“I was shocked by this systems approach, looking at this idea that you give over management to the supplier and they tell you what you need and deliver it. You know, ‘You need a marble Jacuzzi for this house I’m building you.’ ‘I do?’ ‘Sure everyone wants to look at their plasma TV from their marble Jacuzzi.’ But everything happens for a reason, and I saw how this worked at a political level as interest groups met their needs.”
Titled “The Deepwater Program: A Case Study in Organizational Transformation Inspired by the Parallel Interaction of Internal and External Core Groups” (like I said, it’s a thesis) and based in part on interviews he conducted with key members of Coast Guard senior management between 1996 and 2003 before Deepwater became controversial, it highlights the unease that existed on the part of Coast Guard leadership about their ability to find the money needed to modernize their fleet.
Vikram puts it in terms of push and pull funding. Push funding is when agencies try to get appropriations based on their needs by lobbying (or “educating,” since the armed services don’t officially “lobby”) on their own behalf, arguing in terms of the common good they provide the public. This is what the Coast Guard did to get new buoy tenders, but with very limited success, despite the obvious benefits that well-maintained aids to navigation provide for the nation’s maritime commerce and twenty million recreational boaters.
Pull funding, by contrast, is when third parties (lobbyists) represent an agency or department’s interests on Capitol Hill. Examples include the oil, auto, and asphalt industries lobbying for the Department of Transportation’s pork-heavy highway bill or Tier 1 defense contractors wrangling congressional votes when the Department of Defense has some multibillion-dollar weapons system climbing in a gravity-defying cost spiral.
“The Coast Guard was underresourced, competing with submarines and $3 billion to $5 billion aircraft carriers and $1 billion destroyers. They came up on the short end against huge, well-heeled constituencies that know how to work Congress,” Democratic Rep. Gene Taylor of Mississippi, one of only three Coast Guard veterans in Congress, tells me.
For the Coast Guard to modernize its deepwater assets would require Congress to approve up to a billion dollars a year in targeted acquisitions, something the modern Coast Guard had never attempted—although basic sausage making for the defense establishment.
To spark the interest of Tier 1 defense contractors and make the Coast Guard’s requirements attractive to them, headquarters decided to bundle more than fifteen major projects into one “system of systems” package. They even created a manufacturer’s incentive for future overseas sales, as the Air Force does with jet fighters.
“A partnership with a Tier 1 supplier affords one the opportunity to leverage their network, influence, and political savvy in terms of funding obtainment,” Adm. Patrick Stillman, the Coast Guard’s first Deepwater executive officer, told Vikram in 2003.
Future commandant Thad Allen, then chief of staff, concurred. When asked why the integrated systems approach was used to increase the scope of the Deepwater program, he stated that “it was the price of admission to the game.”
“They have armies of lobbyists, they can help get dollars to get the job done. The White House and Congress listen to big industrial concerns” is how retired Coast Guard budget officer Capt. Jim McEntire later explained it to New York Times reporter Eric Lipton.
In 2002, the year their ICGS joint venture took charge of Deepwater, Lockheed and Northrop spent close to $10 million lobbying the federal government and another $4 million in campaign contributions to Washington politicians. Between 2000 and 2007, Lockheed alone spent $33 million on lobbying and $6 million on campaign donations.
Unfortunately, Coast Guard leadership, with what would prove to be a costly case of political naivety, looked at these big defense contractors, saw they were large and gray and had fins on their backs, and thought, “Cool, now we’re swimming with the dolphins.”
“We did have this idea that we would have these innovative ideas, that industry was so smart we’d slap our face in amazement,” Admiral Blore, head of Coast Guard Acquisitions, tells me. “In the end it was pretty traditional looking. ‘Let’s have a large, medium, and baby platform; let’s have a rotary wing and a propeller plane.’ It was really nothing we wouldn’t have thought of ourselves.”
