Deep Trouble for Deepwater
The Coast Guard's massive rebuilding project is just one of its many problems
At the time, it looked like a triumphant moment for the U.S. Coast Guard. Last Veterans Day, about 1,000 people joined Coast Guard Commandant Thad Allen and Michael Chertoff, the homeland security chief, at a shipyard owned by defense giant Northrop Grumman in Pascagoula, Miss., to christen the first major cutter—or large enforcement ship—the agency had acquired in 35 years. As a peppy military band played, Allen predicted the cutter would "be the most capable" the agency had ever had.
It was a heady time. The Coast Guard was still riding a wave of goodwill inspired by the service's response to Hurricane Katrina, when its helicopter rescuers hoisted more than 33,000 people to safety while the rest of the federal effort floundered. President George W. Bush had sworn in Allen—a popular admiral who took over the federal government's response to Katrina from Federal Emergency Management chief Michael Brown—as head of the Coast Guard in May 2006.
Lemons. But now that November gathering is starting to look like a party on the deck of the Titanic. Audits have revealed that the cutter's cost has grown by millions of dollars since it was commissioned and that it has potentially fatal design flaws. And that's only part of the bad news. The 38,000-person military service has been accused of buying what one member of Congress called "a series of lemons" with a $24 billion megacontract to replace nearly all its ships and planes. Meanwhile, the Coast Guard is also dealing with the shocking deaths of two rescue swimmers and allegations of assault at its academy. The Coast Guard's motto is semper paratus—or "always ready"—but its supporters wonder if even Allen can fix all this.
The Coast Guard had traditionally been known for doing more with less. Back in the 1990s, slim budgets left the service with a badly aging fleet that was "a huge embarrassment," says former Rear Adm. George Naccara. By 2002, of the 39 similar cutter fleets around the world, only two were older than the Coast Guard's. Yet the agency's mission was rapidly expanding; after 9/11, it joined the Department of Homeland Security, took over some new port and chemical-plant security roles, and saw its budget grow by 50 percent.
Those new responsibilities added urgency to the massive Deepwater program, an unprecedented effort kicked off in 2002 to upgrade virtually all of the service's fleet. Two large defense contractors—Lockheed Martin and Northrop Grumman—led the team that won a contract to provide a catalog of 91 ships, 49 aviation drones, 124 small boats, and 195 new or upgraded helicopters, all connected by a new communications system. The contracting team advises the Coast Guard on what to buy, chooses the parts providers, and serves as prime builder. Because of staff shortages, the Coast Guard restricted itself initially to a mostly advisory role. "We thought this was a way to eliminate redundancy and save a whole pile of money," says Tom Schatz, president of Citizens Against Government Waste.
Today, that sentiment seems more than a bit ironic. Originally a $17 billion contract, Deepwater was repegged at $24 billion in 2005. A recent DHS inspector general report said that the cost of the first two of the largest cutters—originally estimated at $517 million together—has risen to $775 million and is headed higher still. Allen says much of the swell was caused by his agency's "evolving needs" in an age of terrorism. That 418-foot national security cutter christened in November, for instance, now must be able to sail even if a nuclear bomb is dropped nearby.
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