U.S. Coast Guard’s Deepwater Acquisition Plan In Deep Water?
The Coast Guard has been asserting that its deepwater legacy assets are “failing at an unsustainable rate.” In 2002, the Coast Guard began a multi-year acquisition program to replace or modernize its deepwater assets that is currently estimated to cost $19 to $25 billion. More recently, it began studying options for replacing or modernizing the assets more rapidly in an effort to avoid some of the costs that might be involved in keeping aging assets running for longer periods.
Budgetary battles, funding shortfalls, and a dearth of adequate information from Congress’ point of view are all recapped in GAO report #GAO-05-757, which also looks at the Coast Guard’s overall handling of the program, program risks, and recommendations for improvement.
In its FY 2006 budget request, the Bush Administration requested $966 million for the Deepwater program – $242 million more than Congress appropriated for the program in FY 2005. This request reflects significant revisions to the Deepwater program’s requirements, capabilities, and schedule necessitated by the Coast Guard’s new homeland security mission.
Recently, the House Appropriations Committee recommended $500 million for the Deepwater program, $466 million less than the Administration requested. The committee expressed concern about the path the program has taken and the lack of information provided to Congress as the primary reasons for this recommendation. Specifically, the committee did not believe that the Coast Guard’s revised implementation plan provided enough programmatic information such as asset delivery timelines and funding projections for each year through the program’s completion.
In late May 2005, the Coast Guard submitted documentation to the committee in response to the committee’s request. In June 2005, the Senate Appropriations Committee expressed concern about the lack of information concerning the Deepwater plan in the FY 2006 budget request, but recommended funding of $905.6 million for the program for FY 2006.
As of early July 2005, the FY 2006 appropriation for the Deepwater program was still pending, and so the funding level is still not known. Since the inception of the Deepwater program, however, GAO has expressed concerns about the degree of risk in the acquisition approach and the Coast Guard’s ability to manage and oversee the program.
To quote from the report [PDF format]:
“In 2004 we reported that, well into the contract’s second year, key components needed to manage the program and oversee the system integrator’s performance had not been effectively implemented.24 We also reported that the degree to which the program was on track could not be determined because the Coast Guard was not updating its schedule. We detailed improvements needed in a number of areas… These concerns have a direct bearing on any consideration to increase the program’s pace. Because the Coast Guard was having difficulty managing the Deepwater program at the pace it had anticipated, increasing the pace by expediting the acquisitions would only complicate the problem.”
GAO has also warned that the Coast Guard’s acquisition strategy of relying on a prime contractor (“system integrator”) to identify and deliver the assets needed carries substantial risks, which a more aggressive acquisition schedule would only heighten.
The GAO made the following recommendations:
- Improve integrated product teams responsible for managing the program by providing better training, approving charters, and improving systems for sharing information between teams
- Ensure adequate staffing of the Deepwater program Provide field personnel with guidance and training on transitioning to new Deepwater Assets
- Update the original acquisition schedule to support future budget requests, starting with the FY 2006 request [DID note: see below for a more extensive explanation]
- Develop measurable award fee criteria for contractors consistent with guidance from the Office of Federal Procurement Policy
- Provide for better input from U.S. Coast Guard technical representatives
- Hold system integrator accountable for improving effectiveness of integrated product Teams
- Establish a time frame for putting steps in place to measure contractor’s progress toward improving operational effectiveness
- Establish a baseline for determining whether the acquisition approach is costing the government more than a traditional asset replacement approach
- Establish criteria to determine when to adjust the project baseline and document the reasons for change
- Develop a comprehensive plan for holding the system integrator accountable for ensuring adequate competition among suppliers
- For subcontracts over $5 million awarded by the system integrator to the two major subcontractors, require notification to the Coast Guard about decisions to perform the work in-house rather than contracting it out
The GAO also examined the Deepwater acquisition program, and found that, if the Coast Guard adopts a more aggressive acquisition schedule, it will likely continue to face a number of challenges to effectively manage it.
GAO later added:
“First, the need to replace or upgrade deteriorating legacy assets is considerable. While the Coast Guard currently lacks measures that clearly demonstrate how this deterioration affects its ability to perform deepwater-related missions, it is clear that the deepwater legacy assets are insufficient for the task. As the Coast Guard continues to develop condition measures that are more robust and able to link the assets’ condition with mission capabilities, and as it further develops and implements its Capital Asset Management System (CAMS), it will be in a better position to make more informed decisions regarding where its budget should be spent to maximize the capabilities of its legacy assets as the Coast Guard transitions to the Integrated Deepwater System.
Second, there are signs that as the Deepwater program moves ahead, the Coast Guard will continue to report more problems with sustaining existing assets, together with the attendant need for additional infusions of funding to deal with them. …While the Coast Guard is moving to improve the information it uses to set budget priorities through development of CAMS, the system has not been implemented, and therefore, it is too soon to tell how effective the system will be. We will continue to work with the Coast Guard to monitor its progress on CAMS as a means for ensuring that there is a more systematic and comprehensive approach to keeping Congress abreast of the potential bill for sustaining these assets.
Third, although the need to replace and upgrade assets is strong, there still are major risks in the Coast Guard’s acquisition approach. The cost increases and schedule slippages that have already occurred are warning signs. While the Coast Guard has initiated actions to address problems we have raised involving system integration, cost and schedule management, and integrated product teams, we remain concerned that the program still carries major risks.”
Read the full July 22, 2005 report [PDF format]… and see the GAO’s April 2006 update, which reports progress [PDF format].
- US Coast Guard – Integrated Deepwater System
- Integrated Coast Guard Systems (ICGS), the Lockheed/N-G partnership serving as Deepwater’s systems integrator.
- US Congressional Government Accountability Office (#GAO-06-546, April 28/06) – Coast Guard: Changes to Deepwater Plan Appear Sound, and Program Management Has Improved, but Continued Monitoring Is Warranted
- US Congressional Government Accountability Office (#GAO-05-757, July 22/05) – Coast Guard: Progress Being Made on Addressing Deepwater Legacy Asset Condition Issues and Program Management, but Acquisition Challenges Remain
- DID (May 25/06) – US Coast Guard’s ICGS Deepwater Contract Extended to 2011
- DID (March 30/06) – US Government Ship-Building Roundup. Including Deepwater.
- DID (Aug 25/05) – Seapower: USCG Deepwater Program Special Issue
- DID (Jan 3/06) – Cobham Catches A$ 1B CoastWatch Contract. Australia has a very different and interesting approach to the Coast Guard function, which is also its border patrol.