guard's aircraft--some of which need new systems while other systems 
need to be replaced due to obsolescence. According to Coast Guard 
program officials, the prototypes are planned to be completed by the 
end of fiscal year 2016, at which point the new mission systems will 
need funding for production. 

* Additional Costs for New Assets--As with other cutter classes, the 
Fast Response Cutter and the National Security Cutter will need to 
undergo planned repair and maintenance work when the respective fleets 
reach their service life midpoints beginning in 2025 and 2028, 
respectively. The Coast Guard cannot skip these maintenance periods; 
they are needed to overhaul major components because older equipment 
is not supported over a cutter's 30 year service life. In addition, 
the future operational bases from which the Offshore Patrol Cutter 
will operate need an estimated $431 million for upgrades to intended 
home ports. 

The Coast Guard is not currently required to develop a long-term fleet 
modernization plan that considers its current service levels for the 
next 20 years in relation to its expected acquisition funding. Without 
such a plan, the Coast Guard does not have a mechanism to aid in 
matching its requirements and resources. For example, the Coast Guard 
does not know if it can meet its other acquisition needs while the 
Offshore Patrol Cutter is being built, which according to current 
plans will conclude in about 20 years. In addition, as we have 
previously found, the Coast Guard is deferring costs--such as 
purchasing unmanned systems or replacing its Buoy Tender fleet--that 
could lead to an impending spike in the requirement for additional 
funds.[Footnote 26] The Coast Guard has no method in place to capture 
the effects of deferring such costs on the future of the acquisition 
portfolio. 

The Coast Guard's acquisition guidance supports using a long range 
capital planning framework. According to OMB capital planning guidance 
referenced by the Coast Guard's Major Systems Acquisition Manual, each 
agency is encouraged to have a plan that defines its long-term capital 
asset decisions. This plan should include, among other things, (1) an 
analysis of the portfolio of assets already owned by the agency and in 
procurement, (2) the performance gap and capability necessary to 
bridge the old and new assets, and (3) justification for new 
acquisitions proposed for funding. OMB officials stated that they 
support DHS and the Coast Guard conducting a long term review of the 
Coast Guard's acquisitions to assess the capabilities it can afford. 

Examples of other fleet modernization plans include the Navy's annual 
naval vessel construction plan (also known as the Navy's long range 
shipbuilding plan), which reflects the quantity and categories of 
assets that the Navy needs to buy as well as the total number of 
assets in operation for each year. While we have previously noted 
challenges associated with the Navy's plan, we also observed that such 
a plan is beneficial in that it lays out a strategic approach for 
decision making. A long-term plan can enable trade-offs to be seen and 
addressed in advance, leading to better informed choices and making 
debate possible before irreversible commitments are made to individual 
programs. Without this type of plan, decision makers do not have the 
information they need to better understand the Coast Guard's long term 
outlook.[Footnote 27] In its naval vessel construction plan, the Navy 
also assesses capability gaps and planned construction over the short 
term, middle term and long term--each 10-year periods in the plan. The 
Secretary of Defense transmits the plan to Congress to aid in decision 
making.[Footnote 28] As a result, the Navy has some knowledge of its 
future funding challenges. For example, the Congressional Budget 
Office estimates that if the Navy continues to receive the same 
percentage of DOD funds for shipbuilding as it has in the past, the 
Navy can only fund 70 percent of the current long range plan. When we 
discussed such an approach with the Coast Guard, the response was 
mixed. Some Coast Guard budget officials stated that such a plan is 
not worthwhile because the Coast Guard cannot predict the level of 
funding it will receive in the future. However, other Coast Guard 
officials support the development of such a plan, noting that it would 
help to better understand the effects of funding decisions. Without 
such a plan, it will remain difficult for the Coast Guard to fully 
understand the extent to which future needs match the current level of 
resources and its expected performance levels--and capability gaps--if 
funding levels remain constant. 

The Coast Guard Has Been Pursuing Less Expensive Means of Filling Some 
Capability Gaps: 

The Coast Guard is currently pursuing cost effective alternatives that 
could begin the process of building a viable long term modernization 
plan. 

* Cutter-Based Unmanned Aircraft Systems--The Coast Guard is in the 
process of demonstrating a small unmanned aircraft system on the 
National Security Cutter and, to date, these demonstrations have shown 
that a smaller system is feasible. As opposed to the 2007 estimate of 
$503 million, the Coast Guard preliminarily estimates that it can 
outfit each of the planned eight National Security Cutters with two 
unmanned aircraft and a control station on each vessel for $48 
million. However, according to Coast Guard officials, it is too early 
to fully understand the costs. Once this system is purchased, the 
Coast Guard still plans to pursue a bigger solution in conjunction 
with the Navy that meets all of the Coast Guard's requirements. 

