Coast Guard program to upgrade its fleet is taking on water

This scandal was featured on 60 Minutes 5/21/07.---BBB

Coast Guard program to upgrade its fleet is taking on water
By Maria Recio
McClatchy Newspapers
5/21/07

WASHINGTON - When the Coast Guard's first large cutter in 35 years was christened in November at Northrop Grumman's Pascagoula, Miss., shipyard, it was a gleaming symbol of the service's ambitious $24 billion Deepwater program to update its aging fleet.

Six months later, Deepwater is listing badly under a storm of congressional criticism for design mistakes, cost overruns, and lax oversight. A botched program to lengthen existing patrol boats from 110 feet to 123 feet has forced the Coast Guard to cancel the conversions and completely scrap eight ships.

The Pascagoula, Miss.-built National Security Cutter, at 418 feet the crown jewel of the Deepwater program, is under scrutiny for metal fatigue that critics say shortens its 30-year life to less than five years. The Coast Guard has responded to the hammering from lawmakers by taking oversight of Deepwater from the contractor, Integrated Coast Guard Systems, a joint venture between Lockheed Martin and Northrop Grumman, canceling the conversions and making design modifications to the National Security Cutter.

Thursday, the service announced at a House Homeland Security Committee hearing that it had taken the first legal step to recoup the $100 million loss of the eight cutters from the contractor. ICGS said in a statement that it is still evaluating the letter from the Coast Guard.

But many members of Congress are pressing for more.

Rep. Gene Taylor, D-Miss., calls the failed 110-foot conversion program "the poster child" of what's wrong with Deepwater.

"They stopped after ruining eight boats," said Taylor, a former Coast Guard reservist who commanded patrol boats. "What angers me is we have eight ruined boats, $100 million spent and no one is held accountable. No one has been demoted."

The 13-foot section added to lengthen the ships ended up causing the hull to buckle under the stress of rough waters. In addition, whistleblowers alerted congressional investigators that small search-and-rescue boats that the 123-foot vessel carried had radios that were not waterproof - a finding an incredulous Taylor said was "bizarre."

However, the company vigorously defends its performance.

"Lockheed Martin and Northrop Grumman, along with more than 600 suppliers from over 41 states and many best-of-breed manufacturers from around the world, form the industry team that is committed to supporting the Coast Guard's Deepwater program," Margaret Mitchell-Jones, ICGS communications director, said in a statement.

"ICGS and its suppliers are meeting the terms contracted by the Coast Guard. While costs and capabilities have expanded due to post 9/11 requirements, these are not cost overruns to the baseline contract, but rather reflect changes necessitated by new mission requirements." The program, she said, "has achieved significant progress."

Coast Guard Commandant Adm. Thad Allen, who assumed control of the service last year, announced the program changes last month. "We've relied too much on contractors to do the work of government as a result of tightening budgets, a dearth of contracting expertise in the federal government, and a loss of focus on critical governmental roles and responsibilities in the management and oversight of acquisition programs," he said.

Allen appeared to be trying to head off legislation, but the Senate Commerce Committee last month approved a bill authored by Sen. Maria Cantwell, D-Wash., chair of the committee's oceans, atmosphere, fisheries and Coast Guard subcommittee, which would prevent Coast Guard reliance on a private contractor, open the bidding process, and impose more oversight from government agencies.

ICGS and the Coast Guard are in the final stages of negotiating the second five-year installment of the 25-year program - the first five years expires in June - and company officials are reluctant to get into specifics.

Tirmf

But the National Security Cutter, the flagship of the upgraded Coast Guard fleet with costs topping $500 million, will continue to be in the congressional crosshairs.

"I am deeply concerned about the National Security Cutter," said Cummings, who said a June hearing will focus on the costly cutter. "The Department of Homeland Security inspector general has been unequivocal in stating that the NSC, as currently designed, will not meet the requirements of the Deepwater contract. That is, it will not have sufficient hull strength to be underway for 230 days per year."

The cutter, which is built in Taylor's district by Northrop Grumman Ship Systems, is also on the Mississippi Democrat's radar. Taylor said in an interview that he has seen critical reports from the Department of Homeland Security's inspector general and talked with the contractor, who denies the problem. "At this point, I do not know who to believe," Taylor said.

The Coast Guard under Allen has ordered changes in the designs of the remaining six of eight NSC ships, with plans to retrofit the existing first and second ships.

Taylor sees the core problem as being the effort to privatize the shipbuilding process.

"Why did they farm it out in the first place?" asks Taylor. "We've discovered the hard way that we were doing it the right way in the first place."