The history of the C-27J is complex and involves several government agencies and private contractors. To meet the Army’s combat zone airlift supply mission, in 2007 a joint Army and Air Force program office awarded a contract for C-27Js to a company called Global Military Aircraft Systems—a partnership between L-3 Communications and the manufacturer, an Italian company called Alenia Aermacchi (a Finmeccanica company). L-3 Communications, the lead partner, installed U.S. military-specific equipment on the aircraft manufactured by Alenia Aermacchi. In addition, a separate division of L-3 Communications provided full logistics support to the Army and Air Force under the Global Military Aircraft Systems contract. The Air Force and Army began purchasing these aircraft without fully developing a logistics plan that established how to fully support the aircraft. Five years later, in 2012, the Air Force canceled the program, citing budget constraints and its determination that Air Force C-130s could provide nearly all of the Army’s desired capability. The Air Force had not finished its logistics plan at the time. When the program was canceled in 2012, the Department of Defense (DOD) had purchased 21 C-27Js—13 by the Army and 8 by the Air Force. By mid-2013, the 13 aircraft that the Air Force fielded were sent to AMARG (colloquially referred to as the “boneyard”) for preservation and 8 aircraft were still in production. The Air Force announced that these 21 aircraft would be made available to U.S. government agencies. In May 2012, the Coast Guard conducted a business case, which estimated that receiving the 21 C-27J aircraft would save it $826 million, in fiscal year 2012 dollars, without changing planned performance targets. In August 2013, after USASOC also expressed interest in the aircraft, the Coast Guard wrote a letter to Congress using its prior analysis to estimate that receiving 14 C-27Js, instead of all 21 aircraft, would still save $799 million ($837 million in fiscal year 2015 dollars) over 30 years. Figure 1 illustrates the major events in the history of the C-27J. In fall 2013, DOD transferred 7 C-27J aircraft to USASOC; 3 that had since completed production and 4 aircraft still in production. Then, in December 2013, as a part of the fiscal year 2014 National Defense Authorization Act, Congress directed DOD to transfer the remaining 14 C- 27J aircraft to the Secretary of Homeland Security. These aircraft—13 from AMARG storage and 1 aircraft still owned by L-3 Communications— have been or will be transferred to the Coast Guard. Congress also required Homeland Security to transfer 7 HC-130Hs to the Air Force after certain modifications; the Air Force was required to transfer these aircraft to the Secretary of Agriculture for use by the U.S. Forest Service. These HC-130H aircraft are to be supplied by the Coast Guard. Figure 2 illustrates the transfer of aircraft among these agencies. The Coast Guard’s fixed-wing aviation fleet comprises several assets with different capabilities. Table 1 illustrates the capability differences between the Coast Guard’s long-range (HC-130H and HC-130J) and medium- range (HC-144 and C-27J) airframes in terms of payload, range, endurance, and speed. For each asset, table 1 also includes the number of annual planned flight hours, the designed service life, and cost per flight hour. The HC-144 and C-27J have a lower cost per flight hour than the HC-130. Each aircraft is planned to have the same surveillance and communication capabilities, and, according to program officials, the extent to which the endurance, speed, range, and other attributes increase performance largely depends upon the mission the aircraft is performing. For example, all of these aircraft can conduct maritime security and search and rescue missions in accordance with Coast Guard needs; however, the HC-130J, with greater payload and endurance, is better suited for responding to humanitarian disasters or mass casualty incidents either domestically or overseas. The C-27J is larger than the HC-144, but generally fits between the HC-144 and the HC-130J in terms of the capability of the airframe. In 2005, the Coast Guard developed a mission needs statement that factored in new requirements for its fixed-wing assets following the September 11, 2001, terrorist attacks. In particular, this document emphasized the importance of persistent surveillance in accomplishing Coast Guard missions—generated by flying more hours with surveillance- capable aircraft. Based on this analysis, the Coast Guard determined that it needed 52,400 fixed wing flight hours per year to meet its missions while moving toward a presence-based approach to enforcement, rather than its conventional response-based approach. For example, according to the mission needs statement, this presence-based approach will lead to operations that detect and interdict threats as far from the United States as possible. In 2007, based