U.S. Department ofHomeland SecurityUnited StatesCoast Guard

MEMORANDUM• '••

From: V . S. Crea, VADMVCG

Copy: CG-01CG-ACOCG-1CG-2CG-4CG-5CG-6CG-7CG-8CG-91CG-92/924CG-93/934

CommandantUnited States Coast Guard

#

2100 2nd S t S .W .

Washington, DC 20593-0001Staff Symbol: CG-924Phone: (202)475-3150

5000

JUN 1 7 2008

Reply to M r . Pete BoydAttn of:

To: C G - 9

Subj: AC Q U ISIT IO N DECISION MEMORANDUM, MILESTONE (MS) 1 FOR CG-LIMS

Ref: ( a ) Major Systems Acquisition Manual, COMDTINST M5000.10 (series)(b) Command, Control, Communications, Computers and Information Technology

(C4&IT) Systems Development Life Cycle (SDLC) Policy, COMDTINST 5230.66

1. A s a result of the successful May 23, 2008 MS1 (Project Authorization) brief to the CoastGuard Acquisition Review Council (CGARC), I approve the Coast Guard Logistics InformationManagement System (CG-LIMS) project for entry into the Concept & Technology Development(C&TD) Phase as a major system acquisition project based on the importance of the project tothe Coast Guard mission and level of visibility expected.

2. A s a major system acquisition, the CG-LIMS project should be managed in accordance withthe requirements in reference (a). I n addition, an IT Project Tailoring Plan should be developedand approved by the Coast Guard CIO to ensure compliance with applicable requirements ofreference (b). In addition to the standard Concept and Technology Development objectives listedin reference a, chapter 2, the following exit criteria need to be satisfied before the project canenter the Capability Development & Demonstration Phase:

a. Develop Migration Plans for the first increment of capabilityb. Develop an Implementation Plan for CG-LIMS beginning 1QFY10c. O btain an Independent Lifecycle Cost Estimate

3. I f you have any questions, please contact the CGARC Executive Secretary, Mr. Pete Boyd at(202) 475-3150 or peter. t. bovd useg. mi I.

MISSION NEED STATEMENT

for the

Coast Guard Logistics Information Management System (CG-LIMS)

Submitted by: ( 0 1 \ 1 \ al\OCI\ W, ( 14 5 -) 311 O g

Date

Approved by:

Sponsor (CG-4)

G711 of i cCG Acquisition Executive (VCG) D a t e

DHS Acquisition Decision Memorandum Approval Received:Date

TABLE OF CONTENTS

Title I Paragraph P a g e Number

EXECUTIVE SUMMARY

SECTION 1. MISSION(S) AND CAPABILITIES 1

1.1 Required Mission(s) and Need(s) 1

1.2 Authority 2

1.3 Capability Gap 2

1.4 Resource Availability 3

SECTION 2. PROGRAM JUSTIFICATION 3

2.1 Linkage to Strategic Plan 3

2.2 Compelling Federal Government Interests 4

2.3 Efficiency and Effectiveness 4

2.4 Acquisition Goals and Objectives 5

2.5 Impact of Disapproval 5

EXECUTIVE SUMMARY

The Coast Guard currently invests in multiple logistics information systems representing manycommunities and business processes. The systems are not well integrated and do not provide thenecessary asset and parts visibility to effectively support Coast Guard missions. To the contrary,the inability to share real time information regarding asset status, configuration, inventory, andmaintenance history degrades preparedness and has a negative impact on operations.Additionally, many of these systems have been organically developed and carry with themsignificant support costs.

The Coast Guard's inability to comply with the Chief Financial Officers (CFO) Act of 1990 andthe related Federal Financial Management Improvement Act of 1996 (FFMIA) is closely tied toour inability to correctly capture and track financial information in our Core Accounting Systemthat is traceable back to the transaction level of detail in our logistics system. We must enablethe Coast Guard's Chief Financial Officer to disclose organizational financial performance byproviding transparent, traceable financial information from our logistics system and interfacingeffectively with our core accounting system.

Our current logistics systems are not consistently aligned with the Department of HomelandSecurity (DHS) enterprise architecture. This investment is an opportunity to rectify this situationby endorsing that architecture and potentially serve as a model logistics system for the DHSenterprise.

Our legacy logistics systems are closely tied to their asset-specific business processes. Thoseprocesses are changing as the Coast Guard transforms the organization and support structure.The existing information systems cannot be economically changed to support new processes orscaled to meet the enterprise requirements.

