Coast Guard hopes third time is the charm for troubled Deepwater program

The Coast Guard has nearly finished the third fleet mix analysis of its $27 billion Integrated Deepwater System asset acquisition project, at a time when the program continues to have problems with affordability and management, according to a new report from the Government Accountability Office.

The Coast Guard's first determination of the mix of cutters, patrol boats and other assets to be purchased under Deepwater was done in 2001 before the Sept. 11 terrorist attacks. The fleet mix was reconfigured in 2006 to reflect post-9/11 priorities, but now it is being re-examined again because of the Coast Guard’s new role as lead systems integrator on the project since April 2007, states the GAO report published Feb. 25.

The Coast Guard now recognizes that its knowledge of the 2006 fleet mix analysis is limited, GAO wrote. That is because the contractor — a joint venture between Lockheed Martin Corp. and Northrop Grumman Corp. — “in certain cases had developed the plans for these assets without using all the input from the Coast Guard,” the GAO report said.

As a result, the service decided to conduct another fleet mix analysis.

Although the new analysis was to be finished in the summer of 2009, it isn't completed and will not be ready for several more months, the report said. GAO also said it is too soon to know how much the new fleet mix analysis will affect the project.

Meanwhile, the Coast Guard continues to face management and cost problems with Deepwater.

“Our work on the Deepwater acquisition program identified problems in costs, management and oversight that have led to delivery delays and other operational challenges for certain assets and missions, but it also recognized several steps the Coast Guard has taken to improve Deepwater management,” the report said.

The Coast Guard’s budget request for fiscal year 2011, at $9.87 billion, represents no increase from the enacted fiscal 2010 budget.

“One of the key themes of the fiscal year 2011 budget is the trade off between current operational capacity and continued investment in future capability,” the GAO report said. In fiscal 2011, the Coast Guard is prioritizing capital investment over current operations and “expects that these changes in capacity will reduce the overall level of service it provides the nation and that performance will be diminished in a variety of areas.”

The Deepwater program at $1.11 billion accounts for about 80 percent of the $1.38 billion in capital spending proposed for fiscal 2011. By taking such a large share of available funding Deepwater creates an affordability concern, GAO said.

“Continuing into future budgets, Deepwater affordability is likely to continue to be a major challenge for the Coast Guard given other demands on the agency for both capital and operations spending,” the report concluded.