Coast Guard: Better Logistics Planning Needed to Aid Operational Decisions Related to the Deployment of the National Security Cutter and Its Support Assets
Published: 2009-07-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As part of its more than $24 billion Deepwater program to replace aging vessels and aircraft with new or upgraded assets, the Coast Guard is preparing the National Security Cutter (NSC) for service. GAO previously reported on Deepwater assets' deployment delays and the Coast Guard's management of the Deepwater program. GAO was legislatively directed to continue its oversight of the Deepwater program. As a result, this report addresses: (1) the operational effects, if any, of delays in the delivery of the NSC and its support assets of unmanned aircraft and small boats; (2) Coast Guard plans for mitigating any operational effects and any associated costs of these plans; and (3) the extent to which the Coast Guard has plans, to include cost estimates, for phasing in logistics support of the NSC while phasing out support for the High Endurance Cutter (HEC) it is replacing. GAO's work is based on analyses of the (1) operational capabilities and maintenance plans of the NSC and its support assets and (2) data on the HECs' condition; comparison of an NSC and HEC; and, interviews with Coast Guard officials.
section_title: What GAO Found
paragraphs: Delays in the delivery of the NSC and the support assets of unmanned aircraft and small boats have created operational gaps for the Coast Guard that include the projected loss of thousands of days in NSC availability for conducting missions until 2018. Enhancements to the NSC's capabilities following the 9/11 terrorist attacks and the effects of Hurricane Katrina were factors that contributed to these delays. Given the delivery delays, the Coast Guard must continue to rely on HECs that are becoming increasingly unreliable. Coast Guard officials said that the first NSC's capabilities will be greater than those of an HEC; however, the Coast Guard cannot determine the extent to which the NSC's capabilities will exceed those of the HECs until the NSC's support assets are operational, which will take several years. To mitigate these operational gaps, the Coast Guard plans to upgrade its HECs and use existing aircraft and small boats until unmanned aircraft and new small boats are operational, but because the mitigation plans are not yet finalized, the costs are largely unknown. Also, the Coast Guard has not yet completed operational requirements for the unmanned aircraft or new small boats. As a result, the Coast Guard has not determined the cost of the HEC upgrade plan or the operational gap created by the delay in fielding new support assets for the NSC. The Coast Guard's logistics support plans for its transition to the NSC from the HEC are not finalized, and it has not yet fully determined transition costs. The contractor developed the initial NSC logistics plans, but Coast Guard officials said the plans lacked needed details, such as how the contractor would support the NSC after it becomes fully operational, and so, in 2007, the Coast Guard took over logistics planning. Coast Guard acquisition guidance states that an Integrated Logistics Support Plan should be completed by the time production of an asset is started. Although the first NSC has already been delivered, the Coast Guard has not yet finalized this plan, but expects to do so by October 2009. While the Coast Guard has developed an interim plan, it did not commit to including required logistics support documents to be used or time frames for completing them in the Integrated Logistics Support Plan because it is in the process of determining how to finalize the plan. Ensuring the plan includes these documents and time frames would better prepare the Coast Guard to support the NSC and aid it in making operational decisions given that the Coast Guard has not yet developed a deployment plan or completed cost estimates of the logistics transition from the HEC to the NSC.

section_title: Letter
paragraphs: The Deepwater program is the largest acquisition program in Coast Guard  history—estimated at more than $24 billion—and is intended to replace or  modernize the Coast Guard’s aging vessels, aircraft, and some  communications systems. The first-in-class National Security Cutter (NSC)  Bertholf is undergoing final trials as the Coast Guard prepares it for full  operational service in 2010. We have earlier reported that the Coast Guard  has experienced delays with the delivery of the NSC, and the estimated  production costs of the NSC class have increased from about $3.5 billion  in 2007 to about $4.7 billion in 2009. The NSC delays and cost increases  have raised questions about whether the Coast Guard will have all the  operational capabilities needed to effectively perform its missions and the  resources necessary for maintaining its aging High Endurance Cutters  (HECs)—the vessels that the NSCs are to replace.
The NSC is the first cutter class delivered to the Coast Guard under the  Deepwater program, and, according to the Coast Guard, is to be the most  technologically advanced class in the Coast Guard, with capabilities to aid  the Coast Guard in performing missions worldwide—to include drug  interdiction and defense readiness, among others. Compared to the HEC,  the NSC is to travel at higher sustained speeds and farther distances from  shore for longer time periods and launch and recover upgraded small  boaomts, helicopters, and unmanned aircraft in rough seas—all key  attributes in enabling the Coast Guard to implement its increased national  security responsibilities resulting from the events of September 11, 2001.
A House Appropriations Committee report accompanying the Department  of Homeland Security’s fiscal year 2007 appropriations act directed us to  continue our oversight of the Deepwater program. Based on this  legislative direction, as well as more recent input from House and Senate  Appropriations Committee staff, we assessed the Coast Guard’s  management, operation, and deployment of the NSC. Specifically, this  report addresses:    What operational effects, if any, are anticipated based on delays in  delivery of the NSC class and its accompanying support assets of  unmanned aircraft and small boats?
What plans does the Coast Guard have for mitigating any identified  operational effects, and what are the costs associated with these  plans?
To what extent has the Coast Guard planned for phasing in logistics  support of the NSC and phasing out support of the HEC, and what are  the costs associated with this transition?
In conducting our work, we reviewed studies, prior GAO and Department  of Homeland Security Inspector General reports, and other relevant  documents, such as Quarterly Acquisition Reports to Congress and the  HEC 2008 Sustainment Conference Report covering the Deepwater  program in general and the NSC and HEC specifically. To identify any  operational effects from delays in the delivery of the NSC class, we  reviewed the 2007 Deepwater Acquisition Program Baseline and the 2008  NSC Acquisition Plan. We compared the 2007 and 2008 delivery schedules  to measure the effects of delivery delays on the number of NSC  operational days available to the Coast Guard over the next 9 years. We  also analyzed Coast Guard data from fiscal years 2003 through 2008 to  determine the number of HEC operational days available to the Coast  Guard. To assess the reliability of the operational hour and vessel  condition data obtained from the Coast Guard, we reviewed data systems  manuals and directives to ensure that the systems included controls for  maintaining the integrity of the data. We also interviewed officials  knowledgeable about the data and the systems that produced them. On the  basis of our assessments, we determined that the data were sufficiently  reliable for the purposes of this report. We also reviewed Coast Guard  documentation of the acquisition process for the NSC-based unmanned  aircraft and small boats and the anticipated schedule for the acquisition of  those assets. We toured NSC-Bertholf and HEC-Morgenthau while both  were at their home port in Alameda, California, to compare and contrast  the new vessel with one of the legacy vessels it is replacing. We also  interviewed Coast Guard officials about HEC and planned NSC  operational days and capabilities, including the aircraft and small boats  that support these vessels.
To address the Coast Guard’s plans for mitigating any identified  operational effects, we reviewed and analyzed the Coast Guard’s  mitigation plans contained in the Readiness Management Framework. We  also interviewed Coast Guard officials about the Coast Guard’s plans and  their costs for maintaining and upgrading the HECs for use until the NSCs  are delivered, and for using existing aircraft and small boats until new  unmanned aircraft and small boats are acquired and deployed.
To assess the extent to which the Coast Guard has plans for phasing in  maintenance of the NSCs, we reviewed existing maintenance planning  documents, including the Coast Guard’s Major Systems Acquisition  Manual (MSAM), and the Deepwater contract. We also reviewed a  maintenance and logistical readiness study conducted for the Coast Guard  by the U.S. Navy. Our analysis included reviewing the methodology,  criteria, and assumptions of the study, and discussing the study’s scope,  assumptions, and conclusions with the Coast Guard. As a result of our  review and analysis, we determined that the study and its results were  reasonable for use in our report. To supplement our document reviews  and analyses, we interviewed Coast Guard maintenance and logistics  officials regarding the ongoing maintenance planning process and the  estimated costs of this process. We also contacted officials representing  the maintenance contractor that was originally to perform NSC  maintenance for the Coast Guard to solicit their views on NSC  maintenance planning.
