[Congressional Record Volume 153, Number 48 (Tuesday, March 20, 2007)]
[Senate]
[Pages S3357-S3360]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  By Ms. CANTWELL (for herself and Ms. Snowe):
  S. 924. A bill to strengthen the United States Coast Guard's 
Integrated Deepwater Program; to the Committee on Commerce, Science, 
and Transportation.
  Ms. CANTWELL. Mr. President, I think we all agree that the United 
States Coast Guard plays a critical role in keeping our oceans, coasts, 
and waterways safe, secure, and free from environmental harm. Following 
the events of September 11 and, more recently, Hurricane Katrina the 
Coast Guard has served as a source of strength for this Nation. And, in 
the face of increasing marine traffic, security threats at our Nation's 
ports, and climate change increasing the odds of another Katrina, the 
responsibilities of the Coast Guard continue to increase.
  The Coast Guard is struggling right now to replace their rapidly 
aging fleet of ships, aircraft, and facilities. At a cost of $24 
billion, the Deepwater program is the largest and most complex 
acquisition program in the history of the Coast Guard. We have a 
responsibility to ensure there is transparency and oversight so this 
program is as efficient and effective as possible.
  The Deepwater program utilizes a private sector lead systems 
integrator, LSI, know as Integrated Coast Guard Systems, ICGS, to 
oversee acquisition of a ``system of systems.'' When the Deepwater 
contract was originally awarded in 2002, the Coast Guard did not have 
the personnel within their acquisition department to manage such a 
large contract. We were told that outsourcing that role to industry 
would save the Coast Guard time and money over the long run.
  The approach, which may have seemed innovative at the time, has not 
produced the promised results. Instead of cost and time savings, we've 
seen less competition, inadequate technical oversight and a lack of 
transparency. Over the last year, these problems have caused major 
blunders in the Deepwater program.
  The Department of Homeland Security Inspector General, IG, has 
released three recent reports detailing some of the problems with 
Deepwater.
  In an August 11, 2006 report titled Major Improvements Needed in the 
U.S. Coast Guard's Implementation of Deepwater Information Technology 
System, the IG described problems with Deepwater's C41SR electronics 
equipment, which is to be the integrating technology linking 
Deepwater's aircraft and ships.
  On January 29, 2007, the IG released a scathing report on Deepwater's 
flagship National Security Cutter, NSC, documenting crucial design 
flaws and cost overruns created by a faulty contract structure and lack 
of Coast Guard oversight.
  Finally, on February 9, 2007, the IG released another report, this 
one detailing serious issues with Deepwater's 123-foot cutter 
conversion project.
  These reports, along with others by the Government Accountability 
Office about problems with the stalled Fast Response Cutter, FRC, 
program and the Deepwater contract structure, have prompted a 
resounding cry for Deepwater reform, transparency, and oversight.
  On February 14, 2007, I chaired a hearing in the Commerce Committee's 
Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard to 
better understand these issues and seek solutions. From that hearing it 
was clear that the Coast Guard was working hard to make internal 
reforms. It was also clear that we needed to do more to protect the 
American taxpayer.
  Today, I'm pleased to introduce, along with Senator Snowe, the 
Integrated Deepwater Program Reform Act, a comprehensive bill which 
makes fundamental changes to the Coast Guard's Deepwater acquisition 
program.
  My bill requires the Coast Guard to move away from the industry-led 
Lead Systems Integrator and have full and open competition for future 
Deepwater assets.
  It requires a completely new ``analysis of alternatives'' of all 
future Deepwater assets to ensure that the Coast Guard is getting the 
assets best-suited for their needs.
  It requires the Commandant of the Coast Guard to certify to Congress 
that specific assets to be procured are mature and cost-effective 
technologies, a requirement already applied to Department of Defense 
contracts.
  And, it gives the Coast Guard the tools they need to manage this 
contract and future contracts effectively, including requiring the 
Coast Guard to make internal management changes to ensure open 
competition, increase technical oversight and improve reporting to 
Congress.
  I'm pleased to say that I have worked closely with Senator Snowe and 
the Coast Guard in crafting this bill and I'm confident that this will 
fix many of the problems that have plagued the Deepwater program.
  This legislation takes a big step towards getting the Coast Guard the 
assets they need to meet the pressing needs of our Nation and ensuring 
responsible management of taxpayer dollars. I look forward to working 
with my colleagues to enact the changes we propose today so we can get 
this program back on track.
  I ask unanimous consent that a summary of the bill and the text of 
the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           Summary of Integrated Deepwater Program Reform Act


