Contract Management: Coast Guard's Deepwater Program Needs Increased Attention to Management and Contractor Oversight
GAO-04-380
Published: Mar 09, 2004. Publicly Released: Mar 09, 2004.
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Highlights
The Coast Guard's Deepwater program, the largest acquisition program in its history, involves modernizing or replacing ships, aircraft, and communications equipment. The Coast Guard awarded the Deepwater contract to Integrated Coast Guard Systems (ICGS) in June 2002. The Coast Guard estimates the program will cost $17 billion over a 30-year period. ICGS is a system integrator, with responsibility for identifying and delivering an integrated system of assets to meet the Coast Guard's missions. GAO was asked to assess whether the Coast Guard is effectively managing the Deepwater program and overseeing the contractor and to assess the implications of using the Deepwater contracting model on opportunities for competition.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Coast Guard | To address Deepwater program management, the Secretary of Homeland Security should direct the Commandant of the Coast Guard, in collaboration with the system integrator, to take the necessary steps to make integrated product teams (IPTs) effective, including training IPT members in a timely manner, chartering the sub-IPTs, and making improvements to the electronic information system that would result in better information sharing among IPT members who are geographically dispersed. |
Closed – Implemented
The Coast Guard has reoriented its acquisition organization to execute system integration and program management responsibilities formerly carried out by industry, and it has begun to assert control over Deepwater integrated product teams (IPT). IPTs were previously led and managed by the contractor, while government team members acted as "customer" representatives. IPTs have now been chartered and restructured with Coast Guard officials serving as the sole lead on the IPTs. Based on recent audit work, as discussed in GAO-08-745, this recommendation has been fully implemented.
|
| United States Coast Guard | To address Deepwater program management, the Secretary of Homeland Security should direct the Commandant of the Coast Guard to follow the procedures outlined in the human capital plan to ensure that adequate staffing is in place and turnover among Deepwater personnel is proactively addressed. |
Closed – Implemented
In February 2005, the Deepwater program issued a revised human capital plan that emphasized workforce planning. The Coast Guard has also added new contracting officers and specialists and is working with the Defense Acquisition University to train personnel.
|
| United States Coast Guard | To address Deepwater program management, the Secretary of Homeland Security should direct the Commandant of the Coast Guard to, as Deepwater assets begin to be delivered to operational units, ensure that field operators and maintenance personnel are provided with timely information and training on how the transition will occur and how maintenance responsibilities are to be divided between system integrator and Coast Guard personnel. |
Closed – Implemented
The Coast Guard has taken over maintenance and logistics responsibilities for Deepwater assets and plans to use contractor support on an as needed basis. Based on recent audit work discussed in GAO-08-270R, and a Commandant instruction that formalizes Coast Guard's decision, this recommendation is closed as implemented.
|
| United States Coast Guard | To improve contractor accountability, the Secretary should direct the Commandant to develop and adhere to measurable award fee criteria consistent with the Office of Federal Procurement Policy's guidance. |
Closed – Implemented
Recommendation has been implemented with revised award fee criteria.
|
| United States Coast Guard | To improve contractor accountability, the Secretary should direct the Commandant to, in all future award fee assessments, ensure that the input of contracting officer's technical representatives is considered and set forth in a more rigorous manner. |
Closed – Implemented
The Coast Guard has continued to revise its award fee criteria; domain performance monitor subjective comments are now fully considered by the award fee board and entered into award fee calculations. The Coast Guard has provided additional guidance and training to performance monitors.
|
| United States Coast Guard | To improve contractor accountability, the Secretary should direct the Commandant to hold the system integrator accountable in future award fee determinations for improving the effectiveness of IPTs. |
Closed – Implemented
The Coast Guard changed its award fee measures to place additional emphasis on the system integrator's responsibility for making IPTs effective. Award fee criteria now incorporate the administration, management commitment, collaboration, training, and empowerment of these teams.
|
| United States Coast Guard | To improve contractor accountability, the Secretary should direct the Commandant to, based on the current schedule for delivery of Deepwater assets, establish a time frame for when the models and metrics will be in place with the appropriate degree of fidelity to be able to measure the contractor's progress toward improving operational effectiveness. |
Closed – Not Implemented
The Coast Guard has developed modeling capabilities, namely through the DMOES model, to simulate the effect of new assets' capabilities. Officials acknowledged, however, that tracking operational effectiveness was difficult because the data on mission results and accomplishments did not differentiate between Deepwater assets and non-Deepwater assets. Too few Deepwater assets were online to effectively measure the system integrator's actual performance in improving operational effectiveness as discussed in GAO-06-546. As of January 2008, the Coast Guard is no longer using operational effectiveness to measure contractor performance, but is instead relying on past performance indicators. Coast Guard officials no longer plan to update the model.
|
| United States Coast Guard | To improve contractor accountability, the Secretary should direct the Commandant to establish a total ownership cost (TOC) baseline that can be used to measure whether the Deepwater acquisition approach is providing the government with increased efficiencies compared to what it would have cost without this approach. |
Closed – Not Implemented
The Coast Guard does not intend to track total ownership costs under a traditional procurement approach, as spelled out in the program management plan.
|
| United States Coast Guard | To improve contractor accountability, the Secretary should direct the Commandant to establish criteria to determine when the TOC baseline should be adjusted and ensure that the reasons for any changes are documented. |
Closed – Implemented
The Coast Guard has changed procedures so that the Agency Acquisition Executive approves changes to the total ownership cost baseline. The Coast Guard has begun using criteria from its Major Systems Acquisition Manual as the basis for adjusting the baseline. The Coast Guard is also required to submit baseline information to the Department of Homeland Security on a quarterly basis. Under DHS policy, a baseline breach of 8 percent or more requires the Coast Guard to provide information on the causal factors and propose corrective actions to rectify the breach. In May 2007 DHS approved the Coast Guard's Acquisition Program Baseline for Deepwater, which includes criteria for TOC baseline adjustments and guidelines for documenting such changes in accordance with DHS policy.
|
| United States Coast Guard | To facilitate controlling future costs through competition, the Secretary should direct the Commandant to develop a comprehensive plan for holding the system integrator accountable for ensuring an adequate degree of competition among second-tier suppliers in future program years. This plan should include metrics to measure outcomes and consideration of how these outcomes will be taken into account in future award fee decisions. |
Closed – Implemented
The Coast Guard's transition away from the system of systems contract to an asset-by-asset acquisition is enabling increased government visibility and control over its acquisitions and increasing competition. For example, the Coast Guard recently held its own competition for the Fast Response Cutter-B, in lieu of obtaining the asset through the system integrator after determining that it could better control costs by doing so. The Coast Guard plans to hold other competitions outside the ICGS contract for additional assets in the future. Based on recent audit work discussed in GAO-08-745, this recommendation is closed as implemented.
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| United States Coast Guard | To facilitate controlling future costs through competition, the Secretary should direct the Commandant, for subcontracts over $5 million awarded by ICGS to Lockheed Martin and Northrop Grumman, to require Lockheed Martin and Northrop Grumman to notify the Coast Guard of a decision to perform the work themselves rather than contracting it out. The documentation should include an evaluation of the alternatives considered. |
Closed – Implemented
Coast Guard has asked for notification at a $10 million threshold and the contractor has agreed.
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