COAST GUARD

Portfolio Management 

Approach Needed to 

Improve Major 

Acquisition Outcomes

Report to the Ranking Member, 

Subcommittee on Coast Guard and 

Maritime Transportation, Committee on 

Transportation and Infrastructure, 

House of Representatives

September 2012

GAO-12-918

United States Government Accountability Office

GAO
 

United States Government Accountability Office

 

Highlights of GAO-12-918, a report to the 

Ranking Member, Subcommittee on Coast 

Guard and Maritime Transportation, 

Committee on Transportation and 

Infrastructure, House of Representatives

September 2012

COAST GUARD

Portfolio Management Approach Needed to Improve

Major Acquisition Outcomes 

Why GAO Did This Study

The Coast Guard is in the process of 

acquiring a multi-billion dollar portfolio 

of systems intended to conduct 

missions that range from marine safety 

to defense readiness. GAO has 

reported extensively on the Coast 

Guard’s significant acquisition

challenges, including those of its 

former Deepwater program, as well as 

areas in which it has strengthened its 

acquisition management capabilities. 

For this report, GAO assessed (1) the 

planned cost and schedule of the 

Coast Guard’s portfolio of major 

acquisitions; (2) the steps the Coast 

Guard has recently taken to develop 

an affordable portfolio through its 

requirements process; and (3) the 

extent to which the Coast Guard is 

using cross-directorate teams to 

provide oversight and inform 

acquisition decisions. To conduct this

work, GAO reviewed the Coast 

Guard’s Major Systems Acquisition 

Manual, acquisition program baselines, 

capital investment plans, fleet mix 

analyses, and cross-directorate teams’ 

charters and meeting documentation, 

and interviewed relevant Coast Guard 

and DHS officials. 

What GAO Recommends

GAO recommends that the 

Commandant of the Coast Guard 

conduct a comprehensive portfolio 

review to develop revised acquisition 

program baselines and identify the 

Executive Oversight Council as the 

governing body to oversee acquisitions 

with a portfolio management approach

to help ensure the Coast Guard 

acquires a balanced mix of assets. 

DHS concurred with both 

recommendations and noted planned 

actions to address the 

recommendations.

What GAO Found

The planned cost and schedule of the Coast Guard’s portfolio of major 

acquisitions is unknown because of outdated acquisition program baselines and 

uncertainty surrounding affordability. The Coast Guard’s approved baselines, 

which reflect cost and schedule estimates, indicate the estimated total acquisition 

cost of Coast Guard major acquisitions could be as much as $35.3 billion—an 

increase of approximately 41 percent over the original baselines. However, the 

approved baselines for 10 of 16 programs do not reflect current cost and 

schedule plans because programs have breached the cost or schedule estimates 

in those baselines, changed in scope, or do not expect to receive funding to 

execute baselines as planned. Furthermore, a continued mismatch between 

resources needed to support all approved baselines and expected funding levels 

has required the Coast Guard to make decisions about which programs to fund 

and which programs not to fund as part of its annual budget process. Both DHS 

and the Coast Guard have acknowledged this resource challenge, but efforts to 

address this challenge have not yet resulted in a clear strategy for moving 

forward.

The Coast Guard has taken steps through its requirements process—a process 

that takes mission needs and converts them to specific capabilities—to address 

affordability, but additional efforts are required. For example, in an effort to 

consider affordability, the Coast Guard made some capability trade-offs when 

developing requirements for its largest acquisition, the Offshore Patrol Cutter. But 

whether the cutter ultimately will be affordable depends on some key 

assumptions in the cost estimate that are subject to change. At the fleet level, the 

Coast Guard completed two efforts to reassess what mix of assets it requires to 

meet mission needs, but neither effort used realistic fiscal constraints or 

considered reducing the number of assets being pursued. The mix of assets the 

Coast Guard is acquiring is based upon needs identified in 2005, but the Coast 

Guard may not be on a path to meet these needs and it has not re-examined the

portfolio in light of affordability.

The Coast Guard has established an acquisition governance framework that 

includes the following cross-directorate teams: the Executive Oversight Council, 

the Systems Integration Team, and Resource Councils. The Executive Oversight 

Council—composed of admirals and senior executives—is well-positioned to 

delegate tasks to the other teams or obtain information as needed to assist in 

managing acquisitions. This Council has been active in meeting to discuss 

individual acquisitions; however, it has not met to discuss the portfolio as a 

whole. Coast Guard officials told us it manages portfolio affordability through the 

budget process. GAO’s best practices work has found that successful 

commercial companies assess product investments collectively from an 

enterprise level, rather than as independent and unrelated initiatives. The Coast 

Guard’s current approach of relying on the annual budget process to manage 

portfolio affordability involves immediate trade-offs but does not provide the best 

environment to make decisions to develop a balanced long-term portfolio. 

View GAO-12-918. For more information, 

contact John Hutton at (202) 512-4841 or 

huttonj@gao.gov.
Page i GAO-12-918 Coast Guard Major Acquisitions

Letter 1 

Background 3

Cost and Schedule of Portfolio Remains Unknown Because of 

Outdated Baselines and Uncertainty Surrounding Affordability 10

Opportunities Exist to Address Affordability through the 

Requirements Process 21

Cross-Directorate Acquisition Oversight Groups Have Potential to 

Strengthen Management of Portfolio 35

Conclusions 43

Recommendations for Executive Action 44

Agency Comments and Our Evaluation 45

Appendix I Scope and Methodology 47

Appendix II Key Portfolio Management Practices 50

Appendix III Comments from the Department of Homeland Security and 

Coast Guard 52 

Appendix IV GAO Contact and Staff Acknowledgments 54

Related GAO Products 55

Tables

Table 1: Information on Coast Guard Major Acquisition Programs 4

Table 2: Status of 11 Capabilities Identified in the Coast Guard’s 

2005 Mission Need Statement 25

Table 3: Major Cutter Requirements and Ship Characteristics 

Compared to Cost 32

Table 4: Overview of the Executive Oversight Council, Systems 

Integration Team, and Resource Councils 37

Table 5: Key Examples of Executive Oversight Council Actions in 

2010 and 2011 40

Contents
Page ii GAO-12-918 Coast Guard Major Acquisitions

Figures

Figure 1: Program Management Responsibilities within the Major 

Systems Acquisition Management Framework 6

Figure 2: Coast Guard Level I and II Assets within DHS Acquisition 

Phases and Decision Events as of July 15, 2012 8

Figure 3: Total Acquisition Cost Estimates for Coast Guard 

Portfolio of Major Programs as of July 2012 (Part 1 of 2) 13

Figure 4: Total Acquisition Cost Estimates for Coast Guard 

Portfolio of Major Programs as of July 2012 (Part 2 of 2) 14

Figure 5: Funding Profile in Fiscal Years 2013-2017 Capital 

Investment Plan Compared to Funding Required for a 

Subset of Coast Guard Major Acquisitions 18

Figure 6: An Example of an Affordability Assessment 20

Figure 7: Fleet Mix Phase Two Upper and Lower Bounds 

Compared to Coast Guard’s Past Appropriations and 

Fiscal Year 2013 President’s Budget Request 23

Abbreviations

ADE Acquisition Decision Event

C4ISR Command, Control, Communications, Computer, 

 Intelligence, Surveillance, and Reconnaissance 

DHS Department of Homeland Security

DOD Department of Defense

NM Nautical Miles

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Page 1 GAO-12-918 Coast Guard Major Acquisitions

United States Government Accountability Office

Washington, DC 20548

September 20, 2012

The Honorable Rick Larsen

Ranking Member

Subcommittee on Coast Guard and Maritime Transportation

Committee on Transportation and Infrastructure

House of Representatives

Dear Mr. Larsen: 

The Coast Guard is in the process of acquiring a multi-billion dollar 

portfolio of systems intended to conduct missions that range from marine 

safety to defense readiness. We have reported extensively on the Coast 

Guard’s significant acquisition challenges, including challenges with its 

former Deepwater program that was created to build and modernize 

ships, aircraft, and other capabilities.1 This prior work identified problems 

in costs, management, and oversight that have led to delivery delays and 

other operational challenges for certain assets. Despite these challenges, 

our work has also recognized that the Coast Guard has taken steps to 

strengthen its acquisition management capabilities including reorganizing 

its acquisition directorate, applying the knowledge-based acquisition 

policies and practices outlined in its Major Systems Acquisition Manual, 

and developing acquisition program baselines for each asset. While these

steps have given the Coast Guard better insight into asset-level 

capabilities and costs, we have previously recommended that the 

Commandant of the Coast Guard and the Secretary of the Department of 

Homeland Security (DHS) take additional actions to balance mission

needs and affordability. For example, last year we recommended that the 

Commandant of the Coast Guard take actions—including identifying 

acquisition program priorities and incorporating cost and schedule best 

practices—to help ensure that programs receive and plan to a more 

predictable funding stream.2

 

1

While the Department of Homeland Security (DHS) and the Coast Guard no longer use 

the term “Deepwater” for the program aimed at recapitalizing its surface, air, and 

information technology capacity, the assets that made up the former Deepwater program 

currently constitute the majority of the Coast Guard’s major acquisition programs. 

We also recommended that the Secretary of 

the Department of Homeland Security develop a working group to review 

2

GAO, Coast Guard: Action Needed as Approved Deepwater Program Remains 

Unachievable, GAO-11-743 (Washington, D.C.: July 28, 2011).

 
 

Page 2 GAO-12-918 Coast Guard Major Acquisitions

the results of multiple fleet studies to identify cost, capability, and quantity 

trade-offs that would produce a program that fits within expected budget 

parameters. 

We performed our work under the authority of the Comptroller General to 

conduct work on GAO’s initiative to assist Congress with its oversight 

responsibilities. This report assesses (1) the planned cost and schedule 

of the Coast Guard’s portfolio of major acquisitions; (2) the steps the 

Coast Guard has recently taken to develop an affordable portfolio through 

its requirements process; and (3) the extent to which the Coast Guard is 

using cross-directorate teams to provide oversight and inform acquisition 

decisions. 

To assess the planned cost and schedule of the Coast Guard’s major 

acquisitions portfolio, we reviewed the Coast Guard’s Major Systems 

Acquisition Manual, key asset documents including acquisition program 

baselines and life-cycle cost estimates, the Fiscal Year 2013 President’s 

Budget request and the fiscal years 2013-2017 capital investment plan. 

To assess the steps the Coast Guard has recently taken to develop an 

affordable portfolio through its requirements process, we reviewed the 

Coast Guard’s Fleet Mix Analyses and DHS’s Cutter Study. We also 

reviewed the Coast Guard’s 2005 Integrated Deepwater System Mission 

Need Statement to determine the extent to which the capabilities being 

acquired matched the needs set forth in the plan. Further, we compared 

the National Security Cutter’s and Offshore Patrol Cutter’s missions, 

requirements, and costs to determine similarities and differences. To 

assess the extent to which the Coast Guard is using cross-directorate 

teams to provide oversight and inform acquisition decisions, we compiled 

and analyzed cross-directorate teams’ charters. We also reviewed 

meeting minutes and briefing presentations for the Executive Oversight 

Council and Resource Councils from calendar years 2010 to 2011 to 

identify the extent to which cross-directorate teams are used to inform 

acquisition decisions. We interviewed Coast Guard officials in the 

acquisitions directorate as well as officials in the directorates responsible 

for budgeting and resources and for assessing and developing 

operational requirements (the capabilities directorate). In addition, we 

interviewed DHS officials from the Office of Program Accountability and 

Risk Management and the Office of Policy. Appendix I provides additional 

details about our scope and methodology.

We conducted this performance audit from November 2011 to September 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 
 

Page 3 GAO-12-918 Coast Guard Major Acquisitions

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.

The Coast Guard is a multimission, maritime military service within DHS. 

The Coast Guard has a variety of responsibilities including port security 

and vessel escort, search and rescue, and Polar ice operations. To carry 

out these responsibilities, the Coast Guard operates a number of vessels, 

aircraft, and information technology systems. Since 2001, we have 

reviewed Coast Guard acquisition programs and reported to Congress, 

DHS, and the Coast Guard on the risks and uncertainties inherent in its 

acquisitions. Several of our reports have focused on the Coast Guard’s 

former Deepwater acquisition program that was created to build and 

modernize ships, aircraft, and other capabilities. In our July 2011 report 

on the Deepwater program, we found that the program continues to 

exceed the cost and schedule baselines approved by DHS in 2007, but 

that several factors precluded a solid understanding of the program’s true 

cost and schedule.3

The Coast Guard’s current acquisition portfolio includes 16 major 

acquisition programs—12 of which were part of the former Deepwater 

program. Major acquisitions—level I and level II—have life-cycle cost 

estimates equal to or greater than $1 billion (level I) or from $300 million 

to less than $1 billion (level II) as outlined in the Coast Guard’s Major 

Systems Acquisition Manual. Table 1 provides further information about 

the Coast Guard’s major acquisition programs.

These factors included approved acquisition program 

baselines that did not reflect the current status of some programs, 

unreliable cost estimates and schedules for selected assets, and a 

mismatch between funding needed to support all approved Deepwater 

baselines and expected funding levels. We concluded that while the 

Coast Guard has strengthened its acquisition management capabilities, it 

needed to take additional actions to address the cost growth, schedule 

delays, and expected changes to planned capabilities. 

