COAST GUARD

Mission Performance 

Challenged by the 

Declining Condition and 

Rising Costs of its Legacy 

Vessel Fleet

Statement of Stephen L. Caldwell, Director

Homeland Security and Justice Issues

Testimony 

Before the Subcommittee on Coast Guard 

and Maritime Transportation, Committee 

on Transportation and Infrastructure, 

House of Representatives

For Release on Delivery 

Expected at 2:00 p.m. EST

September 20, 2012

GAO-12-934T

United States Government Accountability Office

GAO
 

Page 1 GAO-12-934T 

Chairman LoBiondo, Ranking Member Larsen, and Members of the 

Subcommittee: 

Thank you for the opportunity to discuss the condition of the Coast 

Guard’s legacy vessel fleet, and challenges the Coast Guard faces in 

sustaining these vessels and meeting mission requirements. The Coast 

Guard, within the Department of Homeland Security, is the principal 

federal agency responsible for maritime safety, security, and 

environmental stewardship. The legacy vessel fleet is critical for 

executing Coast Guard missions, which include defense operations; 

search and rescue; and securing ports, waterways, and coastal areas. My 

comments will focus on the legacy 378-foot high endurance cutters, 270-

foot and 210-foot medium endurance cutters, and 110-foot patrol boats, 

and are based on findings from the report we released in July 2012.1

The legacy high endurance cutters, medium endurance cutters, and 

patrol boats are either approaching the end of or are past their originallyexpected service lives, with a number of these vessels having entered 

into service in the 1960s and 1970s. Coast Guard officials report that 

these legacy vessels have become increasingly costly to maintain and 

their degraded condition has negatively affected the Coast Guard’s 

operational capacity to meet mission requirements. The Coast Guard is in 

the midst of a long-term recapitalization plan that could cost as much as 

$29 billion to replace legacy vessels, aircraft, and other related systems.2

 

1 Our published report provides additional details on the sizes and capabilities of each of 

these vessels. See GAO, Coast Guard: Legacy Vessels’ Declining Conditions Reinforce 

Need for More Realistic Performance Targets, 

However, since beginning the acquisition program in 1996, the Coast 

Guard has experienced cost, management, and oversight problems that 

have led to considerable delays in the delivery of new vessels—by as 

much as 13 years. In turn, delays in delivery of the replacement vessels 

have created uncertainties regarding how the Coast Guard will sustain its 

legacy vessels and meet mission requirements.

GAO-12-741 (Washington, D.C.: July 31, 

2012).

2 The Coast Guard’s asset recapitalization plan includes projects to build or modernize 

five classes each of vessels and aircraft and undertake procurement of other capabilities, 

such as improved command, control, communications, computers, intelligence, 

surveillance, and reconnaissance. This report focuses only on the legacy vessel fleet. For 

more information on the recapitalization effort as a whole, see GAO, Coast Guard: Action 

Needed As Approved Deepwater Program Remains Unachievable. GAO-11-743

(Washington, D.C.: July 28, 2011).

 
 

Page 2 GAO-12-934T 

My testimony today summarizes the findings of our July 2012 report and 

addresses (1) how the physical condition of the Coast Guard’s legacy 

vessel fleet changed from fiscal years 2005 through 2011, and key 

actions the Coast Guard has taken related to the physical condition of its 

legacy fleet; (2) key annual maintenance expenditure trends for the 

legacy vessel fleet, and the extent to which the Coast Guard’s cost 

estimating process has followed established best practices; and (3) the 

operational capacity of the legacy vessel fleet and the extent to which the 

Coast Guard faces challenges in sustaining the legacy vessel fleet and 

meeting mission requirements.

For our report, we analyzed Coast Guard data from fiscal years 2005 

through 2011 on the legacy vessels’ condition, cost, and operational 

performance. We interviewed relevant Coast Guard headquarters officials 

and conducted site visits to five Coast Guard field locations where legacy 

vessels were based or undergoing maintenance. We also compared the 

documentation that the Coast Guard uses to compute its annual legacy 

vessel maintenance cost estimates against established best practices.3

We reviewed Coast Guard documents and other evidence that outlined 

challenges the Coast Guard faces in sustaining its legacy vessels and 

meeting mission requirements given delays in deploying replacement 

vessels. Further, we evaluated the Coast Guard’s actions against Office 

of Management and Budget guidance.4 We conducted this work in 

accordance with generally accepted government auditing standards. Our 

July 2012 report provides further details on our scope and methodology.5

 

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

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: Mar. 2, 2009).

