Coast Guard seeks final bids on major acquisition project

The Coast Guard requested final proposals last week from contractors vying for the agency's multi-billion dollar acquisition project to upgrade aging equipment. The Coast Guard's Deepwater acquisition project seeks to upgrade the agency's equipment for missions 50 miles or more offshore. These activities include interdicting drugs and illegal immigrants and carrying out search-and-rescue missions.

The General Accounting Office has estimated that Deepwater is likely to have a price tag somewhere between $8 billion and $12 billion over the next two decades, and the Coast Guard estimates the project will take up to 30 years to complete. According to Lt. Commander Andrea Palermo, a Coast Guard spokeswoman, the three industry teams competing for the initial Deepwater contract must submit their final project proposals by Sep. 29. The agency plans to award the first five-year contract in April 2002. After that, five additional five-year contracts will be awarded based on the contractor's performance, she said. Competitors for the contract include Boeing Co., Integrated Coast Guard System (comprised of Lockheed Martin, Northrop Grumman and Ingalls Shipbuilding), and Science Applications International Corp. Palermo said the Coast Guard has estimated it will need $300 million for Deepwater for fiscal 2002, and $500 million for every additional year during the life of the contract. In a May report on the risks associated with Deepwater, GAO said that during the current era of budget constraints and competing budget priorities at the Transportation Department, the high cost of the project could take away funds for other Coast Guard projects. The Coast Guard refuted GAO's claim, saying the agency would be able to fund Deepwater without any adverse impact on other projects and expressing optimism that Congress will continue to appropriate enough money each year to sustain the project. The House fiscal 2002 Transportation appropriations bill (H.R. 2299), which passed last month, includes $300 million for the long-term acquisition project. The bill is now in the Senate.

The Coast Guard has said it hopes to control Deepwater's costs by using commercial equipment and by encouraging competition among suppliers in subsequent five-year contracts.