 

3

GAO-11-743. 

Background 
 

Page 4 GAO-12-918 Coast Guard Major Acquisitions

Table 1: Information on Coast Guard Major Acquisition Programs 

Asset

Acquisition 

level Asset purpose

Included as part of 

the former Deepwater 

Program (Yes/No) 

Surface 

Fast Response Cutter Level I The Fast Response Cutter, also referred to as the 

Sentinel class, is a patrol boat designed to have 

high readiness, speed, adaptability, and 

endurance to perform a wide range of missions. 

Yes

Medium Endurance Cutter 

Sustainment

Level I The Medium Endurance Cutter sustainment 

project is intended to improve the cutters’ 

operating and cost performance by replacing 

obsolete, unsupportable, or maintenance-intensive 

equipment. 

Yes

National Security Cutter Level I The National Security Cutter is intended to be the 

flagship of the Coast Guard’s fleet, with an 

extended on-scene presence, long transits, and 

forward deployment. The cutter and its aircraft and 

small-boat assets are to operate worldwide. 

Yes

Offshore Patrol Cutter Level I The Offshore Patrol Cutter is intended to conduct 

patrols for homeland security functions, law 

enforcement, and search-and-rescue operations. It 

will be designed for long-distance transit, extended 

on-scene presence, and operations with aircraft 

and small boats. 

Yes

Patrol Boat Sustainment Level II The Patrol Boat Sustainment project is intended to 

improve the cutters’ operating and cost 

performance by replacing obsolete, unsupportable, 

or maintenance-intensive equipment. 

Yes

Response Boat-Medium Level I The Response Boat-Medium replaces the aging 

41’ utility boats and other nonstandard boats. 

No

Aviation

HC-130H Long-Range Surveillance 

Aircraft 

Level I The HC-130H is the legacy Coast Guard longrange surveillance aircraft that the Coast Guard 

intends to update in multiple segments. 

Yes

HC-130J Long-Range Surveillance 

Aircraft 

Level II The HC-130J is a four-engine turbo-prop aircraft 

that the Coast Guard has deployed with improved 

interoperability, C4ISR (see below), and sensors to 

enhance surveillance, detection, classification, 

identification, and prosecution. 

Yes

HC-144A Maritime Patrol Aircraft Level I The Maritime Patrol Aircraft is a transport and 

surveillance, fixed-wing aircraft for search and

rescue, enforcement of laws and treaties, and 

transportation of cargo and personnel. 

Yes
 

Page 5 GAO-12-918 Coast Guard Major Acquisitions

Asset

Acquisition 

level Asset purpose

Included as part of 

the former Deepwater 

Program (Yes/No) 

HH-60 Medium Range Recovery 

Helicopter

Level I The HH-60 is a medium-range recovery helicopter 

designed to perform search-and-rescue missions 

offshore in all weather conditions. The Coast 

Guard has planned upgrades to the helicopter’s 

avionics and sensors. 

Yes

HH-65 Multi-mission Cutter Helicopter Level I The HH-65 Dolphin is the Coast Guard’s shortrange recovery helicopter. It is being upgraded to 

improve its engines, sensors, navigation 

equipment, avionics, and other capabilities in 

multiple segments. 

Yes

Unmanned Aircraft System Level I The Coast Guard is exploring the use of 

Unmanned Aircraft Systems to augment the 

service’s cutter-and land-based aviation 

capabilities. 

Yes

C4 & Information Technology

Command, Control, Communications, 

Computer, Intelligence, Surveillance, 

and Reconnaissance (C4ISR) Suite

Level I The Coast Guard is incrementally acquiring C4ISR 

capabilities, including upgrades to existing cutters 

and shore installations, acquisitions of new 

capabilities, and development of a common 

operating picture to provide operationally relevant 

information and knowledge across the full range of 

Coast Guard operations.

Yes

Interagency Operations Centers Level I Interagency Operations Centers are intended to 

improve operational capabilities; situational 

awareness; tactical decision making; and joint, 

coordinated emergency response. 

No

Nationwide Automatic Identification 

System 

Level I The Nationwide Automatic Identification System is 

a data collection, processing, and distribution 

system that provides information to enhance 

safety of navigation and improve maritime domain 

awareness. 

No

Rescue 21 Level I Rescue 21 is an advanced command, control, and 

communications system intended to improve the 

Coast Guard’s Search and Rescue mission by 

leveraging direction-finding technology to more 

accurately locate the source of distress calls. 

No

Source: GAO presentation of Coast Guard data.

Three key Coast Guard directorates—capabilities, resources, and 

acquisition—are involved in the major acquisition process. Program 

managers in the acquisition directorate are required to integrate input 

from these three directorates into a coherent strategy to achieve specific 

cost, schedule, and performance parameters for their programs. Figure 1

identifies some key documents that program managers use in this 
 

Page 6 GAO-12-918 Coast Guard Major Acquisitions

process and, according to the Major Systems Acquisition Manual, what 

should happen if a program manager’s cost estimate for achieving 

requirements established by the capabilities directorate does not match 

Coast Guard’s approved or proposed budget.

Figure 1: Program Management Responsibilities within the Major Systems Acquisition Management Framework

Additionally, major acquisition programs are to receive oversight from 

DHS’s Investment Review Board, which is responsible for reviewing 

acquisitions for executable business strategies, resources, management, 
 

Page 7 GAO-12-918 Coast Guard Major Acquisitions

accountability, and alignment to strategic initiatives. The Board also 

supports the Acquisition Decision Authority in determining the appropriate 

direction for an acquisition at key Acquisition Decision Events (ADE). At 

each ADE, the Acquisition Decision Authority approves acquisitions to 

proceed through the acquisition life-cycle phases upon satisfaction of 

applicable criteria. Further, Component Acquisition Executives at the 

Coast Guard and other DHS components are responsible in part for 

managing and overseeing their respective acquisition portfolios. DHS has 

a four-phase acquisition process:

• Need phase—define a problem and identify the need for a new 

acquisition. This phase ends with ADE-1, which validates the need for 

a major acquisition program. 

• Analyze/Select phase—identify alternatives and select the best 

option. This phase ends with ADE-2A, which approves the acquisition 

to proceed to the obtain phase and includes the approval of the 

acquisition program baseline. 

• Obtain phase—develop, test, and evaluate the selected option and 

determine whether to approve production. During the obtain phase, 

ADE-2B approves a discrete segment if an acquisition is being 

developed in segments and ADE-2C approves low-rate initial 

production.This phase ends with ADE-3 which approves full-rate 

production. 

• Produce/Deploy/Support phase—produce and deploy the selected 

option and support it throughout the operational life cycle. 

Figure 2 depicts where level I and II Coast Guard assets currently fall 

within these acquisition phases and decision events.
 

Page 8 GAO-12-918 Coast Guard Major Acquisitions

Figure 2: Coast Guard Level I and II Assets within DHS Acquisition Phases and Decision Events as of July 15, 2012

In conjunction with the management of these programs through the 

acquisition process, the Coast Guard and DHS have also undertaken a 

series of studies in the past several years focused on requirements and 

the mix of assets in the Coast Guard’s acquisition portfolio. Many of these 

studies have primarily focused on the assets that were part of the 

Deepwater program, commonly referred to by the Coast Guard as the 

program of record: 

• In September 2003, the Coast Guard completed a performance gap 

analysis that determined the Deepwater fleet would have significant

capability gaps in meeting emerging mission requirements following 

the September 11, 2001, terrorist attacks. Due to fiscal constraints, 

the Coast Guard decided not to make any significant changes to the 

planned Deepwater fleet, but did approve several asset capability 

changes that were reflected in the 2005 Mission Need Statement, 
 

Page 9 GAO-12-918 Coast Guard Major Acquisitions

which outlines capabilities the Coast Guard needs to meet its mission 

demands.

• In December 2009, the capabilities directorate completed a fleet mix 

analysis which was intended to be a fundamental reassessment of the 

capabilities and mix of assets the Coast Guard needs to fulfill its 

Deepwater mission. 

• In May 2011, the capabilities directorate completed a second fleet mix 

analysis which primarily assessed the rate at which the Coast Guard 

could acquire the program of record within a range of cost constraints.

• In August 2011, DHS completed a cutter study which developed 

alternative cutter fleets that equaled the acquisition cost, at the time of 

the analysis, of the cutter fleet program of record, and assessed the 

expected performance of these alternative fleets compared to the 

program of record.

In July 2011, we reported that it was unclear how DHS and the Coast 

Guard would reconcile and use these multiple studies to make trade-off 

decisions.4 We recommended that the Secretary of the Department of 

Homeland Security develop a working group that includes participation 

from DHS and the Coast Guard’s capabilities, resources, and acquisition 

directorates to review the results of the studies to identify cost, capability, 

and quantity trade-offs that would produce a program of record that fits 

within expected budget parameters. DHS concurred, but has not yet 

implemented this recommendation; the Senate Report accompanying the 

2013 DHS Appropriations Bill directs the DHS and the Coast Guard to 

develop this working group.5

 

 

4

GAO-11-743.

5

S. Rep. No. 112-169, at 84-85 (2012). 
 

Page 10 GAO-12-918 Coast Guard Major Acquisitions

Outdated acquisition program baselines and uncertainty surrounding the 

affordability of the Coast Guard’s acquisition portfolio continue to limit 

visibility into the current cost and schedule of the Coast Guard’s major 

acquisitions. Even though the Coast Guard has revised 15 out of 16 

baselines in its major acquisition portfolio at least once, 10 of those 15 

baselines do not reflect the current cost or schedule of the programs. 

According to the acquisition program baselines that are approved as of 

July 2012 and total program cost for programs with no planned funding 

beyond fiscal year 2014, the Coast Guard is managing a portfolio of major 

acquisitions that could cost as much as $35.3 billion—or 41 percent more 

than the original estimate of $25.1 billion—but the majority of these 

baselines do not reflect the current status of these programs. DHS and 

the Coast Guard have acknowledged that affordability of the Coast 

Guard’s portfolio is a challenge, but the mismatch between resources 

needed to support all approved baselines and anticipated funding levels 

continues to affect Coast Guard acquisitions. Some of this mismatch 

could be alleviated by the Coast Guard’s current five-year budget plan 

which does not include the final two National Security Cutters; however, 

Coast Guard officials have stated that, regardless of this plan, it continues 

to support completing the program of record. A decision to pursue the 

final two National Security Cutters in the near-term budget years could 

have significant portfolio-wide implications. 

The Coast Guard has revised baselines for 15 of the 16 programs in its 

major acquisition portfolio at least once; however, 10 of the 15 revised 

baselines do not reflect the current cost or schedule of the programs. We 

found that the revised baselines do not reflect current cost and schedule

for one or more of the following reasons:

• Program reported a cost or schedule breach to DHS, but does not 

have a DHS-approved baseline to reflect corrective actions for the 

breach as required.

6

• Program has changed in scope, which could have cost and/or 

schedule implications, but its DHS-approved baseline does not reflect 

Seven out of 16 programs in the Coast Guard’s 

major acquisition portfolio fall into this category. The dates of these 

breach notifications range from April 2009 through December 2011.

 

6

An acquisition program baseline breach of cost, schedule, or performance is an inability 

to meet the threshold value of the specific parameter.

Cost and Schedule of 

Portfolio Remains 

Unknown Because of

Outdated Baselines 

and Uncertainty 

Surrounding 

Affordability

Coast Guard Continues to 

Lack Updated Baselines

That Identify the Planned

Cost and Schedule of Its 

Portfolio 
 

Page 11 GAO-12-918 Coast Guard Major Acquisitions

these changes. Two out of 16 programs in the Coast Guard’s major 

acquisition portfolio fall into this category. 

• Program does not expect to receive funding beyond fiscal year 2014,

but its DHS-approved baseline still reflects such funding. Four out of 

16 programs in the Coast Guard’s major acquisition portfolio fall into 

this category. Based on the fiscal years 2013-2017 capital investment 

plan, Coast Guard officials do not anticipate funding for these 

programs through fiscal year 2017 which means the programs cannot 

execute their current baselines as planned.7

These outdated baselines do not provide DHS, Coast Guard, and 

Congress with accurate information about the current cost and schedule 

of the Coast Guard’s major acquisition portfolio. According to the Major 

Systems Acquisition Manual, the acquisition program baseline provides a 

critical reference point for measuring and reporting the status of program 

implementation and revised baselines should be submitted to DHS within 

90 days after reporting a breach. Coast Guard officials acknowledged that 

the approved baselines do not reflect the status of many programs, but 

stated the update process is lengthy and sometimes interrupted by 

decisions made in the budget process each year. For example, the 

National Security Cutter program office formally notified DHS of a cost 

and schedule breach in November 2011 and program officials told us that 

Coast Guard leadership is reviewing a draft baseline. However, officials 

stated that the draft baseline may no longer be valid because it was 

based on a funding profile that was changed in the fiscal year 2013-2017 

capital investment plan submitted to Congress, triggering the need to 

update the baseline once again.

