Coast Guard's Acquisition Management: Deepwater Project's Justification and Affordability Need to Be Addressed More Thoroughly

At this point, according to the Coast Guard, it is not possible for the agency to know, with reasonable specificity, what its outyear funding levels will be, and no single potential funding level holds any greater validity than the existing level. The Coast Guard fully recognizes the potential for variation from this planning figure, and in December 1999, instructed each contracting team to determine the optimal and minimal funding stream required to build their proposed system. While the information provided by the industry teams is proprietary, the Deepwater Project manager told GAO that each team's analysis reasonably supported the baseline funding of $500 million for the outyears.

When the Coast Guard became part of the new Department of Homeland Security (DHS) in March 2003, that department required all acquisitions to be reviewed and approved in advance by the department's Office of Acquisitions. As such, acquisition decisions on the Deepwater project, including changes in delivery dates of key assets, are subject to review by the department. The Coast Guard also keeps DHS and Congress apprised of its major acquisition programs with its monthly major acquisition status reports to DOT, and a semi-annual report to Congress through DOT.

In December 1999, the Coast Guard prolonged the formal contractual link with the contractor teams to allow additional information to be developed and incorporated into their proposed system concepts. By January 2001, the Coast Guard had issued an updated mission analysis report showing that (1) the service life of the various aircraft classes could be extended by about 11 to 28 years over original estimates, assuming that increased maintenance and upgrades occur, and (2) the service life of two of the four ship classes could be extended by an additional 5 years, assuming that increased maintenance and upgrades occur. The Coast Guard provided this information to its contractors so that they could use it in developing their proposals.

According to information provided by the Coast Guard, it will strive to ensure that mission analysis reports for future projects are based on accurate and complete data on the condition of current assets. As a result of the Coast Guard moving to the new Department of Homeland Security, it revised existing acquisition guidelines to stipulate that new projects must be based on complete, accurate, and data-rich information on the condition of its current systems and assets.

According to information provided by the Coast Guard, it agreed that specific information regarding methodologies and data sources should be available throughout the acquisition process. In addition, according to the Coast Guard, it fully supports the use of empirical data and quantitative analysis to support acquisition projects. Its information is based on operating experience with the assets, and specific technical reviews of the assets by highly trained experts. Since the Coast Guard's move to the new Department of Homeland Security, its acquisition manual will now formally stipulate the need for this information.

The Coast Guard has adopted OMB's A-11 processes for planning, budgeting, and acquisition of capital assets, and has revised its Major System Acquisition Manual to reflect OMB Circular A-11 and other federal acquisition policy changes.