on the 2005 mission needs statement, the Coast Guard published a baseline for all of its major acquisition programs, which became a single program of record. The fixed-wing portion of this program of record included 22 HC-130Js and 36 HC-144s, which were planned to meet the annual goal of 52,400 flight hours. The receipt of 14 C-27Js represents a significant change, in terms of fleet composition, to the Coast Guard’s 2007 program of record. As of January 2015, the Coast Guard has transferred 2 of 14 C-27Js to its aircraft maintenance facility, after returning them to flyable status, and is in the process of developing a detailed plan for fielding all 14 aircraft by 2022. The Coast Guard, based on DHS direction, has restructured its HC-144 acquisition program to also encompass the transfer of the C- 27Js. This combined acquisition, termed the Medium Range Surveillance Aircraft program, is considered a new, major program within DHS. The C- 27J transfer process is not simple, as significant work remains to achieve three major milestones before the aircraft are fully operational: (1) induct the aircraft (prepare for use), (2) establish operational units (bases), and (3) add surveillance and advanced communication capabilities. In addition, complicating these efforts are areas of risk that need to be addressed before the Coast Guard can field fully operational C-27Js. These three risk areas are: (1) purchasing spare parts, (2) accessing technical data, and (3) understanding the condition of the aircraft. Figure 4 illustrates the milestones and risk areas the Coast Guard must address before it can field a fully capable aircraft. The Coast Guard’s 2012 business case estimated that it would cost about $600 million in acquisition costs to transform the 14 C-27Js into fully functioning Coast Guard assets, which includes purchasing sets of initial spare parts (estimated at $150 million), flight trainers/maintenance equipment/engineering costs (estimated at $150 million), and installing surveillance capabilities (estimated at $300 million). However, these costs are notional since the Coast Guard is in the process of developing a cost, schedule, and performance baseline for the aircraft as part of its Medium Range Surveillance Aircraft program. These costs are based on the Coast Guard’s experience with other fixed-wing aircraft and do not account for risks specific to the C-27J. The Coast Guard has awarded or plans to award several contracts to assist with these steps, in some cases partnering with USASOC. Coast Guard project officials recognize each of these risk areas and are confident they can work through them given the Coast Guard’s experience with foreign manufactured aircraft, such as the HC-144. DHS oversees Coast Guard major acquisitions and in October 2014 issued an acquisition decision memorandum that outlined how the C-27J would be incorporated into the DHS acquisition review process. In this regard, DHS directed the Coast Guard to restructure its HC-144 program to accommodate the addition of the 14 C-27J aircraft. These aircraft, together, are now termed the Medium Range Surveillance Aircraft program, which is a major DHS acquisition program. DHS directed the Coast Guard to pursue the Medium Range Surveillance Aircraft program in two phases. The first phase is the acquisition of the HC-144, which is currently paused following the purchase of 18 out of 36 planned aircraft. The Coast Guard previously estimated that it would complete the purchase of 36 missionized HC-144s by 2025. DHS has instructed the Coast Guard to develop a plan to close out this phase. The second phase focuses on the acquisition of the C-27J aircraft and has two segments. Segment one is the induction and employment of the unmodified C-27J aircraft that can perform missions, but without surveillance capabilities. Segment two is modification of the 14 aircraft, which principally involves the addition of the surveillance and advanced communication capabilities and operationally testing the asset. The Coast Guard was directed to develop all acquisition documents for the second segment of the C-27J acquisition, including a life-cycle cost estimate and acquisition program baseline. DHS further directed the Coast Guard to operationally test a prototype of the C-27J with the new surveillance capabilities before it modifies all 14 aircraft. estimate, and logistics plan for the first segment of the C-27J phase of this program. 2. Include the funding requirements for the C-27J in the Coast Guard’s forthcoming 5-year funding plan (fiscal years 2016 to fiscal years 2020). 3. Submit a detailed schedule that includes C-27J engineering and testing activities. 4. Present operational test strategies to DHS’s Director of Operational Test and Evaluation for the HC-144 and the C-27J. 5. Provide a revised execution plan including a summary of funds obligated and a spend plan for the fiscal year 2014 and 2015 C-27J funding. 6.