Coast Guard: Update on Deepwater Program Management, Cost, and Acquisition Workforce
Published: 2009-04-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Deepwater Program is intended to recapitalize the Coast Guard's fleet and includes efforts to build or modernize five classes each of ships and aircraft, and procure other key capabilities. In 2002, the Coast Guard contracted with Integrated Coast Guard Systems (ICGS) to manage the acquisition as systems integrator. After the program experienced a series of failures, the Coast Guard announced in April 2007 that it would take over the lead role, with future work on individual assets to be potentially bid competitively outside of the existing contract. A program baseline of $24.2 billion was set as well. In June 2008, GAO reported on the new approach and concluded that while these steps were beneficial, continued oversight and improvement was necessary. The Coast Guard has taken actions to address the recommendations in that report. This testimony updates key issues from prior work: (1) Coast Guard program management at the overall Deepwater Program and asset levels; (2) how cost, schedules, and capabilities have changed from the 2007 baseline and how well costs are communicated to Congress; and (3) Coast Guard efforts to manage and build its acquisition workforce. GAO reviewed Coast Guard acquisition program baselines, human capital plans and other documents, and interviewed officials. For information not previously reported, GAO obtained Coast Guard views. The Coast Guard generally concurred with the findings.
section_title: What GAO Found
paragraphs: The Coast Guard has assumed the role of systems integrator for the overall Deepwater Program by reducing the scope of work on contract with ICGS and assigning these functions to Coast Guard stakeholders. As part of its systems integration responsibilities, the Coast Guard has undertaken a fundamental reassessment of the capabilities, number, and mix of assets it needs; according to an official, it expects to complete this analysis by the summer of 2009. At the individual Deepwater asset level, the Coast Guard has improved and begun to apply the disciplined management process found in its Major Systems Acquisition Manual, but did not meet its goal of complete adherence to this process for all Deepwater assets by the second quarter of fiscal year 2009. For example, key acquisition management activities--such as operational requirements documents and test plans--are not in place for assets with contracts recently awarded or in production, placing the Coast Guard at risk of cost overruns or schedule slips. Due in part to the Coast Guard's increased insight into what it is buying, the anticipated cost, schedules, and capabilities of many of the Deepwater assets have changed since the establishment of the $24.2 billion baseline in 2007. Coast Guard officials have stated that this baseline reflected not a traditional cost estimate but rather the anticipated contract costs as determined by ICGS. As the Coast Guard has developed its own cost baselines for some assets, it has become apparent that some of the assets it is procuring will likely cost more than anticipated. Information to date shows that the total cost of the program may grow by $2.1 billion. As more cost baselines are developed and approved, further cost growth may become apparent. In addition, while the Coast Guard plans to update its annual budget requests with asset-based cost information, the current structure of its budget submission to Congress does not include certain details at the asset level, such as estimates of total costs and total numbers to be procured. The Coast Guard's reevaluation of baselines has also changed its understanding of the delivery schedules and capabilities of Deepwater assets. One reason the Coast Guard sought a systems integrator from outside the Coast Guard was because it recognized that it lacked the experience and depth in workforce to manage the acquisition internally. The Coast Guard acknowledges that it still faces challenges in hiring and retaining qualified acquisition personnel and that this situation poses a risk to the successful execution of its acquisition programs. According to human capital officials in the acquisition directorate, as of April 2009, the acquisition branch had 16 percent of positions unfilled, including key jobs such as contracting officers and systems engineers. Even as it attempts to fill its current vacancies, the Coast Guard plans to increase the size of its acquisition workforce significantly by the end of fiscal year 2011. While the Coast Guard may be hard-pressed to fill these positions, it has made progress in identifying the broader challenges it faces and is working to mitigate them. In the meantime, the Coast Guard has been increasing its use of support contractors.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the Coast Guard’s management  and oversight of its Deepwater Program. The Deepwater Program began in  the late 1990s as an effort to recapitalize the Coast Guard’s operational  fleet and now includes projects to build or modernize five classes each of  ships and aircraft, as well as to procure other capabilities such as  improved command, control, communications, computers, intelligence,  surveillance, and reconnaissance (C4ISR) and unmanned aircraft.  Recognizing that it did not have in place the experience and depth in its  workforce to manage the acquisition, the Coast Guard contracted with  Integrated Coast Guard Systems (ICGS) as a systems integrator in June  2002. After experiencing a series of programmatic failures, the  Commandant acknowledged in April 2007 that the Coast Guard had relied  too heavily on contractors to do the work of government and that  government and industry had failed to control costs. He announced  several major changes to the acquisition approach for Deepwater, the key  one being that the Coast Guard would take over the lead role in systems  integration from ICGS, with future work on individual assets to be  potentially bid competitively outside of the existing contract. In May 2007,  soon after this announcement, the Department of Homeland Security  (DHS) approved a revised acquisition program baseline of $24.2 billion for  the Deepwater Program.
