Report to Congressional Requesters

United States Government Accountability Office

GAO

July 2005 COAST GUARD 

Progress Being Made 

on Addressing 

Deepwater Legacy 

Asset Condition Issues 

and Program 

Management, but 

Acquisition 

Challenges Remain 

GAO-05-757 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-757.

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and methodology, click on the link above. 

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Wrightson at (415) 904-2200 or 

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Highlights of GAO-05-757, a report to 

congressional requesters 

July 2005

COAST GUARD

Progress Being Made on Addressing 

Deepwater Legacy Asset Condition 

Issues and Program Management, but 

Acquisition Challenges Remain 

Available Coast Guard condition measures indicate that the condition of 

most Coast Guard legacy aircraft and cutters generally declined during fiscal 

years 2000-2004, but these measures are inadequate to capture the full extent 

of the decline in the condition with any precision. GAO’s field visits and 

interviews with Coast Guard staff, as well as reviews of other evidence, 

showed significant problems in a variety of asset systems and equipment 

that are not currently captured in the Coast Guard’s condition measures. 

The Coast Guard has already taken actions to help keep its deepwater legacy 

assets operational. For example, to help meet mission requirements, Coast 

Guard staff are performing more extensive maintenance between 

deployments, but even so, aircraft and cutters continue to lose mission 

capabilities. Responding to these continued concerns, as well as to matters 

raised during this review and in prior GAO reports, the Coast Guard has 

begun to explore additional strategies and approaches to better determine 

and improve the mission capabilities of its legacy assets. These actions 

include (1) developing a more proactive approach for prioritizing 

maintenance and capability enhancement projects needed on its legacy 

assets; (2) developing measures that more clearly demonstrate the extent to 

which assets’ conditions affect mission capabilities; and (3) for one 

command, proposing a new strategy to sustain one of its oldest classes of 

cutters. These ongoing efforts, while promising, are too new to allow GAO to 

assess whether they will allow the Coast Guard to better determine and 

improve the mission capabilities of its legacy assets. 

If the Coast Guard adopts a more aggressive acquisition schedule, it will 

likely continue to face a number of challenges to effectively manage the 

Deepwater program. GAO has warned that the Coast Guard’s acquisition 

strategy of relying on a prime contractor (“system integrator”) to identify 

and deliver the assets needed carries substantial risks. GAO found that well 

into the contract’s second year, key components for managing the program 

and overseeing the system integrator’s performance had not been effectively 

implemented. While the Coast Guard has been addressing these problems—

for example, putting more emphasis on competition as a means to control 

costs—many areas have not been fully addressed. A more aggressive 

acquisition schedule would only heighten the risks. 

Two Coast Guard Deepwater Legacy Assets in Action 

Source: Photo courtesy of the U.S. Coast Guard.

Pictured at left is a 270-foot medium-endurance 

cutter and an HH-65 helicopter.

The Coast Guard has been 

asserting that its deepwater legacy 

assets are “failing at an 

unsustainable rate.” After the 

events of September 11, 2001, the 

Coast Guard’s deepwater missions 

expanded to include a greater 

emphasis on ports, waterways, and 

coastal security. These heightened 

responsibilities required changes to 

the Deepwater implementation 

plan to provide the assets with 

greater operational capabilities. To 

address these needs, in 2002, the 

Coast Guard began a multiyear 

acquisition program to replace or 

modernize its deepwater assets 

that is currently estimated to cost 

$19 to $24 billion. More recently, it 

began studying options for 

replacing or modernizing the assets 

more rapidly in an effort to avoid 

some of the costs that might be 

involved in keeping aging assets 

running for longer periods. 

This report addresses three 

questions related to this effort: 

(1) How has the condition of the 

Coast Guard’s deepwater legacy 

assets changed during fiscal years 

2000 through 2004? (2) What 

actions has the Coast Guard taken 

to maintain, upgrade, and better 

manage its deepwater legacy 

assets? and (3) What are the 

management challenges the Coast 

Guard faces in acquiring new 

assets, especially if a more 

aggressive acquisition schedule is 

adopted? 
Page i GAO-05-757 Coast Guard 

Letter 1

Results in Brief 4 

Background 5 

Legacy Assets Show Declining Condition, but Measures Are 

Imprecise and Fail to Capture Impact on Mission Capabilities 11 

Actions to Better Manage Legacy Assets Are Under Way, but 

Effects Will Not Be Known for Some Time 15 

Management Challenges Faced in Acquiring New Assets Remain 

Significant 22 

Concluding Observations 32 

Agency Comments 33 

Appendix I Objectives, Scope, and Methodology 35 

Appendix II Information on Deepwater Legacy Aircraft and 

Cutters 38 

HC-130 Long-Range Surveillance Aircraft 38 

HU-25 Medium-Range Surveillance Aircraft 41 

HH-60 Medium-Range Recovery Helicopter 43 

HH-65 Short-Range Recovery Helicopter 45 

378-Foot High- Endurance Cutter 48 

270-Foot Medium- Endurance Cutter 50 

210-Foot Medium- Endurance Cutter 52 

110-Foot and 123-Foot Patrol Boats 54 

Appendix III GAO Contact and Staff Acknowledgments 58 

GAO Related Products 59 

Tables 

Table 1: Deepwater Legacy Aircraft and Cutter Fleet, as of early 

June 2005 7 

Table 2: Synopsis of Deepwater Legacy Assets’ Condition 12 

Table 3: Estimated Costs for Deferred Maintenance of Deepwater 

Aircraft and Cutters, Fiscal Years 2002-2004 13 

Contents 
Page ii GAO-05-757 Coast Guard 

Table 4: Approved Upgrades for Deepwater Legacy Aircraft and 

Cutters 16 

Table 5: Summary of Deepwater Areas Needing Management 

Attention as Reported by GAO 24 

Table 6: HC-130 Fleet Performance Data for Fiscal Years 2000-2004 38 

Table 7: HC-130 Fleet Maintenance Data forFiscal Years 2000-2004, 

in Fiscal Year 2004 Dollars 39 

Table 8: HU-25 Fleet Performance Data for Fiscal Years 2000-2004 41 

Table 9: HU-25 Fleet Maintenance Data for Fiscal Years 2000-2004, 

in Fiscal Year 2004 Dollars 42 

Table 10: HH-60 Fleet Performance Data for Fiscal Years 2000-2004 43 

Table 11: HH-60 Fleet Maintenance Data for Fiscal Years 2000-2004, 

in Fiscal Year 2004 Dollars 44 

Table 12: HH-65 Fleet Performance Data for Fiscal Years 2000-2004 45 

Table 13: HH-65 Fleet Maintenance Data for Fiscal Years 2000-2004, 

in Fiscal Year 2004 Dollars 46 

Table 14: 378-Foot Cutter Fleet Performance Data for Fiscal Years 

2000-2004 48 

Table 15: 378-Foot Cutter Fleet Maintenance Data for Fiscal Years 

2000-2004, in Fiscal Year 2004 Dollars 49 

Table 16: 270-Foot Cutter Fleet Performance Data for Fiscal Years 

2000-2004 50 

Table 17: 270-Foot Cutter Fleet Maintenance Data for Fiscal Years 

2000-2004, in Fiscal Year 2004 Dollars 51 

Table 18: 210-Foot Cutter Fleet Performance Data for Fiscal Years 

2000-2004 52 

Table 19: 210-Foot Cutter Fleet Maintenance Data for Fiscal Years 

2000-2004, in Fiscal Year 2004 Dollars 53 

Table 20: Patrol Boat Fleet Performance Data for Fiscal Years 

2000-2004 55 

Table 21: Patrol Boat Fleet Maintenance Data for Fiscal Years 2000-

2004, in Fiscal Year 2004 Dollars 55 
Page iii GAO-05-757 Coast Guard 

Abbreviations 

AC&I acquisition, capital, and investment 

CAMS Capital Asset Management Strategy 

DHS Department of Homeland Security 

FRAM Fleet Rehabilitation and Modernization 

HSP Hull Sustainment Project 

ICGS Integrated Coast Guard Systems 

IDS Integrated Deepwater System 

IPT integrated product team 

MCH multimission cutter helicopter 

MEP Mission Effectiveness Project 

POTF percent of time free 

SINTSS Systems Integrated Near Term Support Strategy 

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Page 1 GAO-05-757 Coast Guard Deepwater Program 

July 22, 2005 

The Honorable Don Young 

Chairman, Committee on Transportation and Infrastructure 

House of Representatives 

The Honorable Frank A. LoBiondo 

Chairman, Coast Guard and Maritime Transportation Subcommittee 

House of Representatives 

The Honorable Olympia J. Snowe 

Chair 

The Honorable Maria Cantwell 

Ranking Minority Member 

Subcommittee on Fisheries and the Coast Guard 

United States Senate 

The Coast Guard’s Integrated Deepwater System (or Deepwater) 

acquisition program has experienced several changes since its inception in 

2002. The Deepwater program is intended to be a long-term (20-year) 

replacement or modernization of certain legacy assets,1

 many of which are 

at or approaching the end of their estimated service lives. As originally 

conceived, Deepwater was designed around producing aircraft and cutters 

that would function in the Coast Guard’s traditional at-sea roles, such as 

interdicting illicit drug shipments or rescuing mariners from difficulty at 

sea. The events of September 11, 2001, changed all of that. Suddenly, the 

missions for these assets expanded to include a greater emphasis on ports, 

waterways, and coastal security. These heightened responsibilities forced 

the Coast Guard to revise its Deepwater implementation plan to provide 

the replacement assets with greater operational capabilities. Further 

change has come more recently with the Coast Guard asserting that its 

deepwater legacy assets are “failing at an unsustainable rate” and 

examining options for accelerating their replacement, thereby avoiding 

 1

For purposes of this report, we use the term “legacy assets” to refer to the existing fleet of 

deepwater aircraft and cutters. These legacy assets include the HC-130 (H models only), 

HU-25, HH-60, and HH-65 aircraft and the 378-foot high-endurance cutters, the 210-foot and 

270-foot medium-endurance cutters, and the 110-foot and 123-foot patrol boats. We did not 

include the 213-foot Acushnet, the 230-foot Storis, or the 282-foot Alex Haley as part of our 

analyses of the deepwater legacy assets because they are one-of-a-kind cutters. 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-05-757 Coast Guard Deepwater Program 

some of the costs that might be involved in upgrading these assets 

sufficiently to keep them running for longer periods. 

These changes have created some uncertainty about how the Deepwater 

program is developing. In its fiscal year 2006 budget request, the 

Administration is requesting $966 million for the Deepwater program—

$242 million more than Congress appropriated for the program for fiscal 

year 2005. Part of this request ($239.5 million) is for maintenance and 

upgrades to some deepwater legacy assets, a majority of which are 

scheduled to be part of the Deepwater solution. The fiscal year 2005 

Department of Homeland Security (DHS) Appropriations Act2

 required the 

Secretary of Homeland Security to submit a revised Deepwater 

implementation plan in conjunction with its fiscal year 2006 budget 

request. However, with respect to pending fiscal year 2006 appropriations, 

the House Appropriations Committee considered the Coast Guard’s 

implementation plan submission to be incomplete and recommended 

reducing the Coast Guard’s fiscal year 2006 Deepwater budget request of 

$966 million by nearly 50 percent.3

 In late May 2005, the Coast Guard 

submitted further documentation to the committee in an effort to comply 

with the act’s requirements. In June 2005, the Senate Appropriations 

Committee expressed concern about the lack of information concerning 

the Deepwater plan in the fiscal year 2006 budget request but 

recommended funding of $905.6 million for the program for fiscal year 

2006.4

 As of early July 2005, the Coast Guard’s fiscal year 2006 

appropriation was still pending. 

This report, which focuses on the condition of deepwater legacy assets 

and the Coast Guard’s acquisition and management challenges, is aimed at 

providing information about some of these issues. We presented our 

preliminary observations on these matters in recent testimony.5

 This 

report adds further details on the condition of the assets, as well as 

updated information on Coast Guard initiatives to better sustain these 

 2

Pub. L. No. 108-334, 118 Stat. 1298, 1306 (2004). 

3

H.R. Rep. No. 109-79, at 63 (2005). 

4

S. Rep. No. 109-83, at 60 (2005). 

5

GAO, Coast Guard: Preliminary Observations on the Condition of Deepwater Legacy 

Assets and Acquisition Management Challenges, GAO-05-307T (Washington, D.C.: April 

20, 2005); and GAO, Coast Guard: Preliminary Observations on the Condition of 

Deepwater Legacy Assets and Acquisition Management Challenges, GAO-05-651T 

(Washington, D.C.: June 21, 2005). 
Page 3 GAO-05-757 Coast Guard Deepwater Program 

assets until they are replaced or upgraded. Specifically, our report 

addresses three issues related to these considerations: 

• How has the condition of the Coast Guard’s deepwater legacy assets 

changed during fiscal years 2000 through 2004? 

• What actions has the Coast Guard taken to maintain, upgrade, and better 

manage its deepwater legacy assets? 

• What are the management challenges the Coast Guard faces in acquiring 

new assets, especially if a more aggressive acquisition schedule is 

adopted? 

To address these objectives, we analyzed data and condition measures 

used by the Coast Guard for determining deepwater legacy assets’ 

condition,6

 reviewed Coast Guard actions to maintain and upgrade legacy 

assets and their systems,7

 and met with operations and maintenance staff 

at U.S. Coast Guard headquarters and other Coast Guard facilities selected 

to provide coverage of each type of deepwater legacy aircraft and each 

class of deepwater legacy cutter. In addition, we met with Deepwater 

program staff, performance monitors, and contractor staff and reviewed 

documentation to verify the improvements the Coast Guard is making in 

its management of the Deepwater acquisition. We conducted our work 

between July 2004 and June 2005 in accordance with generally accepted 

governmental auditing standards. Appendix I describes our objectives, 

scope, and methodology in greater detail. 

 6

In assessing the condition of deepwater aircraft and cutters for this report, we analyzed 

what Coast Guard officials told us were the best available condition measures. For 

deepwater aircraft, we reviewed the availability index (percentage of time aircraft were 

available to complete missions), cost per flight hour, labor hours per flight hour, 

programmed flight hours per year, scheduled versus unscheduled maintenance 

expenditures, and estimated deferred maintenance. For cutters, we reviewed the number 

of major casualties, the percent of time free of major casualties, scheduled versus 

unscheduled maintenance, and estimated deferred maintenance. To assess the reliability of 

the Coast Guard’s data and condition measures, we questioned knowledgeable officials and 

reviewed existing documentation about the data and the systems that produced the data. 

We determined that the data were sufficiently reliable for the purposes of this report. 

7

For purposes of this report, we use the term “systems” to include all the electrical, 

mechanical, heating, ventilation, and air conditioning, and other systems on the deepwater 

assets. 
Page 4 GAO-05-757 Coast Guard Deepwater Program 

Coast Guard condition measures show that the condition of most 

deepwater legacy assets generally declined between fiscal years 2000 and 

2004, but the Coast Guard’s available condition measures are inadequate 

to capture the full extent of the decline in the condition of deepwater 

assets with any degree of precision. While there is no systematic, 

quantitative evidence sufficient to demonstrate that deepwater legacy 

assets are “failing at an unsustainable rate” as the Coast Guard has 

asserted, this does not mean that the assets are able to perform their 

missions safely, reliably, and at levels that meet or exceed Coast Guard 

standards. Evidence we gathered in ways other than reviewing condition 

measures, such as interviewing Coast Guard operations and maintenance 

staff, showed significant problems in a variety of the assets’ systems and 

equipment that will need to be addressed if the assets are to continue 

performing their missions at or near current levels until replacement 

assets become operational. These problems are not necessarily reflected 

in the condition measures. For example, the Coast Guard’s HH-65 

helicopter consistently exceeded the Coast Guard’s primary condition 

measure during fiscal years 2000 through 2004, yet its engines are being 

replaced because of safety and reliability concerns. 

The Coast Guard has taken actions to keep its legacy assets operational. 

