oversight

Observations on the Coast Guard's and the Department of Homeland Security's Fleet Studies

Published by the Government Accountability Office on 2012-05-31.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States Government Accountability Office
Washington, DC 20548



          May 31, 2012

          Congressional Committees

          Subject: Observations on the Coast Guard’s and the Department of Homeland
          Security’s Fleet Studies

          This letter transmits the enclosed briefing slides that we provided to you on April 20,
          2012. The Conference Report accompanying the Department of Homeland Security
          (DHS) Appropriations Act, 2012, directed the Coast Guard to submit phases one and
          two of the Fleet Mix Analysis and the Cutter Fleet Mix Analysis, as specified in the
                          1
          Senate Report. The Senate Report directed GAO to provide an assessment of the
          results of these analyses. 2 In response to the mandate, we addressed the following
          objectives: (1) What are the key results of the Coast Guard’s Fleet Mix Studies and
          DHS’s Cutter Study with respect to recapitalization and operations? (2) How useful
          are these studies to DHS, the Office of Management and Budget (OMB), and the
          Coast Guard for informing recapitalization decisions?

          To conduct our work, we obtained and analyzed Fleet Mix Phase One, Fleet Mix
          Phase Two, and the DHS Cutter Study to understand the key results. We reviewed
          Coast Guard appropriations from fiscal years 2008 through 2012 and the President’s
          budget request for fiscal year 2013 to analyze how fiscal assumptions in the studies
          compared with past appropriations. We interviewed Coast Guard, DHS, and OMB
          officials to discuss the studies’ results and primarily relied on agency officials to
          identify whether the studies were useful for informing recapitalization decisions. We
          obtained agency comments on the draft slides prior to the April 20, 2012 briefing.
          These comments were incorporated as appropriate and the agency comment letter is
          included as a part of the enclosed briefing slides.

          We conducted this performance audit from March 2012 to May 2012 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 the evidence obtained provides a reasonable basis for our findings and
          conclusions based on our audit objectives.




          1
              H.R. Conf. Rep. No. 112-331, at 980 (2011).
          2
              S. Rep. No. 112-74, at 100 (2011).


          Page 1                                            GAO-12-751R DHS and USCG Fleet Studies
Background

We have reported extensively on the Coast Guard’s challenges managing its broad
multi-billion dollar major acquisition portfolio, intended to acquire capabilities to
conduct missions ranging from marine safety to defense readiness. The Coast Guard
completed a two-phased Fleet Mix Analysis that intended to eliminate uncertainty
surrounding the future mission performance of the Coast Guard’s fleet and produce a
baseline for the acquisition of a majority of the Coast Guard’s assets. Fleet Mix
Analysis Phase One assessed surface, air, and information technology capabilities
and mission demands in an unconstrained fiscal environment. The Coast Guard then
added cost constraints to Fleet Mix Analysis Phase One, resulting in Fleet Mix
Analysis Phase Two. Seeking information to aid in making trade-offs, DHS, at the
suggestion of OMB, commissioned a Cutter Study looking at potential trade-offs
within the Coast Guard’s major cutter fleet, comprised of National Security Cutters
(NSCs) and Offshore Patrol Cutters (OPCs).

Summary

Fleet Mix Phase One, which was not cost constrained, indicated that the planned
program of record does not fully meet long-term strategic goals and found that, to
meet these goals, the Coast Guard requires a fleet that could cost as much as $65
billion to acquire, which is about $40 billion more than the $24.2 billion program of
record. Coast Guard officials stated that the analysis supports the continued pursuit
of the program of record. However, DHS Program Analysis & Evaluation (PA&E) and
OMB officials told us that the analysis has limited utility without cost constraints and
trade-offs.

Fleet Mix Phase Two considered two different funding scenarios and indicated that
there may be opportunities to improve the affordability of the program of record by
reducing capability, while still enhancing performance over the current fleet. The
study illustrated that by 2034, the performance of the planned fleet will be nearly 50
percent higher than performance projections for the Coast Guard’s fleet in 2014.
However, this level of performance will require an optimistic level of funding. The
lower bound funding scenario used in the study, $1.2 billion (fiscal year 2009 dollars),
is greater than the Coast Guard’s past 5 years of appropriations. The Coast Guard
stated that the study’s results are useful because it found that if the Coast Guard
receives less than $1.2 billion per year, they will not be able to buy the program of
record before the next recapitalization begins. DHS PA&E officials stated that the
usefulness of the Phase Two study is limited because it was based on the program of
record. OMB officials added that the scenarios in the study were based on the
program of record and only increase the total number of assets acquired.

