Sea Change

ighty miles south of Key West, Fla., on a balmy Saturday in January, the Coast Guard cutter Monhegan stalks drug smugglers along a rocky reef known as the Cay Sal Bank-but Coast Guard leaders would cringe if they knew why.

On a normal day, the Monhegan would be farther offshore, patrolling the perimeter of the bank for smugglers making a run to the Florida Keys. But the 110-foot ship has lost its port engine, which overheated, spilling 260-degree water onto the engine room floor. With one engine down, commanding officer Aaron Roth, 29, knows there is no way he can catch a smuggler's speedboat in the open sea. So he plays a hunch. He steers the Monhegan, now reduced to one-half its cruising speed, up to the reef line, a popular hiding spot for smugglers. From here, he could launch a small boat to chase any smugglers that dart from the rocks. Except Roth doesn't see anything as night falls on the ship. He stays for 15 hours before steering his crippled vessel back to Key West.

Back in port, the crew members of the Monhegan prepare for their second emergency overhaul of the ship in a week. Just two days before, Roth's crew worked 14 hours to get the vessel ready for patrol. "My engineers are beat to crud," he says, nodding to electrician Jamie Miller, who sits wearily in the ship's cramped mess area. Climbing onto the deck, Roth points to numerous spots where saltwater and the South Florida humidity have corroded the hull. "I can't imagine an agency in the Defense Department continuing to maintain something like this," he says of his 15-year-old ship.

Roth has a point. The Coast Guard has a tradition of patching together ships and systems that the Navy would scuttle. Even newer cutters in the fleet, such as the Key West-based, 270-foot Mohawk go to sea with weapons that the Navy considers obsolete. The ship's 76-millimeter big gun is broken, and spare parts are hard to come by now that the Navy is decommissioning the ships the weapon was originally designed for. "I haven't seen this thing shoot yet," says commanding officer Gary Rasicot, who has been with the ship since August.

For years, the Coast Guard has been the military's top scavenger, cobbling together cast off and technologically obsolete assets to perform missions more than 50 miles offshore. As a result, the service's current offshore, or deepwater, fleet is a hodge-podge of old cutters and refurbished Navy ships that barely match its missions. Twenty-eight of the Coast Guard's deepwater cutters were designed in the 1960s and 1970s or even earlier. Two ships were commissioned during World War II-well before the Coast Guard started enforcing fisheries law and fighting the war on drugs, two large deepwater missions. Its aircraft are newer, but many planes have severe maintenance problems. At Coast Guard Air Station Miami, Capt. John Currier has to cannibalize parts to keep his 3,200-pound HU-25 jets in the air. He estimates the planes will be unusable in five years.

The Coast Guard started looking for new fleet options in the mid-1990s, when strategic planners realized that the serviceable life of most deepwater assets-55 planes, 136 helicopters and 98 cutters-would end within 10 to 15 years. Suddenly, the Coast Guard faced a choice: It could replace the aging ships and planes one by one as they fell apart, or embark on the riskier strategy of buying an entire package of assets all at one time. Service leaders eventually settled on a still more radical concept, called the Deepwater project. They would ask industry to design a network of new cutters, aircraft and sensors based on the Coast Guard's projected deepwater needs in 2020. This "system of systems" would be linked electronically and have command-and-control communications abilities far beyond those of the current fleet. Most striking, the service would not specify which assets industry should build. Instead, the Coast Guard would describe its mission requirements and give contractors free rein to design new ways to do the Coast Guard's business.

Now, after six years of study, the concept is almost off the drawing board. In late September, three contractor teams led by Boeing, Lockheed Martin, and Science Applications International Corp. (SAIC) submitted their proposals. Following award of the contract, the lead firm will act as system integrator, overseeing a team of subcontractors that will each build part of the new fleet. Evaluation is taking slightly longer than planned, but officials expect to award a contract by June. All told, the Coast Guard plans to spend $10 billion-an average of $500 million a year over the next two decades-to build a cutting-edge package of deepwater equipment.

The Deepwater project seems almost too good to be true to sailors on the Monhegan, who wonder whether the program will be scaled back over time. The Coast Guard they know just doesn't get large infusions of cash for new equipment. "[The crew] knows the Coast Guard doesn't always get what it asks for, so why would you think it would with Deepwater?" asks Roth.

