Coast Guard: Opportunities Exist to Further Improve Acquisition Management Capabilities
Published: 2011-04-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Coast Guard manages a broad $27 billion major acquisition portfolio intended to modernize its ships, aircraft, command and control systems, and other capabilities. GAO has reported extensively on the Coast Guard's significant acquisition challenges, including project challenges in its Deepwater program. GAO's prior work on the Coast Guard acquisition programs identified problems in costs, management, and oversight, but it also recognized several steps the Coast Guard has taken to improve acquisition management. In response to the Coast Guard Authorization Act of 2010, GAO (1) assessed Coast Guard capabilities to manage its major acquisition programs, and (2) determined the extent to which the Coast Guard leverages Department of Defense (DOD) and other agency contracts or expertise to support its major acquisition programs. GAO reviewed Department of Homeland Security (DHS) and Coast Guard acquisition documents, GAO and DHS Inspector General reports, and selected DOD contracts; and interviewed Coast Guard, DHS, and DOD officials
section_title: What GAO Found
paragraphs: The Coast Guard continues to strengthen its acquisition management capabilities by updating acquisitions management policies and reducing acquisition workforce vacancies, but significant challenges remain. In November 2010, the Coast Guard updated its acquisition policy to further incorporate best practices and respond to prior GAO recommendations, such as aligning independent testing requirements with DHS policies and formalizing the Executive Oversight Council to review programs and provide oversight. Additionally, the Coast Guard reduced acquisition workforce vacancies from 20 to 13 percent from April to November 2010, but shortfalls persist in hiring staff for certain key areas such as systems engineers, and some programs continue to be affected by unfilled positions. While the Coast Guard has increased its acquisition management capabilities, most Coast Guard major acquisition programs have ongoing cost, schedule, or program execution risks. Additionally, unrealistic budget planning for the Coast Guard's acquisition portfolio exacerbates these challenges and will likely lead to more program cost and schedule issues. The Coast Guard has several actions under way to further improve acquisition policies and workforce shortfalls, as well as address budget planning issues, but it is too soon to tell whether the actions will be effective. The Coast Guard leveraged DOD contracts to purchase products and services or to gain expertise in support of major acquisition programs. The Coast Guard has entered into approximately 81 memorandums of agreement and other arrangements primarily with DOD, which has experience and technical expertise in purchasing major equipment such as ships and aircraft, to support its major acquisition programs. Examples range from acquiring products and services from established DOD contracts to obtaining engineering and testing expertise from the Navy. According to the Coast Guard, leveraging DOD contracts has led to cost savings for Coast Guard acquisition programs. For instance, the Coast Guard received price discounts for C-130J aircraft by coordinating contracting efforts with the Air Force rather than contracting directly with the aircraft manufacturer. In another example, Coast Guard officials used Navy cost estimators and contracting staff in the November 2010 production contract for the National Security Cutter. At this point, Coast Guard program managers rely on informal contacts to learn about the agreements in place to support program activities, thus potentially limiting staff knowledge of DOD resources available. Coast Guard contracting officials only recently recognized the need to make DOD agreements available to program staff, but due to limited attention to this issue, only about 5 of the 81 agreements are currently accessible to program managers.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Coast Guard take steps to ensure program staff have access to interagency agreements with DOD. DHS concurred with the recommendation.

section_title: Letter
paragraphs: The U.S. Coast Guard manages a broad $27 billion major acquisition  portfolio intended to acquire capabilities to conduct missions that range  from marine safety to defense readiness. We have reported extensively on  the Coast Guard’s significant acquisition challenges, including its  Deepwater program, which currently constitutes the majority of its  acquisition portfolio and was created to build and modernize ships,  aircraft, and other capabilities. Our prior work on the Deepwater  acquisition program identified problems in costs, management, and  oversight that have led to delivery delays and other operational challenges  for certain assets, but it also recognized several steps the Coast Guard has  taken to improve Deepwater management. For example, beginning in  2007, the Coast Guard assumed the role of lead systems integrator for the  Deepwater program. Another key step was to reorganize its acquisition  function and update its business practices. Nonetheless, the Coast Guard  has a well-documented history of workforce challenges, such as difficulty  obtaining critical skills and defining appropriate staffing levels to achieve  its missions.