The DHS Cutter Study primarily demonstrated that the performance of the Coast
Guard’s future fleet is dependent upon the “effective presence” of the assets, which,
according to the Coast Guard, means having the right assets and capabilities at the
right place at the right time. For example, the study showed that the OPC will be able
to launch small boats and helicopters in rougher waters than the current medium
endurance cutter, which will increase the Coast Guard’s ability to be effectively

Page 2                                             GAO-12-751R DHS and USCG Fleet Studies
present in all operating areas. However, the study did not fully consider how often
the Coast Guard needs to operate in these rougher waters. The Cutter Study also
examined the Coast Guard’s defense readiness mission and found that defense
readiness is a key factor in determining the quantity of NSCs to purchase. Coast
Guard officials stated that the Cutter Study supports the continued pursuit of the
program of record. DHS PA&E and OMB have so far used the Cutter Study to inform
the fiscal year 2013 budget. For example, DHS PA&E officials stated that the Cutter
Study provided information that DHS and OMB used, in conjunction with other
information sources, to inform the decision to not include the last two NSC hulls—
hulls 7 and 8—in the FY2013-2017 capital investment plan.

We are not making any new recommendations for agency action. In July 2010,
following the completion of Fleet Mix Phase One, we recommended that the Coast
Guard present a comprehensive review of the Deepwater Program that clarifies the
overall cost, schedule, quantities, and mix of assets required to meet mission needs,
including trade-offs in light of fiscal constraints. 3 DHS concurred, but has not yet
implemented this recommendation. In 2011, we recommended that the Secretary of
Homeland Security develop a working group that includes participation from DHS
and the Coast Guard’s capabilities, resources, and acquisition directorates to review
the results of multiple studies to identify cost, capability, and quantity trade-offs that
would produce a program of record that fits within expected budget parameters. 4
DHS concurred, but has yet to implement this recommendation.

Agency Comments

DHS and the Coast Guard provided technical comments that we incorporated into
this letter as appropriate.

We are sending copies of this report to the appropriate congressional committees.
We are also sending copies to the Secretary of the Department of Homeland Security
and the Commandant of the Coast Guard. This report will also be available at no
charge on our website at http://www.gao.gov. Should you or your staff have
questions concerning this report, contact John Hutton at (202) 512-4841 or
huttonj@gao.gov or Stephen Caldwell at (202) 512-9610 or caldwells@gao.gov.




3
  GAO, Coast Guard: Deepwater Requirements, Quantities, and Cost Require Revalidation to Reflect
Knowledge Gained, GAO-10-790 (Washington, D.C: July 27, 2010).
4
  GAO, Coast Guard: Action Needed As Approved Deepwater Program Remains Unachievable, GAO-
11-743 (Washington, D.C.: July 28, 2011).

Page 3                                                  GAO-12-751R DHS and USCG Fleet Studies
Contact points for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. Key contributors to this report were Katherine
Trimble, Assistant Director; Jonathan Bachman, Laurier Fish, and Molly Traci.




John Hutton
Director, Acquisition and Sourcing Management




Stephen Caldwell
Director, Homeland Security and Justice


Enclosure: Briefing with our observations of the Coast Guard’s and DHS’s Fleet
Studies




Page 4                                            GAO-12-751R DHS and USCG Fleet Studies
List of Requesters:

The Honorable Mary Landrieu
Chairman
The Honorable Dan Coats
Ranking Member
Subcommittee on Homeland Security
Committee on Appropriations
United States Senate

The Honorable Robert B. Aderholt
Chairman
The Honorable David E. Price
Ranking Member
Subcommittee on Homeland Security
Committee on Appropriations
House of Representatives




(121069)


Page 5                              GAO-12-751R DHS and USCG Fleet Studies
       Observations on the Coast Guard’s and the
          D
          Department
                t    t off H
                           Homeland
                               l dS Security’s
                                         it ’
                     Fleet Studies




              Briefing for Congressional Committees
                            April 20, 2012




For more information, contact John Hutton at (202) 512-4841 or huttonj@gao.gov, or Stephen Caldwell at (202) 512-9610 or caldwells@gao.gov.
                                                                                                                                              Page 1
Introduction

• The Coast Guard manages a broad multi-billion dollar major
  acquisition portfolio intended to acquire capabilities to conduct
  missions that range from marine safety to defense readiness.
• We have reported extensively on the Coast Guard’s significant
  acquisition challenges and found that the $24
                                              $24.2
                                                  2 billion Deepwater
  Program, as envisioned in 2007, is no longer achievable in terms
  of cost and schedule.
• The Coast Guard intended the Deepwater Program to be a long-
  term replacement or modernization of certain existing (legacy)
  assets, manyy of which are at or approaching
                                     pp        g the end of their
  projected service lives.