 

8

 

7

The Coast Guard’s capital investment plan is a 5-year plan presented to Congress that 

includes acquisition, construction, and improvements. The Coast Guard updates the 

capital investment plan annually, and it represents the Coast Guard’s submission for the

President’s budget in any given year. The capital investment plan is approved by DHS and 

Office of Management and Budget and, as we have reported in the past, is subject to 

significant change each year. See 

Likewise, in response to our request for 

current cost estimates and schedules for each program, senior resource 

directorate officials told us that current estimates were not available for 

release because they did not know how they would be affected by future 

funding allocations. 

GAO-11-743. 

8

In commenting on a draft of this report, Coast Guard officials stated that a new baseline 

was submitted for approval in July 2012.
 

Page 12 GAO-12-918 Coast Guard Major Acquisitions

Without a stable funding profile, program managers will likely always be 

at a disadvantage as they must frequently update baselines based on the 

budget rather than having a stable budget reflecting program baselines. 

Furthermore, our prior Department of Defense (DOD) work has found that 

balancing investments late in the budget process often leads to additional 

churn in programs, such as increased costs and schedule delays, and 

encumbers efforts to meet strategic objectives.9 We made a 

recommendation in July 2011 that the Coast Guard adopt action items

found in the acquisition directorate’s October 2010 Blueprint for 

Continuous Improvement (Blueprint) such as promoting stability in the 

capital investment plan by measuring the percentage of projects stably 

funded year to year in the plan, ensuring acquisition program baseline 

alignment with the capital investment plan by measuring the percentage 

of projects where the acquisition program baselines fit into the capital 

investment plan, and establishing project priorities as a Coast Guard-wide 

goal.10

While Coast Guard officials acknowledged that baselines for many of its 

major acquisitions do not reflect the current status of the programs, even 

using the approved program baselines as of July 2012 and total program 

cost for programs with no planned funding beyond fiscal year 2014, the 

estimated total acquisition cost of Coast Guard major acquisitions could 

be as much as $35.3 billion. This is about $10 billion more than original 

baselines which totaled $25.1 billion and represents an increase of 

approximately 41 percent. Figure 3 compares each major acquisition 

asset’s cost from the original program baseline with the latest revised 

baselines that have been approved by the Coast Guard, if available. For 

By promoting stability in the capital investment plan, the Coast 

Guard may be able to address the churn in the acquisition program

budgeting process and help ensure that programs receive and can plan to 

a more predictable funding stream. DHS concurred, but has not yet fully 

implemented this recommendation. Coast Guard officials told us that the 

acquisition directorate did develop a metric to measure the percentage of 

programs stably funded from year to year, which confirmed wide 

fluctuations in funding for most programs from year to year. However, it is 

unclear whether the Coast Guard will pursue the remaining action items. 

 

9

GAO, Defense Acquisitions: A Knowledge-Based Funding Approach Could Improve 

Major Weapon System Program Outcomes, GAO-08-619 (Washington, D.C.: July 2, 

2008).

10GAO-11-743. 
 

Page 13 GAO-12-918 Coast Guard Major Acquisitions

those programs with no planned funding beyond fiscal year 2014, figure 4 

compares the original baseline with estimated total program cost based 

on budget data.

Figure 3: Total Acquisition Cost Estimates for Coast Guard Portfolio of Major Programs as of July 2012 (Part 1 of 2)

Note: Dollars in then-year millions.

a

If the revised baselines present both threshold costs (the maximum costs allowable before a breach 

occurs) and objective costs (the minimum cost expected), threshold costs are used. For those 

programs that comprised the former Deepwater program, this allows traceability to the original $24.2 

billion Deepwater baseline (the original baselines) while also showing how much programs could now 

cost based upon revised baselines. Furthermore, as identified in the table, costs are expected to 

increase further for programs that have reported a cost breach. 
 

Page 14 GAO-12-918 Coast Guard Major Acquisitions

Figure 4: Total Acquisition Cost Estimates for Coast Guard Portfolio of Major Programs as of July 2012 (Part 2 of 2)

Note: Dollars in then-year millions.

a

For those programs with no planned funding beyond fiscal year 2014, the estimated total program 

cost equals dollars appropriated to date plus planned funding in the fiscal year 2013-2017 capital 

investment plan. 
 

Page 15 GAO-12-918 Coast Guard Major Acquisitions

b

GAO reported in February 2012 that Coast Guard officials stated the Interagency Operations 

Centers’ cost estimate needs to be updated because it is not accurate, and that those updates would 

also be made to the baseline. Coast Guard has stated that in a constrained fiscal environment, it is 

not feasible to revise the estimate. See GAO, Maritime Security: Coast Guard Needs to Improve Use 

and Management of Interagency Operations Centers, GAO-12-202 (Washington, D.C.: Feb. 13, 

2012).

c

Coast Guard states that other costs including program management do not require a new baseline, 

but provided us with an updated estimate.

As we have previously reported, the cost increases associated with many 

of these revised baselines reflect the Coast Guard’s and DHS’s efforts to 

better understand the acquisition costs of individual assets that formerly 

made up the Deepwater program, as well as provide insight into the 

drivers of cost growth.11

Without baselines that reflect current cost and schedule, DHS and the 

Coast Guard will not have adequate information to determine if the Coast 

Guard can afford other major acquisition programs that are expected to 

begin within the next few years. The Coast Guard is in the early stages of 

planning for several new acquisitions including icebreakers, river buoy 

tenders, and a biometrics-enabled identity program. In addition, officials 

For example, the Coast Guard has attributed the 

more than $1 billion rise in the Fast Response Cutter’s cost to a reflection 

of actual contract cost from the September 2008 contract award and 

costs for shore facilities and initial spare parts not included in the original 

baseline. Another example of the Coast Guard gaining more insight into 

the cost of individual assets is the Offshore Patrol Cutter program. The 

initial Deepwater baseline included an $8 billion estimate for the Offshore 

Patrol Cutter program. However, program officials stated they did not 

have good data for how the lead systems integrator for the Deepwater 

program generated the original estimate, and that the current estimate 

approved by DHS in April 2012—with a threshold of approximately $12 

billion—is higher likely because the original estimate was developed 

before the program requirements were established. Program officials also 

cited delays in the program, and the corresponding inflation associated 

with those delays, as additional reasons for the cost increase. Even 

though the Coast Guard used the original 2007 Deepwater Baseline 

estimate of $8 billion to characterize the expected cost of the program 

multiple times to Congress, it now characterizes the revised acquisition 

program baseline as the initial cost estimate for the program.

 

11GAO, Coast Guard: Deepwater Requirements, Quantities, and Cost Require 

Revalidation to Reflect Knowledge Gained, GAO-10-790 (Washington, D.C.: July 27, 

2010); and GAO-11-743. 
 

Page 16 GAO-12-918 Coast Guard Major Acquisitions

at the Coast Guard’s Aviation Logistics Center told us they recently 

identified that the end of service life for the HH-60s and HH-65s could be 

reached as early as the 2022 time frame—not the 2027 time frame as 

originally planned. Officials added that this will require the Coast Guard to 

either buy new HH-60s and HH-65s or conduct a service life extension—

previous service life extensions have been funded with acquisition dollars. 

Coast Guard officials told us that additional research is being conducted 

regarding the life expectancy of these helicopters, including using 

forecasting models to update service life limits. Regardless, officials also 

stated that the Coast Guard plans to maintain continuous operational 

capability. Furthermore, we recently reported that the medium endurance 

cutters may also need a service life extension program to limit operational 

gaps until the Offshore Patrol Cutters are in service.12 Given that the 

Coast Guard does not have adequate information concerning the cost of 

its current portfolio, it is not well positioned to accurately assess the 

affordability of these programs as requirements are developed for these 

new assets. 

The mismatch we reported in July 2011 between resources needed to 

support all approved program baselines and expected funding levels 

continues to affect the Coast Guard, requiring it to make decisions about 

which programs to fund and which programs not to fund as part of the 

annual budget formulation process. For example, in the fiscal year 2013 

budget request, the following major acquisition programs were funded at 

a level lower than identified in the programs’ life cycle cost estimates for 

that year: Maritime Patrol Aircraft, Fast Response Cutter, HC-130J/H, and 

C4ISR. Combined, the Coast Guard requested approximately $500 

million less than what was identified in the life cycle cost estimates for 

these programs. The funding needs for these programs have not gone 

away and the Coast Guard will have to fund those activities in future fiscal 

years. 

Both DHS and the Coast Guard have acknowledged this resource 

challenge, but efforts to address these challenges have not resulted in a 

clear strategy for moving forward. For example, in an April 2011 

acquisition decision memorandum concerning Coast Guard acquisition 

 

12GAO, Coast Guard: Legacy Vessels’ Declining Conditions Reinforce Need for More 

Realistic Operational Targets, GAO-12-741 (Washington, D.C.: July 31, 2012). 

Upcoming Budget 

Decisions Will Likely Have 

Portfolio-wide 

Implications 
 

Page 17 GAO-12-918 Coast Guard Major Acquisitions

program breaches, DHS stated that future breaches in Coast Guard 

programs would almost be inevitable as funding resources diminish. DHS 

also directed the Coast Guard to develop a plan for showing program 

tradeoffs that illuminates the balance between operational commitments, 

recapitalization, and the realities of the capital investment plan. Following 

the Coast Guard’s presentation of the plan to DHS, DHS issued a second 

acquisition decision memorandum in August 2011 which stated the Coast 

Guard presented a global, systematic, and overarching solution to future 

funding shortfalls that addressed programmatic, resource, and 

operational impacts. However, a senior DHS official involved with this 

review told us that the presentation only brought to light the challenges, 

and did not present a solution. The briefing slides provided to us were 

redacted due to the Coast Guard’s belief that they contained budget 

negotiation information so we were unable to reconcile whether a solution 

was presented. Coast Guard officials stated they had no other examples

of a similar portfolio-wide review to address future funding shortfalls. 

Without a portfolio analysis to establish long-term priorities to guide the 

budget process, it will be difficult for Coast Guard to address this 

mismatch of funding and understand how decisions concerning one 

program affect another program.

Some of the resource challenges in near-term years could be alleviated if 

the Coast Guard executed its fiscal year 2013-2017 capital investment 

plan. For example, this plan does not include funding for National Security 

Cutter 7 in fiscal year 2014 or National Security Cutter 8 in fiscal year 

2015, as was the plan in previous years. However, resource and 

acquisition directorate officials told us that the Coast Guard continues to 

support a program of record of eight National Security Cutters. A senior 

Coast Guard acquisition official added that the Coast Guard has an 

urgent need for the last two cutters and not buying these two ships would 

require major adjustments to other acquisition plans. However, as seen in 

figure 5, if the Coast Guard chooses to pursue National Security Cutter 7 

in fiscal year 2014 and National Security Cutter 8 in fiscal year 2015, 

there will be a significant mismatch in funding required based on life cycle 

cost estimates versus expected funding levels in the fiscal year 2013-

2017 capital investment plan—especially given that some of the activities 

not funded in fiscal year 2013 are expected to be funded in subsequent 

years. 
 

Page 18 GAO-12-918 Coast Guard Major Acquisitions

Figure 5: Funding Profile in Fiscal Years 2013-2017 Capital Investment Plan 

Compared to Funding Required for a Subset of Coast Guard Major Acquisitions

Note: The major acquisition programs in this comparison include National Security Cutter, Fast 

Response Cutter, Offshore Patrol Cutter, HH-65, Maritime Patrol Aircraft, HC-130H, HC-130J, and 

C4ISR. The Coast Guard’s fiscal years 2013-2017 capital investment plan shows reduced funding 

levels to zero beyond fiscal year 2014 for Response Boat-Medium, Nationwide Automatic 

Identification System, Rescue 21, and Interagency Operations Centers as well as indefinitely defers 

plans for some HH-60 upgrades. These programs are not included in this comparison. Unmanned 

Aircraft Systems and Icebreakers are not included in this comparison because these programs are 

not at a point in the acquisitions process that requires a life cycle cost estimate. These omissions do 

not affect the comparison presented in this figure. 

If National Security Cutters 7 and 8 are included in future budgets,

decision makers will likely be faced with a difficult choice: pull funds from 

other high-priority federal programs to support Coast Guard acquisitions 

or accept that some capabilities the Coast Guard promised will have to be 
 

Page 19 GAO-12-918 Coast Guard Major Acquisitions

deferred to later years.13

Coast Guard acquisition officials told us that one way it is trying to 

address portfolio affordability is through an update to its Major Systems 

Acquisition Manual. According to draft language, the acquisition 

directorate’s Office of Resource Management will be required to maintain 

a chart to visually depict all competing acquisition program priorities 

within the capital investment plan at various points in time. Officials told 

us that each acquisition program will be required to include this chart in its 

required materials for future acquisition decision events. This update to 

the Coast Guard’s acquisition manual follows best practices outlined in 

GAO’s Cost Estimating and Assessment Guide with the exception that 

the guide notes the affordability assessment should, preferably, be 

conducted several years beyond the programming period.

However, deferring costs could lead to what is 

commonly characterized as a bow-wave—or an impending spike in the 

requirement for additional funds—unless the Coast Guard proactively

chooses to make some tradeoff decisions by re-examining requirements.

