	Legacy Vessel Fleet’s Condition Is Poor and Generally Declining Despite Coast Guard Maintenance Efforts

From fiscal years 2005 through 2011, the physical condition of the Coast  Guard’s legacy vessels was generally poor. A primary Coast Guard  measure of a vessel’s condition—the operational percent of time free of  major casualties—shows that the high endurance cutters, medium  endurance cutters, and patrol boats generally remained well below target  levels from fiscal years 2005 through 2011. Other evidence, such as our review of vessel condition  assessments and inspections the Coast Guard conducts of the legacy  vessels, also shows that the condition of the legacy vessel fleet is  generally declining. The Coast Guard has taken two key actions to improve the condition of its  legacy vessels. First, in 2009, the Coast Guard reorganized its  maintenance command structure to focus on standardization of practices. Under this reorganization, the Coast Guard eliminated its two  Maintenance and Logistics Commands and replaced them with a  centralized command structure—the Surface Forces Logistics Center— whereby a single product line manager oversees the maintenance of  similar classes of vessels. Coast Guard officials reported that this  change was made to enable better oversight of the condition of entire  classes of the vessel fleet, reduce the workload on vessel crews by  providing centralized support for procurement of replacement parts, and  implement centralized maintenance plans to address commonly occurring   Second, Coast Guard officials also reported that the Coast  casualties.Guard was on schedule to complete a 10-year, almost half-billion dollar  set of sustainment projects to refurbish selected patrol boats and upgrade  medium endurance cutters, known as Mission Effectiveness Projects,  which are intended to improve legacy vessel operating and cost  performance. Maintenance Expenditures Have Recently Increased, and the Process for Estimating Costs Does Not Fully Meet Best Practices

Expenditures for the two key types of legacy vessel annual depot-level  maintenance—scheduled and unscheduled maintenance—declined from  fiscal year 2005 to fiscal year 2007, and then rose from fiscal year 2007  to fiscal year 2011. Our  July 2012 report provides further information regarding the Coast Guard’s  annual depot-level maintenance expenditures. Our review found that the Coast Guard’s process for estimating legacy  vessel annual depot-level maintenance costs does not fully reflect  relevant best practices. GAO’s Cost Estimating and Assessment Guide  states that a high-quality and reliable cost estimate includes certain best  practice characteristics. We determined that the three characteristics  relevant to the Coast Guard’s cost estimation process are that the  process should be (1) well-documented, (2) comprehensive, and (3)  accurate. To address these issues, in our July 2012 report, we recommended that  the Secretary of Homeland Security direct the Commandant of the Coast  Guard to ensure that the Coast Guard’s annual depot-level maintenance  cost estimates conform to cost estimating best practices. Declining Condition of the Legacy Vessel Fleet Makes Operational Capacity Targets Increasingly Unachievable

The operational capacity of the Coast Guard’s legacy vessel fleet  declined from fiscal years 2006 through 2011. In particular, while  performance varied across the legacy vessel classes, two key Coast  Guard metrics—operational hours and lost cutter days—show that the  legacy vessels did not meet their operational capacity targets and lost  considerable planned operational time. For example, the high endurance  cutters and 210-foot medium endurance cutters did not meet any of their  operational hour targets from fiscal years 2006 through 2011, and the  270-foot medium endurance cutters met their targets only in fiscal year  2008. Coast Guard efforts to sustain its legacy vessel fleet and meet mission  requirements until the replacement vessels are delivered are also  challenged by uncertainties regarding the future mix of vessels, as well as  the implementation of a rotational crew concept for the replacement  vessel for the high endurance cutters, known as the national security  cutter. The Coast Guard’s fiscal year 2013 to 2017 5-year Capital  Investment Plan does not allocate funds for the acquisition of the last two  replacement national security cutters, as called for by the program of  record, and it is unclear how this could affect the decommissioning  schedule of the high endurance cutters, the last of which the Coast Guard  currently plans to decommission in fiscal year 2023. GAO Contact and Staff Acknowledgements

For questions about this statement, please contact Stephen L. Caldwell at  (202) 512-9610 or caldwells@gao.gov.
Why GAO Did This Study

