	Operators Extol New Assets’ Performance Compared to Aging Counterparts, but These Assets Have Yet to Meet Key Requirements

Coast Guard operators and commanding officers told us that the National  Security Cutter, Fast Response Cutter, and HC-144 are performing well  during missions and are an improvement over the vessels and aircraft  they are replacing. Based on the  results, neither asset met all key requirements during this testing. We recommended that DHS  and the Coast Guard revise their acquisition guidance to specify when  minimum performance standards should be met and clarify the  performance data that should be used to determine whether a  performance breach has occurred. Further, several issues occurred prior to the start of operational  testing that required retrofits or design changes to meet mission needs. The Coast Guard has not yet evaluated the C4ISR system through  operational testing even though the system has been fielded on nearly all  new assets. In response, the Coast  Guard stated that it now plans to test the C4ISR system’s key  performance parameters during follow on testing for the National Security  Cutter. These cost increases are consuming a large portion of  funding. Consequently, the Coast Guard is farther from fielding its  planned fleet today than it was in 2009, in terms of money needed to  finish these programs. Figure 1 shows the total cost of the portfolio and cost  to complete the major programs included in the Coast Guard’s 2007  baseline in 2009 and 2014. The mechanism in place for reporting  to certain congressional committees, the Capital Investment Plan, does  not reflect the full effects of these trade-off decisions on the total cost and  schedule of its acquisition programs. This information is not currently  required by statute, but without it, decision makers do not have the  information to understand the full extent of funding that will be required to  complete the Coast Guard’s planned acquisition programs. In our report, we  suggest that Congress consider amending the law that governs the 5- year Capital Investment Plan to require the Coast Guard to submit cost  and schedule information that reflects the impact of the President’s  annual budget request on each acquisition across the portfolio. Long Term Plan Needed to Address Gaps That Are Materializing as Coast Guard Shapes Its Capability through the Budget Process

To address budget constraints, the Coast Guard is repeatedly delaying  and reducing its capability through its annual budget process. However,  the Coast Guard does not know the extent to which its mission needs can  be tailored through the annual budget process and still achieve desired  results. For  example, the Coast Guard does not know if it can meet its other  acquisition needs while the Offshore Patrol Cutter is being built. The Coast Guard is not currently required to develop a long-term fleet  modernization plan that considers its current service levels for the next 20  years in relation to its expected acquisition funding. Without this type of plan, decision makers do not have the information  they need to better understand the Coast Guard’s long-term outlook. Without such a plan,  we believe it will remain difficult for the Coast Guard to fully understand  the extent to which future needs match the current level of resources and  its expected performance levels—and capability gaps—if funding levels  remain constant.
Why GAO Did This Study

This testimony summarizes the information contained in GAO's June 2014 report, entitled Coast Guard Acquistions: Better Information on Performance and Funding Needed to Address Shortfalls , GAO-14-450 .

What GAO Found

The selected Coast Guard assets that GAO reviewed are generally demonstrating improved performance--according to Coast Guard operators--but GAO found that they have yet to meet all key requirements. Specifically, two assets, the HC-144 patrol aircraft and Fast Response Cutter, did not meet all key requirements during operational testing before being approved for full-rate production, and Department of Homeland Security (DHS) and Coast Guard guidance do not clearly specify when this level of performance should be achieved. Additionally, the Coast Guard changed its testing strategy for the Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) system and, as a result, is no longer planning to test the system's key requirements. Completing operational testing for the C4ISR system would provide the Coast Guard with the knowledge of whether this asset meets requirements.
As acquisition program costs increase across the portfolio, consuming significant amounts of funding, the Coast Guard is farther from fielding its planned fleet today than it was in 2009, in terms of the money needed to finish these programs. In 2009, GAO found that the Coast Guard needed $18.2 billion to finish its 2007 baseline, but now needs $20.7 billion to finish these assets.
To inform Congress of its budget plans, the Coast Guard uses a statutorily required 5-year Capital Investment Plan, but the law does not require the Coast Guard to report the effects of actual funding levels on individual projects and, thus, it has not done so. For example, the Coast Guard has received less funding than planned in its annual budgets, but has not reflected the effects of this reduced funding in terms of increased cost or schedule for certain projects. Without complete information, Congress cannot know the full cost of the portfolio.
The Coast Guard has repeatedly delayed and reduced its capability through its annual budget process and, therefore, it does not know the extent to which it will meet mission needs and achieve desired results. This is because the Coast Guard does not have a long-term fleet modernization plan that identifies all acquisitions needed to meet mission needs over the next two decades within available resources. Without such a plan, the Coast Guard cannot know the extent to which its assets are affordable and whether it can maintain service levels and meet mission needs. Congress should consider requiring the Coast Guard to include additional information in its Capital Investment Plan. In addition, the Secretary of DHS should clarify when minimum performance standards should be achieved, conduct C4ISR testing, and develop a long-term modernization plan. DHS concurred with the recommendations, but its position on developing a long-term plan does not fully address GAO's concerns as discussed in the report.