                                                                  Page 2
Introduction (continued)

• While the Department of Homeland Security (DHS) and the Coast Guard no
  longer
     g use the term “Deepwater”
                            p       for the p
                                            program
                                               g    aimed at recapitalizing
                                                                  p       g its
  surface, air, and information technology capacity, both organizations have
  completed studies examining the mix of Deepwater assets:1

          • C
            Coastt GGuard’s
                        d’ FlFleett Mi
                                    Mix Ph
                                        Phase 1
                                              1: Intended
                                                 I t d d to
                                                          t address
                                                              dd       uncertainty
                                                                            t i t
            surrounding future mission performance and produce a baseline for the
            Deepwater acquisition
          • Coast Guard’s
                    Guard s Fleet Mix Phase 2: Conducted as a follow
                                                                  follow-on
                                                                         on to Phase 1 to
            add cost constraints
          • DHS’s Cutter Fleet Study (Cutter Study): Conducted to evaluate whether
            an alternative cutter fleet mix could improve the Coast Guard’s
            performance
                f         while
                             hil maintaining
                                     i t i i acquisition
                                                   i iti costs
                                                            t off th
                                                                  the program off record
                                                                                       d
            at the time of the study. DHS Program Analysis and Evaluation (PA&E) led
            the analysis with contractor support including the Center for Naval Analysis
            (
            (CNA).)

1 DHS’s fiscal year 2012 budget request to Congress included a proposal to eliminate the term “Integrated Deepwater System” from the annual
appropriation.                                                                                                                                Page 3
Congressional Mandate and GAO Objectives

The Conference Report accompanying the Department of Homeland
   Security Appropriations Act
                            Act, 2012
                                 2012, directed the Coast Guard to
   submit phases one and two of the Fleet Mix Analysis and the
   Cutter Fleet Mix Analysis, as specified by the Senate Report.2
   The Senate Report directed GAO to provide an assessment of
   the results of these analyses.3

In response to the mandate, we addressed the following objectives:
    1. What are the key results of the Coast Guard’s Fleet Mix
       Studies and DHS’s
                     DHS s Cutter Study with respect to
       recapitalization and operations?
    2. How useful are these studies to DHS, Office of Management
       and Budget
           Budget, and the Coast Guard for informing
       recapitalization decisions?
2   H.R. Conf. Rep. No. 112-331, at 980 (2011).
3 S.  Rep. No. 112-74, at 100 (2011).                          Page 4
Scope and Methodology

•   To conduct our work, we:
    •    obtained and analyzedy    Fleet Mix Phase 1, Fleet Mix Phase 2, and the DHS Cutter
         Study to understand the key results;
    •    informed our analysis of the studies by reviewing past work;
    •    reviewed Coast Guard appropriations from fiscal years 2008-2012 and the
         President’s
         President  s budget request for fiscal year 2013 to analyze how fiscal assumptions
         in the studies compared with past appropriations; and
    •    interviewed officials from the Coast Guard, DHS, and the Office of Management
         and Budget (OMB) to discuss the key results of these analyses and primarily
         relied on officials to identify whether the studies were useful for informing
         recapitalization decisions.

•   We conducted this pperformance audit from March 2012 to Aprilp 2012 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 the evidence obtained pprovides a reasonable basis for our findings
                                                                             g and
    conclusions based on our audit objectives, which is required by the standards.

                                                                                      Page 5
Background

•   The Deepwater Program of Record was based on the Coast Guard’s mission requirements set forth
    in the DHS-approved 2004 Deepwater Mission Need Statement. As seen in Table 1, the Program
    of Record included 13 acquisitions
                          acquisitions.
    Table 1: Deepwater Program of Record
     Asset                                                   Portfolio                Quantity in program of record
     National Security Cutter (NSC)                          Surface                  8 cutters
     Off h
     Offshore Patrol
              P t l Cutter
                     C tt (OPC)                              S f
                                                             Surface                  25 cutters
                                                                                           tt
     Fast Response Cutter (FRC)                              Surface                  58 cutters
     Medium Endurance Cutter Sustainment                     Surface                  27 legacy cutters
     Patrol Boat Sustainment                                 Surface                  17 legacy boats
     Cutter Small Boats                                      Surface                  27 boats
     HC-144A Maritime Patrol Aircraft                        Aircraft                 36 aircraft with mission system pallets
     HC-130J Long-Range Surveillance Aircraft                Aircraft                 8 aircraft
                g    g Surveillance Aircraft
     HC-130H Long-Range                                      Aircraft                 16 aircraft upgraded
                                                                                                   pg      in segments
                                                                                                                g
     HH-65 Multi-mission Cutter Helicopter                   Aircraft                 102 aircraft upgraded in segments
     HH-60 Medium Range Recovery Helicopter                  Aircraft                 42 aircraft upgraded in segments
     Unmanned Aircraft System                                Aircraft                 To be decided
     Command, Control,
     Command     Control Communications,
                           Communications Computers,
                                          Computers          Information Technology   8 segments
     Intelligence, Surveillance and Reconnaissance (C4ISR)
    Source: GAO presentation of Coast Guard data.

