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Coast Guard aims to get control of Deepwater

WASHINGTON — As Congress considers action on its troubled plan to overhaul the Coast Guard’s fleet of ships and planes, the service has taken steps to wrest control of the program from private contractors.

The Coast Guard’s changes could affect Northrup Grumman’s Pascagoula operations, which have Mississippi’s largest defense contracts.

On Friday, the Coast Guard announced the formation of a new acquisitions directorate, which it says will be a model for defense procurement. It has consolidated departments, nearly doubled to 983 the number of members of its acquisition work force and asked the Navy, which has more experience dealing with defense contractors, for help.

More importantly, the Coast Guard vows that it, and not a joint venture between Northrop Grumman and Lockheed Martin known as Integrated Coast Guard Systems, will be making key decisions on the troubled $24 billion “Deepwater” program.

The program has been beset with design flaws, cost overruns and delays.

But Coast Guard control of the massive contract will be a gradual process that could take as long as a year, that’s why ICGS was given a contract extension last month.

Northrop Grumman and Lockheed Martin, who won the massive Deepwater contract in 2002, will continue to build most of Coast Guard’s new ships and planes. But the joint venture will gradually lose its role as program manager and could lose some Deepwater business if it is not considered competitive.

“If Integrated Coast Guard Systems provides the best value, we’ll go with them; if not, we’ll go somewhere else,” said Rear Adm. Gary Blore, the new head of the Coast Guard acquisition program.

Much of the Deepwater work is done at Pascagoula’s Ingalls Shipyards, which is building the National Security Cutter, a ship that’s larger than any the Coast Guard has in its fleet.

Three cutters are under construction in Pascagoula, one nearly completed. The ships have already fallen short of expectations. A Department of Homeland Security inspector general’s report said the cutters will not be strong enough to serve 230 days a year at sea over a period of 30 years, a contract requirement.

In addition, the price of those new cutters has soared. The combined cost of the first two ships is $775 million, almost double the initial contract prices.

Eight aging patrol boats that were modernized and lengthened by a Northrop Grumman subcontractor, Bollinger Shipyards in Louisiana, at a cost of $100 million, were pulled from service in November because their hulls cracked in rough water.

Blore blamed a communications problem in the Coast Guard for its failure to catch problems in the construction of the Deepwater ships.

“We should have paid more attention to our engineers,” he said.

The crisis in the Deepwater program — which some lawmakers say will affect the Coast Guard’s operations and could pose a national security risk — has prompted a Justice Department investigation.

House lawmakers also have moved to cut $200 million from President Bush’s request for the program this year. The Deepwater program had been funded at about $1 billion a year.

“What happened with Deepwater is shocking to the conscience and has to be corrected,” said Rep. Elijah Cummings, D-Md. “It’s one of the worst contracting scandals I’ve seen. They can use this case in law school.”

Cummings, chairman of a House Transportation and Infrastructure subcommittee with authority over the Coast Guard, has sponsored a bill that would overhaul the Deepwater program. The bill was unanimously approved by the transportation committee in June. Cummings said he hopes for a full House vote this month.

Cummings called the Coast Guard’s changes to its acquisition program a “right step.” He said Coast Guard Commandant Adm. Thad Allen “is doing his best to turn this around.”

Cumming’s bill would force the Coast Guard to do more. It would require the service, now a part of the Homeland Security Department, to hire a civilian as head of its acquisition program. It would also open the program to full competition two years after the bill becomes law.

It would also impose more oversight of the Deepwater program though a series of reports and require approval of any cost increase greater than 5 percent.

There’s a similar bill in the Senate, sponsored by Sen. Maria Cantwell, D-Wash., who has called the Deepwater program “a fleecing of the taxpayer with ships that don’t float.”

Other bills that would require an immediate rebidding of the Deepwater contract have been introduced. But they have less support than the legislation sponsored by Cummings and Cantwell.

Integrated Coast Guard Systems has been supportive of the changes the Coast Guard has made in its contracting directorate. But it declined to comment on any of the Deepwater legislation introduced this year.

“We’re not going to talk about legislation, because Lord knows what’s going to happen,” said ICGS spokeswoman Margaret Mitchell-Jones.

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