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Coast Guard Acquisitions: Actions Needed to Address Longstanding Portfolio Management Challenges

GAO-18-454 Published: Jul 24, 2018. Publicly Released: Jul 24, 2018.
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Fast Facts

The Coast Guard is spending billions of dollars to replace aging ships, aircraft, and other assets.

Because the Coast Guard has managed its acquisitions with a short-term, asset-by-asset focus, it has at times lost sight of the balance and cost of its overall asset portfolio. For example, some high-priority acquisitions have been delayed.

Also, the Coast Guard continues to operate its fleets for longer than originally planned, placing risk on its ability to accomplish its missions.

We recommended, among other things, that the Coast Guard annually assess the long-term affordability and balance of its acquisition portfolio.

The Offshore Patrol Cutter is the Coast Guard's highest acquisition priority

This is a photo of the Coast Guard's Offshore Patrol Cutter.

This is a photo of the Coast Guard's Offshore Patrol Cutter.

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What GAO Found

The Coast Guard, a component within the Department of Homeland Security (DHS), continues to manage its acquisitions through its annual budget process and the 5-year Capital Investment Plan (CIP)—congressionally mandated and used for oversight. This management approach creates constant churn as program baselines must continually re-align with budget realities instead of budgets being formulated to support program baselines. Further, Coast Guard officials said the CIP reflects the highest priorities of the department—such as the Offshore Patrol Cutter, which is the Coast Guard's highest priority—and that trade-off decisions are made as part of the annual budget process. However, the effects of these decisions, such as which acquisitions would take on more risk so others can be prioritized and adequately funded, are not communicated in the CIP to key decision makers, because including such information is not statutorily required. Over the years, this approach has left the Coast Guard with a build up—or bow wave—of near-term unfunded acquisitions, negatively affecting recapitalization efforts and limiting the effectiveness of long-term planning. Including the effects of these trade-offs in the CIP would align with GAO's cost estimating best practices. Until it does so, the Coast Guard limits its ability to manage its acquisition portfolio in the long-term, beyond the time covered in the 5-year CIP.

The Coast Guard's Offshore Patrol Cutter

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In response to a September 2012 GAO recommendation, the Coast Guard updated the Executive Oversight Council's (EOC)—a cross-directorate group that oversees major acquisition programs—charter in 2014 to require annual reviews of the acquisition portfolio collectively. However, EOC officials said that these annual reviews never occurred, and GAO found that the annual review requirement was removed from the charter in 2017. Thus, the Coast Guard is without a senior-level group charged to collectively review and ensure affordability of its acquisition portfolio. The Office of Management and Budget's Capital Programming Guide states that a senior-level executive committee should be responsible for reviewing the agency's entire asset portfolio and for making decisions on the proper composition of assets needed to achieve strategic goals within budget constraints.

Why GAO Did This Study

The Coast Guard spends billions of dollars on its major acquisition programs to meet its missions. GAO's prior work has identified the Coast Guard's reliance on its annual budget process to manage its acquisition portfolio as a challenge.

GAO was asked to review the recapitalization of the Coast Guard's acquisition portfolio. This report assesses, among other topics, the extent to which the Coast Guard has made changes to how it manages its acquisition portfolio.

GAO assessed Coast Guard's major acquisition programs to determine changes since GAO's 2014 portfolio review. GAO analyzed program baselines and interviewed Coast Guard officials. GAO analyzed the CIP for fiscal years 2014 through 2018, and reviewed the EOC's documentation.


GAO recommends that the annual CIPs reflect acquisition trade-off decisions and their effects, and that the EOC review the overall acquisition portfolio and its affordability annually. DHS concurred with the CIP recommendation. DHS did not concur with the EOC recommendation. It noted that other existing Coast Guard bodies are responsible for evaluating and prioritizing funding. However, DHS stated that the EOC charter will be updated to require it to review the overall acquisition portfolio, including long-term planning. If this long-term planning accounts for budget realities for the acquisition portfolio, GAO believes the intent of the recommendation will be met.

Recommendations for Executive Action

Agency Affected Recommendation Status
United States Coast Guard The Commandant of the Coast Guard should work with Congress to include in the Coast Guard's annual 5-year CIP a discussion of the acquisition programs it prioritized that describes how trade-off decisions made could affect other acquisition programs, such as by delaying recapitalization efforts or needing to conduct Service Life Extension Projects for legacy assets. (Recommendation 1)
Closed – Implemented
The Coast Guard agreed with this recommendation and in August 2019 officials reported that the Coast Guard was working with DHS to include additional information that addresses how trade-off decisions made could affect other major acquisition programs in future CIP reports. In the FY 2021-2025 CIP, the Coast Guard included information in the background section explaining how it uses the annual budget process to consider trade-offs within existing acquisition programs to ensure the long-term affordability of the acquisition portfolio. Then, in July 2022 officials explained how the information included in the annual CIP provided to Congress shows how trade-off decisions are being made through each annual CIP update. For instance, the FY20-24 CIP showed an expected funding level for the Polar Security Program in FY23 of $200 million while the Coast Guard's fiscal year 2023 Congressional Budget Justification requested $167.2 million. This is a reduction of $32.8 million, which officials stated was due to the Coast Guard making tradeoffs in response to changes in planned funding amounts.
United States Coast Guard The Commandant of the Coast Guard should require the Executive Oversight Council, in its role to facilitate a balanced and affordable acquisition portfolio, to annually review the acquisition portfolio collectively, specifically for long-term affordability. (Recommendation 2)
Closed – Implemented
The Coast Guard disagreed with this recommendation stating that other bodies within the Coast Guard--such as the Investment Board, Deputies Council, and Investment Review Board--are responsible for making decisions regarding out-year funding, while the Executive Oversight Council works outside of the annual budget process. To meet the spirit of our recommendation, the Coast Guard updated the Systems Integration Team's charter in August 2020 to require it to brief members of the Executive Oversight Council on their recommendations for funding of acquisition programs and to include a focus on long-term affordability. Then, in July 2022, the Coast Guard provided documentation showing the Coast Guard Investment Review Board, which is responsible for setting strategic priorities that guide and inform the resource decisions made through the annual budget development process, regularly held meetings in the spring of 2021 to discuss long-term planning and trade-offs. Officials indicated that these meetings are held each year as part of the annual budget development process. While the Coast Guard has not provided longer term outlooks beyond the 5 year window of its Capital Investment Plan, officials pointed to these meetings as evidence that trade-off decisions are being discussed and made during the annual budget process.

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Acquisition programsAssetsBudget processBudgetsCapital investment planningCapital investmentsCost estimatesFederal spendingInvestment planningInvestment portfolioRisk assessment