Coast Guard modernization program faces increased oversight

Coast Guard Commandant Adm. Thad Allen told lawmakers Tuesday he would hold agency personnel and contractors accountable for improving performance in the service's troubled modernization program known as Deepwater.

In testimony before the House Transportation and Infrastructure Subcommittee on the Coast Guard and Maritime Transportation, Allen acknowledged serious problems with the mammoth program to replace its aging equipment. The program is being run by the Integrated Coast Guard Systems, a joint venture of defense contractors Lockheed Martin and Northrop Grumman.

Allen said he took seriously a withering report on the acquisition of the National Security Cutter, the cornerstone of the Deepwater fleet, by Richard Skinner, the inspector general of the Homeland Security Department, the Coast Guard's parent agency.

According to Skinner's 133-page report, the cutter will not meet the performance specifications described in the Deepwater contract. Moreover, he said, the Coast Guard had abdicated its oversight authority in deference to the contractors.

Coast Guard technical experts warned of design flaws as early as 2002. In March 2004, then-Assistant Commandant Rear Adm. Erroll Brown outlined several major areas of concern in a memorandum to then-Program Executive Officer Rear Adm. P.M. Stillman. Brown wanted to halt the program until technical concerns could be addressed after ICGS "unilaterally closed the structural comments and concerns and ended any collaborative effort … without reaching a resolution."

Senior Coast Guard leaders decided to go ahead to prevent the schedule from slipping and further driving up costs. They planned to address the technical problems by retrofitting the first cutter. Delivery of the first cutter is scheduled for August; the second is under construction and scheduled for October 2008. Brown and Stillman, along with other key decision-makers at the time, have since retired. Allen became commandant last May.

The National Security Cutter isn't the only troubled aspect of the program. ICGS had proposed converting the service's aging 110-foot patrol boats to 123-foot patrol boats with enhanced capabilities to extend their life until they could be replaced in 2018 by another boat called the Fast Response Cutter.

But two of eight 110-foot patrol boats converted under the program developed serious hull problems that continue despite multiple attempts at repair. The problems were so significant that in November, Allen suspended operation of the 123-foot patrol boats while the Coast Guard and ICGS decide if it will even be possible to fix the problems.

Allen said he was ordering a major overhaul of the Coast Guard's acquisition directorate to bring all contracting efforts under one organization and eliminate competing interests between contract managers and technical experts. He also has initiated a number of outside reviews of specific aspects of the program to include assessments of key management and technical processes, workload and workforce management issues.

Rep. Elijah E. Cummings, D-Md., subcommittee chairman, said, "The seriousness of the concerns about Deepwater have now been raised to a whole new level." He plans to call Allen as a witness again in 120 days to discuss progress on Deepwater.