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National Defense > Blog > Posts > Coast Guard Expo Opens with Service Facing Uncertainties
Coast Guard Expo Opens with Service Facing Uncertainties
The Coast Guard’s annual "Innovation Expo" begins Oct. 25 with the service facing budget dilemmas that may sink its plans to fully modernize its fleets of ships and aircraft.
Even in the best of times, when the nation homeland security and defense programs were growing in double digits, the Coast Guard was seen as chronically underfunded. Its medium-sized cutters are aging and showing the strains of being past their planned service lives. 
Deepwater, the 25-year, $24.2 billion program to modernize aircraft, ships and the communication backbone that ties them all together, suffered major setbacks during the past decade. Poor oversight on the part of the service led to cost overruns and canceled programs. The Coast Guard had to ultimately take more control of Deepwater and begin the long process of building up its expertise in managing contracts.
Now, with the so-called deficit super committee looking to cut $1.2 trillion from the federal budget over the next 10 years, the service finds itself in an even more precarious position.
As the super committee was meeting in early October, John P. Hutton, director of acquisition and sourcing management at the Government Accountability Office, testified before the House Committee on Transportation and Infrastructure’s subcommittee on Coast Guard and maritime transportation that the current Coast Guard modernization goals were “unachievable.”
A May estimate that the program costs would grow by 20 percent to $29.3 billion may already be out of date, he suggested.
“Additional cost growth is looming because the Coast Guard has yet to develop revised baselines for all assets, including the Offshore Patrol Cutter — the largest cost driver of the program,” Hutton said.
Coast Guard Commandant Adm. Robert J. Papp Jr. said in an interview with National Defense that the service has worked hard to build up its acquisition work force so it can avoid the pitfalls of the past
(See story here).
“Our acquisition outlook is positive,” Papp said at the hearing. “We are on the path of continuous improvement. We have already completed and fielded several new assets, and they are already saving lives … We recognize that there are significant challenges that we must to continue to deliver these assets within the current fiscal environment.”
The Offshore Patrol Cutter looks to be one of the service’s major challenges. It would like to deploy 25 of them, but work has not yet begun in earnest. The Coast Guard has released draft specifications for industry comment, but there has not been much progress beyond that. There are still questions as to how much they will cost if every draft requirement were met and whether all 25 can survive the budget battles.
Congress and the press have focused attention during the past 10 years on the new National Security Cutters, the largest and most technically advanced ship in the Deepwater program. It suffered growing pains as the requirements changed after 9/11, but the Coast Guard has now taken delivery of three of the planed fleet of eight, and Papp has touted both their capabilities and his acquisition personnel’s ability to keep their costs down.
Attention will now turn to the Offshore Patrol Cutters, which the GAO says will cost about $8 billion of the original $24.2 billion total Deepwater price tag.
 Joe Carnevale, senior advisor to the Shipbuilders Council of America, said in an interview that there may not be money in the budget to fund both the Offshore Patrol Cutters and to complete the National Security Cutter fleet. James Jay Carafano, a national security analyst at the Heritage Foundation, said the National Security Cutters, at $482 million each, are a fat target for the super committee.
Hutton’s testimony certainly won’t help. A 2009 fleet mix analysis conducted by the Coast Guard showed that to build everything it needs would cost some $65 billion, a whopping $40 billion than the 2007 baseline. That analysis did not include cost constraints. The Coast Guard has completed work on a second analysis that includes cost constraints, but it has not been released yet, Hutton said. And the longer it takes to replace the aging ships, the more the Coast Guard has to spend on maintaining them, Hutton added.
Meanwhile, the Coast Guard wants to put Deepwater behind it — at least the name. Papp said the service no longer wants to use the term. The “system of systems” connotation is no longer valid because each ship and aircraft is a separate acquisition program, he said. (Congress needs to approve the official name change, but hasn’t done so yet.)
“System of systems” was a popular catch phrase in the military and homeland security acquisition field, but has fallen out of favor after several high profile programs using the approach ran into trouble, namely the Army’s Future Combat Systems, Custom and Border Protection’s Secure Border Initiative, and Deepwater. The concept calls for multiple platforms to be tied together in a seamless information technology, sensor and communications backbone. In the Coast Guard’s case, the National Security Cutter would be one hub where information could be shared between aircraft and small ships.
Hutton’s testimony suggested that there might be more than a name change at work. Only 127 and surface assets, fewer than half of the planned 300, will have information technology systems that enable “full communication as envisioned,” he said.  