                    Use of a Lead Systems Integrator

       Would direct the Coast Guard to stop using a Lead Systems 
     Integrator (LSI) on future Deepwater acquisitions.
       Would allow the Coast Guard to use the LSI to complete any 
     specific work for which a contract or order had already been 
     issued.
       Would allow the Coast Guard to use the LSI to complete the 
     C130-J modifications, the C4ISR program, and also to complete 
     procurements of the National Security Cutters (NSCs) and 
     Maritime Patrol Aircraft (MPA) already under contract for 
     construction. However, the LSI must have no financial 
     interest in subcontracts or have competed the subcontracts.
       Would allow the Coast Guard to use the LSI to complete all 
     of the remaining NSCs and MPAs only after an analysis of 
     alternatives has been conducted and, if the Coast Guard 
     concludes that these procurements and use of an LSI are in 
     the best interests of the federal government, that 
     justifications for not competing assets under the Federal 
     Acquisition Regulations are met, and that the LSI has no 
     financial interest in subcontracts or has competed the 
     subcontracts.
       All other Deepwater assets would be done as a traditional 
     procurement.


                              Competition

       Would require that the Coast Guard have a full and open 
     competition of all Deepwater assets that have not yet gone 
     under contract, other than those that the LSI can complete.
       Would require that the LSI have no financial interest in 
     subcontracts for assets managed by the LSI, or that 
     subcontracts be fully competed. A similar provision was 
     included in the 2006 Defense Authorization Act.


                        Analysis of Alternatives

       Would require an analysis of alternatives of all of the 
     proposed Deepwater assets not currently under contract and 
     whether other alternatives are preferable. Such review would 
     be conducted by an independent third party entity with 
     expertise in major acquisitions, and no financial conflict of 
     interest.
       Would require the Coast Guard to provide a plan to Congress 
     for how to move forward with Deepwater procurements based on 
     this review.
       Would require a similar review for any major changes to the 
     agreed plan in the future.


                             Certification

       Would require the Commandant to certify to Congress, prior 
     to issuing new contracts

[[Page S3358]]

     for specific proposed acquisitions, that the proposed asset 
     meets objective criteria for feasibility, maturity of design, 
     and costs. A similar requirement applies to Department of 
     Defense contracts.


                            Contract changes

       Would require improvements to any contract entered into by 
     the Coast Guard for Deepwater assets, including changes to 
     award term and award fee criteria as recommended by the 
     Government Accountability Office (GAO).
       Would end the practice of allowing the private contractor 
     to self-certify the design and performance of assets being 
     delivered. This will ensure adherence to accepted industry-
     wide standards and procedures.


                    Internal Coast Guard Management

       Would require improvements to Coast Guard's management of 
     Deepwater, including implementation of the Coast Guard's 
     Blueprint for Acquisition Reform as well as recommendations 
     for improved management included in a February 5, 2007 
     Defense Acquisition University (DAU) report and by GAO.
       Would ensure better technical oversight by the Coast 
     Guard's engineering staff.
       Would allow the Coast Guard to shift personnel to support 
     acquisitions projects.


                         Reporting to Congress

       Would require Coast Guard to provide significant additional 
     information to Congress regarding the status of the Deepwater 
     program, similar to what the Department of Defense provides.


                               GAO Review

       Would require GAO to monitor closely the Coast Guard's 
     implementation of improvements to its management of the 
     Deepwater program.
                                  ____


                                 S. 924

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Integrated 
     Deepwater Program Reform Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Procurement structure.
Sec. 3. Analysis of alternatives.
Sec. 4. Certification.
Sec. 5. Contract requirements.
Sec. 6. Improvements in Coast Guard management.
Sec. 7. Procurement and report requirements.
Sec. 8. GAO review and recommendations.
Sec. 9. Definitions.

