US Coast Guard Taking Over Lead Role for Deepwater Program
In “Voted Off the Island: The USCG’s Deepwater FRC Program,” DID wrote:
“The Coast Guard’s March 14, 2007 statement RE: FRC-B’s removal from Integrated Coast Guard Systems’ purview was careful to note that “…this decision pertains only to the acquisition of patrol boats and does not impact ongoing negotiations with ICGS for other work to be done in the second performance period of the Deepwater contract, beginning June 2007.” Nevertheless, the Blueprint for Acquisition Reform that Adm. Allen discussed with Congress on February 8, 2007 definitely lays the groundwork for further shifts if performance does not improve…The one essential truth behind all of these maneuvers is the US Coast Guard’s serious and growing need to replace worn equipment. All else is ultimately variable; the Coast Guard must and will do whatever it takes to secure the confidence and funding it needs, in order to address that underlying truth.”
That assessment appears to be borne out by the April 17, 2007 announcement that the US Coast Guard is taking over the lead integrator role for the entire Deepwater suite of acquisitions. Admiral Thad Allen:
“Working together with industry, the Coast Guard will make the following six fundamental changes in the management of our Deepwater program:
The Coast Guard will assume the lead role as systems integrator for all Coast Guard Deepwater assets, as well as other major acquisitions as appropriate. I have already begun building my organic staff in the fiscal year 2008 budget request, and will combine that with other government assets as we transition to this new role.
The Coast Guard will take full responsibility for leading the management of all life cycle logistics functions within the Deepwater program under an improved logistics architecture established with the new mission support organization.
The Coast Guard will expand the role of the American Bureau of Shipping, or other third-parties as appropriate, for Deepwater vessels to increase assurances that Deepwater assets are properly designed and constructed in accordance with established standards.
The Coast Guard will work collaboratively with Integrated Coast Guard Systems to identify and implement an expeditious resolution to all outstanding issues regarding the national security cutters.
The Coast Guard will consider placing contract responsibilities for continued production of an asset class on a case-by-case basis directly with the prime vendor consistent with competition requirements if: (1) deemed to be in the best interest of the government and (2) only after we verify lead asset performance with established mission requirements.
Finally, I will meet no less than quarterly with my counterparts from industry until any and all Deepwater program issues are fully adjudicated and resolved. Our next meeting is to be scheduled within a month.”
In other news, the converted Island Class patrol cutters that had experienced hull cracking were formally decommissioned… and the Coast Guard is looking into legal remedies:
“A significant step in changing the course of Deepwater is resolving outstanding issues within the program, so let me begin this morning by announcing my decision to permanently decommission the eight 123′ patrol boats converted under the Deepwater program.
Multiple extensive studies and analyses… have been unable to determine a single definitive root cause for the 123-foot patrol boat structural problems. We believe the design of the 123-foot patrol boat reduced the structural cross section necessary to support the added weight distribution following the conversion. Our analysis has been complicated, however, by the fact that we’ve observed permanent deformations of each hull in slightly different ways.
…The excessive cost and time associated with continuing to pursue an uncertain resolution to these structural problems has convinced me… We will continue to mitigate the loss of these patrol boat hours through our ongoing efforts and strategies…[and] will pursue all viably available contractual, legal or other options for recouping any funds that might be owed the government as a result of the loss of these hulls.”
The Washington Post also offers coverage, and notes the Congressional angle:
“Rep. Elijah E. Cummings (D-Md.), who chairs a House transportation subcommittee that will release findings of a Deepwater investigation on Wednesday, said, “I have absolutely no doubt that if it were not for our committee… that this would not be happening right now.”
That could well be true. As Margaret Mitchell-Jones, spokeswoman for the contracting team, put it:
“It seems to reflect what Congress is looking for – that is, for the government to serve overtly as the lead systems integrator.”
The question is how much will actually change in terms of the underlying contract. The answer may not be much. The boats, UAVs, et. al. still need to be built, and equipped. Which means someone must be contracted to do it. While oversight would change, and that change matters, it is possible that Lockheed Martin and Northrop Grumman could end up with many of the projects they would otherwise have executed, even as their overall management contract winds down.
That remains to be seen as the Coast Guard allocates contracts for its new platforms. A more immediate key indicator will be found in the specific terms of the Deepwater contract’s pending 43-month extension, a 2nd phase estimated to be worth $2.5 billion to $3 billion.
Even success on that front may not be the end of the contractor’s problems, which have been greatly exacerbated by some of their executives’ poor decisions during the project. Next on Cummings’ agenda?
“Cummings and the chairman of the House Transportation and Infrastructure Committee, James L. Oberstar (D-Minn.), yesterday called for the Justice Department to open a civil and criminal investigation into Deepwater… It is time for the Department of Justice to step up and hold those who perpetuated this fraud accountable,” Cummings said.”
Whether or not the issues surrounding the Island Class Cutters and FRC patrol boats amount to fraud remains to be seen. As “US Coast Guard’s Deepwater Effort Hits More Rough Sailing” noted, former Deepwater program worker and Lockheed Martin employee Mike DeKort certainly believes that the contractors put their own interests ahead of the program’s and the Coast Guard’s interests. This is no surprise to those familiar with Public Choice Theory. Legal action beyond conventional contractual & civil remedies, however, will require proof of far more than simple project failure and poor decisions.
Additional Readings & Sources
- DID Spotlight – US Coast Guard’s Deepwater Effort Hits More Rough Sailing. Offers a wide range of additional background, research sources, and links.
- Federal Computer Week (April 18/07) – Justice Department investigating Deepwater for possible fraud
- US Coast Guard (April 17/07) – Statement By Adm. Thad Allen On The Converted 123-Foot Patrol Boats And Changes To The Deepwater Acquisition Program
- Washington Post (April 16/07) – Coast Guard To Take Over ‘Deepwater’: Move Wrests Control From Consortium of Contractors.