COAST GUARD 

RECAPITALIZATION

Matching Needs and 

Resources Continue to 

Strain Acquisition Efforts

Statement of Marie A. Mak, Director, 

Acquisition and Sourcing Management

Testimony 

Before the Subcommittee on Coast 

Guard and Maritime Transportation, 

Committee on Transportation and 

Infrastructure, House of Representatives

For Release on Delivery 

Expected at 10:00 a.m. ET

Wednesday, June 7, 2017

GAO-17-654T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-654T, a testimony 

before the Subcommittee on Coast Guard and 

Maritime Transportation, Committee on 

Transportation and Infrastructure, House of 

Representatives

June 7, 2017

COAST GUARD RECAPITALIZATION

Matching Needs and Resources Continue to Strain 

Acquisition Efforts

What GAO Found

The Coast Guard is currently procuring three new cutter classes that are 

intended to have more capability than the legacy assets they are replacing. In 

particular, the National Security Cutter (NSC) and the Fast Response Cutter 

(FRC) are generally demonstrating improved mission performance (see figure). 

Both cutters have greater fuel capacity and efficiency and handling/sea-keeping

than the legacy assets they replace, all of which increase endurance and 

effectiveness. Another new asset—the Offshore Patrol Cutter (OPC)—is also 

expected to provide increased capabilities compared to the Medium Endurance 

Cutter it is replacing, such as the ability to conduct longer patrols. 

The Coast Guard’s Fast Response Cutter and National Security Cutter 

The Coast Guard, however, has not been able to take full advantage of the

FRC’s and NSC’s capabilities because of maintenance and equipment issues

limiting their time available for operations. GAO found in March 2017 that while 

both cutters met their minimum mission capable targets on average over the 

long-term, more recently—from October 2015 to September 2016—they fell 

below their minimum targets due to needed increased depot-level maintenance.

Both cutters have also been plagued by problems with critical equipment, such 

as the diesel engines, which have contributed to lost operational days. 

In June 2014, GAO found gaps between the funding amounts the Coast Guard 

estimates its major acquisitions need and what it has requested. This has 

continued. For example, senior Coast Guard officials peg acquisition needs at

over $2 billion per year, but the President’s budget requested $1.2 billion for

fiscal year 2018. In an effort to address funding constraints, the Coast Guard 

delayed new acquisitions through the annual budget process, but lacks a longterm plan to set forth affordable priorities. As a result of these issues, it is facing 

a gap in the capability provided by its Medium Endurance Cutters, which are 

slated to reach the end of their service lives before all the OPCs are operational. 

GAO recommended in 2014 that the Coast Guard develop a 20-year fleet 

modernization plan that identifies all acquisitions needed to maintain the current 

level of service—aviation and surface—and the fiscal resources needed to buy 

the identified assets. DHS concurred with the recommendation, but it is unclear 

when the Coast Guard will complete this effort . 

View GAO-17-654T. For more information, 

contact Marie A. Mak at (202) 512-4841 or 

makm@gao.gov. 

Why GAO Did This Study

In order to meet its missions of 

maritime safety, security, and 

environmental stewardship, the Coast 

Guard, a component within the 

Department of Homeland Security 

(DHS), employs a variety of surface

and air assets, several of which are 

approaching the end of their intended 

service lives. As part of its efforts to 

modernize its surface and air assets

(an effort known as recapitalization), 

the Coast Guard has begun acquiring 

new vessels, such as the National 

Security Cutter, Fast Response Cutter, 

and a number of air assets, and 

developing the Offshore Patrol Cutter. 

Despite the addition of new assets, 

concerns surrounding capability and 

affordability gaps remain.

This statement addresses (1) the 

capabilities provided by the newer 

Coast Guard assets, (2) maintainability 

and equipment challenges for the new 

cutters, and (3) the overall affordability 

of the Coast Guard’s acquisition 

portfolio. This statement is based on 

GAO’s extensive body of work 

examining the Coast Guard’s 

acquisition efforts spanning several

years, including the March 2017 report 

on the NSC and FRC’s maintainability. 

What GAO Recommends

GAO is not making recommendations 

in this statement but has made 

recommendations to the Coast Guard

and DHS in the past regarding 

recapitalization and the specific assets 

involved, including that the Coast 

Guard develop a 20-year fleet 

modernization plan that identifies all 

acquisitions needed to maintain the 

current level of service and the fiscal 

resources needed to acquire them. 

DHS agreed with this recommendation. 
Letter

Page 1 GAO-17-654T Coast Guard Recapitalization

Chairman Hunter, Ranking Member Garamendi, and Members of the 

Subcommittee:

I am pleased to be here today to discuss key challenges the Coast Guard 

faces as it acquires new assets, a program referred to as Coast Guard 

recapitalization, as well as the overall affordability of the Coast Guard’s 

acquisition portfolio. The U.S. Coast Guard, within the Department of 

Homeland Security (DHS), is the principal federal agency responsible for 

maritime safety, security, and environmental stewardship. In addition, the 

Coast Guard has assumed increasing responsibility for security related 

missions since the September 11, 2001, terrorist attacks. In order to meet 

these missions, the Coast Guard employs a variety of surface and air 

assets. As part of its efforts to modernize its aging fleet, the Coast Guard 

has begun acquiring new vessels, such as the Fast Response Cutter 

(FRC) and National Security Cutter (NSC), to replace the legacy Island 

Class Patrol Boat and High Endurance Cutter, respectively. The new 

cutters are designed to provide the Coast Guard with additional 

capabilities above those offered by the legacy vessels.

