Coast Guard: Deepwater Program Acquisition Schedule Update Needed
(14-JUN-04, GAO-04-695).					 
                                                                 
In 2002, the Coast Guard began its $17 billion, 20-year 	 
Integrated Deepwater System acquisition program to replace or	 
modernize its cutters, aircraft, and communications equipment for
missions generally beyond 50 miles from shore. During fiscal	 
years 2002-03, Deepwater received about $125 million less than	 
the Coast Guard had planned. In fiscal year 2004, Congress	 
appropriated $668 million, $168 million more than the President's
request. GAO has raised concern recently about the Coast Guard's 
initial management of Deepwater and the potential for escalating 
costs. GAO was asked to review the status of the program against 
the initial acquisition schedule and determine the impact of the 
additional $168 million in fiscal year 2004 funding on this	 
schedule.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-695 					        
    ACCNO:   A10448						        
  TITLE:     Coast Guard: Deepwater Program Acquisition Schedule      
Update Needed							 
     DATE:   06/14/2004 
  SUBJECT:   Aircraft						 
	     Communication					 
	     Comparative analysis				 
	     Equipment maintenance				 
	     Equipment management				 
	     Federal procurement				 
	     Program evaluation 				 
	     Schedule slippages 				 
	     Ships						 
	     Cost Guard Deepwater Project			 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-04-695

United States General Accounting Office

GAO	Report to the Chairmen, Subcommittees on Homeland Security,

     Committees on Appropriations, House of Representatives and U.S. Senate

June 2004

COAST GUARD

              Deepwater Program Acquisition Schedule Update Needed

GAO-04-695

Highlights of GAO-04-695, a report to the Chairmen, Subcommittees on
Homeland Security, Committees on Appropriations, House of Representatives
and U.S. Senate

In 2002, the Coast Guard began its $17 billion, 20-year Integrated
Deepwater System acquisition program to replace or modernize its cutters,
aircraft, and communications equipment for missions generally beyond 50
miles from shore. During fiscal years 2002-03, Deepwater received about
$125 million less than the Coast Guard had planned. In fiscal year 2004,
Congress appropriated $668 million, $168 million more than the President's
request.

GAO has raised concern recently about the Coast Guard's initial management
of Deepwater and the potential for escalating costs. GAO was asked to
review the status of the program against the initial acquisition schedule
and determine the impact of the additional $168 million in fiscal year
2004 funding on this schedule.

GAO recommends the Coast Guard update the original 2002 Deepwater
acquisition schedule in time to support the fiscal year 2006 Deepwater
budget submission to the Department of Homeland Security and Congress and
at least once a year thereafter to support each budget submission. The
updated schedule should include the current status of asset acquisition
phases, interim phase milestones, and the critical paths linking assets.
In written comments, the Coast Guard generally concurred with GAO's
findings and recommendation.

www.gao.gov/cgi-bin/getrpt?GAO-04-695.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Margaret Wrightson at (415)
904-2200 or [email protected].

June 2004

COAST GUARD

Deepwater Program Acquisition Schedule Update Needed

The degree to which the Deepwater program is on track with its original
2002 integrated acquisition schedule is difficult to determine because the
Coast Guard has not updated the schedule. Coast Guard officials said they
have not updated it because of the numerous changes Deepwater experiences
every year and the cost, personnel, and time involved. However, in similar
acquisitions-those of the Department of Defense (DOD)-cost, schedule, and
performance updates are fundamental to congressional oversight. DOD is
required to update the schedule at least annually and whenever cost and
schedule thresholds are breached. In practice, DOD continually monitors
and reports schedules for management on a quarterly basis. Updating the
acquisition schedule-including phases such as design and fabrication,
interim phase milestones, and critical paths linking assets- on a more
timely basis is imperative so that annual Coast Guard budget submissions
can allow Congress to base decisions on accurate information.

GAO used available data to develop the current acquisition status for a
number of selected Deepwater assets and found that they have experienced
delays and are at risk of being delivered later than anticipated.

