Coast Guard To Take Over 'Deepwater'

The Bertholf, which was completed last fall as part of the Deepwater program, is the Coast Guard's first national security cutter in 35 years. Lead contractors Lockheed Martin and Northrop Grumman have been criticized for delays.
The Bertholf, which was completed last fall as part of the Deepwater program, is the Coast Guard's first national security cutter in 35 years. Lead contractors Lockheed Martin and Northrop Grumman have been criticized for delays. (Northrup Grumman)

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By Renae Merle and Spencer Hsu
Washington Post Staff Writers
Tuesday, April 17, 2007

The Coast Guard is taking control of its troubled $24 billion modernization program from Lockheed Martin and Northrop Grumman as part of a restructuring of the project, congressional sources confirmed yesterday.

The move comes during mounting criticism of the contract for the so-called Deepwater program that made a Lockheed-Northrop consortium "lead systems integrator" and gave it significant management powers. Critics said the contract gave the corporate team too much control and that the Coast Guard was lax in its oversight duties -- a combination they say led to a series of setbacks. Deployment of cutters and patrol boats produced so far has been delayed, the capabilities of some larger ships have been reduced, and costs have increased.

The Coast Guard will gradually take over the lead systems integrator role, congressional officials said, but a representative for the consortium said it would continue to work on the program. The sources spoke on condition of anonymity because the change is not to be announced until today.

Lawmakers praised the Coast Guard's move, saying the service had followed Congress's urgings to rein in the Deepwater contractors. "Ending Coast Guard's reliance on a single private-sector entity to oversee the entire project, increasing transparency and taking back oversight responsibility is critical," said Sen. Maria Cantwell (D-Wash.), who has drafted a bill to revoke the contractors' Deepwater role. "This announcement shows me that the Coast Guard has been listening."

Rep. Elijah E. Cummings (D-Md.), who chairs a House transportation subcommittee that will release findings of a Deepwater investigation on Wednesday, said, "I have absolutely no doubt that if it were not for our committee . . . that this would not be happening right now."

Coast Guard "personnel would be in jeopardy with some of the things that have been done with these vessels," Cummings said. "Most members of Congress and most Americans will be shocked."

Both houses of Congress have moved to crack down on the Deepwater program, and a critical report by military contracting experts faulted its strategy and management, including its reliance on Northrop of Los Angeles and Lockheed of Bethesda. Last month, the Coast Guard moved to cancel a portion of the program intended to develop a $600 million patrol boat after determining it could manage the effort more efficiently than Northrop or Lockheed.

Among the most significant failures of Deepwater has been a project to lengthen 110-foot patrol boats to 123 feet. Eight of the upgraded boats had to be drydocked in December after the Coast Guard found buckling in the structure underneath the main engine of one of the ships. The Coast Guard will announce today that those boats, which cost about $100 million, will be decommissioned, according to congressional sources.

Cummings and the chairman of the House Transportation and Infrastructure Committee, James L. Oberstar (D-Minn.), yesterday called for the Justice Department to open a civil and criminal investigation into Deepwater. "We cannot risk the lives of the men and women in the Coast Guard by operating unsafe boats. It is time for the Department of Justice to step up and hold those who perpetuated this fraud accountable," Cummings said.

A committee spokesman said the panel members thought Coast Guard and Justice Department investigators were reviewing the evidence. Justice Department spokesman Bryan Sierra declined to comment and said he could not confirm an inquiry was underway.

The contractors played down the significance of the Coast Guard's announcement, saying the service has always had ultimate authority over the program. "It's not really a big surprise. The Coast Guard has always been able to determine what gets bought," said Margaret Mitchell-Jones, spokeswoman for the contracting team. "It seems to reflect what Congress is looking for -- that is, for the government to serve overtly as the lead systems integrator."

Some skeptics in Congress said that since the Coast Guard would continue to route business to Northrop and Lockheed, the full effect of the shift in responsibility would not be clear for some time. For instance, if the Coast Guard goes on to award a contract for construction of its largest-ever vessel, the proposed National Security Cutter, to Northrop and continues to give Lockheed responsibility for command and control systems of its ships and aircraft, today's announcement could amount to a fig leaf covering up its continued reliance on the contractors, said a House official who spoke on condition of anonymity.

Congressional analysts also said it remains to be seen whether and how the Coast Guard rewrites a pending 43-month extension of the Deepwater contract now being negotiated with the contractors. About $2.3 billion has been committed to the program so far, and the Coast Guard has said the second phase will be worth $2.5 billion to $3 billion.

"Why not abandon the contract? Why bother renewing it?" one congressional source said. "The real proof in the pudding will be how they do the contract."

"The Coast Guard must do more than change course -- it must chart a new direction," Rep. Bennie G. Thompson (D-Miss.), chairman of the House Homeland Security Committee, said in a statement. "Millions of taxpayer dollars have been misspent on boats that are not operational, and we must ensure that this type of waste and abuse never happens again."


© 2007 The Washington Post Company

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