Coast Guard Acquisitions: Polar Icebreaker Program Needs to Address Risks before Committing Resources
The Coast Guard and Navy are planning to invest up to $9.8 billion to build and maintain three heavy polar icebreakers to conduct missions in the Antarctic and Arctic. The first ship is scheduled for delivery in 2023.
We found the icebreaker program faces risks in 3 key areas:
the program has not fully assessed how well key technologies will work in this particular effort,
its cost estimate may underestimate the funding needed, and
it set ship delivery dates that are optimistic and not based on a realistic shipbuilding assessment.
We made six recommendations to address these and other risks.
U.S. Coast Guard's Polar Star and Healy icebreakers
Photos of the U.S. Coast Guard's Polar Star and Healy icebreakers
What GAO Found
The Coast Guard—a component of the Department of Homeland Security (DHS)—did not have a sound business case in March 2018, when it established the cost, schedule, and performance baselines for its heavy polar icebreaker acquisition program, because of risks in four key areas:
Design. The Coast Guard set program baselines before conducting a preliminary design review, which puts the program at risk of having an unstable design, thereby increasing the program's cost and schedule risks. While setting baselines without a preliminary design review is consistent with DHS's current acquisition policy, it is inconsistent with acquisition best practices. Based on GAO's prior recommendation, DHS is currently evaluating its policy to better align technical reviews and acquisition decisions.
Technology. The Coast Guard intends to use proven technologies for the program, but did not conduct a technology readiness assessment to determine the maturity of key technologies prior to setting baselines. Coast Guard officials indicated such an assessment was not necessary because the technologies the program plans to employ have been proven on other icebreaker ships. However, according to best practices, such technologies can still pose risks when applied to a different program or operational environment, as in this case. Without such an assessment, the program's technical risk is underrepresented.
Cost. The lifecycle cost estimate that informed the program's $9.8 billion cost baseline substantially met GAO's best practices for being comprehensive, well-documented, and accurate, but only partially met best practices for being credible. The cost estimate did not quantify the range of possible costs over the entire life of the program. As a result, the cost estimate was not fully reliable and may underestimate the total funding needed for the program.
Schedule. The Coast Guard's planned delivery dates were not informed by a realistic assessment of shipbuilding activities, but rather driven by the potential gap in icebreaking capabilities once the Coast Guard's only operating heavy polar icebreaker—the Polar Star —reaches the end of its service life (see figure).
Potential Heavy Polar Icebreaker Gap and Delivery Schedule for New Icebreakers
GAO's analysis of selected lead ships for other shipbuilding programs found the icebreaker program's estimated construction time of 3 years is optimistic. As a result, the Coast Guard is at risk of not delivering the icebreakers when promised and the potential gap in icebreaking capabilities could widen.
Why GAO Did This Study
To maintain heavy polar icebreaking capability, the Coast Guard and the Navy are collaborating to acquire up to three new heavy polar icebreakers through an integrated program office. The Navy plans to award a contract in 2019. GAO has found that before committing resources, successful acquisition programs begin with sound business cases, which include plans for a stable design, mature technologies, a reliable cost estimate, and a realistic schedule.
Section 122 of the National Defense Authorization Act for Fiscal Year 2018 included a provision for GAO to assess issues related to the acquisition of the icebreaker vessels. In addition, GAO was asked to review the heavy polar icebreaker program's acquisition risks. This report examines, among other objectives, the extent to which the program is facing risks to achieving its goals, particularly in the areas of design maturity, technology readiness, cost, and schedule. GAO reviewed Coast Guard and Navy program documents, analyzed Coast Guard and Navy data, and interviewed knowledgeable officials.
GAO is making six recommendations to the Coast Guard, DHS, and the Navy. Among other things, GAO recommends that the program conduct a technology readiness assessment, re-evaluate its cost estimate and develop a schedule according to best practices, and update program baselines following a preliminary design review. DHS concurred with all six of GAO's recommendations.
Recommendations for Executive Action
|United States Coast Guard||The Commandant of the Coast Guard should direct the polar icebreaker program to conduct a technology readiness assessment in accordance with best practices for evaluating technology readiness, identify critical technologies, and develop a plan to mature any technologies not designated to be at least TRL 7 before detail design of the lead ship begins. (Recommendation 1)||
In June 2019, the Department of Homeland Security Science and Technology Directorate (DHS S&T) completed its technology readiness assessment of the polar icebreaker program and identified three critical technologies: the hull, azimuthing propulsors (thrusters that rotate up to 360 degrees and provide propulsion to the ship), and integrated electric propulsion system. DHS S&T determined that the azimuthing propulsors and integrated electric propulsion system were mature and the hull was approaching maturity. The Coast Guard plans to use ice model testing, seakeeping testing, and tow tank testing to increase the maturity and reduce risks for the hull.
