Coast Guard awards $17B pact

The Coast Guard on June 25 announced the award of its Integrated Deepwater System contract potentially worth $17 billion to Integrated Coast Guard Systems, a joint venture established by Lockheed Martin Corp. and Northrop Grumman Corp.

As the largest procurement in the Transportation Department's history, Deepwater represents a sweeping modernization after years of neglect. The program will replace an aging fleet of cutters, aircraft, sensors and the supporting command, control, communications and surveillance systems.

The performance-based contract calls for the delivery of a first set of ships and planes — as well as some upgrades — in the next five years. Eventually up to 91 ships, 35 fixed-wing aircraft, 34 helicopters and 76 unmanned surveillance aircraft will be acquired, and 49 existing cutters and 93 helicopters will be upgraded.

The contract includes $11.04 billion for the new ships and aircraft and improved command and control systems, as well as $5.91 billion for operating, maintenance and sustainment costs.

"With Deepwater, the Coast Guard will one day have an electronically interlinked armada," said Ronald Sugar, president and chief operating officer of Northrop Grumman, speaking at a June 25 news conference announcing the award.

The Coast Guard has faced increased pressures since the Sept. 11 terrorist attacks as an agency operating within the Transportation Department.

"Homeland security, now more than ever, is a mission where we must succeed," Coast Guard Commandant Adm. Thomas Collins said in a June 25 news release. "As the leader in maritime homeland defense, the Coast Guard must have the most capable ships, aircraft, sensors and communications technology available to protect our nation and carry out our many missions.

"The Deepwater Program will give us the necessary tools to create an effective, layered defense of our nation's maritime interests," Collins continued.

The already high-profile program could land in a larger sea if President Bush has his way.

Earlier this month, Bush unveiled his proposal to create a Cabinet-level Homeland Security Department that would house several existing agencies, including the Coast Guard.

Regardless of how the debate over the new department turns out, the systems designed under Deepwater will improve coordination with other agencies and the Defense Department, according to the release.

And the Coast Guard is looking at Deepwater as a long-term solution. The agency could extend the contract up to 30 years.

In the past, members of Congress have questioned whether they will be able to sustain the program's spending needs over time.

The Bush administration's $7.1 billion budget request for the Coast Guard for fiscal 2003 includes $500 million for Deepwater. It received $320 million in funding for fiscal 2002.

"We count our budget in M's," Collins said at a Feb. 4 news conference on the budget. "Now we're starting to count it in B's."