We conducted this performance audit from October 2008 to July 2009 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 based on our audit  objectives.
subsections: section_title: Background
paragraphs: The Coast Guard, an Armed Service of the United States housed within the  Department of Homeland Security, is the principle federal agency  responsible for maritime safety, security, and environmental stewardship  through multimission resources, authorities, and capabilities. According to  the Coast Guard, the greatest threat to mission performance is the  deteriorating condition and increasing technological obsolescence of its  legacy assets. According to the Coast Guard, its assets—such as vessels,  aircraft, and shore facilities—are essential to its homeland security  missions, as well as sustaining other mission areas, such as search and  rescue, law enforcement, and environmental protection. Because many of  the Coast Guard’s assets were reaching the end of their expected service  lives and were in deteriorating condition, the Coast Guard began the 25- year, more than $24 billion Deepwater program in the mid-1990s to  upgrade or replace vessels and aircraft and to acquire other capabilities,  such as improved communications systems.
subsections: section_title: The Coast Guard’s Deepwater Program Acquisition Strategy and Management Have Evolved
paragraphs: The Coast Guard has taken more direct responsibility for the Deepwater  program acquisition strategy and management in recent years. At the start  of the Deepwater acquisition, the Coast Guard chose a system-of-systems  strategy that was to replace the legacy assets with an integrated package  of assets, rather than using a traditional acquisition approach of replacing  individual classes of legacy assets through a series of acquisitions. To  carry out this acquisition, the Coast Guard awarded a competitive contract  to a systems integrator, which for the Deepwater program was a  contractor composed of two major companies—Lockheed Martin  Corporation and Northrop Grumman Corporation. Acting as a joint  venture called “Integrated Coast Guard Systems” (the contractor), these  companies were responsible for designing, constructing, deploying,  supporting, and integrating the various assets to meet projected  Deepwater operational requirements. However, after experiencing a  number of management challenges under the system-of- systems  approach, the Coast Guard recognized that it needed to increase  government oversight and transferred Deepwater system integration and  program management responsibilities, including logistics planning, back to  the Coast Guard in April 2007. Furthermore, when the Coast Guard  assumed the lead role for Deepwater program management, it decided to  consider future work and potential bids on these assets outside of the  existing Deepwater contract. By taking this action, the Coast Guard in  some cases decided to restart the planning and design of the individual  assets. In addition, the Coast Guard took over logistics planning for some  assets from the contractor. For example, the Coast Guard, rather than the  contractor, is now developing the NSC logistics planning documents  including the key logistics document—the Integrated Logistics Support  Plan.
The Deepwater program represents the largest acquisition in the Coast  Guard’s history, and the program has experienced some serious  performance and management problems, such as cost overruns, schedule  slippages, and assets designed and delivered with significant defects. Since  2001, we have reviewed the Deepwater program and informed Congress,  the Department of Homeland Security, and the Coast Guard of the risks  and uncertainties inherent with the system-of-systems approach. In March  2004, we made recommendations to the Coast Guard to address three  broad areas of concern: improving program management and oversight,  strengthening contractor accountability, and promoting cost control  through greater competition among potential subcontractors. In April  2006, June 2007, and March 2008, we issued follow-on reports describing  the Coast Guard’s efforts to address these recommendations and provided  information on the status of various Deepwater assets, including that the  Coast Guard’s increased management and oversight of the Deepwater  acquisition had resulted in improvements to the program. In June 2008,  we reported on additional changes in Deepwater management and  oversight that resulted in improvements to the program and that the Coast  Guard’s mitigating strategies for the loss of patrol boats were achieving  results in the near term.
Since the Coast Guard took over the acquisition and management  responsibilities for the Deepwater program from the contractor in 2007, it  has realized that its knowledge of how the various proposed assets would  work together to help meet mission needs were limited because the  contractor, in some cases, had developed the plans for these assets  without using all of the input from the Coast Guard. In 2001, the contractor  completed a study documenting the capabilities, types, and mix of assets  the Coast Guard needed to fulfill its Deepwater missions, referred to as the  Fleet Mix Study. The Coast Guard has initiated a follow-on study to update  the work originally completed by the contractor. The goals of this study  include validating mission performance requirements and revisiting the  number and mix of assets to be procured. The results of this study are  expected in the summer of 2009, at which time Coast Guard leadership  will assess the results and plan for future asset procurement decisions.  According to Coast Guard officials, the Coast Guard plans to update the  Fleet Mix Study every 4 years and, as a result, the Deepwater program may  change in terms of the numbers and types of specific assets needed.
While the final number may change as a result of the Fleet Mix Study, the  Coast Guard currently is projected to take delivery of a total of eight NSCs  between 2008 and 2017. In May 2008, the contractor delivered the first-in- class NSC, Bertholf, to the Coast Guard. The Bertholf is undergoing testing  and is planned to be fully operational in the fourth quarter of fiscal year  2010. According to the Coast Guard, as of May 2009, the second NSC,  Waesche, was 83 percent complete and is scheduled to be delivered in late  2009, while the third NSC, Stratton, was 11 percent complete and is  scheduled for a late 2011 delivery. The Coast Guard plans to have each  NSC fully operational once testing—which ranges from less than 1 year to  2 years after delivery—is completed. Coast Guard officials stated that the  Coast Guard has awarded the contract to begin purchasing materials for  the fourth NSC, but the Coast Guard has not awarded a contract for  construction of the fourth NSC. Neither materials purchases nor  production has begun on the fifth through eighth NSCs because funds for  these cutters have not yet been appropriated.
section_title: Comparison of National Security Cutter and High Endurance Cutter Capabilities and Operations
paragraphs: According to the Coast Guard, the NSC is designed to be capable of  helping it execute the most challenging of maritime security mission needs  and represents a giant leap forward in capability for the Coast Guard’s  vessel fleet. The Coast Guard further states that the NSC is to be the  largest and most technologically advanced class of cutter in the Coast  Guard, with robust capabilities for maritime homeland security, law  enforcement, and defense readiness missions. The NSC class is to replace  the Coast Guard’s aging HEC class and is to provide several capabilities  that the HECs do not have, such as the ability to collect, analyze, and  transmit classified information; carry, launch, and recover unmanned  aircraft, thereby increasing the cutter’s surveillance capabilities and range;  more easily and safely launch small boats from and return them to the  cutter; and travel away from shore for longer time periods.
In 2007, the Commandant of the Coast Guard stated that the NSC will be  the most sophisticated and capable cutter the Coast Guard has ever  operated, with vastly improved capabilities over legacy HECs. The more  capable NSCs, for example, are designed to enable the Coast Guard to  screen and target vessels faster, and more safely and reliably before they  arrive in U.S. waters. As a result of the increased capabilities of the NSCs,  the Coast Guard plans to replace 12 HECs with 8 NSCs. Figure 1 provides  a comparison of some key operational capabilities between the HEC and  its replacement, the NSC.
In addition to the capabilities described in figure 1, according to the Coast  Guard, the NSC also has the following capabilities that go beyond those of  an HEC:    NSC’s engine and propulsion systems are more efficient than the  HEC’s; allowing the NSC to transit faster while burning less fuel;  the higher transit speed of the NSC allows it to maximize the time that  it operates inside of the mission area;  the NSC has the ability to conduct missions in rougher seas than the  HEC; and  the NSC has more comfortable accommodations for the crew, with  larger sleeping and living areas that include many modern  conveniences, such as computers, entertainment systems, and exercise  facilities.
The primary missions the Coast Guard assigns to its HECs include drug  interdiction, fisheries patrols, and defense readiness. Together these  missions account for over 70 percent of HEC mission assignments.  Although the NSC is a multimission cutter that is to help the Coast Guard  conduct its full range of missions, the Coast Guard plans to assign the NSC  the same mission assignments as the HEC. Figure 2 shows the percentage  of time the HEC conducted Coast Guard missions for fiscal years 1999  through 2008.
Defense Readiness: Participation with the  Department of Defense in global military  operations Support: Training; public affairs; and  cooperation with federal, state, and local  agencies Other Law Enforcement: Protection of  U.S. fishing grounds from illegal harvest by  foreign fishermen Other: Migrant interdiction; ports,  waterways, coastal security; search and  rescue; and marine environmental  protection In conducting missions, Coast Guard vessels log the amount of operational hours deployed by  mission while on patrol. However, the Coast Guard’s system for tracking operational hours captures  hours logged in support of the primary mission that a vessel conducts while on patrol; thus, any  secondary missions that may have been performed on a patrol by these multimission vessels would  not necessarily be reflected in the operational hour data.
Prior to fiscal year 2005, the Other Law Enforcement mission area contained the Enforcement of  Laws and Treaties-Other employment category which captured those law enforcement activities that  did not fall under drug interdiction, fisheries enforcement, or migration interdiction operations.
There are currently 12 HECs in the Coast Guard, with 2 of them based on  the East Coast and another 10 on the West Coast and in Hawaii. To  accomplish its missions, cutters like the HEC typically deploy and operate  with support assets that aid the cutter in performing its mission  requirements. These may include small boats, cutter-based air assets (such  as helicopters), or land-based aircraft (such as fixed-wing aircraft or  helicopters). According to the Coast Guard officials, pairing support assets  with a cutter increases its surveillance and intelligence gathering range  and improves its search and rescue capabilities.
