Rescue Warriors

by David Helvarg

  Later I ask DeKort about the nonwaterproof radios Lockheed had planned to put on the cutter’s rigid inflatable boats. Like $600 toilet seats on military aircraft, this is the kind of small detail in a larger contract screwup that everyone can understand.

  “With the radios, even the vendor said, ‘Don’t use my radio,’ but they thought they’d use a radio the Coast Guard liked—and the Coast Guard did. They liked them on the bridge of a 378-foot cutter, not the exposed deck of an open boat.”

  “I can’t believe how overblown the whole congressional hearing thing is,” Troy Scully, the tall, young, handsome spokesman for Lockheed Martin, tells me outside another oversight hearing. “The 110s [that became 123s] were shitty boats to begin with!”

  This is not what I hear from the Coast Guard men and women serving on the 110s I visit.

  Months later Mr. Scully will point out that of the $96 million the Coast Guard wants back from the 123 contract, only $3 million involves Lockheed’s topside work, implying the rest is Northrop’s fault.

  The Product Line

  On April 17, 2007, Admiral Allen announced his decision to decommission the eight 123-foot patrol boats that had been delivered to the Coast Guard and begin seeking redress from the contractors.

  “Let me state this tactfully,” he later tells me. “In the past we never raised [contract] issues to the CEO level, and that can be daunting sometimes with these people in the private sector . . . What they didn’t understand is that the 123s became a leadership issue for us. It tests the credibility of the senior [Coast Guard] leadership with the deck plate [enlisted rates, chiefs, and junior officers]. If I can’t get shafts in alignment [one of the reasons the boats buckled], it becomes a referendum on me.”

  Admiral Allen and the CEOs of Lockheed and Northrop began holding quarterly meetings to sort out their differences. “He doesn’t blame me,” Lockheed CEO Bob Stevens later told the Wall Street Journal, “but he sure as hell holds me accountable.”

  A March 6, 2008, story by reporter August Cole went on to explain that with all the congressional attention on Deepwater, the big defense contractors worried that “Deepwater’s troubles will tarnish far bigger military programs,” which is why the two CEOs now regularly update “one of their smallest government customers.”

  The original plan for Deepwater called for the delivery of three classes of cutters, along with new and upgraded aircraft and lots of state-of-the-art technologies, including robot helicopters, sensors, surveillance gear, and Department of Defense security-compatible communications systems.

  Aviation elements included the upgrading of the Dolphin helicopter to the C model, an easy fix given that they’d long needed the more powerful Turbomeca engines they were originally designed for. Jayhawk helicopters got new avionics packages. C-130 Hercules transport planes were also upgraded, and a long-range search version, the HC-130J, was put into service.

  Replacing the aging fleet of Falcon jets are twin-engine Spanish-built CASA aircraft. With their glassy flight decks and rear cargo ramps, they look like sporty, flat-backed Mini Hercs. Still, I wondered why prop planes were selected to replace jets.

  “We had an integrator [the ICGS contractor] that was supposed to pull this all together with a cap on how much to spend. Would it have been the same if [Coast Guard] Aviation made the decision? Maybe, maybe not,” the service’s aviation chief, Capt. Mike Moore, tells me in the spring of 2007. “What I tell the aviators is the decision has been made, and if that’s the decision let’s move forward.”

  On February 20, 2008, a CASA aircraft, now called an Ocean Sentry, performed its first search and rescue mission. Two Air Force F-15 fighter jets collided over the Gulf of Mexico off the Florida panhandle, and both pilots managed to bail out. The Ocean Sentry was diverted from a training flight out of Mobile, Alabama, to become the on-scene coordinator.

  The first Coast Guard aircraft with AIS (ship transponder tracking) on board, the Sentry was able to identify and communicate with civilian vessels in the area, including a Good Samaritan fishing vessel, the Nina, that was directed to recover one of the pilots the aircrew had spotted. Unlike the Falcon jet, the Sentry’s bubble observation windows let the aircrew look straight down while conducting their search, and its communications suite allowed it to coordinate with an Air Force tanker and two other Air Force F-15s, the fishing boat, and other civilians on the water, as well as Coast Guard helicopters, Falcons, and a 41-foot utility boat that rushed to the scene. A Coast Guard helicopter lifted one of the injured pilots off the fishing boat while another recovered the second pilot in the water. The first pilot survived the collision; the second did not.