Deep Pockets

The Coast Guard's $10 billion question is how it will fit Deepwater's hefty price tag into its budget for the next 20 years. In a May 2001 report (GAO-01-564), the General Accounting Office scolded the service for planning the acquisition around out-year funding that was not available in White House budget projections-by 2003, the service's estimated shortfall was $173 million. Congress entered the fray in November, making White House approval of Deepwater's out-year budgets a condition for funding in the fiscal 2002 Transportation Appropriations bill. Transportation is the Coast Guard's parent department.

But Deepwater may have a new champion at 1600 Pennsylvania Ave. President Bush proposed $500 million for the project in his 2003 budget, which calls for a 20 percent increase in Coast Guard spending, the biggest budget hike in the history of the agency. "We must make sure that our Coast Guard has got a modern fleet of vessels," Bush said in a Jan. 25 speech to Coast Guard personnel in Portland, Maine. Coast Guard Commandant Adm. James Loy, whose term expires in May, believes Bush will back the system over the long haul. "The support of conviction and commitment to the Deepwater project, I believe, literally goes right into the Oval Office," he says.

If so, then the project's loudest critics will be on Capitol Hill, where the House and Senate Appropriations committees cut $18 million from the Bush administration's fiscal 2002 request for the project. Appropriators worried that Deepwater would gobble up funds for other Coast Guard modernization programs, including an overhaul of the maritime radio distress system. For the 2003 budget cycle, House Budget Committee Chairman Jim Nussle, R-Iowa, already has questioned whether Deepwater should be the Coast Guard's top modernization priority now that the threat of terrorism imposes a need for heavy investment in maritime security-about 20 percent of the Coast Guard's operating budget for the foreseeable future, according to Loy.

In a kind of morbid irony, the Coast Guard-and possibly Deepwater-owes its budget boost to the Sept. 11 attacks. The service's overnight scramble to protect U.S. ports put the spotlight on the Coast Guard's outdated equipment and need for more resources. And while guarding ports is not a deepwater mission, Loy was quick to make the case that the Deepwater project is crucial to the Bush administration's evolving homeland security strategy. In congressional testimony after Sept. 11, Loy noted that Deepwater's command and control abilities would be the key to better intelligence in the maritime domain and to intercepting security risks before they make it to port. While this argument strikes one House staffer as "typical Coast Guard PR," it resonates with the defense industry, says analyst Loren Thompson of the Lexington Institute, a think tank in Arlington, Va. "I think industry is much more optimistic about the fate of Deepwater today than they were a year ago," he says. "Because [the Coast Guard's] role in homeland security is so obvious, the expectation is that they may be able to do some serious modernization."

The companies vying for the pact aren't taking any chances. Last fall, they took out full-page ads promoting Deepwater in publications that target Congress and they plan to step up their advertising campaigns before the contract is awarded. Congress needs to know that Deepwater must get at least $500 million for the next several years, says Jerry Woolever, who spent 35 years in the Coast Guard and is now Deepwater program manager for Boeing. "We need to continue to help Congress understand what the [funding] linkages are on a year-to-year basis," he says.

It is unclear what the Coast Guard will do if Deepwater funding lags down the road. The service has no backup acquisition strategy. The Coast Guard now is crafting one to comply with a provision in the fiscal 2002 Transportation bill, but service leaders note that replacing assets one-by-one would cost more than Deepwater. Repeated funding shortfalls would be an indication that Coast Guard stakeholders need to re-examine what they truly want from the agency, says Adm. Patrick Stillman, Deepwater program executive officer. "There's a certain funding level you reach where you are no longer able to recapitalize, where all you're doing is sustaining," he says. "Once you reach that level, I say it's time for all of us to step back and say, is this still something we really want to do?"

In truth, the Coast Guard's Plan B is to make Plan A work. If they can just get Deepwater off the ground, Coast Guard leaders say, their customers will see the value of the procurement and start lobbying for it. And Capitol Hill will come around, too.

It's a familiar, optimistic strategy for the can-do service-if the Coast Guard puts in enough hours and shows enough results, the service-and in this case, Deepwater-will be rewarded. "My hope is over time, because we hit home runs, we'll get more money," says Stillman.