                                                                                                                                Page 6
Background (continued)

Table 2: Overview of Coast Guard’s Fleet Mix Studies and DHS Cutter Study
Study
    y            Organization
                   g                    Completed
                                           p        Key
                                                      y Aspects
                                                          p     of the Studies

Fleet Mix        Coast Guard            December    • Assessed surface, air, and information technology capabilities
Phase 1                                 2009          and mission demands in an unconstrained fiscal environment to
                                                      identify a fleet that would meet long-term strategic goals
                                                      (objective fleet mix)
                                                                        mix).
                                                    • Developed, based on risk metrics, incremental fleet mixes to
                                                      bridge the objective fleet mix and the program of record.
Fleet Mix        Coast Guard            May         • Primarily assessed the rate at which the Coast Guard could
Phase 2                                 2011          acquire the program of record within a high and low bound of
                                                      annual acquisition cost constraints.

Cutter           DHS                    August      • Developed alternative cutter fleets that equaled the acquisition
Study                                   2011          cost, at the time of the analysis, of the cutter fleet program of
                                                      record.
                                                      record
                                                    • Assessed the expected performance of these alternative fleets
                                                      compared to the program of record.

Source: GAO analysis of Coast Guard data.




                                                                                                                          Page 7
Background (continued)

•   The Coast Guard identified performance metrics for 7 statutory missions that require
    significant
      g         effort from offshore assets ((see table 3).
                                                         ) These p
                                                                 performance metrics were
    commonly used in each of the three studies to compare fleets.
    Table 3: Overview of 7 Coast Guard Missions and the Related Performance Metrics
     Mission                                        Performance Metric

     Drug Interdiction                              Percentage of cocaine seized
     Alien Migrant Interdiction                     Migrant interdiction rate
     Living Marine Resources                        Boarding rate for high-threat and low-threat fisheries
     Other Law Enforcement                          Exclusive economic zone interdiction rate
     Search and Rescue                              Percentage of lives saved
     Port, Waterways, and Coastal Security          Intelligence driven security boarding rate
     Defense Operations                             Planned out of hemisphere deployment fill rate
    Source: GAO presentation of Coast Guard data.




                                                                                                             Page 8
Background (continued)

• In addition, Deepwater assets contribute to maritime domain
  awareness intelligence exploitation
  awareness,              exploitation, general law enforcement
                                                    enforcement,
  and heavy airlift.

• D
  Deepwatert mission
                 i i success requires
                                  i   effective
                                       ff ti presence, which  hi h
  means having the right assets and capabilities at the right place at
  the right time.
   • For example, the DHS Cutter Study defines effective presence as
     major cutter time-on-station, capable of launching and recovering
     aircraft and small boats.




                                                                    Page 9
Objective 1 Summary: Key Results of the Coast
Guard’s Fleet Studies and DHS Cutter Study
                                         y

• Key results from the three studies provide some insights into
  recapitalization and operations under different modeling
  scenarios.
   • Fleet Mix Phase 1: provides insight into the relative performance of the
     program of record and larger fleets
   • Fleet Mix Phase 2: provides insight into
      • Length of time it will take to acquire the program of record under two
        different funding
                        g constraints,,
      • Performance of fleets at different points in time,
      • Performance of fleets using different days away from homeport
        assumptions (rotational crewing)
   • DHS Cutter Study: provides insight into characteristics that are important in
     determining the quantity and capability of surface assets



                                                                            Page 10
Fleet Mix Phase 1 Provides Insight Into Performance of
Program
   g     of Record and Larger
                          g Fleets

• Phase 1 analysis was not cost constrained and identified the Coast
  Guard’s
  Guard   s objective fleet mix that would meet long-term
                                                  long term strategic goals
  within each deepwater mission.
• The Coast Guard estimated the total acquisition costs associated with
  the objective fleet mix could be as much as $65 billion—about
                                                      billion about $40
  billion higher than the approved $24.2 billion program of record.
• The analysis also identified that the planned program of record does not
  meet these long-term
               long term strategic goals
                                     goals.
• In July 2010, following the completion of Fleet Mix Phase 1, we
  recommended that the Coast Guard present a comprehensive review of
  the Deepwater Program that clarifies the overall costcost, schedule
                                                             schedule,
  quantities, and mix of assets required to meet mission needs, including
  trade-offs in light of fiscal constraints.4 DHS concurred, but has not yet
  implemented
     p            this recommendation.

