[House Report 111-215]
[From the U.S. Government Publishing Office]
111th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 111-215
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COAST GUARD ACQUISITION REFORM ACT OF 2009
_______
July 20, 2009.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Oberstar, from the Committee on Transportation and Infrastructure,
submitted the following
R E P O R T
[To accompany H.R. 1665]
[Including cost estimate of the Congressional Budget Office]
The Committee on Transportation and Infrastructure, to whom
was referred the bill (H.R. 1665) to structure Coast Guard
acquisition processes and policies, and for other purposes,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
Purpose of the Legislation
H.R. 1665, the ``Coast Guard Acquisition Reform Act of
2009'', strengthens Coast Guard acquisition management
processes and establishes personnel-related standards and
policies for individuals in the Coast Guard's acquisition
workforce.
Background and Need for Legislation
Coast Guard capital expenditures are funded through the
appropriations made by Congress to its Acquisition,
Construction, and Improvement (AC&I) account, which funds
expenses related to ``acquisition, construction, renovation,
and improvement of aids to navigation, shore facilities,
vessels, and aircraft, including equipment related thereto; and
maintenance, rehabilitation, lease and operation of facilities
and equipment.''\1\ The total Coast Guard AC&I appropriation
for fiscal year 2009 is just under $1.5 billion.
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\1\Consolidated Security, Disaster Assistance, and Continuing
Appropriations Act, 2009 (P.L. 110-329).
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The largest single acquisition program funded through the
AC&I budget is the Deepwater acquisition program. According to
the most recent acquisition program baseline (APB) for the
Deepwater program--APB 1.1, adopted May 15, 2007--the Deepwater
acquisitions are projected to cost a total of $24 billion and
to require 25 years to complete.
The Deepwater acquisition program is the largest single
acquisition effort the Coast Guard has ever undertaken and is
intended to upgrade or modernize nearly all of its air and
surface assets. The acquisition program was formulated by the
Coast Guard in the early 1990s. At that time, after assessing
its mission needs and measuring these against the obsolescence
of its existing technology, the service decided that rather
than simply buy single new assets to replace its existing
assets, it would pursue a system-of-systems acquisition
approach, through which it would acquire an integrated suite of
assets that together could provide the ``functional
capabilities'' required to fulfill its mission needs.
Given the complexity of the acquisition effort to be
undertaken, the Coast Guard decided that it would follow the
example of Department of Defense agencies by engaging a private
firm to serve as the Lead Systems Integrator (LSI). The
Deepwater LSI was to exercise primary responsibility for
managing the development of the system-of-systems--including
selecting the individual assets to be included in the system
and managing their integration around a common operating
picture (real-time displays of operational views that could be
shared by all assets and stations). The Coast Guard also
decided it would manage the Deepwater acquisitions outside the
service's existing acquisition management structure--a decision
that ultimately served to limit the oversight the service was
prepared to exercise over the program in its early years.
In June 2002, the Integrated Coast Guard Systems (ICGS)
team, comprised of Lockheed Martin and Northrop Grumman, was
awarded a $17 billion, Indefinite Delivery/Indefinite Quantity
(IDIQ) contract to serve as the LSI and implement the Deepwater
acquisitions; this initial contract extended for five years,
and included five additional five-year options.
The requirements for the Deepwater acquisitions that were
developed to inform the award of the initial IDIQ in June 2002
had been formulated prior to the terror attacks of September
11, 2001. In 2003, the Coast Guard was transferred from the
Department of Transportation to the Department of Homeland
Security (DHS) and the Coast Guard began to alter the overall
mission requirements for assets produced under the Deepwater
IDIQ; these alterations were generally made after the IDIQ had
already been awarded.
Almost from the signing of the Deepwater contract, the
Coast Guard encountered challenges in managing the LSI. These
challenges were enumerated in multiple reports issued by the
Government Accountability Office (GAO) and the DHS Office of
the Inspector General. One of the over-arching problems
identified with the management of the Deepwater IDIQ was a
failure by the Coast Guard to develop specific metrics to
measure contractor performance or hold the ICGS team
accountable for compliance with contract requirements.
Additionally, because of its reliance on the management
services provided by the LSI, the Coast Guard had only a
limited role in identifying the specific assets that were to be
built under Deepwater or in controlling the production-related
decisions made to meet contract requirements (such as
determining the mix of assets or number of specific assets that
would be built to meet requirements). Further, because the
effectiveness of the Deepwater procurements was to be assessed
at the level of the overall system-of-systems, inadequate
testing and evaluation was performed on individual assets.