4 Office of Management and Budget, Program Assessment Rating Tool Guidance Number 

2007-2, (Washington, D.C.: Jan. 29, 2007).

5 GAO-12-741. 
 

Page 3 GAO-12-934T 

From fiscal years 2005 through 2011, the physical condition of the Coast 

Guard’s legacy vessels was generally poor. A primary Coast Guard 

measure of a vessel’s condition—the operational percent of time free of 

major casualties—shows that the high endurance cutters, medium 

endurance cutters, and patrol boats generally remained well below target 

levels from fiscal years 2005 through 2011.6

The Coast Guard has taken two key actions to improve the condition of its 

legacy vessels. First, in 2009, the Coast Guard reorganized its 

maintenance command structure to focus on standardization of practices. 

Under this reorganization, the Coast Guard eliminated its two 

Maintenance and Logistics Commands and replaced them with a 

centralized command structure—the Surface Forces Logistics Center—

whereby a single product line manager oversees the maintenance of 

For example, over this 7-

year period, the operational percent of time free of major casualties 

averaged about 44 percent for the high endurance cutters and about 65 

percent for the medium endurance cutters versus a target of 72 percent; 

and the patrol boats averaged approximately 74 percent versus a target 

of 86 percent. Other evidence, such as our review of vessel condition 

assessments and inspections the Coast Guard conducts of the legacy 

vessels, also shows that the condition of the legacy vessel fleet is 

generally declining. For example, a variety of Coast Guard assessments 

show that legacy vessels’ critical operating systems—such as main diesel 

engines—have been increasingly prone to mission-degrading casualties. 

In addition, Coast Guard senior maintenance officials and vessel crew 

members we interviewed noted increased maintenance challenges 

because of the advanced age of the legacy vessels. In particular, the 

maintenance managers for both the high endurance and medium 

endurance cutters reported that the performance of critical systems on 

these legacy vessel classes has become increasingly unpredictable and 

refurbishments of these vessel classes’ least reliable systems have 

brought limited returns on the investments. Maintenance officials and 

vessel crew members also reported devoting increasing amounts of time 

and resources to troubleshoot and resolve maintenance issues because 

some systems and parts on these legacy vessel classes are obsolete.

 

6 A major casualty is a deficiency in mission essential equipment that causes the major 

degradation or loss of a primary mission.

Legacy Vessel Fleet’s 

Condition Is Poor and 

Generally Declining 

Despite Coast Guard 

Maintenance Efforts
 

Page 4 GAO-12-934T 

similar classes of vessels.7 Coast Guard officials reported that this 

change was made to enable better oversight of the condition of entire 

classes of the vessel fleet, reduce the workload on vessel crews by 

providing centralized support for procurement of replacement parts, and 

implement centralized maintenance plans to address commonly occurring 

casualties.8 Second, Coast Guard officials also reported that the Coast 

Guard was on schedule to complete a 10-year, almost half-billion dollar

set of sustainment projects to refurbish selected patrol boats and upgrade 

medium endurance cutters, known as Mission Effectiveness Projects, 

which are intended to improve legacy vessel operating and cost 

performance. Our July 2012 report provides additional information 

regarding these actions but, as noted in the report, the condition of these 

legacy vessels continues to decline despite these efforts.

 

7 The Coast Guard established the Surface Forces Logistics Center under which Coast 

Guard vessels are grouped into five product lines whose mission support, maintenance 

procedures, priorities, and funds are overseen by a single product line manager. The 

product lines are the (1) Long Range Enforcer (which includes the high endurance cutter 

and the national security cutter); (2) Medium Endurance Cutter; (3) Ice Breaker, Buoy 

Tender and Construction Tender; (4) Patrol Boat (which includes the 110-foot patrol boat

and fast response cutter); and (5) Small Boat.

