Cutters, Outsourcing, and Idiocy

Two excellent articles appeared this weekend in both the Washington Post and the New York Times (a free subscription may be required for the Times article). Both articles detail the enormous problems that the United States Coast Guard (USCG) is having in making some long-needed upgrades to their fleet. Then today -- for those of you who have either home delivery of the New York Times or a subscription to their TimesSelect web service -- Times columnist Paul Krugman went and wrote an Op-Ed piece that discusses the relationship between these shipbuilding efforts, the outsourcing of governmental functions, and one simply staggering waste of our tax dollars.

Prior to 9/11 and the creation of the Department of Homeland Security (DHS), the Coast Guard was (in peacetime, anyway) part of the Treasury Department. As you might imagine, the day-to-day missions of the Coast Guard -- search, rescue, coastal patrol, intediction, et cetera -- were never a really good fit with the core missions of the Treasury Department as a whole.

The 9/11 attacks shifted the focus onto the Coast Guard's security functions, and also resulted in them moving out of Treasury and into the Department of Homeland Security. Suddenly, there was money for things like shipbuilding, in amounts that could only have been dreamed about in the pre-9/11 days. And to be sure, the USCG was (and still is) in desperate need of new cutters and upgrades to their existing ones. Not only do they have an increased national security workload, but their existing fleet is getting rather old and tired.

The only catch here is that the Coast Guard now needs to work within the rules of that great corporate feeding trough called the Department of Homeland Security. The result is something called "Deepwater", a 25-year modernization program that -- when taken as a whole -- constitutes the Coast Guard's largest contract ever. The name "Deepwater" could not have been better chosen, because it has certainly landed the USCG and those of us who fund it in both very hot water and very deep shit.

Deepwater is one massive shipbuilding program. The plan calls for 91 new or massively refurbished blue-water ships and 124 small boats, which may be more than even the Navy is likely to procure over the same period of time. All of this is taking place within the Department of Homeland Security, which has no experience building ocean-going vessels outside of the Coast Guard itself. And the Coast Guard is -- or so it was believed -- too small of an organization to manage such a massive project all on its own.

The solution was one of the dumbest ideas I have ever seen. The Washington Post describes the situation this way:

The primary contractors, Bethesda-based Lockheed and Northrop Grumman of Los Angeles, have been given unusual authority to run the program through Integrated Coast Guard Systems, according to several government reports. The companies make many of the important decisions, including which ships and aircraft are needed and which subcontractors will design and build them, according to GAO and inspector general reports.

In August, the Homeland Security inspector general reported that... the Coast Guard had "limited influence" over some contractor decisions.

Personally, I find the Post's description of the situation overly generous. The New York Times was probably a bit closer to the mark in their article:

... instead of managing the project itself, the Coast Guard hired Lockheed Martin and Northrop Grumman, two of the nation’s largest military contractors, to plan, supervise and deliver the new vessels and helicopters.

Many retired Coast Guard officials, former company executives and government auditors fault that privatization model, saying it allowed the contractors at times to put their interests ahead of the Guard’s.

“This is the fleecing of America,” said Anthony D’Armiento, a systems engineer who has worked for Northrop and the Coast Guard on the project. “It is the worst contract arrangement I’ve seen in all my 20 plus years in naval engineering.”

In basic, everyday terms, the federal government outsourced every last thing about this project -- including the key "big picture" decisions about what the government would and would not pay for -- to the very people who were profiting from the contract in the first place. The foxes were put in charge of the hen house, and the results were hardly surprising, as descibed by the Times; "... the contractors failed to fulfill their obligation to make sure the government got the best price, frequently steering work to their subsidiaries or business partners instead of competitors, according to government auditors and people affiliated with the program."