  Along with Sentry aircrews another sixty-nine sets of eyes that were supposed to take flight with Deepwater were Eagle Eye unmanned aerial vehicle (UAV) robot helicopters from Bell Helicopter. After five years of development under ICGS, the Coast Guard shut down the program in late 2007. It’s now looking at existing alternatives, including the Navy’s Fire Scout UAV, for at-sea operations. For cutter operations closer to shore, it’s looking at shared use of Department of Homeland Security Predator drones.

  Along with C4ISR [command, control, communications, computers, intelligence, surveillance, and reconnaissance, in case you’ve forgotten], ship construction makes up the biggest slice of the Deepwater pie.

  The stretching out of the 110s to 123s was supposed to act as a bridge to hold the service over until the introduction of a 140-foot Fast Response Cutter (FRC). This was to be built in the same time frame as the 418-foot National Security Cutter (NSC), the Coast Guard’s largest, most powerful vessel, to be followed shortly thereafter by a 360-foot Offshore Patrol Cutter (OPC).

  While converting the 110s, ICGS had a radical new idea for the Fast Response Cutter. Instead of a steel hull, they would build it with a composite hull, a kind of supertough fiberglass.

  Northrop had built a $68 million composite hull assembly line at its Mississippi shipyard hoping to sell the Navy on the idea for its new class of Littoral Combat Ship (LCS), designed for close-to-shore (also known as littoral) combat against mine-laying vessels, submarines, and gunboats.

  After the Navy said no, Northrop announced it would be using the hull for the Coast Guard’s fifty-eight Fast Response Cutters.

  “It was a pure business decision,” a former Northrop executive who didn’t want to be named told the New York Times, “and it was the wrong one.”

  “They had a desire to see what was possible after losing that [LCS] contract. The Coast Guard became their test bed,” Admiral Allen later noted.

  Many Coast Guard engineers were skeptical about the plan from the beginning, saying the composite boat was going to be too slow and heavy, calling it a “brick.” Northrop backhandedly acknowledged this when it added two engines to the two in its original design.

  “Even a brick, if you put enough horsepower on it, you could make it plane on the water,” retired Coast Guard engineer Capt. Kevin Jarvis told 60 Minutes.

  After investing three years and $38 million, the Coast Guard pulled the plug on the Fast Response Cutter deal with ICGS in March 2007. It then put the contract out for competitive bidding. In September 2008 it chose Bollinger Shipyards of Louisiana to construct thirty-four large 153-foot “Sentinel Class” FRCs. The new patrol boat is based on an existing, water-proven Dutch-built vessel, the Damen Stan 4708.

  The largest of the Deepwater vessels and pride of the fleet is the 418-foot National Security Cutter, eight of which are being or will be built by Northrop Grumman at its shipyard in Pascagoula, Mississippi.

  The National Security Cutter has also had its share of problems, including structural flaws first identified by Coast Guard engineers that could shorten its thirty-year lifespan. As a result of these design flaws, the first two Legend-class ships, the Bertholf and the Waesche, will go to sea for a year and then go into dry dock for up to a year of structural retrofitting at an estimated cost of $70 million. The third will need about $15 million of ret
rofitting work, and the fourth through eighth will have the problem corrected in their design phase.

  The Bertholf, the first of the National Security Cutters (named after the Coast Guard’s first commandant), was also found to have many of the same problems with electronic shielding that plagued the 123s. Crewmembers named one of its new radars “Helen Keller” because of its inability to see what it was supposed to. Even after the ship’s 2008 handover to the Coast Guard, continued testing, retrofitting, and shakedown cruises mean it won’t be fully operational until 2010.