     SEC. 2. PROCUREMENT STRUCTURE.

       (a) In General.--
       (1) Use of lead systems integrator.--Except as provided in 
     subsection (b), the United States Coast Guard may not use a 
     private sector entity as a lead systems integrator for 
     procurements under, or in support of, the Integrated 
     Deepwater Program after the date of enactment of this Act.
       (2) Full and open competition.--The United States Coast 
     Guard shall utilize full and open competition for any other 
     procurement for which an outside contractor is used under, or 
     in support of, the Integrated Deepwater Program after the 
     date of enactment of this Act.
       (b) Exceptions.--
       (1) Completion of procurement by lead systems integrator.--
     Notwithstanding subsection (a), the Coast Guard may use a 
     private sector entity as a lead systems integrator--
       (A) to complete, without modification, any delivery order 
     or task order that was issued to the lead systems integrator 
     on or before the date of enactment of this Act;
       (B) for procurements of--
       (i) the HC-130J and the C41SR, and
       (ii) National Security Cutters or Maritime Patrol Aircraft 
     under contract or order for construction as of the date of 
     enactment of this Act,
     if the requirements of subsection (c) are met with respect to 
     such procurements; and
       (C) for the procurement of additional National Security 
     Cutters or Maritime Patrol Aircraft if the Commandant 
     determines, after conducting the analysis of alternatives 
     required by section 3, that--
       (i) the justifications of FAR 6.3 are met;
       (ii) the procurement and the use of a private sector entity 
     as a lead systems integrator for the procurement is in the 
     best interest of the Federal government; and
       (iii) the requirements of subsection (c) are met with 
     respect to such procurement.
       (2) Report on decision-making process.--If the Coast Guard 
     determines under paragraph (1) that it will use a private 
     sector lead systems integrator for a procurement, the 
     Commandant shall transmit a report to the Senate Committee on 
     Commerce, Science, and Transportation and the House of 
     Representatives Committee on Transportation and 
     Infrastructure notifying the Committees of its determination 
     and explaining the rationale for the determination.
       (c) Limitation on Lead Systems Integrators.--Neither an 
     entity performing lead systems integrator functions for a 
     procurement under, or in support of, the Integrated Deepwater 
     Program, nor a Tier 1 subcontractor, for any procurement 
     described in subparagraph (B) or (C) of subsection (b)(1) may 
     have a financial interest below the tier 1 subcontractor 
     level unless--
       (1) the entity was selected by the Coast Guard through full 
     and open competition for such procurement;
       (2) the procurement was awarded by the lead systems 
     integrator or a subcontractor through full and open 
     competition; or
       (3) the procurement was awarded by a subcontractor through 
     a process over which the lead systems integrator or a Tier 1 
     subcontractor exercised no control.

     SEC. 3. ANALYSIS OF ALTERNATIVES.

       (a) In General.--Except with respect to a procurement 
     described in subparagraph (A) or (B) of section 2(b)(1) of 
     this Act, no procurement may be awarded under the Integrated 
     Deepwater Program until an analysis of alternatives has been 
     conducted under this section.
       (b) Independent Analysis.--Within 30 days after the date of 
     enactment of this Act, the Commandant shall execute a 
     contract for an analysis of alternatives with a Federally 
     Funded Research and Development Center, an appropriate entity 
     of the Department of Defense, or a similar independent third 
     party entity that has appropriate acquisition expertise for 
     independent analysis of all of the proposed procurements 
     under, or in support of, the Integrated Deepwater Program, 
     including procurements described in section 2(b)(1)(B), and 
     for any future major changes of such procurements. The 
     Commandant may not contract under this subsection for such an 
     analysis with any entity that has a substantial financial 
     interest in any part of the Integrated Deepwater Program as 
     of the date of enactment of this Act or in any alternative 
     being considered.
       (c) Analysis.--The analysis of alternatives provided 
     pursuant to the contract under subsection (b) shall include--
       (1) a discussion of capability, interoperability, and other 
     advantages and disadvantages of the proposed procurements;
       (2) an examination of feasible alternatives;
       (3) a discussion of key assumptions and variables, and 
     sensitivity to changes in such assumptions and variables;
       (4) an assessment of technology risk and maturity; and
       (5) a calculation of costs, including life-cycle costs.
       (d) Report to Congress.--As soon as possible after an 
     analysis of alternatives has been completed, the Commandant 
     shall develop a plan for the procurements addressed in the 
     analysis and shall transmit a report describing the plan to 
     the Senate Committee on Commerce, Science, and Transportation 
     and the House of Representatives Committee on Transportation 
     and Infrastructure.