In June 2008, we reported on our assessment of the preliminary steps the  Coast Guard had taken to revise its acquisition approach and concluded  that while these steps were beneficial, continued oversight and  improvement was necessary to further mitigate risks. The Coast Guard  has taken actions to address the recommendations we made in that report.  My statement is based largely on ongoing work for this subcommittee. We  plan to provide a more complete analysis of the Deepwater issues raised in  this statement in a report this summer.
My focus today will be on:    Coast Guard efforts to manage the Deepwater Program at both the  overall system and asset levels;    how cost, schedules, and capabilities have changed from the 2007  baseline, and how well costs are communicated to Congress; and    Coast Guard efforts to manage and build its acquisition workforce.
As part of our ongoing work, we reviewed key Coast Guard  documentation such as the Coast Guard’s Major Systems Acquisition  Manual, approved acquisition program baselines, and human capital  plans. We also interviewed Coast Guard officials in the acquisition  directorate, including program managers and contracting officers, and in  other directorates such as those responsible for human capital issues and  for assessing and developing operational requirements for Deepwater  assets. This work was conducted between September 2008 and April 2009.  We also relied on our past work regarding the Deepwater Program.  Appendix I lists our selected reports on the Deepwater Program. All work  for this statement was conducted 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 that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives. For  issues where our observations are based on work that has not been  previously reported, we obtained Coast Guard views on our findings and  incorporated technical comments where appropriate. The Coast Guard  generally concurred with our findings.
subsections: section_title: Background
paragraphs: The Coast Guard is a multimission, maritime military service within DHS.  The Coast Guard’s responsibilities fall into two general categories—those  related to homeland security missions, such as port security and vessel  escorts, and those related to non–homeland security missions, such as  search and rescue and polar ice operations. To carry out these  responsibilities, the Coast Guard operates a number of vessels and aircraft  and, through its Deepwater Program, is currently modernizing or replacing  those assets.
At the start of the Deepwater Program in the late 1990s, the Coast Guard  chose to use a system-of-systems acquisition strategy. A system-of-systems  is defined as a set or arrangement of assets that results when independent  assets are integrated into a larger system that delivers unique capabilities.  As the systems integrator, ICGS was responsible for designing,  constructing, deploying, supporting, and integrating the Deepwater assets  into a system-of-systems. Under this approach, the Coast Guard provided  the contractor with broad, overall performance specifications—such as  the ability to interdict illegal immigrants—and ICGS determined the asset  specifications. According to Coast Guard officials, the ICGS proposal was  submitted and priced as a package; that is, the Coast Guard bought the  entire solution and could not reject any individual component. In  November 2006, the Coast Guard submitted a cost, schedule, and  performance baseline to DHS that established the total acquisition cost of  the ICGS solution at $24.2 billion and projected that the acquisition would  be completed in 2027. In May 2007, shortly after the Coast Guard had  announced its intention to take over the role of systems integrator, DHS  approved the baseline.
Table 1 describes in more detail the assets the Coast Guard is planning to  procure according to approved baselines.
In deciding to take over the systems integrator role from ICGS, the Coast  Guard has taken steps to increase government control and accountability  by, among other things, applying the disciplined program management  processes in its Major Systems Acquisition Manual (MSAM) to  Deepwater assets. The MSAM requires documentation and approval of  acquisition decisions at key points in a program’s life-cycle by designated  officials at high levels. The Coast Guard has established a number of goals  and deadlines for completing these activities in its Blueprint for  Acquisition Reform, which was initially released in July 2007 and was last  updated in July 2008.