4 GAO, Coast Guard: Deepwater Requirements, Quantities, and Cost Require Revalidation to Reflect Knowledge Gained, GAO-10-790 (Washington,

D.C: July 27, 2010).                                                                                                                         Page 11
Fleet Mix Phase 2 Provides Insight into Recapitalization
Timeframes Under Two Funding Scenarios

  • The Coast Guard found that by using the upper bound cost constraint ($1.64
  billion/year), it could acquire the program of record 5 years sooner than under
  the lower bound cost constraint ($1.2 billion/year).5

  Figure 1: Key Recapitalization Timeframes Under Two Funding Scenarios in Fleet Mix Phase 2

                                                                                    Program of record
             Program of record acquired under                                       acquired under lower                        Recapitalization begins again
             upper bound ($1.64 billion/year)                                       bound ($1.2 billion/year)                   under the lower bound


                      FY2029                                                                  FY2034                             FY2036

                                  Under
                                  U d upper b bound,d th
                                                       the study
                                                            t d iindicates
                                                                   di t th   the CCoastt
                                  Guard could acquire from FY2029 to FY2034:
                                       • 1 additional NSC (for a total of 9),
                                       • 11 additional OPCs (for a total of 36), and
                                       • 33 additional FRCs ((for a total of 91).
                                                                                )

    Source: GAO Presentation of Coast Guard data.
5 ConstantFY2009 dollars. We previously reported that the Coast Guard did not document its methodology for establishing these constraints and there was confusion
about their genesis. See GAO, Coast Guard: Action Needed As Approved Deepwater Program Remains Unachievable, GAO-11-743 (Washington, D.C.: July 28, 2011).          Page 12
Fleet Mix Phase 2 Found that Under the Lower Bound
Constraint Performance Improves Prior to Achieving the
P
Program  off Record
             R    d
•    Phase 2 assessed performance based on the number of prosecutions at different points
     of time.6 According to officials, diminishing legacy asset performance over time is not
     accounted for in this study which would likely affect fleet performance.
     Figure 2: Number of Prosecutions Over Time, Assuming $1.2 billion/year Until Program of Record
     is Acquired in FY2034




      Source: GAO Analysis
                        y of Coast Guard data.
      Note: For FY2007, FY2014, and FY2029, the study assumes the major cutters are operating 185 days away from homeport. The fleet in FY2034—
      the program of record—assumes the major cutters are operating 230 days away from homeport.

6 A prosecution occurs when a Coast Guard service member engages with a target of interest during the following missions: migrant interdiction, drug

interdiction, living marine resources, and other law enforcement, as well as non-violator traffic.                                                     Page 13
Fleet Mix Phase 2 Found that Increasing Days Away
from Homeport
           p   Improves
                  p      Performance

• Fleet Mix Phase 2 demonstrates that operating the NSCs and OPCs for
  230 days away from homeport per the planned program of record, as
  opposed to the current fleet’s 185 days, increases performance.7
• However, Coast Guard officials told us that the Coast Guard is
  reevaluating its planned rotational crewing policy—four
                                                  policy four crews per three
  hulls to achieve 230 days away from homeport. Coast Guard analysis
  being conducted separate from Fleet Mix Phase 2 indicates that 230
  days
     y awayy from homeport,
                          p     with its requisite
                                           q       rotational crewing g strategy,
                                                                              gy
  may be difficult and/or costly to achieve.
• Coast Guard officials noted that the analysis in Fleet Mix Phase 2 did
  not look at the effect of rotational crewingg on training,
                                                           g, logistics,
                                                                g      , shore-
  side billets, and other factors.



7 The program of record includes 33 new vessels—8 NSCs and 25 OPCs to replace 40 legacy vessels—12 High Endurance Cutters and 28 Medium

Endurance Cutters, respectively.                                                                                                          Page 14
DHS Cutter Study Examined Alternative Mixes
of Surface Assets
 • In the Cutter Study, DHS looked at the following options, which equaled the acquisition
   cost of the cutter fleet program of record at the time of the analysis:
      • Varying the combination of NSCs and OPCs in the program of record,8
      • Developing and buying a modernized version of the Coast Guard’s current 270-foot
        cutter instead of acquiring the OPC, and
      • Substituting the Navy
                          Navy’ss Littoral Combat Ship (LCS) for some planned OPCs
                                                                              OPCs.
 Table 4: Overview of Fleet Mixes in DHS’s Cutter Study
                      Program of
  Asset               record               Fleet 1      Fleet 2       Fleet 3      Fleet 4        Fleet 5      Fleet 6       Fleet 7     Fleet 8       Fleet 9

  NSC                         8                5            7             9             5             7             8            8           8            8
  OPC                        25               30            26           23             0             0             0           22           19          16
  Mod 270
  Mod-270                     0                0            0             0            41            37            34            0           0            0
  LCS                         0                0            0             0             0             0             0            3           6            9
  FRC                        58               58            62           59            60            58            58           58          58           58

   Source: DHS Cutter Study.

