03.20.07

Cantwell Introduces Legislation to Fix Deepwater

Plan would make sure Coast Guard needs are met without waste of taxpayer dollars by requiring open competition, strict oversight, and third-party review Comprehensive, bipartisan plan is Cantwell's first bill as Chair of Coast Guard subcommittee; bill has backing of Ranking Member Snowe

WASHINGTON, DC - Tuesday, as Chair of the Senate Coast Guard Subcommittee, U.S. Senator Maria Cantwell (D-WA) introduced comprehensive new legislation to fix Deepwater and get the troubled Coast Guard fleet replacement program back on track. Cantwell's legislation would ensure open competition for future Deepwater contracts and end Coast Guard reliance on a single private sector entity to oversee the entire project. It would mandate better technical oversight by Coast Guard engineering staff, and improve internal Coast Guard management of Deepwater. Subcommittee Ranking Member Olympia Snowe (R-ME) is a cosponsor of Cantwell's bill. [A full summary of Cantwell's legislation follows below]

"This comprehensive, bipartisan plan will get Deepwater back on track, stop the waste of taxpayer dollars, and deliver the men and women of our Coast Guard the assets they need," said Cantwell. "Outsourcing management and oversight of Deepwater to industry has not worked. The lack of transparency combined with technical failures has wasted tens of millions of taxpayer dollars. By putting in place strong oversight and transparency standards, moving away from the use of a private sector lead systems integrator, requiring open competition, and giving the Coast Guard the tools it needs to manage this program, we can fix Deepwater and end waste. This plan is the critical, commonsense solution Deepwater needs."

Since taking over as Subcommittee Chair, Cantwell has aggressively pursued fixing Deepwater. In February, Cantwell chaired the first Senate hearing on Deepwater, and heard testimony from Coast Guard Commandant Admiral Thad Allen, Department of Homeland Security (DHS) Inspector General Richard Skinner, Deepwater contractors, and retired Coast Guard engineer Kevin Jarvis. In developing the new legislation, Cantwell worked with the Coast Guard and took into account recommendations by the DHS Inspector General, the Defense Department's Defense Acquisition University (DAU), and the Government Accountability Office (GAO). Cantwell also met with Commandant Allen on several occasions.

Earlier this month, Cantwell and Snowe sent a letter to Commandant Allen calling on him to work with the Justice Department to ensure taxpayers are not burdened with National Security Cutter cost overruns, and to implement the significant changes needed to correct Deepwater's widespread problems. In a second letter, Cantwell and Snowe asked Inspector General Skinner to review and report on the Coast Guard's plans to hold ICGS accountable for failures to meet contract requirements.

Cantwell's Integrated Deepwater Program Reform Act:

  • Direct the Coast Guard to stop using a lead systems integrator for all future deepwater assets not currently under contract, and instead require the Coast Guard to acquire future assets through an open, competitive process
  • So as not to slow work already in progress, the Coast Guard could continue to use the current lead systems integrator to complete specific work orders currently under contract at the time of the legislation's enactment; the Coast Guard could only use a lead systems integrator if it could ensure that ICGS had no financial relationship with subcontractors or that subcontracts were openly competed
  • Require a third-party entity with expertise in major acquisitions to review all of the proposed Deepwater assets for which contracts have not been issued; this third-party entity would also analyze the assets the Coast Guard needs to complete its mission, and how the Coast Guard can best acquire these assets
  • Require the Coast Guard to certify to Congress, prior to issuing new contracts for proposed acquisitions, that the proposed technology meets feasibility, design, mission, and cost objectives
  • End the practice of allowing lead Deepwater contractors to self-certify design standards instead of adhering to accepted industry-wide standards and procedures
  • Require the Coast Guard to provide significant additional information to Congress on the status of Deepwater, and require the GAO to closely monitor the Coast Guard's implementation of the legislation's requirements
  • Ensure better technical oversight by the Coast Guard's engineering staff and allow the Coast Guard to shift personnel to its acquisitions staff
  • Improve the Coast Guard's management of Deepwater by implementing recommendations made in the Coast Guard's Blueprint for Acquisition Reform, as well as recommendations for improved management included in a February 5, 2007 DAU report

Deepwater—a partnership between the Coast Guard and a joint venture by Lockheed Martin and Northrop Grumman, known as Integrated Coast Guard Systems (ICGS)—is a 25-year, $24 billion initiative to replace the aging fleet of Coast Guard assets used in missions more than 50 miles from the coast. The program is plagued by cost overruns, debilitating design flaws, ships and technology that fall far short of contract requirements, and a contract structure that strips the Coast Guard of oversight and decision-making authority. Recent reports from DHS and the Defense Department have detailed problems with specific portions of the contract as well as the overall contract structure.

