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

The Coast Guard’s new asset classes that we reviewed—the National  Security Cutter, Fast Response Cutter, HC-144, and the C4ISR  information technology system—are generally demonstrating improved  mission performance over the assets they are replacing, according to  Coast Guard officials who operate these assets. DHS and the Coast Guard  approved both assets for full-rate production noting planned  improvements, but DHS and Coast Guard acquisition guidance is not  clear as to when a program needs to meet minimum performance  standards. However,  neither asset met all key requirements during initial operational testing. For example, DHS and  Coast Guard guidance provide that the Coast Guard should determine if  the capability meets the established minimum performance standards, but  do not specify when this determination should be made. The Navy also examined the extent to which the Fast Response Cutter  meets key requirements. The Coast Guard initially planned to test  the C4ISR system separately from the operational testing of its planes  and vessels, such as the HC-144 and Fast Response Cutter. Cost Increases Are Consuming Funding and Affordability Issues Have Not Been Addressed or Accurately Represented

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, we found that the Coast Guard needed  $18.2 billion to field its original baseline, but it now needs $20.7 billion to  finish fielding these same assets. The law does not require the Coast Guard to include total cost of its  projects at planned funding levels. Future Capabilities Uncertain as Coast Guard Makes Annual Budget Decisions; Alternatives Could Improve Outlook

The Coast Guard is repeatedly delaying and reducing its capability  through its annual budget process, but does not know the extent to which  its mission needs can be tailored and still achieve desired results. The Coast Guard does not have a long term plan  that demonstrates how it will maintain today’s service level and meet  identified needs. Thus, the Coast Guard does not know what capability it will be able to  provide and whether or not this capability will meet mission needs. The Coast Guard has no method in  The Coast Guard’s acquisition guidance supports using a long range  capital planning framework. As a result,  the Navy has some knowledge of its future funding challenges. Matter for Congressional Consideration

To help ensure that it receives accurate information on the full effect of  funding decisions on acquisition programs, Congress should 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 annual President’s budget request on each  acquisition across the portfolio—in addition to the current practice of  reporting the cost and schedule estimates in current program baselines. To help the Coast Guard improve the long-term outlook of its portfolio, we  recommend that the Commandant of the Coast Guard take the following  action:
Develop a 20-year fleet modernization plan that identifies all  acquisitions needed to maintain the current level of service and the  fiscal resources necessary to build the identified assets. In its  comments, DHS concurred with all of our recommendations. Additional scope and methodology information on each objective of this  report follows. To assess how selected assets are performing operationally and to what  extent they are achieving desired performance levels in testing, we  selected key assets that are being used in operations that were a part of  the original 2007 baseline—the Maritime Patrol Aircraft (HC-144), Fast  Response Cutter, National Security Cutter, and the Command, Control,  Communications, Computers, Intelligence, Surveillance, and  Reconnaissance (C4ISR) systems—and reviewed test reports and  operational data for these assets. To determine the current cost of the Coast Guard’s acquisition portfolio as  well as plans to fund its assets, we reviewed the Coast Guard’s budget  and capital investment plan and identified the programs that are currently  in its acquisition portfolio. To determine the extent to which the Coast Guard is experiencing  capability gaps, if any, given known affordability issues, we assessed the  Coast Guard’s performance targets and compared these targets with  acquisition plans. GAO-13-321.
Why GAO Did This Study

The Coast Guard is managing a multi-billion dollar effort to modernize aging assets, including ships, aircraft, and information technology to provide new capabilities to conduct missions ranging from marine safety to defense readiness. GAO has reviewed the Coast Guard's acquisitions since 2001 and has found it faces challenges managing its portfolio. In 2007, the Coast Guard established a cost baseline of $24.2 billion for 13 assets. GAO was asked to examine the Coast Guard's current and planned acquisition portfolio.
This report assesses: (1) operational performance and testing of selected assets; (2) the current cost of the Coast Guard's portfolio and funding plans; and (3) the extent to which the Coast Guard is experiencing capability gaps, if any, given known affordability issues. To conduct this work, GAO analyzed the operational performance and test reports for all 4 newly fielded assets that the Coast Guard planned to test and the costs and capabilities of its major system acquisition portfolio. GAO also interviewed Coast Guard, DHS, and Navy officials.

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.

What GAO Recommends

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.