8 The   OPC modeled in the DHS Cutter Study is the objective capability—or the optimum performance—per the OPC’s operational requirements document.
                                                                                                                                                      Page 15
DHS Cutter Study: Presence is Key to
Increasing Cutter Fleet Performance
•       The DHS Cutter Study found that speed, seakeeping, range, and endurance are the key
        factors that contribute to effective p
                                             presence.9 The studyy also states that there are other
        ways to increase presence operationally, for example by basing cutters closer to
        operating areas.
•       While the number of cutters improves presence, presence is reduced if cutters cannot
        perform
           f    operations
                     ti    iin sea state
                                    t t five.
                                         fi
                                                                Figure 3: Percentage of Time Cutters Can Operate in Key Regions
•       As seen in Figure 3, a sea
        state 5 OPC improves
        presence in all regions
        compared to a sea state 4
        modernized 270-foot
        cutter.




                                                              Source: GAO presentation of DHS data.
    9Seakeeping refers to a vessel’s ability to withstand harsh sea states. Sea states refer to the height, period, and character of waves on the surface of a
    large body of water. Sea state 5 correlates to wave heights of 8.2 to 13.1 feet and sea state 4 correlates to wave heights of 4.1 to 8.2 feet.               Page 16
DHS Cutter Study: LCS is Not Well-Suited for Coast
Guard Missions
•     DHS’s Cutter Study determined that the LCS is not well-suited for Coast Guard
      missions. For example, while the planned LCS has a higher speed than the planned
      OPC, its limitations include
       • Limited range—requires more frequent refueling than the planned OPC (reducing
           its available mission time)
       • Inability to maintain effective presence
                                         presence—cannot
                                                  cannot operate boats or aircraft in as high
           a sea state
Table 5: Comparison of Key Capabilities between the Planned OPC and LCS
                                              OPC                                                    LCS

    Speed                                                  22-25 knots                       Greater Than 45 knots

    Range                                  8,500-9,500 nautical miles at 17 knots       4,500 nautical miles at 14 knots
    Endurance (days)
              (    )                                           45-60                                  21

    Boat maximum launch limit                Through Sea State 5 (13.1’ waves)       Through Mid-Sea State 4 (6.8’ waves)

    Helo maximum launch limit                Through Sea State 5 (13.1’ waves)      Almost through Sea State 5 (12.1’ waves)
Source: DHS Cutter Study and OPC Operational Requirements Document.


                                                                                                                   Page 17
DHS Cutter Study Indicates that a
Mid-Capability
Mid Capability OPC May Provide the Best Value
•   In the Cutter Study, the Center for Naval Analysis (CNA) recommends that DHS explore
    additional fleet mix options, including looking at a mid-capability OPC.
•   The mid-capability OPC would reduce the speed and range of the objective OPC but
    otherwise maintain its presence capabilities including an ability to operate in sea state 5.
•                      p
    A CNA official responsible for the analysis
                                           y stated that other characteristics of this mid-
    capability OPC could include removing or reducing the following from the objective OPC
    without affecting presence:
        • Sensitive Compartmentalized Information Facility
        •   Air Search and Fire Control Radars (acquire the positions of targets and provide
            these data to a ship's command and control and weapon systems)
        •   Electronic Warfare Support Measures
        •   B thi space (114 iinstead
            Berthing               t d off 122)
        •   Weapons suite (e.g., 25mm gun instead of 57mm)
•   The CNA official also stated that CNA has not studied whether these changes to the
    objective
     bj ti OPC would   ld otherwise
                           th    i affect
                                      ff t mission
                                            i i performance.
                                                     f

                                                                                         Page 18
DHS Cutter Study Found that Defense Operations is a
Key
  y Factor in Determining
                        g Quantity
                                 y of NSCs Needed

• In all three studies, the defense readiness mission is fully satisfied
  before other mission areas are assessed.10 In doing so, defense
  operations is the highest priority mission, only to be met through the use
  of NSCs.
• As a result, the DHS Cutter Study found that a yearly availability of 3.5
  NSCs is necessary to meet the defense operations presence
  requirement.
• In reality
     reality, Coast Guard officials told us they do not give specific missions
  preeminent priority over any assets and actual mission planning is
  primarily determined through an analysis of the expected risks and the
  responsibility
      p         y to respond
                        p    to all statutory
                                            y missions.
    • For example, the first NSC commissioned, BERTHOLF, is currently
       on its second deployment in the Alaska operations area primarily for
       missions other than defense operations.

