The Coast Guard officials didn't mince words in declaring the decade-old acquisition program over. What lessons do they say they learned?
The Coast Guard’s $27 billion “Deepwater” acquisition program is dead.
Writing under the headline, “Deepwater R.I.P.” in the agency’s Service Lines publication, Rear Admiral Jake Korn, assistant commandant for acquisition and chief acquisition officer, said the agency’s ambitious but troubled program to modernize its marine and air assets that started in 2002 was now in its final days.
“The time has come for the U.S. Coast Guard to officially drop the Deepwater name from any reference to our acquisition portfolio,” Korn wrote in the report. “The active period of performance for the last line item under the Integrated Coast Guard Systems contract ends in January, and there will be no further work initiated.”
The Coast Guard is moving forward to fulfill its modernization goals in several ongoing asset modernization and replacement efforts, Korn added in the Dec. 8 article.
“Deepwater is officially dead – long live Coast Guard recapitalization,” Korn wrote.
The Integrated Deepwater Systems program began as a $17 billion multi-year procurement to produce much-needed cutters, patrol boats and other vessels and aircraft for the Coast Guard to replace its aging fleet. The prime contract was awarded to Integrated Coast Guard Systems, a joint venture owned by Lockheed Martin Corp. and Northrop Grumman Corp.
However, the agency got behind schedule, as costs rose and deadlines were pushed back. The Coast Guard rejected an initial delivery of 123-foot patrol boats, saying the boats were structurally unsound. The agency subsequently took over as lead systems integrator in 2007 and has continued procuring and deploying Deepwater assets. The Coast Guard sued Bollinger Shipyards earlier this year for its Deepwater work.
Korn said the Deepwater “umbrella” no longer serves the agency’s ongoing recapitalization needs.
“Deepwater was an innovative idea and in line with conventional wisdom at the time,” Korn wrote. “Moreover, the Coast Guard found ourselves in a position where all our surface assets were in need of recapitalization at nearly the same time, and we needed to elucidate the urgency of this problem. Deepwater was the solution.
“However, due to some well-publicized problems in execution, the Deepwater title now has negative connotations,” Korn continued. “In the end, the general consensus is that we ceded too much responsibility to the contractor, including some functions that should have been reserved for government employees.”
Nonetheless, he argued, the agency has “learned many hard lessons” and has collectively improved its acquisition expertise as a result of the Deepwater effort.
Furthermore, Korn said Deepwater was meant to be time-limited, while the need for recapitalization is ongoing.
Deepwater “had an artificial end date associated with it. This end date implied that the Coast Guard would be recapitalized, no further Acquisition Construction and Improvement funding would be needed, and all would be well,” Korn wrote.
Korn estimated that in meeting its overall asset recapitalization needs, the Coast Guard has achieved 25 percent to 50 percent of that goal.
However, Michael DeKort, a whistleblower who filed a False Claims Act lawsuit against the Deepwater contractors (partially settled in 2010), said the Deepwater problems have had negative impacts in terms of the agency’s ability to maintain a ready fleet.
“I applaud the Coast Guard ending the Lead Systems Integrator contract and taking over,” DeKort wrote in a blog entry on Jan. 4. “But don’t think for a second that is nearly enough. The fleet is in far worse shape than before Deepwater began.”