14 Figure 6 is

the chart included in GAO’s Cost Estimating and Assessment Guide.

 

13In the committee reports accompanying the 2013 DHS Appropriations Bills, both the 

House and Senate Committees on Appropriations proposed funding for long lead time 

materials for the 7th National Security Cutter in fiscal year 2013. The Senate Committee 

also expressed support for buying all 8 National Security Cutters.

14GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009).
 

Page 20 GAO-12-918 Coast Guard Major Acquisitions

Figure 6: An Example of an Affordability Assessment

Note: FY = fiscal year.

The usefulness of the Coast Guard’s chart will be dependent upon the 

extent to which the Coast Guard makes tradeoff decisions now about 

which programs it is going to fund in the near-term so that it can develop 

and present a realistic depiction of funding needs within expected budget 

parameters. For example, Coast Guard officials told us that the Maritime 

Patrol Aircraft program will be the first acquisition program required to 

include this chart in its prepared materials for its full-rate decision event in 

September 2012. However, whether the Maritime Patrol Aircraft program 

is affordable within the context of the Coast Guard’s entire acquisition 

portfolio is largely dependent upon other programs, including whether the 

Coast Guard buys National Security Cutters 7 and 8. Until these nearterm affordability issues are decided and acquisition program baselines 

are updated to reflect current costs, the Coast Guard’s chart may be of 

limited value because the data may not be accurate and complete. 
 

Page 21 GAO-12-918 Coast Guard Major Acquisitions

Opportunities exist for the Coast Guard to address the affordability of the 

fleet and major cutters through the requirements process, which takes 

broad mission and capability needs and converts them to system-specific 

capabilities.15

The Coast Guard completed two efforts to reassess the mix of assets that 

comprised its former Deepwater program but as we reported in May 

2012, both efforts only used its program of record as the basis of the 

analysis and did not consider realistic fiscal constraints.

The Coast Guard completed two efforts to reassess the mix 

of assets but both efforts only used its program of record, based upon the 

2005 Mission Need Statement, as the basis of the analysis and did not 

consider realistic fiscal constraints. While the Coast Guard remains 

committed to this 2005 Mission Need Statement, it may not be on a path 

to achieve several of the capabilities necessary to respond to mission 

demands identified after September 11, 2001, or realize its vision for a 

presence-based operating concept. Combined with cost growth, the 

Coast Guard is at risk of pursuing a fleet that is not affordable and will not 

be able to operate in the manner envisioned. Balancing capability and 

affordability is also a concern for the Coast Guard’s and DHS’s largest 

acquisition, the Offshore Patrol Cutter—which Coast Guard officials 

stated is the first acquisition in the Deepwater surface fleet in which the 

Coast Guard had complete control over the requirements development 

process. However, even though the Coast Guard has made some 

changes to reduce the estimated acquisition cost of the Offshore Patrol 

Cutter, DHS Office of Policy and the Office of the Chief Financial Officer 

have expressed concern regarding future cost growth and the program 

crowding out other Coast Guard programs in future budget years. Further, 

the requirements and missions for the Offshore Patrol Cutter have 

similarities to those of the National Security Cutter though their costs vary 

at this time. 

16

 

15The requirements process starts with a mission analysis, which assesses a deficiency in 

a capability that will prevent the Coast Guard from adequately conducting mission(s) and 

provides justification for preliminary options for satisfying these deficiencies. This analysis 

also leads to the development of an operational requirements document, which is the 

formal statement of the operational performance and related parameters for a proposed 

concept or system. Requirements development is the key link between the mission 

capability gap and a material solution. 

The Coast 

Guard’s first effort, Fleet Mix Phase One, did not use cost constraints and 

16GAO, Observations on the Coast Guard’s and the Department of Homeland Security’s 

Fleet Studies, GAO-12-751R (Washington, D.C.: May 31, 2012). 

Opportunities Exist to 

Address Affordability 

through the 

Requirements Process

Coast Guard Remains 

Committed to the Program 

of Record Amid 

Affordability Concerns and 

Capability Shortfalls
 

Page 22 GAO-12-918 Coast Guard Major Acquisitions

found that the Coast Guard requires a fleet that could cost $65 billion to 

meet its long term strategic goals, which is about $40 billion more than 

the $24.2 billion program of record. Coast Guard officials told us that they 

do not consider the $65 billion fleet to be affordable and are not using it to 

inform decision making. In the second effort, Fleet Mix Phase Two, the 

Coast Guard analyzed how long it would take to buy the program of 

record under two different funding constraints: (1) an upper bound of 

$1.64 billion per year and (2) a lower bound of $1.2 billion per year for 

surface and aviation assets.17 Both of these bounds kept the aviation 

funding level constant at $350 million per year. As we reported in May 

2012, and as shown in figure 7, both the upper and lower bound funding 

scenarios are greater than the Coast Guard’s past 5 years of 

appropriations and its fiscal year 2013 request, indicating the upper 

bound funding level is unrealistic and the lower bound is optimistic.18

 

17Constant fiscal year 2009 dollars. We previously reported that the Coast Guard did not 

document its methodology for establishing these constraints and there was confusion 

about their genesis. See GAO-11-743. 

18GAO-12-751R. 
 

Page 23 GAO-12-918 Coast Guard Major Acquisitions

Figure 7: Fleet Mix Phase Two Upper and Lower Bounds Compared to Coast 

Guard’s Past Appropriations and Fiscal Year 2013 President’s Budget Request 

Notes: FY = fiscal year. The aviation funding level used in the study was $350 million/year for both 

the upper bound and lower bound constraints. 

The program of record that the Coast Guard remains committed to is 

based upon its 2005 Mission Need Statement, which Coast Guard 

officials told us serves as the guiding document for its recapitalization 

effort. This Mission Need Statement outlines capabilities the Coast Guard 

needs to meet its mission demands, including 11 capabilities established 

after September 11, 2001. In addition, it identifies those capabilities that 

would allow the Coast Guard to become more proactive through 

increased surveillance and presence, as opposed to responding to events 
 

Page 24 GAO-12-918 Coast Guard Major Acquisitions

after they occur.19

While the Coast Guard remains committed to this 2005 Mission Need 

Statement, it may not be on a path to achieve several of the capabilities 

necessary to address gaps that emerged following the September 11, 

2001, terrorist attacks. We traced 11 system performance capabilities 

identified in the 2005 Mission Need Statement through various program 

documents, including the 2007 Deepwater acquisition program baseline, 

operational requirements documents, and testing documentation to 

identify which capabilities the Coast Guard is currently planning to 

acquire. As seen in table 2, the Coast Guard’s progress in acquiring the 

capabilities identified in this document is mixed as it has acquired some 

capabilities while other capabilities have been refined or clarified over 

time, are no longer planned for certain assets, or have been cancelled

altogether. 

According to the Mission Need Statement, this 

presence-based operating concept will lead to operations that detect and 

interdict threats as far from the United States as possible. 

 

19Effective presence means having the right assets and capabilities at the right place at 

the right time.
 

Page 25 GAO-12-918 Coast Guard Major Acquisitions

Table 2: Status of 11 Capabilities Identified in the Coast Guard’s 2005 Mission Need Statement

Capabilities identified 

in the 2005 Mission 

Need Statement

Assets planned 

for in 2007 

Program of 

Record

Currently 

planned assets

GAO assessment of extent to which current status is expected to 

deliver capability identified in Mission Need Statement

Naval Operational 

Capabilities and DOD 

Interoperability for the 

Fast Response Cutter

Fast Response 

Cutter

a

Fast Response 

Cutter

 Naval Operational Capabilities—the Fast Response Cutter is designed 

to conduct all patrol boat functions in accordance with this concept, but 

this has not yet been operationally tested. 

DOD Interoperability—the Coast Guard plans for the Fast Response 

Cutter to exchange voice and data with DOD and partners. The Fast 

Response Cutter will not exchange near real time battle data with 

DOD, which Coast Guard officials told us was never the intent of the 

Mission Need Statement.

Organic Air Transport for 

National Strike Force 

Teams

HC-130J and 

HC-130H

HC-130J and 

HC-130H

 The HC-130J and HC-130H are capable of transporting National Strike 

Force Teams.

Airborne Use of Force 

Capability on all Rotor 

Wing Aviation Assets

HH-60 and HH65HH-60 and HH65 The Coast Guard has completed the airframe modifications to provide 

Airborne Use of Force capability on all HH-60s and HH-65s.

Naval Operational 

Capabilities and DOD 

Interoperability for the 

Offshore Patrol Cutter

Offshore Patrol 

Cutter

Offshore Patrol 

Cutter 

 Naval Operational Capabilities—Coast Guard officials stated that there 

are no longer plans to use the Offshore Patrol Cutter in accordance 

with the major cutters section of the Naval Operations Concept due to 

affordability.

DOD Interoperability—the Coast Guard plans for the Offshore Patrol 

Cutter to exchange voice, video, and data with DOD and partners but,

according to officials, will not have a key system to exchange near 

real-time battle data.

Intelligence Information 

Sharing and Exchange 

Capabilities Embedded in 

Maritime Domain 

Awareness

National Security 

Cutter 

Offshore Patrol 

Cutter 

Fast Response 

Cutter

HC-130J

HC-130H

Maritime Patrol 

Aircraft 

HH-60

HH-65

Unmanned Aerial 

vehicle

National 

Security Cutter

Offshore Patrol 

Cutter

Fast Response 

Cutter

Maritime Patrol 

Aircraft 

 National Security Cutter—has a facility to interoperate with the 

intelligence community (top secret data).

Offshore Patrol Cutter—this capability is an objective requirement so 

the cutter does not have to be designed with this capability. The 

threshold requirement is that space, weight, and power be designed 

into the vessel to add-on such a system in the future.

Fast Response Cutter and Maritime Patrol Aircraft—are required to 

have the capability to process secret-level data.

HC-130J/H—capability deferred for secret-level data.
 

Page 26 GAO-12-918 Coast Guard Major Acquisitions

Chemical, Biological, 

Radiological, Defense and 

Decontamination 

Capability for all assets

National Security 

Cutter

Offshore Patrol 

Cutter

HC-130J

HC-130H

Maritime Patrol 

Aircraft

HH-60

HH-65 

National 

Security Cutter

HC-130J 

(objective)

 National Security Cutter has a requirement to operate in a 

contaminated area for up to 36 hours, but did not have the required 

equipment during the most recent operational test event (January 

2011). Coast Guard officials stated that they have since made 

changes to the National Security Cutter that will enable it to meet this 

requirement. These changes have not yet been operationally tested.

HC-130J has an objective requirement to operate in a contaminated 

area for up to 36 hours. However, this asset has not undergone testing 

to see if this requirement has been met.

Anti-Terrorism, Force 

Protection of deepwater 

assets, particularly when 

operating at the outer 

layer with the Navy

National Security 

Cutter 

Fast Response 

Cutter

National 

Security Cutter

Offshore Patrol 

Cutter

 National Security Cutter did not have the systems required to pass this 

test in its most recent operational assessment (January 2011). Coast 

Guard has issued a clarification memo in advance of operational test 

and evaluation which removes this capability as a key performance 

parameter, but it remains a critical issue which the testers must 

examine to evaluate the system’s capability to safely perform its 

missions. 

The Offshore Patrol Cutter lists Anti-Terrorism Force Protection 

capabilities as critical, but the operational requirements document 

does not identify what enables this capability. 

Common Operating 

Picture capabilities 

inherent within Maritime 

Domain Awareness for 

data exchange, 

synchronization, 

correlation, reachback, 

and command and control

National Security 

Cutter 

Offshore Patrol 

Cutter 

Fast Response 

Cutter 

HC-130J

HC-130H

Maritime Patrol 

Aircraft 

HH-60

HH-65

Unmanned aerial

vehicle 

All planned 

assets except 

the HH-60 and 

HH-65

 The Coast Guard planned to buy an integrated C4ISR system for each 

asset to enable greater awareness. As we reported in July 2011, the 

Coast Guard has spent over $600 million purchasing a C4ISR system 

that is difficult to maintain and does not yet achieve the system-ofsystems capability and the Coast Guard’s helicopters are no longer 

going to be a part of this system.b

Underwater capability to 

detect and avoid 

swimmers for the National 

Security Cutter

 

None National 

Security Cutter 

 The National Security Cutter has a requirement related to vulnerability 

against mines/swimmer/underwater objects, but was not built with 

capabilities to detect swimmers or mine-like objects. This shortfall is 

described in Navy evaluations of the National Security Cutter 

including: (1) a combat systems ship qualifications trials report (August 

2009), which stated that detecting a person in the water was an 

unrealistic requirement for National Security Cutter, and by (2) the 

most recent National Security Cutter operational assessment 

(January 2011).

Coast Guard has issued a clarification memo in advance of 

operational test and evaluation which requires only space, weight, and 

power for this capability.
 

Page 27 GAO-12-918 Coast Guard Major Acquisitions

Legend: 

 Current status expected to deliver capability identified in the Mission Need Statement; 

 Current status expected to deliver part of the capability identified in the Mission Need Statement; 

 Current status not expected to deliver capability identified in the Mission Need Statement.