Similarly, the decision to manage the Deepwater contract at the
system level meant that none but the largest cost overruns
would trigger cost ceiling breaches; cost breaches on
individual assets might be too small to register as significant
breaches of the initial $17 billion (and later $24 billion)
overall Deepwater cost baseline.
Several of the individual acquisition efforts undertaken in
the early years of Deepwater failed or proved too impractical
to pursue. Perhaps the most highly publicized failure was the
effort to lengthen the Coast Guard's existing 110-foot patrol
boats to 123 feet and install new, upgraded information
technology suites into the boats. The original task order for
this procurement was issued on August 2, 2002; in June 2005,
the Coast Guard decided that the conversion process would be
suspended at eight boats because ``the converted cutters lacked
adequate capabilities to meet their expanded post 9/11
operational requirements.''\2\ In November 2006, the eight
converted boats were removed from service because of concerns
about their operational safety; they have subsequently been de-
commissioned. Examinations of the vessels conducted just prior
to their removal from service found that they had ``significant
buckling'', ``displayed deck cracking and hull deformation'',
and had ``developed shaft alignment problems related to other
structure issues''.\3\
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\2\Press Release, Coast Guard, Coast Guard Suspends Converted
Patrol Boat Operations (Nov. 30, 2006) (accessed on March 17, 2009 at
https://www.piersystem.com/go/doc/786/138897/).
\3\Id.
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Other procurement efforts initiated in the early years of
the Deepwater contract, including the first effort to procure a
vertical unmanned aerial vehicle and the first effort to
develop a Fast Response Cutter (FRC), were never built after
failing to pass design or prototype testing. These failures
wasted in excess of $100 million.
On May 19, 2006, the Coast Guard awarded an additional
award term totaling 43 months to the ICGS team, which extended
the contract through January 2011. Unlike the first contract
award, however, this contract extension did not guarantee any
quantity of assets to be procured from ICGS.
In February 2007, the Defense Acquisition University (DAU)
published a ``quick look'' study on the Deepwater program,
which had been requested by the Coast Guard. A summary of the
DAU's findings about the Deepwater program is presented below.
Many design changes were added to the
program even after key engineering milestones had been
crossed to respond to the Coast Guard's new mission
needs after 9/11;
Funding provided to the Deepwater effort was
often below the levels negotiated in the Coast Guard's
contract with ICGS;
The contract structure of the initial
Deepwater contract was inappropriate to the changing
missions and requirements of the assets to be acquired
under Deepwater and to the systems integration tasks
required under the program;
ICGS endeavored to keep work within its own
team rather than maximize competition throughout U.S.
industry and draw on existing Coast Guard
infrastructure;
There were insufficient numbers of Coast
Guard acquisition personnel in place and these
personnel had insufficient experience with the
management of major systems acquisition efforts; and
The Coast Guard lacked a management model
and management processes adequate for the efficient
management of acquisition programs as large as the
Deepwater program.\4\
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\4\Defense Acquisition University, Quick Look Study: United States
Coast Guard Deepwater Program (2007).
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In April 2007, the Coast Guard announced a series of major
changes in its management of Deepwater--changes that would also
affect its management of all its acquisition efforts.
Specifically, Admiral Thad Allen, Commandant of the Coast
Guard, announced that the service would:
Assume the role as lead systems integrator
for all Deepwater assets and other major acquisitions
as appropriate;
Assume responsibility for life cycle
logistics functions for Deepwater assets;
Expand the role of the American Bureau of
Shipping and other third-parties as appropriate to
ensure assets meet design and construction standards;
Work with the ICGS team to resolve
outstanding contract issues pertaining to the National
Security Cutter;
Consider procuring assets directly from
prime vendors when this was in the best interests of
the government; and,
Convene regular meetings between the
Commandant and the ICGS team to adjudicate and resolve
Deepwater contracting issues.\5\
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\5\Press Release, Coast Guard, Statement by ADM Thad Allen on the
Converted 123-Foot Patrol Boats and Changes to the Deepwater
Acquisition Program (Apr. 17, 2007)(https://www.piersystem.com/go/doc/
786/154307/).
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At the same time, the Coast Guard began reorganizing its
acquisition management processes.