Section 402(a) of the Coast Guard Authorization Act of 2010 directed GAO  to report on Coast Guard acquisition management for major programs. To  satisfy the mandate, we (1) assessed Coast Guard acquisition management  capabilities for its major acquisition programs, and (2) determined the  extent to which the Coast Guard leverages Department of Defense (DOD)  and other agency contracts or expertise to support its major acquisition  programs.
We assessed Coast Guard acquisition management capabilities by  evaluating its acquisition policies and practices, changes in its acquisition  workforce, and the status of the Coast Guard’s acquisition programs as  measured through their cost, schedule, and performance. To do so, we  reviewed key Coast Guard and DHS documentation such as the Major  Systems Acquisition Manual, the Strategic Plan or Blueprint for  Continuous Improvement, DHS Acquisition Management Directive102-01,  acquisition decision memorandums for Coast Guard programs, Quarterly  Progress Reports, and Quarterly Acquisition Reports to Congress and  analyzed changes issued since our previous report in July 2010. We  interviewed Coast Guard acquisition directorate officials, including  program managers and contracting staff about the cost, schedule, and  performance of Coast Guard programs as well as any instances in which  DOD or other agencies provide support. We also interviewed DHS officials  from the Acquisition Program Management Division concerning Coast  Guard management of its acquisition portfolio. Further, we reviewed  contract documents and identified the agencies Coast Guard most  commonly used to support its major acquisition programs. On the basis of  this analysis, we interviewed Coast Guard officials, as well as DOD, Navy,  and Air Force officials about resources provided to support Coast Guard  major acquisition programs. We also relied in part on our past work,  including our July 2010 report on the Deepwater Program, DHS Inspector  General reports, and other assessments of the Coast Guard’s major  programs. We conducted this performance audit from January 2011 to  April 2011 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. Appendix I  provides additional details about our scope and methodology. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Coast Guard, a maritime military service within DHS, has a variety of  responsibilities including port security and vessel escort, search-and- rescue, and polar ice operations. To carry out these and other  responsibilities, the Coast Guard operates a number of vessels, aircraft,  and information technology programs. The Coast Guard intends to further  meet these responsibilities through ongoing efforts to modernize or  replace assets through the Deepwater program. The Coast Guard’s current  acquisition portfolio, at $27 billion, includes 17 major acquisition programs  and projects and is managed by the Coast Guard Acquisition Directorate,  CG-9.
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). Major acquisition programs are to receive oversight  from DHS’s acquisition review board, which is responsible for reviewing  acquisitions for executable business strategies, resources, management,  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.  At each Acquisition Decision Event, the Acquisition Decision Authority  approves acquisitions to proceed through the acquisition life-cycle phases  upon satisfaction of applicable criteria. Additionally, the Coast Guard and  other DHS components have Component Acquisition Executives  responsible in part for managing and overseeing their respective  acquisition portfolios. DHS has a four-phase acquisition process:  (1) Need phase—Define a problem and identify the need for a new  acquisition;  (2) Analyze/Select phase—Identify alternatives and select the best option;  (3) Obtain phase—Develop, test, and evaluate the selected option and  determine whether to approve production; and  (4) Produce/Deploy/Support phase—Produce and deploy the selected  option and support it throughout the operational life cycle.
Table 1 provides further information about the Coast Guard major  acquisition programs.
Since 2001, we have reviewed Coast Guard acquisition programs and have  reported to Congress, DHS, and the Coast Guard on the risks and  uncertainties inherent in its acquisitions. In our June 2010 report on  selected DHS major acquisitions, we found that acquisition cost estimates  increased by more than 20 percent in five of the Coast Guard’s six major  programs we reviewed. For example, the National Security Cutter’s  acquisition cost estimate grew from an initial figure of $3.45 billion to  $4.75 billion from 2006 to 2009—a 38 percent increase. Moreover, five of  six programs faced challenges due to unapproved or unstable baseline  requirements, and all six programs experienced schedule delays. The  Rescue 21 search-and-rescue program, for example, had both unapproved  or unstable baseline requirements and schedule delays.