Management Pact

Stillman, a management expert who commanded one deepwater cutter and served on two others, took the reins of the Deepwater project in April 2001, when the Coast Guard created a Defense-style program office to run the procurement. He is built like a wrestler-which he was at the Coast Guard Academy-and speaks the idiom of accountability and results favored by senior managers. Managing Deepwater will be the capstone of his Coast Guard career. "I'm here until I retire or I get fired," he says.

Stillman inherited an office that won high marks from GAO for the first stage of the Deepwater procurement, when the Coast Guard developed its acquisition strategy and chose the teams led by Boeing, Lockheed and SAIC to craft proposals. For project continuity, Stillman will continue the practice of keeping Coast Guard personnel at the Deepwater office on longer rotations than normal-four employees have been with Deepwater since 1996-and investing heavily in employee training. Deepwater has sent 65 employees to the Defense Acquisition University since 1996 and spent an average of $596 per employee on training in each of the past five years. After Deepwater is awarded, the Coast Guard will dispatch 60 to 70 employees to work with the integrator on site.

These employees will be on the front lines of the government-industry partnership on which Deepwater ultimately depends. Congress has doubts about giving a 20-year modernization pact to a single contractor team, but Coast Guard leaders believe that extensive performance incentives will motivate the integrator to keep costs down. The integrator will be paid through a cost-plus-award-fee arrangement that makes its profit a function of how well it performs. Other incentives will reward the integrator for post-award innovations that cut costs. Because the contract is structured in five-year increments, the Coast Guard can pick a new integrator if performance slips. The Coast Guard hopes that isn't necessary. It will create a contract "board of directors" with top officials from the Coast Guard, the integrator and Transportation to iron out any problems. The board is part of "management by relationship" approach proposed by Acquisition Solutions Inc., a Va.-based procurement firm that studied the procurement at OMB's request last summer. The concept is pivotal to Stillman. "I want the integrator to care more about the Coast Guard than I do," he says.

Stillman also wants the most bang for the Coast Guard's buck. To drive down development costs, contractor teams will use existing technology where possible and Deepwater will "steal shamelessly" from Navy research and development projects, he says. Project staff also will try to drum up foreign customers that could use Deepwater assets in their navies-a move that could dramatically expand the integrator's customer base and thus reduce the cost of Deepwater equipment.

Mission Control

On a clear Saturday morning, the Coast Guard patrol boat Sitkinak pulls away from dock and out into Key West harbor. Like the Monhegan, the Sitkinak spends the vast majority of its patrols hunting drug and migrant smugglers off the Bahamas and Cuba, which is 90 miles south of Key West. Today the boat slows to a crawl just past the six-mile harbor line as a huge ship appears on the horizon. It's a cruise ship, and the Sitkinak's job is to escort it into harbor.

Port security was virtually the only mission for the Coast Guard's deepwater ships in Key West between Sept. 11 and early January. The Mohawk was deployed to New Orleans, where it helped secure offshore oil fields, and to Tampa to protect high-risk vessels entering port. Key West is not a shipping port, so the chief port security duty here is escorting cruise ships to dock. Sailors on the Sitkinak recognize its importance but mince no words when asked if they would prefer a different mission: "Drugs," say the ship's two quartermasters, as they navigate the ship.

In Key West, sailors view chasing drug smugglers the same way pilots of Coast Guard aircraft regard search-and-rescue cases-it's what they love and the reason some enlisted. Port security can be tedious, stressful work and, in their eyes, is a poor use of the 110-foot cutters. After Sept. 11, the Monhegan spent 40 days on port security deployments in Cape Canaveral and Jacksonville, Fla., and Charleston, S.C. There, commanding officer Roth had to take the ship up the Charleston River, which is only 180 feet wide, making it difficult to turn. "It was not the best asset, but it was the only thing we had," he says.

Loy commiserates and says port security will not become a new deepwater mission. The Coast Guard has designed a budget for the next three years that will allow it to fund the Deepwater project, buy new port security assets and add "thousands of positions" to the service, he says. Eventually, deepwater assets only will be used for port security when intelligence suggests a specific threat or a show of force is needed in port, he adds.

Loy and Stillman maintain that Sept. 11 did not change the Coast Guard's Deepwater requirements, but if mission needs do evolve down the road, the contract is flexible enough to sustain them. Stillman even holds open the possibility that Deepwater could be used to buy port security assets, such as the Coast Guard's 41-foot boats, if they were interoperable with the new Deepwater fleet. The Deepwater contract will be an indefinite-delivery, indefinite-quantity pact, which should allow the Coast Guard to buy different assets as needs arise.