Source: GAO analysis of Coast Guard documentation.

a

Naval Operations Concept 2010 (NOC 10) describes when, where and how U.S. naval forces will 

contribute to enhancing security, preventing conflict, and prevailing in war in order to guide Maritime 

Strategy implementation in a manner consistent with national strategy.

b

GAO-11-743. 

In addition to these 11 capabilities, the Coast Guard also identified the 

need for persistent wide-area surveillance in the 2005 Mission Need 

Statement to achieve the presence-based vision. Two of the solutions 

required to enable this capability, in addition to the C4ISR system

discussed in table 2, are data transmission capacity—or bandwidth—and 

Unmanned Aerial Systems. However, the Coast Guard has struggled to 

supply its assets with the bandwidth necessary to support informationbased operations. Further, as we previously reported, the Unmanned 

Aerial Systems were envisioned as a key component of the Deepwater 

system that would enhance surveillance capability on board the National 

Security Cutter and Offshore Patrol Cutter and also from land. Congress 

has appropriated over $100 million since 2003 to develop an Unmanned 

Aerial System, but the Coast Guard terminated the program due to cost 

increases and technical risks in June 2007. According to Coast Guard 

officials, the Coast Guard established a partnership with the Navy’s Fire 

Scout program in October 2008 and has developed plans to install a 

system that will facilitate a future demonstration of the Fire Scout on the 

National Security Cutter. As an interim solution, the Coast Guard has 

proposed a non-major acquisition to purchase a smaller, less capable, 

and less costly unmanned aerial vehicle. In August 2012, the Coast 

Guard held a technical demonstration on board the National Security 

Cutter that experimented with a possible Navy solution, called the Scan 

Eagle, which may satisfy the Coast Guard’s need for a smaller, less 

capable unmanned aerial vehicle. The Coast Guard currently has plans 

for a more in-depth demonstration in fiscal year 2013. 

Air Intercept capability for 

the Maritime Patrol 

Aircraft

None None  This capability is not a requirement for the Maritime Patrol Aircraft and 

program officials said that there are no plans to change the design. 

The legacy aircraft, HU-25, which conducted air intercept missions has 

the capability of traveling 400 knots while the Maritime Patrol Aircraft 

can only travel 170 knots. 

Capability for Vertical 

Intercept and Vertical 

Delivery of boarding 

teams

HH-60 and HH65 None  The Coast Guard has suspended its vertical insertion capabilities due 

to limited resources.
 

Page 28 GAO-12-918 Coast Guard Major Acquisitions

Due to these capability shortfalls, the Coast Guard is at risk of purchasing 

a fleet that will not be able to close all of the gaps identified following the 

September 11, 2001 terrorist attacks or fully conduct operations in a 

presence-based manner. While the 2005 Mission Need Statement 

presented a business case for the Coast Guard’s future investments, the 

Coast Guard has not re-examined the value of these assets in light of the 

difficult affordability decisions likely to come. By continuing to pursue 

some capabilities and not others without reevaluating the portfolio as a 

whole, the Coast Guard is increasing the risk that it may not accomplish 

the goals envisioned in 2005 and cannot ensure it is maximizing the value 

of the assets it is buying. 

The Coast Guard took some steps to improve the requirements 

development process for the Offshore Patrol Cutter—the largest 

acquisition in DHS’s acquisitions portfolio and, according to officials, the 

first acquisition in the Deepwater surface fleet in which the Coast Guard 

had complete control over the requirements development process. The 

Coast Guard undertook studies and analysis that, in part, considered the 

measurability and testability as required by guidance of the following four 

key performance parameters: operating range, operational sustainment 

and crew, speed, and patrol endurance. For example, the range 

requirement, which is the distance the cutter can travel between refueling, 

is clearly stated as a minimum acceptable requirement of 8,500 nautical 

miles at a constant speed of 14 knots to a maximum level of 9,500 

nautical miles. Although cutters typically transit at various speeds over the 

course of a patrol, the Coast Guard conducted analysis to determine that 

the 14 knots speed at the minimum and maximum ranges would provide 

enough days between refueling given the percentage of time that the 

Coast Guard normally operates at certain speeds. By developing a 

measurable range requirement, the Coast Guard helped to promote a 

clear understanding of Offshore Patrol Cutter performance by potential 

shipbuilders and sought to balance the cost of additional range with the 

value that it provides. Furthermore, officials at the independent test 

authority—the Navy’s Commander Operational Test and Evaluation 

Force—told us that they have been actively involved through the 

requirements development process and many of their questions regarding 

testability have been resolved.

Coast Guard Took Positive 

Steps to Improve 

Requirements 

Development and Consider 

Affordability for the 

Offshore Patrol Cutter 
 

Page 29 GAO-12-918 Coast Guard Major Acquisitions

Two other key performance parameters—seakeeping and 

interoperability—are not as consistent with the Coast Guard’s guidelines 

of measurability and testability as identified in the Major Systems 

Acquisition Manual.

20

During the requirements development process for the Offshore Patrol 

Cutter, the Coast Guard also made some decisions with respect to 

affordability. The following are examples where the Coast Guard made 

capability trades that are expected to help lower the program’s acquisition 

cost: 

For example the seakeeping key performance 

parameter described in the requirements document states that the 

Offshore Patrol Cutter shall be able to launch small boats and helicopters 

in 8.2- to 13.1-foot waves. However, in the specifications document, 

which is used to translate the requirements document into a level of detail 

from which contractors can develop a reasonably priced proposal, the

Coast Guard states that the Offshore Patrol Cutter shall be able to launch 

small boats and helicopters in no more than 10.7 foot waves while 

transiting in a direction that minimizes the pitch and roll of the vessel—an 

important detail not specified in the requirements document. Further, the 

interoperability key performance parameter states that the Coast Guard 

must be able to exchange voice, video, and data with the Department of 

Defense and Homeland Security agencies. However, it does not list 

specific external partners or substantial details regarding the systems 

required to exchange data and the types and size of these data that could 

be examples of measurability and testability. This key performance 

parameter does not make this distinction between parts of the military that 

the Coast Guard operates with most often, such as the U.S. Navy and the 

intelligence community, and simply requires interoperability with all of 

DOD. Similarly, the interoperability key performance parameter does not 

specify the DHS agencies for which the Coast Guard must exchange data 

with, which makes this parameter difficult to test. Coast Guard’s 

independent testing officials agreed that this key performance parameter, 

as currently written, is not testable in a meaningful way and stated that 

there are ongoing efforts to improve the clarity of this requirement. 

• Speed—after a series of analyses, the Coast Guard decided to 

reduce the minimum acceptable speed from 25 to 22 knots thereby, 

 

20Seakeeping refers to a vessel’s ability to withstand harsh sea states to conduct 

operations or survive. Sea states refer to the height, period, and character of waves on the 

surface of a large body of water. 
 

Page 30 GAO-12-918 Coast Guard Major Acquisitions

according to officials, potentially eliminating the need for two diesel 

engines. According to a study completed by the Coast Guard, this 

trade could reduce the acquisition cost of each cutter by $10 million. 

• Stern Launch—the Coast Guard removed the stern launch ramp 

capability from the Offshore Patrol Cutter design. While this trade-off 

may inhibit the launch and recovery of small boats in certain 

conditions, such as substantial roll or side-to-side movement of the 

vessel, Coast Guard officials stated that it will reduce the cost of the 

cutter because a stern launch ramp requires the cutter to be heavier, 

thus adding cost. 

• C4ISR—the Coast Guard eliminated a minimum requirement for an 

integrated C4ISR system and instead is requiring a system built with 

interfaces to communicate between different software programs. 

According to Coast Guard officials, the Coast Guard now plans to use 

a Coast Guard-developed software system—Seawatch—rather than 

the more costly lead systems integrator-developed software system 

currently installed on the National Security Cutter, even though this 

system does not provide the Coast Guard with the capability to 

exchange near real-time battle data with DOD assets. 

The improvements and affordability decisions that the Coast Guard has 

made in its requirements development process for the Offshore Patrol 

Cutter are even more evident when compared with the process for 

generating requirements for its other major cutter—the National Security 

Cutter. Due to the nature of the lead systems integrator strategy that the 

Coast Guard initially used to buy the National Security Cutter, Integrated 

Coast Guard Systems developed the requirements, designed, and began 

producing the National Security Cutter before the requirements document 

was completed.21

 

21In June 2002, the Coast Guard awarded a contract to Integrated Coast Guard Systems, 

a joint venture formed by Northrop Grumman and Lockheed Martin, as a lead systems 

integrator to execute the Deepwater program using a system-of-systems approach. Under 

this approach, the Coast Guard provided the contractor with broad, overall performance 

specifications—such as the ability to interdict illegal immigrants—and the lead systems 

integrator determined the specifications for the Deepwater assets. In 2007, Coast Guard 

took over the systems integrator role.

The Coast Guard did not have an operational 

requirements document at the time the Coast Guard awarded the 

construction contract for the first cutter in 2004, but the Coast Guard 

documented the requirements in 2006. Further, even as the third National 

Security Cutter was in production, Coast Guard was refining the 

requirements and, in January 2010, made the decision to clarify some key 
 

Page 31 GAO-12-918 Coast Guard Major Acquisitions

performance parameters such as anti-terrorism/force protection and 

underwater mine detection because the existing requirements were not 

testable. To further remedy the lack of clear requirements, Coast Guard 

officials stated that they are currently developing a second version of the 

requirements document that improves the specificity and definition of 

many of the National Security Cutter’s requirements and will be used as 

criteria during operational testing. To date, the Coast Guard has not 

reduced the National Security Cutter’s capability for the purpose of 

affordability as it has done for the Offshore Patrol Cutter. However, 

according to Coast Guard officials, there is a revised acquisition program 

baseline under review which will reflect an ongoing effort to lower the 

acquisition cost of the vessel. 

The requirements and missions for the National Security Cutter and the 

Offshore Patrol Cutter programs have similarities, but the actual cost for 

one National Security Cutter compared to the estimated cost of one 

Offshore Patrol Cutter varies greatly. Even though the Coast Guard took 

steps to consider affordability while developing the requirements for the 

Offshore Patrol Cutter, those affordability decisions do not explain the 

magnitude in the difference between these two costs. Table 3 compares

the expected performance of a National Security Cutter with the 

objective/threshold requirements of an Offshore Patrol Cutter, the 

missions each cutter is expected to perform, and the actual/estimated 

costs for each cutter. 

Major Cutter Requirements 

and Missions Have 

Similarities, but Costs Vary 

Greatly and Concerns 

Remain about Affordability 
 

Page 32 GAO-12-918 Coast Guard Major Acquisitions

Table 3: Major Cutter Requirements and Ship Characteristics Compared to Cost

Source: GAO analysis of Coast Guard documentation.

a

For the National Security Cutter, speed is based on the results of an operational assessment and the 

remaining measurements are thresholds that were not tested as a part of the January 2011 

operational assessment. 

b The Coast Guard has 11 statutory missions that range from marine safety to defense readiness.

According to the requirements document, the National Security Cutter is expected to conduct 

components of other missions, such as international ice patrol (a component of Ice Operations) and 

foreign vessel inspection (a component of Marine Safety). While the Offshore Patrol Cutter 

requirements document does not specifically call out these mission components, the cutter’s planned 

capabilities are expected to conduct these mission components as well.

c

Key performance Parameter

Acquisition costs are in fiscal year 2016 dollars and compare the 5th cutter purchased for each fleet 

and, therefore, this comparison holds the learning curve constant.

National Security Cutter Offshore Patrol Cutter

Expected performance Objective/threshold a

Operating Range 12,000 nautical miles (nm) at the most 

economical speed

9,500 nm / 8,500 nm at 14 knots sustained 

speed

Interoperability • Exchange voice and data with 

• Coast Guard 

• Department of Defense

• DHS agencies

• North Atlantic Treaty Organization

• international partners

• Exchange voice, data and video with 

• Coast Guard 

• Department of Defense

• DHS agencies

• North Atlantic Treaty Organization

• international partners

• commercial and private vessels or 

aircraft 

Size of crew 108 Sailors 90 Sailors / 104 sailors

Seakeeping All operations through mid-Sea State 5 Primary missions through Sea State 5 / same 

for threshold

Speed/maneuverability 32 knots 25 knots / 22 knots

Patrol endurance 60 days 60 days / 45 days

Statutory missionsb

• Defense Readiness

• Drug Interdiction

• Living Marine Resources

• Search and Rescue

• Alien Migrant Interdiction Operations

• General Law Enforcement

• Ports, Waterways, and Coastal 

Security 

• Marine Environmental Protection

• Defense Readiness, but according to 

officials, cannot transit with carrier strike 

group

• Drug Interdiction

• Living Marine Resources

• Search and Rescue

• Alien Migrant Interdiction Operations

• General Law Enforcement

• Ports, Waterways, and Coastal Security

Acquisition cost per Cutter Approximately $760 million c Approximately $300 million
 

Page 33 GAO-12-918 Coast Guard Major Acquisitions

This comparison raises questions whether the Offshore Patrol Cutter 

could be a less expensive, viable substitute for the National Security 

Cutter or whether there are assumptions built into the Offshore Patrol 

Cutter cost estimate, not related to requirements, which are driving the 

estimated costs down.22 With respect to the first, DHS, motivated by 

concerns about the affordability of the National Security Cutter program, 

completed a Cutter Study in August 2011 which included an analysis to 

examine the feasibility of varying the combination of objective—or optimal 

performing—Offshore Patrol Cutters and National Security Cutters in the 

program of record. Through this analysis, DHS found that defense 

operations is a key factor in determining the quantity of National Security 

Cutters needed and that the Coast Guard only needs 3.5 National 

Security Cutters per year to fully satisfy the planned requirement for 

defense-related missions.23 DHS concluded that with six National Security 

Cutters the Coast Guard can meet its goals for defense operations and 

mitigate some of the near-term capacity loss of the five National Security 

Cutter fleet modeled in the Cutter Study. DHS Program Analysis and 

Evaluation officials stated that this, in conjunction with other information, 

helped to inform the decision to not include the last two National Security 

Cutter hulls—hulls 7 and 8—in the fiscal years 2013-2017 capital 

investment plan. However, the DHS Cutter Study also notes that the time

line for the two acquisitions makes a trade-off between the National 

Security Cutter and the Offshore Patrol Cutter difficult since the National 

Security Cutter program is in production whereas the Offshore Patrol 

Cutter program is only in the design phase. Similarly, we have reported 

that the Coast Guard may face an operational gap in its ability to perform 

missions using major cutters due to the condition of the legacy fleet.24

With respect to the second possibility that there are assumptions built into 

the Offshore Patrol Cutter cost estimate that are driving the estimated 

costs down, the Coast Guard included three key assumptions in the 

Offshore Patrol Cutter’s life cycle cost estimate, generally not related to 

 

 

22For the purposes of this review, we did not assess the Offshore Patrol Cutter’s life cycle 

cost estimate in accordance with our best practices.

