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Highlights

The Coast Guard's Deepwater Program, under the Department of Homeland Security (DHS), has experienced serious performance and management problems. Deepwater is intended to replace or modernize Coast Guard vessels, aircraft, and the communications and electronic systems that link them together. As of fiscal year 2008, over $4 billion has been appropriated for Deepwater. The Coast Guard awarded a contract in June 2002 to a lead system integrator, Integrated Coast Guard Systems (ICGS), to execute the program using a system-of-systems approach. In response to a Senate report accompanying a Department of Homeland Security appropriations bill, 2008, this GAO report assesses whether the changes the Coast Guard is making to its management and acquisition approach to Deepwater will put it in a position to realize better outcomes. GAO reviewed key program documents and interviewed Coast Guard and contractor personnel.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Homeland Security To help ensure that the initiatives to improve Deepwater management and oversight continue as intended and to facilitate decision-making across the department, the Secretary of Homeland Security should direct the Under Secretary for Management to rescind the delegation of Deepwater acquisition decision authority.
Closed - Implemented
In GAO report GAO-08-745, issued June 2008, we recommended that the Department of Homeland Security rescind the delegation of acquisition decision authority on Deepwater-- granted by a December 22, 2003 memorandum from the department's Investment Review Board-- to help ensure that the initiatives to improve Deepwater management and oversight continue as intended and to facilitate decision-making across the department. On September 25, 2008 the Department of Homeland Security's Under Secretary for Management issued an acquisition decision memorandum rescinding the delegation of Key Decision Point authority for the Integrated Deepwater Systems program and all acquisitions within the program. This action implements our recommendation.
United States Coast Guard To improve knowledge-based decision-making for its acquisitions, the Commandant of the Coast Guard should revise the procedures in the Major Systems Acquisition Manual related to the authorization of low-rate initial production by requiring a formal design review to ensure that the design is stable as well as a review before authorizing initial production.
Closed - Implemented
In GAO report GAO-08-745, issued June 2008, we recommended that the Commandant of the Coast Guard revise procedures for the authorization of low-rate initial production by requiring a formal design review before beginning low-rate production. In the Coast Guard's October 2008 revision of the Major Systems Acquisition Manual, which establishes the procedures for major acquisitions, a new review was added to provide high level approval to commence low-rate production that coincides with completion of the program's critical design review. This revision implements our recommendation.
United States Coast Guard To improve program management of surface assets contracted to Northrop Grumman Ship Systems, the Commandant of the Coast Guard should develop an approach to increase visibility into that contractor's earned value management data reporting before entering into any further contractual relationships, such as for long lead material for and production of the fourth NSC.
Closed - Implemented
In their written comments to GAO-08-745 the Coast Guard partially concurred with the recommendation to increase visibility into Northrop Grumman's earned value management data, stating that the data is not necessary for firm fixed-price contracts for long-lead materials for the National Security Cutter (NSC). The Coast Guard has since provided evidence that the long-lead time material contract for NSC 4 was firm fixed-price, and that they plan to continue with that type of contract for the materials for NSCs 5 and 6. It also provided language for the NSC 4 construction contract that expands the Coast Guard's visibility into earned value management by requiring the contractor to report to the appropriate level of detail and providing for access to further information when requested.

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