The Coast Guard Continues to Improve Its Acquisition Management Capabilities, but Many Programs Face Challenges

		Coast Guard Updates of Policies and Processes for Major Acquisition Programs Better Reflect Best Practices and Respond to Prior GAO Recommendations

The Coast Guard updated its overarching acquisition policy since we last  reported in July 2010 to better reflect best practices and respond to our  prior recommendations, and to more closely align its policy with the DHS  Acquisition Management Directive Number 102-01. In response to the Inspector General’s report, the Coast  Guard has taken steps to prioritize its action items; however, it is too soon  to tell the outcome of these actions. Acquisition workforce vacancies  have decreased, but program managers have ongoing concerns about  staffing program offices. Coast Guard Leverages DOD Contracts and Expertise to Support Programs, But Program Staff Could Benefit From Better Insight of Available Interagency Agreements

		Coast Guard Major Acquisition Programs Have Benefited from Leveraging DOD Expertise and Contracts

According to the Coast Guard, it currently has 81 interagency agreements,  memorandums of agreement, and other arrangements in place primarily  with DOD agencies to support its major acquisition programs. According to Coast Guard officials, they rely on  DOD experience and technical expertise because they both procure  similar major equipment, including ships and aircraft. Examples range  from acquiring products and services from established DOD contracts to  using engineering and testing expertise from the Navy. According to Coast Guard officials, the Coast Guard also collaborated with  Navy cost estimators and contracting staff to prepare for negotiations to  award the November 2010 production contract for the fourth National  Security Cutter. According to Coast Guard officials, examples include the following:     The Coast Guard’s HC-130J program coordinated C-130J contracting  efforts through the Air Force acquisition office’s contract rather than  contracting directly with the aircraft manufacturer and benefited from  discounts in ordering along with other DOD agencies. DOD Resources Available to Support Major Acquisition Programs May Not Be Transparent to Coast Guard Program Staff

Coast Guard program managers largely rely on informal contacts to learn  about the agreements in place with DOD to support program activities. However, due to limited attention devoted to this  issue, Coast Guard officials noted that only 5 of the approximately 81  interagency agreements are in a data system accessible to program staff. Conclusions

The Coast Guard has continued to make progress in strengthening its  capabilities to manage its acquisition portfolio by updating acquisition  policies and practices as well as reducing vacancies in the acquisition  workforce. DHS  provided oral comments stating that it concurred with the  recommendation. Appendix I: Scope and Methodology

The Coast Guard Authorization Act of fiscal year 2010, as amended,  specified that “Within 180 days after the date of enactment of the Coast  Guard Authorization Act for fiscal year 2010, the Comptroller General of  the United States shall transmit a report to the appropriate congressional  committees that—(1) contains an assessment of current Coast Guard  acquisition and management capabilities to manage Level 1 and Level 2  acquisitions; (2) includes recommendations as to how the Coast Guard can  improve its acquisition management, either through internal reforms or by  seeking acquisition expertise from the Department of Defense (DOD); and  (3) addresses specifically the question of whether the Coast Guard can  better leverage Department of Defense or other agencies’ contracts that  would meet the needs of Level 1 or Level 2 acquisitions in order to obtain  the best possible price.”
To determine the Coast Guard’s current management capabilities for its  major acquisition programs, we evaluated the Coast Guard’s acquisition  policies and processes, status of its acquisition workforce, and execution  of its major programs since we last reported on the Coast Guard’s  acquisitions and acquisition management in June and July 2010. To determine the extent to which the Coast Guard leverages DOD and  other agency contracts or expertise to support its major acquisition  programs, we examined the Coast Guard’s interagency agreements and  identified the agencies the Coast Guard most commonly used to support  major acquisition programs. Further, we  reviewed relevant GAO and DHS Inspector General reports.
Why GAO Did This Study

The Coast Guard manages a broad $27 billion major acquisition portfolio intended to modernize its ships, aircraft, command and control systems, and other capabilities. GAO has reported extensively on the Coast Guard's significant acquisition challenges, including project challenges in its Deepwater program. GAO's prior work on the Coast Guard acquisition programs identified problems in costs, management, and oversight, but it also recognized several steps the Coast Guard has taken to improve acquisition management. In response to the Coast Guard Authorization Act of 2010, GAO (1) assessed Coast Guard capabilities to manage its major acquisition programs, and (2) determined the extent to which the Coast Guard leverages Department of Defense (DOD) and other agency contracts or expertise to support its major acquisition programs. GAO reviewed Department of Homeland Security (DHS) and Coast Guard acquisition documents, GAO and DHS Inspector General reports, and selected DOD contracts; and interviewed Coast Guard, DHS, and DOD officials

What GAO Found

The Coast Guard continues to strengthen its acquisition management capabilities by updating acquisitions management policies and reducing acquisition workforce vacancies, but significant challenges remain. In November 2010, the Coast Guard updated its acquisition policy to further incorporate best practices and respond to prior GAO recommendations, such as aligning independent testing requirements with DHS policies and formalizing the Executive Oversight Council to review programs and provide oversight. Additionally, the Coast Guard reduced acquisition workforce vacancies from 20 to 13 percent from April to November 2010, but shortfalls persist in hiring staff for certain key areas such as systems engineers, and some programs continue to be affected by unfilled positions. While the Coast Guard has increased its acquisition management capabilities, most Coast Guard major acquisition programs have ongoing cost, schedule, or program execution risks. Additionally, unrealistic budget planning for the Coast Guard's acquisition portfolio exacerbates these challenges and will likely lead to more program cost and schedule issues. The Coast Guard has several actions under way to further improve acquisition policies and workforce shortfalls, as well as address budget planning issues, but it is too soon to tell whether the actions will be effective. The Coast Guard leveraged DOD contracts to purchase products and services or to gain expertise in support of major acquisition programs. The Coast Guard has entered into approximately 81 memorandums of agreement and other arrangements primarily with DOD, which has experience and technical expertise in purchasing major equipment such as ships and aircraft, to support its major acquisition programs. Examples range from acquiring products and services from established DOD contracts to obtaining engineering and testing expertise from the Navy. According to the Coast Guard, leveraging DOD contracts has led to cost savings for Coast Guard acquisition programs. For instance, the Coast Guard received price discounts for C-130J aircraft by coordinating contracting efforts with the Air Force rather than contracting directly with the aircraft manufacturer. In another example, Coast Guard officials used Navy cost estimators and contracting staff in the November 2010 production contract for the National Security Cutter. At this point, Coast Guard program managers rely on informal contacts to learn about the agreements in place to support program activities, thus potentially limiting staff knowledge of DOD resources available. Coast Guard contracting officials only recently recognized the need to make DOD agreements available to program staff, but due to limited attention to this issue, only about 5 of the 81 agreements are currently accessible to program managers.

What GAO Recommends

GAO recommends that the Coast Guard take steps to ensure program staff have access to interagency agreements with DOD. DHS concurred with the recommendation.