Despite the addition of these and other new assets, concerns surrounding 

capability and affordability gaps remain. For example, the expected 

service life for the Coast Guard’s Medium Endurance Cutter will expire 

prior to delivery of the first Offshore Patrol Cutter (OPC), potentially 

leaving the Coast Guard unable to execute all of its missions. 

Additionally, the Coast Guard has one active heavy icebreaker, which is 

already past its initial expected service life, and at times has been unable 

to provide this capability due to equipment failures. As it seeks to manage 

these issues while building new assets, the Coast Guard will continue to 

be hampered by ongoing affordability concerns, forcing difficult trade-off 

decisions to be made. These decisions may become more difficult as the 

affordability of the Coast Guard’s overall fleet also faces a significant 

challenge from the upcoming OPC procurement, which is planned to cost 

$12.1 billion and will consume about two-thirds of the Coast Guard’s 

planned acquisition budget between 2018 and 2032 based on its recent 

funding history. The Coast Guard’s ability to accomplish all of these 

objectives within its planned budget is not known because the Coast 

Guard has yet to provide a long-term plan that matches its needs with its 

planned budget. In June 2014 we recommended that the Coast Guard 

develop a 20-year fleet modernization plan that identifies all acquisitions 

needed to maintain the current level of service and the fiscal resources 

Letter
Page 2 GAO-17-654T Coast Guard Recapitalization

necessary to build the identified assets.1 The Coast Guard concurred with 

the recommendation, but it is unclear when it plans to complete this effort.

My statement today will address (1) the capabilities provided by the 

newer Coast Guard assets, (2) maintainability and equipment challenges 

for the new Coast Guard cutters, and (3) the overall affordability of the 

Coast Guard’s acquisition portfolio. This statement is based on our 

extensive body of work examining the Coast Guard’s acquisition efforts 

spanning the past several years, including our March 2017 report on the 

NSC and FRC’s maintainability.2

For the reports cited in this statement, among other methodologies, we 

analyzed Coast Guard guidance, data, and documentation, and 

interviewed Coast Guard officials at its headquarters and field units to 

determine how the Coast Guard allocated its assets, how data are used 

to make annual asset allocation decisions, and how the Coast Guard 

determines future resource needs. Each of the reports cited in this 

statement provide further detailed information on our scope and 

methodology. We also updated, through our ongoing work, information 

regarding acquisitions that will need to be funded concurrently with the 

OPC, and obtained updates on the Coast Guard’s actions in response to 

our prior recommendations.

We conducted the work on which this statement is based in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our audit 

objectives.

 1

GAO, Coast Guard Acquisitions: Better Information on Performance and Funding 

Needed to Address Shortfalls, GAO-14-450 (Washington, D.C.: June 5, 2014). The 20-

year fleet modernization plan that we recommended is being called a 20-year Capital 

Investment Plan according to Coast Guard officials.

2

For examples see: GAO, Coast Guard Cutters: Depot Maintenance Is Affecting 

Operational Availability and Cost Estimates Should Reflect Actual Expenditures,

GAO-17-218 (Washington, D.C.: Mar. 2, 2017); National Security Cutter: Enhanced 

Oversight Needed to Ensure Problems Discovered during Testing and Operations Are 

Addressed, GAO-16-148 (Washington, D.C.: Jan. 12, 2016); Coast Guard Aircraft: 

Transfer of Fixed-Wing C-27J Aircraft is Complex and Further Fleet Purchases Should 

Coincide with Study Results, GAO-15-325 (Washington, D.C.: Mar. 26, 2015); and 

GAO-14-450.
Page 3 GAO-17-654T Coast Guard Recapitalization

In the 1990s, the Coast Guard began an initial effort to modernize its 

aging assets that would allow it to successfully meet mission demands. 

After the September 11, 2001 terrorist attacks, the Coast Guard became 

a component of the newly established Department of Homeland Security 

(DHS), which resulted in an increase in mission demands.3 In order to 

meet this increase, the Coast Guard completed a Mission Needs 

Statement—the document that describes the mission(s) and needed 

capabilities to justify a given program—in 2005. The 2005 Mission Needs 

Statement compared the new assets for which the Coast Guard originally 

planned to procure—in 1996 prior to the creation of DHS—to replace its 

legacy assets to the demands of the new missions as laid out by the 

recently formed DHS. Based on the 2005 Mission Needs Statement, DHS 

approved a program of record in 2007—known as the Deepwater 

program—that provided the additional capability required. This effort was 

expected to last 25 years at a cost of $24.2 billion resulting in either the 

rebuilding or replacing of vessels and aircraft that were reaching the end 

of their expected service lives and were in deteriorating condition. Figure 

1 shows some of the Coast Guard’s newer assets that are part of this 

broader modernization effort.

Figure 1: The Coast Guard’s National Security Cutter, HC-144A Maritime Patrol Aircraft, and Fast Response Cutter

 3

The Coast Guard’s increased mission demands following the terrorist attacks of 

September 11, 2001, included incorporating improved capabilities to operate in conditions 

of chemical, biological, and radiological contamination; greater antiterrorism weaponry; 

development of airborne use of force capabilities; improved communications systems; and 

enhanced flight decks.