To maximize the time that the NSC can operate at sea each year without  requiring its crews to be away from their home port more than allowed  with the HEC, the Coast Guard plans to use a “crew rotational concept.”  Under this concept, the Coast Guard plans to have four crews staff and  operate three cutters on a rotating basis. By using the crew rotational  concept, the Coast Guard hopes that each NSC will be able to provide 230  days away from home port per year as compared to the 185 days away  from home port per year provided by each HEC. Days away from home  port is a Coast Guard measure that reflects the level of operations for a  cutter. The measure represents the days the cutter is not at the port where  it is based, including days the cutter is en route to and conducting  missions. For purposes of this report, we refer to days away from home  port as operational days.
section_title: Delays in the Delivery of the NSC and Its Support Assets Have Created an Anticipated Loss of Operational Days and Will Result in the NSC Being Deployed without Certain Operational Capabilities
paragraphs: Delays in the delivery of the NSC and its associated support assets— primarily unmanned aircraft and small boats—have created an anticipated  loss of cutter operational days and delays in achieving certain other  operational capabilities. Enhancements to the NSC’s capabilities following  the 9/11 terrorist attacks, as well as damage to the shipyard and the  exodus of workers as a result of Hurricane Katrina, contributed to these  delays. These delays will require the Coast Guard to continue to rely on its  aging HECs to provide cutter operational days and to use existing aircraft  and small boats to support the new NSC. Also, certain systems on NSC- Bertholf are currently not functioning as planned, but the Coast Guard  plans to resolve these deficiencies before NSC-Bertholf is certified as fully  operational, scheduled for the fourth quarter of fiscal year 2010. Because  the Coast Guard plans to deploy the first NSC without the planned  unmanned aircraft and new small boats, and because on-board  deficiencies still exist, the NSC will not initially operate with the full  complement of its originally-planned capabilities. As a result, the Coast  Guard cannot determine the extent to which the NSC’s final capabilities  will exceed those of the HECs at this time and it may take several years  before some of these capabilities are realized.
subsections: section_title: Comparison of the 2007 and 2008 Delivery Schedules Shows an Anticipated Loss of Over 3,000 National Security Cutter Operational Days
paragraphs: Delays in deployment of the NSCs between the 2007 and 2008 delivery  schedules show an anticipated loss of thousands of NSC operational days.  Comparing the 2007 and 2008 delivery schedules shows that the first NSC  will likely be 1 year behind schedule when it is certified as fully  operational, now scheduled for the fourth quarter of fiscal year 2010.  Further, the eighth and final NSC was to be fully operational in 2016, but is  currently projected to be fully operational by the fourth quarter of  calendar year 2018.
The first NSC was initially projected for delivery in 2006, but slipped to  August 2007 after the 9/11 requirements changes. New requirements  made after 9/11 to enhance the NSC’s capabilities also contributed to these  delays and include the following:  expanded interoperability with the Department of Defense, DHS, and  local first responders;  increased self-defense and survivability, including chemical, biological,  and radiological measures;  increased flight capability via a longer and enhanced flight deck;    upgraded weapon systems; and improved classified communication capabilities.
In addition to the delays brought about by post-9/11 requirements changes  and the associated enhancements to NSC capabilities, delivery of the NSC  was further delayed until May 2008 because of substantial damage to the  shipyard and an exodus of some of the experienced workforce as a result  of Hurricane Katrina.
If the Coast Guard maintains its 2008 acquisition schedule, the most recent  acquisition schedule available to us, it will face a projected loss of  thousands of cutter operational days available from the NSC class for  calendar years 2009 through 2017 from what was originally planned.
Specifically, as shown in figure 3, in comparing the number of operational  days that were expected to be available from the NSC fleet in the 2007  schedule to what is expected based on the updated 2008 schedule delivery  schedule, there is a cumulative projected loss of 3,080 operational days  (an “operational gap”).
Figure 3 represents the loss of operational capabilities as a result of  delivery delays with the NSC, but does not directly translate into lost  cutter operational days for the Coast Guard as a whole because it does not  take into account any operational days that the Coast Guard anticipates  can be provided through continued use of its HECs. Coast Guard officials  emphasized that it plans for the HECs to continue to serve until the NSCs  become operational. As a result, the Coast Guard officials state that they  do not anticipate a gap in operational days, even though they acknowledge  that the HECs have fewer capabilities than the NSCs.
While continued operation of the HECs should at least partially mitigate  the operational gap shown in figure 3, we believe that this analysis is  useful to demonstrate the amount of time that the Coast Guard will be  without the enhanced operational capabilities that the NSCs are expected  to provide once they are deployed with their full complement of support  assets. The Coast Guard is unable to quantify the gap in operational  capabilities that it will actually experience, though, because it has not yet  completed the HEC decommissioning schedule, which, according to Coast  Guard officials, is to be completed in late 2009 at the earliest. The Coast  Guard is also not able to estimate the impact of these lost operational days  on specific future missions. However, given the enhanced capabilities that  NSCs have over the HECs, a loss in NSC operational days could negatively  impact the Coast Guards’ ability to more effectively conduct missions,  such as migrant and drug interdiction, enforcement of domestic fishing  laws, and participation in Department of Defense operations.
section_title: Delays in Delivery of the National Security Cutters Require the Coast Guard to Continue to Rely on Its Aging High Endurance Cutters
paragraphs: Delays in delivery of the NSCs have required the Coast Guard to develop  plans to rely on its aging fleet of HECs to continue to perform missions  that the NSCs were to take over. However, Coast Guard metrics show that  the HECs are becoming increasingly unreliable and, as a fleet, have not  met their target number of cutter operational days in each of the past 6  fiscal years. Specifically, the fleet of 12 HECs lost a cumulative total of 118  to 390 operational days each fiscal year from 2003 through 2008. This  accounts for 5 to 18 percent of the Coast Guard’s annual target of 2,220  days for the HEC fleet. According to the Coast Guard, this loss occurred  because of a combination of unscheduled maintenance and additional  planned maintenance beyond the 143 maintenance days allotted for each  HEC annually, and averaged about 260 lost operational days per year.  Coast Guard officials told us that this additional maintenance was the  result of the HECs’ deteriorating condition. Table 1 shows the actual  operational days provided by the HECs from fiscal years 2003 through  2008, and the gap between the days provided and the Coast Guard’s annual  target of 2,220 days.
Another measure of the condition of the HEC fleet is the percent of time [it  is] fully mission capable (PTFMC). This metric reflects the percentage of  time that the cutters operate without a major equipment failure or loss in  mission capabilities. For example, a PTFMC of 50 percent indicates that  the cutter had one or more major equipment failures (or casualties) that  degraded or forced the termination of missions for half of the cutter’s  operational days in a given year. From fiscal years 2004 through 2008, the  HECs’ PTFMC was 59 percent or less, while the Coast Guard’s PTFMC  goal for the HEC class was 86 percent. Figure 4 shows the PTFMC for the  HECs during that period.
Coast Guard officials said that because of the age and condition of the  HECs, they anticipate that the maintenance needs of the cutters will  continue to increase over time. According to Coast Guard officials, the  loss of cutter operational days and the gap between the actual PTFMC of  the HEC class and the Coast Guard’s goal of 86 percent would negatively  impact their drug interdiction, defense readiness, alien migrant  interdiction, and living marine resource missions. The HECs were  commissioned during 1967 to 1972 and have an estimated service life of  about 40 years, affected in part by a rehabilitation and service life  extension program that began in the late 1980s and ended in 1992. As part  of this program, each cutter received an overhaul, costing from $70 million  to $90 million per cutter. Many major propulsion and hull systems,  however, were overhauled but not upgraded or replaced, and these  systems are now at or near the end of their useful service life.
section_title: The First National Security Cutter Will be Deployed without Planned Support Assets
paragraphs: The Coast Guard plans to deploy the first NSC, scheduled to become fully  operational in the fourth quarter of fiscal year 2010, without its planned  support assets of unmanned aircraft and new small boats. In addition,  based on our review of a Coast Guard study, future NSCs may begin  missions without the originally-planned unmanned aircraft. The Coast  Guard plans to draft operational specifications for the unmanned aircraft  in 2010, and to acquire new small boats that will be deployed with the first  NSC by the end of calendar year 2010. As a result, because Coast Guard  has not determined the needed specifications, the extent of the  operational gap created by the lack of these assets is not known at this  time. In particular, a Coast Guard acquisition official said that the Coast  Guard has not yet selected the type of unmanned aircraft that is to be  deployed with the NSC, but plans to do so by the third quarter of fiscal  year 2012. After the unmanned aircraft is selected, the Coast Guard must  contract for the acquisition and production of the aircraft, accept delivery  of it, and test its capabilities before deploying it with the NSC—activities  that can take several years.
The NSCs are designed to be deployed with the following combinations of  support aircraft:  1 helicopter and 2 unmanned aircraft or  4 unmanned aircraft.