GAO analysis of current acquisition of selected Deepwater assets

The additional $168 million in fiscal year 2004, while allowing the Coast
Guard to conduct a number of Deepwater projects that had been delayed or
would not have been funded in fiscal year 2004, will not fully return the
program to its original 2002 acquisition schedule. Reasons include: all
work originally planned for fiscal year 2004 was not funded and some will
have to be delayed to fiscal year 2005; delivery of some assets has fallen
so far behind schedule that ensuring their original delivery dates is
impossible; and nonfunding reasons have caused delays, such as greater
than expected hull corrosion of patrol boats delaying length extension
upgrades.

Contents

          Letter                                                            1 
                                        Background                          3 
                                          Results                           4 
                                        Conclusions                         8 
                            Recommendation for Executive Action             8 
                                      Agency Comments                       9 
        Appendix I                    Briefing Slides               
       Appendix II                Coast Guard's Comments            

Abbreviations

C4ISR Command, Control, Communications and Computers,

Intelligence, Surveillance, and Reconnaissance Deepwater Integrated
Deepwater Systems program DHS Department of Homeland Security

DOD Department of Defense
EVMS Earned Value Management System
GAO General Accounting Office

ICGS Integrated Coast Guard Systems, LLC
IMS Integrated Master Schedule
MPA Maritime Patrol Aircraft

OPC Offshore Patrol Cutter
UAV Unmanned Air Vehicle

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

United States General Accounting Office Washington, DC 20548

June 14, 2004

The Honorable of Thad Cochran
Chairman, Subcommittee on Homeland Security
Committee on Appropriations
United States Senate

The Honorable Harold Rogers
Chairman, Subcommittee on Homeland Security
Committee on Appropriations
House of Representatives

In 2002, the Coast Guard began the acquisition phase of the largest and
most complex procurement in its history, the Integrated Deepwater
System program (Deepwater). Under this program, the Coast Guard will
replace or modernize its cutters, aircraft, and communications equipment
used for missions generally beyond 50 miles from shore but which may
start at ports, waterways, and coasts and extend seaward to wherever the
Coast Guard is required to take appropriate action. In developing the
program, the Coast Guard chose a contracting approach that relies heavily
on a "systems integrator"-a contractor that will translate the Coast
Guard's mission requirements into specific acquisitions and upgrades. This
contracting approach also relies heavily on a steady, predictable funding
stream throughout the program's anticipated 20-year acquisition span.1
When the program began, we expressed concern that, given this
approach's particularly heavy dependence on funding at planned levels,
the Coast Guard risked schedule slippages and cost escalation if program
funding fell short of planned funding amounts.2 During the program's first
2 years (fiscal years 2002-03), the total amount of funding available was
nearly $125 million less than the amount the Coast Guard had planned and
$32 million less than the President's request. The Congress then increased
the Deepwater appropriation for fiscal year 2004 to about $668 million, or

1The Deepwater program is scheduled to last for 30 years, the assets are
expected to be delivered in the first 20 years, and the contractor is to
be retained an additional 10 years to continue implementing the program.

2See U.S. General Accounting Office, Coast Guard: Progress Being Made on
Deepwater Project, but Risks Remain, GAO-01-564 (Washington, D.C.: May 2,
2001).

about $86 million more than the agency's original plan for that year and
$168 million more than the President's request.

You asked us to assess the Deepwater program's status in light of this
increased funding. We focused our work on (1) reviewing the status of the
program against the initial acquisition schedule and (2) determining the
impact of the additional $168 million in fiscal year 2004 funding on
returning the program to this schedule. You also asked us to provide
information on the Coast Guard's status in revising Deepwater's mission to
meet increased homeland security requirements and the amount of assistance
the Department of Defense (DOD) has provided for Deepwater from fiscal
years 2002 to 2004. On March 12, 2004, we briefed your offices on the
preliminary results of our work to date. This report and the briefing
slides in appendix I provide our final results.