Several of our reports have focused on the Coast Guard’s Deepwater  acquisition program. Most recently, in our July 2010 report on the  program, we found that the Coast Guard had generally revised its  acquisition management policies to align with DHS directives, was taking  steps to address acquisition workforce needs, and was decreasing its  dependence on the Integrated Deepwater Systems contractor by planning  for alternate vendors for some assets, and to award and manage work  outside of the Integrated Coast Guard Systems contract for other assets.  We also have ongoing work on the status of the Deepwater program that is  related but complementary to this report and will result in a separate  published report later this year.
section_title: The Coast Guard Continues to Improve Its Acquisition Management Capabilities, but Many Programs Face Challenges
subsections: section_title: Coast Guard Updates of Policies and Processes for Major Acquisition Programs Better Reflect Best Practices and Respond to Prior GAO Recommendations
paragraphs: The Coast Guard updated its overarching acquisition policy since we last  reported in July 2010 to better reflect best practices and respond to our  prior recommendations, and to more closely align its policy with the DHS  Acquisition Management Directive Number 102-01. For example, in  November 2010, the Coast Guard revised its Major Systems Acquisition  Manual, which establishes policy and procedures, and provides guidance  for major acquisition programs. Revisions included    a list of the Executive Oversight Council’s roles and responsibilities;    aligning roles and responsibilities of independent test authorities to DHS  standards, which satisfied one of our prior recommendations;   a formal acquisition decision event before a program receives approval for  low-rate initial production, which addresses one of our prior  recommendations; and   a requirement to present an acquisition strategy at a program’s first formal  acquisition decision event.
The Coast Guard’s Blueprint for Continuous Improvement (Blueprint)  was created after the Coast Guard began realigning its acquisition function  in 2007 and is designed to provide strategic direction for acquisition  improvements. The Blueprint uses GAO’s Framework for Assessing the  Acquisition Function at Federal Agencies and the Office of Federal  Procurement Policy’s Guidelines for Assessing the Acquisition Function  as guidance, but also includes quantitative and qualitative measures  important to the acquisitions process. Through these measures, the Coast  Guard plans to gain a clearer picture of its acquisition organization’s  health. The Blueprint was revised in October 2010 to formalize the  acquisition directorate’s integration with the Coast Guard’s mission  support structure and includes plans to annually evaluate the Blueprint’s  measures.
The Coast Guard developed the Blueprint as a top-level planning  document to provide acquisition process objectives and strategic direction  as well as to establish action items, but DHS’s Inspector General  expressed concern that the agency did not prioritize action items and  consider the effects of delayed completion of action items on subsequent  program outcomes. For example, the 2010 Inspector General report found  that by the end of fiscal year 2009, 23 percent of assigned action item  completion dates slipped without determining the effect on acquisition  improvements. In response to the Inspector General’s report, the Coast  Guard has taken steps to prioritize its action items; however, it is too soon  to tell the outcome of these actions.
These policies were updated to align with DHS guidance and reflect best  practices. Coast Guard officials also attribute acquisition reforms to the  Coast Guard’s efforts to assume responsibilities for all major acquisition  programs. We previously reported in 2009 that the Coast Guard  acknowledged its need to define systems integrator functions and assign  them to Coast Guard stakeholders as it assumed the systems integrator  role. As a result, the Coast Guard established new relationships among  its directorates to assume control of key systems integrator roles and  responsibilities formerly carried out by the contractor. For example,  according to Coast Guard officials, the Coast Guard formally designated  certain directorates as technical authorities responsible for establishing,  monitoring, and approving technical standards for all assets related to  design, construction, maintenance, logistics, C4ISR, life-cycle staffing, and  training. In addition, the Coast Guard is developing a Commandant’s  Instruction to further institutionalize the roles and responsibilities for  Coast Guard’s acquisition management.
Beyond updating its major acquisition policies and guidance, the Coast  Guard Acquisition Directorate also increased the involvement of its  Executive Oversight Council to facilitate its acquisition process. Coast  Guard officials stated that the council, initially established in 2009 with an  updated charter in November 2010, provides a structured way for flag-level  and senior executive officials in the requirements, acquisition, and  resources directorates, among others, to discuss programs and provide  oversight on a regular basis. As the Coast Guard 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; according to officials, the  council was established in response to that need. Coast Guard officials  noted that major programs are now required to brief the formalized  council annually, prior to milestones, and on an ad hoc basis when major  risks are identified. According to Coast Guard documentation, from fiscal  year 2010 through the first quarter of fiscal year 2011, the council met over  40 times to discuss major programs. For example, the council held more  than five meetings to discuss the Offshore Patrol Cutter’s life-cycle costs  and system requirements, among other issues. The discussions are  captured at a general level in meeting minutes and sent to the Coast Guard  Acquisition Directorate for approval.