10 To   support its statutory defense readiness mission, the Coast Guard provides assets to the Department of Defense to support its military strategy.
                                                                                                                                                          Page 19
Objective Two Summary: Usefulness of Fleet Studies
to Inform Recapitalization
              p            Decisions

• Each of the three studies has limitations that affect their
  usefulness for informing recapitalization decisions
                                            decisions.

• The Coast Guard maintains that all three studies support
  continued pursuit of the program of record. However, DHS
  Program Analysis and Evaluation (PA&E) and OMB are using the
  Cutter Study to inform discussions about whether and how the
  program of record could be changed.




                                                                Page 20
Fleet Mix Phase 1 was Not Cost Constrained, Making
the Results Not Feasible
• As we have previously reported, the Phase 1 analysis was not cost
  constrained. Coast Guard officials stated in 2010 that theyy do not consider the
  objective mix to be feasible due to cost and do not plan to use the results to
  provide recommendations on a baseline for fleet mix decisions.11

• Despite not being a cost constrained analysis
                                           analysis, Coast Guard officials stated that
  this analysis supports continued pursuit of the program of record. However,
  DHS PA&E and OMB officials told us that the Phase 1 analysis has limited
  utilityy without cost constraints and trade-offs.

• We have previously reported that, given the cost growth, schedule delays, and
  expected
    p        changes
                 g to pplanned capabilities,
                                  p         , the Deepwater
                                                     p       p
                                                             program
                                                                 g     of record is
  unachievable.12 Without cost constraints, the Phase 1 analysis does not
  position the Coast Guard to make trade-off decisions in light of fiscal
  constraints.

11 GAO-10-790.
12 GAO-11-743.                                                                  Page 21
Fleet Mix Phase 2 Used Optimistic
Funding Scenarios
•     The upper bound constraint ($1.64 billion/year) used in Phase 2 is unrealistic when compared to
      past Coast Guard appropriations and the President’s FY2013 budget request. Based on this same
      comparison the lower bound ($1
      comparison,                 ($1.2
                                      2 billion/year) is optimistic
                                                         optimistic.
                                  Figure 4: Fleet Mix Phase 2 Upper and Lower Bounds Compared to Coast Guard’s Past
    • Coast Guard officials       Appropriations and FY2013 President’s Budget Request (FY2009 dollars)
      stated that, in the
      current fiscal climate
                     climate,
      the lower bound
      constraint is more likely
      and the upper bound
      scenario is not informing
      decision making.




                                  Source: GAO Analysis
                                                  y of Coast Guard and p
                                                                       past appropriations
                                                                             pp p          data.
                                  Table Note: The aviation funding level used in the analysis was $350 million/year for both the upper bound and
                                  lower bound constraints.

                                                                                                                                           Page 22
Fleet Mix Phase 2 Does Not Examine
Alternatives to the Program of Record
• In Fleet Mix Phase 2, the Coast Guard only looked at scenarios based
  on the pprogram
             g    of record and the studyy does not include anyy trade-off
  analyses involving quantity or capability. Such an analysis would better
  prepare the Coast Guard to make the trade-offs that will be likely in this
  fiscal climate.

• Despite not looking at alternatives to the program of record, Coast
  Guard stated the study is useful because they found that if the Coast
  Guard receives less than $1.2 billion/year, they will not be able to buy
  the program of record before the next recapitalization begins.

• DHS PA&E stated that the usefulness of Fleet Mix Phase 2 is limited
  because it is based on the program of record. OMB added that the
  additional scenarios in the study based on the program of record only
  increased the total number of assets acquired.
                                                                       Page 23
DHS Cutter Study Focused on the Surface Fleet and Did
Not Examine Trade-offs Involving Aviation Assets

• CNA recommended that DHS commission a similar study for Coast
  Guard aircraft because the Cutter Study did not consider changes in the
  number or mix of aviation assets, other than small adjustments to cutter-
  based aviation assets.
   • A CNA official responsible for leading the analysis stated that
     helicopters factor strongly in the mission performance of cutters.
   • CNA noted that there may be opportunities for the Coast Guard to
     trade-off air and surface assets to maximize total performance.
                                                        p

• DHS PA&E stated that they have not implemented this recommendation
  yet but have a working group to examine the number and mix of
  yet,
  aviation assets across DHS’s portfolio.