Our work for this report involved reviewing and analyzing a variety of
documents and interviewing officials from the headquarters of the Coast
Guard and Integrated Coast Guard Systems, LLC, (ICGS). To determine the
status of Deepwater's acquisition schedule for selected assets, we
analyzed (1) the delivery task orders and their associated statements of
work for individual Deepwater assets to establish what work was started,
when it was started, and the period of performance for that work, and (2)
the monthly assessment reports of Deepwater program managers on the
performance of executing the delivery task orders. We compared these start
and end dates of the delivery task orders with the acquisition schedule
laid out in the original June 2002 Integrated Deepwater System
Implementation Plan, which covers the first 5 years of the program. To
determine the specific assets that were originally planned to have been
funded by fiscal year 2004 but were not, we compared the Coast Guard's
original plan listing the work scheduled to begin (contract line item
numbers) for each fiscal year with the work that was actually begun (the
delivery task orders that were issued for those line items). We
interviewed Coast Guard and ICGS officials about the reliability of the
data in the Integrated Master Schedule (IMS) management tool. On the basis
of those discussions, we determined that the data within IMS were not
reliable enough for use in our report. To determine the amount of funding
support DOD provided to the Deepwater program from fiscal years 2002 to
2004, we interviewed officials and analyzed documents from the Navy. We
also interviewed officials from other DOD components; however, they all
referred us back to the Navy. We conducted our work from January through
June 2004 and did our work in accordance with generally accepted
government auditing standards.

Background

In June 2002, the Coast Guard awarded a contract to ICGS to begin the
acquisition phase of the Deepwater program. Rather than using the
traditional approach of replacing classes of ships or aircraft through a
series of individual acquisitions, the Coast Guard chose to employ a
"system of systems" acquisition strategy that would replace its aging
assets of ships, aircraft, and communication capabilities with a single,
integrated package of new or modernized assets and capabilities. The focus
of the program is not just on new ships and aircraft, but rather on an
integrated approach to modernizing existing or "legacy" assets while
transitioning to newer, more capable assets, with improved command,
control, communications and computers, intelligence, surveillance, and
reconnaissance (C4ISR) capabilities. At full implementation, the Deepwater
program will replace the Coast Guard's entire fleet of current deepwater
surface and air assets, comprising three classes of new cutters and their
associated small boats, a new fixed-wing manned aircraft fleet, a
combination of new and upgraded helicopters, and both cutter-based and
land-based unmanned air vehicles (UAVs). In addition, all of these assets
will be linked with state-of-the-art C4ISR capabilities and computers and
will be supported by an integrated logistics management system.

ICGS, a business entity jointly owned by Northrop Grumman and Lockheed
Martin, acts as the system integrator to develop and deliver the Deepwater
program. They are the two first-tier subcontractors for the program and
either provides Deepwater assets themselves or award second-tier
subcontracts for the assets. The Coast Guard's contract with ICGS has a
5-year base period with five additional 5-year options. The Coast Guard is
scheduled to decide on whether to extend ICGS's contract by June 2006,
which is 1 year prior to the end of the first 5-year contract term.
Although ICGS is responsible for designing, constructing, deploying,
supporting, and integrating Deepwater assets, the Coast Guard maintains
responsibility for oversight and overall management of the program. To
help fulfill this responsibility, the Coast Guard uses several management
tools to track progress in the program, such as monthly status reports
called quad reports, a performance-based management tool called the Earned
Value Management System (EVMS), and a schedule management system called
IMS. The quad reports are monthly summaries of the work performed on the
various deepwater assets and were developed to give managers a monthly
progress report on the performance of the program in such areas as cost,
schedule, and contract administration. EVMS is used to track cost and
schedule for certain delivery orders that have been placed to manage the
risk of the major assets and activities. IMS is a three-tiered,
calendar-based schedule used to track the completion of tasks and
milestones of the individual Deepwater delivery task orders. However,

data reliability with IMS has been an area of concern for the Coast Guard,
and it is currently working with a private contractor and ICGS to address
these concerns. Currently, the Coast Guard only maintains the lowest and
most detailed level of IMS with monthly updates. These updates reflect the
status of active contracts of individual assets and feed into EVMS's
monthly cost performance reports of those individual contracts, which
allow program management to monitor the cost, schedule, and technical
performance of ongoing work at these lowest and most detailed levels.