By the Short Hairs
While Admiral Loy could be said to be the architect of Deepwater, it was his successor, Commandant Thomas Collins, who would award the contract to ICGS to upgrade and replace ninety-one ships and 261 aircraft and make offshore communications secure and interoperable, at least among Deepwater assets and the Navy if not with other parts of the Coast Guard (the contract hadn’t specified that). In 2005, Loy, now with the Cohen Group, joined the board of directors of Lockheed Martin. In the previous year, Lockheed-Martin had paid the Cohen Group half a million dollars in consulting fees. Loy was placed on the board’s ethics and corporate responsibility committee.
Loy believes the major problem with ICGS was that it was set up as an equal partnership between Lockheed and Northrop. “The governing structure was doomed to, I won’t say failure, but doomed to be a problem when it was split fifty-fifty. I mean, someone has to be in charge. I may have some protective feeling for Lockheed-Martin, but as a board member I’m pretty proud of what we’ve done.”
“I was unpleasantly surprised how much contention there was between these two competing business interests. There was a lot of immaturity evident,” notes an executive from a subcontracting company that developed classified software for Deepwater and asked that he and his company not be named.
The problems that grew to plague Deepwater involved more than sibling rivalry, however.
“I talked to the guy who built the RIB (rigid inflatable boat) for the 123 for $125,000 and turned it over to Lockheed, which billed the Coast Guard something in the neighborhood of $500,000, explaining that the difference was their lobbying fee to work Congress,” Representative Taylor tells me.
It’s stories like this that inspired the Justice Department to open an ongoing criminal investigation into the Deepwater 123 project.
Key Deepwater problems that I’m not the first to identify included these:
not enough oversight/authority by the Coast Guard
failure of the Coast Guard to seek out project expertise it lacked from the U.S. Navy early in the process
contract language that was vague and included incentives that rewarded the contractor in the present while delaying proof of prodct into the future when the whole “system of systems” was delivered
competition and blame-shifting between the two ICGS partners
attempts to push new technologies that benefited the contractor rather than the customer
attempts to go with naval warfare systems and “off-the-shelf” products that already existed but didn’t necessarily meet the Coast Guard’s needs
Coast Guard Aviation excluded from product decisions
Coast Guard surface operators excluded from product decisions
Coast Guard engineers and naval architects excluded from product design and decisions
lack of strong congressional oversight until the program began imploding in public sight
All that was still to come, however. Having outsourced its management responsibility to the new “systems integrator,” the Coast Guard set up a new Deepwater office in its boxy blue headquarters building at Buzzards Point by the confluence of the less than pure Potomac and Anacostia rivers. The office included roughly seventy-five Coasties and seventy-five contractors. Their first job was to sell the deal internally, which they did with lots of slick PR materials provided by ICGS.
“I had just come back from [duty with] the inspector general’s office in the Department of Commerce investigating waste, fraud, and abuse,” recalls Jon Sall, special agent in charge of the Coast Guard Investigative Service in Miami. “Suddenly I’m looking at these Deepwater full-color brochures with CD
s enclosed that went out to everyone in every part of the Coast Guard. They’re touting how ‘this is a new kind of contract and a partnership with industry,’ and I’m thinking, ‘These guys are gonna fleece the Coast Guard. These beltway bandits have us by the short hairs.’ ”
Chief Chris Smith, in charge of electronics and IT for Coast Guard forces deployed in Bahrain, had a similar feeling. “When I was an [enlisted] E-5, this lieutenant came to sell Deepwater to us. I remember asking, ‘Where’s the oversight?’ and he said I needed more of a corporate mentality. He may have been from Deepwater, but he didn’t have this.” He taps the cutterman’s patch on his chest. “I didn’t trust their loyalty. I wouldn’t want them on a [vessel] boarding team with me. Anyone above 06 [captain] level who didn’t speak out on this needs to be fired.”