Continue to check the National Defense Magazine blog for more coverage of the Coast Guard Innovation Expo Oct. 25-27.


Re: Coast Guard Expo Opens with Service Facing Uncertainties

First of all systems of systems was not the problem and going away from it is a huge mistake. All that process says is you organize your missions,technical requirements and design top down and horizontally instead of every asset figuring out their own plan bottom up. It's really just common sense. The real problem is that while the best solution is system of systems it can also be the worst. If done poorly - usually though lack of communication and expertise, then you wind up spending a lot more money than bottoms up design and get the same problems of discontinuity and mismatches the bottoms up approach has. Don't throw the baby out with the bath water and pile on the bad decisions that were made. Deepwater was a fiasco because leaders in industry and the Coast Guard made bad decisions. Best practices are only the best when done well. Otherwise they are a nightmare.

Lastly finding the money is easy. We found a $9B X3 worth of new fraud in discovery of our 123 case against the prime contractors. Instead of trying to obstruct our case to get that money for the Coast Guard they could help us.

False program wide guaranty and fraudulent inducement of the whole Deepwater contract

The Coast Guard demanded in their RFP that if the contractors were going to use a new shadow company (ICGS), especially one with no capital, they wanted some way to not be left holding the bag. So they made a full program wide guaranty of ICGS performance a mandatory part of the proposal. The contractors came back in their bid and said they would do that. Then after winning they said the “unconditional” program wide guaranty of ICGS performance was “executed”. However we have official contractor witnesses saying that was not true and they never actually did the legal work to execute that guaranty. The CG did nothing about that and even paid MORE to have some buckled 123s fixed. Now let’s say they were just incompetent and didn’t catch the original lapse since they had a contract letter saying the guaranty was “executed”. They simply believed ICGS. Shouldn’t they have tried to exercise the guaranty when the 123s buckled?  This is is fraudulent inducement of the whole program since it was a mandatory part of the proposal and contract. Given the money spent to date this would now be a $9B X3 false claim for the Coast Guard and DoJ. Instead of the CG pursuing this with the DoJ and joining our lawsuit relative to the 123s, the new false guaranty and fraudulent inducement claims against the primes the CG leadership actually did the complete opposite. They told our judge there was NO 123 FRAUD, reneged on giving us declarations they promised us and Sen Cantwell we would get, blew off our new claims and then joined the DoJ against Bollinger – but for only the 123 claims. So they went after the little guy and for much less. Now I am not suggesting Bollinger didn’t do a very bad thing and shouldn’t be held accountable. I am saying that this tactic covers up for the CG leadership, the big contractors and makes it look like they are getting tough and trying to get the money back while letting those big fish off some huge hooks. The real problem with all of this is that the big contractors and the CG leadership are not held accountable to the degree they should be and we all lose out on a huge amount of money we and the Coast Guard desperately need.

As for the expo. My comment here is that the Coast Guard isn’t far enough along leadership wise, specifically related to Deepwater, to fine tune their management.  They still have overarching macro problems that can only be fixed by political courage. Political courage to tell the whole truth, political courage to hold the contractors accountable and the political courage to hold themselves accountable.  The Commandant seems to believe that more money and time will fix things. if the root cause, political courage, were addressed he would be right. instead he needs the money and time to put the Coast Guard and nation at risk so he doesn’t have to be that politically courageous. Too many Pandora’s Boxes would open and too many legacies, cushy public sector jobs and egos of former leaders would be damaged if he did so. And a great many sitting leaders would have to go if the extent to which the problems occurred and are occurring were aired.  The program wide false guaranty and fraudulent inducement cover up being one of them.
Michael DeKort at 10/24/2011 2:29 PM

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