Background
Page 4 GAO-17-654T Coast Guard Recapitalization

In 2016, the Coast Guard revised its Mission Needs Statement in 

response to statutory requirements and committee report language, but 

this revision states it was not intended to provide details on the specific 

assets the Coast Guard needs to meet its mission requirements.4 Further, 

according to the Coast Guard, the 2016 update to the Mission Needs 

Statement is to provide a foundation for long-term investment planning 

that is to culminate with detailed modeling scenarios to evaluate the 

effectiveness of various fleet mixes, and inform the Coast Guard’s Capital 

Investment Plan.5 The 2016 revision, however, does not identify specific 

assets or fiscal resources necessary to meet the Coast Guard’s long-term 

mission requirements, as we had recommended in June 2014.

Unlike the 2005 Mission Needs Statement, the 2016 version did not result 

in a new program of record for the Coast Guard’s recapitalization effort. 

However, since the original program of record in 2007, the Coast Guard’s 

recapitalization program has undergone changes as major acquisition 

programs have been completed and/or modified in response to 

affordability concerns. Figure 2 depicts the Coast Guard’s 2007 

recapitalization program of record and the current 2017 program of 

record.

 4

See the Howard Coble Coast Guard and Maritime Transportation Act of 2014, Pub. L. 

No. 113-281, § 215, 128 Stat. 3022, 3034-35; H.R. Rep. No. 113-481 (2014); S. Rep. No. 

113-198 (2014): and explanatory statement, 161 Cong. Rec. H275, 282 (daily ed., Jan. 

13, 2015), on H.R. 240, the Department of Homeland Security Appropriations Act, 2015, 

which became Pub. L. No. 114-4.

5

A fleet mix refers to the appropriate mixture of assets the Coast Guard will need to

execute its mission set under varying constraints such as funding.
Page 5 GAO-17-654T Coast Guard Recapitalization

Figure 2: The Coast Guard’s 2007 and 2017 Recapitalization Efforts

Note: Dashed lines represent new programs in the 2017 program of record that were modified or 

added to the recapitalization portfolio.

The Coast Guard is currently procuring three new cutter classes that will 

have more capability than the legacy assets they are intended to replace. 

The FRC will replace the legacy Island Class Patrol Boat, the OPC will 

replace both classes of the legacy Medium Endurance Cutter (210-foot 

class and 270-foot class), and the NSC will replace the legacy High 

Endurance Cutter. As we reported in June 2014, several of the Coast 

Guard’s newest asset classes are generally demonstrating improved 

mission performance compared to the assets they are replacing, 

according to Coast Guard officials who operate these assets.6

Specifically, the FRC and NSC have greater fuel capacity and efficiency, 

engine room and boat launch automation, handling/sea-keeping, and food 

capacity, all of which increase endurance and effectiveness. In addition, 

the FRC and NSC both have a stern ramp that allows them to launch and 

recover the cutters’ small boats more safely and in a fraction of the time 

 6

GAO-14-450.

The Coast Guard’s 

Newer Assets Offer 

Greater Capability 

than Its Legacy Fleet
Page 6 GAO-17-654T Coast Guard Recapitalization

that the Island Class Patrol Boats and High Endurance Cutters require, 

which allows the cutters to more efficiently and effectively conduct 

missions. The OPC is also expected to provide increased capabilities 

compared to the Medium Endurance Cutter it is replacing. Table 1 

provides comparison information on selected Coast Guard legacy and 

new surface assets.

Table 1: Comparison of the Coast Guard’s Legacy and New Surface Assets as of April 2017

Legacy Assets

High Endurance Cutter Medium Endurance Cutters Island Class Patrol Boat

210-foot 270-foot

Number in fleet 12 (4 still in service) 14 13 41 (24 still in service)c

Year first-in-class cutter 

commissioned

1967 1964 1983 1986

Length 378 feet 210 feet 270 feet 110 feet

Maximum time at sea without 

reprovisioning

45 days 21 days 21 days 5 days

Range 14,000 milesb 6,100 miles 9,900 miles 1,900 miles

Operational Tempo 185 days away from

home port per year

185 days away 

from home port

185 days away 

from home port

1,800 operational hours 

per year

New Assets

National Security Cutter Offshore Patrol Cutter Fast Response Cutter

Number in fleet 9 planned (6 operational) 25 planned (not yet operational) 58 planned (22 operational)

Year first-in-class cutter 

commissioned

2008 Planned for fiscal year 2021 2012

Length 418 feet To be determined 154 feet

Range 12,000 miles 8,500 to 9,500 miles 2,500 miles

Maximum time at sea without 

reprovisioning

60 days 45 days to 60 days 5 days to 7 days

Operational Tempo 230 days away from 

home port per yeara 230 days away from home port

2,500 operational hours 

per year

Source: GAO presentation of Coast Guard data. | GAO-17-654T

a

To achieve 230 days away from homeport, the Coast Guard plans to use a “crew rotational concept”

in which four crews staff and operate three cutters on a rotating basis.

b

According to the Coast Guard, High Endurance Cutters can achieve a 14,000 nautical mile range 

only if they ballast their fuel tanks once the tanks are depleted, a procedure that is rarely undertaken. 