Changing the Guard

New equipment is the focus of Deepwater, but this equipment will change the Coast Guard's operational doctrine and ultimately prompt a new human resources strategy. Consider how unmanned aerial vehicles (UAVs) would affect cutter operations.

Finding smugglers is a constant struggle for the current deepwater fleet. The main radar on the 270-foot Mohawk was designed to assist with navigation, not locate small boats. In rough seas, a lookout with binoculars might spot a smuggler before the radar does. The Coast Guard's 270-foot and 378-foot cutters can deploy with HH-65 helicopters, which, from the air, can see most craft within 100 miles-but there aren't enough helicopters to go around. The Mohawk went for nearly a year without a helicopter. And the 110s are too small to carry helicopters.

If cutters had UAVs, they could perform routine surveillance themselves and save piloted aircraft for more crucial missions. The prospect tantalizes Roth. "Marines have reconnaissance UAVs in their backpacks. Why don't I have something I can send out?" he asks. With the Customs Service and the Defense Department also angling to buy more UAVs, the Coast Guard could use Deepwater to join in a governmentwide procurement of the aircraft, according to Stillman.

The automation Deepwater may bring could reduce the size of cutter crews, which in turn would give new recruits more time to learn how to be sailors. Enlisted personnel now move up the ranks much more rapidly than they did before the downsizing of the 1990s, when the service slashed 4,000 positions. Now, 18-year-olds often go straight from boot camp to the 110-foot cutters. Roth says it takes six to nine months until they are qualified to handle key tasks, and they usually are transferred off the ship after a year because of staff shortages elsewhere.

In the long run, the crews of the ships and planes purchased through the Deepwater contract will have more specific skills than today's operators, who, for the most part, were trained to be multimission generalists, says Capt. Bruce Viekman, project manager of Future-Force 21, the Coast Guard's human resources planning effort. In part, that's because the service will rely more on contractors for day-to-day maintenance. The three contractor teams must account for the life-cycle costs of assets in their proposals, and one way to hold down those costs is to shift maintenance chores to the private sector.

These trends portend a culture change in the Coast Guard, particularly in the aviation community, where personnel take great pride in repairing aircraft they help operate. Aviation personnel have long resisted dividing their ranks into "fliers," who operate planes, and "fixers," who maintain them-especially if all the fixing jobs were to go to contractors. "My concern with the whole fixers and fliers idea is that contractors would treat it like a 9-to-5 job," says Pedro Fonticoba, who is maintenance chief for helicopters at Air Station Miami.

Turning maintenance over to civilian Coast Guard employees or contractors also would affect how the service schedules sea deployments. Ideally, for every year at sea, a sailor should have at least two years on shore, says Capt. Joseph Nimmich, commanding officer at Group Key West. Even if contractors were to perform on-shore maintenance, the Coast Guard would still need essential maintenance staff, such as engineers, on ships-but these personnel would no longer have on-shore jobs. "If you take all those engineers and civilianize them, that means the only engineers you have left in the Coast Guard are on ships. [Then] you've got 1-to-0 sea-to-shore ratio and you never have hope of getting to the land side, where you can have something of a normal family life," says Nimmich.

But Nimmich, who used to head the Coast Guard's strategic planning shop, sees Deepwater as proof of how seriously the service has taken the 1993 Government Performance and Results Act. The Coast Guard is completely willing to change how it performs its missions to yield better results, he says. The service has made similar changes before. In the 1960s, the Coast Guard had more than 40 buoy tenders-ships that maintain navigation aids-and still used manned lighthouses. Today, nearly all the lighthouses are automated and the buoy tender fleet has been halved. "That's the hallmark of what we try to do," he says.

Deepwater will have at least one more major consequence for Coast Guard personnel: Its fate will shape the careers of young officers. Like most of his Coast Guard Academy classmates, Dan Cost, 24, Sitkinak executive officer, avidly follows Deepwater. If the program is scuttled, he might consider shifting to the marine safety side of Coast Guard operations. "I'd love to be a commanding officer of a ship like this, but do I really want to go through the process of maintaining it?" Cost asks. "I'm not privy to the old Coast Guard ways of 'We can do it all,' " he says. "Guys in here for 20, 25 years, they know what it was like to do the mission at all costs. But some things we just can't do anymore."