Doubts remain over management of Coast Guard fleet upgrade

Members of the House panel overseeing the Coast Guard universally praised the commandant, Adm. Thad Allen, Tuesday for his moves to take control of the troubled Deepwater acquisition program, but expressed concerns that the service did not have enough trained procurement specialists to successfully manage the complex $24 billion effort.

House Transportation and Infrastructure Coast Guard Subcommittee Chairman Elijah Cummings, D-Md., also questioned whether Allen's bold leadership would be enough to overcome the mistakes by the previous Coast Guard leadership and the contractors responsible for producing the Deepwater ships, aircraft and systems.

"The failures already registered in Deepwater are simply unacceptable," Cummings said.

Those views were echoed by Coast Guard Subcommittee ranking member Steven LaTourette, R-Ohio, and other panel members.

Allen described the extensive changes to the Deepwater program and the Coast Guard procurement system he has ordered since becoming commandant last year and assured the panel "we're on the leading edge of significant changes in the program and are already beginning to see real results."

But he also acknowledged the program still faced a lot of challenges.

The subcommittee's concerns were reinforced by Richard Skinner, the Homeland Security Department's inspector general, who said the "sweeping changes" Allen is making "should mitigate many of the cost, schedule and performance risks" in Deepwater. But Skinner also questioned whether the Coast Guard had enough procurement experts to replace the contractor team of Lockheed Martin Corp. and Northrop Grumman Corp. as the lead systems integrator.

And he warned that the Coast Guard's plan to deal with structural flaws in the design of the National Security Cutters, the largest ships being acquired under Deepwater, "could be cost prohibitive" and force reductions in the capabilities of the NSCs or major cuts in other required systems.

Allen told the panel that the Coast Guard has identified design changes that will correct problems in the first NSC that could shorten its expected 30-year service life. Those changes will be made to the next six NSCs as they are built and will be retrofitted into the first two, which are partly constructed, he said.

Although Coast Guard engineers had questioned Northrop Grumman's plans for the NSCs, Allen admitted the government would have to pay for the design changes.

Skinner said the Coast Guard was negotiating with Northrop Grumman to make those changes before it knew how much they would cost.

He said the first two cutters already would cost "well beyond" the estimated $775 million each, not counting the $302 million additional pay the contractor has requested because of changes in the NSC schedule.

Future changes could add hundreds of millions of dollars more, Skinner said, and could require reductions in other ships now planned.

He urged the Coast Guard to delay any commitment for future work on the NSCs until it knew the total costs.

Skinner also cited hundreds of millions of dollars spent on proposed unmanned helicopters "with little to show for it;" the nearly $100 million spent to convert eight 110-foot patrol boats that had to be scrapped, and apparent flaws in expensive electronic systems obtained through Deepwater.

Allen said the Coast Guard will demand that the contractors repay the cost of converting the defunct 110-footers, and Cummings said he wanted to ensure that the taxpayers get back "every dime, every penny."