23In the DHS Cutter Study, the defense readiness mission—a mission in which the Coast 

Guard provides assets to the Department of Defense to meet its military strategy—is fully 

satisfied before other mission areas are assessed. In doing so, defense operations is the 

highest mission priority, only to be met through the use of National Security Cutters.

24 GAO-12-741. 
 

Page 34 GAO-12-918 Coast Guard Major Acquisitions

the cutter’s key requirements, which lower the estimated cost in 

comparison to the actual cost of the National Security Cutter. These three 

assumptions are:

• Learning Curve. The Coast Guard assumes that the shipyard(s) will 

generally continue to reduce the labor hours required to build the 

Offshore Patrol Cutter through the production of all 25 vessels. This 

may prove optimistic, particularly for later ships in the class, because 

the amount of additional learning per vessel–or efficiencies gained 

during production due to improving the manufacturing process to build 

the ship in a way that requires fewer labor hours–typically decreases 

over time in a shipbuilding program. 

• Military versus Commercial Standards. The life cycle cost estimate 

assumes that certain areas of the Offshore Patrol Cutter’s 

construction and material would reflect an average of 55 percent 

commercial standards—or construction standards that are typically 

used for military sealift ships that provide ocean transportation—and 

45 percent military standards—or construction standards typically 

used for Navy combat vessels.25

• Production Schedule. The cost estimate reflects the Coast Guard’s 

plan to switch from building one Offshore Patrol Cutter per year to 

building two Offshore Patrol Cutters per year beginning with the fourth 

and fifth vessel in the class. If the Coast Guard cannot achieve or 

maintain this build rate due to budget constraints, it may choose to 

stretch the schedule for the program which in turn could increase 

costs. 

Any changes in this assumption 

could have a significant effect on the cost estimate because military 

standards require more sophisticated construction applications, 

particularly in the areas of shock hardening and signature reduction, 

to prepare a ship to survive battle. Such sensitivity could help to 

explain the difference in costs between the Offshore Patrol Cutter 

program and the National Security Cutter program and officials stated 

that the latter program is being built to about 90 percent military 

standards. 

 

25The International Maritime Organization requires a ship’s design and construction to be 

approved by ship classification societies, including the American Bureau of Shipping, 

which establishes and maintains standards for commercial and naval ships. These 

societies also class vessels, which is a determination that a ship meets the appropriate set 

of guidelines. Classed commercial ships are designed to conform with the rules for 

building these types of vessels while classed naval combat ships are designed to conform 

with naval vessel rules. 
 

Page 35 GAO-12-918 Coast Guard Major Acquisitions

Coast Guard program officials generally agreed that these three variables 

are important to the cost of the Offshore Patrol Cutter and are key 

reasons why the Coast Guard expects one Offshore Patrol Cutter to cost 

less than half of one National Security Cutter. However, these officials 

recognized that the cost estimate for the Offshore Patrol Cutter is still 

uncertain since the cutter has yet to be designed—thus, the National 

Security Cutter’s actual costs are more reliable. Coast Guard program 

officials also added that the cost estimate for the Offshore Patrol Cutter is 

optimistic in that it assumes that the cutter will be built in accordance with 

the current acquisition strategy and planned schedule. They noted that 

any delays, design issues, or contract oversight problems—all of which 

were experienced during the purchase of the National Security Cutter—

could increase the eventual price of the Offshore Patrol Cutter. 

According to the April 2012 acquisition decision memorandum, which 

documents DHS’s approval for the Coast Guard to move forward and 

award design contracts for the Offshore Patrol Cutter, DHS Office of 

Policy and the Office of the Chief Financial Officer raised concerns about 

the potential for cost growth and this program crowding out other Coast 

Guard programs in future austere budget years. In response to concerns 

about affordability, DHS is requiring the Coast Guard to return for a 

special program review—one that is not required by acquisition 

guidance—before it awards a production contract, which is currently 

planned for fiscal year 2016. DHS Program Accountability and Risk 

Management officials told us that a new life cycle cost estimate is not

required if the Coast Guard can demonstrate during this meeting that the 

acquisition cost and schedule in the approved acquisition program 

baseline are still valid. However, if there is a significant difference from 

the currently approved life cycle cost estimate, DHS would direct the 

Coast Guard at that time to update the life cycle cost estimate. 

The Coast Guard has established an acquisition governance framework 

that includes the following teams: Executive Oversight Council, Systems 

Integration Team, and Resource Councils. The Coast Guard is currently 

working on an update to its Major Systems Acquisition Manual that will 

articulate expectations for how these groups will interact. We found that 

the highest level team, the Executive Oversight Council—a group of 

admirals and senior executives—has actively conducted oversight 

meetings to govern the acquisition process for major acquisitions in the 

Coast Guard’s portfolio. However, these meetings were focused on 

individual programs and the Council has not acted upon some information 

presented to it that could help to manage the portfolio as a whole. Coast 

Cross-Directorate 

Acquisition Oversight 

Groups Have 

Potential to 

Strengthen 

Management of 

Portfolio
 

Page 36 GAO-12-918 Coast Guard Major Acquisitions

Guard officials told us that portfolio affordability decisions are handled

through the budget process. However, this approach results in year to 

year adjustments to individual programs that do not optimize the longterm value of the portfolio.

The Coast Guard has established a governance framework to provide 

leadership for the Coast Guard’s acquisition enterprise that includes the 

following teams: the Executive Oversight Council, Systems Integration 

Team, and Resource Councils. All of these teams have cross-directorate 

representation including members from the acquisitions, resources, and 

requirements directorates. These members are generally senior leaders 

including admirals, captains, and civilian executives. Each group has a 

charter to identify their purpose and scope of responsibilities. Table 4

provides an overview of each team according to their charters.

Coast Guard Has 

Established an Acquisition 

Governance Framework 

That Is Still Evolving 
 

Page 37 GAO-12-918 Coast Guard Major Acquisitions

Table 4: Overview of the Executive Oversight Council, Systems Integration Team, and Resource Councils

Team Directorate Chair Established Responsibilities 

Executive Oversight Council Acquisitions Directorate November 2010 Charter: Admiral/Senior Executive Service-level 

forum established to monitor major risks, address 

emergent issues, review acquisition phase exit 

criteria, and provide direction to cross-directorate 

teams, as required to support successful execution 

of major and non-major acquisitions.

Officials told us that members of the Executive 

Oversight Council are also members of the 

Investment Board which is responsible for building 

the Coast Guard’s budget.

Systems Integration Team Capabilities Directorate December 2011 Charter: Captain/GS-15 team established to 

support the Executive Oversight Council and 

Resource Councils to perform systems integration 

functions by providing a forum to discuss and 

resolve project issues that directly or indirectly 

impact cross-directorate stakeholders.

Resource Councils

• Aviation Resource 

Council

a

• Cutter Resource Council

• C4ISR Resource 

Council

• Capabilities Directorate

• Capabilities Directorate

• Capabilities and 

Intelligence Directorates

• February 

2006

• September 

2010

b

• July 2010

Charter: Teams of senior officers established to 

oversee aviation/cutter/C4ISR challenges that 

affect more than one directorate. 

Officials told us that acquisitions are one facet in 

the scope of their responsibilities including 

decommissioning, maintenance, and budget 

execution.

Source: GAO presentation of Coast Guard data and interviews.

a

There are two other Resource Councils—Boat and Shore Forces—which have responsibilities not 

related to major acquisitions.

b

Coast Guard officials told us that the Aviation Resource Council was the first resource council and 

formed several years ago to help ensure that decisions made by Integrated Coast Guard Solutions 

under the Deepwater program reflected aviation specific sponsor needs. The Coast Guard approved 

an updated charter for this group in September 2010. 

The Coast Guard is currently updating its Major Systems Acquisition 

Manual to document how these teams will interact within this established 

framework. The previous version of the manual highlights the Executive 

Oversight Council as a review board that supports a knowledge-based 

acquisition management approach, but does not include any references 

to the Systems Integration Team or the Resource Councils. Based on 

draft language of the update to the manual, the Systems Integration 

Team and Resource Councils will serve as senior level advisors to the 

Executive Oversight Council. Each of the Resource Councils will report

directly to the Executive Oversight Council for issues within their own 

domain—cutter, aviation, or C4ISR—and report to the Systems 

Integration Team for issues that cross domains. The Systems Integration 

Team will be responsible for coordinating the resolution of these issues 
 

Page 38 GAO-12-918 Coast Guard Major Acquisitions

raised by the Resource Councils as well as providing coordinated 

recommendations to the Executive Oversight Council. In addition, the 

Systems Integration Team will meet quarterly to review Resource Council 

meeting minutes to help ensure issues that affect more than one council 

are being appropriately recognized. 

Although Coast Guard officials stated the way in which teams are 

expected to interact with one another is still formalizing, we found that the 

following examples illustrate that the Executive Oversight Council 

oversees the acquisition governance framework and is well-positioned to 

delegate tasks to the other teams or pull information from them as 

needed to assist in the management of acquisitions or solve problems 

related to acquisitions: 

• At a June 2011 Executive Oversight Council meeting to discuss the 

Patrol Boat and Medium Endurance Cutter Sustainment programs, 

the Council tasked the Cutter Resource Council to provide 

recommendations for unobligated Patrol Boat project funds.

• At an August 2011 Executive Oversight Council meeting to discuss 

the Coast Guard’s acceptance of the third National Security Cutter, 

the issue of the operational usefulness of the ship’s side door was 

raised. Officials suggested that the Cutter Resource Council may 

have a role in this discussion from an engineering perspective.

• According to officials, in Fall 2011, the Executive Oversight Council 

tasked the Systems Integration Team to assist in producing a strategy 

for sharing unclassified aviation imagery collected on classified 

systems so that it can be available for use throughout the Coast 

Guard.26

• A February 2012 memo documents Executive Oversight Council 

approval of the C4ISR Resource Council’s recommendations to clarify 

requirements in the Offshore Patrol Cutter’s requirements document. 

This is a cross-domain issue that was initially raised by the 

Aviation program office and involved the C4ISR and aviation 

stakeholders, among others. Coast Guard officials told us that a 

recommendation is currently in draft form. 

 

26In July 2011 we reported that operators told us that sharing data gathered by the 

Maritime Patrol Aircraft during the Deepwater Horizon spill was difficult because all 

information gathered by the aircraft was maintained on a classified system. See 

GAO-11-743. 
 

Page 39 GAO-12-918 Coast Guard Major Acquisitions

The Executive Oversight Council has been active in meeting with 

individual programs to discuss the current status of the acquisition or 

particular issues, review key program documents, and help prepare 

program managers in advance of briefing more senior Coast Guard and 

DHS officials. According to Coast Guard documentation we reviewed, in 

2010 and 2011, the Executive Oversight Council met 38 times with 

individual program managers to discuss major acquisitions.27

• requesting follow-up information or another meeting,

The Council 

conducted its meetings on a program by program basis and did not meet 

to discuss issues across the portfolio. The results of these meetings 

generally led to the council members taking one of four actions: 

• elevating issues and/or making a recommendation to the Deputy 

Commandant for Mission Support, Deputy Commandant for 

Operations, and/or Vice Commandant, 

• making an acquisition management decision, or

• determining no further action is necessary as the meeting was 

primarily for informational purposes.

Table 5 provides some examples of these meeting results:

 

27In addition, the Executive Oversight Council met 23 times to discuss issues outside the 

scope of major acquisition programs, including non-major acquisitions and administrative 

acquisitions topics. 