* Land-Based Unmanned Aircraft System--The Coast Guard has also begun 
a partnership with U.S. Customs and Border Protection to share and 
operate that component's 10 land-based unmanned aircraft systems. In 
the past year, the Coast Guard has been able to use this asset to 
conduct over 500 hours of surveillance for Coast Guard missions and 
officials expect that this number may increase. While this program is 
growing, the Coast Guard continues to pursue its own land-based 
unmanned aircraft. 

* Heavy Icebreaker--The Coast Guard is working closely with 
international and U.S. agency partners in gaining knowledge to support 
its heavy icebreaker acquisition. So far, while there are more than 10 
U.S. agencies that have requirements for a heavy icebreaker, such as 
the Navy and National Science Foundation, no plans have emerged for 
funding this vessel. 

Conclusions: 

As the Coast Guard's newest assets move through operational testing 
they are demonstrating capability, but problems have been identified. 
This is not unexpected; identifying problems is the purpose of the 
testing. In general, project and acquisition oversight officials 
evaluate these test results, among other data, and make a business 
case as to whether the government is taking on undue risk by mass 
producing these assets. This approach can be reasonable, but the 
parameters for making this case--including defining when an asset must 
meet a minimum level of acceptable performance prior to this decision 
and determining at what point a breach occurs--are not clearly set 
forth in Coast Guard or DHS guidance. Moreover, without a defined 
point in the acquisition process by which the Coast Guard must satisfy 
minimum requirements, the breach process, with regards to performance, 
loses meaning. Further, the Coast Guard no longer plans to 
operationally test the C4ISR system--always intended to be a linchpin 
of the recapitalization program--even though such testing is required 
of all major acquisitions. Without testing to ensure that these 
systems meet minimum performance standards, the Coast Guard cannot 
ensure that they meet mission needs and that the taxpayer receives a 
good value for the investment. 

As the Coast Guard has continued to refine cost estimates for its 
major acquisitions, it is realizing that the cost of its acquisition 
portfolio has grown and is now much greater than initially planned. 
This increased cost is consuming a large portion of the Coast Guard's 
acquisition budget. Our previous recommendations, regarding the need 
for a process to make the trade-off decisions needed to balance 
resources and needs, still stand.[Footnote 29] In the meantime 
however, the extent of expected costs--and how the Coast Guard plans 
to address them through budget trade-off decisions--is not being 
clearly communicated to Congress. The mechanism in place for reporting 
to certain congressional committees, the Capital Investment Plan, does 
not reflect the full effects of these trade-off decisions on the total 
cost and schedule of its acquisition programs. This information is not 
currently required by statute, but without it, decision makers are 
unable to understand the full extent of funding that will be required 
to complete the Coast Guard's planned acquisition programs. 

A pressing concern the Coast Guard faces is that the growing 
affordability gap for its major acquisitions will be exacerbated by 
impending requirements and capability needs. Annual budget decisions 
and the cost saving measures the Coast Guard is pursuing may be 
sufficient for the short term, but they do not position the Coast 
Guard to address future needs. In other words, short term budget 
decisions may not amount to a good long term investment strategy. 
Without a long term plan that sets forth needed capabilities and the 
funding it will take to meet them, the Coast Guard is not well 
positioned to identify how it will meet these mission needs. A long 
term plan of this nature is particularly critical in light of the 
looming Offshore Patrol Cutter procurement, which is currently 
estimated to account for about two-thirds of the acquisition budget. 

Matter for Congressional Consideration: 

To help ensure that it receives accurate information on the full 
effect of funding decisions on acquisition programs, Congress should 
consider amending the law that governs the 5-year Capital Investment 
Plan to require the Coast Guard to submit cost and schedule 
information that reflects the impact of the annual President's budget 
request on each acquisition across the portfolio--in addition to the 
current practice of reporting the cost and schedule estimates in 
current program baselines. 

Recommendations for Executive Action: 

To ensure that Congress and other decision makers are properly 
informed regarding the status of programs, we recommend that the 
Secretary of Homeland Security and the Commandant of the Coast Guard 
revise their acquisition guidance by taking the following two actions: 

* Specify when minimum performance standards should be met, such as 
prior to entering into full-rate production. 

* Clarify the performance data that should be used to assess whether 
or not minimum performance criteria have been met, prior to full-rate 
production, to determine whether a performance breach has occurred. 

To ensure that the Coast Guard's C4ISR system meets mission needs, we 
recommend that the Commandant of the Coast Guard take the following 
action: 

* Assess the operational effectiveness and suitability of the C4ISR 
system by fully integrating this assessment into other assets' 
operational test plans or by testing the C4ISR program on its own. 