In recent months, we have issued two reports that have raised concern
about the Coast Guard's initial management of the Deepwater program and
the potential for escalating costs. In March 2004,3 we reported that key
components needed to manage the Deepwater program and oversee the system
integrator's performance have not been effectively implemented. We
recommended that the Secretary of Homeland Security direct the Commandant
of the Coast Guard to take a number of actions to improve Deepwater
program management and contractor oversight. In April 2004,4 we testified
that the most significant challenge the Coast Guard faces as it moves
forward in the Deepwater program is keeping the program on schedule and
within planned budget estimates. We noted that the Coast Guard was at risk
of having to expend funds to repair deteriorating legacy assets that
otherwise had been planned for Deepwater modernization initiatives, which
could potentially further delay the program and increase total program
costs. We noted further that the Coast Guard's current estimate for
completing the acquisition program within the 20-year schedule has risen
to $17.2 billion, an increase of $2.2 billion over the original $15
billion estimate.5

Results 	The degree to which the Deepwater program is on track with regard
to its original 2002 acquisition schedule is difficult to determine,
because the Coast Guard has not maintained and updated the acquisition
schedule. The original acquisition schedule included acquisition phases
(such as concept

3See U.S. General Accounting Office, Contract Management: Coast Guard's
Deepwater Program Needs Increased Attention to Management and Contractor
Oversight, GAO-04-380 (Washington, D.C.: Mar. 9, 2004).

4See U.S. General Accounting Office, Coast Guard: Key Management and
Budget Challenges for Fiscal Year 2005 and Beyond, GAO-04-636T
(Washington, D.C.: Apr. 7, 2004).

5These amounts are in nominal (current-year) dollars.

technology and design, system development and demonstration, and
fabrication), interim phase milestones (such as preliminary and critical
design reviews, installation, and testing), and the critical paths
integrating the delivery of individual components to particular assets.
However, while the Coast Guard has what is called an integrated master
schedule, it currently uses it only at the lowest and most detailed levels
and have not updated it to demonstrate whether individual components and
assets are being integrated and delivered on schedule and in the critical
sequence. There are a number of reasons why tracking the current
integrated schedule on a major government investment or acquisition is
important, but two stand out. First, our work has shown that it is
important to identify potential risks in major acquisitions as early as
possible so problems can be avoided or minimized. The ability to achieve
scheduled events is a key indicator of risk. Second, cost, schedule, and
performance are fundamental to the Congress's oversight of major
acquisitions. In fact, by law, DOD's major defense acquisition programs
have to report cost, schedule, and performance updates to the Congress at
least annually and whenever cost and schedule thresholds are breached. In
practice, schedules on DOD's major defense acquisitions are continually
monitored and reported to management on a quarterly basis.

While Coast Guard officials indicated that the management tools they use
are sufficient for tracking delivery dates throughout the acquisition, we
found that these tools could not provide a ready and reliable picture of
the current integrated Deepwater acquisition schedule. For example, IMS
has had problems with data reliability and the monthly status reports,
while assessing the progress of individual assets, do not translate those
individual assessments into an overall integrated Deepwater acquisition
schedule. In fact, the February 2004 status report noted that because
there was no accurate overall integrated schedule for the command and
control design phase, the linkages with the development of other assets
were largely unknown. Although maintaining a current integrated schedule
is a best practice for ensuring adequate contract oversight and management
and is a requirement for DOD acquisitions, Coast Guard officials said they
have not done so because of the numerous changes the Deepwater Program
experiences every year and because of the cost, personnel, and time
involved in crafting a revised master plan with the systems integrator on
an annual basis. The officials said they have not planned to update the
original acquisition schedule until just prior to deciding whether to
extend the award of the next 5-year Deepwater contract in 2007. However,
we have found that in acquisitions of similar scope-and in particular,
acquisitions made by DOD-maintaining a current schedule is a fundamental
practice that the department considers necessary.

While the Coast Guard could not provide us with an updated integrated
schedule, we developed the current acquisition status of a number of
selected Deepwater assets from documents provided by the Coast Guard. Our
analysis indicates that several Deepwater assets and capabilities have
experienced delays and are at risk of being delivered later than
anticipated in the original implementation plan. For example, the delivery
of the first two maritime patrol aircraft is behind schedule by about 1
year, and the delivery and integration of the vertical-take-off-and-land
unmanned air vehicle to the first national security cutter has been
delayed 18 months.