These include developing a compendium of information to identify the 

maintenance and upgrade projects needed to keep legacy assets 

operational and performing increasingly more maintenance on the legacy 

assets than it has in the past—for example, spending additional time on 

maintenance when cutters are in port between deployments. These 

additional maintenance efforts are likely helping to prevent a more rapid 

decline in the condition of these assets, but even with the additional 

maintenance, the legacy aircraft and cutters are still losing mission 

capabilities because of equipment and system failures. Responding to 

these continued concerns, as well as to matters raised during this review 

and in our prior reports, the Coast Guard has begun to explore additional 

strategies and approaches to better determine and improve the mission 

capabilities of its legacy assets. First, in an effort to implement our 2002 

recommendation for developing a longer-term strategy for linking mission 

performance to measurable outputs and goals, the Coast Guard is 

developing a more proactive approach for prioritizing maintenance and 

capability enhancement projects needed on its legacy assets to increase 

mission capabilities. Second, after we informed the Coast Guard of our 

concern that existing measures of the condition of its assets were not 

adequate to demonstrate the extent of the assets’ decline, the Coast Guard 

began to develop measures that more clearly demonstrate the extent to 

which assets’ conditions impact mission capabilities. Finally, the Coast 

Results in Brief 
Page 5 GAO-05-757 Coast Guard Deepwater Program 

Guard’s Pacific Area Command, which is heavily dependent on the 

deteriorating 378-foot cutters for certain missions, is attempting to use 

new strategies to help sustain the operation of these cutters through 2016, 

when they are currently scheduled to be replaced with newer cutters. 

These ongoing efforts, while promising, are too new to allow us to assess 

whether they will allow the Coast Guard to better determine and improve 

the mission capabilities of its legacy assets. 

The Coast Guard’s fiscal year 2006 budget request of $966 million for the 

Deepwater program reflects significant revisions to the program’s 

requirements, capabilities, and schedule in light of the homeland security 

mission. However, if a more aggressive acquisition schedule is adopted, 

the Coast Guard will likely continue to face a number of management 

challenges that have already affected its ability to effectively administer 

the Deepwater program. From the outset, we have expressed concern 

about the risks involved with the Coast Guard’s acquisition strategy, which 

involves relying on a prime contractor (or “system integrator”) to identify 

the assets needed, using tiers of subcontractors to design and build the 

actual assets. In 2004 we reported that well into the contract’s second 

year, key components needed to manage the program and oversee the 

system integrator’s performance had not been effectively implemented. 

We made 12 recommendations in the areas of program management, 

contractor accountability, and cost control through competition. While the 

Coast Guard agreed with nearly all of these recommendations and has 

initiated actions to address these problems, we remain concerned that the 

Deepwater program still carries major risks. While the Coast Guard has 

fully addressed 3 of the recommendations, the remaining 

recommendations have not been fully addressed. Recent information 

shows continued challenges in the areas of overall system integration, cost 

and schedule management, and integrated product teams, which consist of 

contractor and government personnel and are the Coast Guard’s principal 

tool for managing the Deepwater program. The uncertainties associated 

with the proposed revisions to the Deepwater program only heighten these 

risks. 

We provided a draft copy of this report to the Department of Homeland 

Security and the U.S. Coast Guard for review. The U.S. Coast Guard 

provided technical comments, which have been incorporated where 

appropriate. 

As the lead federal agency for maritime homeland security within the 

Department of Homeland Security, the Coast Guard is responsible for Background 
Page 6 GAO-05-757 Coast Guard Deepwater Program 

homeland and nonhomeland security missions, including ensuring security 

in ports and waterways and along coastlines, conducting search and 

rescue missions, interdicting drug shipments and illegal aliens, enforcing 

fisheries laws, and responding to reports of pollution. The deepwater fleet, 

which consists of 186 aircraft and 88 cutters of various sizes and 

capabilities, plays a critical role in all of these missions. As shown in table 

1, the fleet includes fixed-wing aircraft, helicopters, and cutters of varying 

lengths. 
Page 7 GAO-05-757 Coast Guard Deepwater Program 

Table 1: Deepwater Legacy Aircraft and Cutter Fleet, as of early June 2005 

a Because of scheduled depot-level maintenance and upgrades that the deepwater aircraft have 

received or will receive, the service lives can be extended beyond the original estimated service lives. 

For the HH-65 helicopter, a Coast Guard aviation official told us that the aircraft had no original 

estimated service life in terms of flight hours, but rather can continue to be operated as long as the 

structure of the aircraft is sound. 

Some Coast Guard deepwater cutters were built in the 1960s. 

Notwithstanding extensive overhauls and other upgrades, a number of the 

cutters are nearing the end of their estimated service lives. Similarly, while 

a number of the deepwater legacy aircraft have received upgrades in 

Deepwater asset Number Description Photograph

Aircraft

HC-130

(long-range 

surveillance airplane)

27 This is the largest aircraft in the Coast Guard’s fleet. It has a planned crew size of 7, a 

maximum speed of 290 knots, and an operating range of 2,600 nautical miles. The 

original estimated service life of the HC-130 was 30 years or 40,000 flight hours.a The inservice fleet average age for the Coast Guard’s HC-130H aircraft is 22.3 years.

Cutters

HU-25

(medium-range 

surveillance airplane)

23 This is the fastest aircraft in the Coast Guard’s fleet. It has a planned crew size of 5, a 

maximum speed of 410 knots, and an operating range of 2,045 nautical miles. The 

original estimated service life of the HU-25 was 20 years or 20,000 flights or 30,000 flight 

hours.a The in-service fleet average age for the Coast Guard’s HU-25 aircraft is 22.4 

years.

HH-60

(medium-range 

recovery helicopter)

41 This helicopter has a planned crew size of 4, a maximum speed of 160 knots, and a 

maximum range of 700 nautical miles. It is capable of flying 300 miles offshore, 

remaining on scene for 45 minutes, hoisting 6 people on board, and returning to its point 

of origin. The original estimated service life of the HH-60 was approximately 20 years or 

10,000 flight hours.a The in-service fleet average age for the Coast Guard’s HH-60 

helicopters is 12.9 years.

HH-65

(short-range recovery 

helicopter)

95 This helicopter has a planned crew size of 3, a maximum speed of 165 knots, a 

maximum range of 400 nautical miles, and a maximum endurance of 3.5 hours. It is 

capable of flying 150 miles offshore. The original estimated service life of the HH-65 was 

20 years.a The in-service fleet average age for the Coast Guard’s HH-65 helicopters is 

18.0 years.

378-foot highendurance cutter12 This is the largest cutter in the Coast Guard’s deepwater fleet. It has a planned crew size 

of 167, a maximum speed of 29 knots, and a cruising range of 14,000 nautical miles. It 

can support helicopter operations. The estimated service life of the 378-foot cutter is 

about 40 years. The average age of the Coast Guard’s 378-foot cutters is 36.3 years.

270-foot mediumendurance cutter13 This cutter has a planned crew size of 98, a maximum speed of 19.5 knots, and a 

cruising range of 10,250 nautical miles. It can support helicopter operations. The 

estimated service life of the 270-foot cutter is 30 years. The average age of the Coast 

Guard’s 270-foot cutters is 18.0 years.

210-foot mediumendurance cutter14 This cutter has a planned crew size of 75, a maximum speed of 18 knots, and a cruising 

range of 6,100 nautical miles. It can support short-range recovery helicopter operations. 

The estimated service life of the 210-foot cutter is from 43 to 49 years. The average age 

of the Coast Guard’s 210-foot cutters is 38.3 years.

110-foot and

123-foot patrol boats

49 The patrol boats have a planned crew size of 16 and a maximum speed of 29.5 knots. 

The 110-foot patrol boat has a cruising range of between 3,300 and 3,500 nautical miles, 

and the 123-foot patrol boat has a cruising range of 3,180 nautical miles, depending on 

the class of the patrol boat. The estimated service life of the patrol boats is from 14 to 20 

years. The average age of the Coast Guard’s patrol boats is 16.4 years.

Source: Developed by GAO from U.S. Coast Guard data. Photographs are courtesy of the U.S. Coast Guard.
Page 8 GAO-05-757 Coast Guard Deepwater Program 

engines, operating systems, and sensor equipment since they were 

originally built, they too have limitations in their operating capabilities. 

In 1996, the Coast Guard began developing what came to be known as the 

Integrated Deepwater System (IDS) acquisition program as its major effort 

to replace or modernize these aircraft and cutters. This Deepwater 

program is designed to replace some assets—such as deteriorating 

cutters—with new cutters and upgrade other assets—such as some types 

of helicopters—so they can meet new performance requirements.8

The Deepwater program represents a unique approach to a major 

acquisition in that the Coast Guard is relying on a prime contractor—the 

system integrator—to identify and deliver the assets needed to meet a set 

of mission requirements the Coast Guard has specified.9

 In 2002, the Coast 

Guard awarded a contract to Integrated Coast Guard Systems (ICGS) as 

the system integrator for the Deepwater program. ICGS has two main 

subcontractors—Lockheed Martin and Northrop Grumman—that in turn 

contract with other subcontractors. Rather than using the traditional 

approach of replacing classes of ships or aircraft through a series of 

individual acquisitions, the Coast Guard chose to employ a “system of 

systems” acquisition strategy that would replace its deteriorating 

deepwater assets with a single, integrated package of new or modernized 

assets. This system-of-systems approach is designed to provide an 

improved, integrated system of aircraft, cutters, and unmanned aerial 

vehicles to be linked effectively through systems that provide command, 

control, communications, computer, intelligence, surveillance, 

reconnaissance, and supporting logistics. The Deepwater program’s three 

overarching goals are to maximize operational effectiveness, minimize 

total ownership cost,10 and satisfy the customer—the operational 

 8

Current plans call for the Coast Guard to replace all of its deepwater legacy cutters and 

patrol boats, beginning with the 378-foot cutters. The Coast Guard also plans to replace the 

HU-25 aircraft, but it will upgrade the existing HC-130 aircraft and HH-60 and HH-65 

helicopters to extend their service lives. 

9

The mission requirements include such things as the ability to (1) respond to 90 percent of 

all distress incidents within 2 hours; (2) detect and track targets of any material such that 

the probability of detection is at least 90 percent for small targets, such as a person in the 

water or a single-engine civil aircraft; and (3) respond to National Emergency Response 

Operations within 48 hours. 

10Total ownership cost is the sum of all costs associated with the research, development, 

procurement, personnel, training, operation, logistical support, and disposal of the entire 

Deepwater system. 
Page 9 GAO-05-757 Coast Guard Deepwater Program 

commanders, aircraft pilots, cutter crews, maintenance personnel, and 

others who will use the assets. 

The revised Deepwater schedule calls for acquisition of new assets under 

the Coast Guard’s Deepwater program to occur over an approximately 20-

year period at an estimated cost of $19 billion to $24 billion.11 By 2007, for 

example, the Coast Guard is to receive the first 418-foot National Security 

Cutter, which will have the capability to conduct military missions related 

to homeland security. Current plans call for 6 to 8 of these cutters to 

replace the 12 existing 378-foot cutters. However, in order to carry out its 

mission effectively, the Coast Guard will also need to keep all of the legacy 

assets operational until they can be replaced or upgraded. 

We have been reviewing the Deepwater program for several years, 

pointing out difficulties and expressing concern over a number of facets of 

the program. In our 2001 report, we identified several areas of risk for 

Deepwater.12 First, the Coast Guard faced potential risk in the overall 

management and day-to-day administration of the contract. At the time, we 

reported on the major challenges such as developing and implementing 

plans for establishing effective human capital practices, having key 

management and oversight processes and procedures in place, and 

tracking data to measure system integrator performance. In addition, we 

expressed concerns about the potential lack of competition during the 

program’s later years and the reliance on a single system integrator for 

procuring the Deepwater assets. We also reported there was little evidence 

that the Coast Guard had analyzed whether the approach carried any 

inherent risks for ensuring the best value to the government and, if so, 

what to do about them. 

We reviewed the program again in 2004 and found many of the same 

concerns.13 Specifically, we reported that key components needed to 

manage the program and oversee the system integrator’s performance had 

 11The original Deepwater plan had an estimated cost of $17 billion. 

12GAO, Coast Guard: Progress Being Made on Deepwater Project, but Risks Remain, 

GAO-01-564 (Washington, D.C.: May 2, 2001). 

13GAO, Coast Guard: Deepwater Program Acquisition Schedule Update Needed, 

GAO-04-695 (Washington, D.C.: June 14, 2004); GAO, Coast Guard: Key Management and 

Budget Challenges for Fiscal Year 2005 and Beyond, GAO-04-636T (Washington, D.C.: 

April 7, 2004); and GAO, Contract Management: Coast Guard’s Deepwater Program Needs 

Increased Attention to Management and Contractor Oversight, GAO-04-380 (Washington, 

D.C.: March 9, 2004). 
Page 10 GAO-05-757 Coast Guard Deepwater Program 

not been effectively implemented. The Coast Guard’s primary tool for 

overseeing the system integrator, the integrated product teams (IPTs) 

were struggling to effectively collaborate and accomplish their missions 

because of changing membership, understaffing, insufficient training, and 

inadequate communication among members. Also, the Coast Guard had 

not adequately addressed the frequent turnover of personnel in the 

program and the transition from existing assets to those assets that will be 

part of the Deepwater program moving forward. Further, the Coast 

Guard’s assessment of the system integrator’s performance in the first year 

of the contract lacked rigor, and the factors that formed the basis for the 

award fee determination were supported only by subjective performance 

monitor comments and not by quantifiable measures. This resulted in the 

system integrator receiving a high performance rating and an award fee of 

$4.0 million out of a maximum of $4.6 million despite documented 

problems in schedule, performance, cost controls, and contract 

administration. 

At the time of our March 2004 report,14 the Coast Guard had begun to 

develop models to measure the extent to which Deepwater was achieving 

operational effectiveness and reduced total ownership cost, but it had not 

made a decision as to which specific suite of models would be used. 

Further, Coast Guard officials were not able to project a time frame for 

when the Coast Guard would be able to hold the contractor accountable 

for progress toward the goals of maximizing operational effectiveness, 

minimizing total ownership cost, and customer satisfaction. Furthermore, 

the Coast Guard had not measured the extent of competition among 

suppliers of Deepwater assets or held the system integrator accountable 

for taking steps to achieve competition. The Coast Guard’s lack of 

progress on these issues has contributed to our concerns about the Coast 

Guard’s ability to rely on competition as a means to control future 

programmatic costs. 

Finally, we found that the Coast Guard had not updated the Deepwater 

integrated acquisition schedule despite numerous changes, making it 

difficult to determine the degree to which the program was on track with 

its original plan. In response to these concerns, we made a number of 

recommendations to improve Deepwater management and oversight of the 

system integrator. The Coast Guard welcomed our observations and 

 14GAO-04-380. 
Page 11 GAO-05-757 Coast Guard Deepwater Program 

concurred with our recommendations and has begun to take actions to 

address them. 

Coast Guard condition measures show that the condition of most 

deepwater legacy assets generally declined between 2000 and 2004, but the 

Coast Guard’s available measures are inadequate to capture the full extent 

of the decline in the condition of deepwater assets with any degree of 

precision and are insufficient for determining the impact on mission 

capabilities. Further, other evidence we gathered, such as information 

from discussions with maintenance and operations personnel, points to 

conditions that may be more severe than the available measures indicate. 

The Coast Guard acknowledges that it needs better condition measures, 

but it has not yet finalized or implemented such measures. The Coast 

Guard anticipates having the new measures finalized by the end of 2005. 

During fiscal years 2000 through 2004, the Coast Guard’s various condition 

measures showed a general decline, although there were year-to-year 

fluctuations (see table 2). For deepwater legacy aircraft, a key summary 

measure of the condition—the availability index (the percentage of time 

aircraft are available to perform their missions)—showed that except for 

the HU-25 medium-range surveillance aircraft, the assets continued to 

perform close to or above fleet availability standards over the 5-year 

period. In contrast, other condition measures for aircraft, such as cost per 

flight hour and labor hours per flight hour, generally reflected some 

deterioration. For cutters, a key summary measure of condition—percent 

of time free of major casualties15—fluctuated but generally remained well 

below target levels. The number of major casualties generally rose from 

fiscal years 2000 through 2003 and then dropped slightly in fiscal year 

2004.16 (Appendix II provides further details on condition measures for 

each of the deepwater legacy aircraft and cutters.) 

 15A casualty is a deficiency in mission essential equipment; a major casualty causes the 

major degradation or loss of at least one primary mission. 

16However, major casualties for the 378-foot high-endurance cutters continued to increase 

in 2004. 

Legacy Assets Show 

Declining Condition, 

but Measures Are 

Imprecise and Fail to 

Capture Impact on 

Mission Capabilities 

Coast Guard’s Condition 

Measures Show General 

Decline in Condition of 

Deepwater Assets, with 

Some Fluctuations 
Page 12 GAO-05-757 Coast Guard Deepwater Program 

Table 2: Synopsis of Deepwater Legacy Assets’ Condition 

Deepwater legacy asset Synopsis of general asset condition 

HC-130 aircraft The percentage of time the HC-130 fleet was available to perform missions nearly met or 

exceeded the Coast Guard’s target level during fiscal years 2000 through 2003, but dropped 

below the target level in fiscal year 2004. 