section_title: Coast Guard Has Continued Progress in Reducing Its Acquisition Workforce Vacancies, Although Shortfalls Remain
paragraphs: The Coast Guard has made progress in reducing its acquisition workforce  vacancies since April 2010. As of November 2010, the percentage of  vacancies dropped from about 20 percent to 13 percent or from 190 to 119  unfilled billets out of 951 total billets. Acquisition workforce vacancies  have decreased, but program managers have ongoing concerns about  staffing program offices. For example, the HH-65 program office has  funded and filled 10 positions out of an identified need for 33 positions.  Although the program has requested funding for an additional 8 billets for  fiscal year 2012, due to the timing of the request, the funding outcome is  unknown as of April 2011. Similarly, the Interagency Operations Center  program is another office affected by acquisition workforce shortages.  According to the Coast Guard, as of March 2011, the program office has  funded and filled 11 positions out of the 27 needed. For some of these  positions, the Interagency Operations Center program uses staff from the  Coast Guard’s Command, Control, and Communications Engineering  Center for systems engineering support; however, workforce shortages  remain. Program officials may face additional challenges in hiring staff  depending on the location of the vacancies within the program’s  management levels. For example, a program official stated that vacant  supervisory positions must be filled first before filling remaining positions  because lower-level positions would not have guidance for their activities.  Figure 1 shows the status of the Coast Guard’s acquisition workforce  vacancies as of November 2010.
We reported in January 2010 that the Coast Guard faces difficulty in  identifying critical skills, defining staffing levels, and allocating staff to  accomplish its diverse missions. An official Coast Guard statement from  2009 partially attributed the challenge of attracting staff for certain  positions to hiring competition with other federal agencies. In February  2010, we reported on the Coast Guard’s long-standing workforce  challenges and evaluated the agency’s efforts to address these  challenges. For example, we reported that while the Coast Guard  developed specific plans to address its human capital challenges, the fell short of identifying gaps between mission areas and personn  plans  el needed.
The Coast Guard has taken steps to outline specific areas of workforce  needs, including developing a human-capital strategic plan and  commissioning a human-capital staffing study published in August 2010,  but program managers continue to state concerns with the Coast Guard’s  ability to satisfy certain skill areas. For example, the August 2010 human- capital staffing study stated that program managers reported concerns  with staffing adequacy in program management and technical areas. To  make up for shortfalls in hiring systems engineers and other acquisition  workforce positions for its major programs, the Coast Guard uses support  contractors. As of November 2010, support contractors constituted 25  percent of the Coast Guard’s acquisition workforce. While we have stated  the risks in using support contractors, we reported in July 2010 that the  Coast Guard acknowledged the risks of using support contractors and had  taken steps to address these risks by training its staff to identify potential  conflicts of interest and by releasing guidance regarding the role of the  government and appropriate oversight of contractors and the work that  they perform.
The Coast Guard has also made progress ensuring that program  management staff received training and DHS certifications to manage  major programs. For example, according to Coast Guard officials, in  December 2010, the Coast Guard was 100 percent compliant with DHS  personnel certification requirements for program-management positions.  We have previously reported that having the right people with the right  skills is critical in ensuring that the government achieves the best value for  its spending.
section_title: Most of the Coast Guard’s Major Acquisition Programs Continue to Experience Challenges Exacerbated in Part by Unrealistic Budget Planning
paragraphs: Most of the Coast Guard’s major acquisition programs continue to  experience challenges in program execution, schedule, and resources. For  program execution, the Coast Guard reported in December 2010 that 12 of  its 17 major programs face moderate to significant risk in one or more  execution metrics such as technical maturity or logistics, which required  management attention. Of these, seven programs have carried these risks  for 1 year or more. For example, the HC-130J program has reported  logistics-assessment risks requiring management attention for 3 years.  Regarding schedule challenges, the Coast Guard reported in December  2010 that 10 of its 12 major programs with approved acquisition program  baselines exceeded schedule objective or threshold parameters. For  example, the Maritime Patrol Aircraft HC-144A program exceeded its  schedule because it delayed a production decision in order to complete  initial operational testing and evaluation per a DHS acquisition review  board decision. As this program was already 4 years behind schedule,  added schedule delays may require the Coast Guard to extend a legacy  aircraft’s service life, which may incur additional costs to sustain it. Major  Coast Guard programs also face resource risks. As of December 2010, 12  of the Coast Guard’s 17 major programs face moderate to significant risk  in project resource metrics such as budgeting and funding. For 9 of these  programs, risks have been reported for more than 1 year. In addition, four  Coast Guard programs, HC-130H aircraft, Nationwide Automatic  Identification System, C4ISR, and HH-60 helicopter, have notified DHS of  acquisition program baseline breaches.