High Endurance Cutters have a range of 9,600 nautical miles under normal circumstances.

c

The 110-foot Patrol Boat fleet originally included 49 vessels. The Coast Guard converted 8 of the 

110-foot Patrol Boats to 123-foot Patrol Boats, but discontinued further conversions in 2005 and 

decommissioned the 123-foot Patrol Boats in 2007 because they were experiencing technical 

difficulties, such as hull buckling, and were not able to meet post-September 11, 2001 mission 

requirements.
Page 7 GAO-17-654T Coast Guard Recapitalization

The Coast Guard commissioned its first FRC in 2012 and, as of April 

2017, has received 23 of these vessels. The Coast Guard exercised a 

contract option for detail design for the OPC in September 2016, and 

there are separate options for the production of each cutter currently 

under contract. The Coast Guard anticipates receiving the first vessel in 

fiscal year 2021, with deliveries each year through 2035 when the 

program is scheduled to achieve full operating capability. Additionally, 

since 2008, the Coast Guard has received a total of 6 NSCs, with 3 in 

various stages of construction.7 Due to its improved capabilities, the NSC 

has been able to complete longer deployments, which has in part resulted 

in more successful drug interdictions than the legacy asset it replaces.

The Coast Guard is also updating and acquiring new aviation assets that 

have increased capabilities compared to the legacy assets they are 

replacing. For example, the fleets of H-65 helicopters are being upgraded 

to allow for greater reliability, maneuverability, and interoperability 

between the H-65 and other government assets. In addition, the Coast 

Guard restructured its HC-144A acquisition program in 2014 to 

accommodate 14 C-27J aircraft it received from the U.S. Air Force. The 

Coast Guard plans to use these twin-engine propeller-driven aircraft to 

conduct all types of Coast Guard missions, including search and rescue 

and disaster response. As we reported in June 2014, officials at Air 

Station Miami stated that since they began regularly operating the HC144A in fiscal year 2011, the aircraft has had a significant role in 

improving the effectiveness of the Coast Guard’s counterdrug and alien 

migrant interdiction operations.8 However, the HC-144A only fully met 

three of its seven key performance parameters during initial operational 

testing, but the Coast Guard plans to conduct additional tests in fiscal 

year 2017 to demonstrate additional key performance parameters. As we 

reported in March 2015, the Coast Guard faces several challenges to 

making the C-27Js operational, including purchasing spare parts and a 

lack of access to the manufacturer’s technical data that are required to 

make modifications to the aircraft’s structure to incorporate, among other 

things, the radar.9 The Coast Guard is currently in the process of 

 7

Although the Coast Guard has planned for 8 NSCs, the Consolidated Appropriations Act, 

2016 stated that, of the funds provided by the Act, not less than $640 million shall be 

immediately available and allotted to contract for the production of the ninth NSC, 

notwithstanding the availability of funds for post-production costs. Pub. L. No. 114-113 

129 Stat. 2242, 2501 (2015).

8

GAO-14-450.

9

GAO-15-325.
Page 8 GAO-17-654T Coast Guard Recapitalization

transitioning to a new mission system on all of its fixed-wing aircraft, 

which is a system currently used by the U.S. Navy and DHS’s Customs 

and Border Protection. The new mission system is intended to enhance 

operator interface and sensor management, as well as replace obsolete 

equipment, which is to enable more commonality between the fixed-wing 

fleet.

The Coast Guard has not been able to take full advantage of increased 

capabilities of the FRC and NSC due to maintenance issues that have 

limited their time available for operations. As we reported in March 2017, 

while over the past few years both the FRC and NSC met their minimum 

mission capable targets on average, which are 48 percent for the FRC 

and 49 percent for the NSC, our analysis of a more recent period—from 

October 2015 to September 2016—found that both cutters fell below their 

minimum targets due to needed increased depot-level maintenance.10

See table 2.

 10GAO-17-218. 

New Coast Guard 

Cutters Are 

Experiencing 

Maintenance and 

Equipment Issues

FRC and NSC Mission 

Capable Rates Are Lower 

than Expected
Page 9 GAO-17-654T Coast Guard Recapitalization

Table 2: Fast Response Cutter’s and National Security Cutter’s Average Asset Status

Source: GAO analysis of Coast Guard data. | GAO-17-654T

Note: The Fast Response Cutter was equipped with the Electronic Asset Logbook system to track this 

data beginning in March 2012 while the National Security Cutter wasn’t equipped with this system 

until November 2013.

According to Coast Guard officials, the FRC’s decrease in monthly 

mission capable rates below its minimum target is primarily because of a 

phased warranty repair drydock period that was not initially anticipated. 

The average warranty repair drydock period will last approximately 15

weeks, with at least one FRC not mission capable due to depot-level 

maintenance at all times from January 2016 to November 2019. These 

drydocks were triggered by continuing structural concerns and problems 

with equipment that was installed during production, including continued 

failures with the main diesel engine. Given that only a few FRCs have 

completed the warranty drydock to date, it is difficult to determine whether 

the overall fleet’s mission capable rate will meet its target range once the 

drydocks are completed.

As we noted in our March 2017 report, while the FRC’s decrease is 

attributable to the unanticipated drydocks, the NSC’s mission capable 

rates are influenced by a roughly 2-year anticipated post-delivery 

maintenance period called the post shakedown availability, which is 

Asset status Fast Response Cutter percentage of time 

in asset status

(target mission capable range, 48 – 60 

percent)

National Security Cutter percentage of time 

in asset status

(target mission capable range, 49 – 61 

percent)

March 2012 –

September 2016

October 2015 –

September 2016

November 2013 –

September 2016

October 2015 –

September 2016

Fully mission capable 47.0 39.5 31.8 27.2

Partially mission capable 2.3 3.3 22.4 9.9

Total mission capable 49.3 42.8 54.2 37.2

Not mission capable due to 

maintenance (equipment failures)

