Report finds mixed outcome on cutter

Despite improvements in its Deepwater acquisition structure during the last two years, the Coast Guard has had mixed results with its National Security Cutter program, according to a new report from the IBM Center for the Business of Government. The report also recommended improving the government's acquisition processes.

“Several issues associated with the National Security Cutter acquisition lead to classification of this asset acquisition as a mixed outcome,” stated the center’s report on the problems of government contracting for complex projects such as the Coast Guard's Deepwater. The study was published on the Web on Dec. 23.

The Coast Guard started the $24 billion Integrated Deepwater Systems acquisition program in 2002 to replace boats, aircraft and other assets. It hired a joint venture of Lockheed Martin Corp. and Northrop Grumman Corporation as prime contractor and lead systems integrator. In 2007, government auditors criticized the program’s 123-foot patrol boats, which the Coast Guard rejected as structurally unsound, and the service took over the role of lead systems integrator and made other changes to its acquisition approach.

The Coast Guard commissioned Deepwater’s first national security cutter, named Bertholf, in August 2008 and is conducting final testing on the ship systems for two years, which is standard procedure. The center’s assessment of Deepwater is one of first to examine the national security cutter acquisition in greater detail.

According to IBM’s report, there were problems with the requirements process and task order that hurt the cutter acquisition. The problems included “indeterminate” performance requirements in the task order. Also, “the task order also did not identify the decision-making rights and obligations of either Integrated Coast Guard Systems (the contractor) or the Coast Guard over these unspecified elements,” the report said.

As a result, it was not clear who had decision-making authority over structural design specifications, conditions for third-party design assessments, and corrective actions, the center concluded.

Overall, the center report makes several recommends for improved handling of complex government acquisitions. In such programs, the products “have qualities that cannot be easily and clearly defined in advance and that are difficult to verify after the product or service has been delivered — government agencies do not fully know how much return on investment they will get from these products,” the report said. It describes Deepwater and the Homeland Security Department’s Secure Border Initiative Network as complex acquisitions.

The report recommended a more highly skilled government acquisition workforce, more investments in learning, and an improved assessment of risk in such projects.

Coast Guard Rear Adm. Gary T. Blore, assistant commandant for acquisition, wrote in his blog on Dec. 31 that he agreed with the center’s recommendations for complex acquisitions and he believes the Coast Guard has made those adjustments to Deepwater.

“I think they ‘got it right’ -- and agree that these three precepts are necessary to the success of any large, federal acquisition enterprise. I'm also confident that the acquisition reforms that the Coast Guard has made over the last two years have fully incorporated the authors' recommendations, and we are a much better organization for having done so,” Blore wrote.