The Coast Guard’s unrealistic acquisition budget planning also  exacerbates the challenges Coast Guard acquisition programs face. We  have previously reported that the Coast Guard faced risks from unrealistic  funding levels and that its reliance on sustained high funding levels in an  environment of budget constraints puts program outcomes at risk if  projected funds are not received. In December 2010, the Coast Guard  reported that 8 of the 17 major program offices were updating their  acquisition program baselines due in part to reduced funding in the fiscal  year 2011-2015 Capital Investment Plan. According to Coast Guard  acquisition officials, when a Capital Investment Plan has funding levels  that are lower than what a program planned to receive, then the program  is more likely to have schedule breaches and other problems. For  example, in November 2010 the HC-130H program reported a schedule  breach to DHS due in part to reduced Capital Investment Plan funding  projections for fiscal years 2011-2015 and had to revise its schedule  parameters to reflect the lower projected funding levels. This also  occurred in the Nationwide Automatic Identification System major  acquisition program. The program had an estimated cost growth of  approximately $32 million due to reduced out-year funding in the fiscal  year 2009-2013 plan, and after further funding reductions in the fiscal year  2011-2015 plan, the program subsequently deferred efforts to update the  program baseline. According to Coast Guard officials, the Coast Guard is  currently reevaluating the program’s system requirements and associated  project cost, schedule, and performance objectives. In 2011, DHS  acquisition oversight officials informed the Coast Guard that future  breaches in other programs would be almost inevitable as funding  resources decrease. Figure 2 illustrates Coast Guard major acquisition  programs facing execution, schedule, resource, and budget planning  challenges as of December 2010.
Progr experiencing inability de to redced projected fnding level.
The Coast Guard developed several action items in its October 2010  update to its Blueprint for Continuous Improvement to address budget  planning challenges. According to Coast Guard acquisition officials, the  most important step is for Coast Guard leadership to establish a priority  list for the major programs based on actual acquisition budgets received in  prior years, and then to make trade-offs between programs to fit within  historical budget constraints. The Coast Guard developed an action item  to assess the percentage of program funding profiles that fit into the  Capital Investment Plan. Specifically, the Blueprint indicates that the  Coast Guard will establish and implement a process to compare and report  the extent to which each individual program’s funding fits into the Capital  Investment Plan funding parameters. Further, the Coast Guard plans to  analyze and regularly report gaps in these funding profiles to the Coast  Guard’s acquisition leadership. The Coast Guard also identified the need to  promote funding stability in the Capital Investment Plan and intends to  evaluate that effort by establishing a mechanism and baseline to measure  Capital Investment Plan stability by comparing project funding against  previous, current, and future 5-year Capital Investment Plans. However,  while the Coast Guard officials stated their intention to use these metrics  to elevate the priority and funding issues to leadership, it is too soon to tell  the outcome of these steps. In a separate ongoing review, we are further  assessing the Coast Guard’s management of program costs and other  budget issues.
section_title: Coast Guard Leverages DOD Contracts and Expertise to Support Programs, But Program Staff Could Benefit From Better Insight of Available Interagency Agreements
subsections: section_title: Coast Guard Major Acquisition Programs Have Benefited from Leveraging DOD Expertise and Contracts
paragraphs: According to the Coast Guard, it currently has 81 interagency agreements,  memorandums of agreement, and other arrangements in place primarily  with DOD agencies to support its major acquisition programs. Each of the  17 major Coast Guard acquisition programs leverages DOD support,  primarily from the Navy. According to Coast Guard officials, they rely on  DOD experience and technical expertise because they both procure  similar major equipment, including ships and aircraft. Examples range  from acquiring products and services from established DOD contracts to  using engineering and testing expertise from the Navy. Some major  programs also receive assistance from other DHS components or other  agencies on a more limited basis. For example, the Rescue 21 program  partnered with the Federal Aviation Administration at two sites to use its  land and towers to install search and rescue capabilities.