9.9 4.1 2.1 2.8

Not mission capable due to supply 0.3 0.1 0.2 0.1

Not mission capable due to depotlevel maintenance 40.5 53.0 43.4 60.0

Total not mission capable 50.7 57.2 45.8 62.8
Page 10 GAO-17-654T Coast Guard Recapitalization

scheduled for each newly delivered NSC.11 During this shakedown 

period, the NSC will be rendered not mission capable due to depot-level 

maintenance for a majority of its time. For example, from January 2015 

until September 2016, the NSC Hamilton spent 70.9 percent of its time in 

depot-level maintenance, and the NSC James spent 82.6 percent of its 

time in depot-level maintenance from September 2015 to September 

2016. With only five NSCs in operation as of September 2016, having two 

cutters spend the majority of their time not mission capable due to depotlevel maintenance is negatively affecting the overall fleet’s mission 

capable rates. This will continue as the Coast Guard introduces new 

NSCs into the fleet and the last cutter completes its 2-year post 

shakedown period—scheduled for 2022 as the ninth cutter is scheduled 

for delivery in 2020. While the first three NSCs achieved their mission 

capable rate targets on average from January 2014 to September 2016, it 

is uncertain if the overall fleet mission capable rate will increase once all 

NSCs complete their post shakedown availabilities.

In addition to the negative effect that depot-level maintenance is having 

on both the FRC and NSC’s mission capable rates, our March 2017 

report found that both cutter classes have been plagued with equipment 

failures resulting in lost operational days or a partially mission capable 

status.12 This means that the cutters are either not able to or are 

conducting operations in a limited capacity. The main diesel engines on 

both cutters, which were manufactured by the same vendor, were among 

the equipment systems that resulted in the most lost operational days 

from 2014 through 2016 and have been problematic since the cutters 

became operational.13 Problems with the FRC’s engine resulted in 

roughly 355 days spent not mission capable due to maintenance. 

However, the FRC’s warranty clause has covered several engine 

problems and, according to the FRC’s contracting officer, has avoided 

about $77 million in potential maintenance costs for the Coast Guard it 

 11GAO-17-218.

12GAO-17-218.

13The Coast Guard classifies lost operational days as the number of days in which a cutter 

was either not mission capable due to an equipment failure or not mission capable due to 

a lack of spare parts. From 2014 to 2016 the FRC’s top three equipment systems with the 

most problems resulted in about 827 combined lost operational days and partially mission 

capable days while the NSC’s top three equipment systems with the most problems 

resulted in about 993 combined lost operational days and partially mission capable days.

New Assets Are Being

Fielded with Known 

Problems
Page 11 GAO-17-654T Coast Guard Recapitalization

otherwise would have needed to pay as of August 2016.14 Furthermore, 

the FRC’s contracting officer stated that as of October 2016, all of the 18 

operational FRCs have undergone various corrective repairs on their 

main diesel engines, including replacing engines on 6 of the cutters.

Similar to the FRC, the NSC’s engines have experienced problems and, 

as we found in January 2016, the engines overheat in waters above 74 

degrees Fahrenheit, which constitutes a portion of the NSC’s operating 

area given that they are intended to be deployed worldwide.15 This can 

cause the cutters to operate 2 to 4 knots below their top speed of 28 

knots. As a result, the Coast Guard has been forced to operate the NSCs 

at reduced speeds during some missions, such as counter drug missions, 

where reaching maximum speeds would be operationally useful. The 

NSC’s inability to achieve top speed in warm waters has also inhibited the 

cutters’ ability to complete their regularly scheduled full power trials, 

which are periodic tests of the propulsion plant operated at maximum 

rated power. The results of these tests advise operators and maintenance 

personnel of the cutter’s full power performance characteristics and can 

provide the basis for maintenance activity. Without these tests, the Coast 

Guard lacks sufficient information that could be useful for assessing 

propulsion systems and planning maintenance.

Further, as we reported in March 2017, the Coast Guard is conducting 

design changes for some critical systems post-delivery for the NSC in 

order to minimize the cost increase of the extra work and to adhere to the 

cutters’ production schedule. One such design change involves the 

NSC’s gantry crane, which was not designed for a maritime environment 

and is inadequately sealed to prevent water intrusion.16 This has led to 

accelerated corrosion and the need for excessive repairs that are not 

considered suitable over the NSC’s life cycle. The design change to 

replace the gantry crane was initiated in January 2010 and the new crane 

was approved for fleet-wide replacement. However, all of the remaining 

NSCs will be built with the original gantry crane installed and then 

replaced during their post-shakedown periods.

 14For additional information on the FRC’s warranty see GAO: Navy and Coast Guard 

Shipbuilding: Navy Should Reconsider Approach to Warranties for Correcting 

Construction Defects, GAO-16-71 (Washington, D.C.: March 3, 2016).

15GAO-16-148.

16The gantry crane is a crane on the rear of the cutter that aides in deploying the NSC’s 

cutter boat.
Page 12 GAO-17-654T Coast Guard Recapitalization

During the work for our March 2017 report, Coast Guard officials stated 

that no formal analysis was developed or documented to determine 

whether a design change should be installed during production or postdelivery. Instead, they used the professional judgment of Coast Guard 

and shipyard officials to determine the most cost efficient timing of when 

to install design changes. Keeping the NSC delivery dates on schedule 

was one of the primary reasons officials gave for not installing some 

design changes during production. Given that the program has been 

aware of these design changes for many years, the Coast Guard had an 

opportunity to install the design changes during production instead of 

during the post-delivery period. We concluded that by not installing the 

design changes during production, the Coast Guard will need to maintain 

the original equipment installed during production for all NSCs, including 

the ninth NSC (the separate production contract for which was awarded in 

December 2016), and then later conduct retrofits after accepting delivery 

of the cutters. This will necessitate the installation of systems with known 

defects or deficiencies during production only to replace such systems 

later, requiring maintenance on some of these systems until the retrofits 

are complete. In our March 2017 report, we therefore recommended that 

the Coast Guard update the Joint Surface Engineering Change Process 

Guide to require a documented cost analysis to provide decision makers 

with adequate data to make informed decisions regarding the expected 

costs and when it is most cost effective to install design changes.17 The 

Coast Guard concurred with our recommendation and plans to 

incorporate a documented cost analysis requirement into an update to its 

guidance by December 31, 2017.