The $168 million appropriated in fiscal year 2004 for the Deepwater
program above the President's request of $500 million will allow the Coast
Guard to conduct a number of projects that had been delayed or would not
have been funded in fiscal year 2004, but it will not fully return the
program to its original 2002 acquisition schedule. Our analysis indicates
there are several reasons for this result. First, even with the additional
amount, the program still had a cumulative funding shortfall of $39
million through fiscal year 2004, as compared to the Coast Guard's planned
funding amount. Second, because part of the additional $168 million was
needed to start work delayed from fiscal year 2003, it did not provide
enough funding for the delayed work and for all the work that the Coast
Guard had originally planned for fiscal year 2004. As a result, some of
this work will have to be delayed to fiscal year 2005. Third, the delivery
of some assets has fallen so far behind schedule that it is impossible to
ensure their delivery according to the original 2002 implementation
schedule by simply providing more money. For example, according to the
2002 implementation schedule, nine maritime patrol aircraft were to be
delivered by the end of 2005; according to the current contract, none will
be delivered in 2005 and two will be delivered by the end of 2006.
Similarly, the original schedule called for completing 18 123-foot patrol
boat conversions by the end of 2005; according to the current contract, 8
will be completed by the end of 2005.6 Fourth, the acquisition of some
assets has been delayed for reasons other than funding. For example,
greater than anticipated hull corrosion in the 110 ft. patrol boats has
delayed the conversion of those into 123 footers and delays in the
availability of faster satellite service for legacy cutters has delayed
the delivery of those upgraded legacy cutters. Finally, in keeping with
appropriations conference committee directives for how the additional

6The conversion is to extend the 110-foot patrol boats by 13 feet to
incorporate a stern ramp.

amount was to be spent, part of the additional funding went for design of
the offshore patrol cutter, work that, under the original schedule, would
not begin for another 6 to 8 years. This work may speed up acquisition of
these assets, but they were not on the original schedule this early in the
program.

The Coast Guard is currently revising Deepwater's mission needs statement
in response to increased homeland security requirements resulting from the
terrorist attacks of September 11, 2001. According to the Coast Guard, in
May 2004 it submitted the revised statement to the Department of Homeland
Security's (DHS) Joint Requirements Council, which conditionally accepted
it until the Deepwater contractor, ICGS, completes a new estimate of the
costs needed to acquire the necessary functional capabilities resulting
from the revised mission needs statement. The council further directed the
Coast Guard to complete the new cost estimate in order to brief the DHS
Investment Review Board in October 2004. Acting as an agent of the DHS,
the board will approve any increases in the Deepwater total ownership cost
associated with the revised mission needs statement and any growth in the
Deepwater budget. Specifications for some specific Deepwater assets-most
notably the National Security Cutter-will be changed in light of the Coast
Guard's added homeland security responsibilities. Coast Guard officials
said the main impact of the revision would be to close the gaps in
Deepwater asset capabilities created by the expansion of Coast Guard
mission requirement after September 11.7

Regarding DOD's assistance to the Coast Guard for Deepwater, the Navy
budgeted $25 million for the Deepwater program in fiscal years 2002-04,
mainly to help outfit the National Security Cutter. The Navy budgeted
these funds to provide capabilities and equipment it regarded as important
for the Coast Guard to have for potential national defense missions that
would be carried out in conjunction with Navy operations.8

7An April 2004 RAND Corporation study concluded that the Coast Guard will
need twice the number of cutters and 50 percent more aircraft to meet new
national security requirements. U.S. Coast Guard's Deepwater Force
Modernization Plan: Can it Be Accelerated? Will Meet Changing Security
Needs?, The Rand Corporation, Santa Monica, Calif., April 2004.

8Through a 1987 agreement, the Navy provides to the Coast Guard all
Navy-owned, military readiness equipment and associated support materials
that the Navy deems necessary to enable the Coast Guard to carry out
assigned missions while operating with the Navy. Upon declaration of war,
or when the President directs, the Coast Guard operates as a service of
the Navy and is subject to the orders of the Secretary of the Navy.