Unfortunately, those who did speak out, including Rear Adm. Errol Brown, the Coast Guard’s chief engineer (and first black admiral), and Capt. Kevin Jarvis, who ran the Engineering Logistics Center at the Coast Guard shipyard in Baltimore, were ignored or told that they were out of line criticizing a “world-class shipbuilder” like Northrop.
Capt. Mathew Bliven is a ship driver, naval architect, and engineer who was on Coast Guard inspection teams during the construction of the 110-foot cutters in the 1980s and 175- and 225-foot buoy tenders in the 1990s. “My experience with acquisitions is you get what you inspect for,” he says. “We had fifty to sixty people in the shipyard [Marinette Marine, in Wisconsin] with the 175s and 225s holding the contractor accountable. With the Deepwater plan there was very little on-site oversight.”
I
first met Adm. Gary Blore in the spring of 2007, when he was executive officer in charge of the Deepwater office, which had moved around the corner from the service’s boxy blue headquarters to the Jemal Building, a boxy brown one that had previously housed the FBI’s D.C. field office. Even though he’s a big guy who scowls easily, I still thought the loyalty question was a legitimate one and so asked if, working as closely as they did with the contractors, Coast Guard officers in the Deepwater office had “gone native.”
“It started as esprit de corps, and I wouldn’t be as strong as you’re saying, ‘going native,’ but you work with industry and you get all this criticism from other parts of the organization [the Coast Guard] and you seek solace and share a sense of common cause [with industry],” he admits. Just then his aide interrupts to say that Admiral Allen is now on CNN talking about Deepwater.
We take a break to join half a dozen staffers seated in front of a flat-screen TV. It’s midafternoon. Before the commandant gets to speak, the cable news channel has an updated report on a pair of stray whales that have wandered into the Sacramento delta in California. Coast Guard crews from Station Rio Vista are helping herd them back toward the ocean.
CNN’s Kyra Phillips then interviews Admiral Allen for about ten minutes. She’s breezy and lovely. He’s stolid and spit-shined.
She talks about Deepwater and asks about millions of tax dollars wasted on the 123s and structural problems on the National Security Cutter. He assures her, “Our National Security Cutters will be the most capable cutters we’ve ever produced for the Coast Guard.”
She tells him she’s been on these cutters “going through Antarctica and cutting through the ice and getting to the South Pole. They’re—it’s an incredible ship.” She’s talking about a Coast Guard icebreaker. He’s talking about the next-generation Coast Guard multimission ship, the first of which is still under construction in Mississippi.
He explains the added costs of making them “more survivable in a chemical, nuclear, biological attack . . . Everything was directed at the new requirements and the new threat environment we found ourselves in after 9/11.” He continues to talk on about maritime domain awareness, the need for persistent surveillance in the marine environment, and how to detect “anomalous activity” and intercept it.
“We look forward to seeing solutions to those problems,” she responds convincingly. “Admiral Thad Allen, head of the U.S. Coast Guard, I appreciate your time today, sir.”
“Thank you, Kyra.”
There’s an immediate discussion in the Deepwater office of how they thought he did.
I’m thinking, if the Coast Guard helps save the whales they’re heroes. If the whales die they’re the guys who can’t even float a boat. Eventually the whales will head back out to sea through the Golden Gate, but on their own schedule, at night, so that the paparazzi are unable to catch their departure.
My next conversation with Admiral Blore is in 2008 after the Coast Guard has taken charge of Deepwater management and promoted him to head of their new Acquisitions Directorate. The latest catch phrase is “The Coast Guard is the system of systems.” Dozens of civilian contract management employees are being hired on, and, in the interim, Navy experts from the Naval Sea Systems Command and Naval Air Systems Command have been contracted (at government rate) to provide third-party review and expertise on cost estimates, design review, and other oversight issues.
“That relationship works great ’cause the Navy knows how to speak Coast Guard and to a large degree you substitute the Navy for ICGS,” Admiral Blore explains, which makes me wonder why this wasn’t thought of six years earlier.