This testimony discusses the condition of the Coast Guard's legacy vessel fleet, and challenges the Coast Guard faces in sustaining these vessels and meeting mission requirements. The Coast Guard, within the Department of Homeland Security, is the principal federal agency responsible for maritime safety, security, and environmental stewardship. The legacy vessel fleet is critical for executing Coast Guard missions, which include defense operations; search and rescue; and securing ports, waterways, and coastal areas. The comments will focus on the legacy 378-foot high endurance cutters, 270-foot and 210-foot medium endurance cutters, and 110-foot patrol boats, and are based on findings from the report we released in July 2012.
This testimony summarizes the findings of our July 2012 report and addresses (1) how the physical condition of the Coast Guard's legacy vessel fleet changed from fiscal years 2005 through 2011, and key actions the Coast Guard has taken related to the physical condition of its legacy fleet; (2) key annual maintenance expenditure trends for the legacy vessel fleet, and the extent to which the Coast Guard's cost estimating process has followed established best practices; and (3) the operational capacity of the legacy vessel fleet and the extent to which the Coast Guard faces challenges in sustaining the legacy vessel fleet and meeting mission requirements.
For information, contact contact Stephen L. Caldwell at (202) 512-9610 or caldwells@gao.gov .

What GAO Found

From fiscal years 2005 through 2011, the physical condition of the Coast Guard's legacy vessels was generally poor. A primary Coast Guard measure of a vessel's condition--the operational percent of time free of major casualties--shows that the high endurance cutters, medium endurance cutters, and patrol boats generally remained well below target levels from fiscal years 2005 through 2011.
The Coast Guard has taken two key actions to improve the condition of its legacy vessels. First, in 2009, the Coast Guard reorganized its maintenance command structure to focus on standardization of practices. Under this reorganization, the Coast Guard eliminated its two Maintenance and Logistics Commands and replaced them with a centralized command structure--the Surface Forces Logistics Center--whereby a single product line manager oversees the maintenance of similar classes of vessels. Coast Guard officials reported that this change was made to enable better oversight of the condition of entire classes of the vessel fleet, reduce the workload on vessel crews by providing centralized support for procurement of replacement parts, and implement centralized maintenance plans to address commonly occurring casualties. Second, Coast Guard officials also reported that the Coast Guard was on schedule to complete a 10-year, almost half-billion dollar set of sustainment projects to refurbish selected patrol boats and upgrade medium endurance cutters, known as Mission Effectiveness Projects, which are intended to improve legacy vessel operating and cost performance.
Expenditures for the two key types of legacy vessel annual depot-level maintenance--scheduled and unscheduled maintenance--declined from fiscal year 2005 to fiscal year 2007, and then rose from fiscal year 2007 to fiscal year 2011.
Further, annual depot-level maintenance expenditures often exceeded the Coast Guard's budgeted funds for depot-level maintenance for the legacy vessels--known as Standard Support Levels--from fiscal years 2005 through 2011. Our review found that the Coast Guard's process for estimating legacy vessel annual depot-level maintenance costs does not fully reflect relevant best practices. GAO's Cost Estimating and Assessment Guide states that a high-quality and reliable cost estimate includes certain best practice characteristics. We determined that the three characteristics relevant to the Coast Guard's cost estimation process are that the process should be (1) well-documented, (2) comprehensive, and (3) accurate.
The operational capacity of the Coast Guard's legacy vessel fleet declined from fiscal years 2006 through 2011. In particular, while performance varied across the legacy vessel classes, two key Coast Guard metrics--operational hours and lost cutter days--show that the legacy vessels did not meet their operational capacity targets and lost considerable planned operational time.
Coast Guard efforts to sustain its legacy vessel fleet and meet mission requirements until the replacement vessels are delivered are also challenged by uncertainties regarding the future mix of vessels, as well as the implementation of a rotational crew concept for the replacement vessel for the high endurance cutters, known as the national security cutter. The Coast Guard's fiscal year 2013 to 2017 5-year Capital Investment Plan does not allocate funds for the acquisition of the last two replacement national security cutters, as called for by the program of record, and it is unclear how this could affect the decommissioning schedule of the high endurance cutters, the last of which the Coast Guard currently plans to decommission in fiscal year 2023.