So far, eight 123-foot patrol boats converted under the Deepwater program are out of service—a waste of $100 million. After spending $25 million, the Coast Guard suspended the Fast Response Cutter project because the contractors' design failed to meet testing requirements. The National Security Cutter—the largest of the new Deepwater ships—is over budget and the current design and construction fails to meet the Coast Guard's performance goals. Deepwater's Unmanned Aerial Vehicle, Eagle Eye, has significant delays, and the prototype crashed. These mistakes have cost taxpayers hundreds of millions of dollars, while delays have forced the Coast Guard to rely more heavily on outdated equipment that was not built for post-9/11 missions.

FACT SHEET: Cantwell's Integrated Deepwater Program Reform Act

Use of a Lead Systems Integrator

  • Directs the Coast Guard to stop using a Lead Systems Integrator (LSI) on future Deepwater acquisitions.
  •  Allows the Coast Guard to use the LSI to complete any specific work for which a contract or order has already been issued.
  • Allows the Coast Guard to use the LSI to complete the C130-J modifications, the C4ISR program, and also to complete procurements of the National Security Cutters (NSCs) and Maritime Patrol Aircraft (MPA) already under contract for construction. However, the LSI must have no financial interest in subcontracts or must have competed the subcontracts.
  • Allows the Coast Guard to use the LSI to complete all of the remaining NSCs and MPAs only after an analysis of alternatives has been conducted, and if the Coast Guard concludes that these procurements and use of an LSI are in the best interests of the federal government, that justifications for not competing assets under the Federal Acquisition Regulations are met, and that the LSI has no financial interest in subcontracts or has competed the subcontracts.
  • All other Deepwater assets would be done as a traditional procurement.

Competition

  • Requires that the Coast Guard have a full and open competition of all Deepwater assets that have not yet gone on contract, other than those that the LSI can complete.
  • Requires that the LSI have no financial interest in subcontracts for assets managed by the LSI, or that subcontracts be fully competed. A similar provision was included in the 2006 Defense Authorization Act.

Analysis of Alternatives

  • Requires an analysis of alternatives of all of the proposed Deepwater assets not currently under contract and analyze whether other alternatives are preferable. Such review would be conducted by an independent third party entity with expertise in major acquisitions, and no financial conflict of interest.
  • Requires the Coast Guard to provide a plan to Congress for how to move forward with Deepwater procurements based on this review.
  • Requires a similar review for any major changes to the agreed plan in the future.

Certification

  • Requires the Commandant to certify to Congress prior to issuing new contracts for specific proposed acquisitions that the proposed asset meets objective criteria on feasibility, maturity of design, and costs. A similar requirement applies to Department of Defense contracts.

Contract changes

  • Requires improvements to any contract entered into by the Coast Guard for Deepwater assets, including changes to award term and award fee criteria as recommended by the Government Accountability Office (GAO).
  • Ends the practice of allowing the private contractor to self-certify the design and performance of assets being delivered. This will ensure adherence to accepted industry-wide standards and procedures.

Internal Coast Guard Management

  • Requires improvements to Coast Guard management of Deepwater, including implementation of the Coast Guard's Blueprint for Acquisition Reform as well as recommendations for improved management included in a February 5, 2007 Defense Acquisition University (DAU) report and by GAO.
  • Ensures better technical oversight by the Coast Guard's engineering staff. -Allows the Coast Guard to shift personnel to support acquisitions projects.

Reporting to Congress and GAO Review

  • Requires Coast Guard to provide significant additional information to Congress regarding the status of the Deepwater program, similar to what the Department of Defense provides.
  • Requires GAO to closely monitor Coast Guard's implementation of improvements to its management of the Deepwater program.

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