Based on the 2005 Mission Needs Statement, DHS  approved a program of record in 2007—known as the Deepwater  program—that provided the additional capability required. Figure  1 shows some of the Coast Guard’s newer assets that are part of this  broader modernization effort. The Coast Guard’s Newer Assets Offer Greater Capability than Its Legacy Fleet

The Coast Guard is currently procuring three new cutter classes that will  have more capability than the legacy assets they are intended to replace. Specifically, the FRC and NSC have greater fuel capacity and efficiency,  engine room and boat launch automation, handling/sea-keeping, and food  capacity, all of which increase endurance and effectiveness. The OPC is also expected to provide increased capabilities  compared to the Medium Endurance Cutter it is replacing. The Coast Guard is also updating and acquiring new aviation assets that  have increased capabilities compared to the legacy assets they are  replacing. New Coast Guard Cutters Are Experiencing Maintenance and Equipment Issues

		FRC and NSC Mission Capable Rates Are Lower than Expected

The Coast Guard has not been able to take full advantage of increased  capabilities of the FRC and NSC due to maintenance issues that have  limited their time available for operations. As we reported in March 2017,  while over the past few years both the FRC and NSC met their minimum  mission capable targets on average, which are 48 percent for the FRC  and 49 percent for the NSC, our analysis of a more recent period—from  October 2015 to September 2016—found that both cutters fell below their  minimum targets due to needed increased depot-level maintenance. The main diesel engines on  both cutters, which were manufactured by the same vendor, were among  the equipment systems that resulted in the most lost operational days  from 2014 through 2016 and have been problematic since the cutters  became operational. Affordability of the Coast Guard’s Acquisition Portfolio Remains in Doubt

As we found in June 2014, there are gaps between what the Coast Guard  estimates it needs to carry out its program of record for its major  acquisitions and what it has traditionally requested and received. For example, senior  Coast Guard officials have stated a need for over $2 billion per year, but  the President’s budget requested $1.2 billion for fiscal year 2018, after  asking for $1.1 billion in fiscal year 2017. In an effort to address the  funding constraints it has faced annually, the Coast Guard has been in a  reactive mode, delaying and reducing its capability through the annual  budget process by delaying new acquisitions, and does not have a plan to realistically set forth affordable priorities. For instance, the Coast Guard  has realized delays in many of its programs but, in particular, is facing a  gap in the capability provided by its Medium Endurance Cutter fleet,  which will likely begin reaching the end of their service lives before the  OPCs are operational. These key  actions included: 1) the Coast Guard conducting a comprehensive  portfolio review across all its acquisitions to develop revised baselines  that meet mission needs and reflect realistic funding scenarios and 2) the  Coast Guard developing a 20-year plan that identifies all necessary  recapitalization efforts and any fiscal resources likely necessary to  complete these efforts. In June 2014, we also recommended that the Coast Guard develop a 20- year fleet modernization plan that identifies all acquisitions necessary for  maintaining at least its current level of service and the fiscal resources  necessary to build these assets. DHS concurred with the recommendation, but it is  unclear when the Coast Guard plans to complete this effort. In conclusion, as the Coast Guard continues to field new or refurbish  existing cutters and aircraft with improved capabilities, it is important that  the Coast Guard plan for the affordability of its future portfolio so that it  can minimize the capability gaps that can occur as legacy assets reach  the end of their service lives before the new assets become operational.
Why GAO Did This Study

In order to meet its missions of maritime safety, security, and environmental stewardship, the Coast Guard, a component within the Department of Homeland Security (DHS), employs a variety of surface and air assets, several of which are approaching the end of their intended service lives. As part of its efforts to modernize its surface and air assets (an effort known as recapitalization), the Coast Guard has begun acquiring new vessels, such as the National Security Cutter, Fast Response Cutter, and a number of air assets, and developing the Offshore Patrol Cutter. Despite the addition of new assets, concerns surrounding capability and affordability gaps remain.
This statement addresses (1) the capabilities provided by the newer Coast Guard assets, (2) maintainability and equipment challenges for the new cutters, and (3) the overall affordability of the Coast Guard's acquisition portfolio. This statement is based on GAO's extensive body of work examining the Coast Guard's acquisition efforts spanning several years, including the March 2017 report on the NSC and FRC's maintainability.

What GAO Found

The Coast Guard is currently procuring three new cutter classes that are intended to have more capability than the legacy assets they are replacing. In particular, the National Security Cutter (NSC) and the Fast Response Cutter (FRC) are generally demonstrating improved mission performance (see figure). Both cutters have greater fuel capacity and efficiency and handling/sea-keeping than the legacy assets they replace, all of which increase endurance and effectiveness. Another new asset—the Offshore Patrol Cutter (OPC)—is also expected to provide increased capabilities compared to the Medium Endurance Cutter it is replacing, such as the ability to conduct longer patrols.
The Coast Guard, however, has not been able to take full advantage of the FRC's and NSC's capabilities because of maintenance and equipment issues limiting their time available for operations. GAO found in March 2017 that while both cutters met their minimum mission capable targets on average over the long-term, more recently—from October 2015 to September 2016—they fell below their minimum targets due to needed increased depot-level maintenance. Both cutters have also been plagued by problems with critical equipment, such as the diesel engines, which have contributed to lost operational days.
In June 2014, GAO found gaps between the funding amounts the Coast Guard estimates its major acquisitions need and what it has requested. This has continued. For example, senior Coast Guard officials peg acquisition needs at over $2 billion per year, but the President's budget requested $1.2 billion for fiscal year 2018. In an effort to address funding constraints, the Coast Guard delayed new acquisitions through the annual budget process, but lacks a long-term plan to set forth affordable priorities. As a result of these issues, it is facing a gap in the capability provided by its Medium Endurance Cutters, which are slated to reach the end of their service lives before all the OPCs are operational. GAO recommended in 2014 that the Coast Guard develop a 20-year fleet modernization plan that identifies all acquisitions needed to maintain the current level of service—aviation and surface—and the fiscal resources needed to buy the identified assets. DHS concurred with the recommendation, but it is unclear when the Coast Guard will complete this effort.

What GAO Recommends

GAO is not making recommendations in this statement but has made recommendations to the Coast Guard and DHS in the past regarding recapitalization and the specific assets involved, including that the Coast Guard develop a 20-year fleet modernization plan that identifies all acquisitions needed to maintain the current level of service and the fiscal resources needed to acquire them. DHS agreed with this recommendation.