The helicopter may be used for surveillance, rescue operations, or  airborne use of force, whereas the unmanned aircraft is intended to  increase the NSC’s surveillance capabilities. In addition to the support  aircraft, the NSC is intended to be deployed with three new small boats,  rather than the two small boats on the HECs, and, according to the Coast  Guard, will be able to launch and recover small boats in rougher seas than  the HEC. The small boats are designed to assist the Coast Guard in  conducting vessel boardings, pursuing and interdicting vessels suspected  of unlawful behavior, and conducting search and rescue operations. The  Coast Guard currently operates the helicopters that can be deployed with  the NSC, but has restarted the acquisition of the small boats and is in a  pre-acquisition process for the unmanned aircraft because the operational  requirements for the unmanned aircraft and small boats, as set forth by the  contractor, did not meet the Coast Guard’s needs. These support assets  are to provide the NSC with surveillance and other capabilities beyond  those of the HECs. However, until operational requirements are completed  and the unmanned aircraft and small boats are delivered, these increased  capabilities of the NSC will not be realized by the Coast Guard. Coast  Guard officials acknowledged that the lack of unmanned aircraft would  create a gap between the NSC’s actual and planned capabilities, but noted  that deployment of existing small boats with the NSC would mitigate any  capability gap created by the absence the new small boats, as discussed  later in this report.
subsections: section_title: Unmanned Aircraft
paragraphs: The Coast Guard has not finalized the operational requirements or  acquisition schedule for the unmanned aircraft to be deployed with an  NSC, making it difficult for the Coast Guard to quantify the expected  operational gap. Acquisition of the unmanned aircraft was discontinued by  the Coast Guard in 2007. According to Coast Guard officials, the Coast  Guard discontinued this acquisition because the technology was unproven  and the projected costs were greater than those originally planned.  According to a Coast Guard acquisition official, the Coast Guard will  assess alternative aircraft platforms and plans to select one by the third  quarter of fiscal year 2012 for acquisition. Having assumed responsibility  for the acquisition of the unmanned aircraft from the contractor, the Coast  Guard is to follow the processes set forth in its acquisition guidance.  However, because the acquisition program is in its early stages, the Coast  Guard has not yet determined a date for the deployment of an NSC-based  unmanned aircraft.
section_title: Small Boats
paragraphs: The capabilities of the small boats that are to be deployed with the NSCs  are also not currently defined. According to Coast Guard officials, the  original small boat capabilities as planned by the contractor were not  realistic. For example, Coast Guard officials told us that operational  requirements—such as the inclusion of gun mounts, a top speed of 45  knots, and communication suite requirements—may have been achievable  individually, but were not feasible when taken together. Coast Guard  officials said that they do not yet know what the new operational  requirements will be, but that they plan for the new small boats to have  greater capabilities than the legacy small boats, which will further enhance  the capabilities of the NSC. The Coast Guard planned to finalize the  operational requirements by summer 2009, and Coast Guard officials  anticipate deployment of the small boats by the end of calendar year 2010.  However, until these operational requirements and a determined delivery  schedule are in place, the Coast Guard is unable to quantify the  operational gap that will be created by the absence of the new small boats  that were to have been deployed on the NSC.
section_title: The Coast Guard Is Addressing National Security Cutter Onboard Deficiencies
paragraphs: In addition to the gaps created by lost operational days and the absence of  the unmanned aircraft and small boats, the Coast Guard has identified  several operational deficiencies onboard NSC-Bertholf that it plans to  address by the end of calendar year 2010. In particular, according to Coast  Guard officials, three deficiencies are to be addressed before the cutter is  certified as fully operational in the fourth quarter of fiscal year 2010.  Details on these three deficiencies are as follows:    First, NSC-Bertholf currently lacks a shipboard sensitive  compartmented information facility required for participation in  certain Department of Defense missions and exercises. Coast Guard  officials told us that building such a facility was a post-9/11  requirement the manufacturer did not have time to integrate into NSC- Bertholf. This facility is to improve communication of sensitive and  classified information with other Coast Guard and Department of  Defense assets and shore facilities. Work on the facility is underway  and the Coast Guard plans to complete the installation and testing in  February 2010. According to Coast Guard officials, the Coast Guard  will also be responsible for installing similar facilities on the future  NSCs, as they will not be installed by the contractor during  construction for security reasons.
Second, full installation of technology that aids the movement of  helicopters into the NSC’s two hangars is not yet complete, because  the helicopters that are to be deployed with the NSC have not yet been  modified to use this technology. NSC-Bertholf is equipped with a  system designed to automatically secure helicopters after landing and  then move them into a hangar. According to Coast Guard officials, this  system reduces the number of crew members needed to assist in  landing the helicopter and increases the safety of the landing process.  The system has been installed on NSC-Bertholf, but the Coast Guard  has not yet completed the modification of the helicopters to enable  them to integrate with the system. Therefore, the Coast Guard plans to  manually tie down and move the helicopters until the modification is  complete, which, according to Coast Guard officials, is planned for  March 2010. Coast Guard officials stated that the system is to be  included during construction of all future NSCs.
Third, the functionality of the stern ramp and doors used to launch  small boats on NSC-Bertholf is limited. Coast Guard officials reported  that the doors do not open and close as expected and that the doors  are safe to operate only when the NSC is moving at speeds of 5 knots  or less, because sections of the doors protrude into the water at the  edge of the cutter when they are opened. The stern launch system  facilitates the launch and recovery of small boats and requires fewer  crew to operate than traditional side-launch systems that rely on  cranes to both lower the small boats into the water and then raise  them on to the cutter when their missions are completed. Replacement  doors have been designed that angle up, away from the water, and are  equipped with a mechanism that will better handle their weight to  enable them to operate more reliably and safely. According to the  Coast Guard, the new doors are to be retrofitted to NSC-Bertholf when  the cutter goes in for a maintenance period, planned for March 2010,  and are to be installed on future NSCs during their construction.
Until these onboard deficiencies are addressed and the NSC’s unmanned  aircraft and new small boats are delivered, the NSC will be operating  without planned assets that would enhance its capabilities over those of  an HEC. Coast Guard officials stated, though, that even without the  planned unmanned aircraft and new small boats, NSC-Bertholf’s  capabilities will be greater than those of an HEC when it is certified as  fully operational at the end of fiscal year 2010. In particular, the officials  stated that, among other things, the NSC will have improved habitability,  increased transit speeds, better fuel efficiency, and a superior weapons  system. However, some of these improvements have not been fully tested  and the NSC will initially not have other key capabilities, such as the  unmanned aircraft, which will require several years of construction and  testing after its initial selection in 2010.
section_title: The Coast Guard Plans to Mitigate Identified Operational Gaps by Upgrading Certain High Endurance Cutters and Using Existing Support Assets, but the Success and Costs of These Plans Cannot Be Fully Determined
paragraphs: To mitigate the operational gaps identified to date that have been created  by delays in deployment of the NSC and its associated support assets, the  Coast Guard plans to keep the HECs operational and to use existing air  assets and small boats until new assets are acquired. However, the costs of  these plans and the extent to which these plans will successfully mitigate  gaps caused by delivery delays cannot be fully determined at this time.
subsections: section_title: The Coast Guard Plans to Perform Upgrades and Maintenance on the High Endurance Cutters to Help Mitigate Lost Cutter Operational Days, but Complete Costs Cannot Be Determined
paragraphs: The Coast Guard plans to perform a series of upgrades and maintenance  procedures on its HECs to help mitigate the loss of NSC operational days,  but the complete costs of these improvements cannot be determined  because the Coast Guard has not finalized its plans for completing these  tasks, nor has funding been provided. The Coast Guard has also begun a  management initiative to increase the number of operational days  available from the HECs, given delays in deploying the NSCs. However,  because these plans have not yet been finalized and the Coast Guard could  not provide estimated completion dates, the extent to which these plans  will help mitigate the loss of cutter operational days faced by the Coast  Guard cannot be fully determined at this time. More specifically, the Coast  Guard’s mitigation plans include three key elements, as follows:    First, the Coast Guard plans to overhaul or replace equipment on  selected HECs through an HEC sustainment program. According to  Coast Guard officials, the purpose of the program is to replace  obsolete or increasingly unsupportable parts and equipment to lower  the cost of future HEC maintenance and increase the number of days  that the HECs are able to operate each year. Depending on the state of  each individual HEC, the sustainment program could include repairs or  upgrades to the hull and propulsion machinery, fire alarm systems, air- conditioning and refrigeration systems, or other equipment that has  become difficult to maintain. According to Coast Guard officials, they  do not expect that all of the HECs will receive these upgrades; rather,  the selection of the cutters to be upgraded is to be based on an  analysis of their condition. Coast Guard officials stated that the  analysis of the condition of the HECs is expected to begin in 2011, and  that the work to overhaul the selected cutters is to begin in 2015, with  work on the first selected HEC to be completed in 2016. Based on  these time frames, there will be a loss of cutter operational days  resulting from the deteriorating condition of the HECs for at least the  next 7 years, until 2016. During the years in which the Coast Guard  carries out the sustainment program, the operational gap created by  lost cutter operational days could widen because each HEC selected  for upgrade is to be taken out of service for 1 year while the necessary  work is completed. Coast Guard officials noted that this is required in  order for HECs to continue operations until the NSCs are deployed  and that they intend to coordinate the HEC upgrades, the HEC  decommissioning schedule, and the deployment of the NSCs to ensure  that a combination of 12 HECs and NSCs are available for operations  while HECs are removed from service for upgrades. The Coast Guard  officials said that they have drafted the sustainment program proposal,  but it was not finalized at the time of our review and the Coast Guard  does not have an estimated date for when it will be completed. The  officials added that they could not predict whether this program would  be funded.
Second, in 2007, the Coast Guard implemented a management initiative  to (1) clearly define HEC maintenance goals, (2) enumerate tasks to  achieve those goals, (3) assign personnel responsible for each goal,  and (4) provide a means of measuring whether the goal had been  achieved, in order to improve the readiness of the HECs based on the  West Coast and Hawaii. For example, the Coast Guard personnel  responsible for the HECs’ maintenance were assigned the goal of  improving HEC engineering equipment readiness, including tasks such  as reducing the time taken to address failures in essential equipment to  less than 15 days. Similarly, the commanding officers of each HEC  were assigned the goal of improving scheduled preventive  maintenance completion rates and to keep records to measure how  much of this maintenance was completed. Through regular analysis of  the measures associated with each goal or task, the responsible  personnel are to identify issues that may impact mission readiness,  develop and implement corrective actions, and evaluate the  effectiveness of those actions. While this management initiative is still  ongoing, Coast Guard officials stated that they believe it has been  successful. For example, the officials told us that from 2006—the year  before the initiative began—through 2008, the number of HEC  equipment failures that impacted missions declined by over 50 percent.
