CG: Deepwater costs rise to $27.4 billion - Navy News | News from Afghanistan & Iraq - Navy Times

CG: Deepwater costs rise to $27.4 billion

The price tag for the Coast Guard’s major acquisitions program, called Deepwater, rose to $27.4 billion, the service’s acquisition’s chief told a congressional subcommittee Thursday.

Rear Adm. Ronald Rábago said that he expected the costs to increase because of several outstanding projects. They include the offshore patrol cutter and unmanned aerial vehicles, which are still under development. He could not say how much the costs would increase.

Last summer, the Coast Guard acquisitions directorate reported that the program would cost $26.3 billion over 25 years.

Despite the cost increase, Rep. Elijah Cummings, D-Md., the chairman of the House subcommittee on Coast Guard and maritime transportation, praised Rábago and his staff for bringing the Deepwater program under control since the service stood up its own acquisitions department in 2007. Rábago testified that the problems and cost overruns with the national security cutters have been ironed out and everything was on track for the other surface ships under production.

“It has simply been phenomenal,” Cummings said. “We have been very pleased with what you have been able to achieve.”

The tone from the congressional panel was a marked contrast to blistering criticism the Coast Guard received in the past for its management of the Deepwater acquisition program, a massive project to replace the service’s aging ships and aircraft. Deepwater, now set to be completed in 2027, has been beleaguered by delays and escalating costs. The program’s estimated cost was $17 billion in 1998, with a completion date of 2018.

Problems with the program surfaced in 2005 under the Coast Guard’s former lead system integrator, Integrated Coast Guard Systems — a joint venture between Lockheed Martin and Northrop Grumman Ships Systems. The Coast Guard became the lead system integrator in 2007. The current contract with ICGS will expire in 2011.

The Department of Justice still is investigating the contract dispute that erupted when the Coast Guard received eight faulty 123-foot patrol boats. The Coast Guard has managed to salvage some parts from the unusable cutters that were supposed to be a replacement for the service’s 110-foot patrol craft, but it must preserve the rest for evidence in the investigation, Rábago said.

Work has begun on the new replacement: the fast response cutter. Bollinger Shipyards of Lockport, La., began construction in late November on Sentinel, the first in a class of 58 cutters. The Coast Guard awarded a contract option for about $141 million to Bollinger Shipyards on Dec. 15 to begin production on three additional fast response cutters.

Rábago said the Coast Guard also is moving forward on the 357-foot offshore patrol cutters, which will replace the medium endurance cutters.

And the Coast Guard is in negotiations on its fourth national security cutter. It hopes to award a contract later this year. Cummings asked Rábago whether the design had been perfected because previous problems had caused the cost of the ship to escalate.

“The cost of the national security cutters is steadily rising far above what we anticipated,” Cummings said.

Rábago said the requirements had been perfected and he expected costs to stabilize.

The Coast Guard also has made progress in hiring and certifying its acquisitions staff, as well as implementing policies and procedures, Rábago said. In fiscal 2009, the directorate hired 90 new people, reducing its civilian vacancy rate from nearly 24 percent at the end of fiscal 2008 to less than 10 percent by the end of fiscal 2009. That vacancy percentage rose slightly when the directorate received funding in this fiscal year to hire 100 additional people, he said. The directorate now employs 950 military and civilian personnel.