8 According to Coast Guard officials, vessel crews had previously been responsible for 

managing procurement of replacements for minor casualties. According to these officials, 

doing so could be time consuming for crews. Under the reorganization, the Surface 

Forces Logistics Center manages a greater share of the procurement of replacement 

parts and systems to both reduce the workload of crews and provide better oversight 

across the vessel fleet. Additionally, the new organization is structured to provide a single 

point of accountability (the product line manager) for all maintenance, system upgrades, 

and supply functions for a vessel class. 
 

Page 5 GAO-12-934T 

Expenditures for the two key types of legacy vessel annual depot-level 

maintenance—scheduled and unscheduled maintenance—declined from 

fiscal year 2005 to fiscal year 2007, and then rose from fiscal year 2007 

to fiscal year 2011.9 For example, scheduled maintenance expenditures 

rose from about $43 million in fiscal year 2007 to about $70 million in 

fiscal year 2011. Coast Guard officials attributed the increase in 

scheduled maintenance expenditures to better identifying maintenance 

needs, increasing the prioritization of completing all scheduled 

maintenance, and the receipt of supplemental funding. In contrast, 

unscheduled maintenance expenditures varied by vessel class from fiscal 

years 2005 through 2011, but the high endurance cutter fleet consistently 

incurred the greatest share of unscheduled maintenance expenditures. 

For example, high endurance cutters accounted for 86 percent of all 

unscheduled maintenance expenditures in fiscal year 2011. Coast Guard 

officials attributed the comparatively high unscheduled maintenance 

expenditures to the high endurance cutters’ advanced age and size.10

Further, annual depot-level maintenance expenditures often exceeded 

the Coast Guard’s budgeted funds for depot-level maintenance for the 

legacy vessels—known as Standard Support Levels—from fiscal years 

2005 through 2011. For example, actual depot-level maintenance 

expenditures for the high endurance cutters were about 3.6 times higher 

than Standard Support Levels in fiscal year 2009—$55.5 million 

compared with $15.5 million. The Standard Support Levels have 

generally remained unchanged over decades and do not reflect the rising 

costs to maintain the legacy vessels as they have aged.

 

11

 

9 Depot-level maintenance is vessel maintenance that is beyond the capability of the 

operating units. 

Senior Coast 

Guard vessel maintenance officials cited this funding gap as a challenge, 

10 Coast Guard officials told us that major casualties on three high endurance cutters—the 

CHASE, DALLAS and GALLATIN—contributed disproportionately to these expenditures in 

fiscal years 2010 and 2011. The Coast Guard has since decommissioned the CHASE and

DALLAS on May 13, 2011 and March 30, 2012, respectively. 

11 According to Coast Guard officials, Standard Support Levels are established when a 

vessel class enters service or undergoes a service life extension program. For example, 

the Coast Guard reset the Standard Support Level for the high endurance cutters after 

conducting a service life extension program between 1987 and 1992—the Fleet 

Renovation and Modernization Program—but has not reset the Standard Support Levels 

for the medium endurance cutters or patrol boats. Coast Guard officials indicated that the 

Coast Guard increases Standard Support Levels using non-pay inflation, but it has not 

done so every year. 

Maintenance 

Expenditures Have 

Recently Increased, 

and the Process for

Estimating Costs 

Does Not Fully Meet 

Best Practices
 

Page 6 GAO-12-934T 

noting that supplemental funding had been critical to enable the Coast 

Guard to fund necessary maintenance for the legacy vessel fleet. Our 

July 2012 report provides further information regarding the Coast Guard’s 

annual depot-level maintenance expenditures.

Our review found that the Coast Guard’s process for estimating legacy 

vessel annual depot-level maintenance costs does not fully reflect 

relevant best practices. GAO’s Cost Estimating and Assessment Guide 

states that a high-quality and reliable cost estimate includes certain best 

practice characteristics. We determined that the three characteristics 

relevant to the Coast Guard’s cost estimation process are that the 

process should be (1) well-documented, (2) comprehensive, and (3) 

accurate. Our assessment showed that the Coast Guard’s legacy vessel 

maintenance cost-estimating process partially met the three 

characteristics, as follows:

• Partially comprehensive: The Coast Guard’s process for estimating 

annual legacy vessel depot-level maintenance costs defines the 

program, among other things, but does not document all costinfluencing ground rules and assumptions (e.g., inflation rate).