section_title: Coast Guard Has Assumed the Role of Systems Integrator But Lags In Applying Disciplined Asset- Level Processes as It Continues with Procurements
paragraphs: The Coast Guard has taken three major steps to become the systems  integrator for the Deepwater Program. It has defined and assigned systems  integrator functions to Coast Guard stakeholders, begun to reassess the  capabilities and mix of assets it requires, and significantly reduced the  contractual responsibilities of ICGS. While the Coast Guard has made  progress in applying the disciplined MSAM acquisition process to its  Deepwater assets, it did not meet its goal of being fully compliant by the  second quarter of fiscal year 2009. In the meantime, the Coast Guard  continues with production of certain assets and award of new contracts in  light of what it views as pressing operational needs.
subsections: section_title: Coast Guard Has Assumed Key Roles and Responsibilities from ICGS in Becoming the Systems Integrator
paragraphs: The role of systems integrator involves planning, organizing, and  integrating a mix of assets into a system-of-systems capability greater than  the sum of the capabilities of the individual parts. ICGS’s role as systems  integrator for the Deepwater Program included requirements management,  systems engineering, and defining how assets would be employed by Coast  Guard users in an operational setting. In addition, the contractor had  technical authority over all asset design and configuration decisions. In  2008, the Coast Guard acknowledged that in order to assume the role of  systems integrator, it needed to define systems integrator functions and  assign them to Coast Guard stakeholders. Through codified changes to  internal relationships, policies, and contractual arrangements, the Coast  Guard has done so. For example, the Coast Guard formally designated  certain directorates as technical authorities to establish, monitor, and  approve technical standards for Deepwater assets related to design,  construction, maintenance, logistics, C4ISR, and life-cycle staffing and  training. The Coast Guard’s capabilities directorate determines operational  requirements and the asset mix to satisfy those requirements and  establishes priorities. This directorate is expected to collaborate with the  technical authorities to ensure that the Coast Guard’s technical standards  are incorporated during the requirements development process. Further,  the acquisition directorate’s program and project managers are to be held  accountable for ensuring that the assets it procures fulfill operational  requirements and the technical authority standards. The relationships  between Coast Guard directorates in executing their systems integrator  roles are represented graphically in figure 1.
When it contracted with ICGS, the Coast Guard had limited insight into  how the contractor’s proposed solution would meet overall mission needs,  limiting its ability to justify the proposed solution and make informed  decisions about possible trade-offs. To improve its insight, the capabilities  directorate has initiated a fundamental reassessment of the capabilities  and mix of assets the Coast Guard needs to fulfill its Deepwater missions.  The goals of this fleet mix analysis include validating mission performance  requirements and revisiting the number and mix of all assets that are part  of the Deepwater Program. A specific part of the study will be to analyze  alternatives and quantities for the Offshore Patrol Cutter, an asset which  accounts for a projected $8 billion of the total Deepwater costs. According  to an official, the results of this analysis are expected in the summer of  2009. Coast Guard leadership plans to assess the results and make future  procurement decisions based on the analysis.
In conjunction with its assuming the role of systems integrator, the Coast  Guard has significantly reduced the scope of work on contract with ICGS.  In March 2009, the Coast Guard issued a task order to ICGS limited to  tasks such as data management and quality assurance for assets currently  under contract with ICGS including C4ISR, the Maritime Patrol Aircraft  (MPA), and the National Security Cutter (NSC). The Coast Guard is  currently developing plans to transition these functions from ICGS to the  Coast Guard or an independent third party by February 2011 when this  task order expires. For assets procured or planned to be procured outside  of the ICGS contract such as the Offshore Patrol Cutter, systems  engineering and program management functions are expected to be  carried out by the Coast Guard with support from third parties and  contractors. According to officials, the Coast Guard has no plans to award  additional orders to ICGS for systems integrator functions within the  current award term or for any work after the award term expires in  January 2011.
section_title: As Asset-level Management Gets Underway, Production and Award of New Contracts Are Proceeding Despite Some Gaps in Knowledge
paragraphs: Since our June 2008 report on the Deepwater Program, and taking into  account our recommendation, the Coast Guard has improved its MSAM  process.  For example, the process now dictates that the acquisition  project and program managers work collaboratively with the technical  authorities as described above. The MSAM process was revised to require  acquisition planning and an analysis of alternatives for procurement to  start at an earlier stage, which is intended to help inform the budget and  planning processes. Other improvements include the adoption of our  recommendation for a formal design review, Milestone 2A, before  authorizing low-rate initial production. The MSAM phases and milestones  are shown in figure 2.
