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Marine Log

January 30, 2007

Deepwater faces mounting Washington woes

The Coast Guard's Deepwater program is in deep trouble in Washington, D.C. And the plan to build a composite-hulled Fast Response Cutter as part of the program appears to be dead for the foreseeable future.

Monday, the DHS Inspector-General made public a report that is sharply critical of the Coast Guard's National Security Cutter program.

The report had been circulating in DHS and Congress for some days, eliciting the comment from Congressman Bennie G. Thompson, Chairman of the House Committee on Homeland Security, that "this Congress is not a ship of fools. We will not tolerate the spending of $775 million of the taxpayers' money on a boat that will not perform its intended function, will have a shortened service life and will cost another fortune to maintain."

Tuesday, the House Subcommittee on Coast Guard & Maritime Transportation held an oversight hearing on the whole Deepwater program.

In his opening statement Rep. James L. Oberstar (Minn.), Chairman of the Coast Guard panel's parent Committee on Transportation and Infrastructure, said: "No one here debates the need to replace the Coast Guard's aging fleet of aircraft and ships. However, over the past several years, Members of this side have voiced concerns about several aspects of the Deepwater Acquisition Program."

Questioning the arrangement whereby the Deepwater acquisition is managed by a joint venture between Lockheed Martin and Northrop Grumman, Chairman Oberstar said: "I will never understand why the Coast Guard chose to give the contractor full technical authority over all Deepwater design and construction decisions ... The Coast Guard let the fox guard the chicken coop."

In his opening remarks, Subcommittee Chairman Elijah E. Cummings (Md.) noted that "the Deepwater procurement process has had significant and highly publicized problems, including a failed effort to rehabilitate and modernize eight 110-foot legacy cutters and problems with the initial design of the Fast Response Cutter that required the design process to be halted."

"The seriousness of the concerns about Deepwater have, however, now been raised to a whole new level," he continued, noting that the DHS Inspector General report criticized "almost every aspect of the procurement of the National Security Cutter (the NSC)-- the most expensive asset to be acquired under the Deepwater program."

"The DHS IG's report would suggest," said Chairman Cummings, "that the Coast Guard and its contractors have knowingly and willfully spent close to $1 billion --a figure that is likely to rise-- to build a flawed ship and that, as a result of this decision, the U.S. taxpayer is likely to now have to pay for repairs on brand new vessels--which may nonetheless still not serve their full anticipated service life."

"The IG is unequivocal in stating that the design failures plaguing the NCS occurred specifically because the Coast Guard yielded too much authority for the NSC program to ICGS [Integrated Coast Guard Systems, the Lockheed Martin and Northrup Grumman joint venture contracted to manage the program]. Further, the IG claims that the Coast Guard was resistant to its investigation--and that it has failed to properly document the decisions taken during the development of the NSC," said the Chairman.

"This is one of the most troubling Inspector General reports I have read during my entire Congressional career," he noted.

He warned that the subcommittee "will require accountability of the Coast Guard and of Northrop Grumman and Lockheed Martin. Our Subcommittee will not allow taxpayer money to continue to be wasted on failing projects."

You can access the subcommittee's background information on the hearing here. It contains links to the prepared statements of Coast Guard Commandant Admiral Thad Allen; Phillip Teel, President, Northrop Grumman Ship Systems and Dr. Leo S Mackay Jr., President, Integrated Coast Guard Systems.

Admiral Allen's testimony points out that the main reasons for increases in Deepwater program costs have included the need for increased Coast Guard capabilities post 9/11 and the impact on Gulf Coast shipbuilders of Hurricanes Katrina and Rita.

But he acknowledges some failures in the program and says "we have learned some hard lessons and are implementing recommendations from the GAO and OIG to keep Deepwater moving forward."

One interesting revelation in Admiral Allen's testimony: "We are completing a bottom-up business case analysis on what we have termed the 'FRC-A Class' to provide an 'apples to apples' look at composite versus steel hulls. Results from this analysis should be available the next month. Additionally, we had a technology readiness assessment performed to review critical technology elements associated with a composite-hulled design. Initial findings from this assessment indicate that necessary critical technology elements do not yet support immediate production of a composite-hulled patrol boat."

What options are open to Congress?
According to a Congressional Research Service Report published on December 18, 2006, potential options for Congress regarding the Deepwater program include but are not limited to the following, some of which might be combined:

  • continuing with the program as currently planned;

  • instituting additional or stricter reporting requirements;

  • compressing the acquisition period from 25 years to 15 or 10 years;

  • replacing ICGS as the LSI;

  • dropping the use of an LSI in favor of direct Coast Guard management and integration of the program;

  • replacing the Deepwater program with a series of separate procurement programs for replacing individual classes of cutters, boats, and aircraft
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