To help the Coast Guard improve the long-term outlook of its 
portfolio, we recommend that the Commandant of the Coast Guard take 
the following action: 

* Develop a 20-year fleet modernization plan that identifies all 
acquisitions needed to maintain the current level of service and the 
fiscal resources necessary to build the identified assets. The plan 
should also consider trade-offs if the fiscal resources needed to 
execute the plan are not consistent with annual budgets. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DHS for review and comment. In 
its comments, DHS concurred with all of our recommendations. DHS's 
written comments are reprinted in appendix II. We also provided draft 
sections of the report to OMB and COTF, which provided us with 
technical comments via email; we incorporated their comments as 
appropriate. 

Regarding the first two recommendations, on the timing of reporting 
and actions to be taken when assets do not meet performance standards 
in testing, DHS stated that it plans to make changes to its 
acquisition guidance by June 30, 2015. 

In concurring with the third recommendation, regarding the testing of 
the C4ISR system, DHS noted that it plans to provide clearer guidance 
in the next update of its acquisition policy, currently scheduled for 
June 30, 2015. Additionally, DHS stated that it still plans to test 
the C4ISR system in conjunction with the vessels and aircraft on which 
the system is installed. This strategy would be acceptable as long as 
the Coast Guard incorporates the key performance parameters 
specifically related to the C4ISR system into the vessel and aircraft 
test plans. In its response, DHS disagreed in general with our 
description of the C4ISR system as not meeting goals, noting that, 
according to the Coast Guard, the original system was closed as a 
result of obsolescence and not due to performance and maintenance 
problems. While it is true that much of the original system--developed 
as part of Deepwater--is obsolete because it was inextricably linked 
to the commercial vendor's proprietary software, performance problems 
were also an issue. We have previously reported on these problems, 
such as assets not having the capability to share data as envisioned 
and the system needing to be restarted during operations. In short, 
the system of systems capability that was the original intent has not 
been achieved. While DHS states that the C4ISR program is one example 
of where the Coast Guard made tough decisions to provide the greatest 
capability of equipment while using the least amount of dollars, the 
Coast Guard invested $413 million to develop and field the original 
system that is now being replaced with Seawatch. 

While DHS concurred with our fourth recommendation to develop a 20-
year fleet modernization plan, the response does not fully address our 
concerns or set forth an estimated date for completion, as the 
response did for the other recommendations. DHS stated that the Coast 
Guard values long term planning and can assemble a profile of the 
anticipated service lives of the various assets and project this 
information to the future. However, the response also reaffirmed the 
very reason we made this recommendation--that trade-off decisions 
considering the cost, schedule, and performance of acquisitions are 
made during the annual budget process. There is no evidence that these 
short-term budget decisions will amount to a good long-term strategy 
and, as we have previously noted, the Coast Guard's annual, budget-
driven approach creates continual churn as program baselines must 
continually re-align with budget realities instead of budgets being 
formulated to support program baselines. In the case of the Coast 
Guard, this budget-driven process is pushing tough trade-off 
decisions--between capability and cost--into the future. Without a 
long-term plan, as we have recommended, no one knows what taxpayers 
are ultimately going to get for their approximately $1.5 billion 
annual investment in Coast Guard acquisitions. We continue to believe 
that a properly constructed 20-year plan is necessary to illuminate 
what is feasible in the long term and will also provide a basis for 
informed decisions that align the Coast Guard's needs and resources. 

DHS and the Coast Guard also provided technical comments that we 
incorporated into the report as appropriate. 

We are sending copies of this report to the Secretary of the 
Department of Homeland Security, Commandant of the Coast Guard, and 
Director of the Office of Management and Budget. In addition, the 
report is available on our website at [hyperlink, http://www.gao.gov]. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 13 days 
from the report date. At that time, we will send copies to your 
offices. In addition, the report will be available at no charge on the 
GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-4841 or mackinm@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix IV. 

Signed by: 

Michele Mackin: 
Director, Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

In conducting this review, we relied in part on the information and 
analysis in our past work, including reports completed in 2008 through 
2012. Additional scope and methodology information on each objective 
of this report follows. 