Because the Coast Guard previously exempted Deepwater from the MSAM  process, assets were procured without following a disciplined program  management approach. Recognizing the importance of ensuring that each  acquisition project is managed through sustainable and repeatable  processes and wanting to adhere to proven acquisition procedures, in July  2008, the Coast Guard set a goal of completing the MSAM acquisition  management activities for all Deepwater assets by the second quarter of  fiscal year 2009. However, of the 12 Deepwater assets in the concept and  technology development phase or later, 9 are behind plan in terms of  MSAM compliance. In the meantime, the Coast Guard has proceeded with  production and awarded new contracts without all of the knowledge it  needs to ensure that the capabilities it is buying will meet Coast Guard  needs within cost and schedule constraints.
For assets already in production, such as the MPA and the NSC, the Coast  Guard has made some progress in the past year in retroactively developing  acquisition documentation with the intent of providing the traceability  from mission needs to operational performance that was previously  lacking. For example, the Coast Guard approved an operational  requirements document for the MPA in October 2008 to establish a formal  performance baseline and identify attributes for testing. Through this  process, the Coast Guard discovered that ICGS’s requirement for  operational availability (the amount of time that an aircraft is available to  perform missions) was excessive compared to the Coast Guard’s own  standards. According to a Coast Guard official, the ICGS requirement  would have needlessly increased costs to maintain and operate the  aircraft.
Even as the Coast Guard gains this additional knowledge about MPA  requirements, it is continuing with this procurement despite not having  completed operational testing. According to the MSAM, testing in an  operational environment should be completed with the initial production  variants of an asset to demonstrate that capabilities meet requirements  before committing to larger purchases. An approved test plan helps ensure  that the tests conducted are clearly linked to requirements and mission  needs. While the MPA began an operational assessment in July 2008, the  Coast Guard still lacked, as of March 2009, a test plan approved by DHS  and endorsed by its independent test authority, the Navy’s Commander  Operational Testing and Evaluation Force. With 11 of 36 MPAs already on  contract, the Coast Guard has completed the operational assessment  but  does not plan to complete operational testing until the fiscal year 2011  time frame.  Similarly, according to Coast Guard officials, operational  testing of the NSC, also conducted by the Coast Guard’s independent test  authority, has begun in the absence of an approved test plan, which is now  expected in July 2009. By the time testing is scheduled to be completed in  2011, the Coast Guard plans to have six of eight NSCs either built or on  contract.
According to the MSAM process, operational requirements must be  approved before procuring an asset. However, since committing to the  MSAM process, the Coast Guard has awarded new contracts for assets  without having all required acquisition documentation in place, due to its  determination that the need for these capabilities is pressing. This  situation puts the Coast Guard at risk of cost overruns and schedule slips  if it turns out that what it is buying does not meet requirements.
In September 2008, after conducting a full and open competition, the  Coast Guard awarded an $88.2 million contract for the design and  construction of a lead Fast Response Cutter. However, the Coast  Guard does not have an approved operational requirements document  or test plan for this asset. Recognizing the risks inherent in this  approach, the Coast Guard developed a basic requirements document  and an acquisition strategy based on procuring a proven design. These  documents were reviewed and approved by the Coast Guard’s  capabilities directorate, the engineering and logistics directorate, and  chief of staff before the procurement began. According to a Coast  Guard official, the Coast Guard intends to have an approved  operational requirements document before procuring additional ships.
In February 2009, the Coast Guard issued a $77.7 million task order to  ICGS for a second segment of C4SIR design and development, before  developing its requirements for performance. Design and development  costs for the first segment increased from $55.5 million to $141.3  million. According to Coast Guard officials, this increase was due in  part to the structure of the ICGS contract under which the Coast  Guard lacked visibility into the software development processes and  requirements. Furthermore, ICGS’s C4ISR solution for the Deepwater  Program contains proprietary software. The Coast Guard has acquired  data rights to the software and, according to Coast Guard officials, has  determined that the capabilities it is buying meet Coast Guard  technical standards for maintenance, logistics, and interoperability.
section_title: Coast Guard Developing More Realistic Cost Estimates for Deepwater Assets, but Cost Reporting May Not Keep Congress Fully Informed
paragraphs: Since the establishment of the $24.2 billion baseline for the Deepwater  program in 2007, the anticipated cost, schedules, and capabilities of many  of the Deepwater assets have changed, in part due to the Coast Guard’s  increased insight into what it is buying. The purpose of the 2007 baseline  was to establish cost, schedule, and operational requirements for the  Deepwater system as a whole; these were then allocated to the major  assets. Coast Guard officials have stated that this baseline reflected not a  traditional cost estimate but rather the anticipated contract costs as  determined by ICGS. Furthermore, the Coast Guard lacked insight into  how ICGS arrived at some of the costs for Deepwater assets.