Conclusions

Recommendation for Executive Action

The 2002 Deepwater acquisition schedule showed not only the individual
planned phases and interim milestones for designing, testing, and
fabricating assets but also the integrated schedules of critical linkages
between assets. The absence of an up-to-date integrated acquisition
schedule for the Deepwater program is a concern, because it is a symptom
of the larger issues we reported in March 2004 that are related to whether
this complicated acquisition is being adequately managed and whether the
government's interests are being properly safeguarded. Since the inception
of the unique contracting approach to this project, we have pointed out
that it poses risks, in that it would be expensive to alter and, because
of the unique "systems integrator" approach, does not operate like a
conventional acquisition. The recent disclosure that, just 3 years into
the acquisition, costs have risen by $2.2 billion points to the need for a
clear understanding of what assets are being acquired, when they are being
acquired, and at what cost. This lack of such a current schedule lessens
the Coast Guard's ability to monitor the contractor's performance and to
take early action on potential risks before they become problems later in
the program.

The Coast Guard has so far maintained that it is not worth the time and
cost involved to update the acquisition schedule until just before the
award of the next 5-year Deepwater contract, but we disagree. We recognize
that there are costs involved with keeping an acquisition schedule
updated. However, for Department of Defense acquisitions of such scope,
maintaining a current schedule is a fundamental and necessary practice.
Deepwater remains a program in transition, in that the Coast Guard is
currently revising the program's mission requirements to include increased
homeland security requirements. The major modifications that may result to
key assets make keeping the program on track that much harder. As evolving
mission requirements are translated into decisions about what assets are
needed and what capabilities they will need to have, it becomes even more
imperative that Coast Guard officials update the acquisition schedule on a
more timely basis, so that budget submissions by the Coast Guard can allow
DHS and Congress to base decisions on accurate information.

We recommend that the Secretary of Homeland Security direct the Commandant
of the Coast Guard to update the original 2002 Deepwater acquisition
schedule in time to support the fiscal year 2006 Deepwater budget
submission to DHS and Congress and at least once a year thereafter to
support each budget submission. The updated schedule should include the
current status of asset acquisition phases (such as

  Agency Comments

concept technology and design, system development and demonstration, and
fabrication), interim phase milestones (such as preliminary and critical
design reviews, installation, and testing), and the critical paths linking
the delivery of individual components to particular assets.

We provided a draft of this report to DHS and the Coast Guard for their
review and comment. In written comments, which are reproduced in appendix
II, the Coast Guard generally concurred with the findings and
recommendations in the report. The Coast Guard also provided technical
comments, which we incorporated as appropriate.

The Coast Guard, however, did not concur with three areas of discussion.
First, the Coast Guard said that our draft report did not accurately
portray its current acquisition tools and disagreed with our determination
that data within one of those tools, the IMS, was not reliable enough for
use in our report. As we noted in the report, at the time of our review
Coast Guard officials expressed concerns about the reliability of IMS
data, such as out-dated data and less than adequate data input and
adjustment, and told us that they had hired a consultant to address those
concerns. For that reason and with Coast Guard and ICGS agreement on our
methodology, we based our analysis on the same source documents the Coast
Guard uses as inputs to IMS's lowest, most detailed level. The Coast Guard
stated in its written comments that while not in the form of an
acquisition schedule, IMS's lower level data are reliable. According to
its written comments, the Coast Guard is making improvements in updating
IMS at all levels.

Second, the Coast Guard said that we did not highlight that delays in the
delivery schedule have been caused by a lack of funding and the subsequent
need to sustain legacy assets rather than a lack of acquisition schedule
updates. The scope of our review was to determine the impact of the
additional $168 million in fiscal year 2004 on returning Deepwater to its
original 2002 schedule, not to determine effects of receiving
appropriations that were less than requested in previous years. However,
in explaining why the $168 million will not return the Deepwater to its
original schedule, we did note that part of the $168 million was needed to
start work delayed from fiscal year 2003, and that the acquisition of some
assets had been delayed due to greater than anticipated hull corrosion in
legacy 110-foot patrol boats causing the delay in converting them to
123footers.