HU-25 aircraft The percentage of time the HU-25 fleet was available to perform missions varied from year to 

year but was consistently below the Coast Guard’s target level during fiscal years 2000 

through 2004. 

HH-60 aircraft The percentage of time the HH-60 fleet was available to perform missions met or was just 

below the Coast Guard’s target level during fiscal years 2000 though 2004. 

HH-65 aircraft The percentage of time the HH-65 fleet was available to perform missions consistently 

exceeded the Coast Guard’s target level during fiscal years 2000 through 2004. 

378-foot highendurance cutters The percentage of time the 378-foot cutter fleet has operated free of deficiencies in missionessential equipment remained substantially below the Coast Guard’s target level during fiscal 

years 2000 through 2004. 

270-foot and 

210-foot medium-endurance cutters 

The percentage of time the 210-foot and 270-foot cutter fleets have operated free of 

deficiencies in mission-essential equipment was well below the Coast Guard’s target level 

during fiscal years 2000 through 2004, but it showed slight improvement in fiscal year 2004. 

110-foot and 123-foot patrol boatsa The percentage of time the patrol boat fleet has operated free of deficiencies in missionessential equipment was below but near the Coast Guard’s target level during fiscal years 

2000 and 2001, but it declined in more recent years. 

Source: GAO analysis of data provided by the U.S. Coast Guard. 

a Data on the 123-foot patrol boats were not compiled until fiscal year 2004. That year’s data were 

added to the 110-foot patrol boat data to arrive at totals for the patrol boat fleet. 

Another, albeit less direct, measure of an asset’s condition is deferred 

maintenance—the amount of scheduled maintenance on an asset that 

must be postponed in order to pay for unscheduled repairs. Such deferrals 

can occur when the Coast Guard does not have enough money to absorb 

unexpected maintenance expenditures and still perform all of its 

scheduled maintenance, thus creating a backlog. For example, in spring 

2004, while on a counterdrug mission, the 210-foot cutter Active

experienced problems in the condition of its flight deck that were to be 

corrected during its scheduled depot-level maintenance. However, 

because of a shortage of maintenance funds, the maintenance was 

deferred and the flight deck was not repaired. As a result, the cutter lost all 

shipboard helicopter capability, significantly degrading mission readiness. 

As table 3 shows, deferred maintenance does not show a clear pattern 

across all classes of deepwater legacy assets. For the deepwater legacy 

aircraft, the overall amount of estimated deferred maintenance increased 

each year during fiscal years 2002 through 2004, from $12.3 million to 

about $24.6 million. However, most of the increase came for one type of 
Page 13 GAO-05-757 Coast Guard Deepwater Program 

asset, the HH-60 helicopter, and the increase came mainly from deferring 

maintenance past the 48-month interval requirement—thereby increasing 

the scheduled maintenance workload—and not from having to divert 

money to deal with unscheduled maintenance. For the deepwater cutters, 

the amount of estimated deferred maintenance increased from fiscal year 

2002 to 2003, but then it dropped significantly in fiscal year 2004. The 

decrease in fiscal year 2004 came mainly because the Coast Guard 

received supplemental funding allowing it to address both scheduled and 

unscheduled maintenance. Thus, the drop in the estimate of deferred 

maintenance costs for fiscal year 2004 is not necessarily an indicator that 

the condition of the legacy assets was improving; it could be the result of 

the Coast Guard having more money to address the maintenance needs. 

Table 3: Estimated Costs for Deferred Maintenance of Deepwater Aircraft and Cutters, Fiscal Years 2002-2004 

Deepwater legacy asset Fiscal year 2002 Fiscal year 2003 Fiscal year 2004

HC-130 $4,691,000 $7,016,000 $5,737,000

HU-25 0 $201,000 0

HH-60 $7,630,000 $9,436,000 $18,824,000

HH-65 0 0 0

Subtotal for aircraft $12,321,000 $16,653,000 $24,561,000

378-foot cutters $2,556,000 $8,135,000 $3,000,000

270-foot cutters $2,070,000 $870,000 0

210-foot cutters $786,000 $1,137,000 0

110-foot patrol boats $1,618,000 $1,961,000 $500,000

Subtotal for cutters $7,030,000 $12,103,000 $3,500,000

Total for all deepwater assets $19,351,000 $28,756,000 $28,061,000

Source: U.S. Coast Guard. 

Note: The Coast Guard estimates the cost for aircraft deferred maintenance by multiplying a 

percentage of average depot maintenance costs by the number of aircraft overdue for depot 

maintenance overhauls, plus the annual cost for extension inspections each year. The Coast Guard 

generally does not track deferred maintenance costs by cutter class but compiled these data at 

GAO’s request for fiscal years 2002 through 2004. The Coast Guard estimated the costs of only the 

planned cutter maintenance that had to be deferred to the following year and not the amount of 

maintenance that should have been conducted and was not funded. 

At the time we began our work, the Coast Guard’s measures generated 

some limited information on the condition of its legacy assets, but the 

measures were not sufficiently robust to link the assets’ declining 

condition to degradation in mission capabilities or performance. As a 

result, the picture that emerges regarding the condition of the deepwater 

legacy assets based on current Coast Guard condition measures should be 

viewed with some caution. While there is no systematic, quantitative 

Current Condition 

Measures Not Sufficiently 

Robust to Link Condition 

with Impact on Mission 

Capabilities 
Page 14 GAO-05-757 Coast Guard Deepwater Program 

evidence sufficient to demonstrate that deepwater legacy assets are 

“failing at an unsustainable rate,” as the Coast Guard has asserted, this 

does not mean the assets are in good condition or have been performing 

their missions safely, reliably, and at levels that meet or exceed Coast 

Guard standards. We identified two factors that need to be considered to 

put these condition measures into proper context. 

The first factor deals with limitations in the measures themselves. Simply 

put, the Coast Guard’s measures of asset condition do not fully capture the 

extent of the problems. As such, they may understate the decline in the 

legacy assets’ condition. More specifically, the Coast Guard measures we 

assessed focus on events, such as equipment casualties or flight mishaps, 

but do not measure the extent to which these and other incidents degrade 

mission capabilities. The following is an example in which Coast Guard 

measures we assessed are not sufficiently robust to systematically capture 

degradation in mission capabilities: 

• The 378-foot cutter Jarvis recently experienced a failure in one of its 

two main gas turbines shortly after embarking on a living marine 

resources and search and rescue mission. While Jarvis was able to 

accomplish its given mission, albeit at reduced speed, this casualty 

rendered the cutter unable to respond to any emergency request it 

might have received—but did not in this case—to undertake a mission 

requiring higher speeds, such as drug interdiction. The Coast Guard 

condition measures are not robust enough to capture these distinctions 

in mission capability. 

The second factor that needs to be kept in mind is the compelling nature 

of the other evidence we gathered outside of the Coast Guard’s condition 

measures. This evidence, gleaned from information collected during our 

site visits and discussions with maintenance personnel, indicated 

deteriorating and obsolete systems and equipment as a major cause of the 

reduction in mission capabilities for a number of deepwater legacy aircraft 

and cutters. Such problems, however, are not captured by the Coast 

Guard’s condition measures. One example of this involves the HH-65 

short-range recovery helicopter. While this helicopter consistently 

exceeded availability standards established by the Coast Guard over the 

5-year period we examined, it is currently operating with engines that have 

become increasingly subject to power failures, which may potentially 

render the fleet unable to meet mission requirements. As a result, Coast 

Guard pilots employ a number of work-arounds, such as dumping fuel or 

occasionally leaving the rescue swimmer on scene if the load becomes too 

heavy. Further, because of increasing safety and reliability problems, the 
Page 15 GAO-05-757 Coast Guard Deepwater Program 

Coast Guard has also implemented a number of operational restrictions—

such as not allowing the helicopter to land on helipads—to safeguard crew 

and passengers and prevent mishaps until all of the fleet’s engines can be 

replaced. 

The Coast Guard has already undertaken two main types of actions to 

keep its legacy assets operational: developing a compendium of 

information for making decisions regarding maintenance and upgrades 

needed, and performing increasingly more maintenance on these assets 

between deployments. These efforts are likely helping to prevent a more 

rapid decline in the condition of the assets, but the condition of these 

assets has nonetheless generally continued to worsen. In response to both 

the continued decline in the condition of its legacy assets, as well as to 

various observations we have made to the Coast Guard about its need to 

develop more objective information on mission capability needs and more 

precise condition measures, the Coast Guard has begun to undertake 

additional efforts. These additional efforts include developing a 

knowledge-based model to provide more objective data on where to best 

spend budget dollars to achieve the greatest enhancements in mission 

capabilities, improving the condition measures it uses to more clearly 

quantify the impact declining conditions have on mission capabilities, and, 

at the Pacific Area Command, applying new business rules and strategies 

to better sustain the 378-foot high-endurance cutters through 2016. These 

ongoing efforts, while promising, are largely untested, and so it is too soon 

to tell whether they will allow the Coast Guard to better determine and 

improve the mission capabilities of its legacy assets. 

Since 2002, the Coast Guard has annually issued a Systems Integrated Near 

Term Support Strategy compendium. Among other things, this 

compendium consolidates information needed to make planning and 

budgeting decisions regarding maintenance and upgrades to sustain legacy 

assets. Its purpose is to serve as a tool for senior Coast Guard 

management in setting priorities and planning budgets. From this strategic 

document, the Coast Guard has identified a number of upgrades to 

improve the capabilities of the deepwater legacy aircraft and cutters. The 

most recent compendium (for fiscal year 2006) lists more than $1 billion 

worth of upgrades to the deepwater legacy assets. The planned upgrades 

identified in the compendium that have been approved and received initial 

funding account for an estimated $856 million the Coast Guard anticipates 

it will need to complete those projects. The approved upgrades for 

deepwater legacy assets are shown in table 4. 

Actions to Better 

Manage Legacy Assets 

Are Under Way, 

but Effects Will Not 

Be Known for Some 

Time 

Coast Guard Has 

Developed and Is Using a 

Compendium of Needs 
Page 16 GAO-05-757 Coast Guard Deepwater Program 

Table 4: Approved Upgrades for Deepwater Legacy Aircraft and Cutters 

Deepwater legacy asset Synopsis of planned upgrades 

Estimated costs and time frames of 

upgrades 

HC-130 aircraft The Coast Guard is beginning to replace 

aircraft’s dated and difficult-to-support surface 

search radar system. 

The radar system replacement is projected to 

cost $78 million and be completed in fiscal 

year 2008. A total of $9 million has been 

allocated through fiscal year 2005. 

HH-60 

aircraft 

The Coast Guard has begun a service life 

extension plan and a replacement of the 

obsolete avionics suite. 

The service life extension program is 

estimated to cost $16 million and be 

completed by fiscal year 2009. The avionics 

replacement program is projected to cost $121 

million and be completed by fiscal year 2010. 

A total of $32.8 million has been allocated 

through fiscal year 2005 for these upgrades. 

HH-65 aircraft Serious safety and reliability problems with the 

engine led the Coast Guard to place 

operational restrictions on the HH-65 fleet in 

October 2003. 

The Coast Guard plans to re-engine 84 HH-65 

aircraft at a projected cost of $349 million, now 

estimated to be completed by February 2007. 

A total of $160.7 million has been allocated 

through fiscal year 2005. 

270-foot and 210-foot mediumendurance cutters During fiscal year 2005 these cutters are to 

enter a legacy asset sustainment project 

known as the Mission Effectiveness Project 

(MEP) aimed at increasing their service lives 

until their replacement by a new cutter. The 

MEP includes upgrading major engineering 

subsystems such as evaporators, sewage 

systems, and gyrocompasses. 

The MEP is projected to cost a total of $292 

million and be completed by fiscal year 2015. 

The medium-endurance cutters will ultimately 

be replaced by the Offshore Patrol Cutter. A 

total of $12.5 million has been allocated 

through fiscal year 2005. 

Total A total of $856 million is needed to fund 

these projects, of which $215 million has 

been allocated through fiscal year 2005. 

Source: GAO analysis of data provided by the U.S. Coast Guard. 

Note: While no funds have been allocated for upgrades to the HU-25 aircraft, the 378-foot cutters, or 

the 110-foot and 123-foot patrol boats, since all of these deepwater legacy assets are scheduled to 

be replaced, each of these assets has upgrades listed in the Systems Integrated Near Term Support 

Strategy compendium. The HU-25 aircraft has an engine replacement project estimated to cost 

$78.1 million; the 378-foot cutter has an MEP estimated to cost $137.8 million; and the patrol boats 

have three projects—replacement of the fin stabilizer system that is estimated to cost $10.4 million, 

an MEP that is estimated to cost $162 million, and replacement of the ship service generators that is 

estimated to cost $20.7 million. If the Coast Guard were to request funding for all of these 

sustainment projects, it would cost an additional $409 million. 

Among the projects already begun is the re-engining of the HH-65 

helicopters to address safety and reliability concerns. The Coast Guard is 

also upgrading several other aviation systems in an effort to improve 

aircraft capabilities. Enhancements are also planned for certain classes of 

deepwater cutters. For example, during fiscal year 2005, the Coast Guard 

is beginning a maintenance effectiveness project on the 210-foot and 

270-foot cutters. This project includes replacing major engineering 

subsystems with the goal of extending the cutters’ service lives until their 
Page 17 GAO-05-757 Coast Guard Deepwater Program 

replacement by the Offshore Patrol Cutter. Of the $856 million total 

estimated costs needed for the planned upgrades to the deepwater legacy 

assets listed above, $215 million has been allocated through fiscal year 

2005, and the Coast Guard has requested another $217.3 million in its fiscal 

year 2006 budget. The remaining estimated costs of $423.7 million would 

have to be funded beyond fiscal year 2006. 

Coast Guard personnel consistently reported to us that crew members 

have to spend increasingly more time between missions to prepare for the 

next deployment. For example, due to the aging main landing gear on the 

HH-65 helicopter, Coast Guard official stated that maintenance crews 

spend extensive time servicing, troubleshooting and fixing them in predeployment maintenance. Comparable accounts were given by personnel 

working on cutters. For example, officers of the 270-foot cutter Northland

told us that because of dated equipment and the deteriorating condition of 

its piping and other subsystems, crew members have to spend increasingly 

more time and resources while in port to prepare for their next 

deployment. While we could not verify these increases in time and 

resources because the Coast Guard does not capture data on these 

additional maintenance efforts, the need for increasing amounts of 

maintenance was a message we consistently heard from the operations 

and maintenance personnel with whom we met. 

Such efforts are likely helping to prevent a more rapid decline in the 

condition of these deepwater legacy assets, but it is important to note that 

even with the increasing amounts of maintenance, these assets are still 

losing mission capabilities because of deteriorating equipment and system 

failures. For example, in fiscal year 2004, the 378-foot cutter Chase lost 

98 counterdrug mission days because of a number of patrol-ending 

casualties—including the loss of ability to raise and lower boats and run 

major electrical equipment—requiring $1.2 million in emergency 

maintenance. In addition, the 378-foot cutter Hamilton lost 

27 counterdrug mission days in the fall of 2004 when it required 

emergency dry dock maintenance because of hydraulic oil leaking into the 

reduction gear. 

Increasing Amounts of 

Maintenance Are Being 

Performed, but Loss of 

Mission Capabilities 

Continues 
Page 18 GAO-05-757 Coast Guard Deepwater Program 

In the past, we have recommended that the Coast Guard develop a longterm strategy to set and assess levels of mission performance.17 We found 

this was an important step for the Coast Guard to take because it links 

legacy asset investments to asset capabilities, mission priorities, and goals 

so that the Coast Guard can better decide how limited budget dollars 

should be spent. The Coast Guard has recently begun to apply the 

principles behind such a strategy to (1) better prioritize the projects 

needed to upgrade legacy assets that will be part of the Deepwater 

program and (2) obtain the greatest overall mix of capabilities for its 

assets within its budget in order to maximize mission performance. The 

tool it is developing is called the Capital Asset Management Strategy 

(CAMS). 

CAMS, once fully implemented, is expected to help the Coast Guard to 

better manage its assets by linking funding decisions to asset condition. 