The Secretary of Homeland Security is authorized to enter into agreements  with other executive agencies and to transfer funds as required. This  authority has been delegated to the Commandant of the Coast Guard.  Interagency agreements include a description of the general terms and  conditions that govern the relationship between agencies, and specific  information on the requesting agencies’ requirement to establish a need  and to authorize the transfer of funds. According to Coast Guard officials,  Coast Guard interagency agreements with DOD typically include a  memorandum of agreement or a memorandum of understanding with a  DOD agency. A memorandum of agreement is a document that defines the  responsibilities of, and actions to be taken by, each of the parties so that  their goals will be accomplished. A memorandum of understanding is a  document that describes broad concepts of mutual understanding, goals,  and plans shared by the parties. Interagency agreements also are typically  funded by military interdepartmental purchasing requests in which the  requiring agency must include a description of the end items purchased  and the funding data for acquiring these supplies or services. Interagency  agreements can be for direct, assisted, or other than assisted acquisitions.  In direct acquisitions, the requesting agency places orders against another  agency’s indefinite-delivery contracts, such as task and delivery order  contracts, while assisted acquisitions use the acquisition services of a  servicing agency. Other than assisted acquisitions utilize the internal  expertise of a servicing agency.
In 2001, the Chief of Naval Operations and the Commandant of the Coast  Guard agreed to build a national fleet that combines Navy and Coast  Guard forces to maximize effectiveness across all naval and maritime  missions. More than 50 of the Coast Guard’s agreements with DOD  leverage support from the Department of the Navy. Moreover, Coast Guard  and Navy officials have noted an increase in Navy involvement to support  the Coast Guard’s major acquisition programs since the Coast Guard  assumed the Deepwater lead systems integrator role in 2007. Examples of  updated support agreements in place with Navy entities include the  following:    A 2011 interagency agreement with the Naval Sea Systems Command  (NAVSEA) to support Coast Guard acquisition programs in program  management, design, technical assistance, cost estimating, and other  support.
A 2010 memorandum of agreement with the Navy’s Commander,  Operational Test and Evaluation Forces, allows the Coast Guard to request  the Navy to serve as the operational test authority for Coast Guard major  acquisition programs.
Two memorandums of agreement / interagency agreements in 2009 with  the Naval Air Systems Command (NAVAIR), which allow Coast Guard  major acquisition programs to leverage Navy services and aviation  program office assistance including: planning, technical assistance, cost  estimation, warfare modeling and analysis, requirements definition, risk  management, and integrated logistics support.
A 2009 memorandum of agreement with the Navy’s Space and Naval  Warfare Systems Command Pacific that allows Coast Guard programs to  request and obtain technical and other support services for the research  and development, design, engineering, integration, acquisition, test and  evaluation, installation, and life-cycle support of Coast Guard systems.
Most Coast Guard major acquisition programs leverage Navy expertise, in  some way, to support a range of testing, engineering, and other program  activities. For example, the Fast Response Cutter program used Naval  Surface Warfare Center Dahlgren services to help with topside design and  electromagnetic testing. In another instance, the Coast Guard used Naval  Surface Warfare Center Carderock division to test and evaluate boats and  provide technical expertise for the Response Boat-Medium program.  According to Coast Guard officials, the Coast Guard also collaborated with  Navy cost estimators and contracting staff to prepare for negotiations to  award the November 2010 production contract for the fourth National  Security Cutter. In another instance, the Navy provided engineering and  technical support for the Coast Guard’s MH-60 helicopter program.  Further, the Navy’s Operational Test and Evaluation Command is currently  supporting testing activities for 11 Coast Guard programs.
According to Coast Guard and DOD officials, the Coast Guard has  achieved cost savings from using DOD contracts through quantity  discounts and reduced unit prices when Coast Guard orders are combined  with orders from other DOD departments. Additional benefits include  reductions in contracting administrative costs, and expedited processing  times. According to Coast Guard officials, examples include the following:     The Coast Guard’s HC-130J program coordinated C-130J contracting  efforts through the Air Force acquisition office’s contract rather than  contracting directly with the aircraft manufacturer and benefited from  discounts in ordering along with other DOD agencies. In addition, by using  the standard configuration of the C-130J common among U.S. government  users, the Coast Guard benefited from cost savings in aircraft sustainment.
The Coast Guard obtained Navy systems, such as the SPQ-9B Radar, at a  reduced cost for Coast Guard cutter programs.
The National Security Cutter program used Navy contracts to provide and  install ultra high frequency radios and electronic warfare systems.
The Rescue 21 program placed search-and-rescue sensors on Army, Air  Force, Navy, and Marine Corps facilities, which reduced recurring Coast  Guard costs.
The HH-65 program office reduced procurement costs by approximately  12 percent or $25,000 by purchasing a range of subsystems and  components, such as a cockpit display unit, from an Army contract.