On July 13, 2007, the Coast Guard created a new Acquisition
Directorate (known as CG-9). The Acquisition Directorate re-
integrated the Coast Guard's acquisition-related functions into
a single unit employing standard processes for managing
acquisition efforts. The Directorate is managed by the
Assistant Commandant for Acquisition. The Directorate is
comprised of program management personnel, contracting
management personnel, and personnel with expertise in cost
estimation, risk assessment, training and certification, and
strategic planning. The Deepwater program is now managed
directly by the Acquisition Directorate; the Program Executive
Officer for the Deepwater acquisition effort, who
simultaneously serves as the Director of Acquisition Programs,
is located within the Directorate and reports to the Assistant
Commandant for Acquisition.
Currently, the Assistant Commandant for Acquisition reports
directly to the Chief of Staff who, in turn, reports to the
Vice Commandant, who then reports to the Commandant. On January
22, 2009, DHS requested that the Coast Guard nominate a
Component Acquisition Executive (CAE). On March 2, the Coast
Guard nominated the Vice Commandant to be the CAE; DHS has not
yet finalized the appointment. If the appointment is finalized,
the Vice Commandant would have authority over Level III
acquisitions and Level II acquisitions, as delegated by DHS.
The Coast Guard has proposed reorganizing its top-level
military leadership. Under the proposed reorganization, the
Vice Commandant position would become a four-star position (it
is currently a three-star position); additionally, the Chief of
Staff's position as well as the Atlantic Area and Pacific Area
Commander positions would be eliminated and four new three-star
positions would be created (each of which would report directly
to the Vice Commandant). One of the four Deputy Commandant
positions to be created is the Deputy Commandant for Mission
Support, who is to have four direct reports:
Assistant Commandant for Acquisition (which
currently is and would remain a 2-star position),
Chief Information Officer,
Chief Sustainment Officer (essentially
overseeing lifecycle maintenance), and
Chief Human Resource Officer.
The Coast Guard believes that its projected organization of
the Acquisition Directorate--and its placement under the Deputy
Commandant for Mission Support--would enable the service to
better manage the entire life cycle of an acquired asset.
The Coast Guard issued a ``Blueprint for Acquisition
Reform'' (Blueprint) to guide the implementation of the new
policies and procedures it is implementing to strengthen the
management of Coast Guard acquisition initiatives and to guide
the organization of the Acquisition Directorate. The Blueprint
was first issued on July 9, 2007, with the most recent version
issued in July 2008. The Blueprint is to be updated in July of
each year. The Blueprint sets forth the Coast Guard's plans for
organizational alignment and leadership, the development of new
policies and procedures, human capital management and
development, and information management and stewardship.
The release of the Blueprint and the creation of the
Acquisition Directorate are intended to: standardize
acquisition procedures within the Coast Guard; ensure that the
service is equipped to control procurement-related costs and
that acquisition efforts adhere to set schedules; and empower
program managers to effectively manage acquisition efforts
(previously, program managers were at best ``partners'' to LSI
personnel).
As of December 2008, the Coast Guard indicated that it had
assigned a Level III-certified program manager (Level III
certification is the highest certification available to a
program manager) to each of its 14 Level I acquisitions (under
DHS Acquisition Directive 102-01, acquisition efforts are
classed as Level I, II, or III depending on their total life-
cycle costs--with Level I acquisitions having life-cycle costs
at or above $1 billion). Seven of the Level III-certified
program managers assigned to Level I acquisitions were military
officers and five were members of the civil service (two
program managers were each managing two separate Level I
acquisitions). As of February 2009, the Coast Guard had 27
military officers who had achieved a Level III program manager
certification, including three Admirals, 12 Captains, 11
Commanders, and four Lieutenant Commanders.
In 2008, the Coast Guard assigned the Admiral currently
serving as the Assistant Commandant for Acquisition (who is a
Level III-certified program manager) to be the commander of
District 13 (headquartered in Seattle); this assignment was
made as part of the Coast Guard's regular process for rotating
its personnel. The Program Executive Officer for the Deepwater
acquisition effort, also a Level-III certified program manager,
was assigned to be the Assistant Commandant for Acquisition. A
Captain recently selected for promotion to Rear Admiral who
lacked a Level III program manager certification at the time of
his selection was named to be the Program Executive Officer for
Deepwater. These assignments are to take effect on or about
July 1, 2009.
