Coast Guard acquisition in smoother waters

Improvements made to procurement, but risks remain

With new leadership and recast priorities, the Coast Guard’s Acquisition Directorate appears to be sailing into calmer waters, at least for now. It is a welcome direction for a unit created two years ago to steer a new course for the agency’s troubled Deepwater procurement.

The Coast Guard is midway through the $26 billion Deepwater contract, the largest acquisition in the agency’s history, which was awarded in 2002 to a joint venture by Lockheed Martin Corp. and Northrop Grumman Corp. The goal was to replace the agency’s aging vessels and aircraft with a modern system-of-systems group of assets. But the program has experienced serious performance and management problems, including cost overruns, schedule delays, and rejection of completed patrol boats deemed to be severely defective.

In June 2007, Coast Guard Commandant Adm. Thad Allen created the Acquisition Directorate to strengthen oversight and take over the lead systems integrator role for the project.

Two years later, Deepwater’s first national security cutter has been completed and is in operation, the second is nearly complete, and first lady Michelle Obama celebrated the laying of the keel for the third. A new assistant commandant for acquisition, Rear Adm. Ronald Rabago, took over the directorate in June from Rear Adm. Gary Blore.

A program management approach

Rabago, an engineer, has noted that he is the agency’s first acquisition chief to start in the post with a Level III certification for program management. He has emphasized that he intends to institutionalize the new processes and relationships that have been created in the past two years.

His other top goals for the next several months also include certifying acquisition employees, strengthening communication and feedback, and aligning the directorate’s role with the Coast Guard’s modernization efforts.

“The Coast Guard has undertaken a major effort to reform and modernize our acquisition enterprise,” Rabago wrote in a blog post July 23. “Today we are in a much stronger position to address the myriad of challenges that confront our complex modernization and recapitalization programs.”

Here are some other acquisition milestones.

  • In October 2008, the Coast Guard completed a revision to its Major Systems Acquisition Manual to enhance best practices and align acquisition with other initiatives at the agency. Rabago said in his blog that he intends to update it again to reflect the strong working relationships that have developed with the Defense and Homeland Security departments and with technical authorities and sponsors.
  • In July, the Coast Guard’s Acquisition Directorate published a fourth iteration of the Blueprint for Continuous Change, which lays out a strategy for updating major processes and policies.
  • The Coast Guard is preparing to issue a request for proposals in September or October for a major services contract to acquire additional assistance in acquisition, administrative services and business services, spokeswoman Laura Williams said in August. The contract could be worth as much as $650 million, according to Input Inc., a market research firm.

But there are lingering concerns. Federal auditors have issued a series of reports noting progress in Coast Guard acquisition management but also pointing out deficiencies. The auditors are cautiously optimistic that Coast Guard procurement is on the right course.

Plenty yet to do

In April, the Government Accountability Office reported that the Coast Guard, even as lead systems integrator, has not always adhered to its procurement processes for Deepwater, and its budget submissions do not include detailed cost estimates.

The Coast Guard is addressing those defects by restarting the planning and design of new Deepwater assets in some cases and taking over logistics support planning.

“There is an effort being made to instill a more structured and disciplined management style, to bring up the level of technical expertise and to bring more engineering to bear earlier in the process,” said Stephen Caldwell, GAO's director of homeland security and justice issues. “The problem is that they didn’t have a disciplined approach before.” But with the recent blueprint update and the commitment to utilize the Major Systems Acquisition Manual, that discipline may begin to bear fruit, he added.

Even so, there are lapses, and as of March, the Coast Guard had not met the goal of complete adherence to the acquisitions manual for all Deepwater assets, according to a July GAO report. Coast Guard officials agreed with GAO’s recommendations to follow the manual and raised no objection to those findings.

“I think there is a lot on their plate,” said John Hutton, director of acquisition and sourcing management at GAO. “I would hope [Rabago] will try to maintain the momentum and continue making the improvements that have been charted out. The course has been set pretty well; they know which direction they are going, and they are trying to maintain momentum.”

Several challenges lie ahead. The auditors said they believe Coast Guard acquisition executives will need to maintain a disciplined approach, boost their skilled workforce, and move quickly to complete Deepwater and other major acquisitions on schedule and within budget. As of April, the acquisition unit had a 16 percent vacancy rate.

Allen told a congressional committee in April that the acquisition staff numbered 855, with 65 additional positions to be added in 2009. However, as of Aug. 17, the total number of acquisition staff was 842, Williams said.

She ascribed the drop on temporary summer vacation and rotation schedules. “As summer ends and we approach Labor Day, those numbers should begin to climb and positions will be filled by incoming military and civilian personnel," Williams said.

A scramble for acquisition talent

But some experts are skeptical that the hirings will go as planned because of the high demand for acquisition talent throughout the federal government. “It is a mad scramble out there,” said Jeremy Grant, director of development at Acquisition Solutions Inc., a consulting firm. "The agencies are all competing for the same talent."

Meanwhile, Coast Guard acquisition still has a lot to prove. Deepwater’s budget recently inched up by $2 billion, to $26 billion. GAO warned in a report released in July that costs and schedule could continue to slip.

Congress is stepping up its oversight. The House passed legislation in July that would bar the Coast Guard from using private lead systems integrators. The Senate Commerce, Science and Transportation Committee passed a separate authorization bill.

“We are in the process of earning the trust of Congress,” Rabago told the Navy League in a July interview. “Our biggest challenge would probably be receiving enough funds to recapitalize the Coast Guard at a rate that does not have to make our men and women be heroic out there to take care of these very old, old ships and planes.”

But even Congress might not back all the Coast Guard’s plans because of its track record. “If Coast Guard modernization means more investment dollars from Congress, well, Congress is pretty supportive, but they also are being tough,” said Ray Bjorklund, senior vice president of FedSources Inc., a market research firm. “There is a little bit of risk there.”

Congress is still focused on oversight. “Some in Congress still feel they need to put some of these changes in statute,” GAO's Caldwell said. “It is a little late to prevent what has already happened, but they feel it can prevent future problems.”

Reader Comments

Sun, Aug 30, 2009 Michael DeKort

"Even so, there are lapses, and as of March, the Coast Guard had not met the goal of complete adherence to the acquisitions manual for all Deepwater assets, according to a July GAO report. Coast Guard officials agreed with GAO’s recommendations to follow the manual and raised no objection to those findings." In english this said that the CG didn't used the MSAM as it should have and promised to on the EXACT program it was meant for - Deepwater. "Congress is stepping up its oversight. The House passed legislation in July that would bar the Coast Guard from using private lead systems integrators. The Senate Commerce, Science and Transportation Committee passed a separate authorization bill." This is misleading. The congress passed a bill sating that the CG could waive the reforms in the bill if it chose to do so and those waivers could be used on the Deepwater program - the same program that drove reforms. And the CG has stated the LSI's would not go away until 2011. That is after all of the NSC contracts and I would imagine the OPC contracts are let. Basically this is all a smoke screen. There have been some worthwhile changes but most are only skin deep - there is no root cause fix here. (The NSC still have major security issues - issues that will be propagated on to the FRCs and OPCs unless the root causes are addressed) Lastly let me mention again that ICGS, LM and NG have not only not paid the $100M refund for the 123s but they blame the CG for the problems with the hulls and have suggested they may actually seek damages from the CG for canceling the 123 effort. The contractors still run this program from behind the scenes.

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