Executive Oversight 

Council Is Conducting 

Program Level Oversight, 

but Opportunities Exist to 

Strengthen Its Review of 

the Acquisitions Portfolio
 

Page 40 GAO-12-918 Coast Guard Major Acquisitions

Table 5: Key Examples of Executive Oversight Council Actions in 2010 and 2011

Executive Oversight 

Council meeting outcomes Acquisition program reviewed Targeted outcome Coast Guard action 

Requested follow-up 

information or meeting Reviewed polar business case analysis 

throughout multiple meetings and 

requested follow-on discussions

Polar Icebreaker To be informed about the 

progress of the business case 

analysis and be prepared to brief 

more senior leadership

As of the end of 2011, the 

Coast Guard continued to 

gather additional 

information

Elevated issues and/or made 

formal recommendation to 

more senior officials (Vice 

and Deputy Commandants) 

or DHS

Made recommendation to Vice 

Commandant: Remove Aircraft Ship 

Integrated Secure and Traverse from 

the National Security Cutter program

National Security Cutter To replace a system that did not 

work

Removed Aircraft Ship 

Integrated Secure and 

Traverse on current and 

future National Security 

Cutters

Made recommendation to Vice 

Commandant: revise acquisition 

strategy to consist of a hybrid mix of 11 

HC-130Hs and 11 HC-130Js into a 

combined acquisition program baseline

HC 130 H/J To streamline program 

management and integrate 

acquisition time lines

Submitted combined 

baseline to DHS 

Made an acquisition 

management decision Tasking to Program: submit Breach 

Notification Memo, schedule breach 

due to lead ship delivery delay

Fast Response Cutter To follow breach notification 

process and document/provide 

breach remediation plan and new 

baseline

Notified DHS of schedule 

breach in December 2011

Based on program status review, 

Executive Oversight Council moved to 

issue a decision memorandum to 

inform the Deputy Commandant of 

Mission Support on the reclassifying of 

CG-LIMS to a non-major acquisition

CG-LIMS To align expected project cost 

with appropriate acquisition 

category

Submitted request to DHS

Met for informational 

purposes without actions 

documented Executive Oversight Council received a 

briefing on the fleet mix analysis phase 

2 to come to agreement on the 

pertinent information presented and the 

evolution of the analysis since fleet mix 

phase 1, but did not pursue further 

action on the study

Fleet Mix Analysis 2 To be prepared to inform and 

brief Coast Guard senior 

leadership on relevant issues

No action

Source: GAO presentation of Coast Guard data.

While the Executive Oversight Council is positioned to have direct access 

to complete information on the progress of all acquisition programs as it 

conducts acquisitions oversight with support from the Systems Integration 

Team and Resource Councils, it has not acted on some information 

presented that could help the Coast Guard manage its portfolio as whole. 

Our best practices work has found that successful commercial companies 

assess product investments collectively from an enterprise level, rather 
 

Page 41 GAO-12-918 Coast Guard Major Acquisitions

than as independent and unrelated initiatives, and prioritize investments 

by integrating the requirements, acquisition, and budget processes.28 This 

approach empowers leadership to make decisions about the best way to 

invest resources and holds managers accountable for outcomes. 

Organizations should use an integrated approach to prioritize needs and 

allocate resources in accordance with strategic goals, so they can avoid 

pursuing more products than they can afford and optimize return on 

investment. Appendix II provides additional details about four key portfolio 

management practices including: clearly define and empower leadership; 

establish standard assessment criteria, and demonstrate comprehensive 

knowledge of the portfolio; prioritize investments by integrating the 

requirements, acquisition, and budget processes; and continually make 

go/no-go decision to rebalance the portfolio. These best practices 

suggest that one potential positive of the Deepwater program as 

envisioned was the prospect of making trades within the portfolio as 

opposed to trying to manage and optimize each program individually. As 

we reported in April 2011, Coast Guard officials told us that as it began 

assuming the system integrator function from the Deepwater contractor in 

2007, it believed it needed a forum to make trade-offs and other program 

decisions especially in a constrained budget environment and established 

the Executive Oversight Council.29

• At the request of the Executive Oversight Council, in September 2010, 

the Systems Integration Team briefed the Council on strategic 

courses of action to revise acquisition program baselines under a 

budget constraint, but officials from the Systems Integration Team 

stated that the briefing led to no decisions or further taskings.

We did identify instances in which the 

Executive Oversight Council was presented with opportunities to manage 

its acquisitions as a portfolio, but tasks were not completed or no action 

was taken: 

30

 

28

Coast 

Guard officials stated that the briefing was also given to the Deputy 

Commandant for Mission Support and the Deputy Commandant for 

Operations.

GAO-07-388. 

29GAO, Coast Guard: Opportunities Exist to Further Improve Acquisition Management 

Capabilities, GAO-11-480. (Washington, D.C.: April 13, 2011).

30While the Systems Integration Team’s charter was not signed until December 2011, 

officials told us the team was called upon to complete this task in 2010. 
 

Page 42 GAO-12-918 Coast Guard Major Acquisitions

• The Acquisition Directorate’s October 2010 Blueprint for Continuous 

Improvement included action items for the Executive Oversight 

Council to establish, document and approve project priority review 

time lines as well as publish project priority guidance to support a 

larger goal of developing and implementing effective and efficient 

decisonmaking to maximize results and manage risk within resource 

constraints. The planned completion dates for these activities was the 

end of fiscal year 2011, but these action items have not yet been 

completed. Officials responsible for developing the Blueprint

explained that the action items and associated completion dates may 

have been optimistic given the amount of cross-directorate 

collaboration required.

• In May 2011 the Executive Oversight Council received a briefing on 

Fleet Mix Analysis Phase 2, but no decisions or recommendations 

based on this analysis were made. Coast Guard officials stated that 

the briefing was also given to the Deputy Commandant for Mission 

Support and the Deputy Commandant for Operations. A senior Coast 

Guard official who is the point of contact for the Council stated that the 

council’s responsibility was to be informed of the matter but does not 

have a decision authority. We also found no discussion of DHS’s 

Cutter Study—which includes scenarios that could affect the Coast 

Guard’s surface fleet—through our review of meeting minutes from 

2010 and 2011. 

While the Executive Oversight Council has had opportunities to discuss 

affordability of the entire portfolio and make informed trade-off decisions, 

Coast Guard officials told us that all of these decisions are handled 

through the annual budget process, which also takes into account 

budgeting for operating expenses. However, the Coast Guard’s current 

approach of relying on the budget process to manage the affordability of 

its portfolio has proven ineffective. The preparation of the annual budget 

request involves immediate trade-offs, but does not provide the best 

environment to make decisions to develop a balanced, long-term 

portfolio. As we have previously reported, given that the Coast Guard is 

managing more programs than its budget can support, and it does not 

review its portfolio outside of the annual budget process, the Coast Guard 

has relied on budget decisions each year to drive the acquisitions 

process.31

 

31

As a result, program managers react to the budget request 

each year as opposed to having a reliable funding profile consistent with

GAO-11-743. 
 

Page 43 GAO-12-918 Coast Guard Major Acquisitions

their approved baselines by which to execute their programs. One of the 

responsibilities in the Executive Oversight Council’s charter is to 

synchronize projects with planning, programming, budgeting, and 

execution milestones to align them for successful completion of key 

milestones, but Coast Guard officials acknowledged that this alignment 

has not yet occurred. 

The Coast Guard has made progress in improving its acquisition 

management capabilities. Yet the Coast Guard continues to manage a 

portfolio of acquisitions that lacks up-to-date, DHS-approved baselines to 

reflect current costs and schedules and that will likely cost significantly 

more than originally planned. While its portfolio requires more funding on 

an annual basis than its expected budget can support, the Coast Guard 

has not yet fully implemented our recommendation from July 2011 to 

adopt action items to promote stability in the capital investment plan, 

ensure program baselines are aligned with the capital investment plan, 

and establish project priorities as a Coast Guard-wide goal. In the 

absence of up-to-date program baselines, the Coast Guard makes 

decisions about which programs to fund and which programs not to fund 

as part of its annual budget process as opposed to having a stable and 

meaningful long-term capital investment plan based on identified needs.

This puts Congress and the taxpayer in the position of having to commit 

resources to individual programs without knowing whether they are 

affordable, or achievable, within the context of the overall portfolio.

Furthermore, unplanned demands for additional funds are likely as the 

Coast Guard begins to start new acquisition programs. If the Coast Guard 

continues to make expedient decisions in the near-term environment of 

budget decisions without an effective means of portfolio management, 

there is no way to help ensure that near-term budget decisions are 

optimized and in the best interest of the Coast Guard’s acquisition 

portfolio in the long term.

The Coast Guard has made improvements in its process to develop 

requirements for the Offshore Patrol Cutter in response to concerns about 

affordability, but has not reassessed the mix of assets in its portfolio for 

the same purpose. The Coast Guard may not be on track to acquire many 

of the capabilities identified as necessary after September 11, 2001, while 

stating that those mission needs are still guiding the ongoing acquisitions. 

It is unclear, given the Coast Guard’s decisions not to pursue some of 

these capabilities, whether it will obtain a balanced mix of assets and the 

presence-based operating concept called for in its 2005 Mission Need 

Statement. Furthermore, the Coast Guard remains committed to 

Conclusions 
 

Page 44 GAO-12-918 Coast Guard Major Acquisitions

purchasing its major cutter program of record even though the 

requirements of the two cutters have similarities, yet have very different 

expected costs. It is too early to know what the Offshore Patrol Cutter will 

eventually cost, but the current estimate includes some assumptions that 

may help explain the differences in the estimated cost of the Offshore 

Patrol Cutter when compared to the National Security Cutter. 

The Coast Guard’s initiative to establish an acquisition governance 

board—the Executive Oversight Council—provides an opportunity for it to 

strengthen portfolio management practices that we found contribute to the 

success of commercial companies. For example, given its crossdirectorate representation and direct access to complete information on 

all acquisition programs—with support from the Systems Integration 

Team and Resource Councils—the Council has the potential to 

implement key portfolio management practices such as prioritizing 

investments by integrating the requirements, acquisition, and budget 

processes. But the Council has not engaged in these portfolio-wide 

reviews, and instead, the Coast Guard continues to manage its 

acquisitions through the budget process. Until the Executive Oversight 

Council begins to use the individual program information it receives to 

manage its portfolio of acquisitions—including informing strategic tradeoff decisions—the Coast Guard will continue to operate in an environment 

where its needs are not balanced with available resources. 

• To help the Coast Guard create stability in the acquisition process and 

provide decision makers, including DHS, Office of Management and 

Budget, and Congress, with current information to make decisions 

about budgets, we recommend that the Commandant of the Coast 

Guard conduct a comprehensive portfolio review to develop revised 

baselines that reflect acquisition priorities as well as realistic funding 

scenarios.

• To strengthen the Coast Guard’s acquisition governance framework

and better prepare the Coast Guard in a constrained fiscal 

environment, we recommend that the Commandant of the Coast 

Guard identify the Executive Oversight Council as the governing body 

to oversee the Coast Guard’s acquisition enterprise with a portfolio 

management approach. The Executive Oversight Council should 

supplement individual program reviews with portfolio-wide reviews to 

make performance and affordability trade-off decisions that will help 

ensure the Coast Guard is acquiring a balanced portfolio to meet 

mission needs, given the Coast Guard is not currently on a path to 

Recommendations for 

Executive Action 
 

Page 45 GAO-12-918 Coast Guard Major Acquisitions

achieve several capabilities identified in the 2005 Mission Need 

Statement. 

We provided a draft of this report to DHS and the Coast Guard for 

comment. In its written comments, DHS concurred with both 

recommendations. The written comments are reprinted in appendix III.

With respect to the first recommendation, that the Coast Guard conduct a 

comprehensive portfolio review to develop revised baselines that reflect 

acquisition priorities as well as realistic funding scenarios, DHS agreed 

and stated the Coast Guard will conduct a portfolio-wide review following 

submittal of the next President’s budget request. Furthermore, DHS 

stated that the Coast Guard is committed to ensuring acquisition plans 

are executable in the current fiscal climate and noted that the Coast 

Guard is currently revising its acquisition program baselines and several 

new baselines are in the approval process. However, DHS added that 

funding has varied considerably over the last several years making it 

extraordinarily difficult to predict future budget authority with precision 

and, as a result, it is inevitable that trade-off decisions will need to be 

made on an annual basis. We understand that the budget process is a 

dynamic environment in which some trade-off decisions may have to be 

made on an annual basis, but we believe that the Coast Guard should 

develop revised baselines that reflect acquisition priorities as well as 

realistic funding scenarios to minimize the magnitude of trade-offs needed 

each year resulting from the current mismatch between resources needed 

to support all approved program baselines and expected funding levels. 

Without such long-term priorities, program managers will likely always be 

at a disadvantage of having to continuously update baselines to react to 

the Coast Guard’s budget planning as opposed to having a stable budget 

profile reflecting the baselines.

In concurring with our second recommendation, DHS stated that the 

Coast Guard will identify the Executive Oversight Council as the 

governing body to oversee the Coast Guard’s acquisition enterprise with 

a portfolio management approach.

Agency Comments 

and Our Evaluation
 

Page 46 GAO-12-918 Coast Guard Major Acquisitions

The Coast Guard also provided technical comments that were 

incorporated, as appropriate.

