Coast Guard:

Deepwater Program Acquisition Schedule Update Needed

GAO-04-695: Published: Jun 14, 2004. Publicly Released: Jun 29, 2004.

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In 2002, the Coast Guard began its $17 billion, 20-year Integrated Deepwater System acquisition program to replace or modernize its cutters, aircraft, and communications equipment for missions generally beyond 50 miles from shore. During fiscal years 2002-03, Deepwater received about $125 million less than the Coast Guard had planned. In fiscal year 2004, Congress appropriated $668 million, $168 million more than the President's request. GAO has raised concern recently about the Coast Guard's initial management of Deepwater and the potential for escalating costs. GAO was asked to review the status of the program against the initial acquisition schedule and determine the impact of the additional $168 million in fiscal year 2004 funding on this schedule.

The degree to which the Deepwater program is on track with its original 2002 integrated acquisition schedule is difficult to determine because the Coast Guard has not updated the schedule. Coast Guard officials said they have not updated it because of the numerous changes Deepwater experiences every year and the cost, personnel, and time involved. However, in similar acquisitions--those of the Department of Defense (DOD)--cost, schedule, and performance updates are fundamental to congressional oversight. DOD is required to update the schedule at least annually and whenever cost and schedule thresholds are breached. In practice, DOD continually monitors and reports schedules for management on a quarterly basis. Updating the acquisition schedule--including phases such as design and fabrication, interim phase milestones, and critical paths linking assets-- on a more timely basis is imperative so that annual Coast Guard budget submissions can allow Congress to base decisions on accurate information. GAO used available data to develop the current acquisition status for a number of selected Deepwater assets and found that they have experienced delays and are at risk of being delivered later than anticipated. The additional $168 million in fiscal year 2004, while allowing the Coast Guard to conduct a number of Deepwater projects that had been delayed or would not have been funded in fiscal year 2004, will not fully return the program to its original 2002 acquisition schedule. Reasons include: all work originally planned for fiscal year 2004 was not funded and some will have to be delayed to fiscal year 2005; delivery of some assets has fallen so far behind schedule that ensuring their original delivery dates is impossible; and nonfunding reasons have caused delays, such as greater than expected hull corrosion of patrol boats delaying length extension upgrades.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendation for Executive Action

    Recommendation: The Secretary of Homeland Security should direct the Commandant of the Coast Guard to update the original 2002 Deepwater acquisition schedule in time to support the fiscal year 2006 Deepwater budget submission to DHS and Congress and at least once a year thereafter to support each budget submission. The updated schedule should include the current status of asset acquisition phases (such as concept technology and design, system development and demonstration, and fabrication), interim phase milestones (such as preliminary and critical design reviews, installation, and testing), and the critical paths linking the delivery of individual components to particular assets.

    Agency Affected: Department of Homeland Security: United States Coast Guard

    Status: Closed - Implemented

    Comments: In fiscal year 2004, Congress increased appropriations for the Coast Guard's Deepwater acquisition program by $168 million to $668 million. In light of this increased funding, the Senate and House Appropriations Committees requested GAO to determine the status of the Deepwater program against its initial 2002 acquisition schedule and the impact of the additional funding on the acquisition schedule. In June 2004, we reported that we could not determine Deepwater's current acquisition schedule because the Coast Guard had not updated it but that the additional funding would not fully return the program to its 2002 schedule. Based on our experience in reviewing Department of Defense acquisition programs of similar scope, we concluded that maintaining a current schedule is a fundamental and necessary practice, that this lack of such a current schedule lessened the Coast Guard's ability to monitor the Deepwater contractor's performance, and that updating the schedule on a more timely basis would allow the Department of Homeland Security (DHS) and Congress to make better decisions on Deepwater budget submissions. As a result, we recommended that the Coast Guard update the original 2002 acquisition schedule, which is included in the Integrated Deepwater System Implementation Plan, in time to support the fiscal year 2006 Deepwater budget submission to DHS and Congress, and at least once a year thereafter to support each budget submission. We specified in our recommendation that the updated schedule should include the current status of asset acquisition phases, interim milestones, and the critical paths linking delivery of individual components to particular assets. In March 2005, we testified that the Coast Guard had taken steps since to update the schedule and that it had plans to continue to do so semi-annually to support its budget planning efforts. In April 2006, we reported that the Coast Guard submitted a revised Deepwater implementation plan to the House Appropriations Committee in May 2005, which included a 20-year and a 25-year plan. The Committee directed DHS and the Coast Guard to select a single revised implementation plan to accompany the Deepwater fiscal year 2006 budget request. In compliance to the Committee's direction, the Commandant of the Coast Guard testified in July 2005 to the 25-year revised Deepwater implementation plan. In February 2006, the Coast Guard submitted an updated Deepwater implementation plan to align with its fiscal year 2007 budget submission.

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