Finally, we did not intend to imply that the lack of acquisition schedule
updates caused delays in delivery schedule. However, we continue to
believe that not updating an integrated schedule to show the acquisition
linkages between critical assets is a management concern. We believe in
the importance of updating acquisition schedules at least annually not
only as a best practice for managing and overseeing a complex integrated
acquisition such as Deepwater but also as a up-to-date source of
information on which DHS and the Congress can base annual budget
decisions.

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 15 days from
its issue date. At that time, we will send copies of this report to the
Secretary of Homeland Security, the Commandant of the Coast Guard,
appropriate congressional committees, and other interested parties. The
report will also be available at no charge on GAO's Web site at
http://www.gao.gov. If you or your staffs have any questions about this
report, please contact me at (415) 904-2200 or by email at
[email protected], or Steve Calvo, Assistant Director, at (206) 287-4839
or by email at [email protected]. Other key contributors to this report were
Shawn Arbogast, Leo Barbour, David Best, Michele Fejfar, Paul Francis, Sam
Hinojosa, David Hooper, Michele Mackin, and Stan Stenersen.

Margaret T. Wrightson Director, Homeland Security and Justice Issues

      Type of asset or work planned to be started     Original fiscal year to 
                                                            start work        
      1 MPA w/o missionization and initial spares                        2003 
     Detail Design and Long Lead Material for VUAV                       2003 
      Options on four 110-123 Patrol Boat Upgrades                       2003 
4 Short Range Prosecutors to be delivered with 123                    2004 
                    ft. Patrol Boats                  
     Command & Control System Upgrades on two 210'                       2004 
                        Cutters                       
        Additional C4ISR shore site upgrades at:      
                     Atlantic area                                       2004 
                      Pacific area                                       2004 
        Greater antilles section, San Juan, P.R.                         2004 

          Type of asset or work delayed to fiscal year 2005 or beyond         
               C4ISR Modification of 270 Class Cutter ships 10,13             
                    CAMS CC-2 Low Rate of Initial Production                  
      COMMSTA CC-2 Low Rate of Initial Production (CSTA-01,02,03,04,05,06)    
    Production and Deployment for Major Modification of 110/123 Class Patrol  
                       Cutter Lot 5 (follow ships 13-20)                      
            Coast Guard Air Station (CGAS) Production and Deployment          
      Aircraft Repair and Supply Center (AR&SC) Production and Deployment     
            Aircraft Training Center (ATC) Production and Deployment          
      Aviation Technical Training Center (ATTC) Production and Deployment     
Production and Deployment of MPA Low rate of initial production (aircraft  
                                      7-9)                                    

                      Appendix II: Coast Guard's Comments

  GAO's Mission

Obtaining Copies of GAO Reports and Testimony

The General Accounting Office, the audit, evaluation and investigative arm
of Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability of
the federal government for the American people. GAO examines the use of
public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost
is through the Internet. GAO's Web site (www.gao.gov) contains abstracts
and fulltext files of current reports and testimony and an expanding
archive of older products. The Web site features a search engine to help
you locate documents using key words and phrases. You can print these
documents in their entirety, including charts and other graphics.

Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document files.
To have GAO e-mail this list to you every afternoon, go to www.gao.gov and
select "Subscribe to e-mail alerts" under the "Order GAO Products"
heading.

Order by Mail or Phone 	The first copy of each printed report is free.
Additional copies are $2 each. A check or money order should be made out
to the Superintendent of Documents. GAO also accepts VISA and Mastercard.
Orders for 100 or more copies mailed to a single address are discounted 25
percent. Orders should be sent to:

U.S. General Accounting Office 441 G Street NW, Room LM Washington, D.C.
20548

To order by Phone: 	Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061

To Report Fraud,	Contact: Web site: www.gao.gov/fraudnet/fraudnet.htm

  Waste, and Abuse in E-mail: [email protected]

Federal Programs Automated answering system: (800) 424-5454 or (202)
512-7470

Jeff Nelligan, Managing Director, [email protected] (202) 512-4800

Public Affairs 	U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
*** End of document. ***