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GAO: Deepwater program costs still unclear

Jul. 29, 2011 - 03:08PM   |   Last Updated: Jul. 29, 2011 - 03:08PM  |  
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How much will the Coast Guard's beleaguered Deepwater acquisition program cost, and what's the timeline for getting new vessels and aircraft out to the fleet?

The service has pinned down neither a true cost nor schedule for the recapitalization plan, according to a report released Thursday, although cost increases and delays continue to plague the program.

Deepwater — which includes everything from cutters to aircraft to unmanned aerial systems — was priced at $24.2 billion when the Coast Guard took helm of the acquisition program as lead systems integrator in 2007. But that total could now be as much as $29.3 billion, and the service's most recent five-year budget plan indicates the program could cost even more and face further delays, according to the Government Accountability Office report.

Some individual programs also show sharp increases in costs. The estimated price of the National Security Cutter program — considered the flagship of the Coast Guard's reacquisition plan — grew nearly 40 percent over the past four years, from $3.45 billion to $4.75 billion. The cost for fast response cutters grew 32 percent, from $3.21 billion to $4.24 billion.

GAO investigators found that the Coast Guard is managing an acquisitions portfolio "that is expected to cost more than what its budget will likely support."

"Coast Guard and DHS officials agree that the annual funding needs to support all approved Deepwater baselines exceeds current and expected funding levels in this fiscal climate," according to the report. "This contributes to churn in program baselines when programs are not able to execute schedules as planned."

GAO made 10 recommendations in the report, including that Homeland Security and the Coast Guard should create a working group analyzing cost, capability and quality of acquisitions "that would produce a program that fits within expected budget parameters."

Investigators also recommended that the Coast Guard use best practices for cost estimates and schedules, which they said the service has failed to do.

The Coast Guard's Acquisition Directorate said in a two-page statement that the service is "taking steps to address GAO's recommendations while it continues improvements already underway." The statement also emphasized the importance of continuing the service's recapitalization plan.

"The Coast Guard faces many challenges as it manages a multiyear, multibillion-dollar acquisition portfolio in today's constrained fiscal environment," the statement reads. "While the fiscal environment may have changed, the needs of this country have not. It is necessary for the Coast Guard to stay on course and continue building new assets to allow it to carry out the missions that the American people demand."

The Coast Guard's acquisitions program has drawn ire from Congress in recent years, with lawmakers calling Deepwater "http://www.navytimes.com/news/2007/02/gnsdeepwater070215/">a troubling period for the Coast Guard" that has produced "http://www.navytimes.com/news/2007/02/apdeepwater070208/">a series of lemons."

The GAO report found that the service's quarterly reports to Congress tracking acquisitions progress don't fully capture the risks of the Deepwater program.

The service produces two quarterly reports, one internal and the other going to Congress. According to GAO, risks identified in those internal reports for acquisition projects don't make it into Congressional copies. In comparing both sets of reports for fiscal 2010, GAO found that more than 50 percent of medium and high risks found in the internal report don't make it into the Congressional copy.

In addition, the Coast Guard submitted congressional reports late for all four fiscal quarters of 2010 and, as of May 2011, hadn't submitted its first quarter fiscal 2011 report to Congress even though its internal second-quarter report had already been completed.

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