By choosing to proceed with a funding scenario that appears to be unrealistically high in the face of budget projections that are substantially less, the Coast Guard is increasing the risk that the project will incur future cost increases and schedule stretch-outs. Our work focused on four risks: (1) planning the project around annual funding levels far above what the administration has told the Coast Guard it can expect to receive, (2) keeping costs under control in the contract’s later years, (3) ensuring that procedures and personnel are in place for managing and overseeing the contractor once the contract is awarded, and (4) minimizing potential with developing unproven technology. We reviewed the Coast Guard’s draft acquisition plan and RFP for the Deepwater Project phase 2, comments that the Coast Guard received from the consultants it hired to evaluate its acquisition strategy, and other documents to identify how the agency plans to manage and administer the procurement phase of the Deepwater Project. This is the largest aircraft in the Coast Guard’s fleet. This helicopter is capable of flying 150 nautical miles off shore. Whether the Coast Guard has adequately addressed these risks will not be known for years to come. First, it requires sustained funding at planned levels of more than $500 million for 2 or more decades.
What GAO Found

The Coast Guard is in the final stages of planning the largest procurement project in its history-the modernization or replacement of more than 90 cutters and 200 aircraft used for missions more than 50 miles from shore. This project, called the Deepwater Capability Replacement Project, is expected to cost more than $10 billion and take 20 years or longer to complete. Congress and the Coast Guard are at a major crossroads with the project. Planning is essentially complete, and Congress will soon be asked to commit to a multibillion-dollar project that will define the way the Coast Guard performs many of its missions for decades to come. The deepwater acquisition strategy is unique and untried for a project of this magnitude. It carries many risks that could potentially cause significant schedule delays and cost increases. The project faces risks in the following four areas: (1) planning the project around annual funding levels far above what the administration has told the Coast Guard it can expect to receive, (2) keeping costs under control in the contract's later years, (3) ensuring that procedures and personnel are in place for managing and overseeing the contractor once the contract is awarded, and (4) minimizing potential problems with developing unproven technology. All of these risks can be mitigated to varying degrees, but not without management attention.