While the Coast Guard has made significant improvements in
strengthening its acquisition workforce and implementing
policies and procedures that should enable it to more
effectively manage acquisition efforts, challenges remain. In a
June 2008 report on the Deepwater procurements, the GAO found
that the changes in the Deepwater management and the creation
of the Acquisition Directorate have ``increased
accountability'' because ``Coast Guard project managers and
technical experts now hold the greater balance of management
responsibility and accountability for program outcomes.''\6\
Nonetheless, the GAO found that the Coast Guard still ``faces
challenges in building a capable government workforce to manage
this large acquisition.''\7\
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\6\GAO, Coast Guard: Change in Course Improves Deepwater Management
and Oversight, but Outcome Still Uncertain 3 (2008).
\7\Id.
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Specifically, in the June 2008 report, the GAO indicates
that as the Coast Guard assumes responsibility for individual
assets, there are some system-level aspects of the program that
the service is ``not fully positioned to manage.''\8\
Additionally, the GAO noted that the Coast Guard confronts an
on-going shortage of civilian acquisition staff members (which
is a problem throughout the Federal Government), the service
lacks an acquisition career path for military personnel, and it
continues to rely on contractors for specific types of
technical and programmatic expertise.\9\
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\8\Id. at 4.
\9\Id. at 13-14.
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In the 110th Congress, the Subcommittee held three hearings
on the Coast Guard's Deepwater acquisition program. On January
30, 2007, the Subcommittee met to receive a status update on
the Deepwater acquisitions. On March 8, 2007, the Subcommittee
met to consider the Bush Administration's fiscal year 2008
budget request for the U.S. Coast Guard, and also received
testimony from the Coast Guard, the DHS Inspector General and
the GAO on the Deepwater acquisition program. On June 12, 2007,
the Subcommittee met to receive an initial update from the
Coast Guard Commandant on the service's implementation of the
changes the Commandant had announced to the management of the
Deepwater contract.
On April 18, 2007, the Committee on Transportation and
Infrastructure convened a hearing to review the results of an
investigation of the Deepwater program conducted by Committee
investigative staff. This investigation closely examined the
multiple factors that contributed to the failure of the effort
to lengthen the 110-foot patrol boats to 123 feet, including
limited oversight exercised by Coast Guard acquisition
management officials, rigid adherence to schedule, and
contractor self-certification.
In the 111th Congress, on March 23, 2009, Chairman Cummings
introduced H.R. 1665, the ``Coast Guard Acquisition Reform Act
of 2009''. On March 24, 2009, the Subcommittee on Coast Guard
and Maritime Transportation held a hearing, ``Overview of Coast
Guard Acquisition Policies and Programs,'' to review the
changes the service had implemented in its acquisition
management processes since 2007, and to examine H.R. 1665.
During that hearing, Rear Admiral Gary Blore, the Assistant
Commandant for Acquisition, announced that under an agreement
signed the morning of the hearing, all options for extending
the Deepwater contract with the ICGS team beyond the date of
expiration of the current award, January 24, 2011, had been
eliminated.
Admiral Blore also indicated that the current APB for the
Deepwater program would not be updated again. Instead, in
keeping with the service's decision to manage Deepwater on an
asset-by-asset basis, Admiral Blore explained that the Coast
Guard is now working to develop individual APBs for each class
of assets to be acquired under Deepwater. Importantly, however,
Admiral Blore acknowledged that when the individual APBs that
had been approved at the time of the hearing were added to the
original cost estimates for those assets that did not yet have
individual ABPs, the cost of the Deepwater program was
projected to exceed $26 billion. This suggests that cost
overruns may continue to plague Coast Guard acquisition
efforts.
Admiral Blore also spoke about the importance of providing
to the Coast Guard the kinds of authorities to hire trained
acquisition professionals and to provide incentives to new
hires that other agencies, particularly the Department of
Defense, currently have. Further, Admiral Blore indicated that
the Coast Guard is moving to create a ``quasi career path'' in
the acquisition field--and he indicated that the service will
work to inform younger officers of the kinds of tours and
certifications that are available in the acquisition field and
to identify the qualifications and professional experiences
necessary to prepare an officer for assignment to the senior
levels of the Coast Guard's acquisition management workforce.
