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Coast Guard Cited in Report on Flawed Ship
"This Congress is not a ship of fools," Thompson said, promising unspecified oversight. "We will not tolerate the spending of $775 million of the taxpayer's money on a boat that will not perform its intended function, will have a shortened service life and will cost another fortune to maintain."
The inspector general's report is the latest in a series of audits that have faulted the Department of Homeland Security for its failure to manage contracts for its most complex and demanding missions. Deepwater was the largest project on a list of 32 Homeland Security contracts worth $34 billion cited in July by the House Government Reform Committee as marred by "significant overcharges, wasteful spending, or mismanagement." Other projects singled out included the hiring of airport screeners and deploying baggage inspection equipment, as well as programs involving nuclear detection equipment, border sensors and emergency housing after Hurricane Katrina.
  Rep. Bennie Thompson said a report critical of the Coast Guard's handling of the National Security Cutter was "a stunning indictment." (AP) |
The Coast Guard cutter report laid much of the blame on the Coast Guard's relationship with its contracting team.
The ship's "design and performance deficiencies are fundamentally the result of the Coast Guard's failure to exercise technical oversight over the design and construction of its Deepwater assets," the report said. The Coast Guard plans to build eight new cutters. The first was christened in November and will be delivered to the service in August. The second is slated for delivery in October 2008.
The combined cost of the first two ships has already increased from $517 million to about $775 million. That does not include the cost of addressing the design flaws or another $302 million for "re-pricing of all work associated with the production and deployment" of the first two ships, the report said.
Put another way, the cost of the first two ships will roughly double while their expected service life will likely be cut by 20 percent.
That's because shortly after the contract was awarded in 2002, Coast Guard technical experts began to warn about design flaws. The "fatigue service lives" of several critical elements are expected to be less than three years. In 2004, an assistant commandant wrote a memo expressing concern about the structural design, noting that "several of these problems compromise the safety and viability of the hull."
The Coast Guard eventually decided to make upgrades to the two current ships so they could operate at least 170 to 180 days a year at sea, the report says. The original contract calls for the ships to be able to operate 230 days a year.
The Coast Guard "has chosen to reinterpret the Deepwater contract rather than hold the contractor accountable" for the higher standard, the report says. The change allows the service to "downplay" the seriousness of the deficiencies and "minimize" the scope of improvements required.
In its response, the Coast Guard said it had "not lowered performance standards." The ship's structure "does not pose an immediate concern; rather, it presents a risk that it may need some structural repairs during its service life," the response said.
The inspector general also faulted the Coast Guard and contractors for imposing restrictions on interviews with employees and "hindering" the audit. The contractors, for example, wanted lawyers present during interviews with their employees. The meetings never took place.
The Coast Guard initially required that contact with the auditors be reported, that interviewees submit documents to the service before turning them over to auditors, and that an agency official be present during any interviews. The inspector general suspended fieldwork for five weeks in 2005 because of the agency's demands.
The Coast Guard's lawyers found some of the restrictions violated employees' rights. Auditors eventually interviewed some agency officials, but continued to have problems obtaining documents, according to the inspector general. In December 2005, auditors requested a copy of a briefing detailing the results of a structural analysis. The Coast Guard submitted the document, but omitted several pages of technical information, including notations "in large red lettering" stating that the ships would not meet their 30-year service life requirement, the report said.
In a response to the report, the Coast Guard said it did not prevent employees from meeting with the audit team and that Homeland Security officials are developing department-wide guidance for working with the inspector general in the future. A spokeswoman for the Lockheed-Northrop contracting team said the team companies concurred with the Coast Guard's response.
"There are no flaws with the design," spokeswoman Margaret Mitchell-Jones said.
She said the Coast Guard is the "technical authority for the National Security Cutter" and if the report claims otherwise, "then the report is flawed."
