The upcoming acquisition of new high-speed patrol boats for the U.S. Coast Guard is viewed as a make-or-break effort that could help the service recover from a string of setbacks in its Deepwater modernization program.
Coast Guard officials voice optimism about the $1.5 billion project to acquire a fleet of new Sentinel-class fast patrol boats. They tout a recent reorganization of Deepwater management to ensure tight oversight of contractors and praise the decision to buy the new boats on a fixed-price contract in order to avert future cost overruns.
But the project still faces significant hurdles, including an industry protest that could set the schedule back by months or years. The Coast Guard also must prove it can endure the pressure of close congressional scrutiny as it tries to develop and deploy technically complex ships, aircraft and information systems.
Deepwater began in 1999 as a 25-year modernization program whose cost has grown from $17 billion to $24 billion.
By 2007, the future of Deepwater began to look bleak. The Coast Guard lost nearly $100 million when it contracted with Integrated Coast Guard Systems to convert several dozen 110-foot Island class cutters to 123-foot boats. The first eight vessels showed such serious workmanship flaws that the job had to be scrapped. A firestorm of criticism from Congress and a Department of Justice investigation ensued.
The Coast Guard has since instituted acquisition reforms, including the removal of Deepwater’s “lead systems integrator” industry team, which was replaced by in-house management.
In September, it awarded an $88 million contract to Bollinger Shipyards Inc. to build the first Sentinel-class Fast Response Cutter. The company will manufacture 34 of these during the next six to eight years, under a $1.5 billion contract. A total of 58 will eventually be constructed. The vessel will replace the aging 110-foot Island class cutters.
It is still too early to tell whether the Sentinel marks the end of the Coast Guard’s acquisition troubles, said Rep. Elijah Cummings, D-Md.
Cummings chairs the House Transportation and Infrastructure Committee’s Coast Guard and maritime transportation panel.
“It’s almost like walking into a court and assuming that a judge is going to rule one way or another and then betting on it. You don’t do that. You let the process play itself out,” he said in an interview. “We thought in the past that everything was going fine, and then we found out that we had boats that didn’t float.”
He is primarily concerned about three factors — whether the Coast Guard can fulfill expectations, deliver the boats on time and avoid cost overruns.
But Cummings said he is encouraged by the Coast Guard’s attempt to learn from its past mistakes.
“Considering the fact that [Congress has] now placed a microscope on everything that the Coast Guard does, I think they are a lot more careful with regard to these matters,” he said. “But the jury is still out with regard to putting this whole [Deepwater] situation behind us.”
Other critics fret about the choice of Bollinger Shipyards Inc. to build the boat, since that company was previously involved in the botched 110-foot Island class boat conversion.
“One would think that the Coast Guard would be more wary of awarding this contract to a company with a history of past poor performance, especially since the Coast Guard asked for a $96 million refund,” noted the watchdog group Project on Government Oversight.
Marinette Marine Corp., a ship builder, filed a protest with the Government Accountability Office over the award in October, which challenged the decision to give the contract to Bollinger. GAO is expected to rule on the project in mid- to late January.
Rear Adm. Gary T. Blore, the Coast Guard’s assistant commandant of acquisition, said the protest will cause some delays but he is confident it will not derail the program.
Blore said the Coast Guard took extraordinary measures to ensure the success of this program.
“We wanted to go to a fixed-price contract because of the control it gives us over cost,” he told reporters. He also characterized the Sentinel as a “low-risk” design that is based on a modern hull form, the Damen 4708, which was originally developed by Damen Shipyards in the Netherlands.
“We have extensive involvement of our own technical authorities and engineers in reviewing this design from the very, very beginning,” Blore said. “That mitigates the risk of surprises potentially down the line.”
The Damen hull has been built around the world under license. “It’s a very proven design in that sense,” Blore said.
Reps. Steve Kagen, D-Wis., and Bart Stupak, D-Mich., wrote a letter to the Coast Guard that questioned its decision to award the contract to Bollinger. Marinette Marine employs hundreds of workers in the congressmen’s districts.
Commandant of the Coast Guard Adm. Thad Allen said despite some past troubles, the company has a record of success with other projects outside of Deepwater.
Bollinger has built 179-foot patrol boats for the Navy and 87-foot patrol boats for the Coast Guard, all of which have performed well, Allen said.
“We evaluated all the proposals. Bollinger emerged as the best for the job,” Allen said.
A spokesman for Bollinger declined to comment for this article.
Blore said, “The Sentinel project represents basically the fruition of those reforms that were put in place ... There will be a clear understanding between the manufacturer and the government,” he told National Defense at the National Defense Industrial Association’s Coast Guard conference and exhibition in Virginia Beach, Va.
A Government Accountability Office report said that the Coast Guard is making positive changes in its management and acquisition policies. But it has had difficulties building its acquisition workforce.
Blore said that while the acquisition directorate needs to hire about 100 new people over the next few years, it has more qualified personnel than it did during Deepwater’s crisis.
The Coast Guard acquisitions office now has nearly four times as many fully certified project managers than it had two years ago, he said. According to current policy, all project managers handling contracts worth more than $100 million are properly certified, Blore said.
Oversight has also increased.
As of last September, the Coast Guard is required to seek approval from the Department of Homeland Security before embarking on certain stages of acquisitions, such as before a project is started and before production commences.
Nate Hughes, a military analyst at Stratfor, said the Sentinel acquisition demonstrates that the Coast Guard has learned from Deepwater’s past mistakes.
“The choice to go with a proven design for the Sentinel is emblematic of precisely the lesson that came out of Deepwater. Simply — don’t re-invent the wheel,” he said.
The decision to acquire the Sentinel came after an earlier attempt to develop a new design for the Fast Response Cutter using a composite hull rather than a proven steel hull design. That approach had to be abandoned when design flaws emerged.
The current “off-the-shelf approach” is a significant break from the originally conceived program, Hughes said. “Ultimately, I think it is fair to say that the [Coast Guard] has recognized and internalized the failure of Deepwater.”
Still, significant challenges lie ahead, Hughes said.
“While some expertise can be brought on board, [the Coast Guard] is essentially starting from scratch,” he said. It has to learn how to manage major acquisition programs, which are vastly different than the smaller projects it has undertaken in the past, Hughes said.
The first Sentinel is scheduled for delivery in 2011 to Coast Guard District 7 in Miami. It will be 153 feet long and be able to reach speeds of 28 nautical miles per hour. With a crew of 22, it will be able to stay out at sea for at least five days and sail for 2,500 hours per year. It is expected to have a service life of 20 years.
Coast Guard officials, meanwhile, point out that despite the recent difficulties, the Deepwater program continues to deliver equipment to the fleet.
“We do have the first National Security Cutter, Bertholf, operating off the West Coast right now as it continues to go through its post-acceptance availability,” Blore said. “We’ve christened Waesche, which is the second one and we’ve started fabrication work on Stratton, which is the third National Security Cutter.”
The Coast Guard has received four boats under the response boat-medium program and recently opened a new facility in Green Bay, Wis., which will allow the contractor, Marinette Marine Corp., to build about 30 boats per year until it reaches 180 boats.
Additional reporting by Sandra I. Erwin