Coast Guard boots lead integrator

The agency's decision to take back control of troubled project could be a bellwether

Coast Guard takes helm of Deepwater

The Coast Guard’s decision last week to regain control of the $24 billion Deepwater modernization program from the contractor team of Lockheed Martin and Northrop Grumman surprised many observers. The decision seemed to express a growing frustration of federal agencies and lawmakers with lead systems integrators who manage — or, in some cases, mismanage — large systems projects for the government.

“We’ve relied too much on contractors to do the work of government as a result of tightening budgets, a dearth of contracting expertise in the federal government, and a loss of focus on critical governmental roles and responsibilities in the management and oversight of acquisition programs,” said Adm. Thad Allen, Coast Guard commandant. “Both industry and government have failed to accurately predict and control costs. We must improve.”

The Coast Guard’s decision to take over as lead systems integrator came as Congress held its sixth hearing this year on the troubled Deepwater project. Congress has a seventh hearing scheduled for the week of April 23 to examine long-standing problems with new ships to be delivered.

Meanwhile, the Justice Department opened an investigation about possible fraud by Lockheed Martin and Northrop Grumman because of well-known flaws in the new ships’ design. The department notified the two companies in December 2006 that it would conduct an investigation, and it asked the companies not to destroy any information related to the Deepwater program, said Margaret Mitchell-Jones, communications director of the Integrated Coast Guard Systems, a Lockheed Martin and Northrop Grumman joint venture. “ICGS is cooperating with the investigation,” she said.

Coast Guard spokesman Cmdr. Jeff Carter referred all questions about a possible investigation to Justice.

The maritime agency is not alone in moving away from the lead systems integrator concept. The Defense Department said earlier this year it would rely less on large contractors to develop systems of systems that require large integration efforts.

Lawmakers are also pushing passage of at least five bills that address the role of lead systems integrators, including four that are aimed directly at Deepwater.

The Accountability in Government Contracting Act, introduced by Sen.
Susan Collins (R-Maine), would rein in lead systems integrators. “The Deepwater program is a good example of the problems that can arise when government relies too heavily on” lead systems integrators, she said.

Her legislation would require the Office of Federal Procurement Policy to examine contracts for which the government has used contractors as lead systems integrators, develop a governmentwide definition of lead systems integrators and make recommendations to Congress for regulating them.

Recent studies from the Government Accountability Office and Congressional Research Service also address the role of lead systems integrators. Valerie Bailey Grasso, an analyst who wrote the CRS report, said most agencies report they use lead systems integrators because they lack the expertise to manage large-scale, complex programs. “With regard to the Coast Guard’s decision, it is not clear to me what has changed,” she said.

Stan Soloway, president of the Professional Services Council, said no one has figured out the best way to solve the lead systems integrator problem. Soloway said some projects, such as the Homeland Security Department’s Secure Border Initiative, hired an independent third-party contractor to oversee Boeing, the lead systems integrator.

“Clearly the government is moving away” from the lead systems integrator, Soloway said. “The question is how will they replace it.”

1105 Government Information Group staff writer Alice Lipowicz contributed to this story.

Coast Guard announces next stepsThe Coast Guard will assume the lead role for all Deepwater assets and other major acquisitions. Commandant Adm. Thad Allen said the maritime agency would:
  • Permanently decommission eight 123-foot patrol boats converted under the Deepwater program because of the boats’ extensive structural problems.
  • Take charge of logistics functions for the Deepwater program.
  • Work collaboratively with Lockheed Martin and Northrop Grumman to resolve issues with national security cutters.
  • Meet quarterly with contractors, starting in May, until all Deepwater program issues are fully adjudicated and resolved.
— Alice Lipowicz

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