Coast Guard Aircraft: Transfer of Fixed-Wing C-27J Aircraft Is Complex and Further Fleet Purchases Should Coincide with Study Results

Highlights

What GAO Found

As of January 2015, the Coast Guard had transferred 2 of the 14 C-27J aircraft it is receiving from the Air Force to its aircraft maintenance facility, with plans to field 14 fully operational C-27Js by 2022. According to initial Coast Guard estimates, while the aircraft come at no cost, the Coast Guard needs about $600 million to fully operationalize them. This process is complex and significant work and risk remain. For example, the Coast Guard must establish its needs and purchase a set of spare parts for each aircraft, but faces hurdles due to potential pricing issues and delivery delays from the manufacturer. Also, the Coast Guard does not have access to the manufacturer's technical data that are required for modifications to the aircraft's structure to, for example, incorporate radar. These and other risks may inhibit the Coast Guard's ability to operate the aircraft as planned. However, the Coast Guard is working to mitigate these risks.

Major Milestones and Risk Areas in Developing a Fully Operational Coast Guard C-27J Aircraft

The C-27J will improve the affordability of the Coast Guard's fixed-wing fleet, but the fleet as currently planned may not be optimal in terms of cost and flight hour capability. The Coast Guard submitted a business case to Congress in 2013 that determined the C-27J would save $837 million over 30 years, compared to the program of record, without reducing fleet performance. GAO estimates that the fleet the Coast Guard is currently pursuing achieves nearly all of these savings. However, the source of these savings has shifted. A significant portion of the savings now results from an 18 percent drop in flight hours due to a change in the mix of aircraft the Coast Guard intends to pursue. GAO used updated information in conducting its analysis, such as the expected service life of each aircraft type. Consistent with congressional direction, the Coast Guard is conducting a multi-phased analysis of its mission needs—including its flight hour goals and fleet of fixed-wing assets—but will not present the full results prior to its 2019 budget request. In the meantime, the Coast Guard has prudently paused its existing HC-144 acquisition program. However, since 2000, the Coast Guard has received 12 HC-130Js without budgeting for them and it may continue to receive these aircraft while it studies its fixed-wing fleet needs. If the Coast Guard continues to receive these aircraft in the near term, the capability and cost of the Coast Guard's fixed-wing fleet runs the risk of being dictated by the assets the Coast Guard already owns rather than what it determines it needs.

Why GAO Did This Study

The Air Force is transferring 14 C-27J aircraft to the Coast Guard. Once modified into surveillance aircraft, the C-27Js will be a part of the Coast Guard's fixed-wing aircraft fleet. In 2007, the Coast Guard established a baseline of aircraft quantities and costs known as the program of record. This baseline established the cost and quantity of aircraft necessary to achieve its goal of 52,400 flight hours per year. The Coast Guard's aircraft, including the HC-144 and HC-130J/H, are integral to its missions, such as counterdrug and search and rescue.

GAO was asked to review the transfer of the C-27J to the Coast Guard. This report assesses (1) the status of the transfer and risks the Coast Guard faces in fielding the transferred aircraft; and (2) the extent to which acquiring the C-27J affects the overall cost and performance of the Coast Guard's fixed-wing aviation fleet.

GAO analyzed program documents and maintenance records for the C-27J. GAO interviewed Coast Guard and Air Force officials and private contractors. GAO also analyzed the Coast Guard's C-27J business case.

Recommendations

The Department of Homeland Security (DHS) and the Coast Guard should advise Congress of the time frames for the Coast Guard's fleet analysis and to modify the provision of additional HC-130Js, as appropriate, in the interim. DHS agreed with the first recommendation, but did not agree with the second recommendation. If the Coast Guard accepts additional HC-130Js before completing the fleet mix study, the aircraft may be in excess of the Coast Guard's need.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Homeland Security	The Secretary of Homeland Security and the Commandant of the Coast Guard should inform Congress of the time frames and key milestones for completing the fleet mix study, including the specific date when the Coast Guard will publish its revised annual flight hour needs and when it plans to inform Congress of the corresponding changes to the composition of its fixed-wing fleet to meet these needs.	Closed – Implemented The Coast Guard completed the fleet mix analysis and informed Congress of the results in November 2016. The Coast Guard's analysis found that the numbers in our report (GAO-15-325) were correct. In the report, we found that the current fleet of aircraft that the Coast Guard is pursuing is not optimal in terms of cost and flight hour capability. As a result, the Coast Guard is facing an 18 percent gap between its needs and capabilities while paying more money per flight hour than planned. The Coast Guard's study did not address these concerns.
United States Coast Guard	The Secretary of Homeland Security and the Commandant of the Coast Guard should inform Congress of the time frames and key milestones for completing the fleet mix study, including the specific date when the Coast Guard will publish its revised annual flight hour needs and when it plans to inform Congress of the corresponding changes to the composition of its fixed-wing fleet to meet these needs.	Closed – Implemented In March 2015, we reported that a significant portion of the savings generated by the transfer of C-27J aircraft results from a drop in the number of planned flight hours due to reducing the quantity of aircraft as opposed to acquisition savings. In its August 2013 letter to Congress, the Coast Guard stated that receiving 14 C-27Js would save money without reducing planned flight hours below its goal of 52,400 hours per year, set forth in the Coast Guard's 2005 mission needs statement. To do this, the Coast Guard planned to replace three HC-130Js with three C-27Js, gaining 600 flight hours per year at a lower cost per flight hour, and to decommission its HC-130Hs sooner than originally planned. However, the Coast Guard has since changed its planned fleet composition, and is now on a path to replace 14 HC-144s with 14 C-27Js and buy all 22 of the HC-130Js as planned in the program of record. This change results in 9,200 fewer flight hours per year (an 18 percent reduction) once the currently planned fleet is fully operational. As a result, we recommended that the Secretary of Homeland Security and the Commandant of the Coast Guard inform Congress of the time frames and key milestones for completing the fleet mix study, including the specific date when the Coast Guard will publish its revised annual flight hour needs and when it plans to inform Congress of the corresponding changes to the composition of its fixed-wing fleet to meet these needs. In November 2016, The Coast Guard completed a Coast Guard Fixed Wing Aircraft Fleet Mix Analysis and reported the results to Congress. The analysis confirmed that they will have an 18 percent flight hour gap, once all planes are operational, but did not provide any specific information regarding how the Coast Guard plans to mitigate the gap.
United States Coast Guard	The Commandant of the Coast Guard should advise Congress to modify the provision of any additional HC-130Js, as appropriate, pending the findings of the fleet mix study.	Closed – Not Implemented The agency did not concur with this recommendation and confirmed in April 2016 that it does not intend to implement it.