To assess how selected assets are performing operationally and to what 
extent they are achieving desired performance levels in testing, we 
selected key assets that are being used in operations that were a part 
of the original 2007 baseline--the Maritime Patrol Aircraft (HC-144), 
Fast Response Cutter, National Security Cutter, and the Command, 
Control, Communications, Computers, Intelligence, Surveillance, and 
Reconnaissance (C4ISR) systems--and reviewed test reports and 
operational data for these assets. We also reviewed the Coast Guard's 
Major Systems Acquisition Manual and Department of Homeland Security 
(DHS) Acquisition Management Directive 102-01 to review regulations 
and directions for operational testing. We assessed operational test 
reports for the HC-144 and Fast Response Cutter to determine what 
issues were discovered during testing and interviewed officials from 
the DHS's Science and Technology directorate and the Navy's Commander, 
Operational Test and Evaluation Force (COTF) to discuss the results 
and limitations of these tests and plans for future testing. For the 
National Security Cutter and C4ISR programs, we reviewed preliminary 
tests and changes being made to the systems as a result of knowledge 
gained through early testing or operations that has led to retrofits 
or design changes. We compared the results of these tests and 
operational data with operational requirements documents for each 
program to determine if these assets are performing as planned. We 
interviewed Coast Guard officials with the capabilities and resource 
directorates, and officials and operators with the National Security 
Cutter, Fast Response Cutter, HC-144, and C4ISR programs to gain a 
greater understanding of operational challenges and how they are being 
addressed. We met with National Security Cutter operators at U.S. 
Coast Guard Base Alameda in Alameda, California and we met with the 
District Commander for the Coast Guard's Seventh District, Fast 
Response Cutter operators at Coast Guard Sector Miami, and HC-144 
operators at U.S. Coast Guard Air Station Miami in Miami, Florida and 
discussed the C4ISR operations aboard each of these assets to discuss 
how these assets are performing operationally. We interviewed 
contractor representatives from Huntington Ingalls Industries for the 
National Security Cutter and Bollinger Shipyards for the Fast Response 
Cutter and toured their respective shipyards to discuss issues related 
to the production of these assets. 

To determine the current cost of the Coast Guard's acquisition 
portfolio as well as plans to fund its assets, we reviewed the Coast 
Guard's budget and capital investment plan and identified the programs 
that are currently in its acquisition portfolio. Based upon our 
definition, the Coast Guard's current acquisition portfolio consists 
of all major acquisitions that are planned to receive funding in the 
current budget year and/or within the next 5 years. We reviewed the 
approved acquisition program baselines for programs currently in the 
portfolio to determine their cost and schedule. We compared current 
baselines to previous baselines to evaluate whether there has been any 
cost or schedule growth in these programs. In comparing original costs 
to revised baseline costs, if a revised baseline presents both 
threshold costs and objective costs, threshold costs were used. In 
determining the cost to complete, we took the total estimated cost of 
the acquisition in its current baseline and subtracted the funding 
that the program has received as of and including fiscal year 2014. 
For some assets, such as the HC-130J which received funding not 
included in the Coast Guard budget, we derived the cost to complete by 
totaling the funds required to finish the program based upon the 
current cost estimate. We also reviewed the Coast Guard's Major 
Systems Acquisition Manual for guidance on acquisition program 
baselines. We interviewed officials from the Office of Management and 
Budget and the Department of Homeland Security's Program 
Accountability and Risk Management directorate and Program Analysis 
and Evaluation directorate to determine what, if anything, they are 
doing to balance the Coast Guard's needs with anticipated funding. 

To determine the extent to which the Coast Guard is experiencing 
capability gaps, if any, given known affordability issues, we assessed 
the Coast Guard's performance targets and compared these targets with 
acquisition plans. In addition, we interviewed officials from the 
Coast Guard's acquisitions and resource directorates to identify the 
challenges the Coast Guard faces reaching these targets using current 
funding levels and to understand actions taken by the Systems 
Integration Team and Executive Oversight Council to address these 
challenges. We also reviewed actions the Coast Guard is taking to 
improve the affordability of recapitalizing its assets. We interviewed 
officials with the Coast Guard's acquisition directorate and the 
program managers for all of the programs currently in the portfolio to 
discuss the cost of the portfolio and future funding plans. To 
determine the condition and expected service life of legacy assets, we 
reviewed Coast Guard analysis of these assets and prior GAO work on 
legacy assets. 

We conducted this performance audit from June 2013 to June 2014 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 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: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

May 23, 2014: 

Michele Mackin: 
Director, Acquisition and Sourcing Management: 
U. S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: Draft Report GAO-14-450, "Coast Guard Acquisitions: Better 
Information on Performance and Funding Needed to Address Shortfalls" 

Dear Ms. Mackin: 

Thank you for the opportunity to review and comment on this draft 
report. The U.S. Department of Rome land Security (DRS) appreciates 
the U.S. Government Accountability Office's (GAO's) work in planning 
and conducting its review and issuing this report. 

The Department is pleased to note GAO's acknowledgment that the U.S. 
Coast Guard (USCG) has "made strides in its efforts to improve its 
acquisition management capabilities." The USCG is proud of its long 
record of public safety and law enforcement service to the American 
people. The USCG must manage and balance a wide range of missions 
mandated by DRS priorities, as well as those required by existing 
statutes. Aside from managing and securing our borders, the USCG must 
manage and enforce maritime safety, environmental laws, and respond to
emergencies of all types as required. It is also a vital component of 
the U.S. defense readiness strategy. As such, all capital acquisitions 
must consider the broadest range of mission contingencies in order to 
provide for the greatest flexibility and utilization of equipment from 
tax payer dollars. This approach provides a greater return on 
investment to the Nation as compared to an acquisition plan that only 
builds new assets to address single mission areas. 

