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IG report shows early concerns over cutter

Some Coast Guard officials began raising concerns about the design of the new national security cutter nearly five years ago, three years before the keel was laid for the first 418-foot vessel, a Homeland Security Inspector General’s report states.

In 2002, technical experts for the service raised doubts about the ship’s hull, contending that significant flaws exist in its structural design, according to investigators.

In 2004, assistant commandant Rear Adm. Errol Brown sent a memo detailing more than five design deficiencies to the program executive officer overseeing the build, Rear Adm. Patrick Stillman. Brown urged Stillman to resolve any disputes over engineering before proceeding with construction of the first cutter in the class.

In a 133-page report prepared by the office of Homeland Security Inspector General Robert Skinner, the OIG details a program it says has increased in cost by more than one-third since the $24 billion, $25-year Deepwater contract was first awarded and doesn’t meet Coast Guard specifications.

The OIG also charges that the Coast Guard and its prime contractor for the performance-based Deepwater program, Integrated Coast Guard Systems, stymied the OIG’s investigation by refusing to allow their personnel to conduct private interviews with auditors.

“This is the most troubling IG report I’ve read during my 11 years as a representative in Congress,” House Coast Guard and Maritime Transportation Subcommittee chairman Elijah Cummings, D-Md., said Jan. 30 during an oversight hearing.

Coming on the heels of other memos and news critical of Deepwater, including a stand-down of the Coast Guard’s 123-foot patrol boat fleet in November 2006 due to hull problems, a suspension of design work last July for its replacement patrol boat, the fast response cutter, and concerns raised late last year about the communications suite on board the 123-foot patrol boats, the report has “raised concerns of Deepwater to a whole new level,” said Cummings and other members of his panel.

“We’ve been repeatedly reassured that the worst is behind us, and it seems like it never ends,” Rep. Frank LoBiondo, R-N.J., said.

The Coast Guard contends that many of the concerns catalogued in the inspector general’s report, titled “Acquisition of the National Security Cutter,” have been addressed. It even charges that, in some cases, the OIG is wrong.

“The report contains selective inclusion of documents that do not represent the most current, comprehensive or technically accurate data. Consequently, the report’s utility for program status analysis or improvements is inherently limited,” the Coast Guard wrote in its response to the OIG.

Coast Guard commandant Adm. Thad Allen told congressional panel members that the service is taking steps to better manage the Deepwater contract. He said he is overhauling the service’s acquisition management office to ensure better oversight and accountability, increasing collaboration with ICGS and taking steps to foster better relationships between the Coast Guard and its government oversight agencies, including the GAO, the Homeland Security Department’s OIG and congressional representatives.

“Let me be clear here. We concur and have implemented five of the six recommendations made by the IG. ... Having said that, there are technical issues as to how contracts are interpreted that we have to work out with the IG,” Allen said.

Plagued with problems

The report is another blow to the Coast Guard’s usually impeccable reputation as an organized, “can-do” outfit. The service, which had been riding high following its performance during Hurricane Katrina, has been plagued in the last eight months by what Rep. Rick Larsen, D-Wash., called a “tidal wave of bad news,” including the deaths of two Coast Guard divers last August in the Arctic and a court-martial for sexual assault at the Coast Guard Academy, with a subsequent investigation into possible gender and race discrimination at the school.

Many of the problems — decisions regarding Deepwater, a move to court-martial a cadet and failed oversight of the service’s dive program — began before Allen took over the service in May 2006. But in the hearing, Allen, who served as chief of staff from 2002 to 2006, admitted being aware of major contractual and program decisions and took responsibility for the service’s woes.

“I am the commandant of the Coast Guard, I am responsible, I will do this right,” Allen said.

Allen has established an acquisition pipeline headed by a rear admiral who is directly accountable to him. He has sought the advice of acquisition experts at Defense Acquisition University and begun implementing recommendations. He’s hired additional personnel to support the Coast Guard’s buying contracts, including Deepwater and the Rescue 21 communications system, and has ordered assistant commandants to “look into the corners” of their chains of command to ensure their programs are meeting Coast Guard requirements and regulations, he told the House panel.

“I’ve asked them to do assessments, looking at where we may have issues out there we could predict ahead of time if we were cognizant of the fact that we had juniority problems because we grew too fast or lacked personnel,” Allen said.

For the past year, oversight agencies, including the GAO, the Homeland Security department’s OIG and the Congressional Research Service, have criticized the Coast Guard’s management oversight of ICGS, contending that the industry partners have been allowed to self-monitor execution of their contract and certify their own compliance to federal standards.

Allen agreed that in the past, the Coast Guard was understaffed and couldn’t adequately monitor its contracts. But, he says he has taken steps to ensure better oversight, meeting personally with Lockheed Martin’s and Northrop Grumman’s top executives to spell out his expectations.

The House Coast Guard subcommittee asked Allen to report back his progress in 120 days.

In addressing Allen, House Transportation Committee chairman Rep. James Oberstar, D-Minn., commended Allen for his leadership and said the service needs to get its act together.

“The Coast Guard needs to learn better how to handle contracts,” Oberstar chided.

The disputes and disagreements have cost taxpayers. However, just how much money has been drained from Deepwater coffers remains to be determined. Allen said that since issues with the national security cutter are still being negotiated, he couldn’t estimate the additional cost of fortifying the hulls of national security cutters three through eight, or put a price tag on retrofitting the first and second.

He added that the 123-foot patrol boat conversion cost nearly $100 million, but Coast Guard engineers haven’t yet determined whether the ships are a total loss.

Officials at Northrop Grumman, the company that builds the national security cutters in Pascagoula, Miss., say there is nothing wrong with the national security cutters’ hulls. They say their engineers disagree with the Coast Guard’s assessment of the design but are strengthening it because “that’s what the customer wants.”

“Fatigue analysis and projection is a fairly new science in shipbuilding,” Northrop Grumman Ship Systems President Philip Teel told the panel. “The national security cutter is the best first-class vehicle ever built … she’s an outstanding ship.”

Despite the commandant’s assurances to Congress, at least one panel member isn’t convinced.

Rep. Gene Taylor, D-Miss., whose district includes the Northrop Grumman Pascagoula shipyard, says he’s dismayed by the ongoing problems with Coast Guard shipbuilding and the Navy littoral combat ship as well.

“I’m disappointed. All of our business plans call for ships to last for 30 years; when ships fail at 15, everyone loses. There is no room for failure,” said Taylor, a former Coast Guard boatswain’s mate.