     SEC. 4. CERTIFICATION.

       (a) In General.--A contract, delivery order, or task order 
     for procurement under, or in support of, the Coast Guard's 
     Integrated Deepwater Program may not be executed by the Coast 
     Guard until the Commandant certifies that--
       (1) appropriate market research has been conducted prior to 
     technology development to reduce duplication of existing 
     technology and products;
       (2) the technology has been demonstrated in a relevant 
     environment;
       (3) the technology demonstrates a high likelihood of 
     accomplishing its intended mission;
       (4) the technology is affordable when considering the per 
     unit cost and the total procurement cost in the context of 
     the total resources available during the period covered by 
     the Integrated Deepwater Program;
       (5) the technology is affordable when considering the 
     ability of the Coast Guard to accomplish its missions using 
     alternatives, based on demonstrated technology, design, and 
     knowledge;
       (6) reasonable cost and schedule estimates have been 
     developed to execute the product development and production 
     plan for the technology;
       (7) funding is available to execute the product development 
     and production plan for the technology; and
       (8) the technology complies with all relevant policies, 
     regulations, and directives of the Coast Guard.
       (b) Report to Congress.--The Commandant shall transmit a 
     copy of each certification required under subsection (a) to 
     the Senate Committee on Commerce, Science, and Transportation 
     and the House of Representatives Committee on Transportation 
     and Infrastructure within 30 days after the completion of the 
     certification.

     SEC. 5. CONTRACT REQUIREMENTS.

       The Commandant shall ensure that any contract, delivery 
     order, or task order for procurement under, or in support of, 
     the Integrated Deepwater Program executed by the Coast 
     Guard--
       (1) incorporates provisions that address the 
     recommendations related to award fee determination and award 
     term evaluation made by the Government Accountability Office 
     in its March, 2004, report entitled Coast Guard's Deepwater 
     Program Needs Increased Attention to Management and 
     Contractor Oversight, GAO-04-380, and any subsequent 
     Government Accountability Office recommendations relevant to 
     the contract terms issued before the date of enactment of 
     this Act, including that any award or incentive fee is tied 
     to program outcomes;
       (2) provides that certification of any Integrated Deepwater 
     Program procurement for performance, safety, and any other 
     relevant factor will be conducted by an independent third 
     party;
       (3) does not include--
       (A) for any contract extending the existing Integrated 
     Deepwater Program contract

[[Page S3359]]

     term, minimum requirements for the purchase of a given or 
     determinable number of specific assets;
       (B) provisions that commit the Coast Guard without express 
     written approval by the Coast Guard;
       (C) any provision allowing for equitable adjustment that 
     differs from the Federal Acquisition Regulations; and
       (4) for any contract extending the existing Integrated 
     Deepwater Program contract term, is reviewed by, and 
     addresses recommendations made by, the Under Secretary of 
     Defense for Acquisition, Technology, and Logistics through 
     the Defense Acquisition University.

     SEC. 6. IMPROVEMENTS IN COAST GUARD MANAGEMENT.