DHS is concerned, however, that GAO described the legacy Command, 
Control, Communications, Computers, Intelligence, Surveillance, and 
Reconnaissance (C4ISR) systems program as one that did not meet 
program goals. According to the USCG, the old C4ISR program was closed 
as a result of obsolescence and not due to performance and maintenance
issues. The C4ISR software replacement was required because the 
current commercial operating system was becoming unsupportable through 
the commercial vendor. The project recognized this issue and 
instituted an effective approach to manage a known, impending technology
obsolescence issue. Incorporating commercial items (particularly 
software) into government systems can reduce cost, but by doing so, 
the government inherently carries the risk of having to update systems 
due to obsolescence when the commercial entity changes portions of, or 
the entire system. This is but one example of were the USCG has made 
tough decisions to provide the greatest capability of equipment while 
using the least amount of dollars. Sometimes those decisions require 
identifying and cutting loses before they grow out of control. DRS 
believes this example highlights, among others, where USCG has 
performed as a positive and effective systems evaluator and integrator. 

The draft report contained four recommendations with which the 
Department concurs. Specifically, GAO recommended that the Secretary 
of Homeland Security and the Commandant of the Coast Guard revise 
their acquisition guidance to: 

Recommendation 1: Specify when minimum performance standards should be 
met, such as prior to entering into full rate production. 

Response: Concur. The USCG Assistant Commandant for Acquisition (CG-9) 
intends to update its Major System Acquisition Manual (MSAM) policy to 
address when minimum acquisition project performance standards should 
be met. Estimated Completion Date (ECD): June 30, 2015. 

Recommendation 2: Clarify the performance data that should be used to 
assess whether or not minimum performance criteria have been met, 
prior to full rate production, to determine whether a performance 
breach has occurred. 

Response: Concur. The USCG CG-9 intends to update its MSAM policy to 
address when minimum acquisition project performance standards have 
been met relative to a performance breach. ECD: June 30, 2015. 

GAO also recommended that the Commandant of the Coast Guard: 

Recommendation 3: Assess the operational effectiveness and suitability 
of the C4ISR system by fully integrating this assessment into other 
assets' operational test plans or by testing the C4ISR program on its 
own. 

Response: Concur. The draft report states that the USCG will no longer 
test C4ISR systems, which could be confusing to some readers. It is 
important to note that the USCG is already testing a C4ISR system as 
part of its assessment of new assets, including the Fast Response
Cutter. As C4ISR systems are integral to the operational performance 
of the asset, they are installed and their performance will be tested 
concurrently with the boat, cutter or aircraft they support. Since the 
overarching common C4ISR architecture originally envisioned by the
Deepwater Program no longer exists, there is no single system per se 
to be operationally tested in isolation, separate from the supported 
asset. All installed C4ISR systems are operationally tested 
concurrently with the supported asset. The USCG CG-9 intends to 
provide clearer guidance with respect to testing of C4ISR systems in 
the next update to its MSAM policy to address how to test the C4ISR 
within the supported assets operational test plans. ECD: June 30, 2015. 

Recommendation 4: Develop a 20-year fleet modernization plan that 
identifies all acquisitions needed to maintain the current level of 
service and the fiscal resources necessary to build the identified 
assets. The plan should also consider trade-offs if the fiscal resources
needed to execute the plan are not consistent with annual budgets. 

Response: Concur. The USCG values long-term planning and will work 
closely with DRS to initiate longer term capital plans, as 
appropriate, among other topics and related assumptions, including the 
frequency of these efforts. The USCG can assemble a profile of the 
anticipated service lives of the various assets in its inventory and 
project them into the future. Such recapitalization plans are 
generally requirements driven; however, acquisitions do take into
account affordability assessments upon entering into the acquisition 
decision process and at milestone events throughout the lifecycle. As 
a result, if annual budgets change during the acquisition cycle, 
recapitalization plans can be adjusted. The trade-off decisions 
considering cost, schedule and performance as a result of a changing 
fiscal environment or other program factors are made during the annual 
budget process and during acquisition program reviews to further 
account for future budgetary uncertainties. ECD: To Be Determined. 

Again, thank you for the opportunity to review and provide comments on 
this draft report. Technical comments were previously provided under 
separate cover. Please feel free to contact me if you have any 
questions. We look forward to working with you in the future. 

Sincerely, 

Signed by: 

Jim H. Crumpacker, CIA, CFE: 
Director: 
Departmental GAO-OIG Liaison Office: 

[End of section] 

Appendix III: Coast Guard Acquisition Portfolio Costs: 

The Coast Guard has 11 major acquisition programs in its current 
portfolio, based on the Fiscal Years 2014 through 2018 Capital 
Investment Plan. Of these 11 major acquisition programs, 8 were also a 
part of the 2007 recapitalization portfolio.[Footnote 30] Over time, 
the composition of the portfolio has changed. For example, since our 
last review in 2012, the Coast Guard has added 3 programs to its 
acquisition portfolio and another 7 programs are ending and, 
therefore, will no longer need additional acquisition funding. We 
excluded $3.6 billion in "other costs including project management" 
from our analysis of the Coast Guard's current portfolio of assets 
because these costs are not periodically re-baselined. Thus, the total 
cost of the original 2007 baseline excluding these costs is $20.563 
billion. Table 5 lists the total acquisition cost for each of the 
programs in the Coast Guard's current portfolio as well as the cost 
increases and cost to complete for the programs in the original 2007 
baseline. 