|United States Coast Guard||The Commandant of the Coast Guard, in collaboration with the Secretary of the Navy, should direct the polar icebreaker program and NAVSEA 05C to update the HPIB cost estimate in accordance with best practices for cost estimation, including (1) developing risk bounds for all phases of the program lifecycle, and on the basis of these risk bounds, conduct risk and uncertainty analysis, as well as sensitivity analysis, on all phases of the program lifecycle, and (2) reconciling the results with an updated independent cost estimate based on the same technical baseline before the option for construction of the lead ship is awarded. (Recommendation 2)||
In January 2021, the Coast Guard updated its cost estimate for the polar icebreaker program, which included the types of sensitivity analysis and risk and uncertainty analysis called for in best practices. Additionally, in January 2021, the Department of Homeland Security's cost analysis division conducted an independent assessment of the cost estimate. By better accounting for risks and an independent review, the Coast Guard's cost estimate provides a more credible range of costs the polar icebreaker acquisition program may incur and addresses the intent of our recommendation.
|United States Coast Guard||The Commandant of the Coast Guard should direct the polar icebreaker program office to develop a program schedule in accordance with best practices for project schedules, including determining realistic durations of all shipbuilding activities and identifying and including a reasonable amount of margin in the schedule, to set realistic schedule goals for all three ships before the option for construction of the lead ship is awarded. (Recommendation 3)||
In providing comments on this report, the Coast Guard concurred with our recommendation. However, when the program awarded the contract for the design and construction of the lead ship in April 2019--a decision point in which significant resource commitments were made--the Coast Guard had not yet developed a program schedule in accordance with best practices for project schedules, particularly as it relates to setting realistic schedule goals for all three ships. While the Coast Guard continues efforts to work with the contractor to develop a realistic schedule for the lead ship, the timeframe for implementation of this recommendation passed after the Coast Guard made another significant resource decision prior to developing realistic goals for all three ships--the December 2021 award of the option for construction of the second ship. We are currently conducting another review which will address the Coast Guard's progress on developing a realistic schedule before additional significant resource commitments are made.
|United States Coast Guard||The Commandant of the Coast Guard should direct the polar icebreaker program office to analyze and determine appropriate schedule risks that could affect the program after construction of the lead ship begins to be included in its risk management plan and develop appropriate risk mitigation strategies. (Recommendation 4)||
In August 2019, the Coast Guard updated its risk register to include risks and mitigation strategies that affect the polar icebreaker program's schedule during lead ship construction, such as engine testing and integrated power system design and integration.
|Department of Homeland Security||The DHS Under Secretary for Management should require the Coast Guard to update the HPIB acquisition program baselines prior to authorizing lead ship construction, after completion of the preliminary design review, and after it has gained the requisite knowledge on its technologies, cost, and schedule, as recommended above. (Recommendation 5)||
In providing comments on this report, DHS concurred with our recommendation and stated that it will require the Coast Guard to update the HPIB program's acquisition program baselines prior to authorizing lead ship construction. While the program took steps to gain the requisite knowledge on its technologies and cost by implementing our recommendations in 2019 and 2021, it has not yet gained the requisite knowledge on its schedule--namely, developing realistic goals for all three ships--when it updated its program baselines in May 2021 for the Acquisition Decision Event (ADE) 2B. For example, Coast Guard officials stated that as of June 2022, the delivery dates for the second and third ships were still notional. By setting the program's baselines at ADE 2B prior to obtaining sufficient knowledge in the schedule, the program did not establish a sound business case for investing in the program before significant resource commitments were made. The program's next milestone is ADE 2C--authorization to start construction of the lead ship. As we noted in our report, evaluating the program's baselines at ADE 2C--immediately before the shipbuilder is authorized to start construction--is too late because the funding required for the construction phase has already been requested and provided. As a result, the timeframe for implementation of this recommendation has passed. We will continue to monitor Coast Guard's progress developing a realistic schedule and schedule baselines through other reviews.
|United States Coast Guard||The Commandant of the Coast Guard, in collaboration with the Secretary of the Navy, should update the financial management and budget execution appendix of the memorandum of agreement between the Coast Guard and the Navy to clarify and document agreement on how all cost growth on the HPIB program, including changes in scope, will be addressed between the Coast Guard and the Navy. (Recommendation 6)||
In April 2019, the Coast Guard and the Navy updated the memorandum of agreement to clarify that increases in funding requirements will be coordinated between the two organizations and applicable congressional committees and that the program office will formulate a spend plan to cover the government's potential liability in the appropriation that originally funded each effort.