Unlike the Coast Guard’s current compendium, CAMS is designed to 

provide analyses on the capability trade-offs for upgrades and 

maintenance projects across asset classes, thereby allowing the Coast 

Guard to determine which combination of projects will provide the most 

capability for the dollars invested. For example, when Coast Guard 

officials are trying to decide among potential project upgrades such as an 

HC-130 weather radar replacement, an HH-65 sliding cabin door 

replacement, or a 110-foot patrol boat fin stabilizer replacement, CAMS, 

once fully implemented, could provide the officials with a recommended 

mix of project upgrades that would achieve the greatest capability 

enhancements based on the available budget. 

CAMS analyses are to be based on legacy asset condition and readiness 

data, asset retirement and replacement timelines, asset degradation 

estimates, project production rates, cost data, and mission utility rankings. 

Mission utility rankings will grade an asset’s importance to specific 

missions, such as search and rescue or counterdrug operations. Rankings 

may also be assigned to an asset’s critical subsystems or may be altered 

based on an asset’s geographic location. For example, a 378-foot cutter 

may be critical to the success of fisheries patrols in the Pacific but may not 

be as important for alien/migrant interdiction operations in the Caribbean. 

However, according to Coast Guard headquarters officials, the Coast 

 17GAO, Coast Guard: Comprehensive Blueprint Needed to Balance and Monitor Resource 

Use and Measure Performance for All Missions, GAO-03-544T (Washington, D.C.: March 

12, 2003); and GAO, Coast Guard: Strategy Needed for Setting and Monitoring Levels of 

Effort for All Missions, GAO-03-155 (Washington, D.C.: Nov. 12, 2002). 

Coast Guard Is Developing 

a Strategy to Better 

Prioritize Upgrades and 

Maximize Asset 

Capabilities 
Page 19 GAO-05-757 Coast Guard Deepwater Program 

Guard remains cautious about employing such a strategy because an 

investment strategy of this nature could lead to cutters that are no longer 

multmission capable and are unable to respond to an emergency due to 

reduced capabilities. In addition, the Coast Guard plans to rank its 

missions within CAMS based on their relative importance.18 Each of these 

elements is to form the basis for recommendations regarding which 

combination of upgrade and maintenance projects will provide the 

greatest enhancements to fleet capabilities. 

According to Coast Guard staff, CAMS recommendations are not a 

replacement for the existing budget development process, but rather are 

to augment and make more consistent the information currently provided 

to decision makers. Because the recommendations are to be based, in part, 

on user assumptions, CAMS recommendations are to be reviewed by 

several internal Coast Guard officials before any final funding requests are 

made. Further, in order to prevent user “gaming”—making assumptions in 

such a way as to ensure a positive recommendation or outcome for a 

particular project—the Coast Guard is developing a series of job aids, 

manuals, and training courses to ensure data integrity and consistency. 

Coast Guard officials expect to have CAMS fully implemented by 

September 2005 and intend to use it while developing the Coast Guard’s 

fiscal year 2008 budget submission. Although it is too soon to assess the 

effectiveness of CAMS, we view this approach as a good faith effort 

toward knowledge-based budgeting for legacy asset sustainment. 

At the time we began our work, in August 2004, the majority of the Coast 

Guard’s condition measures were not sufficiently robust to link an asset’s 

condition with its impact on mission capabilities. As we discussed with 

Coast Guard officials, without such condition measures, the extent and 

severity of the decline in the existing deepwater legacy assets and their 

true condition cannot be fully determined. On the basis of our inquiries 

and a series of discussions we held with cognizant Coast Guard officials, 

the Coast Guard has begun developing improved measures to more 

accurately capture data on the extent to which its deepwater legacy assets 

 18A mission’s relative importance will be determined by Coast Guard operational decision 

makers. These determinations will not be static, but rather will be reviewed and revised to 

reflect changing priorities. 

Coast Guard is Developing 

More Robust Condition 

Measures 
Page 20 GAO-05-757 Coast Guard Deepwater Program 

are degraded in their mission capabilities. However, because these 

measures have not been finalized or fully implemented, we were unable to 

assess their effectiveness. The Coast Guard anticipates having the new 

measures finalized by the end of 2005. 

Coast Guard naval engineers told us that they had begun developing a 

“percent of time fully mission capable” measure to reflect the degree of 

mission capability, as well as measures to track cutter readiness. As part 

of this measure, the Coast Guard is developing mission criticality codes, 

which would rank the degree of importance of each piece of a cutter’s 

equipment to each possible mission that the cutter could perform. These 

codes would then be linked to electronic casualty reports for each cutter, 

which would provide the cutter engineers and operators with information 

on the impact that the equipment casualties would have on each possible 

mission. This casualty report/mission criticality linkage will then be 

factored into the calculation of the percent of time fully mission capable 

measure for each cutter class and mission type. Coast Guard officials 

could then review this measure to determine, for example, the degree of 

capability that its 270-foot medium endurance cutter fleet has to conduct 

search and rescue missions at any given time. We agree that measures like 

this are needed—and as soon as possible. 

According to Coast Guard officials, while the availability index will remain 

the Coast Guard’s primary measure for aircraft condition and operational 

readiness, the Coast Guard is working to improve its dispatch reliability 

index measure, which provides causal information on delayed, aborted, or 

canceled missions.19 The Coast Guard can use the dispatch reliability 

index—in conjunction with data captured by unit-level and depot-level 

maintenance staff and entered into the Coast Guard’s Electronic Aircraft 

Logbook and Aviation Logistics Management Information System, 

respectively—to determine which components and systems are failing 

most frequently and thus causing degradation in aircraft availability and 

mission performance. According to Coast Guard officials, data provided 

from these systems rival the information that will be produced by the 

cutter community’s proposed percent of time fully mission capable 

measure. Because the dispatch reliability index measure and the 

electronic aircraft logbook are relatively new and have only recently been 

 19Because this measure was not in use during the full period covered by our review (fiscal 

years 2000 through 2004), we did not include it as one of the measures we used for 

assessing the condition of deepwater legacy aircraft; see appendix II. 
Page 21 GAO-05-757 Coast Guard Deepwater Program 

fully implemented Coast Guard-wide, we have not assessed their 

effectiveness. However, we view these tools as a positive step toward 

providing Coast Guard decision makers with more detailed information on 

the primary factors leading to mission degradation. 

One effort is under way at the Coast Guard’s Pacific Area Command to 

improve maintenance practices for its 378-foot cutters, which are among 

the oldest cutters in its fleet.20 Pacific Area officials have recognized that a 

different approach to maintaining and sustaining legacy cutters may be 

needed since they are dependent on 378-foot cutters for meeting missions, 

such as defense operations and fisheries patrols. As a first step, Pacific 

Area officials have undertaken an initiative applying what they refer to as 

“new business rules and strategies” to better maintain the 378-foot highendurance cutters through 2016, when they are scheduled to be fully 

replaced by National Security Cutters. Under the original Deepwater 

proposal, the final 378-foot cutter was to be decommissioned in 2013, but 

by 2005, that date had slipped to 2016. To help keep these cutters running 

through this date, Pacific Area officials are applying such rules and 

strategies as (1) ensuring that operations and maintenance staffs work 

closely together to determine priorities, (2) recognizing that maintaining 

or enhancing cutter capabilities will involve trade-off determinations, and 

(3) accepting the proposition that with limited funding not all cutters will 

be fully capable to perform all types of missions as they near the end of 

their useful lives. Pacific Area officials believe that in combination, these 

rules and strategies will result in more cost-effective maintenance and 

resource allocation decisions—recognizing that difficult decisions will still 

have to be made to balance maintenance and operations. However, 

according to Coast Guard headquarters officials, if such strategies are 

employed, careful planning must occur to avoid placing a cutter in an 

operational emergency where it is incapable of adequately responding. 

One example of the bridging strategies Pacific Area officials are exploring 

is the development of what Pacific Area officials refer to as a “class within 

a class” approach. Under this strategy, the individual cutters within the 

378-foot high-endurance cutter fleet would be designated to perform 

specific mission types based on an assessment of their condition and 

 20The Pacific Area Command is responsible for operations covering 74 million square miles, 

ranging from South America to the Arctic Circle and west to the Far East. 

New Initiative for 

Maintaining 378-Foot 

Cutters Is Under Way 
Page 22 GAO-05-757 Coast Guard Deepwater Program 

mission capabilities.21 Cutters possessing full mission capabilities could be 

assigned to the more demanding defensive operations, while cutters in 

poorer condition and less than fully capable would be assigned to less 

demanding missions, such as fisheries enforcement. According to Pacific 

Area officials, this strategy is designed to more effectively spend the 

maintenance funds available for the 378-foot cutters, since current funding 

levels for the 378-foot cutters make it very difficult for Pacific Area to 

maintain all 10 of its 378-foot cutters as fully mission capable. 

Pacific Area Command’s new initiative has the potential for assisting the 

Coast Guard in making more informed choices regarding the best use of 

their resources, but according to Pacific Area officials, the approach will 

likely require that the Coast Guard allocate additional maintenance funds. 

Further, because the approach has not been fully implemented, it is too 

soon to tell whether the approach will provide the results intended. Coast 

Guard headquarters officials stated that before such a strategy can be 

implemented further analysis is required, to include: (1) determining the 

estimated savings associated with creating multiple 378-foot cutter 

classes; (2) analyzing other cost saving concepts, such as 

decommissioning cutters or rotating crews; (3) obtaining further 

information on the effect on Coast Guard mission readiness; and 

(4) assessing the operational risk associated with operating cutters that 

are no longer multimission capable. Officials from Coast Guard 

headquarters officials further stated that they are exploring the possibility 

of increasing the funds available for operating expenses for the 378-foot 

high-endurance cutters in fiscal year 2007. 

In its fiscal year 2006 budget request, the Administration requested 

$966 million for the Deepwater program—-$242 million more than 

Congress appropriated for the program in fiscal year 2005. This request 

reflects significant revisions to the Deepwater program’s requirements, 

capabilities, and schedule necessitated by the Coast Guard’s new 

homeland security mission. Recently, the House Appropriations 

Committee recommended $500 million for the Deepwater program, 

$466 million less than the Administration requested.22 The committee 

 21Pacific Area officials have developed a “report card” to assist in assigning cutters to 

specific missions by collecting a variety of data and condition assessments from its cutter 

crews from which it prepares a color-coded assessment of (1) the condition of each 

cutter’s critical systems (e.g., propulsion, electrical) to meet its current mission, and (2) the 

ability of each cutter to meet each possible future mission. 

22H.R. Rep. No. 109-79, at 63 (2005). 

Management 

Challenges Faced in 

Acquiring New Assets 

Remain Significant 
Page 23 GAO-05-757 Coast Guard Deepwater Program 

expressed concern about the path the program has taken and the lack of 

information provided to Congress as the primary reasons for this 

recommendation. Specifically, the committee did not believe that the 

Coast Guard’s revised implementation plan provided enough 

programmatic information such as asset delivery timelines and funding 

projections for each year through the program’s completion. 

In late May 2005, the Coast Guard submitted documentation to the 

committee in response to the committee’s request. In June 2005, the 

Senate Appropriations Committee expressed concern about the lack of 

information concerning the Deepwater plan in the fiscal year 2006 budget 

request but recommended funding of $905.6 million for the program for 

fiscal year 2006.23 As of early July 2005, the fiscal year 2006 appropriation 

for the Deepwater program was still pending, and so the funding level is 

still not known. Since the inception of the Deepwater program, we have 

expressed concerns about the degree of risk in the acquisition approach 

and the Coast Guard’s ability to manage and oversee the program. In 2004 

we reported that, well into the contract’s second year, key components 

needed to manage the program and oversee the system integrator’s 

performance had not been effectively implemented.24 We also reported that 

the degree to which the program was on track could not be determined 

because the Coast Guard was not updating its schedule.25 We detailed 

improvements needed in a number of areas, shown in table 5. These 

concerns have a direct bearing on any consideration to increase the 

program’s pace. Because the Coast Guard was having difficulty managing 

the Deepwater program at the pace it had anticipated, increasing the pace 

by expediting the acquisitions would only complicate the problem. 

 23S. Rep. No. 109-83, at 60 (2005). 

24GAO-04-380. 

25GAO-04-695. 
Page 24 GAO-05-757 Coast Guard Deepwater Program 

Table 5: Summary of Deepwater Areas Needing Management Attention as Reported by GAO 

Area of concern Recommendations to the U.S. Coast Guard 

Key components of management and 

oversight are not effectively implemented 

Improve integrated product teams responsible for managing the program by providing 

better training, approving charters, and improving systems for sharing information 

between teams 

 Ensure adequate staffing of the Deepwater program 

 Provide field personnel with guidance and training on transitioning to new Deepwater 

assets 

 Update the original acquisition schedule to support future budget requests, starting 

with the fiscal year 2006 request 

Procedures for ensuring contractor 

accountability are inadequate 

Develop measurable award fee criteria consistent with guidance from the Office of 

Federal Procurement Policy 

 Provide for better input from U.S. Coast Guard technical representatives 

 Hold system integrator accountable for improving effectiveness of integrated product 

teams 

 Establish a time frame for putting steps in place to measure contractor’s progress 

toward improving operational effectiveness 

 Establish a baseline for determining whether the acquisition approach is costing the 

government more than a traditional asset replacement approach 

 Establish criteria to determine when to adjust the project baseline and document the 

reasons for change 

Control of future costs through competition 

remains at risk because of weak oversight 

Develop a comprehensive plan for holding the system integrator accountable for 

ensuring adequate competition among suppliers 

 For subcontracts over $5 million awarded by the system integrator to the two major 

subcontractors, require notification to the Coast Guard about decisions to perform the 

work in-house rather than contracting it out 

Source: GAO. 

The Coast Guard agreed with nearly all of our recommendations and has 

made progress in implementing them. Specifically, the Coast Guard has 

fully addressed three of the recommendations and has actions under way 

on others. However, in light of continuing management challenges, it will 

likely take some time for the Coast Guard to fully address the remaining 

recommendations. While actions are under way, management challenges 

remain that are likely to take some time for the Coast Guard to fully 

address. 

We have seen mixed success in the Coast Guard’s efforts to improve 

management of the program and contractor oversight. Three of the four 

areas of concern—improving integrated project teams (IPT), ensuring 

adequate staff for the program, and planning for human capital 

Improvement of Program 

Management and 

Contractor Oversight Is 

Mixed 
Page 25 GAO-05-757 Coast Guard Deepwater Program 

requirements for field units receiving new assets—have yet to be fully 

addressed. 

Although the Deepwater program has made some efforts to improve the 

effectiveness of IPTs, we continue to see evidence that more 

improvements are needed—such as greater coordination—for the teams to 

effectively do their jobs. These teams, the Coast Guard’s primary tool for 

managing the program and overseeing the contractor, are generally 

chaired by a subcontractor representative and consist of members from 

subcontractors and the Coast Guard. The teams are responsible for overall 

program planning and management, asset integration, and overseeing 

delivery of specific Deepwater assets. Since our March 2004 report, the 

teams have been restructured, and 20 teams have charters setting forth 

their purpose, authority, and performance goals. And new, entry-level 

training is being provided to team members. 

Despite this progress, however, the needed changes are not yet sufficiently 

in place. A recent assessment by the Coast Guard of the system 

integrator’s performance found that roles and responsibilities in some 

teams continue to be unclear. Decision making is to a large extent 

stovepiped, and some teams still lack adequate authority to make 

decisions within their realm of responsibility. One source of difficulty for 

some team members has been the fact that each of the two major 

subcontractors has used its own databases and processes to manage 

different segments of the program. Decisions on air assets are made by 

Lockheed Martin, while decisions regarding surface assets are made by 

Northrop Grumman. This approach can lessen the likelihood that a 

system-of-systems outcome will be achieved if decisions affecting the 

entire program are made without the full consultation of all parties 

involved. Deepwater program officials told us that more attention is being 

paid to taking a system-wide approach and that the Coast Guard has 

emphasized the need to ensure that the two major subcontractors 

integrate their management systems. We will continue to monitor the 

Coast Guard’s progress in implementing this recommendation during our 

pending review of the revised Deepwater plan. 

