Wednesday, March 25, 2009

Troubled Waters for Coast Guard Deepwater Program

New testimony from John P. Hutton, Director of Acquisition and Sourcing Management, (GAO-09-462T), before the House Subcommittee on Coast Guard and Maritime Transportation reveals the continued efforts of the Coast Guard to effectively manage their troubled Deepwater Program. Deepwater is the largest acquisition program ever attempted at the Coast Guard, involving the replacement or modernization of 15 major classes of Coast Guard assets, accounting for almost 60 percent of the Coast Guard’s fiscal year 2009 appropriation for acquisition, construction and improvements.

Like many other major acquisition programs, the GAO has been kept busy over the last three years of reporting serious performance and management problems such as cost increases, schedule slips, and assets designed and delivered with significant defects. In other words, the same issues for many other major defense acquisition programs.

The Coast Guard contracted with Integrated Coast Guard Systems (ICGS), a partnership of Northrop Grumman and Lockheed Martin as a systems integrator in June 2002 to carry out the Deepwater acquisition. In April 2007, Coast Guard Commandant Admiral Thad W. Allen acknowledged that the Coast Guard had relied too heavily on contractors to do the work of government and announced that the Coast Guard was taking over the lead role in systems integration from ICGS.

The new report by GAO outlines the results of this decision, and details the resultant issues and problems surrounding the program.

According to Mr. Hutton, one of the key decisions was to consolidate acquisitions under one Directorate, including Deepwater, as outlined in the Coast Guard’s Blueprint for Acquisition Reform, which sets forth a number of objectives and specific tasks with the intent of improving acquisition processes and results. Previously, Deepwater was managed independently of other Coast Guard acquisitions, with the resultant insulated structure and fractured decision making for the Coast Guard’s most visible and comprehensive acquisition. The Coast Guard has also vested its government project managers with management and oversight responsibilities formerly held by ICGS.

The Coast Guard has also begun to follow a disciplined project management process using the framework set forth in its Major Systems Acquisition Manual and Blueprint for Acquisition Reform. This process requires documentation and approval of program activities at key points in a program’s life cycle.

…The process begins with identification of deficiencies in Coast Guard capabilities and then proceeds through a series of structured phases and decision points to identify requirements for performance, develop and select candidate systems that meet those requirements, demonstrate the feasibility of selected systems, and produce a functional capability…

In other words, follow an events driven approach to the acquisition, using key milestones for decision points. What were they doing before? Apparently ICGS was following a system-of-systems approach based on a schedule-driven methodology. This was one of the issues identified in the eventual takeover, as the ICGS approach was not very practical, or feasible really, for an asset-based acquisition program of that magnitude.

Mr. Hutton further stated that leadership at DHS is now formally involved in reviewing and approving key acquisition decisions for Deepwater. GAO reported in June 2008 that DHS approval of Deepwater acquisition decisions was not required, as most decisions were deferred to the Coast Guard in 2003. I am not sure how that subrogation of responsibility lasted as long as it did. Billions of dollars on investment were made before DHS got involved in the decision making process. How could their budgets have been realistic?

Not surprisingly, Mr. Hutton stated that DHS had not effectively implemented or adhered to their own investment review process, and has not provided the oversight needed to identify and address cost, schedule, and performance problems in its major investments.

The most important and problematic area of concern was the testimony regarding the decisions, or lack thereof, that are coming back to haunt the Coast Guard. The example he sates was the acceptance of the design, specifications, and ultimate blessing to proceed with the long-range interceptor, without so much as doing any business case, capability analysis, or needs assessment. ICGS basically determined this need for the Coast Guard, with little or no analysis, and the Coast Guard approved it. Also provided was the example of the Fast Response Cutter-A (FRC-A), which a third-party validated the Coast Guards fears that the design was faulty, and would not even come close to its expected service life (30 years). The FRC-A has been since scrapped.

Further detailed was the lack fundamental issue of all government agencies in regards to acquiring and managing acquisitions, and that is the weakness in numbers and skills of its acquisition workforce.

… The Coast Guard’s 2008 acquisition human capital strategic plan sets forth a number of workforce challenges that pose the greatest threats to acquisition success, including a shortage of civilian acquisition staff , its military personnel rotation policy, and the lack of an acquisition career path for its military personnel…

One item in the testimony of particular interest was the use of contracting personnel by Mr. Hutton:

…In the meantime, the lack of a sufficient government acquisition workforce means that the Coast Guard is relying on contractors to supplement government staff, often in key positions such as cost estimators, contract specialists, and program management support. While support contractors can provide a variety of essential services, when they are performing certain activities that closely support inherently governmental functions their use must be carefully overseen to ensure that they do not perform inherently governmental roles. Conflicts of interest, improper use of personal services contracts, and increased costs are also potential concerns of reliance on contractors…

Government oversight, as I have mentioned in this blog, is one of the principle areas of attention that the government needs to address, in conjunction with an overall, holistic approach to the acquisition workforce crisis. Although the current economic climate has mitigated some of the pending retirements by senior acquisition personnel, it has not been resolved. Contractors are providing a vital role in executing the acquisition mission across government, and need to be included in human capital strategies as part of a strategic, mission-oriented approach to human capital management. That has to be coupled with effective training and hiring to ensure the correct mix of skills and personnel are brought to bear on providing oversight to the workforce.

Although contractors often bear the brunt of ire in the oversight department, lack of enforcement of acquisition rules and poor leadership also cause significant delays and problems in regards to government acquisition personnel and the outcomes of procurements. We need to communicate better with our government counterparts, and help demonstrate industry’s continued support and need in supporting the acquisition mission. The bottom line is that many of the resources currently needed to keep acquisitions going exist outside of government, and that fact needs to be understood by government leaders to find better ways to work with industry.

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