Blore seems less combative now, more assured that things are finally on the right track. Still, he takes exception to the “foxes guarding the henhouse” metaphor.
“Industry was not just out for itself or it could have been eating chickens every night,” he claims, pointing to some outside contracts that were awarded by Lockheed and Northrop, including the potential billion-dollar Eagle Eye contract to Bell Helicopter.
Yet without adequate oversight or direction from the customer (the Coast Guard), Deepwater failed to deliver on many of its promises, including timely production of fully functioning vessels.
Deep Steam
This wasn’t the first time that the service got it wrong on a major acquisition program and untried technologies even while making a necessary transition from one historic era to another.
In the 1840s, recognizing that the age of sail was coming to a close, the Revenue Service built eight steam-powered vessels, some with bell-shaped hulls that used horizontal underwater paddlewheels for propulsion rather than sidewheels. It also purchased cutters that used the new largely untried Ericsson screw propeller. Early in their testing, major problems emerged with the cutters’ performance or lack thereof.
In 1845, Capt. William Howard, an early advocate turned critic of the horizontal Hunter wheel, was upbraided for trying to convert one of the ships into a more seaworthy sidewheel steamer.
Construction delays, noncompetitive bidding, and cost overruns continued through the Mexican-American War, during which the new cutters proved to be a greater danger to their crews than to the enemy.
By 1849, all eight steamships—including one originally estimated to cost less than $50,000 whose final price tag ran over $220,000—had been converted to lightships, sold off to private investors, or transferred to the U.S. Coast Survey. They had sailed under the Revenue Service for about three years. The entire program that was supposed to cost under $400,000 ended up costing the government over $2 million. After that, the Treasury Department and its Revenue Service were not allowed to build or purchase any new ships without congressional authorization.
Today legislation that echoes Congress’s displeasure more than 150 years ago requires that the Coast Guard maintain firm control over its Deepwater program, have open and competitive bidding for new assets, and periodically report progress on its acquisitions to congressional oversight committees in the House and Senate.
Oversight
Elijah Cummings is a big man with a creased melon of a head and a slow, deliberate manner that can make him seem like an immovable object to any self-styled irresistible force. As chair of the Coast Guard and Maritime Transportation Subcommittee of the House Committee on Transportation and Infrastructure, the six-term congressm
an oversees all aspects of the service.
In the middle of a series of innocuous questions to a witness during that marathon Deepwater hearing in 2007 he asked, “And who awarded $4 million out of a possible $4.6 million [contract] bonus when we got boats that aren’t even floating?”
When the inspector general for the Department of Homeland Security, who’d been frustrated in his own investigations of Deepwater, told Cummings the contracts were based on attitude and effort rather than outcome, the congressman cut to the chase. “Would you be for pulling the plug?” he asked.
“He’s got a very matter-of-fact manner about him, an everyman approach that can catch witnesses off guard,” says Steve Ellis, an ex–Coast Guard lieutenant jg who, as vice president of the nonprofit Taxpayers for Common Sense, has followed the Baltimore Democrat’s career. “He’s got that Columbo [TV detective] approach that can lull them into overconfidence. Whenever he starts a question with ‘Maybe I just don’t get this . . .’ you know he gets it exactly.”
I meet with the congressman at his office off a marble hallway in Rayburn 2235. All the House and Senate offices have paired U.S. and state flags on either side of their doors, so you have to read the numbers carefully to find your way.
Cummings’s small reception area includes an office manager’s desk, blue carpet, a two-person green couch, and framed photos on the wall including Cummings with Bill Clinton when he was president, Bill Cosby, House Speaker Nancy Pelosi, South Africa’s Nelson Mandela, and the University of Maryland’s Juan Dixon the year he led the Terrapins to their first NCAA basketball title. In his inner office Cummings has a meeting table in front of his desk below a large black-and-white lithograph of African American cowboys in the Old West [he represents West Baltimore].
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