As we found in June 2014, there are gaps between what the Coast Guard 

estimates it needs to carry out its program of record for its major 

acquisitions and what it has traditionally requested and received.18 This 

issue has continued since we issued our report. For example, senior 

Coast Guard officials have stated a need for over $2 billion per year, but 

the President’s budget requested $1.2 billion for fiscal year 2018, after 

asking for $1.1 billion in fiscal year 2017. In an effort to address the 

funding constraints it has faced annually, the Coast Guard has been in a 

reactive mode, delaying and reducing its capability through the annual 

budget process by delaying new acquisitions, and does not have a plan to 

 17GAO-17-218.

18GAO-14-450.

Affordability of the 

Coast Guard’s 

Acquisition Portfolio 

Remains in Doubt
Page 13 GAO-17-654T Coast Guard Recapitalization

realistically set forth affordable priorities. For instance, the Coast Guard 

has realized delays in many of its programs but, in particular, is facing a 

gap in the capability provided by its Medium Endurance Cutter fleet, 

which will likely begin reaching the end of their service lives before the 

OPCs are operational. In 2014, Coast Guard, DHS, and Office of 

Management and Budget officials acknowledged that the Coast Guard 

could not afford to recapitalize and modernize its assets in accordance 

with its current plan at current funding levels. While efforts have been 

underway to address this issue for several years, the Coast Guard has 

made little progress in improving the affordability of its acquisition 

portfolio. As a result, the Coast Guard faces significant capability gaps if 

funding increases do not materialize.

Since 2011, we have recommended that DHS and the Coast Guard take 

several actions to gain an understanding of what the Coast Guard needs 

to meet its missions within its likely acquisition funding levels. These key 

actions included: 1) the Coast Guard conducting a comprehensive 

portfolio review across all its acquisitions to develop revised baselines 

that meet mission needs and reflect realistic funding scenarios and 2) the

Coast Guard developing a 20-year plan that identifies all necessary 

recapitalization efforts and any fiscal resources likely necessary to 

complete these efforts.19

Following our September 2012 report, Congress asked the Coast Guard 

to examine its mission needs across its portfolio of assets.20 In 2016, the 

Coast Guard revised its 2005 Mission Needs Statement, which provides a 

basic foundation for long-term investment planning that is to serve as the 

basis for evaluating the effectiveness of various fleet mixes, and inform 

the Coast Guard’s Capital Investment Plan—its key portfolio planning 

tool. However, the 2016 Mission Needs Statement did not identify specific 

assets the Coast Guard needs to achieve its missions, nor did it update 

 19GAO, Coast Guard: Portfolio Management Approach Needed to Improve Major 

Acquisition Outcomes, GAO-12-918 (Washington, D.C.: Sept. 20, 2012) and GAO-14-450.

2014 U.S.C. § 569. The legislation requires that on the date on which the President 

submits to Congress a budget for fiscal years 2016, 2019, and every 4 years thereafter, 

the Commandant submit to congressional committees an integrated major acquisition 

mission need statement which, among other things, is to identify current and projected 

gaps in Coast Guard capabilities using specific mission hour targets and explain how each 

major acquisition program addresses gaps if funded at the level provided for in the Coast 

Guard’s Capital Investment Plan.

The Coast Guard Has Not 

Accomplished Long-Term 

Planning Actions that 

Would Help Ensure its 

Needs Match its 

Resources
Page 14 GAO-17-654T Coast Guard Recapitalization

the annual hours it needs from each asset class to satisfactorily complete 

its missions. In line with our past recommendation from September 2012, 

the Coast Guard is currently in the process of updating its fleet mix 

analysis to detail the assets it needs to meet requirements, but this 

analysis is not planned to be finalized until the 2019 President’s budget is 

submitted.21 Once completed, this analysis could serve as a foundation 

for understanding potential trade-offs that could be made across the 

Coast Guard’s portfolio of acquisitions to better meet mission needs 

within realistic funding levels.

In June 2014, we also recommended that the Coast Guard develop a 20-

year fleet modernization plan that identifies all acquisitions necessary for 

maintaining at least its current level of service and the fiscal resources 

necessary to build these assets.22 Such an analysis would facilitate a full 

understanding of the affordability challenges facing the Coast Guard while 

it builds the OPC. DHS concurred with the recommendation, but it is 

unclear when the Coast Guard plans to complete this effort.

As we reported in April 2017, the full operational capability date has been 

delayed for several Coast Guard acquisition programs.23 For example, the 

FRC program experienced a delay of more than 4 years because 

affordability constraints necessitated that it reduce the quantity of cutters 

procured annually from a proposed 6 cutters to 4 cutters per year. In 

addition, the Coast Guard delayed the OPC procurement by 14 years 

from the 2007 program of record to develop the requirements for this 

cutter and conduct a competition, while prioritizing acquisition of the NSC. 