The list of incredible screw-ups from Deepwater just go on and on and on. I couldn't begin to list them all. Here's just a small sample:

Part of the program called for taking all 49 of the USCG's 110-foot patrol boats, cutting them open, and sliding in a new 13-foot section to increase their overall length to 123 feet. After putting 8 boats through this process (at a cost of $11 million apiece), the Coast Guard discovered that the ships could not handle even moderately-heavy seas. After one of these boats developed a six-inch crack in its deck and a buckled hull, the Coast Guard put all of them on "restrictive duty" that prohibited them from operating in seas higher than eight feet. Then, just last month, they found new structural problems, resulting in all eight boats being pulled out of service completely.

Another aspect of the program is the construction on an entirely new class of 147-foot cutter called the "Fast Response Cutter". The Times describes what happened here far better than I ever could:

The hull was to be built from glass-reinforced plastic, known as a composite, something never tried on a large American military ship.

While acknowledging that it might cost much more to build the 58 planned cutters with composite hulls instead of steel, Northrop and Lockheed claimed the boats would last longer and require less maintenance, saving money over the long run.

Coast Guard engineers... were doubtful that Northrop’s design would work, citing concerns about weight, hull shape and fuel consumption. The Coast Guard also found inconsistencies in the cost data Northrop used to justify the new hull.

One former Northrop executive said the company was pushing the plan not because it was in the best interest of the Coast Guard, but because Northrop had just spent $64 million to turn its shipyard in Gulfport, Miss., into the country’s first large-scale composite hull manufacturing plant for military ships.

“It was a pure business decision,” said the former executive, who disagreed with the plan and would speak only anonymously for fear of retribution. “And it was the wrong one.”

That became clear when a scale model of the Fast Response Cutter was placed in a tank of water — and flunked the test. After three years and $38 million, Northrop Grumman’s plan was suspended.

Another new class of ship to come out of Deepwater was the 425-foot National Security Cutter. One of those was finally delivered last month at a cost $564 million, despite years of warnings from naval engineers that it too had structural flaws. And now it too is stuck dockside while the Coast Guard tries to figure out the modifications needed to make it seaworthy. Meanwhile, a second cutter of the same class is being built with the same original plans, since it is "too late" in the process to make any changes.

These are the big screw-ups, but there are others. The radios placed in small, open boats were not waterproof, making them useless in heavy seas. An order of eight small, inflatable boats (according to the Times article) cost an extra half-million dollars because the purchase was passed through four layers of contractors. My favorite disaster, however, is an electronics suite that the Coast Guard says it never wanted or ordered, but which is nevertheless being installed on every National Security Cutter. The Coast Guard's plan, after each new cutter is delivered, is to sail it to another location and have the unnecessary electronics ripped out there.

There are a huge number of reasons why things have spun this far out of control, including the raw lobbying power of the main defense contractors and all the Fairy God Congressmembers whose districts are getting a piece of the action. But the central theme comes down to this absurd notion of taking jobs that have traditionally been performed by members of the armed services and handing these functions over to for-profit corporations.

On the face of things, the Deepwater project seems similar to our idiotic use of civilian truck drivers to deliver ammunition in a war zone. Or to hiring civilian food service workers to cook meals for our troops in Iraq. But, as dumb as those decisions are, Deepwater is far worse. In this case, we've actually hired for-profit companies to make the very decisions which determine what we are going to purchase from them and how much we are going to pay.

Stunning. Simply stunning. And I really don't have any good ideas how to put a stop to it. The Paul Krugman Op-Ed piece is similary devoid of any good ideas, apart from expressing hope that the new Democratic congress will "let the subpoenas fly" in investigating this and other disasters of governmental outsourcing. But it's really far too late for that. By the time that first subpoena takes wing, we will already have spent billions of dollars on ships that are incapable of going to sea, and have no other option than to spend millions more to give them that capability.

The Coast Guard is, to my mind, the most noble of our armed services. Even in peacetime, they put themselves at grave risk on a daily basis. They alone volunteer go out into weather that no knowledgeable sailor would ever willingly place themselves. We owe it to them to provide them with the ships needed to do handle such conditions, and we are failing them miserably.