GAO: Coast Guard needs to revalidate modernization plans

The Coast Guard's 25-year modernization program, known as Deepwater, has exceeded cost and schedule baselines established in 2007 and might not meet performance targets, according to a new report by the Government Accountability Office.

The Coast Guard launched Deepwater 14 years ago to modernize its rapidly aging fleets of aircraft and ships along with the technologies that provide service members with command and control, communications, intelligence, surveillance, and reconnaissance capabilities.

Because the service lacked a sufficient number of skilled contract managers, engineers and other key personnel capable of overseeing such a far-reaching program, it initially turned to a systems integrator to manage Deepwater. But repeated cost overruns, schedule delays and performance failures forced the Coast Guard to take over the program from Integrated Coast Guard Systems in 2007, five years after the contract was awarded. ICGS is a joint venture of Lockheed Martin Corp. and Northrop Grumman Corp.

In 2007, then-Commandant Adm. Thad Allen revamped the Deepwater program and the service's acquisition office to improve oversight. The Coast Guard also established new cost and schedule baselines for individual assets within the program.

"The asset-specific baselines that have been approved to date, while providing greater insight into asset-level capabilities, place the total cost of Deepwater at roughly $28 billion, or $3.8 billion over the $24.2 billion 2007 baseline," the report said.

"Costs could continue to grow as four assets currently lack revised cost baselines; among them is the largest cost driver in the Deepwater program, the offshore patrol cutter. The asset-level baselines also indicate that schedules for some assets are expected to be delayed by several years," GAO found.

The Coast Guard's preliminary assessments suggest some assets could experience further cost and schedule growth, GAO wrote.

When the Coast Guard took over the role of systems integrator in 2007, it planned to revalidate the quantities of assets needed to meet operational needs; determining the number and type of assets needed to meet mission demands is key to managing the acquisition and will determine final cost and performance of the program.

In 2008, service officials began a comprehensive fleet mix analysis, but it was conducted without regard for any budget constraints. The results of that analysis have never been released and Coast Guard officials told GAO auditors they don't intend to use them to produce recommendations for the program.

The service now is conducting a second, cost-constrained fleet mix analysis, limited to surface assets, which is expected to be completed in February 2011.

GAO recommended the Coast Guard complete an overall assessment that clarifies the quantities, mix and cost of all assets needed to meet its operational requirements, and that the report be submitted to Congress. The Homeland Security Department concurred with the recommendation.