Figure 3 shows the proposed full operational capability date as of the 

original 2007 program of record, the first DHS-approved baseline for each 

program, and the current baseline.

 21GAO-12-918.

22GAO-14-450.

23GAO, Homeland Security Acquisitions: Earlier Requirements Definition and Clear 

Documentation of Key Decisions Could Facilitate Ongoing Progress, GAO-17-346SP 

(Washington, D.C.: Apr. 6, 2017).

Coast Guard Affordability 

Challenges Have Resulted 

in Delayed Acquisition 

Schedules and Potential 

Capability Gaps
Page 15 GAO-17-654T Coast Guard Recapitalization

Figure 3: Full Operational Capability Delays for New Assets as of January 2017

Note: The Polar Icebreaker and unmanned aircraft system programs have not yet reached the point 

in the acquisition life cycle where they are required to have a baseline, therefore they were not 

included.

a

The current baseline includes cost and schedule estimates for eight NSCs. However, the Coast 

Guard is working on updating the baseline to reflect a ninth NSC.

b

Formerly two separate acquisition programs, the acquisition program baseline for this combined 

program was approved in July 2012.

c

The 2007 baseline only included one aircraft type. The current baseline includes both the HC-144A 

and HC-27J programs.

d

C4ISR stands for Command, Control, Communications, Computers, Intelligence, Surveillance, and 

Reconnaissance. C4ISR does not have an intended full operational capability date to signal the end 

of the acquisition phase, instead these dates reflect their planned transition from proprietary software 

and interoperability upgrades.

As we reported in July 2012, the Coast Guard’s delay in the OPC 

acquisition has resulted in potential mission capability shortfalls as the 

condition of the legacy Medium Endurance Cutters further declines.24 The 

210-foot Medium Endurance Cutters—originally built in the 1960s—will be 

nearly 60 years old by the time they are replaced and have already 

 24GAO, Coast Guard: Legacy Vessels’ Declining Conditions Reinforce Need for More 

Realistic Operational Targets, GAO-12-741 (Washington, D.C.: July 31, 2012).
Page 16 GAO-17-654T Coast Guard Recapitalization

exceeded their expected service lives.25 In September 2014, the Coast 

Guard conducted refurbishment work for the Medium Endurance Cutters 

(both the 210-foot and 270-foot) that could provide an additional 5, 10, or 

15 years of service. However, senior Coast Guard officials responsible for 

these efforts at the time indicated that the estimate of up to 15 years was 

optimistic and that the refurbishment provided needed upgrades to the 

Medium Endurance Cutters, but was not designed to further extend the 

cutters’ useful lives. As depicted in figure 4, even with the most optimistic 

projection for the current extended useful life of the Medium Endurance 

Cutters, we found as of May 2017 that there would be a gap before the 

planned OPCs are operational, which the Coast Guard does not expect to 

begin until at least 2022.

 25In our July 2012 report we found that the 210-foot Medium Endurance Cutters had an 

estimated service life of 47 years, which included an additional 15 years that was added to 

the cutters through a Major Maintenance Availability that was conducted between 1987 

and 1998. See GAO-12-741.
Page 17 GAO-17-654T Coast Guard Recapitalization

Figure 4: Comparison of the Projected Extended Useful Lives for the Legacy Medium Endurance Cutter (MEC) Fleet with the 

Planned Offshore Patrol Cutter (OPC) Delivery Dates

As we reported in June 2014 and, more recently in our April 2017 

assessment of DHS major acquisition programs, the Coast Guard faces 

affordability challenges that could result in additional capability gaps.26

The upcoming OPC procurement, for which the planned acquisition costs 

are $12.1 billion—making it the largest Coast Guard acquisition program 

to date—is going to create additional strain on the Coast Guard’s 

 26GAO-14-450 and GAO-17-346SP.

The Coast Guard May 

Need to Fund Several 

New Acquisitions 

Concurrent with OPC 

Procurement
Page 18 GAO-17-654T Coast Guard Recapitalization

acquisition budget. According to the Coast Guard, the OPC is its top 

priority and, as such, it will be funded before other assets, such as the 

River Buoy Tenders and helicopters. However, if the Coast Guard’s 

acquisition budget remains at its current levels, the funding remaining for 

other assets will be very limited. Beginning in September 2018, the OPC 

will absorb about two-thirds of the Coast Guard’s annual acquisition 

funding until 2032 based on recent funding history. The Coast Guard 

initially plans to fund one OPC per year and eventually two OPCs per 

year until all 25 planned cutters are delivered. If the OPC experiences 

cost growth during development, the acquisition funding available for 

other programs could be reduced if the program attempts to meet its 

current delivery schedule, or the funding constraints could be prolonged if 

the delivery schedule for the OPC is extended.

Any remaining Coast Guard acquisition programs will have to compete for 

acquisition funds not used for the OPC. For instance, the Coast Guard 

must also recapitalize other assets such as the polar icebreakers—to 

alleviate a current capability gap—and refurbish other legacy vessels 

such as its fleet of river buoy tenders, as these assets continue to age 

beyond their expected service lives and, in some cases, have been 

removed from service without a replacement. The following are some 

examples that we identified in our June 2014 report of Coast Guard 

assets that will likely require some level of funding while the OPC is in 

development:27

Icebreakers—The Coast Guard currently has a gap in its heavy 

icebreaking capability and has previously been without any heavy polar 

icebreakers when the legacy vessels were in disrepair from 2010 to 2013. 

