Coast Guard awards multibillion-dollar ship, aircraft deal

The Coast Guard has awarded an $11 billion contract to a joint venture of Lockheed Martin and Northrop Grumman to build a next-generation fleet of deepwater ships and aircraft for the service, Deputy Transportation Secretary Michael Jackson announced Tuesday.

The pact--the largest in Coast Guard history--will replace the service's aging offshore fleet with a series of ships, helicopters and unmanned aerial vehicles to be built over the next 30 years. The team, led by Lockheed Martin and Northrop Grumman, bested teams led by Boeing and Science Applications Industrial Corp. for the contract, which could ultimately be worth nearly $17 billion.

"With this award, we are providing our personnel who defend our country on the seas and in the air with the assets to perform their mission," said Coast Guard Commandant Thomas Collins.

The award caps a six-year process in which the Coast Guard developed an innovative procurement strategy to buy a network of ships, aircraft and sensors all at once. Instead of specifying the precise mix of assets for its new fleet, the Coast Guard described its offshore mission requirements and gave contractors free rein to come up with the best way to perform these missions. This performance-based approach is a model for how the new Transportation Security Administration can tap the best ideas of industry, Jackson said.

"The lessons of this procurement have been studied by this administration and…have helped us think through how to structure contracts to stand up a new agency," he said.

In all, the industry team will build 91 new ships, 35 airplanes, 34 helicopters and 76 unmanned aerial vehicles (UAVs). The contractors will also renovate 49 existing cutters and 93 helicopters. The first ships to be decommissioned will be the Coast Guard's 12 378-foot cutters, which will be replaced by a set of 425-foot "national security cutters." The design for the new ships could be finished later this year, and the first cutters could be ready within five to six years, according to Coast Guard officials.

The Lockheed-Northrop team also plans to build a 341-foot medium-range cutter and will build a 130-foot short-range cutter in the later phases of the project. The latter vessel will replace the Coast Guard's 110-foot ships, which will be overhauled and extended to 123 feet to allow them to serve for another 10 to 15 years.

On the aviation side, the industry team will build a new maritime patrol aircraft to replace the Coast Guard's aging HU-25 planes. The contractor team also envisions adding a short-range and long-range UAV to the Coast Guard fleet.

The Coast Guard must still convince Congress to fund the project over its 30-year duration. The Bush administration proposed $500 million for the project in its 2003 budget, but funding must be renewed regularly for the program to continue. Some appropriators, including Sen. Ted Stevens, R-Alaska, have questioned the Coast Guard's approach and timing, given its new focus on homeland security. But Coast Guard officials believe the project will be fully funded if the first stages come in on time and on budget.

"I think the prospects [for full funding] are excellent assuming we make it work," said Adm. Patrick Stillman, Deepwater program executive officer.

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