• Partially well-documented: The Coast Guard’s process for 

estimating annual legacy vessel depot-level maintenance costs 

discusses the technical baseline description, and the data in the 

baseline are consistent with the estimate; however, the Coast Guard 

did not provide documentation that discusses key cost estimating 

factors, such as how the data were normalized or the reliability of the 

data.

• Partially accurate: The Coast Guard’s process for estimating annual 

legacy vessel depot-level maintenance costs contains few, if any, 

minor mathematical mistakes and is regularly updated to reflect 

significant program changes and current status. However, we 

assessed the cost estimate as being not fully accurate because Coast 

Guard officials could not provide us with documentation that would 

allow us to assess the reliability of the historical data used, the 

accuracy of the calculations, the relationship of the data to the 

historical contractor bids, or the final estimates for all maintenance 

costs. 

To address these issues, in our July 2012 report, we recommended that 

the Secretary of Homeland Security direct the Commandant of the Coast 

Guard to ensure that the Coast Guard’s annual depot-level maintenance 
 

Page 7 GAO-12-934T 

cost estimates conform to cost estimating best practices. DHS concurred 

with this recommendation and described actions the Coast Guard has 

taken or plans to take, but these actions may not fully address the intent 

of this recommendation. For example, DHS noted that given current fiscal 

constraints, the Coast Guard will focus on improvements that do not 

require additional resources. While we agree that federal resources are 

limited, aligning the cost estimating process for legacy vessel 

maintenance with best practices would not necessarily require an 

increased investment of resources. Rather, having a well documented 

cost estimating process and using accurate historical data should enable 

the Coast Guard to operate more efficiently.12

The operational capacity of the Coast Guard’s legacy vessel fleet 

declined from fiscal years 2006 through 2011. In particular, while 

performance varied across the legacy vessel classes, two key Coast 

Guard metrics—operational hours and lost cutter days—show that the 

legacy vessels did not meet their operational capacity targets and lost 

considerable planned operational time. For example, the high endurance 

cutters and 210-foot medium endurance cutters did not meet any of their 

operational hour targets from fiscal years 2006 through 2011, and the 

270-foot medium endurance cutters met their targets only in fiscal year 

2008. Specifically, operational hours for the high endurance cutters 

declined by about 32 percent from fiscal year 2008 to 2011,13 and the 

combined operational hours of the 210-foot and 270-foot medium 

endurance cutters declined nearly 21 percent from fiscal year 2007 to 

fiscal year 2011.14

 

12 See the July 2012 report for more information on DHS’s comments and our evaluation 

of them.

In addition, Coast Guard data show the high and 

medium endurance cutters, collectively, averaged about 618 lost cutter 

days per year from fiscal years 2006 through 2011. Further, the number 

of lost cutter days for the high endurance cutters has been nearly 

13 Coast Guard headquarters officials reported that two high endurance cutters were 

decommissioned in fiscal year 2011 for a total reduction of 3,330 operational hours from 

that achieved in fiscal year 2010.

14 Coast Guard officials attributed declines in the medium endurance cutters’ capacity 

primarily to increased unscheduled maintenance. However, the officials also reported that 

because medium endurance cutters were taken out of service on a rotating basis to 

undergo the Mission Effectiveness Project, doing so may have also decreased the 

medium endurance cutters’ operational hours by as much as 9,900 hours annually. 

Declining Condition 

of the Legacy Vessel 

Fleet Makes 

Operational Capacity 

Targets Increasingly 

Unachievable 
 

Page 8 GAO-12-934T 

equivalent to three high endurance cutters being out of service for an 

entire year in each of the last 3 fiscal years. Moreover, lost cutter days for 

both the 210-foot and 270-foot medium endurance cutters combined 

more than doubled, from 122 lost cutter days in fiscal year 2006 to 276 

lost cutter days in fiscal year 2010.15

Coast Guard officials also reported that delays in the delivery of 

replacement vessels will require the Coast Guard to continue to operate 

its legacy vessels beyond their originally-expected service lives and result 

in a widening operational capacity gap.

