Coast Guard's Deepwater program hits rough waters

WASHINGTON — U.S. Sen. Maria Cantwell launched her role as a Senate panel chairwoman last month with a hearing into a $24 billion U.S. Coast Guard contract that auditors say is over budget, behind schedule and producing shoddy results.

But she's had a hard time getting the issue out of dry dock.

Politics, along with a Coast Guard that has been slow to reveal the extent of the problems, has put Cantwell on the spot as her Senate subcommittee reviews the troubled Deepwater program to replace or rebuild the Coast Guard's aging fleet of cutters, patrol boats and aircraft.

Many of those vessels are based in Washington waters.

The goal is to better equip the Coast Guard for its homeland-security mission, expanded since the Sept. 11 terrorist attacks.

The 25-year program, launched in 2002, has been the source of four highly critical government audits citing buckling hulls in the first ships delivered.

Its planned fast-response cutter is so heavy that engineering supervisors have nicknamed it "The Brick." Development of the boat is now on hold. The first 123-foot cutters completed under the program have potential structural problems that restrict their use.

"Deepwater is in deep trouble," Cantwell said. "It's a failed experiment and cost us hundreds of millions of dollars."

The audits, including a scathing report by Homeland Security's inspector general, detail an inattentive Coast Guard command, unheeded warnings by agency supervisors and design flaws with some ships.

The contract with Northrop Grumman and Lockheed Martin involves 90 ships, nearly 200 helicopters and planes and dozens of small boats. It gives unusual power to the private companies to set standards and judge their own results.

Northrop and Lockheed are two of the nation's largest defense contractors, and there are limits on the amount of punishment that can be imposed if they are at fault.

Some Coast Guard vessels are 60 years old, and the agency needs new cutters soon. Spending too much time investigating what went wrong could hold up the new ships.

Deepwater program

Lockheed engineer's video about troubles with Deepwater: www.youtube.com/watch?v=qd3VV8Za04g

Coast Guard's Deepwater Web site: www.uscg.mil/deepwater

Audit report on 123-foot cutter: www.dhs.gov/xoig/assets/mgmtrpts/OIG_07-27_Feb07.pdf

Audit report on 425-foot cutter: www.dhs.gov/xoig/assets/mgmtrpts/OIG_07-23_Jan07.pdf

The two 378-foot, high-endurance cutters that operate in Washington are about 35 years old, a Coast Guard spokesman said; their life expectancy is 40 years.

Northrop and Lockheed deny many of the statements in the government audits and say that fixes are being made where necessary, though it remains uncertain who will pay the extra cost.

"Contrary to recent reporting ... member companies are meeting the terms contracted by the Coast Guard," said Northrop spokeswoman Margaret Mitchell-Jones.

Adm. Thad W. Allen, the Coast Guard commandant, has acknowledged problems with the program and said the agency is making changes, including increased oversight.

Some of the most damaging information about Deepwater didn't surface in Congress until mid-December, a month before Cantwell became chairwoman of the Commerce subcommittee that oversees the Coast Guard.

Even then, news of the extent of the problems first reached Cantwell and the subcommittee's ranking Republican, Sen. Olympia Snowe of Maine, via a reporter who had obtained a copy of an internal 2004 memo that warned of potential structural failure of Deepwater's flagship cutter.

The Coast Guard was forced to do damage control on Capitol Hill. Like other Northwest politicians, Cantwell has been a patron of the Coast Guard, because of its role in protecting Washington waters.

Big and complex

The Deepwater debacle presents a major challenge for Cantwell.

The contract — the largest in the Coast Guard's history — is big and complex. Northrop Grumman and Lockheed Martin have powerful allies in Congress.

And with a slim Democratic majority in the Senate, Cantwell had trouble getting bipartisan support to even schedule an oversight hearing last month, let alone dig into alleged mismanagement.

The Deepwater contract's main promoters were Republicans, including Sen. Trent Lott of Mississippi, former Senate majority leader and a member of Cantwell's committee.

Some of the ships' hulls were going to be built in Mississippi.

"Cantwell needs to take the reins and take charge," said Steve Ellis, head of Taxpayers for Common Sense, a watchdog group.

"Taking a timid course on Deepwater won't help the Coast Guard in the long term," said Ellis, who is a Coast Guard Academy graduate and was an officer for six years. "They need these cutters, and they need them to work."

Cantwell was beaten to the punch by Rep. Henry Waxman, D-Calif., who held a spirited hearing about Deepwater in his House Government Reform Committee weeks before Cantwell's hearing.

Rep. Rick Larsen, D-Lake Stevens, who sits on the House Coast Guard subcommittee, also has called for a full review of the cost overruns.

The contract dispute could have implications for Boeing.

Waxman wants to review two similarly structured multibillion-dollar projects — the Army's Future Combat Systems, and Homeland Security's SBI-Net program to protect the borders — both managed by Boeing.

During last month's hearing, Cantwell called the Deepwater controversy a "fleecing of the taxpayer." But it was Snowe who seemed more aggressive when, sounding frustrated, she asked Northrop Grumman Ship Systems President Philip Teel: "Do you agree that there are any problems" with the contract?

Cantwell has been worried about the Deepwater program for some time and has written several letters to government agencies about rumored problems since 2004.

She said she was stunned the Coast Guard and Homeland Security Department, which oversees that agency, had been sitting on a memo questioning the safety of the project's flagship, the first National Security Cutter, for more than two years.

"Importantly, several of these problems compromise the safety and viability of the hull, possibly resulting in structural failure," the 2004 memo said.

The 425-foot cutter, which cost $564 million to build, is designed to handle larger crews and longer missions.

"Preposterous"

The memo and the inspector-general reports might not have surfaced without the help of a whistle-blower who turned to YouTube, the video-sharing Web site. In August, Michael DeKort, a Lockheed engineer, posted a video outlining troubles with Deepwater that began, "What I am going to tell you is going to seem preposterous and unbelievable."

Waxman and others have proposed rebidding the Deepwater contract and starting over, but that may not be feasible.

"We'll have to get smart attorneys looking at that, look into changing the terms," Cantwell said.

The program to extend the hulls of 49 110-foot cutters to 123 feet has been suspended while engineers review structural concerns.

The fast-response cutter, intended to interdict speedy drug dealers and illegal immigrants, also is on hold. Its weight with additional communications gear is now 52 percent more than expected, a supervising agency engineer said.

"Even a brick, if you put enough horsepower on it, you can make it plane across the water at 35 knots," Capt. Kevin Jarvis said at last month's hearing. But, he added, he didn't think that was what the Coast Guard really wanted.

Northrop officials discussed their concerns about rising congressional anger over the contract with one of their strongest Democratic sympathizers, Commerce Committee Chairman Daniel Inouye, D-Hawaii. But Inouye said he won't stop Cantwell if she wants further investigation.

A new hearing on the Coast Guard budget, which Cantwell has called for Thursday, will likely revisit the Deepwater controversy.

Snowe says she will work with Cantwell to get the contract on track.

Getting more bipartisan support will be a challenge, Cantwell said, noting the GOP support for the original contract. But, she added, "The information is shocking."

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com