The New Guardians

Coast Guard chief Thad Allen and his team are remaking the service from the inside out.

It's chilly afternoon in April, and Adm. Thad Allen, the 23rd commandant of the Coast Guard, is explaining to a group of Coasties assigned to a small boat station in Rockland, Maine, how their work lives are going to change soon.

"Who handles procurement and supply here?" Allen asks. A hand goes up.

"Don't you love the fourth quarter? You try to close out and de-obligate obligations and when you're doing all that, your computer crashes, right?" Heads nod.

"You're dealing with a desktop application that's not very user-friendly, right? That ought to be easier and it's one of the things we're looking at," Allen says. A short discussion about the difficulty of reconciling the station's books clearly resonates with the young supply officer and Allen assures him, "There are things we can do to make it easier for you."

Allen switches the subject to maintenance. Nothing will make life easier for small stations like Rockland than a clearly prescribed, centrally managed, automated maintenance system-something Coast Guard aviators have had for years, but for some reason has never been a priority for tracking and maintaining parts and servicing small boats and cutters. "We rescued 32,000 people in New Orleans [after Katrina], over 13,000 of them from helicopters, and we never lost an aircraft because of maintenance and we never had a mishap," Allen tells them, ascribing that record to the fact that every helicopter in the Coast Guard is maintained according to strict procedures; parts and tools are tracked through a central computer system and everything is meticulously documented.

That's not the case with cutters and small boats, Allen says. "You go out to do a maintenance procedure on a boat and you come back and look around and you can't find a screwdriver. What do we do in the surface community? You steal one from the cutter pilot, or better yet, you go buy two more because you might lose another one." Those days are numbered, Allen tells them. Servicewide logistics procedures are being rolled out across the Coast Guard. In the future, when tools go missing during maintenance, the crew members will stop what they're doing and work their way back through all the steps they took until the tool is found.

Under the new system, all boats will be maintained to a proven standard, using parts from a centrally managed inventory. If that sounds bureaucratic to the rank and file, it is intended to be more reliable and efficient than the current system. Now boats are sometimes maintained using locally procured, nonstandard parts, occasionally creating a hash for future repair crews who find themselves dealing with uniquely configured boats. The idea behind the changes is to create a single point of accountability for each of the Coast Guard's assets-a product line management support structure, in business school parlance. That way, when one of the 47-foot boats in Rockland experiences a problem with its exhaust manifold, a manager at the new Surface Forces Logistics Center in Baltimore will know if the problem is a fluke or a trend. Such visibility into maintenance issues across the fleet will allow senior leaders to detect problems early and address them holistically, saving small unit commanders a lot of headaches. At least that's the idea.

The changes under way in financial management and logistics are part of a broader modernization plan Allen has spearheaded since becoming commandant. By the time his term is over next spring, much about the Coast Guard will be markedly different. The way the service buys boats, aircraft and other equipment and maintains those assets across the fleet and the way senior leaders are organized to manage those things are all evolving.

"It's going to require some cultural changes and we're facing this as a whole Coast Guard," Allen tells them. "It will require you to trust the system, and the system to trust you."

Course Correction

Trust has been a painful issue for the Coast Guard in recent years. When Allen became commandant in April 2006, trouble with the mammoth, multiyear procurement program known as Deepwater was brewing and about to blow a big hole in the service's credibility. The program, potentially worth about $25 billion over a 25-year period, was designed to upgrade and replace a significant portion of aging air and sea assets and modernize the communications equipment that linked them. Because the Coast Guard lacked the engineering and contracting expertise to run such a complex program, it structured the contract to be managed by a commercial lead systems integrator-a decision that was supported, and sometimes lauded, by auditors at the Government Accountability Office and members of Congress as an effective and affordable way to leverage commercial expertise to support a shrinking federal acquisition workforce.

In 2002, a consortium called Integrated Coast Guard Systems, a joint venture of defense contractors Lockheed Martin Corp. and Northrop Grumman Corp., won the contract to manage Deepwater. As the lead systems integrator, ICGS had broad authority to select and manage subcontractors and to shape the acquisition plan to best meet mission requirements.