                                                                     Page 24
DHS and OMB are Using DHS Cutter Study to Inform
Ongoing
  g g Recapitalization
           p           Discussions

• DHS PA&E officials stated that the Cutter Study provides information
  about surface fleet options and used the results to inform discussions
        • with OMB on the FY2013 budget, including the decision to not
          include the last two NSC hulls—hulls 7 and 8—in the FY2013-2017
          capital investment plan
                              plan. As we have noted in past work
                                                             work, the capital
          investment plan is subject to change each year.13
        • at the OPC’s recent Acquisition Decision Event meeting and plans
          to continue to use it in assessing OPC affordability
                                                 affordability.
• OMB officials agreed that the DHS Cutter Study was useful for FY2013
  budget planning and added that the study’s conclusion that the LCS is
  nott a suitable
           it bl medium
                   di   endurance
                           d       cutter
                                     tt was helpful.
                                              h l f l
• However, by keeping the cost of the cutter fleet program of record
                      y
  constant in the analysis, the studyy does not illuminate trade-offs, in the
  likely event they become necessary.
13 GAO-11-743.
                                                                         Page 25
How Studies Will Inform Program Decisions
is Unclear
• In July 2011, we reported that it was unclear how DHS and the
  Coast Guard would reconcile and use these multiple studies to
  make trade-off decisions.14
• We recommended that the Secretary of Homeland Security
  d
  develop
       l a working
                 ki group that
                             h iincludes
                                     l d participation
                                               i i i ffrom DHS
  and the Coast Guard’s capabilities, resources, and acquisition
  directorates to review the results of multiple
                                              p studies to identify
                                                                  y
  cost, capability, and quantity trade-offs that would produce a
  program of record that fits within expected budget parameters.
  DHS S co
        concurred,
            cu ed, bu
                    but has
                         as not
                             o ye
                                yet implemented
                                       p e e ed this s
  recommendation.


14 GAO-11-743.
                                                               Page 26
Concluding Observations

•   The Coast Guard completed Fleet Mix Phase 1 and 2 to examine its mix of assets, but
    neither acknowledged the federal budget pressures facing our country, limiting the
    usefulness
        f l      off the
                     th studies
                            t di for
                                   f ttrade-off
                                          d ff decisions.
                                                  d i i
•   Fleet Mix Phase 2 found that the Coast Guard’s performance will increase once it
    acquires the program of record. However, whether that performance increase is
    affordable is not addressed in the study.     y
•   More recently, DHS’s Cutter Study looked at trade-offs within the Coast Guard’s surface
    program of record and provides some useful information to decision makers as they
    consider OPC affordability and how many NSCs the Coast Guard needs. However, as
    the study indicates,
              indicates examining trade  trade-offs
                                                offs in the aviation portfolio could also provide
    additional insights.
•   DHS PA&E and OMB officials said they are using information in the Cutter Study to
    inform discussions concerning the Coast Guard’s program of record, but the extent to
    which
      hi h changes
            h          will
                         ill b
                             be iimplemented
                                    l      t d is
                                               i nott yett kknown.
•   Given that executing the program of record within original cost and schedule baselines
    is unachievable, DHS and the Coast Guard need to identify trade-off decisions that
    balance effectiveness with affordability,    y, as p
                                                       previouslyy recommended.


                                                                                          Page 27
Summary of Agency Comments

•    DHS provided us with written comments on a draft of this briefing (attached). DHS stated that
     it works with the Coast Guard to prioritize investments and address affordability issues. For
     example when the Coast Guard identifies programs that deviate from original baselines
     example,                                                                          baselines,
     DHS holds an investment review board to re-baseline programs to fit within expected budget
     parameters. We reported in July 2011 that Coast Guard is managing a portfolio—which
     includes many revised baselines approved by DHS—that is expected to cost more than what
     its annual budget will likely support
                                   support.15 As we noted in that report
                                                                  report, we believe the Coast Guard
     needs to be more proactive in addressing this mismatch of expected funding and actual
     funding needs. As such, the Coast Guard needs to consider trade-offs within the portfolio to
     produce a program of record that fits within expected budget parameters.
•    DHS also stated that it did consider the results of the Coast Guard’s
                                                                    Guard s fleet mix analysis phase
     1 and the DHS Cutter Study when developing its fiscal year 2013 budget. This is consistent
     with our finding that PA&E used the DHS Cutter Study to inform this year’s budget. However,
     as we noted, some of these considerations are deferred to the later years in the FY2013-
     2017 capital investment plan
                                plan, which is subject to change
                                                          change.
•    DHS and Coast Guard also provided technical comments that we incorporated into the
     briefing as appropriate. We also provided draft sections of the briefing to OMB and CNA
     officials, who provided us technical comments via e-mail; we incorporated their comments as
     appropriate.
     appropriate

15 GAO-11-743.
                                                                                             Page 28
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