The Coast Guard has also identified opportunities to further leverage DOD  resources. In 2009, the Navy and Coast Guard conducted a commonality  study that identified, among other things, 17 commonality opportunities  with near term potential for mutual benefit that required little or no up- front investment to execute. Typically they require only the modification  of a policy document. Key opportunities identified included the following:    Acquisition personnel exchanges with NAVSEA to promote collaboration  and leveraging of cross-service capabilities in the acquisition community.
Leveraging existing Navy logistics management systems during the  development of the Coast Guard Logistics Information Management  System to reduce developmental costs.
section_title: DOD Resources Available to Support Major Acquisition Programs May Not Be Transparent to Coast Guard Program Staff
paragraphs: Coast Guard program managers largely rely on informal contacts to learn  about the agreements in place with DOD to support program activities.  Many Coast Guard program managers we met with indicated that they  became aware of DOD resources that could be leveraged for their  programs through contacts with their DOD counterparts or by other  means. According to Coast Guard officials, program managers also learn  about another agency’s expertise or resources through word of mouth,  market research, head of contracting activity discussions, conferences, or  networking channels. While this interaction has led to Coast Guard  programs successfully leveraging DOD resources, Navy officials told us  that in the past Navy leadership was not always fully aware of support  being provided to the Coast Guard, and as such was unable to ensure that  the right Navy entities were conducting the work and that the results  provided to the Coast Guard met Navy standards. NAVAIR and NAVSEA  have each established a liaison assigned to the Coast Guard to facilitate  information and knowledge sharing about Navy capabilities and contracts  available to Coast Guard programs. For example, NAVAIR and NAVSEA  liaisons serve as Coast Guard on-site experts, engage in dialogue with  Coast Guard, and work to increase Coast Guard awareness of Navy  resources. However, without current knowledge of existing interagency  agreements, Coast Guard program managers may not be aware of the  liaisons and their role in working with the Navy.
Relying on informal contacts may also present missed opportunities for  greater cooperation and leveraging of DOD resources. For example, the  Coast Guard has 50 or more agreements with the Navy, some of which are  broad agreements with major Navy commands such as NAVSEA or  NAVAIR, while others are specific agreements with Navy agencies such as  the Naval Ordnance Safety and Security Office, Naval Surface Warfare  Center Dahlgren Division, and the Naval Supply Systems Command.  Interagency agreements may call for a designated point of contact for  Coast Guard program managers to contact, but program managers do not  have a systematic way to gain insight into the details of the agreements.
According to Coast Guard contracting officials, the Coast Guard has  recently begun to develop a database of interagency agreements with DOD  and other agencies that Coast Guard programs can leverage to support  acquisition activities. However, due to limited attention devoted to this  issue, Coast Guard officials noted that only 5 of the approximately 81  interagency agreements are in a data system accessible to program staff.  These officials also noted that a database is needed to avoid duplicative  efforts and to ensure program staff are aware of existing agreements,  including the latest versions of agreements specifying updated products  and services available.
section_title: Conclusions
paragraphs: The Coast Guard has continued to make progress in strengthening its  capabilities to manage its acquisition portfolio by updating acquisition  policies and practices as well as reducing vacancies in the acquisition  workforce. As the Coast Guard improves its acquisition management  capabilities, it may find that adjustments and changes will be necessary in  light of how well its major acquisition programs are progressing. The  Coast Guard has leveraged DOD contracts to help support its major  acquisition programs, but reliance on informal contacts may also present  missed opportunities for greater cooperation and leveraging of DOD  resources to help save scarce resources, manage programs risks, and  support positive acquisition outcomes.
section_title: Recommendation for Executive Action
paragraphs: To provide Coast Guard program management staff with greater access to  updated information about agreements in place with DOD to facilitate  leveraging support for major acquisition programs, we recommend that  the Commandant of the Coast Guard take steps to ensure all interagency  agreements are captured in a database or other format and make this  information readily accessible to program staff.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Coast Guard, DHS, and DOD. DHS  provided oral comments stating that it concurred with the  recommendation. The Coast Guard and DOD provided technical  comments, which we incorporated into the report as appropriate.
