Money pit: $3B in cost overruns for Coast Guard's Deepwater procurement

The program budgeted at $17 billion in 2002 is now expected to cost $28 billion

The cost of the Coast Guard’s Deepwater asset acquisition program has risen to about $28 billion, and the agency still does not have a handle on determining its overall expenses and performance capabilities, according to a new report from the Government Accountability Office.

The complex procurement of cutters, patrol boats, helicopters, aircraft and other assets started in 2002 and originally was expected to cost $17 billion. In 2007, the Coast Guard rejected eight patrol boats as structurally defective and took over as lead systems integrator from the Integrated Coast Guard Systems, a joint venture of Lockheed Martin and Northrop Grumman. The Coast Guard also recalculated the baseline cost of the program at $24 billion.

In today’s report, the GAO said baseline costs have increased to $28 billion—$3.8 billion over the $24.2 billion 2007 baseline. At the same time, performance capabilities have degraded.

“Currently, the Deepwater program exceeds the 2007 cost and schedule baselines and, given revisions to performance parameters for certain assets, it is unlikely to meet system-level performance baselines,” the report said.

The computation of baselines has been complicated by the reduction in projected service life of the new assets. With shorter service lives, life-cycle costs have dropped.

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Even so, costs could expand further. “Costs could continue to grow as four assets currently lack revised cost baselines,” the GAO wrote. In addition, schedules for delivery of some of the assets are likely to be pushed back by several years.

“Overall, the 2007 baseline may not be achievable, as the Coast Guard has redefined or eliminated key performance indicators for many individual assets, while significant uncertainties surround other assets. Further[more], a planned analysis to reassess the overall fleet mix for Deepwater was not completed as planned,” the report said.

The GAO recommended that the Coast Guard complete an overall assessment “that clarifies the quantities, mix and cost of assets needed to meet requirements, given that the current Deepwater baseline is no longer feasible, and that the results be reported to Congress.” Department officials agreed with the recommendation.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

Reader Comments

Fri, Jul 30, 2010 IT Watchdog Wash DC

If the White House or DHS want to prevent cost overruns and IT program failures like VA FLITE, DOD DHRMS, Deepwater, SBInet, and FBI Sentinel, they need to take on the root causes of failure as suggested in Peter Orszag's June 28th memo to agency heads. Since much of program management has been outsourced, one needs to look for the common thread. Each of these failures in fact were managed by the same two contractors; BAH and Mitre. They are the ones benefiting most from failure as they recognize implementation eliminates their continued support. Its is time to start holding the program management contractors accountable, as they are the ones driving these train wrecks. We do this in the building industry and audit industry. This is why Arthur Anderson is defunct.

Thu, Jul 29, 2010 Lance Winslow United States

I'd like to point out that; "Government's Number One Responsibility is to Protect the American People," thus, I have a slight problem with the headline of the article. I can certainly think of money-pit and unnecessary spending in the Federal Government, but the USCG program here is essential. There are serious and real threats, we must protect our nation, if our government cannot do that for us, it's simply not needed.

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