Table 5: Acquisition Cost Estimates, Including Cost to Complete, for 
Coast Guard Portfolio of Major Programs as of March 2014 (dollars in 
millions): 

Dollars in millions: 

Asset: National Security Cutter; 
Original 2007 Baseline: $3,450; 
Current Baseline (threshold costs)[A]: $5,682; 
Cost Increases Since 2007: $2,232; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $1,316. 

Asset: Offshore Patrol Cutter; 
Original 2007 Baseline: $8,098; 
Current Baseline (threshold costs)[A]: $12,101; 
Cost Increases Since 2007: $4,003; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $11,939. 

Asset: Fast Response Cutter; 
Original 2007 Baseline: $3,206; 
Current Baseline (threshold costs)[A]: $4,243; 
Cost Increases Since 2007: $1,037; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $2,547. 

Asset: HC-130H/J[C]; 
Original 2007 Baseline: $621; 
Current Baseline (threshold costs)[A]: $3,038; 
Cost Increases Since 2007: $2,417; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $1,829. 

Asset: HC-144; 
Original 2007 Baseline: $1,706; 
Current Baseline (threshold costs)[A]: $3,169; 
Cost Increases Since 2007: $1,463; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $2,127[D]. 

Asset: HH-65; 
Original 2007 Baseline: $741; 
Current Baseline (threshold costs)[A]: $1,150; 
Cost Increases Since 2007: $409; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $570. 

Asset: C4ISR; 
Original 2007 Baseline: 1,353; 
Current Baseline (threshold costs)[A]: 1,123; 
Cost Increases Since 2007: (230); 
Cost to Complete (as of the end of fiscal year 2015)[B]: 353. 

Asset: Unmanned Aircraft System (Cutter-Based Only); 
Original 2007 Baseline: $503; 
Current Baseline (threshold costs)[A]: N/A; 
Cost Increases Since 2007: N/A; 
Cost to Complete (as of the end of fiscal year 2015)[B]: N/A. 

Asset: Icebreaker; 
Original 2007 Baseline: N/A; 
Current Baseline (threshold costs)[A]: $831[E]; 
Cost Increases Since 2007: N/A; 
Cost to Complete (as of the end of fiscal year 2015)[B]: N/A. 

Asset: In-Service Vessel Sustainment; 
Original 2007 Baseline: N/A; 
Current Baseline (threshold costs)[A]: $221[F]; 
Cost Increases Since 2007: N/A; 
Cost to Complete (as of the end of fiscal year 2015)[B]: N/A. 

Asset: C-27J; 
Original 2007 Baseline: N/A; 
Current Baseline (threshold costs)[A]: TBD; 
Cost Increases Since 2007: N/A; 
Cost to Complete (as of the end of fiscal year 2015)[B]: TBD. 

Asset: Programs No Longer Planned to Receive Funding (Total)[G]; 
Original 2007 Baseline: 885; 
Current Baseline (threshold costs)[A]: N/A; 
Cost Increases Since 2007: N/A; 
Cost to Complete (as of the end of fiscal year 2015)[B]: N/A. 

Total: 
Original 2007 Baseline: $20,563[H]; 
Current Baseline (threshold costs)[A]: $31,558; 
Cost Increases Since 2007: $11,331; 
Cost to Complete (as of the end of fiscal year 2015)[B]: $20,681. 

Source: GAO Analysis of Coast Guard data: 

Note: In current/then-year dollars in millions. This means that 
numbers have not been normalized for inflation. Numbers may not add 
due to rounding. 

[A] The revised baselines present both threshold costs (the maximum 
costs allowable before a breach occurs) and objective costs (the 
minimum cost expected), threshold costs are used. For those programs 
that comprised the former Deepwater program, this allows traceability 
to the original $20.6 billion Deepwater baseline (the original 
baselines) while also showing how much programs could now cost based 
upon revised baselines. 

[B] Cost to complete is calculated as the current baseline minus the 
funding provided to the program to date. Thus, it represents the 
amount of funding needed from fiscal year 2015 until the end of each 
program based on current estimates. 

[C] The total cost of this program reflects a fleet of 22 HC-130Js. 

[D] The Coast Guard has yet to make an official decision on the future 
of the HC-144 program; however, Coast Guard officials told us that it 
is likely that they will end procurement of the HC-144 program as the 
C-27Js come on line. The HC-144 program is currently paused. 

