The Coast Guard’s Process for Allocating Assets to Meet Mission Responsibilities

Since fiscal year 2008, the Coast Guard has used the Standard  Operational Planning Process for annually developing and  communicating strategic commitments and allocating resource hours, by  asset type (i.e., aircraft, cutters, and boats), throughout its chain of  command for meeting mission responsibilities. The Coast Guard’s Acquisition Plans Do Not Reflect Its New Assets and Current Funding Levels

		The 2005 Mission Needs Statement Baseline Does Not Reflect the Coast Guard’s Planned Assets and Capacities

Since the Coast Guard developed acquisition plans for its Deepwater  recapitalization program, many of the assumptions that initially informed  these plans, including the 2005 Mission Needs Statement baseline for  those assets, have changed and are no longer accurate, as we reported  in June 2014 and May 2015. However, we reported  in March 2015 that the unexpected transfer of C-27J aircraft from the  Department of Defense in December 2013 represented a significant  change to this aircraft fleet mix. However, Congress recently provided  the Coast Guard with funding for a ninth National Security Cutter as part  of the Consolidated Appropriations Act, 2016, representing an  unanticipated addition to its planned major cutter fleet. However, the Coast Guard’s  April 2016 report to Congress on its capital investments states that the  planned resource hours for each Fast Response Cutter is 2,500 hours per  year—a reduction of 500 hours per cutter from the 2005 baseline. For the past 6 years, we have consistently found that there is a  significant difference between the funding 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 through annual  appropriations. To date, the Coast Guard’s attempts to address this  difference by establishing its future fleet’s mission needs within  reasonable budget constraints have been unsuccessful. As the Coast Guard has faced fiscal constraints in recent  years, this has led to asset capability gaps. We  recommended in June 2014, that the Coast Guard develop a 20-year fleet  modernization plan that identifies all acquisitions needed to maintain the  current level of service—aircraft and vessels—and the fiscal resources  needed to buy the identified assets. As  of June 2016, the Coast Guard has yet to complete this plan. Past GAO Recommendations

In addition to the 20-year fleet modernization plan, we have made several  recommendations in recent years for the Coast Guard to improve its  recapitalization business case by, among other things, identifying the  cost, capabilities, and quantity and mix of assets needed; as well as the  trade-offs necessary to meet fiscal constraints. Use of Asset Capacities Limit the Strategic Effectiveness of the Asset Allocation Process, but the Coast Guard Is Taking Steps to Improve the Process

		Coast Guard Headquarters’ Strategic Planning Directions Reflect Asset Maximum Capacities Rather Than Achievable Goals

In May 2016, we reported that Coast Guard headquarters does not  provide field units with realistic goals for allocating assets, by mission. In response to our findings, we recommended that the Coast Guard more  systematically incorporate field unit input to inform more realistic asset  allocation decisions—in addition to asset maximum capacities currently  used—in the annual Strategic Planning Directions to more effectively  communicate strategic intent to field units. The Coast Guard concurred  with our recommendation and stated that it was taking actions to better  incorporate field unit input for fiscal year 2017. The Coast Guard Does Not Document the Extent to Which Risk Assessments Affect Asset Allocation Decisions

In May 2016, we also reported that the Coast Guard does not maintain  documentation on the extent to which risk factors have affected the  allocation of asset resource hours to missions through its Strategic  Planning Directions. Furthermore, to ensure that assets are deployed consistent with Coast  Guard mission priorities, the Coast Guard should follow through with  implementing our prior recommendations to improve its annual resource  allocation process. Key  contributors for the previous work that this testimony is based on are  listed in each product.
Why GAO Did This Study

Following the terrorist attacks of September 11, 2001, the Coast Guard has been charged with expanded security-related missions. Constrained budgets in recent years have underscored the importance of ensuring that the Coast Guard has the proper mix of assets and that it can effectively allocate these assets to achieve its missions. In recent years, the Coast Guard has begun to deploy new assets, and has taken actions to assess what assets it needs to carry out its missions and how to best allocate its current assets. However, the Coast Guard continues to face decisions about what assets it needs and how to best allocate these assets to meet its mission responsibilities.
This statement addresses the Coast Guard's (1) mission needs, and (2) process for allocating asset resource hours across missions and units. This testimony is based on GAO's May 2016 report on the Coast Guard's allocation of assets, and GAO's body of work over the past 6 years on Coast Guard major acquisitions, as well as selected updates obtained in May 2016. For the selected updates, GAO reviewed Coast Guard documentation and analyzed fiscal year 2015 data on Coast Guard asset resource hour utilization, which GAO found to be sufficiently reliable for the purposes of this testimony statement.

What GAO Found

Since the U.S. Coast Guard developed acquisition plans for its asset recapitalization program, many of the assumptions that initially informed these documents, including its 2005 Mission Needs Statement baseline, are no longer accurate. For example, in March 2015, GAO reported that the Coast Guard received an unexpected transfer of 14 C-27J aircraft from the Air Force, representing a significant change to its aircraft fleet mix. In addition, Congress recently provided the Coast Guard with funding for a ninth National Security Cutter—one more than it had planned for in 2005. Further, the Coast Guard has reduced the operational capacities of several assets to reflect more realistic and achievable operational targets. For example, the Coast Guard reduced the operational capacity of the Fast Response Cutter from 3,000 hours per vessel per year to 2,500 hours. GAO has also consistently found that there is a significant difference between the funding the Coast Guard estimates it needs for its major acquisitions and what it has traditionally requested and received. The Coast Guard's attempts to address this difference by establishing its future fleet's mission needs within reasonable budget constraints have been unsuccessful. GAO has made several recommendations for the Coast Guard to improve its recapitalization business case, 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. The Coast Guard concurred with the recommendation and has actions underway, but has not completed this plan. Given that key changes have taken place since 2005, the Coast Guard should continue to take steps to address GAO's recommendations.
GAO reported in May 2016 that the Coast Guard uses the Standard Operational Planning Process to annually allocate asset resource hours to field units for meeting missions, but the headquarters' Strategic Planning Directions used in this process do not provide field units with strategic, realistic goals. Rather, headquarters' Strategic Planning Directions allocate maximum resource hour capacities for each asset. These allocations have consistently exceeded actual asset resource hours used by field units. GAO recommended, among other things, that the Coast Guard more systematically incorporate field unit input to inform more realistic asset allocation decisions—in addition to asset maximum capacities currently used—in the annual Strategic Planning Directions to more effectively communicate strategic intent to field units. The Coast Guard concurred with GAO's recommendation and stated that it was taking actions to better incorporate field unit input for fiscal year 2017.

What GAO Recommends

GAO is not making any new recommendations in this statement.