The Coast Guard must invest in a centrally-managed, integrated, enterprise wide logisticsinformation management system that leverages government and industry standards and bestpractices. By implementing a logistics system capable of supporting improved businessprocesses and organizational structures, we will optimize operational support, reduce costsacross the organization, provide real time financial data, and align with DHS enterprisearchitecture. CG-LIMS is necessary for the Coast Guard to continue to accomplish the missionand capably manage increasing roles in homeland security.

SECTION 1. MISSIONS AND CAPABILITIES

1.1 Required Missions and NeedsThe Coast Guard defines logistics as all support activities associated with developing, acquiring,testing, and sustaining the mission effectiveness of operating systems throughout their servicelives.' The overall objective of logistics is to provide our people and customers the rightmaterial, in the right condition, at the right time, with the right quantity, at the right place and atthe right cost.

Until recently, the Coast Guard placed insufficient emphasis on integrating logistics across assettypes throughout their lifecycle. For the most part, logistics was synonymous with supply. Wedid not have a vision outlining what an integrated logistics system would look like. The variouscomponents of capability were managed within "stovepipes" which led to decisions about onecomponent without consideration of its impact upon other components. As a result, we aresaddled with narrow and inefficient business processes and are unable to optimize theeffectiveness of our assets. I t is evident that we need to integrate our logistics system or riskCoast Guard units not being able to perform their missions.2The Coast Guard's role in supporting the Department of Homeland Security (DHS) mission ofsecuring America is grounded in its ability to provide capable, prepared operating forces. Theongoing Deepwater acquisition program highlights the Coast Guard's need to support new,complex assets within improved Coast Guard business processes that provide visibility of partsand assets throughout the organization. The Coast Guard's current logistics support capability,which is tied to stressed, organically-designed Information Technology (IT) systems anddisparate business processes, is not prepared to adequately handle the new assets, much lessprovide the needed visibility and integrate the business processes supporting them.

Recent efforts to comply with the CFO Act and FTMIA illustrate the need for improved logisticswithin the Coast Guard. To adequately measure financial performance, provide transparency toour financial history and obligations, and execute effective budgeting and financial planning, theCoast Guard needs centrally-managed logistics capable of tracking purchases and expendituresthroughout their lifecycle and properly integrating with the Coast Guard's Core AccountingSystem.

Improved logistics business processes will support both Asset Management and Supply ChainManagement, as defined in the Coast Guard Enterprise Architecture (CGEA), and the FederalEnterprise Architecture (FEA) Business Reference Model (BRM). These processes mustinterface with multiple information objects and align with the CGEA Information Inventory, aswell as DHS Information Architecture. A technical solution has not yet been defined, but theCoast Guard IT Products and Standards Inventory, DHS EA Transition Strategy, DHS TechnicalReference Model (TRM) and FEA TRM will be used to assist in the identification of anappropriate solution that meets the Coast Guard's logistics management requirements.

1 COMDTINST M4000.2, Coast Guard Logistics Handbook2 COMDTINST 4000.5A, Coast Guard Logistics Doctrine

The current disparate IT systems in the Coast Guard do not adequately fill the gap of neededintegrated logistics, nor are they consistently aligned with the DHS enterprise architecture.

1.2 AuthorityTitles 10 and 14 of the United States Code (USC) define the Coast Guard as both an armed forceof the United States and a federal law enforcement agency.

The Chief Financial Officers Act of 1990 (CFO Act) requires that federal agencies produceaccurate, detailed financial statements certified by independent auditors, on an annual basis.

The Homeland Security Act of 2002 established DHS and placed the Coast Guard in this newDepartment.

1.3 Capability GapOver the years, the Coast Guard has developed multiple logistics systems and associatedbusiness models to support its Air, Surface, Shore, and Deepwater lines of business: (1) AviationLogistics Management Information System (ALMIS) provides supply, inventory, operations, andmaintenance support for aircraft; (2) Vessel Logistics System (VLS) provides supply, inventory,operations, and maintenance support for Coast Guard cutters, boats, and C48LIT; (3) Shore AssetManagement System (SAM) provides preventive maintenance schedule, work requests, workorders, and inventory management support for facilities engineers; and (4) Logistics InformationManagement System (LIMS) was developed to support Deepwater assets within the Deepwatersupport processes.

The existence of multiple business models hinders the Coast Guard's ability to integrate thesecommunities and identify the best mix of various mission-critical operational assets andassociated logistics support requirements. In 2007, Coast Guard Business Intelligence (CGBI)reported cutter availability at 58.8% (target is 70%). This is equivalent to the annual unplannedloss of capability for several cutters, fleet wide. Similarly, the shore facility community reported$596-million in deferred maintenance for FY07 (up from $489-million since FY04).3The current systems and supporting organization do not permit the Coast Guard to plan, source,deliver and maintain its operational capabilities at an enterprise level. Total asset visibility,including engineering configuration, cost-based and historical part tracking, inventory, andmaintenance history and scheduling, are not possible. The lack of integration and enterprisevisibility prevents the Coast Guard from quickly identifying where mission needs are not beingmet.

