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Correction to This Article
A Dec. 8 article about the Coast Guard¿s fleet-modernization program incorrectly referred to Sen. Trent Lott (R-Miss.) as the incoming Senate minority leader. He will be the minority whip.
Costly Fleet Update Falters
Contractors Oversee Coast Guard Project

By Renae Merle and Spencer S. Hsu
Washington Post Staff Writers
Friday, December 8, 2006

A multibillion-dollar effort to modernize the Coast Guard's fleet has suffered delays, cost increases, design flaws and, most recently, the idling of eight 123-foot patrol boats that were found to be not seaworthy after an $88 million refurbishment.

The sidelining of eight of 10 Miami-based cutters worsens a patrol-boat crisis while the Coast Guard is preparing for an exodus of Cubans that could happen when dictator Fidel Castro is no longer in power, Coast Guard leaders acknowledge.

More broadly, congressional critics warn that early mistakes in the 25-year modernization program, called Deepwater -- the Coast Guard's largest contract ever -- are hobbling the service's transformation into a front-line homeland security force.

With the failure of the retrofitting program, eight of 49 boats in the service's workhorse fleet of Island-class patrol boats are out of action. Coast Guard leaders reported last year that only 25 percent of the aging cutters were fully "mission capable," because of maintenance problems and deployment of some boats to Iraq. In reports submitted to Congress, the Coast Guard projected that the fleet would be able to log about 80 percent of its targeted 98,200 operational hours a year.

Meanwhile, a Coast Guard plan to fill the gap by accelerating development of its next-generation cutter by 10 years has stalled because of technical problems.

House members tried to cut $121 million of the $1.1 billion appropriated this year for the $24 billion Deepwater modernization program, but the attempt was defeated by the program's defenders in the Senate. Citing plans for some of the replacement cutters to be built in Mississippi, critics said some decision making was influenced by Coast Guard attempts to curry favor with Mississippi GOP senators Thad Cochran, chairman of the Appropriations Committee, and Trent Lott, the incoming minority whip.

The program's failures are spelled out in a series of Government Accountability Office and Department of Homeland Security inspector general's reports and in congressional testimony, which point to the leeway given to the program's contractors, Lockheed Martin Corp. and Northrop Grumman Corp. Through their joint venture, Integrated Coast Guard Systems, the companies declined to comment, referring all questions to the Coast Guard.

But congressional critics are also raising fresh complaints of rising costs and failed ships in one of the largest national security contracts awarded after the Sept. 11, 2001, terrorist attacks.

"Deepwater is a mess. Over the last five years the Coast Guard procurement has been riddled with problems," said Rep. David W. Obey (D-Wis.), incoming chairman of the House Appropriations Committee. "Coast Guard needs to put in place a plan to fix this problem immediately."

"The big problem here is the boat doesn't work," said Sen. Judd Gregg (R-N.H.), outgoing chairman of the Senate Appropriations subcommittee on homeland security. "The people who manufactured these boats are going to have responsibility for their failure. . . . Someone's got to figure out who's responsible."

The Coast Guard has taken criticism of the program seriously and made significant improvements in the past few years, said Rear Adm. Gary Blore, head of the modernization program, which also includes Coast Guard aircraft. For example, the project that led to the sidelined patrol boats was approved without an independent review, which he said would not happen today.

"There is never a good time to not have enough patrol boats," Blore said. "I just regret that we haven't delivered an asset from when those management reforms were put in place."

Deepwater, awarded in 2002 and modified in 2005, lays out an ambitious plan to modernize and greatly expand the Coast Guard's aging fleet of ships, planes and helicopters, equipping the fleet with more modern technology in the process. The aim is to carry out expanded homeland security missions, including offshore patrols, port protection, and vessel boarding and escorting duties, which the Coast Guard said will consume 68,500 operational hours a year for its Island cutters. In that time, Deepwater's cost grew from $17 billion to $24 billion.

The first problems appeared in 2004, when the patrol boat Matagorda was fleeing Hurricane Ivan off the coast of Florida. The Island-class ship had just undergone an $11 million upgrade that included extending its hull from 110 feet to 123 feet. Adm. Thomas H. Collins, then commandant of the Coast Guard, called it the "leading symbol of our service's transformation."

Soon after the hurricane, the Coast Guard found a six-inch crack in the ship's deck and buckling in its hull.

The Coast Guard abandoned plans to overhaul all 49 of its 110-foot boats. In 2005, the eight ships already converted were put on restrictive duty that prohibited them from operating in seas higher than eight feet.

Last month, the Coast Guard found new structural problems beneath the main engines of some ships -- a safety risk. All eight boats were pulled out of commission. Officials said they are now figuring out how to fix them, acknowledging that it will probably require more money.

To make matters worse, the proposed replacement ships for those cutters have also run into technical problems.

The 140-foot Fast Response Cutter is meant to be speedier and tougher than its predecessor, capable of operating in higher seas and for longer periods, and resupplying less often. Responding to a Coast Guard demand to fast-track up to 58 new cutters, contractors proposed a hull design using composite materials instead of steel, which they said would weigh less and be cheaper in the long run. The Coast Guard approved the approach despite having never used such material, a Coast Guard spokesman said.

But, according to a GAO report, concern soon emerged within the service about the form and design of the hull, which was to be built at a Gulfport, Miss., shipyard owned by Northrop Grumman's Ship Systems of Pascagoula, Miss. By February 2006, those concerns had been confirmed by an independent review, and the Coast Guard suspended work on the $3 billion program after spending $25 million.

The Coast Guard is now looking for another stopgap measure, perhaps even ordering an existing ship that would be deployed by 2010, agency officials said.

House Democrats have discussed exerting more control over Deepwater projects. But Gregg said the answer is more money to accelerate Deepwater, not less. "My view is, we're going to spend what it takes to get the nation up to speed," he said.

The program's problems have been compounded by the Coast Guard's hands-off management. The primary contractors, Bethesda-based Lockheed and Northrop Grumman of Los Angeles, have been given unusual authority to run the program through Integrated Coast Guard Systems, according to several government reports. The companies make many of the important decisions, including which ships and aircraft are needed and which subcontractors will design and build them, according to GAO and inspector general reports.

In August, the Homeland Security inspector general reported that the companies had not consistently followed information-technology testing procedures and that the Coast Guard had "limited influence" over some contractor decisions.

One contracting official told the inspector general that the Coast Guard, because of personnel shortages, struggles to review documents within the 30 days the contractors allow. By the time it reviews the documents, the companies may have moved ahead with their plans, leaving the agency to accept the work or try to change it at additional cost, the report said.

The Coast Guard said it is on a "learning curve."

"We continue to make the contract more rigorous," said Mary Elder, the Coast Guard's spokeswoman for the program. "The contractor is learning lessons, as are we, about how best to interact with each other."

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