Third, in advance of the HEC sustainment program, the Coast Guard  intended to increase funding for HEC maintenance by $10 million  during fiscal year 2010. However, Coast Guard officials reported that  their request for the funding—intended to enable the Coast Guard to  complete HEC maintenance that had been deferred over time and  address the near-term maintenance needs of the HECs until the  sustainment program begins—was not included in the fiscal year 2010  budget.
section_title: The Coast Guard Plans to Address Operational Gaps Caused by Delays in the Delivery of Unmanned Aircraft and Small Boats with Existing Assets, Thus Costs May Not Increase
paragraphs: According to the Coast Guard, operational gaps caused by delays in the  delivery of unmanned aircraft and small boats are to be addressed through  the use of existing aircraft and small boats and thus, it likely would not  incur new costs. The unmanned aircraft is intended to increase the NSC’s  surveillance capabilities, while the small boats are designed to assist the  Coast Guard in conducting vessel boardings, pursuing and interdicting  other vessels, and conducting search and rescue operations. The Coast  Guard has not yet finalized the operational requirements of these assets;  therefore, it is not yet able to quantify the gap in aircraft surveillance and  small boat missions created by their absence.
Manned aircraft currently provide surveillance support to the HECs and  other Coast Guard vessels and could be assigned to support NSC missions,  as needed. While existing aircraft would provide the NSCs with a level of  air support comparable to that currently provided to the HECs, a Coast  Guard study found that manned aircraft cannot provide the same level of  surveillance capabilities that would be provided by a cutter-based  unmanned aircraft. Because the NSCs are to replace decommissioned  HECs, Coast Guard officials told us that the level of support provided by  the manned aircraft to the NSCs is not expected to be greater than that  currently provided to the HECs. Therefore, the Coast Guard would,  theoretically, not incur new costs in assigning existing air assets to the  NSC as the HECs are decommissioned and no longer need air support.
According to Coast Guard officials, the Coast Guard plans to deploy the  first NSC with existing small boats until new small boats are acquired.  During its operational testing period, NSC-Bertholf is using a prototype  small boat delivered by the contractor, as well as small boats used on the  HEC class. According to Coast Guard officials, there is no additional cost  to use these small boats beyond the funds already allocated for small boat  operations. Furthermore, Coast Guard officials told us that the  configuration of the small boats on the NSC will enhance its small boat  capabilities relative to the HECs. In particular, the NSC will be equipped  with three small boats, rather than the two small boats on the HECs, and  will be able to launch and recover small boats in rougher seas than the  HEC. Nevertheless, the lack of operational requirements and a delivery  schedule for new small boats precludes the Coast Guard from quantifying  the gap between the capabilities of the existing small boats and those that  it intends to acquire. As a result, the Coast Guard has not determined the  extent to which existing small boats will help mitigate the operational gap  between the existing small boats that will be initially deployed on the NSC  and the new small boats with which the NSC will deploy in the future.
section_title: The Coast Guard Is Working to Finalize Its Key Logistics Plan by October 2009, but Complete Logistics Costs Cannot Yet Be Determined
paragraphs: The Coast Guard has begun planning for the logistics support transition to  the NSC from the HEC, and is working to finalize its key NSC logistics  support plan by October 2009, but the Coast Guard cannot determine the  complete logistics transition costs. While the Coast Guard is generally  following the process established in its acquisition guide and is developing  logistics plans to support the NSC, the key logistics support plan has not  been finalized and approved within required time frames. In particular, to  meet the near term logistics needs of NSC-Bertholf, the Coast Guard has  developed and is using an interim support plan, but this plan does not  include the requisite descriptions of the detailed documents that the Coast  Guard plans to use to provide logistics support to the NSC or time frames  for completing these documents. Further, according to its acquisition  guide, the Coast Guard’s key logistics support plan—the Integrated  Logistics Support Plan—for the NSC should have been finalized prior to  the start of production on the first NSC in June 2004; but the Coast Guard  has not finalized or approved this plan. Further, the Coast Guard cannot  fully estimate the costs of the transition from the HECs to its NSCs.
subsections: section_title: The Coast Guard Is Developing Required Logistics Plans for the National Security Cutter, but the Key Logistics Plan Has Not Been Completed and Approved, as Required
paragraphs: The Coast Guard is developing logistics plans to support the NSC as  required by its Major Systems Acquisition Manual (MSAM), but the key  plan has not been finalized and approved in accordance with the time  frames required by the MSAM. The Coast Guard is required to follow the  MSAM when designing and producing new assets. Specifically, the MSAM  requires a management approach that begins with the identification of  deficiencies in overall Coast Guard capabilities and then proceeds through  a series of structured phases and decision points to: (1) identify  requirements for performance, (2) develop and match these requirements  with a proposed solution (e.g., asset needed), (3) demonstrate the  feasibility of the proposed asset, and (4) produce the desired asset. The  MSAM process provides a number of benefits that have the potential to  improve acquisition outcomes, such as ensuring that the new systems and  equipment are optimally supportable and the necessary logistics support  resources are in place and acquired at an optimal cost. Primarily, it  requires event-driven decision making by high- ranking Coast Guard  acquisition personnel at a number of key points in an asset’s life cycle. At  each decision point, or “milestone,” the MSAM requires the Coast Guard to  prepare certain documents or plans that capture the information needed  for decision making and approval of acquisition activities. The MSAM- required documents or plans also guide the transition to a new asset (e.g.,  NSC) from a legacy asset (e.g., HEC), and the MSAM provides criteria for  the Coast Guard to follow when preparing each of these documents.
Required logistics support documents include the Integrated Logistics  Support Plan, the Logistics Readiness Review, and the NSC Deployment  Plan. The Integrated Logistics Support Plan, which should have been  finalized and approved by the time production of the first NSC was started  in June 2004, is expected to be completed by October 2009. According to  Coast Guard officials, the Coast Guard contracted for the Logistics  Readiness Review and the Coast Guard expects to complete the  Deployment Plan within the time frames required by the MSAM, which is  2012. Table 2 describes and provides the status of these plans for the NSC  acquisition. Appendix I includes a list of the Coast Guard documents  necessary for NSC operations and logistical support, as well as the status  of the documents.
In 2007, the Coast Guard contracted with the Department of the Navy to  conduct a Logistics Readiness Review of NSC logistics, which identified  gaps in logistics planning and recommended corrective actions that the  Coast Guard has begun to address. The Deepwater contractor developed  the initial NSC logistics plans, but in 2007, the Coast Guard assumed  responsibility for NSC logistical planning because, according to Coast  Guard officials, the contractor’s plans were deficient. Coast Guard officials  stated that they were concerned that the contractor was not completing  NSC logistics plans quickly enough and the plans had insufficient detail.  For example, Coast Guard officials said that the contractor’s logistics  plans did not include the necessary details, such as how the contractor  would support the NSC after it becomes fully operational. As part of the  logistics shift from the contractor to the Coast Guard, in 2007, the Coast  Guard contracted with the Department of the Navy to assess the logistics  readiness level of NSC-Bertholf. While not required by the MSAM at the  time the review was contracted for, Coast Guard officials said that the  review helped them focus on areas where logistics planning for the NSC  were lacking. Coast Guard officials added that the review proved to be  very useful for logistics planning and, as a result, they revised the MSAM  to now require this review before new assets transition to fully operational  status.
Published in May 2008, the Logistics Readiness Review focused on nine  areas of logistics readiness and identified logistics gaps in those areas. The  areas of logistics readiness included the adequacy of the spare parts and  supplies available to support NSC-Bertholf, the adequacy of technical  support document and plans, and the adequacy of the NSC logistical  support facilities, among others. In total, the Navy identified 34 gaps  within the 9 logistics areas and developed recommendations on how the  Coast Guard could take appropriate action to address those gaps. The  Navy identified 18 of the 34 gaps as “high priority,” which means that the  gap introduces significant risk to near-term supportability and  workarounds either do not exist or they introduce additional risk. For  example, the review found that the Coast Guard had not conducted a  sufficient number of analyses to determine NSC crew training needs.  According to Coast Guard officials, the Coast Guard generally agreed with  the Logistic Readiness Review’s findings and has made some progress in  addressing the recommendations identified. According to Coast Guard  officials, the Coast Guard plans to address 31 of the 34 recommendations.  However, according to Coast Guard officials, the Coast Guard has decided  not to address three recommendations because the costs of addressing  these recommendations outweighed the benefits. For example, the review  found that the lifting capability of the crane used to hoist items from the  pier onto the NSC was insufficient and made a recommendation to address  this deficiency. Coast Guard officials stated the Navy’s finding was based  on the projected capability of the crane and countered that its actual lift  capabilities are sufficient to meet the needs of the NSC.