       (a) In General.--As soon as practicable after the date of 
     enactment of this Act, the Commandant shall take action to 
     ensure that--
       (1) the measures contained in the Coast Guard's report 
     entitled Coast Guard: Blue Print for Acquisition Reform are 
     implemented fully;
       (2) any additional measures for improved management 
     recommended by the Defense Acquisition University in its 
     Quick Look Study of the United States Coast Guard Deepwater 
     Program, dated February 5, 2007, are implemented;
       (3) integrated product teams, and all higher-level teams 
     that oversee integrated product teams, are chaired by Coast 
     Guard personnel; and
       (4) the Assistant Commandant for Engineering and Logistics 
     is designated as the Technical Authority for all design, 
     engineering, and technical decisions for the Integrated 
     Deepwater Program.
       (b) Transfer.--
       (1) In general.--Section 93(a) of title 14, United States 
     Code, is amended--
       (A) by striking ``and'' after the semicolon in paragraph 
     (23);
       (B) by striking ``appropriate.'' in paragraph (24) and 
     inserting ``appropriate; and''; and
       (C) by adding at the end thereof the following:
       ``(25) notwithstanding any other provision of law, in any 
     fiscal year transfer funds made available for personnel, 
     compensation, and benefits from the appropriation account 
     `Acquisition, Construction, and Improvement' to the 
     appropriation account `Operating Expenses' for personnel 
     compensation and benefits and related costs necessary to 
     execute new or existing procurements of the Coast Guard.''.
       (2) Notification.--Within 30 days after making a transfer 
     under section 93(a)(25) of title 14, United States Code, the 
     Commandant shall notify the Senate Committee on Commerce, 
     Science, Transportation and Infrastructure, the Senate 
     Committee on Appropriations, the House Committee on 
     Transportation and Infrastructure, and the House Committee on 
     Appropriations.

     SEC. 7. PROCUREMENT AND REPORT REQUIREMENTS.

       (a) Selected Acquisition Reports.--The Commandant shall 
     submit to the Senate Committee on Commerce, Science, and 
     Transportation and the House of Representatives Committee on 
     Transportation and Infrastructure reports on the Integrated 
     Deepwater Program that contain the same type of information 
     with respect to that Program, to the greatest extent 
     practicable, as the Secretary of Defense is required to 
     provide to the Congress under section 2432 of title 10, 
     United States Code, with respect to major defense procurement 
     programs.
       (b) Unit Cost Reports.--Each Coast Guard program manager 
     under the Coast Guard's Integrated Deepwater Program shall 
     provide to the Commandant, or the Commandant's designee, 
     reports on the unit cost of assets acquired or modified that 
     are under the management or control of the Coast Guard 
     program manager on the same basis and containing the same 
     information, to the greatest extent practicable, as is 
     required to be included in the reports a program manager is 
     required to provide to the service procurement executive 
     designated by the Secretary of Defense under section 2433 of 
     title 10, United States Code, with respect to a major defense 
     procurement program.
       (c) Reporting on Cost Overruns and Delays.--Within 30 days 
     after the Commandant becomes aware of a likely cost overrun 
     or scheduled delay, the Commandant shall transmit a report to 
     the Senate Committee on Commerce, Science, and Transportation 
     and the House of Representatives Committee on Transportation 
     and Infrastructure that includes--
       (1) a description of the known or anticipated cost overrun;
       (2) a detailed explanation for such overruns;
       (3) a detailed description of the Coast Guard's plans for 
     responding to such overrun and preventing additional 
     overruns; and
       (4) a description of any significant delays in procurement 
     schedules.

     SEC. 8. GAO REVIEW AND RECOMMENDATIONS.

       (a) Award Fee and Award Term Criteria.--The Coast Guard may 
     not execute a new contract, delivery order, or task order, 
     nor agree to extend the term of an existing contract, with a 
     prime contractor for procurement under, or in support of, the 
     Integrated Deepwater Program until the Commandant has 
     consulted with the Comptroller General to ensure that the 
     Government Accountability Office's recommendations, in its 
     March, 2004, report entitled Coast Guard's Deepwater Program 
     Needs Increased Attention to Management and Contractor 
     Oversight, GAO-04-380, and any subsequent Government 
     Accountability Office recommendations issued before the date 
     of enactment of this Act, with respect to award fee and award 
     term criteria have been fully addressed.
       (b) Other Recommendations.--The Commandant shall ensure 
     that all other recommendations in that report, and any 
     subsequent recommendations issued before the date of 
     enactment of this Act, are implemented to the maximum extent 
     practicable by the Coast Guard within 1 year after the date 
     of enactment of this Act. The Commandant shall report to the 
     Senate Committee on Commerce, Science, and Transportation and 
     the House of Representatives Committee on Transportation and 
     Infrastructure on the Coast Guard's progress in implementing 
     such recommendations.
       (c) GAO Reports on Implementation.--Beginning 6 months 
     after the date of enactment of this Act, the Comptroller 
     General shall submit an annual report to the Senate Committee 
     on Commerce, Science, and Transportation and the House of 
     Representatives Committee on Transportation and 
     Infrastructure on the Coast Guard's progress in implementing 
     the Government Accountability Office's recommendations, in 
     its March, 2004, report entitled Coast Guard's Deepwater 
     Program Needs Increased Attention to Management and 
     Contractor Oversight, GAO-04-380, and any subsequent 
     Government Accountability Office recommendations issued 
     before the date of enactment of this Act, in carrying out 
     this Act.