None of the legacy systems are sufficiently complete or integrated to support a holistic view oflogistics for the assets managed. They represent the best solution available given the technologyand funding available when developed. For example, the IT tool used for configurationmanagement of aircraft was first delivered 20 years ago.

3 Coast Guard FY07 Year-end Financial Statements.

Recent CFO Act and FFMIA compliance shortfalls have demonstrated how IT systems withoutadequate transaction-level valuation capability perpetuate a manpower-intensive, non-cohesivework-around culture for Coast Guard resource management. Meeting CFO and FFMIAstandards requires that the IT system conducting logistics transactions capture the data necessaryto make financial valuation determinations for transmission to the core accounting system.Varying degrees of compliance exist among the Coast Guard's current disparate logisticssystems, highlighting the need for a common approach based on Coast Guard and industry bestpractices. The future state of the Coast Guard financial system will include a single procurementsystem and single, authoritative general ledger as two components of its broader CoreAccounting System. Coast Guard logistics must support this system by capturing and providingadequate transaction level information.

DHS has identified target technologies towards which certain investments should be moving inthe fiscal years through 2014. For asset management related investments, such as CG-LIMS, thetarget is Sunflower. While no technical solution has yet been defined for CG-LIMS, thedepartmental target technology will be evaluated to determine whether it fulfills Coast Guardlogistics management requirements.

1.4 Resource AvailabilityCost estimates, priorities, and affordability have not yet been evaluated and depend on therequirements documented and alternatives selected to best meet the needs of the Coast Guard.Because the Coast Guard modified the original Deepwater support model by assumingsustainment responsibility for Deepwater assets, the logistics system being acquired within theDeepwater Acquisition Program Baseline (APB) has shifted focus to provide a system thatsupports Deepwater assets within the Coast Guard's emerging business model. Incorporating theapproach outlined in this Mission Need Statement (MNS) as a baseline for delivery, the staff andresources previously committed to acquiring Deepwater TAMS in the Acquisition Directoratewill be used to acquire CG-LIMS. CG-6 has identified CG-LIMS as an enterprise C48LIT assetand designated Coast Guard Operations Systems Center (OSC) as the CG-LIMS SystemDevelopment Agent for designing, developing, implementing and supporting CG-LIMS.Additional funding required will be requested through the capital investment planning process.

SECTION 2. PROGRAM JUSTIFICATION

2.1 Linkage to Strategic PlanImproved enterprise business processes will strengthen operational posture and optimizeoperational force capability, directly supporting DHS Strategic Goals of Prevention, Protection,Response, Recovery and Service. Highlighting this concept is an excerpt from StrategicObjective 4.2 — "We will provide integrated logistical support to ensure a rapid and effectiveresponse."

The Strategic Goal of Organizational Excellence, however, is how a centrally-managed,integrated logistics system links best to the Strategic Plan. Every objective indicates the need for

an integrated, interoperable system that provides financial transparency to allow for evaluationand mitigation of organizational costs. Replacing many existing, resource-intensive logisticssystems with one centrally-managed, integrated system provides the additional immediatepotential benefit of significant cost savings in the IT application alone.

2.2 Compelling Federal Government InterestsFollowing the terror attacks of September 1 ith, 2 0 0 1 , b o t h t h e P r e s i d e n t a n d C o n g r e ss i d e n t i f ie d

homeland security as a top priority. The Government Accountability Office (GAO) hasperformed several reviews of the Coast Guard's missions and has subsequently testified beforeCongress regarding the Coast Guard's implementation challenges in moving to the Departmentof Homeland Security. GAO determined that the Coast Guard faces significant challenges inevery one of six key focus areas: strategic planning, communications and partnership building,performance management, human capital strategy, information management and technology, andacquisition management. According to GAO, the challenges are compounded because the CoastGuard must also "substantially reinvent itself to meet the agency's new security role."4The DHS Headquarters staff is developing requirements for logistics support needs across DHScomponents and has a vested interest in their having standardized, interoperable businessprocesses. Leveraging industry standards and best practices to implement a logistics system thatprovides both optimized support and full visibility of the organization's assets and property willopen the possibilities for much greater integration across component lines. The Coast Guard willwork closely with DHS logistics committees to ensure the Coast Guard system is scalable andflexible in order to integrate with and support any potential future DHS-wide logistics system.