Coast Guard headquarters officials 

reported that the declining operational capacity of its legacy vessel fleet—

particularly the high and medium endurance cutters—has been a prime 

contributor to the Coast Guard’s declining ability to meet mission 

requirements and intercept threats beyond U.S. territorial waters.

16 As a result, these officials 

expect the Coast Guard’s legacy vessels to become increasingly 

unreliable, have increasingly diminished operational capacity, and be 

increasingly costly and challenging to maintain. In the next few years, the 

operational capacity gap that exists for the high endurance cutter and 

patrol boat fleets is expected to increase because of actions the Coast 

Guard plans to take to better balance the needs of the legacy fleet with 

the acquisition of replacement vessels. For example, by the end of fiscal 

year 2012, the Coast Guard plans to end the “High Tempo/High 

Maintenance” program for eight of its patrol boats.17

 

15 Coast Guard officials attributed the majority of the high endurance cutter lost cutter 

days to propulsion system casualties. For example, the Coast Guard reported that 

catastrophic engine failure rendered the high endurance cutters DALLAS, CHASE, and 

GALLATIN inoperative for 1 year, 1 year and 5 months, and 2 years, respectively, during 

this time period. As stated previously, the Coast Guard has since decommissioned the

CHASE and DALLAS.

Then, in fiscal year 

2013, the Coast Guard plans to decommission the next two most 

degraded and costly high endurance cutters, as well as three patrol 

boats. While these actions will reduce legacy fleet expenditures, they will 

16 The Naval Engineering Manual defines remaining service life as the time period during 

which no major expenditures will be required for hull and structural repairs or 

modernizations, or for machinery or system modernizations based solely on the vessel’s 

capability to meet existing mission requirements. 

17 The “High Tempo/High Maintenance” program was designed to mitigate the loss of 

eight patrol boats to hull failure and six to deployment to Bahrain by doubling the 

operational hour output of eight patrol boats through the use of double crews and 

increased maintenance. Coast Guard officials reported that these eight patrol boats will 

return to normal operations at the end of fiscal year 2012. 
 

Page 9 GAO-12-934T 

also increase the vessel fleet’s operational capacity gap because the 

Coast Guard will not receive sufficient numbers of replacement vessels 

during this time period to make up for the lost capacity.

The ongoing delivery of replacement vessels is expected to help mitigate 

the existing operational capacity gap for the legacy high endurance cutter 

and patrol boat fleets. However, Coast Guard officials reported, and our 

analysis of Coast Guard documents confirms, that the medium endurance 

cutter fleet will be most affected by delays in delivery of replacement 

vessels. The Coast Guard is refurbishing its medium endurance cutters 

through the Mission Effectiveness Project to increase these cutters’ 

reliability and reduce longer-term maintenance costs, and third-party 

assessments show that the performance of those medium endurance 

cutters that have completed the project has improved.18

Coast Guard efforts to sustain its legacy vessel fleet and meet mission 

requirements until the replacement vessels are delivered are also 

challenged by uncertainties regarding the future mix of vessels, as well as 

the implementation of a rotational crew concept for the replacement 

vessel for the high endurance cutters, known as the national security 

Even if the most 

optimistic projections were realized, though, and the Mission 

Effectiveness Project was to extend the medium endurance cutters’ 

service lives by 15 years, the medium endurance cutters would remain in 

service increasingly beyond the end of their originally-expected service 

lives before full deployment of their replacement vessels—the offshore 

patrol cutters. In particular, according to current plans, some of the 270-

foot medium endurance cutters are to remain in service as late as 2033—

up to 21 years beyond the end of their originally-expected service lives—

before they are replaced. Coast Guard officials reported that a further 

refurbishment of the medium endurance cutters will be necessary to meet 

operational requirements and that the Coast Guard is in the early stages 

of developing plans for addressing the expected gap between remaining 

medium endurance cutter fleet service lives and the delivery of the 

replacement offshore patrol cutters.

 

18 The Coast Guard has contracted with the Department of Transportation, Research and 

Innovative Technology Administration’s Volpe National Transportation Systems Center to 

conduct annual assessments of the effectiveness of the Mission Effectiveness Project. 
 

