Building a U.S. Coast Guard for the 21st Century - Center for ...

From the project’s outset, the service realized that it did not have the resources to
manage such a large, multibillion-dollar project in house. Specifically, the Coast
Guard determined that it lacked “the experience and depth of workforce to manage
the acquisition internally.” So the service decided to outsource the entire project
to a private-sector venture called Integrated Coast Guard Systems, which split
the responsibilities 50-50 between Lockheed Martin and Northrop Grumman.
ICGS become the systems integrator, meaning that it was not only in charge of
the construction of the program’s assets but also ran the oversight and day-today
management of the contract. This created a situation in which the people
who were supposed to be managing the contractors were in fact the contractors
themselves—a situation similar to that faced by the Coast Guard’s sister services
in the Pentagon. 59
The Deepwater program experienced such severe construction and integration
failures under ICGS, particularly on the part of Northrop Grumman, that the
Coast Guard felt it necessary to take over the entire program in 2007. Under ICGS
a number of platforms experienced severe problems, among them:
• Critical engineering failures on the Coast Guard’s extended patrol boats
caused the first eight boats under renovation to be rendered worthless and
entirely decommissioned.
• Electronic communications systems failures allowed data transmissions to be
leaked and potentially received by non-Coast Guard vessels, including those of
other countries or nonstate actors.
• Material design flaws made the initial design of the Fast Response Cutter too
heavy even to float, creating $38 million in wasted developmental costs. 60
Then-Commandant Allen acknowledged in 2007 that the Coast Guard “had
relied too heavily on contractors to do the work of the government and that
government and industry had failed to control costs.” After the Coast Guard
took over as the lead systems integration, the Coast Guard established its own
Acquisitions Directorate. Because the directorate was still in its infancy DHS
and Integrated Coast Guard Systems took on the responsibility of reassessing
the expected cost of the program and approved an acquisition baseline of $24.2
billion for the program, an increase of nearly 45 percent above Deepwater’s FY
2002 initial cost estimate of $17 billion.
32 Center for American Progress | Building a U.S. Coast Guard for the 21st Century