  With the first ship costing around $640 million and the full run of eight totaling around $4 billion, the contractors and Coast Guard had to come up with a way to replace twelve Vietnam-era High Endurance Cutters with eight high-priced National Security Cutters. They did this by rotating four crews for every three ships in order to keep them at sea longer.

  A number of sailors and ships’ COs I spoke with were skeptical of this scheme, worrying that their future shipmates’ “pride of ownership” might be lost among the rotating crews. The skipper of the Bertholf thinks that after the first three ships are brought online the whole rotating crew idea may have to be revisited.

  While the first National Security Cutters are about two years behind schedule, the next Deepwater asset, the 360-foot Offshore Patrol Cutter, has fallen even further behind. Its design phase is now set to begin in 2010.

  So, as I wondered earlier, how did the Heroes of Katrina 2005 end up with the Deepwater Fiasco of 2007? The answer is both complex and fascinating and goes back a lot further than two years.

  From Governors Island to ICGS

  I’m visiting Governors Island on a cold winter day, and everywhere I look is a scenic wonder—the two-hundred-year-old stone battlements of Fort Jay and Castle Williams, the tree-lined historic district where British governors, Civil War generals, and future Coast Guard commandants lived. The views of lower Manhattan, a seven-minute ferry ride away, or toward the Statue of Liberty are breathtaking. Even the views of the high-rises on the Jersey waterfront and the shipping terminal at Red Hook in Brooklyn just across Buttermilk Channel make one want to pause and enjoy the moment. For years the Army generals in charge of the island complained about the loud buoy bell in Buttermilk Channel, and the Coast Guard apologetically explained that it was essential for navigation. Within months of the Coast Guard taking over the island, the bell was gone.

  From 1966 to 1996, this was the heart of the Coast Guard, its largest base and island community, with over five thousand people living an idyllic small-town life in the heart of America’s greatest harbor. This was the service’s most prestigious and visible symbol, home to its white-hulled fleet and its Atlantic Command. Growing up in New York, all I knew about the Coast Guard was that they were on Governors Island.

  Then in 1996 they left, relocating bits and pieces of commands to Staten Island and New Jersey and the tidewaters of Virginia and North Carolina. By doing so, they explained, they would save $54 million a year, less than half of what the Navy spends each year maintaining a single aircraft carrier. By the time they moved, however, the Coast Guard felt there was little choice.

  That same year, the service launched its Deepwater acquisitions program. The loss of Governors Island and the eventual scandal and restructuring of Deepwater are not unrelated. You just have to follow the money, or lack thereof.

  B

  y the 1990s, the Coast Guard was facing a downward spiral of budgetary cutbacks and aging assets, including aircraft, patrol boats, and deepwater cutters, that were becoming dangerously vulnerable to accidents and breakdowns. In December 1989, the grounding and eventual scuttling of the Mesquite, a World War II buoy tender, on Lake Superior sparked a Coast Guard effort to replace twenty-six of its aging tenders, most of them more than fifty years old, at a proposed cost of $1 billion. In 1992, Congress authorized replacement of just eleven for $200 million. The Coast Guard had a lot of real needs but didn’t seem to have the congressional influence to get those needs met. Nor did it have much support within its own cabinet department.

  President Lyndon Johnson created the Department of Transportation (DOT) in 1966 and pushed the transfer of the Coast Guard from the Department of the Treasury to give his new creation more ballast in terms of numbers of employees, but within DOT the cause of the Coast Guard would never gain much traction. Next to the Federal Highway Administration or Federal Aviation Administration, with their close links to the politically influential oil, auto, cement, and airlines industries, the Coast Guard, with its small surfboat contracts and surplus Navy ships, had about as much clout as Amtrak.

  In the early 1980s, the Reagan administration’s Lt. Col. Oliver North (who’d later gain infamy for his role in the Iran-Contra scandal) championed and defended the Coast Guard against plans by Office of Management and Budget (OMB) chief David Stockman to outsource and privatize it.