The Coast Guard has taken steps to more fully staff the Deepwater 

program, with mixed effects. In February 2005, the Deepwater program 

executive officer approved a revised human capital plan. The plan 

emphasizes workforce planning, including determining needed knowledge, 

skills, and abilities and developing ways to leverage institutional 

knowledge as staff rotate out of the program. This analysis is intended to 

help determine what gaps exist between needed skills and existing skills 

Strengthening Integrated 

Product Teams 

Ensuring Adequate Staffing for 

the Deepwater Program 
Page 26 GAO-05-757 Coast Guard Deepwater Program 

and to develop a plan to bridge these gaps. The Coast Guard has also taken 

some short-term steps to improve Deepwater program staffing, hiring 

contractors to assist with program support functions, shifting some 

positions from military to civilian to mitigate turnover risk, and identifying 

hard-to-fill positions and developing recruitment plans specifically for 

them. Finally, the Deepwater program and the Coast Guard’s acquisition 

branch have begun using an automated system for forecasting military 

rotation cycles, a step Deepwater officials believe will help with longrange strategic workforce planning and analysis. 

Despite these actions, however, vacancies remain in the program, and 

some measures that may have highlighted the need for more stability in 

the program’s staff have been removed from the new human capital plan. 

As of January 2005, 244 positions were assigned to the program, with 

206 of these filled, resulting in a 16 percent vacancy rate. A year ago, 

209 staff were assigned to the program. Further, the new human capital 

plan removes a performance goal that measured the percentage of billets 

filled at any given time. Coast Guard officials stated that the prior plan’s 

goal of a 95 percent or higher fill rate was unduly optimistic and was a 

poor measure of the Coast Guard’s ability to meet its hiring goals. For 

example, billets for military personnel who plan to rotate into the program 

in the summer are created at the beginning of the budget year, leading the 

measure to count those positions as vacant from the beginning of the 

budget year until summer. Other performance measures that were 

included in the prior plan to measure progress in human capital issues 

have also been removed. For example, to help ensure that incoming 

personnel received acquisition training and on-the-job training, a billet was 

included in the prior plan to serve as a floating training position that 

replacement personnel could use for a year before the departure of 

military incumbents. The Coast Guard did not fund this position, and the 

new plan removes the billet. According to the Coast Guard, these 

measures were removed because the revised Deepwater plan focuses on 

the long-range strategic human capital issues associated with the 

execution of the acquisition over the entire period, whereas the prior plan 

had a short-term operational focus. We will continue to monitor the Coast 

Guard’s progress in implementing this recommendation during our 

pending review of the revised Deepwater plan. 

The Coast Guard recognizes the critical need to inform the operators who 

are to use the Deepwater assets of progress in the program, and officials 

stated that on the basis of our recommendations, they have made a 

number of improvements in this area. A November 2004 analysis of the 

Deepwater program’s communication process, conducted in coordination 

Improving Communication 

with Personnel Who Will Use 

the New Assets 
Page 27 GAO-05-757 Coast Guard Deepwater Program 

with the National Graduate School, found that the communication and 

feedback processes were inadequate. Emphasis has now been placed on 

outreach to field personnel, with a multipronged approach involving 

customer surveys, face-to-face meetings, and presentations. We have not 

yet evaluated the effectiveness of the new approach. 

Human capital requirements for the Deepwater program—such as crew 

numbers and schedules, training, and support personnel—will have an 

increasing impact on the program’s ability to meet its goals as the pace at 

which assets are delivered to field units picks up. Recent assessments by 

Coast Guard performance monitors show this to be an area of concern.26

Coast Guard officials have expressed concern about whether the system 

integrator is appropriately considering human capital in systems 

engineering decisions. The system integrator is required to develop a 

workforce management plan for Deepwater, as well as “human factors 

engineering” plans for each Deepwater asset and for the overall system of 

systems. The Coast Guard rejected the contractor’s workforce 

management plan and several of the proposed human factors engineering 

plans as being inadequate. The rejections were due, in part, to the lack of 

an established and integrated system-level engineering approach that 

shows how issues relating to human capabilities and limitations of actually 

performing with the system will be approached. One performance monitor 

noted that as of late 2004, requirements for staffing and training of 

maintenance facilities and organizations had yet to be determined. 

According to the Coast Guard, emphasis on a system integrator for 

addressing human capital considerations is necessary to ensure that 

Deepwater goals are met, especially as they pertain to operational 

effectiveness and total ownership cost. We will continue to monitor the 

Coast Guard’s progress in implementing this recommendation during our 

pending review of the revised Deepwater plan. 

The Coast Guard has recently undertaken efforts to update the original 

2002 Deepwater acquisition schedule—an action that we suggested in our 

June 2004 report.27 The original schedule had milestone dates showing 

when work on an asset would begin and when delivery would be expected, 

as well as the integrated schedules of critical linkages between assets, but 

we found that the Coast Guard was not maintaining an updated and 

 26Performance monitors are contracting officers’ technical representatives, who represent 

the contracting officer in monitoring the contractor’s performance. 

27GAO-04-695. 

Updating the Acquisition 

Schedule 
Page 28 GAO-05-757 Coast Guard Deepwater Program 

integrated version of the schedule.28 As a result, the Coast Guard could not 

demonstrate whether individual components and assets were being 

integrated and delivered on schedule and in critical sequence. As recently 

as October 2004, Deepwater performance monitors likewise expressed 

concern that the Coast Guard lacked adequate visibility into the program’s 

status and that lack of visibility into the schedules for component-level 

items prevented reliable forecasting and risk analysis. The Coast Guard 

has since taken steps to update the outdated schedule and has indicated 

that it plans to continue to update the schedule each month for internal 

management purposes, and semiannually to support its budget planning 

efforts. We think this is an important step toward improving the Coast 

Guard’s management of the program because it provides a more tangible 

picture of progress, as well as a baseline for holding contractors 

accountable. We will continue our oversight of the Coast Guard to ensure 

progress is made and to monitor how risks are mitigated. 

We have seen progress in terms of the rigor with which the Coast Guard is 

periodically assessing the system integrator’s performance, but concerns 

remain about the broader issues of accountability for achieving the 

overarching goals of minimizing total ownership cost and maximizing 

operational effectiveness. 

Improvements continue to be made to the criteria for assessing the system 

integrator’s performance. In March 2004, we reported that the process for 

assessing performance against specific contract tasks lacked rigor. The 

criteria for doing so have since been revised to more clearly reflect those 

that are objective, (that is, measured through automated tools against 

established measures) and those that are subjective, meaning the narrative 

comments by Coast Guard performance monitors. Weights have been 

assigned to each set of evaluation factors, and the Coast Guard continues 

to refine the distribution of the weights to reach an appropriate balance 

between automated results and the eyewitness observations of the 

performance monitors. Coast Guard officials told us that they have also 

provided additional guidance and training to performance monitors. We 

found that efforts have been made to improve the consistency of the 

 28Not maintaining a current and integrated schedule lessens the Coast Guard’s ability to 

monitor the system integrator’s performance and take early action to resolve risks that 

could become problems later. Maintaining such a schedule is an industry best practice; the 

Department of Defense is required to do so in order to be able to report any breaches in 

cost, schedule, or performance targets.

Procedures for Ensuring 

System Integrator 

Accountability Are More 

Rigorous, but Concerns 

Remain 

Improving Criteria for 

Assessing Performance 
Page 29 GAO-05-757 Coast Guard Deepwater Program 

format used for their input in assessments of the system integrator’s 

performance. Coast Guard officials said that they are continuing to make 

improvements to ensure that performance monitors’ relevant observations 

are appropriately considered in making award fee determinations. 

It is important to note that although performance monitor comments are 

considered subjective, they are valuable inputs to assessing the system 

integrator’s performance, particularly when they are tied to measurable 

outcomes. According to Coast Guard officials, the Coast Guard will 

continue to refine the award fee factors as the program progresses. In 

some cases, we noted that the performance monitors’ assessments 

differed vastly from the results of automated, data-driven assessments. For 

example, while schedule management is discussed in the Coast Guard’s 

midterm assessment of the system integrator’s performance as a major 

area of challenge and risk, the objective measure showed 100 percent 

compliance in this area. Another measure assesses the extent to which 

integrated product teams consider the impact of their decisions on the 

overall cost and effectiveness of the Deepwater program. Performance 

monitors reported that because system-level guidance had not been 

provided to the teams responsible for specific assets, they had a limited 

ability to see the whole picture and understand the impact of decisions on 

total ownership cost and operational effectiveness. However, the 

automated measure was again 100 percent compliance. Coast Guard 

officials said that, in some cases, the data-driven measures do not 

accurately reflect the contractor’s performance. We will continue to 

monitor changes to the Coast Guard’s measures for assessing the system 

integrator’s performance. 

Changes have been made to the award fee measures that place additional 

emphasis on the system integrator’s responsibility for making integrated 

product teams effective. Award fee criteria now incorporate specific 

aspects of how the integrator is managing the program, including 

administration, management commitment, collaboration, training, and 

empowerment of these teams. However, as discussed above, concerns 

remain about whether the teams are effectively accomplishing their goals. 

While the Coast Guard has developed models to measure the system 

integrator’s performance in operational effectiveness and total ownership 

cost, concrete results have not yet emerged. Minimizing total ownership 

cost and maximizing operational effectiveness are two of the overarching 

goals of the Deepwater program. The system integrator’s performance in 

these two areas will be a critical piece of information when the Coast 

Guard makes a decision about whether to award the contractor the first 

Holding the System Integrator 

Accountable for Effectiveness 

of Product Teams 

Evaluation of Operational 

Effectiveness and Total 

Ownership Cost 
Page 30 GAO-05-757 Coast Guard Deepwater Program 

contract option period of 5 years. Initial decision making is to start in June 

2006. 

With regard to the operational effectiveness of the program, measuring the 

system integrator’s impact has yielded limited results to date because few 

of the new assets are operational. The Coast Guard has developed 

modeling capabilities to simulate the effect of the new capabilities on its 

ability to meet its missions. However, until additional assets become 

operational, progress toward this goal will be difficult to determine. 

With regard to total ownership cost, the Coast Guard does not plan to 

implement our recommendation, despite concurring with it at the time of 

our March 2004 report. The Coast Guard has not adhered to its original 

plan, set forth in the Deepwater program management plan, of establishing 

as its baseline a cost not to exceed the dollar value of replacing the assets 

under a traditional approach (e.g., on an asset-by-asset basis rather than a 

system-of-systems approach). In addition to providing for greater 

synergies between air, sea, sensor and communications assets and 

equipment, the system-of-systems approach was to yield cost savings 

when compared with a traditional acquisition approach. Although the 

Coast Guard initially established a cost baseline consistent with the 

program management plan’s approach, the Coast Guard has not updated it 

to reflect changes made to the system integrator’s cost estimate baseline, 

and therefore is not being used to evaluate the contractor’s progress in 

holding down total ownership cost. As a result, the cost baseline being 

used to measure total ownership cost is not the Coast Guard’s, but rather 

is the system integrator’s own cost estimate. As we reported in March 

2004, we believe that measuring the system integrator’s cost growth 

compared with its own cost proposal will tell the government nothing 

about whether it is gaining efficiencies by turning to the system-of-systems 

concept rather than the traditional asset-by-asset approach. Although the 

Deepwater program has undergone a number of alterations since the 

contract was awarded in 2002, the Coast Guard has not studied whether 

the system-of-systems approach is still more cost effective as opposed to a 

traditional acquisition approach. Thus, the Coast Guard will lack this 

information as it prepares to decide whether to award the first contract 

option beginning in June 2006. 

Coast Guard officials stated that the contract total ownership cost and 

operational effectiveness baseline is adjusted based on approved decision 

memorandums from the Agency Acquisition Executive, the Vice 

Commandant of the Coast Guard. Such memorandums were originally 

approved by the program executive officer on a case-by-case basis. As we 

Establishing Criteria and 

Documenting Changes to the 

Baseline 
Page 31 GAO-05-757 Coast Guard Deepwater Program 

reported in March 2004,29 establishing a solid baseline against which to 

measure progress in lowering total ownership cost is critical to holding the 

contractor accountable. 

The Coast Guard reported that it is taking steps to address our 

recommendations concerning cost control through competition among 

second-tier suppliers and notification of “make” decisions.30 While we have 

not assessed the effectiveness of the Coast Guard’s actions regarding 

competition among second-tier suppliers, we are satisfied with its efforts 

regarding notification of make decisions. It should be noted, though, that 

we have not assessed the effectiveness of the following actions. 

• Competition among second-tier suppliers. Coast Guard officials told us 

that in making the decision about whether to award the first contract 

option, the government will specifically examine the system integrator’s 

ability to control costs by assessing the degree to which competition is 

fostered at the major subcontractor level. The evaluation will consider the 

subcontractors’ project management structure and processes to control 

costs, as well as how market surveys of similar assets and major 

subsystems are implemented. The Coast Guard is focusing its attention on 

those areas that were priced after the initial competition for the 

Deepwater contract was completed, such as the HH-65 re-engining and the 

C-130J missionization.31 For example, a new process implemented for the 

C-130J missionization was a requirement for competition in subcontracting 

and government approval of all subcontracts exceeding $2 million in order 

for the Coast Guard to monitor the integrator’s competition efforts. 

• Notification of make decisions. According to the Federal Acquisition 

Regulation, the prime contractor is responsible for managing contract 

performance, including planning, placing, and administering subcontracts 

as necessary to ensure the lowest overall cost and technical risk to the 

government.32 The Federal Acquisition Regulation further provides that 

 29GAO-04-380. 

30A “make item” means an item or work effort to be produced or performed by the prime 

contractor or its affiliates, subsidiaries, or divisions. 

31The C-130J missionization, planned for the Coast Guard’s six C-130J aircraft, is intended 

to modify and install mission-essential equipment to convert the aircraft into C-130J longrange surveillance maritime patrol aircraft. 

32Federal Acquisition Regulation §15.407-2, “Make or Buy Programs.” 

Coast Guard Reports 

Taking Steps to Hold the 

System Integrator 

Accountable for 

Competition 
Page 32 GAO-05-757 Coast Guard Deepwater Program 

when “make-or-buy programs” are required, the government may reserve 

the right to review and agree on the contractor’s make-or-buy program 

when necessary to ensure negotiation of reasonable contract prices, 

among other things. We recommended that the Coast Guard be notified of 

make-or-buy decisions over $5 million in order to facilitate controlling 

costs through competition. We suggested the $5 million threshold because 

Lockheed Martin, one of the major subcontractors, considers that amount 

to be the threshold for considering its suppliers major. The Coast Guard 

has asked the system integrator, on a voluntary basis, to provide 

notification 1 week in advance of a make decision of $10 million or more 

based on the criteria in the make-or-buy program provisions of the Federal 

Acquisition Regulation. According to Coast Guard officials, to date, no 

make decision has exceeded $10 million since the request was made. The 

details implementing this recommendation have not yet been worked out, 

such as specifically who in the Coast Guard will monitor the 

subcontractors’ make decisions to ensure that the voluntary agreement is 

complied with. We will continue to monitor the Coast Guard’s progress in 

implementing this recommendation during our pending review of the 

revised Deepwater plan. 

Our work suggests the costly and important Deepwater program will need 

constant monitoring and management attention to successfully 

accomplish its goals. In this respect, we identified three points that should 

be kept in mind in considering how to proceed with the program. 

• First, the need to replace or upgrade deteriorating legacy assets is 

considerable. While the Coast Guard currently lacks measures that clearly 

demonstrate how this deterioration affects its ability to perform 

deepwater-related missions, it is clear that the deepwater legacy assets are 

insufficient for the task. As the Coast Guard continues to develop 

condition measures that are more robust and able to link the assets’ 

condition with mission capabilities, and as it further develops and 

implements its Capital Asset Management System, it will be in a better 

position to make more informed decisions regarding where its budget 

should be spent to maximize the capabilities of its legacy assets as the 

Coast Guard transitions to the Integrated Deepwater System. 

• Second, there are signs that as the Deepwater program moves ahead, the 

Coast Guard will continue to report more problems with sustaining 

existing assets, together with the attendant need for additional infusions of 

funding to deal with them. Some of these problems, such as those on the 

378-foot cutters, are included in the compendium the Coast Guard uses to 

set sustainment priorities and plan budgets, but the Coast Guard has not 

allocated funds because the problems pertain to assets that are among the 

Concluding 

Observations 
Page 33 GAO-05-757 Coast Guard Deepwater Program 

first to be replaced. However, projects to address these problems are 

nevertheless likely to be needed. While the Coast Guard is moving to 

improve the information it uses to set budget priorities through 

development of CAMS, the system has not been implemented, and 

therefore, it is too soon to tell how effective the system will be. We will 

continue to work with the Coast Guard to monitor its progress on CAMS 

as a means for ensuring that there is a more systematic and 

comprehensive approach to keeping Congress abreast of the potential bill 

for sustaining these assets. 