Deepwater is critical to the Coast Guard's future. The mission has expanded substantially since Sept. 11, 2001, and many of its cutters and smaller boats are operating well beyond their expected lifespan. But by the summer of 2006, two 110-foot patrol boats that had been upgraded and expanded to 123 feet under the Deepwater contract developed cracks in their hulls while at sea. The structural problems proved so severe that Allen pulled from the fleet all eight boats that had been converted under Deepwater by that point (another 41 boats were in line for conversion). Naval engineers eventually determined the boats were so flawed the Coast Guard should cut its losses and sell them for scrap. More than two years later, the Justice Department still is seeking to recoup funds from ICGS for the eight bungled boats.

Not only did the Coast Guard waste tens of millions of dollars on boats that weren't seaworthy, it lost eight boats critical to its mission. To help compensate for the loss, the Coast Guard has had to borrow three patrol boats from the Navy and assign multiple crews to the remaining fleet of 110s, which only accelerates the wear and tear on those aging hulls.

As the 123-foot patrol boat debacle was still unfolding, in January 2007, Homeland Security Inspector General Richard Skinner published a report highly critical of the national security cutter-the 418-foot centerpiece of the Deepwater program designed for the most challenging security, defense and law enforcement missions. The national security cutters will replace the 378-foot high endurance cutters that have been in service since the 1960s. Skinner said it was doubtful the new cutter would meet service life specifications stipulated in the contract, and he determined the Coast Guard had abdicated its oversight authority in deference to the contractors.

By April 2007, problems with Deepwater became so egregious Allen decided the Coast Guard would take over the lead systems integrator role from ICGS, a decision that required the service to rebuild its acquisition workforce. That job fell to Rear Adm. Gary Blore, then the program executive officer overseeing Deepwater, now the assistant commandant for acquisition.

Like Allen, Blore inherited the Deepwater problem. The Coast Guard aviator and former chief budget officer had never worked in acquisition when he was tapped by Allen, then chief of staff, to oversee Deepwater in late 2005. In fact, as a budget officer, Blore had tried unsuccessfully to kill the 110-foot patrol boat expansion program long before structural problems emerged, on the grounds that the program wasn't financially sound.

"I certainly had mixed feelings," about the assignment to Deepwater, Blore says. Besides being an active critic of the program, he was concerned about his lack of procurement experience, which he felt others could rightly criticize. Nonetheless, "Adm. Allen puts a lot of strategic intent into making assignments, and I had confidence that he was playing to my strengths, whatever they might be," Blore says.

Even before Deepwater problems came to a head in the summer and fall of 2006, Allen had decided he wanted to overhaul the service's acquisition arm and build an organization responsible for administering all procurement programs, including Deepwater, which then was separate. His first directive upon becoming commandant was to Blore, to create that organization.

Deepwater had divided the service in a way Blore found unnerving. "To a certain extent, the Coast Guard was being pulled apart over it," he says. "I was very concerned about what it was doing to my Coast Guard-not to be overly possessive. It was unusual in my career to see elements of the Coast Guard getting along so poorly." One of the first things Blore did was to try to bridge the gap between the Deepwater staff and the acquisition office, which handled all other procurements. He worked with colleagues to craft a blueprint for a new acquisition organization. He also reached out to establish much stronger relationships with the naval engineering community, which was led by a former classmate and friend from his days at the Coast Guard Academy. That relationship proved essential to addressing design problems with the national security cutter raised by the IG.

As Blore worked on acquisition and Deepwater reforms, he also earned his certification as a Level 3 program manager. Certification for the acquisition workforce had never been a top priority, but Blore made it one. "Whether you're civilian or military, there's a certain goodness about going through the training necessary for certification," regardless of one's experience, he says. Between 2006 and 2009, about 500 civilian and uniformed employees received certification in one of 13 acquisition professions, a huge jump from what had previously been about 10 certifications issued annually.