  In 1994, the Clinton administration called for a “streamlining” of the federal government and asked agencies to propose ways they could operate with a 10 percent reduction in force. While other agencies in the Department of Transportation and across the government used bureaucratic delay and obfuscation to avoid the cuts, the Coast Guard voluntarily reduced its personnel by 12 percent, laying off four thousand people. This inspired some service wags to suggest that if they could do more with less, they should be able to do everything with nothing. Many well-qualified midcareer officers, seeing the handwriting on the pilothouse wall, also began to leave the service in search of more stable employment.

  By the time the Coast Guard left Governors Island as a cost-saving measure, its High Endurance Cutters, many built in the late 1960s, were experiencing a 25 percent loss of function due to unscheduled maintenance, as were their older patrol boats. Coast Guard helicopter in-flight engine power losses were occurring at a rate of 329 mishaps per 100,000 flying hours. The Federal Aviation Administration considers helicopters experiencing more than 1 mishap per 100,000 hours unsafe and unreliable. Still, no one suggested the Coast Guard reduce its search and rescue missions to protect its own people.

  Rather, the Clinton administration’s Office of Management and Budget wanted to know if there was really a need for the Coast Guard, if its functions couldn’t be carried out by other agencies of government or (as had been suggested by the Reagan White House) handed off to the private sector.

  While the Coast Guard didn’t want to see its missions privatized, it began thinking it might need to see its lobbying efforts privatized.

  I

  ts deepwater ships and aircraft, which operated more than fifty miles offshore, were all approaching bloc obsolescence, facing the end of their useful lives at around the same time. So were many of its other assets, but much of the senior leadership was made up of blue-water cuttermen, and that became their immediate focus.

  “When it was clear everything that went [more than] fifty miles offshore was aging at the same rate, we went through some strategic planning and did a roles-and-mission study with all our federal customers . . . all sitting around the table and talking about what they’d want twenty-five years down the road,” former Coast Guard commandant James Loy recalls. Loy, a decorated Vietnam veteran, now works for the Cohen Group, the Washington, DC, lobbying firm founded by former secretary of defense William Cohen.

  During his time as commandant (1998 to 2002), the Coast Guard decided that rather than contract for individual assets like patrol boats and Medium and High Endurance Cutters as it had in the past, the service would go with a “system of systems” approach asking competing industry teams to offer a single management plan and design for a whole package of deepwater assets— cutters, aircraft, sensors, communications, and logistics.

  The original competing teams were led by Lockheed, Avondale Shipyard, and Science Applications International Corporation (SAIC).

  These three consortiums were given their own offices on the top floor of Coast Guard headquarters. “I remember being asked, ‘Are you read into
Deepwater?’ ” says Adm. Gary Blore, now head of Coast Guard Acquisitions. “For the different consortiums you had to [read and] sign a nondisclosure clause, and they had their own security badges and locked doors. The fifth floor became this neighborhood of exclusivity.”

  In 2002, the Deepwater contract was awarded to ICGS, Integrated Coast Guard Systems, a joint venture of Lockheed Martin and Northrop Grumman. Its initial projected cost was $12 billion to $15 billion, though with post-9/11 contract revisions to make ships impervious to nuclear, biological, and chemical attack, with Hurricane Katrina damage to the National Security Cutter’s Mississippi shipyard, and with ICGS doing the math, that number soon ballooned to $24 billion.

  “We needed to sell the integrated system approach to acquisitions to the Office of Federal Procurement Policy at OMB,” Admiral Loy recalls, “and I had many conversations about recognizing the shortfalls in terms of our [the Coast Guard’s] lack of acquisitions and oversight expertise. That was one reason we were so open to industry expertise,” he tells me, and I wonder if I’ve just missed something.

  If you don’t have enough farmers to build and guard your integrated system of henhouses and chicken runs, the normal reaction is not to be more open to the fox’s expertise.

  A

  clearer explanation of the Coast Guard’s integrated “system of systems” approach can be found in a 2004 master’s thesis written by Boston businessman and consultant Vikram Mansharamani.

  Vikram tells me that while working on his PhD thesis at MIT’s Sloan School of Management he met Admiral Allen, who was there getting his MBA. After some conversations, Vikram decided to do an independent study on Deepwater (that became one of his two master’s) because it struck him as so absurd from a business point of view.