As the Coast Guard has assumed greater responsibility for management of  the Deepwater Program, it has begun to improve its understanding of costs  by establishing new baselines for individual assets based on its own cost  estimates. These baselines begin at the asset level and are developed by  Coast Guard project managers, validated by a separate office within the  acquisition branch and, in most cases, are reviewed and approved by DHS.  The estimates use common cost estimating procedures and assumptions,  and may account for costs not previously captured. Beginning in  September 2008 the Coast Guard began submitting new baselines to DHS.  To date, 10 asset baselines have been submitted to DHS and 4 have been  approved. These new baselines are formulated using various sources of  information depending on the acquisition phase of the asset. For example,  the baseline for the NSC was updated using the actual costs of material,  labor, and other considerations already in effect at the shipyards. The  baselines for other assets, like the MPA, were updated using independent  cost estimates. As the Coast Guard approaches major milestones, such as  the decision to enter low-rate initial production or begin system  development, officials have stated that the cost estimates for all assets will  be reassessed and revalidated.
subsections: section_title: Better-informed Baselines Suggest Deepwater Costs Could Exceed $24.2 Billion
paragraphs: As the Coast Guard has developed its own cost baselines for Deepwater  assets, it has become apparent that some of the assets it is procuring will  likely cost more than anticipated. While the Coast Guard is still in the  process of communicating the effect and origin of these cost issues to  DHS, information available to date for assets shows that the total cost of  the program will likely exceed $24.2 billion, with potential cost growth of  approximately $2.1 billion through the life of the Deepwater Program. As  more baselines are approved by DHS, further cost growth may become  apparent. Table 2 provides the estimates of asset costs available as of April  2009. It does not reflect the roughly $3.6 billion in other Deepwater costs,  such as program management, that the Coast Guard states do not require a  new baseline.
The effort by the Coast Guard to develop new baselines provides not only  a better understanding of the costs of the Deepwater assets, but also  insight into the drivers of any cost growth. For example, the new NSC  baseline attributes a $1.3 billion rise in cost to a range of factors, from the  additional costs to correct fatigue issues on the first three cutters to the  rise in commodity and labor prices. The additional $517 million needed to  procure all 36 MPA is attributed primarily to items that were not  accounted for in the previous baseline, including a simulator to train  aircrews, facility improvements, and adequate spare parts. By  understanding the reasons for cost growth, the Coast Guard may be able  to better anticipate and control costs in the future.
The Coast Guard has structured some of the new baselines to show how  cost growth could be controlled by making trade-offs in asset quantities  and/or capabilities. For example, the new MPA baseline provides cost  increments that show the acquisition may be able to remain within its  initial allotment of the overall $24.2 billion if 8 fewer aircraft are acquired.  Coast Guard officials have stated that other baselines currently under  review by DHS present similar cost increments. This information, if  combined with data from the fleet mix study to show the effect of quantity  or capability reductions on the system-of-systems as a whole, offers a  unique opportunity to the Coast Guard for serious discussions of trade- offs.
The Coast Guard’s reevaluation of baselines has also changed its  understanding of the delivery schedules and capabilities of Deepwater  assets. According to the new baselines, a number of assets will be  available for operational use later than originally anticipated. This includes  a 12-month delay for the NSC to reach its initial operating capability and  an 18-month delay for the MPA. Coast Guard officials stated that the  restructuring of the unmanned aircraft and small boat projects has delayed  the deployment of these assets with the NSC and affects the ship’s  anticipated capabilities in the near term. We plan to report later this  summer on the operational effect of the delays in the NSC project.
section_title: Current Budget Reporting Lacks Detail at Asset Level, and May Not Adequately Inform Congress
paragraphs: While the Coast Guard plans to update its annual budget requests with  asset-based cost information, the current structure of its budget  submission could limit Congress’s understanding of details at the asset  level. The budget submission presents total acquisition costs only at the  overall Deepwater system level ($24.2 billion), and the description of  funding for individual assets does not include key information such as  costs beyond the current 5-year capital investment plan, i.e., life-cycle  costs, or the total quantities of assets planned. For example, while the  justification of the NSC request includes an account of the capabilities the  asset is expected to provide, how these capabilities link to the Coast  Guard’s missions, and details on what activities past appropriations have  funded, it does not include estimates of total program cost, future award  or delivery dates of remaining assets, or even the total number of assets to  be procured.
