To carry out these responsibilities, the Coast Guard operates a number of  vessels and aircraft and, through its Deepwater Program, is currently  modernizing or replacing those assets. At the start of Deepwater, the Coast  Guard chose to use a system-of-systems acquisition strategy that would  replace its assets with a single, integrated package of aircraft, vessels, and  communications systems through Integrated Coast Guard Systems  (ICGS), a system integrator that was responsible for designing,  constructing, deploying, supporting and integrating the assets to meet  Coast Guard requirements. In a series of reports since  2001, we have noted the risks inherent in the systems integrator approach  and have made a number of recommendations intended to improve the  Coast Guard’s management and oversight. Coast Guard Is Taking Steps To Increase Management Of The Deepwater Program

Over the past year, the Coast Guard’s Deepwater Program has been in the  midst of a major shift, from heavy reliance on a system integrator to  greater government control and a greater government role in decision- making. The Coast Guard has made a number  of significant program decisions and taken actions, including:    an increase in the Coast Guard’s management role through a  reorganization of its acquisition directorate;    a restructured approach to the review and approval of individual    planned improvements to the use and quality of information on  program performance, and  initiatives to develop a workforce with the requisite acquisition and  program management skills. Maintaining momentum will be important in improving  the Deepwater Program; we will continue to evaluate the Coast Guard’s  progress in all of these areas as part of our ongoing work. At this time, the Coast Guard has completed reports on ten  Deepwater assets. Coast Guard Continues to Face Challenges in Balancing Its Homeland Security and Non-Homeland Security Missions

The new and modernized assets the Coast Guard expects to acquire under  the Deepwater Program are intended to be used to help meet a wide range  of missions. After the September 11, 2001, terrorist attacks, the Coast  Guard’s priorities and focus had to shift suddenly and dramatically toward  protecting the nation’s vast and sprawling network of ports and  waterways. Although we have previously reported that  the Coast Guard is restoring activity levels for many of its non-homeland  security missions, the Coast Guard continues to face challenges in  balancing its resources between the homeland and non-homeland security  missions. In addition to the growing demands for homeland security  missions, there are indications that the Coast Guard’s requirements are  also increasing for selected non-homeland security missions. The additional requirements found in the SAFE Port Act have  added to the resource challenges already faced by the Coast Guard, some  of which are described below:     Inspecting domestic maritime facilities: Pursuant to Coast Guard  guidance, the Coast Guard has conducted annual inspections of  domestic maritime facilities to ensure that they are in compliance with  their security plans. Appendix I: Deepwater

In 2005, the Coast Guard revised its Deepwater acquisition program  baseline to reflect updated cost, schedule, and performance measures. Other assets, such as the National  Security Cutter and Maritime Patrol Aircraft, are in production.
Why GAO Did This Study

The Deepwater Program is intended to replace or modernize 15 major classes of Coast Guard assets--including vessels, aircraft, and communications systems. At the program's start, the Coast Guard chose to use a system integrator, Integrated Coast Guard Systems, to design, build, deploy, and support Deepwater in a system-of-systems approach. In a series of reports, we have noted the risks inherent in this approach. With the Deepwater program under way, the Coast Guard's priorities and focus shifted after September 11 toward homeland security missions, such as protecting the nation's ports and waterways. The 2002 Maritime Transportation Security Act and the 2006 SAFE Port Act required a wide range of security improvements. GAO is monitoring the acquisition of Deepwater and the Coast Guard's ability to carry out its numerous missions. This testimony addresses: (1) changes the Coast Guard is making as it assumes a larger role in managing the Deepwater Program and (2) challenges the Coast Guard is facing in carrying out its various missions. To conduct this work, GAO reviewed key documents, such as Deepwater acquisition program baselines, human capital plans, and Coast Guard budget and performance documents. For information on which GAO has not previously reported, GAO obtained Coast Guard views. The Coast Guard generally concurred with the information.

What GAO Found

With a recognition that too much control had been ceded to the system integrator under the Deepwater Program, the Coast Guard began this past year to shift the way it is managing the acquisition. Significant changes pertain to: (1) increasing government management of the program as part of the Coast Guard's reorganized Acquisition Directorate; (2) acquiring Deepwater assets individually as opposed to through a system-of-systems approach; (3) improving information to analyze and evaluate progress; and (4) developing an acquisition workforce with the requisite contracting and program management skills. Many of these initiatives are just getting under way and, while they are positive steps, the extent of their impact remains to be seen. The Coast Guard will likely continue to face challenges balancing its various missions within its resources for both the short and long term. For several years, we have noted that the Coast Guard has had difficulties fully funding and executing both homeland security missions and its non-homeland security missions. GAO's recent and ongoing work has shown that the Coast Guard's requirements continue to increase in such homeland security areas as providing vessel escorts, conducting security patrols of critical infrastructure, and completing inspections of maritime facilities here and abroad. In several cases, the Coast Guard has not been able to keep up with these security demands, in that it is not meeting its own requirements for vessel escorts and other security activities at some ports. In addition, there are indications that the Coast Guard's requirements are also increasing for selected non-homeland security missions. Since 2001, we have reviewed the Deepwater Program and have informed Congress, the Department of Homeland Security, and the Coast Guard of the risks and uncertainties inherent with such a large acquisition. In March 2004, we made a series of recommendations to the Coast Guard. The Coast Guard has taken actions on many of them. Three recommendations remain open, as the actions have not yet been sufficient to allow us to close them. In past work on Coast Guard missions, GAO made recommendations related to strategic plans, human capital, performance measures, and program operations.