• Third, although the need to replace and upgrade assets is strong, there still 

are major risks in the Coast Guard’s acquisition approach. The cost 

increases and schedule slippages that have already occurred are warning 

signs. While the Coast Guard has initiated actions to address problems we 

have raised involving system integration, cost and schedule management, 

and integrated product teams, we remain concerned that the program still 

carries major risks. We will continue to work with the Coast Guard to 

determine how best to manage these risks so that the Deepwater missions 

can be accomplished in the most cost-effective way. 

We requested comments on a draft of this report from the Department of 

Homeland Security and the U.S. Coast Guard. The U.S. Coast Guard 

provided technical comments, which have been incorporated into the 

report where appropriate. 

We are providing copies of this report to the Secretary of the Department 

of Homeland Security, the Commandant of the U.S. Coast Guard, and 

interested congressional committees. The report will also be made 

available to others upon request. In addition, the report will be available at 

no charge on GAO’s Web site at http//www.gao.gov. 

For information about this report, please contact me at (415) 904-2200, or 

wrightsonm@gao.gov. Contact points for our Offices of Congressional 

Agency Comments 
Page 34 GAO-05-757 Coast Guard Deepwater Program 

Relations and Public Affairs may be found on the last page of this report. 

Individuals making key contributions to this report are listed in appendix 

III. 

Margaret T. Wrightson 

Director, Homeland Security and Justice Issues 
Appendix I: Objectives, Scope, and 

Methodology 

Page 35 GAO-05-757 Coast Guard Deepwater Program 

This report examines the condition of the U. S. Coast Guard’s Deepwater 

legacy assets and the acquisition management challenges the Coast Guard 

faces. Our work focused on three key questions: (1) How has the condition 

of the Coast Guard’s deepwater legacy assets changed during fiscal years 

2000 through 2004? (2) What actions has the Coast Guard taken to 

maintain, upgrade, and better manage its deepwater legacy assets? 

(3) What are the management challenges the Coast Guard faces in 

acquiring new assets, especially if a more aggressive schedule is adopted? 

In assessing how the condition of the deepwater legacy assets has changed 

during fiscal years 2000 through 2004, we analyzed what Coast Guard 

officials told us were the best available condition measures. For 

deepwater aircraft, we obtained concurrence from Coast Guard Office of 

Aeronautical Engineering officials that the appropriate measures to use for 

aircraft condition included the availability index (percentage of time 

aircraft were available to complete missions), cost per flight hour, labor 

hours per flight hour, programmed flight hours per year, scheduled versus 

unscheduled maintenance expenditures, and estimated deferred 

maintenance. For cutters, we obtained concurrence from the Office of 

Naval Engineering and the Office of Cutter Forces that the appropriate 

measures to use for cutter condition were the number of major (category 3 

and 4) casualties, the percent of time free of major casualties, scheduled 

versus unscheduled maintenance, and estimated deferred maintenance. 

We also reviewed data on mishaps and the dispatch reliability index for 

aircraft, and lost cutter days and unscheduled maintenance days for 

cutters, but we did not use these measures because the data were either 

not relevant to our analysis, incomplete, not available for the entire time 

period covered by our review, or not sufficiently reliable for our purposes. 

We supplemented our analyses of these measures with documentation 

from relevant reports and studies, as well as from interviews of asset 

program managers and crews for each type of deepwater legacy aircraft 

and cutter. For aircraft, we collected data from the Aircraft Repair and 

Supply Center in Elizabeth City, North Carolina; and visited selected air 

stations in Kodiak, Alaska; Miami, Florida; and Elizabeth City, North 

Carolina; to provide coverage of each of the four types of Deepwater 

aircraft—HC-130 and HU-25 fixed wing aircraft, and the HH-60 and HH-65 

rotary aircraft. For cutters, we collected data at the Maintenance and 

Logistics Commands in Alameda, California; and Norfolk, Virginia; and 

visited selected Coast Guard facilities in Kodiak, Alaska; Portsmouth, 

Virginia; and Miami, Florida; to provide coverage of each of the three types 

of Deepwater vessels—high-endurance cutters, medium-endurance 

cutters, and patrol boats. We also reviewed Coast Guard policies and 

standards, including the Coast Guard Cutter Employment Standards, 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology 

Page 36 GAO-05-757 Coast Guard Deepwater Program 

Coast Guard Aircraft Employment Standards for Days Employed 

Aboard Ship and Days Away from Home Station, and the Coast Guard 

Environmental Health and Safety Manual. In addition, to assess the 

reliability of the Coast Guard’s data and condition measures, we 

questioned knowledgeable officials and reviewed existing documentation 

about the data and the systems that produced the data. On the basis of our 

assessments, we determined that the data were sufficiently reliable for the 

purposes of this report. 

To determine the actions that the Coast Guard has undertaken to maintain, 

upgrade, and better manage its deepwater legacy assets, we reviewed 

documentation such as the Systems Integrated Near Term Support 

Strategy (SINTSS), which is a compendium of information on proposed 

asset sustainment projects, and spoke with various Coast Guard program 

officials from the Offices of Naval and Aeronautical Engineering, as well as 

the Atlantic Area Maintenance and Logistics Command, regarding the need 

to perform increasing maintenance on assets between deployments. To 

determine additional efforts that Coast Guard plans to undertake to better 

manage these assets, we met with Coast Guard officials from the Office of 

Naval Engineering to discuss the development of measures that the Coast 

Guard hopes will more accurately measure the impact that the declining 

condition of its legacy assets has on mission capabilities and reviewed 

documentation relevant to these measures. We also reviewed plans and 

guidance for the newly developed Capital Asset Management Strategy 

(CAMS), which the Coast Guard intends to use in establishing priorities 

for determining which Deepwater asset maintenance and sustainment 

projects to fund. In addition, we also met with officials at the Pacific Area 

Command and Maintenance and Logistics Command to discuss their fleet 

sustainment initiative for keeping the high-endurance cutters operational 

until their replacement by the National Security Cutter. 

To determine what management challenges the Coast Guard faces in 

acquiring new assets, we followed up on actions the Coast Guard has 

taken to implement the 11 recommendations in our report Contract 

Management: Coast Guard’s Deepwater Program Needs Increased 

Attention to Management and Contractor Oversight (GAO-04-380), of 

March 9, 2004; and the 1 recommendation from our report Coast Guard: 

Deepwater Program Acquisition Schedule Update Needed, (GAO-04-695), 

of June 14, 2004. We received briefings and held several meetings with the 

Deepwater Program Executive Officer, the Deputy Program Executive 

Officer, and a number of Deepwater staff, including contracting officers. 

We also held a discussion with representatives of the system integrator to 

get their views on progress made in implementing the recommendations. 
Appendix I: Objectives, Scope, and 

Methodology 

Page 37 GAO-05-757 Coast Guard Deepwater Program 

We analyzed documentation supporting the Coast Guard’s midterm 

assessment of the contractor’s system integration and management 

performance in the third year of the contract, including written comments 

by the performance monitors. We also held discussions with Deepwater 

program performance monitors. We recently began an assessment of the 

third year of performance. However, we were not able to thoroughly 

review the documentation in time to include our observations in this 

report. We reviewed information on Deepwater integrated product teams, 

including membership lists and briefings provided by the Coast Guard on 

measures of effectiveness for the teams. We analyzed the Coast Guard’s 

plans to increase communications to field operators, including its August 

2004 Integrated Deepwater Systems Internal Communications Plan, and 

received a briefing on how the plan is being implemented. We compared 

the September 2003 Deepwater Human Capital Plan with the February 

2005 revised plan to identify changes that had been made and discussed 

Deepwater program office staffing numbers and plans with Coast Guard 

officials. Finally, we discussed with Coast Guard officials steps the Coast 

Guard has taken to hold the system integrator accountable for “make” 

versus “buy” decisions by the two major subcontractors and reviewed a 

January 2005 letter on this subject from the Director of Subcontracts for 

Integrated Coast Guard Systems to the subcontractors. 

We performed our review from July 2004 to June 2005 in accordance with 

generally accepted government auditing standards at various Coast Guard 

offices and facilities. 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 38 GAO-05-757 Coast Guard Deepwater Program 

The HC-130 is a long-range, fixed-wing, multimission aircraft used for 

search and rescue, drug interdiction, alien and migrant interdiction, living 

marine resources, and defense readiness and logistics missions. 

Manufactured by Lockheed Martin Aero, the HC-130 aircraft entered Coast 

Guard service beginning in 1972. There are currently 27 HC-130 aircraft 

within the Coast Guard. The estimated service life is approximately 

30 years or 40,000 flight hours. 

The HC-130 fleet’s performance data show that while there was a decline 

in fiscal year 2004, fleet availability has steadily improved since 2000 and 

remains near the Coast Guard’s 71 percent availability standard. Similarly, 

the number of labor hours per flight hour remained fairly stable from fiscal 

year 2000 to 2003 but increased slightly in fiscal year 2004. Programmed 

flight hours have also remained reasonably stable, with some year-to-year 

fluctuations after a decline in fiscal year 2001. These performance 

measures are summarized in table 6. 

Table 6: HC-130 Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year

Availability

indexa

Programmed 

flight hoursb

Labor hours 

per flight hourc

2000 63.5% 20,805 15.3

2001 65.9% 19,027 16.0

2002 71.0% 18,824 16.7

2003 73.3% 19,006 16.9

2004 68.6% 18,800 20.0

Source: U.S. Coast Guard. 

a The availability index indicates the percentage of time that aircraft assigned to Coast Guard air 

stations are available to perform Coast Guard missions. The historical availability standard is 

71 percent, driven in part by the Coast Guard’s goal of each air station with at least three aircraft 

having at least one aircraft ready to launch within 30 minutes of a distress signal. 

b Programmed flight hours are the number of hours per year assigned to a particular type of aircraft 

based on budget considerations for operation and maintenance costs. 

c Labor hours per flight hour represent the average of the number of maintenance labor hours 

expended by field units versus the number of flight hours produced by those units, for each asset 

class. 

Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

HC-130 Long-Range 

Surveillance Aircraft 

HC-130 Fleet Overview 

Performance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 39 GAO-05-757 Coast Guard Deepwater Program 

The HC-130 fleet’s maintenance costs have generally increased during 

fiscal years 2000 through 2004. Overall, the fleet’s cost per flight hour and 

scheduled maintenance expenditures have risen, driven by an increase in 

the scope of depot-level maintenance to improve the fleet’s material 

condition. Also, depot-level maintenance schedule delays have led to a 

backlog, thereby increasing the amount of fleet deferred maintenance, as 

shown in table 7. 

Table 7: HC-130 Fleet Maintenance Data forFiscal Years 2000-2004, in Fiscal Year 2004 Dollars 

Fiscal year 

Cost per 

flight houra

Estimated scheduled 

maintenance expenditures 

Estimated unscheduled 

maintenance expendituresb

Estimated deferred 

maintenance costs

2000 $1,347 $8,415,000 $9,051,000 $4,549,000 

2001 $1,637 $9,769,000 $7,226,000 $14,295,000 

2002 $2,202 $9,309,000 $6,354,000 $4,976,000 

2003 $2,077 $12,891,000 $7,593,000 $7,223,000 

2004 $2,357 $18,641,000 $10,142,000 $5,737,000 

Source: GAO analysis of U.S. Coast Guard data. 

Note: Cost per flight hour, estimated maintenance expenditures and deferred maintenance cost data 

in this and other aircraft fleet maintenance data tables were adjusted for inflation using U.S. 

Department of Labor producer price indices for aircraft maintenance and repair, and are presented in 

fiscal year 2004 dollars. 

a The cost per flight hour measure represents the variable costs of spare parts and depot-level 

maintenance associated with operating each aircraft type. This figure is derived by dividing historical 

aircraft part demand data by the number of hours flown during the same period. The current year 

data are combined with that of the 2 previous fiscal years, adjusted for inflation, to calculate a 

weighted average. The model does not address deferred maintenance or inventory holes but reports 

how much it costs to operate each fleet for a given number of hours in a given fiscal year. 

b The Coast Guard does not normally track aviation unscheduled maintenance expenditures in relation 

to scheduled maintenance expenditures. However, at GAO’s request, Coast Guard officials estimated 

the unscheduled maintenance expenditures for each type of deepwater aircraft based on the 

classification of air station requests for certain spare parts. 

According to Coast Guard officials, there is an urgent need to replace the 

HC-130’s APS-137 surface search radar system. The radar system—part of 

the aircraft’s original configuration—is subject to frequent failures and is 

quickly becoming unsupportable, according to the Coast Guard officials. 

Replacement parts are very difficult to locate. While HC-130 flight crews 

will work around any failures, without the system, the flight crews are 

reduced to looking out windows for targets, thereby greatly reducing 

mission capabilities for performing search and rescue, alien-migrant 

interdiction, and drug interdiction missions. In the conference report 

Maintenance Trends 

Sustainment Issues 

Obsolescence of the HC-130’s 

Surface Search Radar System 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 40 GAO-05-757 Coast Guard Deepwater Program 

accompanying the Coast Guard’s fiscal year 2005 appropriation, the 

conferees directed $9 million for the radar system.1

 Total system 

replacement costs are estimated to be $78 million and are to be completed 

in fiscal year 2008. 

The Coast Guard has identified several additional HC-130 sustainment 

projects in its latest Systems Integrated Near Term Support Strategy. 

Included in these projects are an avionics modernization and a related 

wing-rewiring project. According to the Coast Guard, the HC-130’s 

avionics suite utilizes 1960s technology that is costly to maintain and will 

soon be unsupportable because of a lack of spare and repair parts. This 

cockpit modernization project is aimed at enabling the HC-130 aircraft to 

better support maritime safety and security and national defense and 

logistics missions. The Coast Guard estimates this project will cost 

$305 million and take 4 years to complete. The wing-rewiring project is 

designed to provide more power to an upgraded avionics suite and to ward 

off potential safety issues due to deteriorating wiring, such as electrical 

shorts and probability of fire. Coast Guard officials estimate the project 

will cost nearly $11 million and will take 5 years to complete. 

Five of the 27 operational HC-130s have recently been placed under 

operational restrictions at the request of the aircraft’s manufacturer, 

Lockheed Martin Aero, because of a problem associated with the aircraft’s 

center wing box. The restrictions include limitations on weight, airspeeds, 

maneuvering, and mission endurance. As of early June 2005, the Coast 

Guard was awaiting the release of inspection criteria from Lockheed 

Martin. Nevertheless, the Coast Guard estimates that the inspections will 

cost $2 million for the 5 aircraft. This problem is not limited to Coast 

Guard aircraft, but is affecting HC-130s worldwide. The remaining Coast 

Guard HC-130s are not subject to the operational restrictions but will 

likely have to undergo similar limitations and inspections beginning in 

fiscal year 2006. 

 1

H.R. Conf. Rep. No. 108-774, at 57 (2004). 

Avionics Modernization and 

Wing-Rewiring Projects 

HC-130 Center Wing Box 

Structural Issues 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 41 GAO-05-757 Coast Guard Deepwater Program 

The HU-25 is a medium-range, fixed-wing, multimission aircraft used for 

search and rescue, drug interdiction, alien/migrant interdiction, fisheries 

law enforcement, defense readiness, and essential logistics missions. 

Manufactured by Falcon Jet, the HU-25 entered the Coast Guard aviation 

fleet in 1982. The Coast Guard’s fleet contains 23 aircraft. The Coast Guard 

maintained a fleet of 26 operational HU-25 aircraft in fiscal year 2000 but 

reduced the fleet because of budgetary constraints in fiscal year 2002. The 

original estimated service life was 20 years or 20,000 flights (landings) or 

30,000 flight hours. 

The HU-25 fleet’s programmed flight hours have fluctuated during fiscal 

years 2000 through 2004 with changes in fleet size. In fiscal year 2004, the 

fleet flew 86 percent of the fiscal year 2001 programmed flight hours with 

29 percent fewer aircraft. Moreover, the fleet’s availability index has 

generally improved during fiscal years 2000 through 2003, in large part 

because of the enhanced reliability of the HU-25’s ATF-3 engine. Though it 

consistently remained below the Coast Guard’s 71 percent availability 

standard, it has improved from fiscal year 2000 levels. The fleet’s labor 

hours per flight hour have also remained fairly consistent since fleet 

reduction. Table 8 provides a summary of the HU-25’s key performance 

measures. 