Our past work has emphasized that one of the keys to a successful capital  acquisition, such as the multibillion-dollar ships and aircraft the Coast  Guard is procuring, is budget submissions that clearly communicate  needs. A key part of this communication is to provide decision makers  with information about cost estimates, risks, and the scope of a planned  project before committing substantial resources to it. Good budgeting also  requires that the full costs of a project be considered upfront when  decisions are made. Other agencies within the federal government that  acquire systems similar to those of the Coast Guard capture these  elements in justifications of their requests. To illustrate, table 3 provides a  comparison of the information found in the NSC budget justification with  that used by the Navy for its shipbuilding programs.
While the Coast Guard does include some of this information in its asset- level Quarterly Acquisition Reports to Congress and the Deepwater  Program Expenditure Report, these documents are provided only to the  appropriations committees, and the information is restricted due to  acquisition sensitive material.
section_title: Coast Guard Having Difficulty Staffing Government Acquisition Positions but Working To Improve Processes
paragraphs: One reason the Coast Guard originally sought a systems integrator was  because it recognized that it lacked the experience and depth in its  workforce to manage the acquisition internally. Now that the Coast Guard  has taken control of the Deepwater acquisition, it acknowledges that it  faces challenges in hiring and retaining qualified acquisition personnel and  that this situation poses a risk to the successful execution of its acquisition  programs. According to human capital officials in the acquisition  directorate, as of April 2009, the acquisition branch had funding for 855  military and civilian personnel and had filled 717 of these positions— leaving 16 percent unfilled. The Coast Guard has identified some of these  unfilled positions as core to the acquisition workforce, such as contracting  officers and specialists, program management support staff, and  engineering and technical specialists. Even as it attempts to fill its current  vacancies, the Coast Guard plans to increase the size of its acquisition  workforce significantly by the end of fiscal year 2011.
subsections: section_title: Coast Guard Has Expanded Collaboration with Independent Third Parties and Increased Use of Support Contractors to Assist with Acquisition
paragraphs: To supplement and enhance the use of its internal expertise, the Coast  Guard has increased its use of third-party, independent experts outside of  both the Coast Guard and existing Deepwater contractors. For example, a  number of organizations within the Navy provided independent views and  expertise on a wide range of issues, including testing and safety. In  addition, the Coast Guard will use the American Bureau of Shipping, an  independent organization that establishes and applies standards for the  design and construction of ship and other marine equipment, as an advisor  and independent reviewer on the design and construction of the Fast  Response Cutter. The Coast Guard has also begun a relationship with a  university-affiliated research center to augment its expertise as it executes  its fleet mix analysis.
In addition to third party experts, the Coast Guard has been increasing its  use of support contractors. Currently, there are approximately 200  contractor employees in support of the acquisition directorate— representing 24 percent of its total acquisition workforce—a number that  has steadily increased in recent years. These contractors are performing a  variety of services—some of which support functions the Coast Guard has  identified as core to the government acquisition workforce—including  project management support, engineering, contract administration, and  business analysis and management. While support contractors can provide  a variety of essential services, their use must be carefully overseen to  ensure that they do not perform inherently governmental roles. The Coast  Guard acknowledges this risk and is monitoring its use of support  contractors to properly identify the functions they perform, as well as  developing a policy to define what is and what is not inherently  governmental.
