T&I Committee Urges Coast Guard to Examine Future of Deepwater Contract

Monday, April 16, 2007
James L. Oberstar (Minn.), Chairman of the Committee on Transportation and Infrastructure, and Rep. Elijah E. Cummings (Md.), Chairman of the Subcommittee on Coast Guard and Maritime Transportation, today called on the U.S. Coast Guard to restructure the Deepwater Program, which is critical to the mission readiness of the Coast Guard. Under the Deepwater Program, the Coast Guard is procuring 91 cutters, more than 100 small surface craft, and 244 new or converted aircraft, including helicopters and fixed-wing airplanes. "Congress has seen time and time again that the Executive Branch is trying to contract out program management duties that should be carried out by Federal employees. The Deepwater Program has tried to replace the expertise of the Coast Guard with the expertise of private contractors. The unique expertise of the Coast Guard cannot be replaced by people who are experts at making money for their stockholders," said Chairman Oberstar. "The Deepwater Program has been sailing into a head wind. It is time to change direction for a smoother and more efficient sail."

Chairman Oberstar and Chairman Cummings stated that, based on the Committee's previous oversight hearings and its current oversight investigation, the Coast Guard needs to significantly restructure the Deepwater contract. "The Coast Guard must act immediately to cut their losses if they want to save this program. The $24 billion Deepwater Program must provide the men and women of the Coast Guard with the best platforms to accomplish their missions in a manner that protects the financial interest of the U.S. taxpayer," Chairman Cummings said. "This weekend, millions of Americans will file their tax returns. It is our job to make sure those dollars are spent effectively and efficiently -- and to hold those who are spending this money are accountable for their decisions." "Our expectations for Deepwater are really very straightforward," stated Chairman Cummings. "We expect Deepwater to produce boats that float, ships that fly, and information technology systems that are fully functional and that protect classified information. Unfortunately, right now, these expectations are not being met." "We have spent some $64 million to fund the rehabilitation of eight ships that are now likely never to be returned to service because they have cracked hulls, and we are concerned about the ability of the Deepwater Program to successfully complete other major procurements, including the $2.9 billion National Security Cutter," according to Chairman Oberstar.

Chairman Oberstar and Chairman Cummings have urged the Coast Guard to return system-integration back in-house as an internal Coast Guard function. "The men and women who serve in the Coast Guard know what they need to carry out their missions better than any contractor. The Coast Guard should not attempt to replace the expertise they have gained from decades of enforcing our laws with the limited knowledge of 'inside-the-beltway' contractors who are out to make money for their stockholders," stated Chairman Cummings. "Second, the Coast Guard needs to contract directly with aircraft manufacturers and shipbuilding companies. Cutting out the middle-man can save the taxpayer millions of dollars over the life of this procurement. The Coast Guard has been building ships since Alexander Hamilton contracted for the construction of the 'Baltimore schooner' cutters to enforce our customs laws in 1790. Having the shipyard or an aircraft manufacturer be a subcontractor to a system integrator only adds overhead and makes coordination between the Coast Guard and the shipyard more difficult." "And third, it is time to salvage equipment and parts from the 123-foot patrol boats and begin a civil and criminal investigation into how the Federal Government and the American taxpayers were sold a boat that is unsafe. Admiral Thad Allen, the Commandant of the U.S. Coast Guard, made the right decision to tie these boats up. We cannot risk the lives of the men and women in the Coast Guard by operating unsafe boats," added Chairman Cummings. "It is time for the Department of Justice to step up and hold those who perpetuated this fraud accountable."

"Our Committee will work closely with Admiral Allen to ensure that the Coast Guard has the personnel - both uniformed military and civilian personnel - with the expertise in contract management and financial management and other specialized acquisitions activities to ensure effective oversight of the Deepwater Program," concluded Chairman Oberstar. "We also expect that all future procurements under Deepwater meet independent certification standards. Contractor self-certification is tantamount to no certification and does not produce reliable results." Chairman Oberstar and Chairman Cummings expressed confidence in Admiral Allen and stated that he has the leadership and management skills necessary to turn the Deepwater Program around. "We believe that in six months, the Deepwater Program will not be the same program that has been mismanaged over the past several years." On Wednesday, April 18, the Committee on Transportation and Infrastructure will convene a hearing entitled "Compliance with the Requirements of the Deepwater Contract" to examine the Deepwater Program.

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