We are sending copies of this report to interested congressional  committees, the Secretary of Homeland Security, the Secretary of Defense,  and the Commandant of the Coast Guard. This report will also be available  at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report or need additional  information, 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. Staff  acknowledgments are provided in appendix II.
section_title: Appendix I: Scope and Methodology
paragraphs: The Coast Guard Authorization Act of fiscal year 2010, as amended,  specified that “Within 180 days after the date of enactment of the Coast  Guard Authorization Act for fiscal year 2010, the Comptroller General of  the United States shall transmit a report to the appropriate congressional  committees that—(1) contains an assessment of current Coast Guard  acquisition and management capabilities to manage Level 1 and Level 2  acquisitions; (2) includes recommendations as to how the Coast Guard can  improve its acquisition management, either through internal reforms or by  seeking acquisition expertise from the Department of Defense (DOD); and  (3) addresses specifically the question of whether the Coast Guard can  better leverage Department of Defense or other agencies’ contracts that  would meet the needs of Level 1 or Level 2 acquisitions in order to obtain  the best possible price.”
To determine the Coast Guard’s current management capabilities for its  major acquisition programs, we evaluated the Coast Guard’s acquisition  policies and processes, status of its acquisition workforce, and execution  of its major programs since we last reported on the Coast Guard’s  acquisitions and acquisition management in June and July 2010. We  reviewed Coast Guard acquisition governance, policy, and process  documents such as the Coast Guard’s Major Systems Acquisition Manual  and Blueprint for Continuous Improvement that have been issued,  implemented, or updated since July 2010. We also interviewed Coast  Guard and other Department of Homeland Security (DHS) acquisition  officials to analyze and explain the factors behind the acquisition  governance changes as well as how changes have been implemented to  date through review of meeting briefings, minutes, and subsequent  decision memos.
To evaluate the Coast Guard’s status of its acquisition workforce, we  reviewed Coast Guard information on government, contractor, and vacant  positions to identify any progress made in reducing acquisition workforce  vacancies and filling critical positions since July 2010 as well as any  positions that continue to be challenging to fill. Additionally, we obtained  and analyzed Coast Guard program staff information to determine specific  programs experiencing staffing shortfalls and conducted interviews to  supplement Coast Guard information and determine the extent to which  staffing shortfalls affect program execution.
To evaluate the Coast Guard’s execution of its major programs we  analyzed information on the status of those programs since July 2010  through reviews of general acquisition status reports (e.g., Quarterly  Acquisition Reports to Congress and Quarterly Performance Reports),  program briefings, and acquisition process documents (e.g., Acquisition  Program Baselines) to determine how many programs have cost, schedule,  or performance issues based on criteria in the Major Systems Acquisition  Manual. Further, we analyzed additional program performance, schedule,  cost, and funding information from the Capital Investment Plan, breach  memos, and acquisition decision memos to identify funding stability issues  and the extent to which funding issues were factors leading to breaches in  established program baselines. We also corroborated program information  with interviews of Coast Guard program staff and interviews with external  DHS stakeholders, such as acquisition oversight and cost analysis staff in  the acquisition program management directorate. Moreover, we examined  and identified best practices from prior GAO reporting on Coast Guard  funding stability as a factor in program continuity and successful  outcomes.
To determine the extent to which the Coast Guard leverages DOD and  other agency contracts or expertise to support its major acquisition  programs, we examined the Coast Guard’s interagency agreements and  identified the agencies the Coast Guard most commonly used to support  major acquisition programs. On the basis of this analysis, we interviewed  Coast Guard officials, as well as DOD, Navy, and Air Force officials about  resources provided to support Coast Guard major acquisition programs.  We also discussed with Coast Guard officials any current efforts to update  the agreements. Using this analysis, we identified examples of cost savings  and other benefits for selected Coast Guard acquisitions. Further, we  reviewed relevant GAO and DHS Inspector General reports. We  corroborated testimonial information from interviews with Coast Guard  acquisition and program staff by reviewing contracts, agreements, and  other documents that show the amount of resources expended by the  Coast Guard for DOD-provided goods and services and by interviewing  DOD officials at the Naval Sea Systems Command, Naval Air Systems  Command, Space and Naval Warfare Systems Commands, and the  Department of the Air Force.
We conducted this performance audit from January 2011 to April 2011 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.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: Other individuals making key contributions to this report were John  Neumann, Assistant Director; William Russell; Jessica Drucker; Sylvia  Schatz; Kenneth Patton; and Morgan Delaney Ramaker.
section_title: Related GAO Products
paragraphs: 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.
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: Status of Selected Assets of the Coast Guard’s Deepwater  Program. GAO-08-270R. Washington, D.C.: March 11, 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.