Coast Guard officials stated that the NSC logistics transition from the  contractor to the Coast Guard either created or increased the significance  of several of the gaps identified. For example, under the contractor- supported model, the Coast Guard would have been responsible for a  limited amount of NSC maintenance. However, because the Coast Guard  now plans to support the NSC with its own staff, it must train personnel  and upgrade facilities. Appendix II provides more detail on the review’s  findings and the status of the Coast Guard’s progress in implementing the  recommendations made to address the gaps identified. Coast Guard  officials noted that the Navy does not plan to validate the actions the  Coast Guard has taken. Table 3 shows the Coast Guard’s assessment of the  status of the 34 gaps identified by the Navy’s review.
According to the Coast Guard officials, the Coast Guard has completed  work to address six recommendations, such as revising the NSC  Configuration Management Plan, which the Navy found to be inadequate  and considered a high-priority gap. Regarding the 25 recommendations in  process or not yet started, Coast Guard officials stated the Coast Guard  has made some progress in addressing these recommendations. For  example, one high-priority gap cited the lack of training for Coast Guard  personnel who will be supporting NSC-Bertholf, so, according to Coast  Guard officials, the Coast Guard is training these personnel as needs arise.  Despite progress, more work needs to be done. For example, the review  concluded that facility budgets are insufficient and are not aligned with  asset deliveries, and that the Coast Guard has not developed plans for  either home ports or facilities for all NSCs. The review recommended  developing these documents to address these high-priority gaps. Coast  Guard officials stated that the Coast Guard is in the process of addressing  the home port recommendation, but has not started to address the facility  recommendation.
subsections: section_title: The National Security Cutter’s Integrated Logistics Support Plan Has Not Been Completed and Approved, as Required
paragraphs: The NSC’s Integrated Logistics Support Plan—the key logistics planning  document that is to describe the necessary logistics support activities— has not been completed and approved as required by the MSAM. The  MSAM requires that this plan assign responsibility to a Coast Guard unit  for the planning of each logistics area and establish a schedule with time  frames for completing these activities. According to the MSAM, each of the  10 logistics areas should have a section in the Integrated Logistics Support  Plan that identifies and describes the detailed documents the Coast Guard  intends to use to support the project in each logistics area with the details  to be provided separately. Moreover, the plan is to identify what details  will be provided, who will provide them, and when. Table 4 describes the  10 logistics areas.
According to the MSAM, the Coast Guard is to prepare and approve the  Integrated Logistics Support Plan before production is started on the first  asset in a class. Although the NSC acquisition passed this phase in June  2004, as of May 2009, the Coast Guard has not completed and approved  this plan. Coast Guard officials said that the Coast Guard initially required  the contractor to develop the Integrated Logistics Support Plan, but when  the Coast Guard assumed responsibility for NSC logistics in 2007, it  determined that the contractor’s plan did not meet the Coast Guard’s  needs and began to update it. According to Coast Guard officials, they  expect to complete the plan by October 2009.
To meet the near term logistics needs of the NSC and guide logistics  planning until the Coast Guard completes the Integrated Logistics Support  Plan, it developed an Interim Support Plan. According to the Coast Guard,  the interim plan is to provide information about how the Coast Guard  would sustain NSC-Bertholf and to identify the personnel responsible for  maintaining the NSC. Our review of the Interim Support Plan, however,  found that while the plan assigns responsibility to a Coast Guard unit for  activities in all 10 logistics areas, it does not provide the level of detail that  would be required by the MSAM for an NSC Integrated Logistics Support  Plan. In particular, as shown in table 5, we found that 5 of the 10 areas  covered in the Interim Support Plan do not contain a planning section that  describes the detailed documents the Coast Guard plans to use to support  the NSC in each logistics area. In addition, none of the 10 logistics areas  contain detailed time frames for when the planning information is to be  developed and finalized. For example, while the interim plan makes note  of the “Training” logistics area, the plan does not contain any dates to  guide the Coast Guard’s planning of this area. Further, five areas, such as  “Maintenance Planning” and “Supply Support” do not contain a planning  section and, therefore, do not have required time frames for completing  documents.
According to Coast Guard officials, while the Interim Support Plan was  developed using the MSAM-mandated Integrated Logistics Support Plan  structure as a guide, they acknowledged that the interim plan does not  meet MSAM requirements. Further, Coast Guard officials did not commit  to including all the required items, such as details of documents to be used  and time frames for completing these documents, when revising the final  Integrated Logistics Support Plan because they are still in the process of  determining how to proceed with finalizing the plan. Including these  details and time frames for the completion of logistics planning documents  could strengthen the Coast Guard’s efforts to support the NSC in the 10  logistics areas by providing a roadmap to guide its personnel regarding  actions to take and when to take them. For example, the interim plan lacks  MSAM-required details on maintenance planning and supply support— which are critical in determining the number of people and supplies for  supporting the NSC. In addition, providing details and time frames for the  other logistics areas, as noted in table 5, would help ensure such actions  are conducted in accordance with management’s directives and better  position the Coast Guard to more effectively support the NSCs as they are  deployed.
section_title: The Coast Guard Continues to Develop Required Components of the National Security Cutter Deployment Plan
paragraphs: The Coast Guard has made some progress in developing a deployment  plan that is to address the logistics transition from the HEC to the NSC and  some of the costs of this transition and expects to complete this plan by  2012, as required by the MSAM. Specifically, the MSAM requires the Coast  Guard to develop an asset deployment plan that includes items such as the  timing of deliveries, the decommissioning of legacy assets, and the  selection of locations where the new assets will be based. In addition, the  Deployment Plan is to identify any costs that will be incurred as part of (1)  NSC deployment, (2) new or modified facilities requirements, (3) staffing  issues, and (4) plans for disposal of HECs. For the NSC, the MSAM  requires an approved plan be in place by 2012, prior to full production. The  Coast Guard anticipates it will complete the NSC Deployment Plan to  satisfy this requirement within the time frame established by the MSAM.  Some parts of the Deployment Plan currently under development include  the following:    Delivery schedule: The Coast Guard has developed an NSC delivery  schedule. The first NSC was delivered in 2008 and the final NSC is  expected to be delivered in 2017.
Home port locations: According to Coast Guard officials, the Coast  Guard plans to base the first three NSCs in Alameda, California and  continues to develop home port plans for the other five cutters and  determine the facilities upgrades needed at these ports. According to  the MSAM, both the home port and facility plans are to be completed  by 2012, and Coast Guard officials stated the Coast Guard is on track  to meet this requirement for both plans. Specifically, Coast Guard  officials stated that the Coast Guard expects to decide the home port  locations for the fourth through sixth NSCs by the end of fiscal year  2009, and it plans to decide the home port locations for the seventh  and eighth NSCs by fiscal year 2011. According to Coast Guard  officials, facility planning is to begin after home port locations are  determined.
Decommissioning Schedule: Coast Guard officials stated that they  continue to work on a decommissioning schedule and have  determined that the Coast Guard will decommission HEC-Hamilton  shortly after NSC-Bertholf becomes fully operational. According to  Coast Guard officials, the order in which the other HECs are to be  decommissioned is to be determined in 2009, although the order may  change after the completion of an analysis of the condition of HECs. A  critical component of this analysis is an assessment of HEC hulls.  According to Coast Guard officials, saltwater corrodes a cutter’s hull  over time, and the studies are to determine the extent to which the  hulls are degraded on HECs. Studies of two HEC hulls have been  completed, and the Coast Guard expects to complete five more in  2009, and then complete the remaining five by 2011. Ultimately, the  Coast Guard plans to use these studies to inform its decision about  which HECs to decommission first and which to sustain longer.  According to Coast Guard officials, the time frames the Coast Guard  develops to implement its HEC sustainment plan may also impact the  decommissioning schedule, as the Coast Guard may delay the  decommissioning of an HEC until it completes sustainment upgrades  on another HEC to minimize any operational gaps. To further minimize  any operational gaps, Coast Guard plans to schedule HEC  decommissioning dates to coincide with NSCs becoming operational.
section_title: Coast Guard Continues to Develop Logistics Transition Cost Estimates
paragraphs: The Coast Guard has incurred some costs and developed cost estimates  related to the logistics transition from the HEC to the NSC, such as NSC  maintenance personnel salaries at Alameda, but other costs related to this  transition, such as facilities upgrades for ports other than Alameda, cannot  be fully determined at this time. According to Coast Guard officials, the  primary cost drivers of the logistics transition are: (1) maintenance  planning, (2) maintenance training, (3) facilities upgrades, and (4)  maintenance execution. These officials stated that the cost drivers they  identified contained both transition and life-cycle logistics costs, and that  it was difficult to differentiate between these costs. For example, Coast  Guard officials stated that the maintenance execution cost driver—the  actions taken to maintain an asset—does not distinguish between  transition and life-cycle costs. A discussion of the transition component of  each cost driver, the costs incurred to date, and any estimated future costs  follows.
subsections: section_title: Maintenance Planning
paragraphs: Coast Guard officials said that the first cost driver for the logistics  transition from HECs to NSCs is the development of maintenance planning  documents and schedules. According to Coast Guard officials, most  maintenance planning is complete, and as of May 2009, the Coast Guard  has spent an estimated $2.5 million on these efforts. More specifically, the  Coast Guard spent about $1.1 million on contracting, primarily for  maintenance plan development and management, while the remaining $1.4  million represents the amount paid to Coast Guard personnel working on  maintenance planning. Coast Guard officials estimated that as of May  2009, the Coast Guard had completed at least 90 percent of the needed  NSC maintenance planning.