Admiral Blore also discussed the requirement changes that
led, in part, to the significant cost overruns with the Rescue
21 system, the largest non-Deepwater acquisition effort being
conducted by the Coast Guard. Rescue 21 is intended to replace
the Coast Guard's National Distress Response System, which was
activated in the 1970s, with an upgraded Very High Frequency-
Frequency Modulated (VHF-FM) communications system that will
improve the service's ability to locate mariners in distress,
coordinate with Federal, State and local first responders, and
reduce communication coverage gaps in coastal areas. The
original acquisition baseline for the Rescue 21 project was
adopted on April 16, 1999; at that time, the system was
projected to cost $250 million and the acquisition was
projected to be completed in fiscal year 2006. The baseline for
this project was revised five times between 1999 and 2008. The
acquisition baseline now stands at nearly $1.1 billion and the
projected completion date is fiscal year 2017; this most recent
acquisition program baseline was adopted on May 27, 2008.
Mr. John P. Hutton, Director of the GAO's Acquisition and
Sourcing Management unit, also testified at the March 24, 2009,
Subcommittee hearing. Mr. Hutton commended the Coast Guard's
move toward an asset-by-asset management approach, stating it
would allow program performance to be measured in more detail
and would enable cost and schedule breaches to be identified at
a much lower level than was possible when the Deepwater
acquisitions were managed at the system-of-systems level.
Further, he indicated that the Coast Guard's reorganization of
its acquisition directorate and its move away from the use of
private sector LSI was putting a more structured and
disciplined acquisition approach in place for the Deepwater
program.
Mr. Hutton indicated that because of the lack of civilian
staff in the acquisition field, the Coast Guard is still
relying on contractors in some key positions, such as cost
estimation and program management support. Mr. Hutton indicated
that over-reliance on contractors in such positions can lead to
the performance by these contractors of what are inherently
governmental functions. Over-reliance on contractors can also
lead to cost increases if government personnel cannot ensure
effective management in the government's best interest.
Mr. Hutton also indicated that a key factor in controlling
costs is ensuring the effective definition of requirements
before an asset acquisition is initiated to ensure that the
acquiring agency understands what it is buying and that the
requirement can be maintained with limited alteration
throughout the acquisition effort, thereby reducing the risk to
the government that arises from the modification of
requirements during an acquisition effort. He also mentioned
that one of the key steps remaining in the development of the
Coast Guard's acquisition management capacity is the creation
and maintenance of a qualified acquisition workforce.
H.R. 1665 responds directly to the issues that the
Committee on Transportation and Infrastructure and the
Subcommittee on Coast Guard and Maritime Transportation have
examined in five hearings conducted during the 110th and 111th
Congresses. It also requires the implementation of acquisition-
related policies and procedures and personnel standards that
will build on the acquisition reform efforts the service has
already undertaken.
Summary of the Legislation
TITLE I--RESTRICTION ON USE OF LEAD SYSTEMS INTEGRATORS
Sec. 101. Procurement structure
This section prohibits the use of a LSI beginning 180 days
after the date of enactment of the Act. However, the Coast
Guard is permitted to continue to use a LSI for the completion
of National Security Cutters 2 and 3, the National Distress and
Response System Modernization Program (known as Rescue 21), and
other on-going acquisitions.
However, all exemptions for the use of a LSI except for
National Security Cutters 2 and 3 and the Rescue 21 program
expire on September 30, 2011; after that date, no private-
sector LSI can be used. The prohibition on the use of a
private-sector LSI could take effect earlier if the Commandant
certifies that the Coast Guard has available the personnel and
expertise within the service or through the use of contracts
with private sector entities or agreements with other Federal
agencies to enable it to perform the LSI function itself.
This section also requires full and open competition for
contracts issued by the Coast Guard and any LSI employed by the
Coast Guard.
TITLE II--COAST GUARD ACQUISITION POLICY
Sec. 201. Operational requirements
This section requires the Coast Guard to establish specific
operational requirements for a new acquisition before awarding
a production contract for the acquisition. The Coast Guard must
also enable a full assessment of the trade-offs among
performance, cost, and schedule to be made.
Sec. 202. Required contract terms
This section requires the Commandant to put certain terms
in all contracts for acquisitions with costs equal to or
exceeding $10,000,000. The required terms include:
All certifications regarding contractor
performance shall be made by the Coast Guard or an independent
third-party; self-certification of compliance with performance
requirements is not allowed.
All contracts must designate the Coast Guard as
the final technical authority for all requirements.