section_title: Coast Guard Has Made Progress in Identifying and Mitigating Acquisition Workforce Challenges
paragraphs: While the Coast Guard may be hard-pressed to fill the government  acquisition positions it has identified both now and in the future, it has  made progress in identifying the broader challenges it faces and is working  to mitigate them. The Coast Guard has updated two documents key to this  effort, the Blueprint for Acquisition Reform, now in its third iteration,  and the Acquisition Human Capital Strategic Plan, which is in its second  iteration. Each document identifies challenges the Coast Guard faces in  developing and managing its acquisition workforce and outlines initiatives  and policies to meet these challenges. For example, the Acquisition  Human Capital Strategic Plan lays out three overall challenges and  outlines over a dozen strategies the Coast Guard is pursuing to address  them in building and maintaining an acquisition workforce. The discussion  of strategies includes status indicators and milestones to monitor  progress, as well as supporting actions such as the formation of  partnerships with the Defense Acquisition University and continually  monitoring turnover in critical occupations. The Blueprint for Acquisition  Reform supports many these initiatives and provides deadlines for their  completion. In fact, the Coast Guard has already completed a number of  initiatives including    achieving and maintaining Level III program manager certifications,    adopting a model to assess future workforce needs,   incorporating requests for additional staff into the budget cycle,   initiating tracking of workforce trends and metrics,    expanding use of merit-based rewards and recognitions, and   initiating training on interactions and relationships with contractors.
section_title: Concluding Observations
paragraphs: In conclusion, I’d like to emphasize several key points as we continue to  oversee the various Coast Guard initiatives discussed today. It is important  to recognize that Coast Guard leadership has made significant progress in  identifying and addressing the challenges in taking on the role of systems  integrator for the Deepwater Program. The Coast Guard is continuing to  build on this progress by starting to follow a disciplined program  management approach that improves its knowledge of what is required to  meet its goals. An important component of this approach is gaining  realistic assessments of needed capabilities and associated costs to enable  the Coast Guard and Congress to better execute decision making and  oversight. The Coast Guard’s ability to build an adequate acquisition  workforce is critical, and over time the right balance must be struck  between numbers of government and contractor personnel. Until the  Coast Guard gains a thorough understanding of what it is buying and how  much it will cost, and is able to put in place the necessary workforce to  manage the Deepwater Program, it will continue to face risks in carrying  out this multibillion dollar acquisition.
Mr. Chairman, this concludes my statement and I would be happy to  respond to any questions the committee may have.
section_title: GAO Contact and Acknowledgements
paragraphs: For further information about this testimony, please contact John P.  Hutton, Director, Acquisition and Sourcing Management, at (202) 512-4841,  huttonj@gao.gov. Other individuals making key contributions to this  testimony include Michele Mackin, Assistant Director; Greg Campbell;  Carolynn Cavanaugh; J. Kristopher Keener; Angie Nichols-Friedman; and  Sylvia Schatz.
section_title: Related GAO Products
paragraphs: 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: Observations on Changes to Management and Oversight of  the Deepwater Program. GAO-09-462T. Washington, D.C.: March 24, 2009.
Status of Selected Assets of the Coast Guard’s Deepwater Program.   GAO-08-270R. Washington, D.C.: March 11, 2008.
Coast Guard: Deepwater Program Management Initiatives and Key  Homeland Security Missions. GAO-08-531T. Washington, D.C.: March 5,  2008.
Coast Guard: Status of Efforts to Improve Deepwater Program  Management and Address Operational Challenges. GAO-07-575T.  Washington, D.C.: March 8, 2007.
Coast Guard: Status of Deepwater Fast Response Cutter Design Efforts.  GAO-06-764. Washington, D.C.: June 23, 2006.
Coast Guard: Changes to Deepwater Plan Appear Sound, and Program  Management Has Improved, but Continued Monitoring Is Warranted.  GAO-06-546. Washington, D.C.: April 28, 2006.
Coast Guard: Progress Being Made on Addressing Deepwater Legacy  Asset Condition Issues and Program Management, but Acquisition  Challenges Remain. GAO-05-757. Washington, D.C.: July 22, 2005.
Coast Guard: Preliminary Observations on the Condition of Deepwater  Legacy Assets and Acquisition Management Challenges. GAO-05-651T.  Washington, D.C.: June 21, 2005.
Coast Guard: Deepwater Program Acquisition Schedule Update Needed.  GAO-04-695. Washington, D.C.: June 14, 2004.
Contract Management: Coast Guard’s Deepwater Program Needs  Increased Attention to Management and Contractor Oversight.   GAO-04-380. Washington, D.C.: March 9, 2004.
Coast Guard: Actions Needed to Mitigate Deepwater Project Risks.   GAO-01-659T. Washington, D.C.: May 3, 2001.
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