     SEC. 9. DEFINITIONS.

       In this Act:
       (1) Commandant.--The term ``Commandant'' means the 
     Commandant of the United States Coast Guard.
       (2) Integrated deepwater program.--The term ``Integrated 
     Deepwater Program'' means the Integrated Deepwater Systems 
     Program described by the Coast Guard in its Report to 
     Congress on Revised Deepwater Implementation Plan, dated 
     March 25, 2005, including any subsequent modifications, 
     revisions, or restatements of the Program.
       (3) Procurement.--The term ``procurement'' includes 
     development, production, sustainment, modification, 
     conversion, and missionization.

  Ms. SNOWE. Mr. President, today I rise to support introduction of the 
Integrated Deepwater Reform Act.
  Since 1790, the United States Coast Guard has served as the guardian 
of our shores. It began its service to the Nation as a lifesaving 
organization, protecting our mariners from the perils of the sea. Over 
time, its missions have come to encompass additional responsibilities 
including performing drug and migrant interdiction, enforcing fisheries 
regulations, and maintaining our Nation's waterways and aids to 
navigation. Following the tragic events of September 11th, 2001, the 
Coast Guard expanded its role in homeland security operations, becoming 
the agency charged with protecting our Nation from maritime threats.
  Though we have expanded the role of this valiant service, we have not 
upgraded its equipment to the degree necessary to carry out the tasks 
it has been assigned. Current Coast Guard vessels comprise the third 
oldest naval fleet in the world. Some of its cutters still in service 
are over sixty years old. Recognizing the looming obsolescence of its 
legacy fleet, in the mid 1990s the Coast Guard embarked on an effort to 
create a wholly integrated system of ships, aircraft, sensors, and 
communications systems and called the effort Deepwater. Recapitalizing 
the Coast Guard remains one of this Nation's most important National 
Security initiatives.
  However, recent events have made it clear that additional 
Congressional oversight is warranted for this major acquisitions 
program. Failure of the 123-foot patrol boat conversion program, and 
questions about the fatigue life of the hull of the National Security 
Cutter under the purview of Integrated Coast Guard Systems have called 
into question the value of this ``lead systems integrator.'' The 
contract as written has given the contractor too much autonomy and not 
enough focus on actual performance.
  By placing restrictions on the structure of any agreements between 
the Coast Guard and its contractors, this bill will ensure that future 
Deepwater contracts protect the American taxpayer while allowing the 
Coast Guard to acquire the assets necessary to carry out its critical 
responsibilities. We cannot change the simple fact that in order to 
protect our Nation, the Coast Guard must be able to upgrade its 
existing assets. The safety of the brave men and women who serve in the 
Coast Guard, and the security of every American depends on the success 
of this program.

[[Page S3360]]

  I remain convinced that the Integrated Deepwater Program is the 
appropriate vehicle for the Coast Guard's modernization. However, in 
order for the Coast Guard to receive the best assets at the best value 
for the American taxpayer, Congress must ensure that the service and 
the contractors recognizes their joint commitment to both excellence 
and fiscal responsibility. By limiting the use of a lead systems 
integrator, increasing requirements for open competition, requiring 
additional internal Coast Guard management, and increasing reporting 
requirements to Congress, this bill provides that assurance.
  I am proud to add this bill to my record of Coast Guard oversight. I 
also would like to take this opportunity to thank Senator Cantwell for 
all her hard work on this legislation.
                                 ______