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

What GAO Found

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 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.

Why GAO Did This Study

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 Senate Report. The Senate Report directed GAO to provide an assessment of the results of these analyses. 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?