GAO Report on Deepwater: A Self-Fulfilling Prophecy?

• Author: Thompson, Phillip
• Position: General Accounting Office's report on Coast Guard's Integrated Deepwater recapitalization project

A recent report by the General Accounting Office may indicate rough seas ahead for the Coast Guard's Integrated Deepwater recapitalization project.

The May report, titled, "Progress Being Made on Deepwater Project, But Risks Remain," raises serious questions about the affordability and the acquisition strategy of Deepwater, the Coast Guard's project aimed at modernizing its aging fleet. Deepwater would replace or upgrade more than 90 cutters and 200 aircraft used in "deepwater" missions, which are operations that take place more than 50 miles from shore.

With Deepwater, the Coast Guard wants to create an integrated suite of systems that work together, rather than acquire hulls and airframes on one-for-one replacement basis.

The GAO'S criticisms come at a crucial juncture in the life of the project. The report noted: "The Congress and the Coast Guard are at a major crossroads with the Deepwater Project, in that planning for the project is essentially complete, and the Congress will soon be asked to commit to a multibillion-dollar project that will define the way the Coast Guard performs many of its missions for decades to come.

Hence the first, and most significant, criticism: affordability. Deepwater will cost about $10 billion over the next 20 years or so, at an average annual expenditure of about $500 million, far more than the Coast Guard currently receives for acquisition. GAO repeatedly points out that there simply will not be that kind of money available to the Coast Guard in the next few years.

At first glance, the report seems to be a "silver bullet" to anyone looking to kill the program. But it also gives the Coast Guard high marks on the work that it has accomplished so far on the project and even notes that management of the project has been "generally excellent."

Even so, the GAO pointed out that the Coast Guard and the Transportation Department are relying heavily--too heavily, in GAO'S opinion--on sustained high levels of funding during years of anticipated diminished federal spending. Furthermore, the report states, Deepwater is not "easily adaptable to lower levels of funding without stretching the schedule and increasing costs. However, there are signs that funding levels may be lower than the planned amount.

In other words, if the Coast Guard cannot secure the $500 million or so it will need each year for the next two decades, its Deepwater program may be reduced to yet another piecemeal, stop-and-shop program. That...