Table 8: HU-25 Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year

Availability 

index

Programmed 

flight hours 

Labor hours 

per flight hour

2000 59.0% 16,322 10.9

2001 57.4% 15,616 13.4

2002 62.4% 11,200 12.9

2003 67.2% 14,122 12.9

2004 65.8% 13,500 13.5

Source: U.S. Coast Guard. 

The maintenance measures for the HU-25 show varied results. During 

fiscal years 2000 through 2004, the fleet’s cost per flight hour has generally 

HU-25 Medium-Range 

Surveillance Aircraft 

HU-25 Fleet Overview 

Performance Trends 

Maintenance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 42 GAO-05-757 Coast Guard Deepwater Program 

declined, scheduled and unscheduled maintenance expenditures 

fluctuated, and the amount of deferred maintenance dropped significantly. 

Table 9 provides a summary of the key maintenance measures. 

Table 9: HU-25 Fleet Maintenance Data for Fiscal Years 2000-2004, in Fiscal Year 2004 Dollars 

Fiscal year 

Cost per 

flight hour 

Estimated scheduled 

maintenance expenditures

Estimated unscheduled 

maintenance expenditures 

Estimated deferred 

maintenance costs

2000 $1,980 $17,616,000 $16,572,000 $12,338,000

2001 $1,979 $15,184,000 $18,979,000 $4,230,000

2002 $1,917 $13,264,000 $11,065,000 0

2003 $1,833 $18,447,000 $9,868,000 $207,000

2004 $1,897 $16,524,000 $11,961,000 0

Source: GAO analysis of U.S. Coast Guard data. 

According to Coast Guard officials, the HU-25’s Honeywell ATF-3 engines 

are complex, have been historically unreliable, and are time-consuming to 

maintain—requiring as long as 4 days to re-install a repaired engine. Some 

of the engine problems have been mitigated by improvements in sensor 

capabilities that allow the aircraft to fly at higher altitudes for longer 

periods of time during surveillance missions. Flying at higher altitudes 

reduces the amount of saltwater introduced into the engines, thereby 

reducing corrosion and placing less stress on the engines. According to 

Coast Guard officials, this has contributed to increasing engine reliability 

and improvements in HU-25 fleet availability. 

The sensors on the six HU-25D models were recently upgraded at a cost of 

$43 million in acquisition, capital, and investment (AC&I) funding. Five of 

the six upgraded HU-25D aircraft are stationed at air station Miami. 

According to the air station’s commanding officer, the upgraded sensors, 

while critical to mission success, also have a relatively high rate of 

inoperability. Sensor inoperability is a function of the aircraft’s poor air 

conditioning system. When the cabin becomes too warm, the sensors fail. 

Air conditioning system and sensor failure does not present a safety of 

flight issue but does degrade mission capability. According to Coast Guard 

officials this problem is limited to the HU-25D models. 

Sustainment Issues 

Engines 

Sensors 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 43 GAO-05-757 Coast Guard Deepwater Program 

The HH-60 helicopter is used for ports, waterways, and coastal security; 

drug interdiction; alien/migrant interdiction; defense readiness; search and 

rescue; ice operations; living marine resources; and marine environmental 

protection missions. Manufactured by Sikorsky Aircraft Corporation, the 

HH-60 entered into the Coast Guard fleet in 1990. The Coast Guard has a 

total of 41 HH-60 aircraft. The original estimated service life was 

approximately 20 years. 

The HH-60’s deteriorating subsystems, such as the avionics suite, are 

requiring increasing amounts of maintenance and thereby reducing fleet 

performance. Nevertheless, the HH-60 fleet has maintained a relatively 

high availability level, remaining close to or exceeding the Coast Guard’s 

71 percent availability standard since fiscal year 2000. The fleet’s number 

of programmed flight hours has experienced some year-to-year 

fluctuations but has been relatively stable. At the same time, increasing 

subsystem failures are requiring more unit-level maintenance, as reflected 

by the fleet’s general rise in the number of labor hours per flight hour. 

Further, Coast Guard officials have told us that flight crews and 

maintenance personnel have to work harder and longer to maintain the 

fleet’s high availability levels. Table 10 provides a summary of the key 

performance measures. 

Table 10: HH-60 Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year 

Availability 

index

Programmed 

flight hours 

Labor hours

per flight hour

2000 71.4% 24,109 16.5

2001 70.8% 22,115 18.6

2002 68.1% 24,915 20.2

2003 72.4% 26,014 19.8

2004 69.8% 24,832 21.5

Source: U.S. Coast Guard. 

In constant dollars, the HH-60 fleet’s estimated scheduled and 

unscheduled maintenance expenditures generally trended downward 

during fiscal years 2000 through 2004, while the cost per flight hour has 

HH-60 Medium-Range 

Recovery Helicopter 

HH-60 Fleet Overview 

Performance Trends 

Maintenance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 44 GAO-05-757 Coast Guard Deepwater Program 

fluctuated. In contrast, the amount of HH-60 deferred maintenance 

incurred by the Coast Guard has nearly doubled since fiscal year 2000. HH60 fleet product line managers attribute this increase to budget constraints 

and an expansion in the scope of the HH-60 overhauls without a 

corresponding increase in the number of maintenance personnel. Table 11 

provides a summary of the key maintenance measures. 

Table 11: HH-60 Fleet Maintenance Data for Fiscal Years 2000-2004, in Fiscal Year 2004 Dollars 

Fiscal year 

Cost per 

flight hour 

Estimated scheduled 

maintenance expenditures

Estimated unscheduled 

maintenance expenditures 

Estimated deferred 

maintenance costs

2000 $1,062 $18,968,000 $17,897,000 $10,067,000

2001 $1,294 $20,787,000 $15,450,000 $11,374,000

2002 $1,568 $17,848,000 $15,845,000 $8,094,000

2003 $1,516 $17,189,000 $12,017,000 $9,715,000

2004 $1,387 $17,254,000 $12,596,000 $18,824,000

Source: GAO analysis of U.S. Coast Guard data. 

According to HH-60 flight crews and maintenance staff, the reliability of 

the aircraft’s 1970s era avionics system is steadily declining. The system’s 

increasing failure rate is directly affecting the HH-60 fleet’s mission 

capabilities, as avionics system failures are occurring every 11 flight hours, 

on average. Further, according to the Coast Guard, HH-60 avionics repair 

vendors will phase out system component repairs in fiscal year 2007. For 

these reasons, the Coast Guard has implemented an HH-60 avionics 

upgrade to replace the current system with a state-of-the-art open 

architecture system that Coast Guard officials claim will meet the future 

needs of HH-60 missions. The Coast Guard estimates that this program will 

cost about $84 million and will be completed in fiscal year 2010. The Coast 

Guard has allocated $30.8 million through fiscal year 2005 for the program. 

The Coast Guard has developed a service life extension program for the 

HH-60 fleet to upgrade structural components such as beams, fittings, and 

frames, and will increase depot-level maintenance production to nine 

aircraft per year. According to the Coast Guard, the program will extend 

the service life of the HH-60 fleet through 2022. 

Sustainment Issues 

HH-60 Avionics Replacement 

The HH-60 Service Life 

Extension Program 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 45 GAO-05-757 Coast Guard Deepwater Program 

The HH-65 is a twin-engine, short-range recovery helicopter used for ports, 

waterways and coastal security; drug interdiction; alien-migrant 

interdiction; defense readiness; search and rescue; ice operations; and 

marine environmental missions. The HH-65 entered Coast Guard service 

beginning in 1984. The helicopter’s airframe is manufactured by 

Eurocopter, and most HH-65s are equipped with Honeywell-manufactured 

LTS-101-750 engines. However, these engines are currently being replaced 

(see details below). The Coast Guard maintains 95 aircraft in the fleet. The 

original estimated service life for the HH-65 aircraft was 20 years, but 

according to Coast Guard aviation staff, the engine replacement program 

should extend the service live beyond that estimate. 

Despite safety and reliability concerns related to its engines, the HH-65 

fleet has consistently maintained an availability level above the 71 percent 

Coast Guard standard during fiscal years 2000 through 2004. Moreover, the 

number of fleet programmed flight hours has steadily increased since 

fiscal year 2000. The fleet’s labor hours per flight hour have remained 

stable since fiscal year 2001. However, it should be noted that the number 

of fleet mishaps, particularly engine-related mishaps, increased sharply in 

2004, primarily because of the engine and engine control system’s poor 

reliability. Table 12 provides a summary of the key performance measures. 

Table 12: HH-65 Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year 

Availability 

index

Programmed 

flight hours 

Labor hours

per flight hour

2000 76.6% 46,451 11.4

2001 75.0% 45,212 13.0

2002 73.4% 50,840 13.0

2003 75.5% 51,380 13.6

2004 80.9% 51,745 13.3

Source: U.S. Coast Guard. 

The HH-65 fleet has sustained a comparatively high level of availability 

even though maintenance data show that the fleet has had challenges 

related to poor engine performance. Fleet cost per flight hour steadily 

increased during fiscal years 2000 through 2004. The Coast Guard has not 

HH-65 Short-Range 

Recovery Helicopter 

HH-65 Fleet Overview 

Performance Trends 

Maintenance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 46 GAO-05-757 Coast Guard Deepwater Program 

deferred any maintenance for the HH-65 fleet from fiscal year 2000 

through 2004. Table 13 provides a summary of the key maintenance 

measures. 

Table 13: HH-65 Fleet Maintenance Data for Fiscal Years 2000-2004, in Fiscal Year 2004 Dollars 

Fiscal year 

Cost per 

flight hour 

Estimated scheduled 

maintenance expenditures

Estimated unscheduled 

maintenance expenditures 

Estimated deferred 

maintenance costs

2000 $908 $36,034,000 $18,377,000 0

2001 $976 $31,793,000 $17,690,000 0

2002 $1,089 $33,296,000 $21,458,000 0

2003 $1,107 $36,623,000 $22,388,000 0

2004 $1,312 $31,431,000 $22,815,000 0

Source: GAO analysis of U.S. Coast Guard data. 

The increasing trend in the number and seriousness of safety-related HH65 incidents prompted a Coast Guard decision in January 2004 to replace 

the existing engines and the associated engine control systems within 

24 months. However, the Coast Guard now anticipates that the re-engining 

of all 84 operational HH-65 helicopters will take until February 2007. Total 

program costs are estimated to be nearly $350 million, or about $3.7 

million per helicopter. 

As of June 7, 2005, 5 HH-65 aircraft have been successfully re-engined, 

14 are under production at the Coast Guard’s Aircraft Repair and Supply 

Center, and an additional aircraft is under production at the American 

Eurocopter’s facility in Columbus, Mississippi. Upon completion of this 

test case, the Coast Guard will determine if the American Eurocopter 

facility is suitable to serve as the site for a second re-engining production 

line. 

According to the Coast Guard, the HH-65 was selected for conversion to 

the Deepwater program’s multimission cutter helicopter (MCH) beginning 

in fiscal year 2007. As such, the converted HH-65 helicopters will be part of 

the Deepwater program moving forward. There are several steps 

constituting the full MCH conversion, of which the current HH-65 reengining program is one element. Other elements include the replacement 

of the HH-65’s landing gear and tail rotors. The HH-65’s new engine should 

allow the helicopter to support an increase in maximum gross weight. 

However, the current landing gear cannot support such an increase. The 

Sustainment Issues 

The HH-65 Re-engining 

Program 

Other Multimission Cutter 

Helicopter Conversion 

Elements 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 47 GAO-05-757 Coast Guard Deepwater Program 

current tail rotors also need to be replaced because the product 

manufacturer is discontinuing production of the rotors, though supplies on 

hand should last until May 2005. 

Other elements of the MCH conversion, such as an upgrade of the 

avionics, will increase the aircraft’s service life and capabilities. These 

conversion elements are scheduled for integration beginning in fiscal year 

2007. 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 48 GAO-05-757 Coast Guard Deepwater Program 

The 378-foot cutters are the largest cutters in the deepwater fleet, with a 

crew size of 19 officers and 147 enlisted. The Coast Guard has 12 of the 

378-foot cutters in its deepwater fleet, with 10 of these stationed in the 

Pacific Area Command and the remaining 2 in the Atlantic Area Command. 

The 378-foot cutters typically operate 185 days away from home port per 

year. The 378-foot cutters are used in a number of missions, such as 

defense operations; maritime security/law enforcement; search and 

rescue; living marine resources; ports, waterway, and coastal security; 

alien-migrant interdiction; and drug interdiction. These cutters were 

commissioned by the Coast Guard during 1967 to 1972 and have an 

estimated service life of about 40 years, affected in part by the Fleet 

Rehabilitation and Modernization (FRAM) program, which is discussed in 

further detail below. 

The 378-foot cutters are considered by the Coast Guard to generally be 

deteriorating in condition, and this assertion is supported by the Coast 

Guard’s data measures. Major casualties2

 per cutter have increased from 

fiscal year 2000 through 2004, and the percent of time free (POTF) of 

major casualties has fluctuated, but it has remained well below the target 

of 72 percent. Table 14 provides a summary of the key performance 

measures. 

Table 14: 378-Foot Cutter Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year Major casualties per cutter POTF of major casualties

2000 10.7 30%

2001 15.3 22%

2002 15.3 38%

2003 17.1 26%

2004 17.3 7%

Source: U.S. Coast Guard. 

 2

A major casualty is a deficiency in mission-essential equipment that causes the major 

degradation of a primary mission or loss of at least one primary mission. 

378-Foot HighEndurance Cutter 

378-foot High-Endurance 

Cutter Fleet Overview 

Performance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 49 GAO-05-757 Coast Guard Deepwater Program 

Both scheduled and unscheduled maintenance expenditures for the 378-

foot cutters have been on a general upward trend during fiscal years 2000 

through 2004, with some fluctuations. The increasing age of these cutters, 

along with equipment obsolescence, appears to be driving these costs. 

Table 15 provides a summary of the key maintenance measures. 

Table 15: 378-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-2004, in Fiscal Year 2004 Dollars 

Fiscal year Scheduled maintenance costs Unscheduled maintenance costs Total maintenance costs

2000 $13,376,901 $2,641,025 $16,017,925

2001 $19,842,996 $4,230,497 $24,073,493

2002 $15,109,120 $3,416,032 $18,525,152

2003 $15,523,775 $6,487,666 $22,011,440

2004 $17,131,625 $4,686,052 $21,817,677

Source: GAO analysis of U.S. Coast Guard data. 

Note: The data in this and other cutter maintenance expenditure tables are adjusted for inflation using 

U.S. Department of Labor producer price indexes for ship repair, conversion, reconversion, and the 

U.S. military. 

The average age of the 378-foot cutters is 36.3 years. Each 378-foot cutter 

underwent the FRAM at approximately 20 years of age, beginning in the 

late 1980s and ending in 1992. As part of the FRAM, each cutter received 

an overhaul, costing anywhere from $70 million to $90 million, that Pacific 

Area Command officials estimated would add about 15 additional years of 

service—a mark that many of the cutters are beginning to reach. Many 

major propulsion and hull systems, however, were merely overhauled but 

not upgraded or replaced, and these systems are now at or near the end of 

their useful service life. In addition, the Coast Guard regularly compiles a 

list of the top 10 maintenance issues affecting each cutter class. The most 

recent top 10 list has identified service boilers, the gyrocompass 

navigation system, and propulsion shafting and shaft bearings, among 

other things, as the most critical sustainment issues for the 378-foot 

cutters. 

Maintenance Trends 

Sustainment Issues 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 50 GAO-05-757 Coast Guard Deepwater Program 

The Coast Guard’s 270-foot cutter fleet consists of 13 cutters, all of which 

are stationed in the Atlantic Area Command. These cutters were 

commissioned between 1983 and 1991, have an estimated service life of 

30 years, and operate with a crew of 13 officers and 85 enlisted personnel. 

The 270-foot cutters typically operate 185 days away from home port each 

year and are used for maritime security/law enforcement; search and 

rescue; living marine resources; ports, waterway, and coastal security; 

alien-migrant interdiction; drug interdiction; and defense missions. 

Officials at Coast Guard headquarters stated that the condition of the 

270-foot medium endurance cutters is generally worsening, and key 

condition measures seem to bear this out, though there were some 

improvements in fiscal year 2004. Major casualties per cutter saw a major 

increase from fiscal year 2000 to 2001, remained fairly steady during fiscal 

years 2002 and 2003, and then decreased in fiscal year 2004. The POTF of 

major casualties fluctuated during fiscal years 2000 through 2004 but 

remained well below the POTF target rate of 72 percent. Table 16 provides 

a summary of the key performance measures. 