The ability to fully trace financial obligations, asset valuations, and overall CFO Act and FFMIAcompliance is a high priority for the Coast Guard. An integrated, centrally-managed logisticssystem, properly integrated with the Core Accounting System at the transaction level of detail,will enable accountable tracking of financial transactions throughout the organization, in lieu ofthe current stove-piped processes that make the task manpower-intensive and overwhelming

2.3 Efficiency and EffectivenessCurrent legacy logistics IT investments in the Coast Guard will be targeted for consolidation andreplacement by CG-LIMS. Capability required for each stove-piped community will be fullyconsidered in the requirements phase of this investment. This investment will specificallyleverage lessons learned from the Logistics Transformation Program Integration Office (LTPIO)while using ALMIS to pilot efforts to implement a single logistics business model acrossmultiple Coast Guard communities.

The Coast Guard's financial transformation and progress toward compliance with CFO Act andFFMIA is enhanced by the transparency of logistics systems and ability to interface with relevantinformation managed within them. Investing in a centrally-managed, integrated logistics system

4 Homeland Security: Challenges Facing the Coast Guard as it Transitions to the New Department. (GAO-03-467T, February2003).

4

will enable the Coast Guard to provide timely and consistent data to the Coast Guard's CoreAccounting System.

Tightly integrating business processes and systems with mission needs, made possible in part byorganizational changes, will significantly reduce costs and improve the effectiveness of logisticsoperations throughout the lifecycle of assets, including disposal. Appropriate stakeholders, suchas financial, property, workforce, operations, systems engineering, and information architecturerepresentatives will be involved with identifying needed capability of CG-LIMS and ensuringintegration requirements are captured.

DHS has described the Asset Management portfolio as including "all activities related to themaintenance, administration and operation of office buildings, fleets, machinery and other capitalassets that are possessions of the federal government." The Coast Guard has identified thisportfolio as the correct one for all our logistics management and supply chain related systems, toinclude CG-LIMS.

24 Acquisition Goals and ObjectivesThe Coast Guard must improve the segregated, inefficient logistics systems within theorganization. The objective of the acquired system will be to leverage industry standards andbest practices to increase enterprise efficiency, optimize effectiveness, and establishorganizational ownership and accountability of all its assets and resources. The Coast Guardmust employ a world-class logistics system to support a business model that enables planning,sourcing, delivery, maintenance, and improved decision-making I t must provide visibility anddecision-making support for department and component leaders, as well as operationalcommanders.

2.5 Impact of DisapprovalMaintaining the status quo with current IT logistics systems poses greater problems the longerthe Coast Guard maintains the current architecture. Because the key logistics processes ofplanning, sourcing, delivery and maintenance are interconnected rather than isolated, changes toone element are likely to affect the cost and performance of the other processes, which will havea compounding effect as the Coast Guard takes delivery of new, more complex Deepwaterassets. Failure to account for each process can have negative repercussions across wholebusiness areas.

In addition to redundancies between communities, the interdependent relationships betweenthese business areas can easily create over-tasking or under-tasking within each area. This inturn increases cost and ultimately degrades mission readiness. Establishing a common set oflogistics processes and supporting systems is critically important for effective and efficientmanagement of an organization of the Coast Guard's size and complexity.

The Coast Guard will never be CFO Act and FFMIA compliant using the current logisticssystems.

5

Finally, the Coast Guard's many diverse logistics systems make it difficult to integrateeffectively with DHS operational and administrative systems, a developing departmentalrequirement.

6

U. S. DEPARTMENTOF HOMELANDSECURITYU.S. COAST GUARDCG-4229 (Rev. 6-04)

From: C '-4

To: V C G

Thru: C G - 0 I

4. Recommend approval.

I. Attached is the CG-LIMS MNS for your approval.

SIGNER'S COMMENTS

Re: C O A S T GUARD LOGISTICS INFORMATION MANAGEMENT SYSTEM (CG-LIMS)MISSION NEED STATEMENT (MNS)

End: Coast Guard Logistics Information System (CG-LIMS) Mission Need Statement

APPROVAL:

SIGNATURE:

INFORMATION:

JUN 1 2 2008

2. The MNS has achieved Concurrent Clearance from CG-094, CG-1, CG-2, CG-ACO, CG-5, CG-6, CG-7,CG-8 and CG-9.

3. The acquisition of CG-LIMS is necessary to modernize and consolidate our logistics IT systems so that wemay support the common business process being instituted by LTPIO with common, supportable, ITcapability.