In 2014, the Coast Guard returned one of these heavy icebreakers back 

to service, but still has one fewer heavy icebreaker than it has historically 

operated and two fewer than it needs, according to the Coast Guard’s 

June 2013 heavy icebreaker mission need statement.28 The 2017 

President’s budget requested $147.6 million to begin funding the first 

heavy icebreaker—with preliminary estimates of about $1 billion. The 

 27GAO-14-450.

28For recent GAO work regarding the Arctic and Coast Guard icebreakers see GAO, 

Coast Guard: Arctic Strategy Is Underway, but Agency Could Better Assess How Its 

Actions Mitigate Known Arctic Capability Gaps, GAO-16-453 (Washington, D.C.: June 15, 

2016) and Arctic Planning: DOD Expects to Play a Supporting Role to Other Federal 

Agencies and Has Efforts Under Way to Address Capability Needs and Update Plans,

GAO-15-566 (Washington, D.C.: June 19, 2015).
Page 19 GAO-17-654T Coast Guard Recapitalization

Coast Guard’s preliminary estimates indicate that the first new heavy 

icebreaker could be available for operations in fiscal year 2023.

River Buoy Tenders—The Coast Guard fleet of river buoy tenders was 

mostly constructed between the 1950s and the 1970s and are in need of 

replacing. The Coast Guard plans to initiate a program to begin 

development and construction of new vessels to replace the legacy 

assets, however, no date has been provided as to when this effort will 

begin.

Service Life Extension for the 270-foot Medium Endurance Cutters—

The Coast Guard plans to conduct a service life extension on the 270-foot 

Medium Endurance Cutters to help keep the cutters operational until the 

OPCs are delivered. Coast Guard officials said they have no plans to 

conduct service life extension work on the 210-foot Medium Endurance 

Cutters.

H-60 and H-65 Helicopter Fleets—The Coast Guard is planning to 

conduct a service life extension of both the H-60 and H-65 fleets. 

Extending these aircraft into the mid-2030s will enable the Coast Guard to 

potentially complete the OPC acquisition before starting a recapitalization 

effort for its rotary fleet. Regardless of the future path, significant 

acquisition dollars will be required to maintain annual flight hours for the 

next 20 years, according to Coast Guard program officials.

While the Coast Guard faces affordability challenges with these 

programs, it has also taken steps to mitigate affordability challenges in 

other programs. For example, the 2007 program of record planned to 

acquire 45 unmanned aircraft systems at a total cost of $503 million. 

However, the Coast Guard truncated this program and now plans to outfit 

the NSC fleet with six unmanned aircraft systems for $104 million. The 

Coast Guard is currently in the process of demonstrating a small 

unmanned aircraft system on the NSC and, according to officials, plans to 

issue a request for proposals from industry later this year to outfit the rest 

of the NSC fleet.

In conclusion, as the Coast Guard continues to field new or refurbish 

existing cutters and aircraft with improved capabilities, it is important that 

the Coast Guard plan for the affordability of its future portfolio so that it 

can minimize the capability gaps that can occur as legacy assets reach 

the end of their service lives before the new assets become operational. 

We have made several recommendations in recent years intended to help 
Page 20 GAO-17-654T Coast Guard Recapitalization

the Coast Guard plan for these future acquisitions and the difficult tradeoff decisions that it will likely face. If the Coast Guard fully implements 

these recommendations, it will likely position itself to provide decision 

makers with critical knowledge needed to prioritize its constrained 

acquisition funding. Without these efforts, the Coast Guard will continue, 

as it has in recent years, to plan its future acquisitions through the annual 

budgeting process, which has led to delayed and reduced capabilities. A 

thorough plan regarding the affordability of its future acquisitions would 

provide timely information to decision makers on how to spend scarce 

taxpayer dollars in support of a modern, capable Coast Guard fleet.

Chairman Hunter, Ranking Member Garamendi, and Members of the 

Subcommittee, this concludes my prepared statement. I would be 

pleased to respond to any questions.

If you or your staff have any questions about this statement, please 

contact Marie A. Mak, (202) 512-4841 or makm@gao.gov. In addition, 

contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this statement. Individuals who 

made key contributions to this testimony include Richard A. Cederholm, 

Assistant Director; Peter W. Anderson; Erin Butkowski; John Crawford; 

Laurier Fish; and Roxanna T. Sun.

GAO Contact and 

Staff 

Acknowledgments

(101954)
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
The Government Accountability Office, the audit, evaluation, and investigative 

arm of Congress, exists to support Congress in meeting its constitutional 

responsibilities and to help improve the performance and accountability of the 

federal government for the American people. GAO examines the use of public 

funds; evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed 

oversight, policy, and funding decisions. GAO’s commitment to good government 

is reflected in its core values of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through GAO’s website (http://www.gao.gov). Each weekday afternoon, GAO 

posts on its website newly released reports, testimony, and correspondence. To 

have GAO e-mail you a list of newly posted products, go to http://www.gao.gov

and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of production and 

distribution and depends on the number of pages in the publication and whether 

the publication is printed in color or black and white. Pricing and ordering 

information is posted on GAO’s website, http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, MasterCard, 

Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, LinkedIn, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at www.gao.gov and read The Watchblog.

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-4400, 

U.S. Government Accountability Office, 441 G Street NW, Room 7125, 

Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

James-Christian Blockwood, Managing Director, spel@gao.gov, (202) 512-4707

U.S. Government Accountability Office, 441 G Street NW, Room 7814, 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Strategic Planning and 

External Liaison

Please Print on Recycled Paper.