We are sending copies of this report to interested congressional 

committees, the Secretary of Homeland Security, and the Commandant 

of the Coast Guard. In addition, the report is available at no charge on the 

GAO website at http://www.gao.gov. 

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

me at (202) 512-4841 or huttonj@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix IV. 

Sincerely yours,

John P. Hutton

Director

Acquisition and Sourcing Management
Appendix I: Scope and Methodology

Page 47 GAO-12-918 Coast Guard Major Acquisitions

In conducting this review, we relied in part on the information and analysis 

in our past work, including reports completed in 2010, 2011, and 2012.1

To assess the planned cost and schedule of the Coast Guard’s major 

acquisitions portfolio, we reviewed each asset’s original acquisition 

program baseline and revised baseline, if an approved, revised baseline 

was available. To determine whether these baselines reflected the current 

status of the program, we reviewed breach notifications, the fiscal year 

2013 President’s Budget request, and interviewed officials from program 

offices. We also reviewed the Coast Guard’s Major Systems Acquisition 

Manual to identify when programs are required to update baselines. In 

comparing original costs to revised baseline costs, if a revised baseline 

presents both threshold costs and objective costs, threshold costs were 

used. For those programs that comprised the former Deepwater program 

this methodology allows traceability to the original $24.2 billion Deepwater 

baseline while also showing how much programs could now cost based 

upon revised baselines. Furthermore, some programs have reported a 

cost breach to the revised baseline and costs are expected to increase 

beyond the threshold values. In making this comparison for those 

programs with no planned funding beyond fiscal year 2014, the estimated 

total program cost equals dollars appropriated to date plus planned 

funding in the fiscal years 2013-2017 capital investment plan. Further, we 

analyzed the Coast Guard’s fiscal years 2013-2017 expanded capital 

investment plan to identify the planned annual funding levels for each 

major acquisition program. We then compared those planned funding 

levels to the annual funding needs identified in the program’s life cycle 

cost estimate to determine whether there was a match. If an approved life 

cycle cost estimate was not available, we used the annual funding needs 

identified by the Coast Guard in the expanded capital investment plan. 

We also interviewed Coast Guard officials from the acquisitions 

directorate and resources directorate to discuss future funding plans as 

well as to discuss the Coast Guard’s plans for the National Security 

Cutter program to determine how those plans could affect other 

programs. We also interviewed officials from the Department of 

Homeland Security (DHS) Program Accountability and Risk Management 

 

Additional scope and methodology information on each objective of this 

report follows.

 

1

GAO-10-790, GAO-11-743, and GAO-12-751. 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology

Page 48 GAO-12-918 Coast Guard Major Acquisitions

and DHS Office of Policy to discuss their oversight responsibilities for 

Coast Guard programs.

To assess the steps the Coast Guard has recently taken to develop an 

affordable portfolio through its requirements process, we obtained and 

analyzed Fleet Mix Analysis Phase One, Fleet Mix Analysis Phase Two, 

and the DHS Cutter Study. We also relied on our past work that reviewed 

Coast Guard appropriations from fiscal years 2008 through 2012 and the 

President’s budget request for fiscal year 2013 to analyze how fiscal 

assumptions in the studies compared with past appropriations. Further, 

we examined the 2005 Mission Need Statement to determine the extent 

to which the capabilities being acquired matched the needs set forth in 

this plan. In doing so, we traced 11 system performance capabilities 

identified in the 2005 Mission Need Statement through various program 

documents, including the 2007 Deepwater acquisition program baseline, 

operational requirements documents, and testing documents to identify 

which capabilities the Coast Guard is currently planning to acquire. In 

addition to reviewing fleetwide requirements, we also reviewed the 

requirements development process for the National Security Cutter and 

the Offshore Patrol Cutter. We focused on these two assets as they are 

the two largest cost drivers in the Coast Guard’s major acquisition 

portfolio. To examine the Offshore Patrol Cutter’s requirements 

development process, we reviewed the Coast Guard’s Major Systems 

Acquisition Manual and Requirements Guidance and interviewed officials 

in the capabilities directorate to discuss the process and to identify key 

documents and studies that guided this process. We also compared the 

National Security Cutter’s and Offshore Patrol Cutter’s missions, 

requirements, and costs to determine similarities and differences. We 

used Coast Guard budget documentation to determine the cost of the fifth 

National Security Cutter and then used the Offshore Patrol Cutter’s life 

cycle cost estimate which identified the average cost of the fourth and fifth 

Offshore Patrol Cutters. We discussed the comparison between the 

National Security Cutter and Offshore Patrol Cutter with DHS and Coast 

Guard officials. 

To assess the extent to which Coast Guard is using cross-directorate 

teams to provide oversight and inform acquisition decisions, we 

interviewed officials from the acquisition and resource directorates to 

identify what teams the Coast Guard has established as part of an 

acquisition governance framework. We also reviewed the charters for 

each of those teams. We then collected and analyzed meeting minutes 

and briefing presentations for the Executive Oversight Council and 

Resource Councils from calendar years 2010-2011, but we did not do the 
Appendix I: Scope and Methodology

Page 49 GAO-12-918 Coast Guard Major Acquisitions

same for the Systems Integration Team because it was just forming 

during this time period. We also reviewed the acquisition directorate’s 

Blueprint to identify what action items had been tasked to these teams. 

We interviewed senior representatives from the Executive Oversight 

Council, Systems Integration Team, and chairs of the Aviation, Cutter and 

C4ISR Resource Councils to understand their specific roles and 

responsibilities for managing acquisition programs and informing 

recapitalization decisions. We also interviewed stakeholders from the 

acquisitions and resources directorates to gather their understanding of 

the roles of the Executive Oversight Council, Systems Integration Team 

and Resource Councils, and the nature and extent of their interaction with 

these groups. Furthermore, we referred to previous GAO work on best 

practices for portfolio management to identify the extent to which the 

Coast Guard’s framework implements this management approach. 

To support our review, we requested information and documents 

pertaining to the current cost estimates and schedules for each asset in 

the Coast Guard’s major acquisitions portfolio, a copy of the DHSdirected briefing in which Coast Guard was to develop a plan for showing 

program tradeoffs, and several sets of Executive Oversight Council 

meeting minutes. The Coast Guard did not provide us current cost 

estimates and schedules, the complete DHS-directed briefing, or all sets 

of meeting minutes because officials stated these documents included 

budget negotiation information. 

We conducted this performance audit from November 2011 to September 

2012 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.
Appendix II: Key Portfolio Management 

Practices

Page 50 GAO-12-918 Coast Guard Major Acquisitions

The following list identifies several key practices that can improve 

outcomes when managing a portfolio of multiple programs. 

• Those responsible for product investment decisions and oversight 

should be clearly identified and held accountable for outcomes. 

• Portfolio managers should be empowered to make decisions about 

the best way to invest resources. 

• Portfolio managers should be supported with cross-functional teams 

composed of representatives from key functional areas. 

• Specific criteria should be used to ensure transparency and 

comparability across alternatives. 

• Investments should be ranked and selected using a disciplined 

process to assess the costs, benefits, and risks of alternative 

products. 

• Knowledge should encompass the entire portfolio, including needs, 

gaps, and how to best meet the gaps. 

• Requirements, acquisition, and budget processes should be 

connected to promote stability and accountability. 

• Organizations should use an integrated approach to prioritize needs 

and allocate resources, so they can avoid pursuing more products 

than they can afford, and optimize return on investment. 

• Resource allocation across the portfolio should align with strategic 

goals/objectives, and investment review policy should use long-range 

planning. 

• Program requirements should be reviewed annually to make 

recommendations on proposed changes/descoping options. 

• As potential new products are identified, portfolios should be 

rebalanced based on those that add the most value. 

• If project estimates breach established thresholds, the product should 

be immediately reassessed within the context of the portfolio to 

determine whether it is still relevant and affordable. 

• Agencies should use information gathered from post-implementation 

reviews of investments, as well as information learned from other 

organizations, to fine-tune the investment process and the portfolios 

to shape strategic outcomes. 

Appendix II: Key Portfolio Management 

Practices

Clearly define and 

empower leadership

Establish standard 

assessment criteria, and 

demonstrate 

comprehensive knowledge 

of the portfolio

Prioritize investments by 

integrating the 

requirements, acquisition, 

and budget processes 

Continually make go/no-go 

decisions to rebalance the 

portfolio 
Appendix II: Key Portfolio Management 

Practices

Page 51 GAO-12-918 Coast Guard Major Acquisitions

• Defense Acquisitions: Assessments of Selected Weapon 

Programs, GAO-10-388SP (Washington, D.C.: March 30, 2010)

• Department of Homeland Security: Billions Invested in Major 

Programs Lack Appropriate Oversight, GAO-09-29 (Washington, 

D.C.: November 18, 2008)

• Best Practices: An Integrated Portfolio Management Approach to 

Weapon System Investments Could Improve DOD’s Acquisition 

Outcomes, GAO-07-388 (Washington, D.C.: March 30, 2007)

• Information Technology Investment Management: A Framework 

for Assessing and Improving Process Maturity, GAO-04-394G 

(Washington, D.C.: March 2004)

• Executive Guide: Leading Practices in Capital Decision-Making, 

GAO/AIMD-99-32 (Washington, D.C.: December 1998)

Previous Reports Establishing 

Key Acquisition Management 

Practices
Appendix III: Comments from the Department 

of Homeland Security and Coast Guard

Page 52 GAO-12-918 Coast Guard Major Acquisitions

Appendix III: Comments from the 

Department of Homeland Security and Coast 

Guard
Appendix III: Comments from the Department 

of Homeland Security and Coast Guard

Page 53 GAO-12-918 Coast Guard Major Acquisitions
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 54 GAO-12-918 Coast Guard Major Acquisitions

John P. Hutton, (202) 512-4841 or huttonj@gao.gov. 

In addition to the contact named above, individuals making key 

contributions to this report include Katherine Trimble, Assistant Director; 

Molly Traci; Jose Cardenas; Mya Dinh; Laurier Fish; Laura Greifner; 

Kristine Hassinger; and Andrea Yohe.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related GAO Products

Page 55 GAO-12-918 Coast Guard Major Acquisitions

Coast Guard: Legacy Vessels’ Declining Conditions Reinforce Need for 

More Realistic Operational Targets. GAO-12-741. Washington, D.C.: July 

31, 2012.

Observations on the Coast Guard’s and the Department of Homeland 

Security’s Fleet Studies. GAO-12-751R. Washington, D.C.: May 31, 2012. 

Coast Guard: Observations on Arctic Requirements, Icebreakers, and 

Coordination with Stakeholders. GAO-12-254T. Washington, D.C.: 

December 1, 2011. 

Coast Guard: Action Needed as Approved Deepwater Program Remains 

Unachievable. GAO-12-101T. Washington, D.C.: October 4, 2011. 

Coast Guard: Action Needed as Approved Deepwater Program Remains 

Unachievable. GAO-11-743. Washington, D.C.: July 28, 2011. 

Coast Guard: Observations on Acquisition Management and Efforts to 

Reassess the Deepwater Program. GAO-11-535T. Washington, D.C.: 

April 13, 2011. 

Coast Guard: Opportunities Exist to Further Improve Acquisition 

Management Capabilities. GAO-11-480. Washington, D.C.: April 13, 

2011. 

Coast Guard: Deepwater Requirements, Quantities, and Cost Require 

Revalidation to Reflect Knowledge Gained. GAO-10-790. Washington, 

D.C.: July 27, 2010. 

Department of Homeland Security: Assessments of Selected Complex 

Acquisitions. GAO-10-588SP. Washington, D.C.: June 30, 2010. 

Coast Guard: Observations on the Requested Fiscal Year 2011 Budget, 

Past Performance, and Current Challenges. GAO-10-411T. Washington, 

D.C.: February 25, 2010. 

Coast Guard: Better Logistics Planning Needed to Aid Operational 

Decisions Related to the Deployment of the National Security Cutter and 

Its Support Assets. GAO-09-497. Washington, D.C.: July 17, 2009. 

Coast Guard: As Deepwater Systems Integrator, Coast Guard Is 

Reassessing Costs and Capabilities but Lags in Applying Its Disciplined 

Acquisition Approach. GAO-09-682. Washington, D.C.: July 14, 2009. 

Related GAO Products
Related GAO Products

Page 56 GAO-12-918 Coast Guard Major Acquisitions

Coast Guard: Observations on Changes to Management and Oversight of 

the Deepwater Program. GAO-09-462T. Washington, D.C.: March 24, 

2009.

Coast Guard: Change in Course Improves Deepwater Management and 

Oversight, but Outcome Still Uncertain. GAO-08-745. Washington, D.C.: 

June 24, 2008. 

Coast Guard: Strategies for Mitigating the Loss of Patrol Boats Are 

Achieving Results in the Near Term, but They Come at a Cost and 

Longer Term Sustainability Is Unknown. GAO-08-660. Washington, DC: 

Jun 23, 2008. 

Status of Selected Assets of the Coast Guard’s Deepwater Program. 

GAO-08-270R. Washington, D.C.: March 11, 2008.

(121020)
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