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This testimony discusses our recent work on the Coast Guard's Deepwater acquisition, which represents the majority of the Coast Guard's efforts to recapitalize its fleet of vessels and aircraft. This statement is based on our July 28, 2011, report, Coast Guard: Action Needed as Approved Deepwater Program Remains Unachievable. This report discusses areas in which the Coast Guard has strengthened its acquisition management capabilities but also emphasizes actions the Coast Guard needs to take to address the cost growth, schedule delays, and capability shortfalls that have made the approved Deepwater Program unachievable. Today's climate of rapidly building fiscal pressures underscores the importance of assessing priorities--from a Coast Guard-wide perspective--so that more realistic budgets can be submitted to Congress. Such a step would help alleviate what has become a pattern of churn in revising program baselines when unrealistic planned funding does not materialize, which contributes to schedule delays and can lead to other issues such as unhealthy competition for funding. We also recognize several steps that the Coast Guard has taken to improve the management of the Deepwater Program. For example, the Coast Guard has updated its Major Systems Acquisition Manual to better reflect best practices and has significantly reduced its relationship with the prior lead systems integrator, Integrated Coast Guard Systems, by awarding fixed-price contracts outside of the prior construct. To continue this improvement, our July 2011 report made several recommendations with which the Department of Homeland Security (DHS) concurred. We have reviewed the Coast Guard's recapitalization efforts since 2001 and have built an extensive body of work over the last 10 years that has focused on the need for the Coast Guard to improve its acquisition workforce, contractor management, and oversight capability. For the July 2011 report, we assessed (1) the extent to which the Deepwater Program's planned cost and schedule baselines have been exceeded and the credibility of cost estimates and schedules for selected assets; (2) the progression of the execution, design, and testing of the assets within the Deepwater Program; and (3) whether the Coast Guard has undertaken a fleet mix study that addresses trade-offs in a cost-constrained environment.

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