Page 10 GAO-12-934T 

cutter.19 The Coast Guard’s fiscal year 2013 to 2017 5-year Capital 

Investment Plan does not allocate funds for the acquisition of the last two 

replacement national security cutters, as called for by the program of 

record, and it is unclear how this could affect the decommissioning 

schedule of the high endurance cutters, the last of which the Coast Guard 

currently plans to decommission in fiscal year 2023.20

The Coast Guard has established operational hour targets for the number 

of hours its vessels are expected to conduct operations or missions each 

fiscal year and uses these targets to inform planning decisions, such as 

setting performance targets and corresponding resource allocations. 

Although senior Coast Guard headquarters officials reported considering 

various factors when setting overall mission performance targets 

annually, these officials reported doing so based on the assumption that 

vessel class assets will achieve 100 percent of their operational hour 

targets. Our analysis of Coast Guard data, though, makes it clear that the 

Coast Guard’s legacy vessel fleet has increasingly fallen below 

operational hour targets in recent years, and this trend is expected to 

continue. In addition, Coast Guard officials reported that the decline in 

legacy vessel operational capacity has challenged the Coast Guard’s 

ability to meet its mission performance targets. Further, Coast Guard 

operational commanders reported taking actions to mitigate the effect of 

declining legacy vessel capacity, such as diverting vessels tasked to 

other missions to help complete operations. Nevertheless, the Coast 

Guard has not revised legacy vessel operational hour targets because, 

according to Coast Guard officials, doing so would lower its mission 

performance targets. However, these targets have gone unmet because 

of the declining operational capacity of the legacy vessel fleet. Because it 

sets mission performance targets and allocates resources on the 

assumption that legacy vessels will achieve 100 percent of operational 

hour targets, the Coast Guard’s allocation of resources is not realistic. 

Further, because the Coast Guard uses vessels’ operational hour targets 

 

19 The Coast Guard’s program of record assumes that the new national security cutter 

fleet will achieve more operational capacity than the legacy high endurance cutter fleet by 

implementing a rotational crew concept in which the Coast Guard would have four sets of 

crew staff and operate three national security cutters on a rotating basis to increase the 

vessels’ operational time.

20 The Coast Guard recently revised the high endurance cutter decommissioning schedule 

to delay the decommissioning of the last high endurance cutter from 2020 to 2023 in its 

fiscal years 2013-2017 Capital Investment Plan. 
 

Page 11 GAO-12-934T 

to set agency-wide performance targets and to allocate resources, 

consistent achievement of its performance targets is at increased risk. 

In our July 2012 report, we recommended that the Secretary of Homeland 

Security direct the Commandant of the Coast Guard to adjust legacy 

vessel fleet operational hour targets to reflect actual capacity, as 

appropriate by class. DHS did not concur with this recommendation and 

noted, among other things, that reducing the operational hour targets 

would fail to fully utilize those assets not impacted by maintenance 

issues. We disagree with DHS’s position because, as noted in the July 

2012 report, while senior Coast Guard officials reported that the Coast 

Guard adjusts its mission performance targets annually, it does not also 

adjust legacy vessel operational hour targets annually. These officials 

also stated that the Coast Guard’s mission performance targets are 

based on each vessel class’s capacity, with the assumption that each 

vessel will operate at 100 percent of its planned operating time. Thus, we 

do not believe that reducing the operational hour targets would result in a 

failure by the Coast Guard to fully utilize assets not impacted by 

maintenance challenges and continue to believe that this 

recommendation has merit.21

Chairman LoBiondo, Ranking Member Larsen, and members of the 

subcommittee, this completes my prepared statement. I would be happy 

to respond to any questions you may have at this time.

For questions about this statement, please contact Stephen L. Caldwell at 

(202) 512-9610 or caldwells@gao.gov. Contact points for our Offices of 

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

of this statement. Individuals making key contributions to this statement 

include Christopher Conrad (Assistant Director) and Michael C. 

Lenington. Additional contributors include Jason Berman, Chloe Brown, 

and Lara Miklozek.

 

21 See the July 2012 report for more information on DHS’s comments and our evaluation 

of them.

GAO Contact and 

Staff 

Acknowledgements 

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