section_title: Maintenance Training
paragraphs: Coast Guard officials stated that the second cost driver for the logistics  transition from HECs to NSCs is the preparation of the crew and shore- side maintenance personnel to support the NSC. As of June 2008, the  Coast Guard estimated that it needed about $7 million for training.  According to Coast Guard officials, the Coast Guard continues to develop  training programs and further work remains to be done. For example, the  Logistics Readiness Review recommended completing additional training  analyses on 30 equipment systems unique to the NSC, but Coast Guard  officials stated that as of February 2009, only 4 analyses of these systems  were under way. Additionally, the Coast Guard has not decided the extent  to which it will develop its own training courses—which require more  upfront costs—as opposed to contracting with equipment manufacturers  for the training. The costs incurred for this driver as well as the overall  logistics transition costs may increase if the Coast Guard decides to  develop more training.
section_title: Facility Upgrades
paragraphs: Coast Guard officials told us that the third cost driver for the logistics  transition from HECs to NSCs includes the modifications to the port and  its associated buildings to accommodate the new NSCs. By June 2008, the  Coast Guard had completed about $12.5 million of the facility upgrades  needed at the Alameda, California port where at least three NSCs are to be  based. These modifications included pier upgrades to accommodate the  larger NSC as well as dredging the channel to accommodate the NSC’s  deeper draft. Because of these logistics improvements, the Coast Guard  port at Alameda can now accommodate NSC-Bertholf, as shown in   figure 5.
While certain facility upgrades have been completed in Alameda, other  upgrades have not been completed. For example, the Coast Guard believes  it will need a building to house those crew members who are part of the  new rotational crewing concept for the NSC, but as of June 2009,  construction of the estimated $22.4 million facility has not started.  According to Coast Guard officials, the Coast Guard also has not begun  facility upgrades at other locations because the Coast Guard has not  finalized the NSC Home Port Plan. Coast Guard officials stated that the  Coast Guard expects to decide the home port locations for the fourth  through sixth NSCs by the end of fiscal year 2009, and it plans to decide  the home port locations for the seventh and eighth NSCs by fiscal year  2011. Coast Guard officials stated that the Coast Guard may select home  ports for NSCs in locations that could require more significant upgrades  than Alameda, an outcome that would increase costs.
section_title: Maintenance Execution
paragraphs: Coast Guard officials said that the fourth cost driver for the logistics  transition from HECs to NSCs is maintenance activities to support the  NSCs and include (1) the cost of purchasing agreements and other  commercial contracts to supply and maintain the NSCs and (2) salaries for  Coast Guard shore-side maintenance personnel. According to Coast Guard  officials, as of May 2009, the Coast Guard had spent $550,000 on  purchasing agreements it developed with equipment manufacturers to  help bridge the gap between contractor-supported and Coast Guard- supported logistics and plans to allocate $5.6 million for these agreements  from 2008 through 2011. Coast Guard officials stated the Coast Guard has  used these agreements to purchase parts and extend equipment  warranties, among other things. Additionally, Coast Guard officials stated  that the Coast Guard plans to enter into other commercial contracts for  NSC maintenance from 2008 through 2011, but cannot estimate the costs  of those contracts because it does not have historical maintenance data on  the NSC’s new equipment that are needed to estimate the frequency of  equipment failures and the costs of repairing them. Coast Guard officials  stated that the Coast Guard currently has a 5-year study underway to  develop more accurate maintenance cost estimates.
Regarding maintenance personnel salaries, Coast Guard officials said that  separating the personnel costs for the logistics transition from HECs to  NSCs is difficult because maintenance execution costs are determined  based on the service life of the cutters and transition costs are not  accounted for separately. As such, these officials could not estimate the  maintenance personnel cost component of the logistics transition.  Although the Coast Guard has estimated shore side maintenance costs for  NSCs that are to use Alameda as a home port, Coast Guard officials stated  that they have not determined how quickly the support needs for HECs  will diminish as NSCs begin conducting missions and HECs are  decommissioned. With this in mind, Coast Guard officials stated that the  Coast Guard plans to phase out personnel positions currently dedicated to  supporting HECs and replace them with personnel dedicated to support  NSCs. According to Coast Guard officials, the Coast Guard currently has  79 maintenance personnel positions in Alameda to support four HECs and  could not estimate the cost for these positions. These officials stated the  Coast Guard has added 11 NSC maintenance positions in Alameda, at a  cost of $940,000 per year, and estimate that it will need 108 additional  maintenance personnel to support the first three NSCs at a cost of about  $9 million per year for all three combined. Furthermore, Coast Guard  officials stated that they expect the maintenance execution cost estimates  to change after the Coast Guard completes a study to determine the  number of shore-side personnel needed to support the NSC—the lack of  that study was identified in the Logistics Readiness Review as high  priority.
section_title: Conclusions
paragraphs: The NSC, the first cutter class delivered to the Coast Guard under the  Deepwater program, is to be instrumental in carrying out the Coast  Guard’s missions as it replaces the aging and increasingly unreliable HEC  class. Although the Coast Guard assumed responsibility for NSC logistical  planning in 2007 because it believed that the contractor’s plans did not  contain sufficient details, the Coast Guard has yet to complete the  Integrated Logistics Support Plan, as required by the MSAM. The Coast  Guard has developed an interim support plan to guide logistics planning  for the NSC until the Integrated Logistics Support Plan is finalized, but the  interim plan lacks MSAM-required details, such as maintenance planning  and supply support that are critical in determining the number of people  and supplies the Coast Guard will need to support the NSC. Further, while  the Coast Guard expects to complete the Integrated Logistics Support Plan  by October 2009, the plan may not include the required details of logistics  support documents to be used and time frames for completing them  because the Coast Guard is still determining how to proceed with  finalizing the plan and did not commit to including these details.  Identifying these details and time frames for the completion of logistics  planning documents could strengthen the Coast Guard’s efforts to support  the NSC in the 10 logistics areas by providing a roadmap to guide its  personnel of actions to take and when to take them, better position the  Coast Guard to more effectively transition to the NSC, better ensure that  the Coast Guard’s cost estimates are reasonable, and reduce uncertainties  for the Coast Guard (which must budget for such costs in advance) and  Congress (which must appropriate the funds).
section_title: Recommendation for Executive Action
paragraphs: To meet MSAM requirements and aid the Coast Guard in making  operational decisions, GAO recommends that the Commandant of the  Coast Guard ensure that as the Coast Guard finalizes the Integrated  Logistics Support Plan for the NSC, that the plan includes the required  logistics support documents to be used and the time frames for completing  them.
section_title: Agency Comments
paragraphs: In June 2009, we requested comments on a draft of this report from the  Department of Homeland Security and the Coast Guard. The Coast Guard  provided technical comments, which we have incorporated into the report,  as appropriate. In addition to the technical comments, the Department of  Homeland Security and the Coast Guard jointly provided an official letter  for inclusion in this report. In the letter, the agencies noted that they  generally concur with our findings and recommendation. A copy of this  letter can be seen in appendix III.
We are providing copies of this report to the Secretary of DHS, the  Commandant of the U.S. Coast Guard, and interested congressional  committees. In addition, the report will also be made 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, please contact me  at (202) 512-9610, or caldwells@gao.gov. Contact points for our Office of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix IV.
section_title: Appendix I: National Security Cutter Operations and Logistics Documents
paragraphs: This appendix lists the Coast Guard’s National Security Cutter (NSC)  operations and logistics documents that are incomplete or under  development. The Coast Guard uses many documents to guide the  acquisition and logistical support of its assets. The Coast Guard  documents relative to the NSC, their expected completion dates, and  purpose are listed in table 6.
section_title: Appendix II: Logistics Readiness Review Findings and the Coast Guard’s Efforts to Address Identified Gaps
paragraphs: This appendix describes the results of the Navy’s Logistics Readiness  Review (LRR) and the Coast Guard’s efforts to address identified gaps, as  of May 2009. The MSAM requires the completion of a LRR as a part of the  acquisition process. The Coast Guard contracted with the Department of  the Navy to conduct a LRR, which assessed the adequacy of the Coast  Guard’s readiness to support the NSC based on logistics plans provided by  the contractor. Specifically, the LRR determined the logistics readiness  level of NSC-Bertholf, identified gaps in support, assessed potential  impacts on mission performance, and recommended remediation for  identified gaps. This appendix provides details on the review’s findings  and the status of the recommendations made to address the gaps  identified.
subsections: section_title: Navy Review of National Security Cutter Logistics Areas Identified Gaps
paragraphs: The LRR focused on nine areas of logistics readiness, including supply  support, technical documents, facilities, and aviation, among others.  Table 7 provides the review’s findings in the nine areas.