Table 16: 270-Foot Cutter Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year Major casualties per cutter POTF of major casualties

2000 11.7 38%

2001 15.1 35%

2002 14.2 47%

2003 14.7 32%

2004 11.9 42%

Source: U.S. Coast Guard. 

Scheduled maintenance expenditures fluctuated for the 270-foot mediumendurance cutters from fiscal years 2000 to 2004, with a major increase in 

fiscal year 2003. Coast Guard officials attribute this increase in 

expenditures to the age and poor structural condition of the cutters, the 

replacement of obsolete equipment, and upgrades. The increased cutter 

maintenance that occurred in fiscal year 2003 was sourced from 

supplemental appropriations. Unscheduled maintenance expenditures saw 

270-Foot MediumEndurance Cutter 

270-Foot MediumEndurance Cutter Fleet 

Overview 

Performance Trends 

Maintenance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 51 GAO-05-757 Coast Guard Deepwater Program 

a small amount of fluctuation for the 270-foot cutters during fiscal years 

2000 through 2004. Table 17 provides a summary of the key maintenance 

measures. 

Table 17: 270-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-2004, in 

Fiscal Year 2004 Dollars 

Fiscal year 

Scheduled 

maintenance costs

Unscheduled 

maintenance costs 

Total 

maintenance costs

2000 $9,175,918 $1,419,443 $10,595,360 

2001 $10,253,382 $1,365,576 $11,618,957 

2002 $8,814,319 $1,527,919 $10,342,238 

2003 $15,744,978 $1,690,038 $17,435,015 

2004 $6,098,884 $1,620,839 $7,719,723 

Source: GAO analysis of U.S. Coast Guard data. 

The average age of the 270-foot cutters is 18.0 years. During fiscal year 

2005, the Coast Guard began a Mission Effectiveness Project (MEP) on the 

medium-endurance cutters (270-foot and 210-foot) in order to extend their 

service lives. The MEP includes replacement of the major systems, such as 

evaporators and gyrocompasses, as well as other auxiliary systems. The 

first 270-foot cutter entered the MEP in May 2005 at a cost of $7.5 million, 

funded from the Deepwater program’s acquisition, construction, and 

improvement account. Overall, the 270-foot cutter MEP is projected to 

cost $193.5 million, and the work will extend 10 years, into fiscal year 

2015. In addition, regularly scheduled maintenance should continue to 

address the principal maintenance problems for the 270-foot cutters as 

identified in the top 10 list, including the air conditioning and refrigeration 

systems, the main propulsion control and monitoring system, and the 

auxiliary saltwater and sewage piping systems. 

Sustainment Issues 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 52 GAO-05-757 Coast Guard Deepwater Program 

The Coast Guard’s 210-foot cutter fleet consists of 14 cutters, 11 of which 

are stationed in the Atlantic Area Command, and the remaining 3 are 

based in the Pacific Area Command. These cutters were commissioned 

between 1964 and 1969, have an estimated service life of 43 to 49 years and 

operate with a crew of 12 officers and 63 enlisted personnel. The 210-foot 

cutters typically operate 185 days away from home port each year, during 

which time they perform missions such as maritime security/law 

enforcement; search and rescue; living marine resources; ports, waterway, 

and coastal security; alien-migrant interdiction; and drug interdiction. 

Officials at Coast Guard headquarters stated that the condition of the 

210-foot medium endurance cutters is generally worsening, and key 

condition measures seem to bear this out, though there were some 

improvements in fiscal year 2004. Major casualties per cutter saw a major 

increase from fiscal year 2000 to 2001, a smaller increase during fiscal 

years 2002 and 2003, and then a decrease in fiscal year 2004. The POTF of 

major casualties has generally declined for the 210-foot cutters during 

fiscal years 2000 through 2004, and consistently remained well below the 

POTF target rate of 72 percent. Table 18 provides a summary of the key 

performance measures. 

Table 18: 210-Foot Cutter Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year 

Major casualties 

per cutter 

POTF of major

casualties

2000 7.1 52%

2001 11.1 48%

2002 12.1 40%

2003 12.6 37%

2004 11.1 41%

Source: U.S. Coast Guard. 

Scheduled maintenance expenditures fluctuated for the 210-foot mediumendurance cutters from fiscal years 2000 to 2004, with a major increase in 

fiscal year 2003. Coast Guard officials attribute this increase in 

expenditures to the age and poor structural condition of the cutters, the 

210-Foot MediumEndurance Cutter 

210-Foot MediumEndurance Cutter Fleet 

Overview 

Performance Trends 

Maintenance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 53 GAO-05-757 Coast Guard Deepwater Program 

replacement of obsolete equipment, and upgrades. The increased cutter 

maintenance that occurred in fiscal year 2003 was sourced from 

supplemental appropriations. Unscheduled maintenance expenditures saw 

a small amount of fluctuation during fiscal years 2000 through 2004. Table 

19 provides a summary of the key maintenance measures. 

Table 19: 210-Foot Cutter Fleet Maintenance Data for Fiscal Years 2000-2004, in 

Fiscal Year 2004 Dollars 

Fiscal year 

Scheduled

maintenance costs

Unscheduled 

maintenance costs 

Total

maintenance costs

2000 $9,994,463 $1,899,895 $11,894,358 

2001 $8,801,109 $1,783,393 $10,584,502 

2002 $6,168,837 $1,443,401 $7,612,238 

2003 $15,209,055 $1,541,610 $16,750,666 

2004 $6,362,468 $1,176,492 $7,538,960 

Source: GAO analysis of U.S. Coast Guard data. 

The average age of the 210-foot cutters is 38.3 years. The first 210-foot 

cutter will enter the MEP beginning in September 2005 at a projected cost 

of $5 million, funded from the Deepwater program’s acquisition, 

construction, and improvement account. Overall, the 210-foot cutter MEP 

is projected to cost a total of $98.5 million, and the work will extend into 

fiscal year 2009. In addition, regularly scheduled maintenance should 

continue to address the principal maintenance problems for the 210-foot 

cutters as identified in the top 10 list, such as the air conditioning system, 

refrigeration system, oily water separators, and supportability of the 

emergency diesel generators. 

Sustainment Issues 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 54 GAO-05-757 Coast Guard Deepwater Program 

Overall, there are currently 49 patrol boats in the Coast Guard Deepwater 

fleet. Of these, 41 are 110 feet long, with 29 of those stationed in the 

Atlantic Area Command and the remaining 12 stationed in the Pacific Area 

Command. Six of the Atlantic Area Command’s 110-foot patrol boats are 

currently serving in the Persian Gulf. These 110-foot patrol boats were 

acquired between 1986 and 1992, have estimated service lives of 14 to 

20 years, and operate with a crew of 2 officers and 14 enlisted personnel. 

The patrol boats generally operate at 1,800 hours per year. The 110-foot 

patrol boats are used in a variety of missions, such as defense operations; 

maritime security/law enforcement; search and rescue; living marine 

resources; ports, waterway, and coastal security; alien-migrant 

interdiction; and drug interdiction. 

The remaining 8 patrol boats either have undergone or are in the process 

of being converted into 123-foot patrol boats. These patrol boats are to be 

stationed in the Atlantic Area Command and, like the 110-foot patrol boats, 

are to operate with a crew of 2 officers and 14 enlisted personnel. The 

123-foot patrol boats are slated to perform the same missions as the 

110-foot patrol boats but will have the capability to generally operate 

2,500 hours per year. The first converted 123-foot patrol boat (Matagorda) 

became operational in February 2005, and as of early June 2005, 

4 additional 123-foot patrol boats are operational, with restrictions.3

During fiscal years 2000 through 2004, the 110-foot patrol boats have 

experienced many problems, especially hull corrosion issues, which led to 

a worsening condition. However, the Coast Guard began addressing the 

hull condition issues (see details below), which likely contributed to the 

decreases in the major casualties in fiscal years 2003 and 2004. Table 20 

provides a summary of the key performance measures. 

 3

The patrol boats’ operational restrictions require a reduction in speed based upon 

significant wave heights that might be encountered at sea. 

110-Foot and 123-Foot 

Patrol Boats 

110-Foot and 123-Foot 

Patrol Boat Fleet Overview 

Performance Trends 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 55 GAO-05-757 Coast Guard Deepwater Program 

Table 20: Patrol Boat Fleet Performance Data for Fiscal Years 2000-2004 

Fiscal year 

Major casualties 

per patrol boat 

POTF of major

casualties

2000 6.2 67%

2001 9.9 57%

2002 12.9 47%

2003 9.7 48%

2004a 7.7 44%

Source: U.S. Coast Guard. 

a

Fiscal year 2004 data include major casualties and POTF data from the newly converted 123-foot 

patrol boats. 

Scheduled and unscheduled maintenance expenditures saw large 

increases in fiscal years 2002 and 2003. These increases appear to be 

closely related to increased major casualties, deteriorating hull conditions, 

and an increase in operational tempo. In addition, increased cutter 

maintenance occurred during this time period due to supplemental 

appropriations. Table 21 provides a summary of the key maintenance 

measures. 

Table 21: Patrol Boat Fleet Maintenance Data for Fiscal Years 2000-2004, in Fiscal 

Year 2004 Dollars 

Fiscal year

Scheduled 

maintenance costs

Unscheduled 

maintenance costs 

Total

maintenance costs

2000 $12,713,001 $1,650,862 $14,363,864 

2001 $12,891,098 $2,445,161 $15,336,258 

2002 $21,406,754 $3,439,798 $24,846,551 

2003 $23,713,280 $5,149,335 $28,862,615 

2004a $18,850,450 $3,625,459 $22,475,909 

Source: GAO analysis of U.S. Coast Guard data. 

a

Fiscal year 2004 expenditure data also include maintenance expenditures for the newly-converted 

123-foot patrol boats. 

The average age of the patrol boats is 16.4 years. A number of the 110-foot 

patrol boats have experienced significant hull deterioration. To combat 

these corrosion problems and add other capabilities to the 110-foot patrol 

boats, the Coast Guard developed the Hull Sustainment Project (HSP) and 

the 123-foot patrol boat conversion program. 

Maintenance Trends 

Sustainment Issues 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 56 GAO-05-757 Coast Guard Deepwater Program 

The HSP was implemented to replace all deteriorated hull plates and 

structural members. The selected patrol boats were gutted, sandblasted, 

and thoroughly inspected, and all metal wasted beyond 15 percent was 

renewed. As of early June 2005, 9 of the original 49 110-foot patrol boats 

had completed the HSP. The Coast Guard believes that all remaining 

110-foot patrol boats that have not had their hulls strengthened or 

replaced will eventually require such work. The Coast Guard is currently 

preparing a business case analysis in order to use $49.2 million in fiscal 

year 2005 supplemental appropriations4

 for a 110-foot patrol boat MEP. 

This project would include hull sustainment work. 

In addition to the HSP, 8 patrol boats deemed to be among those in the 

worst condition were placed in the 123-foot conversion program. The 

Coast Guard had the option to place an additional 4 patrol boats (for a 

total of 12) in the 123-foot conversion program but has decided not to 

exercise this option. This program was implemented to renew the 

deteriorated hull structure and to add additional capability. Among the 

expected capability improvements are: 

• enhanced and improved command, control, communications, 

computer, intelligence, surveillance, and reconnaissance capabilities; 

• stern launch/recovery capability for the Short Range Prosecutor; 

• renovation of some berthing areas, including relocation of aft berthing 

to a location forward and nonadjacent to the engine room; and 

• renewing the pilot house to include a 360-degree bridge. 

As of early June 2005, 7 of the 8 patrol boats have completed the 

conversion, and 5 converted patrol boats are operational (Matagorda, 

Metompkin, Padre, Attu, and Vashon, with all patrol boats currently 

under operating restrictions). The first patrol boat to come out of the 

conversion process, the Matagorda, was delivered to the Coast Guard in 

March 2004 but experienced a number of problems that prevented it from 

becoming operational until February 2005. Specifically, upon delivery, the 

 4

Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and 

Tsunami Relief, 2005, Pub. L. No. 109-13, 119 Stat. 231, 270 (2005). In the conference 

report accompanying the bill that was enacted into law as Public Law 109-13, the conferees 

agreed that such funds may be used for procurement of new U.S. Coast Guard 110-foot 

patrol boats or major refits, renovation, and subsystem replacement. H.R. Conf. Rep. No. 

109-72, at 138 (2005). 
Appendix II: Information on Deepwater 

Legacy Aircraft and Cutters 

Page 57 GAO-05-757 Coast Guard Deepwater Program 

Coast Guard identified several discrepancies with the original 

performance specifications. One such discrepancy was the inability of the 

patrol boat to simultaneously launch or recover the short-range prosecutor 

while towing another vessel. In September 2004, Matagorda experienced 

hull buckling, and repairs were completed in December 2004. However, 

while en route from the shipyard to Key West, Florida, Matagorda

encountered a storm, causing damage to the primary radar system and 

new cracks in the hull. These problems were resolved, and Matagorda

began patrols in early February 2005. Additionally, the contractor that 

performed the work is applying lessons learned from the Matagorda

conversion to the other patrol boats still undergoing conversion. Further, 

the contractor has increased the number of quality assurance personnel 

from one to four to improve oversight of the conversion process. 

The Coast Guard top 10 list mentions several maintenance concerns, in 

addition to hull corrosion, that have negatively affected the condition of 

the 110-foot patrol boats. These include difficulties in obtaining parts for 

the fin stabilizer system, steering spaces holding moisture (which leads to 

rust and corrosion), and exhaust piping leaks. In addition, the Coast Guard 

has stated that mechanical and electrical subsystems need to be upgraded 

or replaced if the patrol boats are to operate for another 10 to 15 years, 

even the newly converted 123-foot patrol boats. 
Appendix III: GAO Contact and Staff 

Acknowledgments 

Page 58 GAO-05-757 Coast Guard Deepwater Program 

Margaret Wrightson, Director (415) 904-2200. 

Steven Calvo, Christopher Conrad, Adam Couvillion, Michele Fejfar, 

Geoffrey Hamilton, Julie Leetch, Michele Mackin, Stan Stenersen, and 

Linda Kay Willard. 

Appendix III: GAO Contact and Staff 

Acknowledgments 

Staff Contact 

Acknowledgment 
GAO Related Products 

Page 59 GAO-05-757 Coast Guard Deepwater Program 

Coast Guard’s Acquisition Management: Deepwater Project’s 

Justification and Affordability Need to Be Addressed More Thoroughly, 

GAO/RCED-99-6 (Washington, D.C.: Oct. 26, 1998) 

Coast Guard: Budget Challenges for 2001 and Beyond, 

GAO/T-RCED-00-103 (Washington, D.C.: March 15, 2000) 

Coast Guard: Progress Being Made on Deepwater Project, but Risks 

Remain, GAO-01-564 (Washington, D.C.: May 2, 2001) 

Coast Guard: Actions Needed to Mitigate Deepwater Project Risks, 

GAO-01-659T (Washington, D.C.: May 3, 2001) 

Coast Guard: Strategy Needed for Setting and Monitoring Levels of 

Effort for All Missions, GAO-03-155 (Washington, D.C.: Nov. 12, 2002) 

Coast Guard: Comprehensive Blueprint Needed to Balance and Monitor 

Resource Use and Measure Performance for All Missions, GAO-03-544T

(Washington, D.C.: March 12, 2003) 

Contract Management: Coast Guard’s Deepwater Program Needs 

Increased Attention to Management and Contractor Oversight, 

GAO-04-380 (Washington, D.C.: March 9, 2004) 

Coast Guard: Replacement of HH-65 Helicopter Engine, GAO-04-595

(Washington, D.C.: March 24, 2004) 

Coast Guard: Key Management and Budget Challenges for Fiscal Year 

2005 and Beyond, GAO-04-636T (Washington, D.C.: April 7, 2004) 

Coast Guard: Deepwater Program Acquisition Schedule Update Needed, 

GAO-04-695 (Washington, D.C.: June 14, 2004) 

Coast Guard: Observations and Agency Priorities in Fiscal Year 2006 

Budget Request, GAO-05-364T (Washington, D.C.: March 17, 2005) 

Coast Guard: Preliminary Observations on the Condition of Deepwater 

Legacy Assets and Acquisition Management Challenges, GAO-05-307T

(Washington, D.C.: April 20, 2005) 

Coast Guard: Preliminary Observations on the Condition of Deepwater 

Legacy Assets and Acquisition Management Challenges, GAO-05-651T

(Washington, D.C.: June 21, 2005) 

GAO Related Products 

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