In July 2007, Blore stood up the new acquisition organization. While ICGS still has production responsibilities under the original Deepwater contract, it no longer has any responsibilities as a lead systems integrator-those responsibilities fall to his staff of about 850 employees, supported by about 200 contractors (the Coast Guard has requested funds in 2010 for another 100 acquisition employees, bringing the staff to the level Blore has advocated). When the final ICGS requirements expire in January, the contract essentially will cease, ending any illusions about the viability of giving contractors such extensive authority over acquisition programs.

The acquisition branch received a significant boost in 2008, when GAO and the U.S. Court of Federal Claims both rejected a protest of the Coast Guard's selection of Bollinger Shipyards Inc. to build the Sentinel class patrol boat, a fast response cutter that will begin replacing the overworked 110-foot patrol boats next year. The decisions were essentially an endorsement of the organization's handling of a contract worth up to $3 billion.

Despite the enormous cost in credibility (Blore and Allen regularly meet with lawmakers and congressional staff to explain the service's acquisition decisions), Blore takes the long view of Deepwater and its problems.

"ICGS, for a lot of reasons, was not a good lash-up for the Coast Guard. First off, many of the assumptions that were made in retrospect don't appear to be that well thought out, and that's not industry's fault, that's the government's fault," Blore says. "The whole concept of building ICGS around the new assets of the Coast Guard, as opposed to the [entire] assets of the Coast Guard, was myopic.

"Having said that, if you go back and look at the history from the late 1990s, everybody's jumping on this concept [of having a commercial lead systems integrator]. GAO endorses it, the IG endorses it, Congress endorses it. On paper it looks a lot better than it did to actually live the experience," Blore says. Nonetheless, he gives Deepwater's founders credit for sparking much-needed recapitalization. "They got the program started, they got a funding line item in the budget, and they got the program described. . . . Given that prior [acquisition spending] levels were between $250 million and $400 million a year and we're now regularly at $1.5 billion a year, that's a pretty major accomplishment," he says.

Living in a Blender

For two years now, Allen has been seeking congressional authorization to codify the organizational changes he believes are necessary to carry his modernization initiatives forward after his departure next spring. Besides creating the acquisition organization, Allen is restructuring the stovepiped Pacific and Atlantic Area commands into a single operations command responsible for executing all missions, and a single force readiness command responsible for standardizing doctrine and training. A deputy commandant for operations will be aligning operational plans with the Coast Guard's policy and resources.

Additionally, logistics activity formerly handled by the Atlantic and Pacific Area commands is being consolidated with the Coast Guard's Engineering Logistics Center in Baltimore under a deputy commandant for mission support. The Surface Forces Logistics Center is among five hubs in a new organization that will support various aspects of the fleet, including boats and cutters, aviation, shore infrastructure, information technology, and personnel.

The changes will give the Coast Guard the same operating flexibility the Defense Department services have. The changes are in various stages across the fleet, but until Congress authorizes the new flag officer positions, many Coast Guard leaders will be dual-hatted to maintain the old organizational structure.

What's more, many of the reforms, especially in maintenance and logistics, will depend on negotiations with the unions that represent civilian employees, says Cmdr. Marty Sarch, a member of the implementation team for the Surface Forces Logistics Center.

Managing the reinvention while handling day-to-day operations is like "living in a blender," Allen says. "You have to manage what I call the tyranny of the present-the budget, operations, things like that. But you can't let that distract you from what you're trying to do. The fact of the matter is, it is fundamental that we reposition this service in terms of organizational structure so it can do its job in the future. That's job one."

While Allen prods Congress for an authorization bill codifying the changes, he never misses an opportunity to sell modernization to the rank and file.

"I always like mixing it up with the kids," Allen says after the all-hands meeting at Station Rockland. "I need to be able to take a complex subject like modernization and make it relevant to their world of work. I've got to do it in the vernacular and with an ease that makes them feel comfortable, where they will raise their hands and ask questions. The worst all-hands you can have is where you're done and nobody asks a question."

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