[E] Estimate is preliminary and not based upon a full program life 
cycle cost estimate: 

[F] Estimate only includes two projects. This funding line is intended 
to encompass all fleet maintenance as it is needed. 

[G] The programs no longer planned to receive additional funding as of 
2013 are: HH-60, Medium Endurance Cutter Sustainment, and Patrol Boat 
Sustainment. 

[H] The original cost of the Deepwater baseline was $24.2 billion, but 
we have excluded program management costs. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Michele Mackin, (202) 512-4841 or mackinm@gao.gov. 

Staff Acknowledgments: 

In addition to the contact above, Katherine Trimble, Assistant 
Director; Laurier R. Fish; Peter W. Anderson; William Carrigg; John 
Crawford; Sylvia Schatz; and Lindsay Taylor all made key contributions 
to this report. 

[End of section] 

Related GAO Products: 

Defense Contracting: Actions Needed to Increase Competition. 
[hyperlink, http://www.gao.gov/products/GAO-13-325]. Washington, D.C.: 
March 28, 2013. 

Coast Guard: Clarifying the Application of Guidance for Common 
Operational Picture Development Would Strengthen Program. [hyperlink, 
http://www.gao.gov/products/GAO-13-321]. Washington, D.C.: April 25, 
2013. 

Coast Guard: Portfolio Management Approach Needed to Improve Major 
Acquisition Outcomes. [hyperlink, 
http://www.gao.gov/products/GAO-12-918]. Washington, D.C.: September 
20, 2012. 

Observations on the Coast Guard's and the Department of Homeland 
Security's Fleet Studies. [hyperlink, 
http://www.gao.gov/products/GAO-12-751R]. Washington, D.C.: May 31, 
2012. 

Coast Guard: Legacy Vessels' Declining Conditions Reinforce Need for 
More Realistic Operational Targets. [hyperlink, 
http://www.gao.gov/products/GAO-12-741]. Washington, D.C.: July 31, 
2012. 

Missile Defense: Opportunity Exists to Strengthen Acquisitions by 
Reducing Concurrency. [hyperlink, 
http://www.gao.gov/products/GAO-12-486]. Washington, D.C.: April 20, 
2012. 

Coast Guard: Action Needed as Approved Deepwater Program Remains 
Unachievable. [hyperlink, http://www.gao.gov/products/GAO-11-743]. 
Washington, D.C.: July 28, 2011. 

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. 

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. 

Coast Guard: Better Logistics Planning Needed to Aid Operational 
Decisions Related to the Deployment of the National Security Cutter 
and Its Support Assets. [hyperlink, 
http://www.gao.gov/products/GAO-09-497]. Washington, D.C.: July 17, 
2009. 

Best Practices: High Levels of Knowledge at Key Points Differentiate 
Commercial Shipbuilding from Navy Shipbuilding. [hyperlink, 
http://www.gao.gov/products/GAO-09-322]. Washington, D.C.: May 13, 
2009. 

[End of section] 

Footnotes: 

[1] See list of related GAO products at the end of this report. 

[2] GAO, Coast Guard: Portfolio Management Approach Needed to Improve 
Major Acquisition Outcomes, [hyperlink, 
http://www.gao.gov/products/GAO-12-918] (Washington, D.C.: Sept. 20, 
2012). 

[3] 14 U.S.C. § 663. The Coast Guard's Capital Investment Plan is a 5-
year plan presented to Congress that includes, among other things, 
projected funding for capital assets in such areas as acquisition, 
construction, and improvements. The Coast Guard updates the Capital 
Investment Plan annually, and submits it with the President's budget 
in any given year. The Capital Investment Plan is approved by DHS and 
OMB and, as we have reported in the past, is subject to significant 
change each year. See [hyperlink, 
http://www.gao.gov/products/GAO-12-918]. 

[4] [hyperlink, http://www.gao.gov/products/GAO-12-918]. 

[5] GAO, Observations on the Coast Guard's and the Department of 
Homeland Security's Fleet Studies, [hyperlink, 
http://www.gao.gov/products/GAO-12-751R] (Washington, D.C.: May 31, 
2012). 

[6] A major acquisition is equipment, service, and/or intellectual 
property acquired by the Coast Guard with a lifecycle cost greater 
than $300 million. 

[7] The 2007 baseline includes $3.6 billion in "other costs including 
project management" that we exclude from our analysis of the cost of 
the Coast Guard's assets in appendix III. 

[8] GAO, Defense Contracting: Actions Needed to Increase Competition, 
[hyperlink, http://www.gao.gov/products/GAO-13-325] (Washington, D.C.: 
Mar. 28, 2013). 

[9] Seakeeping refers to a vessel's ability to withstand harsh sea 
states to conduct operations or survive. Sea states refer to the 
height, period, and character of waves on the surface of a large body 
of water. 

