Appendix II provides information on the programs included in the Coast  Guard’s major acquisition portfolio in 2018. DHS concurred with our  recommendation. Officials told us at that time that the portfolio oversight was  done through the annual budget process. DHS concurred and the Coast Guard updated the Executive Oversight  Council’s charter in 2014 to require the group to annually oversee the  acquisitions collectively as a balanced long-term and affordable portfolio. As we have previously found, the Coast Guard’s 5-year CIPs continue to  demonstrate a pattern of certain planning practices, to include: not identifying priorities or trade-offs between acquisition programs  and not showing the effect of current decisions on the overall  affordability of the acquisition portfolio; projecting funding levels for the current budget year that do not reflect  the full extent of the Coast Guard’s projected acquisition needs; and projecting funding levels for future years that frequently surpass the  average funding amounts requested by the Coast Guard in recent  years. These shortcomings limit the Coast Guard’s ability to manage the  affordability of its acquisition portfolio. Coast Guard officials said the CIP  reflects the highest priorities of the department within the given top  funding level and that prioritization and trade-off decisions are made as  part of the annual budget cycle. However, these decisions, and the  resulting impacts on affected programs, are not articulated in the CIPs. While the Coast Guard is not required under statute to identify the effects  of trade-off decisions in the CIP, failing to show which acquisitions would  take on more risk so other acquisitions can be prioritized and adequately  funded within budget parameters also makes it difficult for Congress and  other stakeholders, such as DHS and the Office of Management and  Budget (OMB), to understand other options the Coast Guard considered. In June 2014, we also found  that there is no evidence that short-term budget decisions will result in a  good long-term strategy, and the Coast Guard’s annual budget-driven  trade-off approach creates constant churn as program baselines must  continually re-align with budget realities instead of budgets being  formulated to support program baselines. According to Executive  Oversight Council officials, this responsibility was removed from the 2017  charter because the council did not conduct these annual reviews. This OMB guidance states that a  senior-level executive review committee should be responsible for  reviewing the agency’s entire capital asset portfolio on a periodic basis  and for making decisions or priorities on the proper composition of  agency assets needed to achieve strategic goals and objectives within  the budget limits. In the past, this council had a documented role to annually review  and oversee the Coast Guard’s overall acquisition portfolio, but it never  conducted these reviews. DHS also  stated that, to meet the spirit of our recommendation, the Coast Guard  will update the Executive Oversight Council’s charter to require a review  of the collective acquisition portfolio, specifically evaluating long-term  planning. GAO staff who made key contributions to this report are  listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

The objectives of this report are to assess (1) the extent to which the  Coast Guard has made changes to how it manages its acquisition  portfolio and (2) how the Coast Guard is sustaining existing assets until  new assets become operational. We analyzed Coast Guard 5-year Capital Investment  Plans (CIP) that supported the budget requests for fiscal years 2014  through 2018 to determine how the Coast Guard has managed the  affordability of its acquisition portfolio. We compared Coast Guard practices for managing the affordability  of its acquisition portfolio and long-term planning with best practices  outlined in GAO’s Cost Estimating and Assessment Guide and prior GAO  reports.
Why GAO Did This Study

The Coast Guard spends billions of dollars on its major acquisition programs to meet its missions. GAO's prior work has identified the Coast Guard's reliance on its annual budget process to manage its acquisition portfolio as a challenge.
GAO was asked to review the recapitalization of the Coast Guard's acquisition portfolio. This report assesses, among other topics, the extent to which the Coast Guard has made changes to how it manages its acquisition portfolio.
GAO assessed Coast Guard's major acquisition programs to determine changes since GAO's 2014 portfolio review. GAO analyzed program baselines and interviewed Coast Guard officials. GAO analyzed the CIP for fiscal years 2014 through 2018, and reviewed the EOC's documentation.

What GAO Found

The Coast Guard, a component within the Department of Homeland Security (DHS), continues to manage its acquisitions through its annual budget process and the 5-year Capital Investment Plan (CIP)—congressionally mandated and used for oversight. This management approach creates constant churn as program baselines must continually re-align with budget realities instead of budgets being formulated to support program baselines. Further, Coast Guard officials said the CIP reflects the highest priorities of the department—such as the Offshore Patrol Cutter, which is the Coast Guard's highest priority—and that trade-off decisions are made as part of the annual budget process. However, the effects of these decisions, such as which acquisitions would take on more risk so others can be prioritized and adequately funded, are not communicated in the CIP to key decision makers, because including such information is not statutorily required. Over the years, this approach has left the Coast Guard with a build up—or bow wave—of near-term unfunded acquisitions, negatively affecting recapitalization efforts and limiting the effectiveness of long-term planning. Including the effects of these trade-offs in the CIP would align with GAO's cost estimating best practices. Until it does so, the Coast Guard limits its ability to manage its acquisition portfolio in the long-term, beyond the time covered in the 5-year CIP.
In response to a September 2012 GAO recommendation, the Coast Guard updated the Executive Oversight Council's (EOC)—a cross-directorate group that oversees major acquisition programs—charter in 2014 to require annual reviews of the acquisition portfolio collectively. However, EOC officials said that these annual reviews never occurred, and GAO found that the annual review requirement was removed from the charter in 2017. Thus, the Coast Guard is without a senior-level group charged to collectively review and ensure affordability of its acquisition portfolio. The Office of Management and Budget's Capital Programming Guide states that a senior-level executive committee should be responsible for reviewing the agency's entire asset portfolio and for making decisions on the proper composition of assets needed to achieve strategic goals within budget constraints.

What GAO Recommends

GAO recommends that the annual CIPs reflect acquisition trade-off decisions and their effects, and that the EOC review the overall acquisition portfolio and its affordability annually. DHS concurred with the CIP recommendation. DHS did not concur with the EOC recommendation. It noted that other existing Coast Guard bodies are responsible for evaluating and prioritizing funding. However, DHS stated that the EOC charter will be updated to require it to review the overall acquisition portfolio, including long-term planning. If this long-term planning accounts for budget realities for the acquisition portfolio, GAO believes the intent of the recommendation will be met.