In 1996, in order to continue carrying out its  responsibilities and operations, the Coast Guard initiated the Deepwater  program to replace or upgrade its aging vessels, aircraft, and other  essential equipment. After the terrorist attacks on  September 11, 2001, the Coast Guard was also assigned homeland security  missions related to protection of ports, waterways, and coastal areas. Based on its revised mission responsibilities, the Coast Guard updated its  Deepwater Acquisition Program Baseline in November 2005. Coast Guard Removed 123-foot Patrol Boats from Service for Operational and Safety Reasons, and is Acting to Mitigate Operational Impacts

Between January 2001 and November 2006, numerous events led up to the  failure of the Coast Guard’s bridging strategy to convert the legacy   110-foot patrol boats into 123-foot patrol boats. To address these  issues, the Coast Guard’s original (2002) Deepwater plan included a  strategy to convert all 49 of the 110-foot patrol boats into 123-foot patrol  boats to strengthen the hulls. These  8 converted boats were removed from service on November 30, 2006  because of operational and safety concerns. Specifically, in recent testimony, the Commandant of the Coast Guard  stated that Coast Guard has taken the following actions:     multi-crewing certain 110-foot patrol boats with crews from the   123-foot patrol boats that have been removed from service so that  patrol hours for these vessels can be increased;    deploying other Coast Guard vessels to assist in missions formerly  performed by the 123-foot patrol boats; and    securing permission from the U.S. Navy to continue using 179-foot  cutters on loan from the Navy for an additional 5 years (these were  originally to be returned to the Navy in 2008) to supplement the Coast  Guard’s patrol craft. Deepwater Asset Delivery Schedule is Mixed, with 7 of 10 on or Ahead of Schedule and 3 Behind Due to Various Factors

Our review of available data show that as of January 2007, of the 10  classes of Deepwater assets to be acquired or upgraded, 4 are ahead of  schedule; 3 remain on schedule (and for 1 of these, design problems have  arisen); and 3 are behind scheduled delivery and face design, funding, or  technology challenges. The remaining 2 new maritime  assets are small vessels that are on or ahead of schedule at this time. Fast Response Cutter

Concerns about the viability of the design of the FRC have delayed the  delivery of the first FRC by at least 2 years. Preliminary Observations on the Status of Deepwater Program Management, Contractor Accountability, and Cost Control

Since the inception of the Deepwater program, we have expressed  concerns about the risks involved with the Coast Guard’s system-of- systems acquisition approach and the Coast Guard’s ability to manage and  oversee the program. Our concerns have centered on three main areas:   program management, contractor accountability, and cost control through  competition. We will continue our work focusing on the Coast  Guard’s efforts to address our recommendations and report on our  findings later this year. The Coast Guard’s ability to assess IPT performance continues to be  problematic. Preliminary  observations from our ongoing work on the Coast Guard’s efforts to  improve system integrator accountability follow.
Why GAO Did This Study

The U.S. Coast Guard's Deepwater program was designed to upgrade or replace its aging legacy aircraft and vessels with assets focusing on the Coast Guard's traditional at-sea roles. After the September 11, 2001 terrorist attacks, the Coast Guard took on additional security missions, resulting in revisions to the Deepwater plan. GAO's prior work raised concerns about Coast Guard's efforts to upgrade or acquire assets on schedule, and manage and effectively monitor the system integrator. This testimony provides GAO's preliminary observations on (1) events and issues surrounding the Coast Guard's bridging strategy to convert the legacy 110-foot patrol boats to 123-foot patrol boats; (2) the status of the Coast Guard's efforts to acquire new or upgraded Deepwater assets; and (3) the Coast Guard's ability to effectively manage the Deepwater program, hold contractors accountable, and control costs through competition. GAO's preliminary observations are based on audit work performed from August 2006 to February 2007.

What GAO Found

Numerous events since January 2001 led up to the failure of the Coast Guard's bridging strategy to convert its legacy 110-foot patrol boats into 123-foot patrol boats. These converted boats were removed from service on November 30, 2006 because of operational and safety concerns. According to the Coast Guard Commandant, actions are being taken to mitigate the impact of the removal of these patrol boats on mission activities. For example, patrol hours of some 110-foot patrol boats have been increased through the addition of crews from the 123-foot patrol boats, and other Coast Guard vessels have been deployed to assist in carrying out missions. The delivery record for the 10 classes of upgraded or new Deepwater aircraft and vessels is mixed. Specifically, 7 of the 10 asset classes are on or ahead of schedule. Among these, 5 first-in-class assets have been delivered on or ahead of schedule; 2 others remain on time but their planned delivery dates are in 2009 or beyond; therefore, delays could still potentially occur. Three Deepwater asset classes are currently behind schedule due to various problems related to designs, technology, or funding. For example, the Fast Response Cutter (a new vessel), which had been scheduled for first-in-class delivery in 2007, has been delayed by at least 2 years in part because work on its design was suspended until technical problems can be addressed. From the program's outset, GAO has raised concerns about the risks involved with the Coast Guard's acquisition strategy. In 2004, GAO reported that program management, contractor accountability, and cost control were all challenges, and made recommendations in these areas. Insufficient staffing, ineffective performance measures, and the Coast Guard's lack of knowledge about the extent to which the contractor was using competition have contributed to program risk. The Coast Guard has taken some actions to address these issues. GAO plans to continue to assess the Coast Guard's Deepwater program, including its efforts to address GAO recommendations, and will report the findings later this year.