	Long-Term Strategic Planning in Acquisitions Enables Better Tradeoff Decisions

Key elements of strategic planning include establishing long-term goals  and strategies for how those goals are to be achieved. In June 2014, we found that the Coast Guard—a component within the  Department of Homeland Security (DHS)—did not have a long-term fleet  modernization plan that identified all acquisitions needed to meet mission  needs over the next two decades within available resources. Further, in July 2018, we found the Coast Guard continues to manage its  acquisitions through its annual budget process and the 5-year Capital  Investment Plan, which is congressionally mandated and submitted to  Congress annually. Coast Guard officials told us the Capital Investment  Plan reflects the highest priorities of the department and that trade-off  decisions are made as part of the annual budget process. As a result of  this planning process, the Coast Guard has continued to defer planned  acquisitions to future years and left a number of operational capability  gaps unaddressed that could affect future operations. We recommended  that the annual Capital Investment Plans reflect acquisition trade-off  decisions and their effects. According to Coast Guard officials, the Coast Guard plans to  implement this recommendation by March 2020. Successful Acquisition Programs Begin with Sound Business Cases

Our prior work has repeatedly found that successful acquisition programs  start with solid, executable business cases before setting program  baselines and committing resources. At the  heart of a business case is a knowledge-based approach—we have  found that successful shipbuilding programs build on attaining critical  levels of knowledge at key points in the shipbuilding process before  significant investments are made (see figure 1). In September 2018, we found the Coast Guard did not have this type of  sound business case when it established the cost, schedule, and  performance baselines for its polar icebreaker program in March 2018. The Coast Guard’s planned delivery dates of 2023, 2025,  and 2026 for the three ships were not informed by a realistic  assessment of shipbuilding activities, but rather were primarily driven  by the potential gap in icebreaking capabilities once the Coast  Guard’s only operating heavy polar icebreaker—the Polar Star— reaches the end of its service life (see figure 2). DHS concurred with all six recommendations and identified  actions it planned to take to address them. Leveraging Navy’s Shipbuilding Experience May Create Efficiencies

Given the Navy’s experience in shipbuilding, agencies have partnered  with the Navy to take advantage of its expertise. For example, in April and  September 2018, we found examples of how the Coast Guard had  leveraged the Navy’s resources and acquisition approaches when  acquiring the polar icebreakers, including:
Establishing an integrated program office and potentially using  funding from both organizations. The ship design team  includes Coast Guard and Navy technical experts who develop ship  specifications based on the polar icebreaker program’s operational  requirements document. With  input from the integrated program office and ship design team, Navy  cost estimators developed the polar icebreaker program’s cost  estimate, which informed the program’s cost baselines and  affordability constraints. For each  acquisition within their portfolios, agencies should ensure that they have  established a sound business case before committing significant  resources.
Why GAO Did This Study

Both the Coast Guard—a component of the Department of Homeland Security (DHS)—and the Department of Commerce's National Oceanic and Atmospheric Administration (NOAA) are investing significant resources to recapitalize their aging fleets of ships. Ensuring that the Coast Guard and NOAA maintain their ships and address potential capability gaps is vital for protecting national security and scientific interests.
This statement summarizes lessons that GAO has identified from its prior reviews of Coast Guard and Navy acquisitions, which can be applied to the Coast Guard's and NOAA's shipbuilding efforts. Specifically, this testimony provides information on, among other things, (1) long-term strategic planning for acquisitions, (2) the need for a sound business case, and (3) the leveraging of the Navy's acquisition resources and shipbuilding expertise. In its prior work, GAO reviewed Coast Guard and Navy programs and interviewed officials. For this testimony, GAO obtained publicly available information on NOAA's ship acquisition efforts.

What GAO Found

GAO has found that acquisition programs can benefit from long-term strategic planning that identifies how tradeoff decisions would affect the future of the acquisition portfolio. In July 2018, GAO found the Coast Guard continues to manage its acquisitions through its annual budget process and the 5-year Capital Investment Plan. As a result of this planning process, the Coast Guard has continued to defer planned acquisitions to future years and left a number of operational capability gaps unaddressed. Incorporating the use of a long-term strategic plan and additional tradeoff discussion into the Capital Investment Plan could lead to more informed choices before irreversible commitments are made.
GAO's prior work has also found that acquisition programs should start with solid business cases before setting program baselines and committing resources. At the heart of a business case is a knowledge-based approach—successful shipbuilding programs build on attaining critical levels of knowledge at key points in the shipbuilding process before significant investments are made (see figure).
In September 2018, GAO found the Coast Guard did not have this type of sound business case when it established the program baselines for its polar icebreaker program in March 2018 due to risks in technology, design, cost, and schedule. For example, the Coast Guard's planned delivery dates were not informed by a realistic assessment of shipbuilding activities, but rather were primarily driven by the potential gap in icebreaking capabilities once the Coast Guard's only operating heavy polar icebreaker reaches the end of its service life.
Agencies have partnered with the Navy to take advantage of its resources and shipbuilding expertise, including the Coast Guard when acquiring the polar icebreakers. For example, in September 2018, GAO found that the Coast Guard and the Navy had established an integrated program office and a ship design team. These teams provided input to Navy cost estimators, who developed the polar icebreaker program's cost estimate.

What GAO Recommends

GAO has previously recommended that the Coast Guard develop a 20-year fleet modernization plan, reflect acquisition trade-off decisions in its annual Capital Investment Plans, and address risks to establish a sound business case for its polar icebreakers acquisition. DHS concurred with these recommendations and is taking steps to implement them.