Lawmakers urge continued attention to Coast Guard acquisition reform

House lawmakers on Tuesday acknowledged improvements to the Coast Guard's acquisition processes in the wake of severe problems with the Deepwater modernization program, but said the service's work is far from over.

Rep. Elijah Cummings, D-Md., said during a House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation hearing that the 2009 Coast Guard Acquisition Reform Act (H.R. 1665) he introduced on Monday would help the service stay on track with its transformation.

The bill would formalize procedures to ensure the Coast Guard defines operational requirements adequately before moving forward with contracts and assesses trade-offs among performance, cost and schedule for each acquisition. New assets, such as ships and aircraft, would be required to undergo testing for adherence to contractual and safety requirements.

The legislation also would bar the Coast Guard from using contractors as lead systems integrators after Sept. 30, 2011. Many of the problems with Deepwater acquisitions stemmed from the service's heavy reliance on a joint venture of Lockheed Martin Corp. and Northrop Grumman Corp. as a systems integrator for the $24 billion effort to upgrade cutters, aircraft and communications systems.

In April 2007, the Coast Guard announced it was taking over that role. Rear Adm. Gary Blore, assistant commandant for acquisition, testified that the work of the joint venture -- called Integrated Coast Guard Systems -- had been reduced drastically.

"Any remaining instances of ICGS involvement as a [lead systems integrator] are based on the need to close out pre-existing contractual relationships or gain rights to system designs and plans," Blore told lawmakers. "We will not renew the current [lead systems integrator] award term contract when it expires in 2011.... Let there be no doubt about our commitment, we are currently modifying the existing award term contract by removing the option for continuing the contract beyond 2011."

Despite these reforms, the Coast Guard continues to face significant hurdles in managing its acquisitions, witnesses testified. James Hutton, director of acquisition and sourcing management at the Government Accountability Office, noted the service originally hired ICGS partly because it lacked the experience and workforce to manage the acquisition itself. Coast Guard officials have used recruitment incentives and relocation bonuses to boost the workforce and have rehired federal annuitants, Hutton said. The service also plans to emphasize acquisition for military officers during their regular three-year rotations.

With these efforts, the Coast Guard's acquisition directorate has 855 military and civilian personnel and is continuing to grow. It gained 104 acquisition and program management officials in 2008 and already has hired 10 in 2009. But it continues to outsource key jobs, including cost estimation and program management support, Hutton said.

"While support contractors can provide a variety of essential services, when they are performing certain activities that closely support inherently governmental functions, their use must be carefully overseen to ensure that they do not perform inherently governmental roles," Hutton said. "Conflicts of interest, improper use of personal services contracts and increased costs are also potential concerns of reliance on contractors."

Blore told the subcommittee that the Coast Guard largely has the tools it needs to hire talented acquisition professionals, but he asked lawmakers to place the service on the same level as other agencies.

"When the market is so tight for acquisition professionals, one slight advantage on the part of another agency having, for example, direct hire authority can be hurtful to our interests," Blore said. "So we don't ask for anything different than what anyone else has, but largely parity with the Department of Defense, which is who we're normally competing with in the job market."

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