subsections: section_title: Support Equipment
paragraphs: Support equipment is all the required equipment needed to support the  operation and maintenance of a system, including: tools; ground support  equipment such as generators and service carts; and calibration  equipment, among others. Systems include such areas as propellers, guns,  and the rudder. A review of 197 NSC systems identified incomplete and  inconsistent support equipment documentation. For example, 22 percent  of the items needed to support the NSC systems had complete support  equipment data while the remaining 78 percent had either partial or no  data. Additionally, numerous support equipment items were referenced  multiple times for the same systems. For example, a system that should  require only one 2,000 pound chain hoist had documents that listed a 2,000  pound chain hoist 15 times.
section_title: Configuration Management
paragraphs: Configuration management is the process used to understand the  important components of an asset and to manage any changes to these  components that might be made over the asset’s service life. This process  includes identifying components that require management; controlling  changes to these components; and recording changes made to  components. The LRR concluded that there was limited capacity within  the Coast Guard to address near-term configuration management  processes and that the working-level details in the draft configuration  management plan were not adequate to support the NSC. For example, the  Navy identified more than 13,700 NSC equipment and system records from  databases and site inspections, but the contractor’s databases included  only 5,600 records.
section_title: Capstone Documentation
paragraphs: The Navy identified NSC Capstone documents, which are the documents  normally required for major milestone decisions. The Navy found that  several logistics documents needed to be updated, such as the  Configuration Management Plan and the Interim Logistics Support Plan.  The Configuration Management Plan provides the process the Coast Guard  uses to control changes to NSC components, while the Logistics Support  Plan serves as the master logistics support document. Other documents— including the Home Port Plan and Facilities Plan—need to be developed.  The Home Port Plan is to outline where all eight NSCs are to be  permanently stationed and the Facilities Plan is to describe the necessary  changes to those homeports needed to accommodate NSCs.
section_title: Manpower, Personnel, and Training
paragraphs: Manpower and personnel is the identification and acquisition of personnel  (military and civilian) with skills and grades required to operate, support,  and maintain a system over its life cycle. Training is the processes,  procedures, techniques, training devices, equipment, and materials used  by personnel to operate and support a system throughout its life cycle.  Overall, the Navy found that this area had minor problems, but identified  some areas of concern. For example, the personnel evaluation identified  several administrative findings the Coast Guard needed to resolve,  including filling three vacant NSC-Bertholf crew positions. Additionally,  the training evaluation found that NSC training requirements are  “significantly greater” than for legacy cutters and determined that 137  systems require additional formal training. For example, the LRR found  that the average number of training days needed for an HEC crewmember  is 23, but NSC crew members need an average of 61 days of training.
section_title: Aviation and Small Boats
paragraphs: The aviation logistics area was found to have minor problems and the  small boats area was categorized as having moderate problems. The  review identified two aviation Priority 3 gaps and found, for example, that  the wind indicating system pilots use to land helicopters on the NSC was  inadequate. According to the LRR, the NSC does not have a system  certified by the Navy, but Coast Guard officials stated that the Coast  Guard has received interim approval from the Navy to use the current  system. The review also found that the Coast Guard had not made a final  decision regarding the small boat package required for the NSC. The  review recommended conducting a small boat LRR once the Coast Guard  decided on the small boat package.
section_title: Technical documentation
paragraphs: Technical documentation is the information needed to translate system  and equipment design requirements into discrete engineering and logistics  considerations, such as manual and maintenance procedures. The Navy  compared technical documentation data from different Coast Guard  sources and found that there were a number of technical documentation  discrepancies. The baseline documentation lists were inconsistent and did  not provide the desired level of logistics information as compared with  documentation found on other vessel classes. For example, the review  identified about 300 document duplications and discrepancies in Coast  Guard data. Moreover, the review determined that the Coast Guard was  unable to effectively identify and track these documents.
section_title: Supply support
paragraphs: Supply support is all the management actions, procedures, and techniques  necessary to acquire, catalog, receive, store, transfer, issue and dispose of  secondary items (piece and repair parts below the major system level).  The review found that the contractor did not include maintenance  requirements in the spares determination process; out of the 316 items the  Navy reviewed, 55 items had sufficient spares ordered, 127 items had  insufficient spares, and 134 items had either incomplete or no data.
section_title: Facilities
paragraphs: The review also examined all planned, ongoing, and completed shoreside  facility projects to gauge the potential impact on the delivery of NSC- Bertholf to the Coast Guard’s Alameda, California location. The review  found numerous logistics gaps—such as an expired certification for a  crane used to maintain NSC small boats—but none introduced significant  risk to the near-term supportability of the NSC.
section_title: Maintenance planning
paragraphs: Maintenance planning is the analytical methodology used to establish the  maintenance philosophy of a system and answers questions such as: What  can go wrong? Who will fix it? Where will be fixed? How will it be fixed?  And how often will it need to be fixed? The LRR for the NSC did not  review the detailed maintenance procedures needed to support the hull,  mechanical, electrical, and communications systems because Coast Guard  officials told the Navy that the procedures in place at the time of the LRR  did not contain the information needed. The review identified the  inadequacy of maintenance procedures as a significant gap.
section_title: The Coast Guard Reports Making Progress in Addressing Gaps Identified by the Logistics Readiness Review
paragraphs: The Coast Guard has addressed some of the gaps identified by the  Logistics Readiness Review. The Navy categorized the gaps it identified in  the LRR and developed recommendations to address those gaps. The Navy  ranked the gaps it identified in the LRR as Priority 1, 2, or 3. Priority 1 gaps  are defined as those that introduce significant risk to near-term  supportability, and workarounds either do not exist or introduce  additional risk. Priority 2 gaps do not introduce significant risk to near- term supportability, and workarounds are likely to increase the cost or  reduce the efficiency of maintenance or operations. Priority 3 gaps do not  introduce significant risk to near-term supportability, and workarounds  exist that do not introduce additional risk. Of the 34 gaps, the Navy  identified 18 as Priority 1, 8 as Priority 2, and 8 as Priority 3. As of May  2009, Coast Guard officials stated that the Coast Guard had addressed 7  recommendations (3 of which pertain to priority 1 gaps), was in the  process of addressing 21 (13 of which pertain to priority 1 gaps), had not  started 3 (2 of which pertain to priority 1 gaps), and had decided not to  address 3 gaps (none of which pertain to priority 1 gaps). Table 8 provides  a list of the 34 gaps the LRR identified and the progress the Coast Guard  has made in addressing these gaps.
section_title: Appendix III: Comments from the Department of Homeland Security
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Christopher Conrad, Assistant  Director, and Ellen Wolfe, Analyst-in-Charge, managed this review.  Christoph Hoashi-Erhardt and Paul Hobart made significant contributions  to the work. Geoffrey Hamilton provided legal and regulatory support;  Adam Vogt provided assistance in report preparation; Michele Fejfar  assisted with design, methodology, and data analysis; and Karen Burke  helped develop the report’s graphics.
section_title: Related GAO Products
paragraphs: 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 the Fiscal Year 2010 Budget and Related  Performance and Management Challenges. GAO-09-810T. Washington,  D.C.: July 7, 24, 2009.
Coast Guard: Observations on the Genesis and Progress of the Service’s  Modernization Program. GAO-09-530R. Washington, D.C.: June 24, 2009.
Coast Guard: Update on Deepwater Program Management, Cost, and  Acquisition Workforce. GAO-09-620T. Washington, D.C.: April 22, 2009.
Coast Guard: Change in Course Improves Deepwater Management and  Oversight, but Outcome Still Uncertain. GAO-08-745. Washington D.C.:  June 24, 2008.
Coast Guard: Strategies for Mitigating the Loss of Patrol Boats Are  Achieving Results in the Near Term, but They Come at a Cost and  Longer Term Sustainability Is Unknown. GAO-08-660. Washington, D.C.:  June 23, 2008.
Status of Selected Aspects of the Coast Guard’s Deepwater Program.  GAO-08-270R. Washington, D.C.: March 11, 2008.
Coast Guard: Observations on the Fiscal Year 2009 Budget, Recent  Performance, and Related Challenges. GAO-08-494T. Washington, D.C.:  March 6, 2008.
Coast Guard: Deepwater Program Management Initiatives and Key  Homeland Security Missions.GAO-08-531T. Washington, D.C.: March 5,  2008.
Coast Guard: Challenges Affecting Deepwater Asset Deployment and  Management and Efforts to Address Them. GAO-07-874. Washington,  D.C.: June 18, 2007.
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: Preliminary Observations on Deepwater Program Assets  and Management Challenges. GAO-07-446T. Washington, D.C.: February  15, 2007.
Coast Guard: Coast Guard Efforts to Improve Management and Address  Operational Challenges in the Deepwater Program. GAO-07-460T.  Washington, D.C.: February 14, 2007.
Homeland Security: Observations on the Department of Homeland  Security’s Acquisition Organization and on the Coast Guard’s  Deepwater Program. GAO-07-453T. Washington, D.C.: February 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: Preliminary Observations on the Condition of Deepwater  Legacy Assets and Acquisition Management Challenges. GAO-05-307T.  Washington, D.C.: April 20, 2005.
Coast Guard: Deepwater Program Acquisition Schedule Update Needed.  GAO-04-695. Washington, D.C.: June 14, 2004.
Coast Guard: Progress Being Made on Deepwater Project, but Risks  Remain. GAO-01-564. Washington, D.C.: May 2, 2001.