[10] The National Security Cutter does not currently deploy with an 
unmanned aircraft system. Officials said that a small unmanned 
aircraft system was being demonstrated on the National Security Cutter 
during this mission to determine if such a solution is possible. 

[11] GAO, Missile Defense: Opportunity Exists to Strengthen 
Acquisitions by Reducing Concurrency, [hyperlink, 
http://www.gao.gov/products/GAO-12-486] (Washington, D.C.: Apr. 20, 
2012). 

[12] GAO, Navy Shipbuilding: Significant Investments in the Littoral 
Combat Ship Continue Amid Substantial Unknowns about Capabilities, 
Use, and Cost, [hyperlink, http://www.gao.gov/products/GAO-13-530] 
(Washington, D.C.: July 22, 2013). 

[13] For more information on the common operational picture, see GAO, 
Clarifying the Application of Guidance for Common Operational Picture 
Development Would Strengthen Program, [hyperlink, 
http://www.gao.gov/products/GAO-13-321] (Washington, D.C.: Apr. 25, 
2013). 

[14] 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). 

[15] [hyperlink, http://www.gao.gov/products/GAO-12-918]. 

[16] GAO, Homeland Security Acquisitions: DHS Could Better Manage Its 
Portfolio to Address Funding Gaps and Improve Communications with 
Congress, [hyperlink, http://www.gao.gov/products/GAO-14-332] 
(Washington, D.C.: April 17, 2014). 

[17] [hyperlink, http://www.gao.gov/products/GAO-14-332]. 

[18] [hyperlink, http://www.gao.gov/products/GAO-11-743] and 
[hyperlink, http://www.gao.gov/products/GAO-12-918]. 

[19] 14 U.S.C. § 663. 

[20] DHS Inspector General, Independent Review of U.S. Coast Guard's 
Reporting of FY 2013 Drug Control Performance Summary Report, OIG-14-
35 (Washington, D.C.: Feb. 2014). 

[21] GAO, Coast Guard: Legacy Vessels' Declining Conditions Reinforce 
Need for More Realistic Operational Targets, [hyperlink, 
http://www.gao.gov/products/GAO-12-741] (Washington, D.C.: July 31, 
2012). 

[22] Our best practices work shows that there are three critical 
junctures at which firms must have knowledge to make large investment 
decisions. See GAO, Best Practices: Using a Knowledge-Based Approach 
to Improve Weapon Acquisition, [hyperlink, 
http://www.gao.gov/products/GAO-04-386SP] (Washington, D.C.: January 
2004). 

[23] [hyperlink, http://www.gao.gov/products/GAO-12-918]. 

[24] GAO, Defense Acquisitions: Major Weapon Systems Continue to 
Experience Cost and Schedule Problems under DOD's Revised Policy, 
[hyperlink, http://www.gao.gov/products/GAO-06-368] (Washington, D.C.: 
Apr. 13, 2006). 

[25] GAO, Best Practices: Better Matching of Needs and Resources Will 
Lead to Better Weapon System Outcomes, [hyperlink, 
http://www.gao.gov/products/GAO-01-288] (Washington, D.C.: Mar. 8, 
2001). 

[26] [hyperlink, http://www.gao.gov/products/GAO-12-918]. 

[27] GAO, Defense Acquisitions: Challenges Associated with the Navy's 
Long-Range Shipbuilding Plan, [hyperlink, 
http://www.gao.gov/products/GAO-06-587T], (Washington, D.C.: Mar. 30, 
2006). 

[28] Department of Defense, Report to Congress on the Annual Long-
Range Plan for Construction of Naval Vessels for FY2014 (Washington, 
D.C.: May 2013). 

[29] [hyperlink, http://www.gao.gov/products/GAO-11-743] and 
[hyperlink, http://www.gao.gov/products/GAO-12-918]. 

[30] A major acquisition is equipment, service, and/or intellectual 
property acquired by the Coast Guard with a lifecycle cost greater 
than $300 million. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation, and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the 
performance and accountability of the federal government for the 
American people. GAO examines the use of public funds; evaluates 
federal programs and policies; and provides analyses, recommendations, 
and other assistance to help Congress make informed oversight, policy, 
and funding decisions. GAO's commitment to good government is 
reflected in its core values of accountability, integrity, and 
reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's website [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its website newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select 
"E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO's actual cost of 
production and distribution and depends on the number of pages in the 
publication and whether the publication is printed in color or black 
and white. Pricing and ordering information is posted on GAO's 
website, [hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Connect with GAO: 

Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov]. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 
E-mail: fraudnet@gao.gov; 
Automated answering system: (800) 424-5454 or (202) 512-7470. 

Congressional Relations: 

Katherine Siggerud, Managing Director, siggerudk@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, DC 20548. 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548. 

[End of document]