All contracts shall measure the performance of
contractors and subcontractors on the status of actual work
performed, including the extent to which the work met cost and
schedule requirements.
TEMPEST standards for an asset shall be those in
use by the Navy for the type of asset for which the TEMPEST
test is required. TEMPEST (not an acronym--it is a formerly
classified DOD code word from the 1950s) is the short name
referring to investigation, study, and control of compromising
emanations from telecommunications and Automated Information
Systems equipment. TEMPEST testing is comprised of visual and
instrumented inspections to ensure compliance with emission
security requirements.
For contracts for an Offshore Patrol Cutter (a
large cutter--but slightly smaller than the National Security
Cutters), the contracts shall specify the service life, hull
fatigue life, and days underway under specific sea conditions
the ship will be built to meet.
Sec. 203. Life-Cycle cost estimates
This section requires the Coast Guard to develop life-cycle
cost estimates for projects expected to cost more than $10
million and to result in the development of assets with service
lives of 10 years. In addition, the Coast Guard is required to
develop independent life-cycle cost estimates for acquisitions
that have total acquisition costs exceeding $100,000,000 or
total life-cycle costs exceeding $300,000,000. These life-cycle
costs estimates must be updated as the acquisition prepares to
cross each acquisition milestone.
Sec. 204. Test and evaluation
This section requires the Coast Guard to develop and
approve a formal Test and Evaluation Master Plan (TEMP), which
will guide all developmental and operational testing on
acquisitions with total acquisition costs exceeding
$100,000,000 or total life-cycle costs exceeding $300,000,000.
As part of the TEMP, the service is required to identify
and resolve any safety concerns with new assets. A safety
concern is defined as any hazard that is likely to cause
serious bodily injury or death to a Coast Guard member or that
could cause major damage to the asset. If such problems are
found before a contract for the production of an asset is
issued, they must be resolved before a contract is issued, or,
if a contract for any level of production is issued before they
are resolved, the safety concerns must be reported to Congress
along with an explanation of why the service is proceeding with
a contract for any level of production of the asset before the
issue is resolved together with an explanation of how it will
be resolved. If a safety concern is found in an asset already
in some level of production, the service must communicate the
concern to Congress and explain how it will be resolved.
Sec. 205. Capability standards
This section imposes requirements on specific asset types,
including requiring that: all new vessels other than the
National Security Cutter (which is already under construction)
be classed by the American Bureau of Shipping; TEMPEST testing
be performed by an authorized independent third party; before a
contract is signed to resolve the hull fatigue issues with
National Security Cutters 1 and 2, the Coast Guard must provide
Congress a description of the measures that will be performed
and conduct a cost-benefit analysis of the measures; and
aircraft be assessed by a third party for airworthiness.
Sec. 206. Acquisition program reports
This section requires the Coast Guard to report to Congress
for any acquisition with total acquisition costs exceeding
$100,000,000 or total life-cycle costs exceeding $300,000,000,
the key performance parameters the asset will be built to
achieve, the systems with which the asset will be
interoperable, the anticipated unit cost for the asset, and a
detailed schedule for the asset's acquisition process showing
when the asset will be completed and when it will be fully
deployed.
Sec. 207. Undefinitized contractual actions
This section prohibits the Coast Guard from entering an
undefinitized contractual action unless it is approved by the
Head of Contracting Activity. Undefinitized contractual actions
are procurements for which the contractual terms,
specifications, or price are not agreed upon before the
performance of the contract is begun.
If an undefinitized contractual action is approved, this
section sets specific conditions on such actions, including how
much money can be paid to a contractor before the contract is
definitized.
Exceptions are provided for contracting actions relating to
contingency operations, operations in response to emergency
situations, and operations in response to disasters designated
by the President under the Stafford Act.
Sec. 208. Guidance on excess pass-through charges
This section requires the Commandant to issue guidance to
ensure that excessive pass-through charges are not paid by the
Coast Guard to an LSI for work performed by subcontractors.
Excessive pass-through charges are defined as charges to the
Federal Government by a contractor or subcontractor that are
overhead or profit on work performed by a lower-tier
subcontractor other than reasonable charges for the direct
costs of managing the lower-tier subcontractors.
Sec. 209. Acquisition of major capabilities: Alternatives analysis
This section requires that before the Coast Guard acquires
an asset that is experimental or technically immature or that
has total acquisition costs exceeding $100,000,000 or total
life-cycle costs exceeding $300,000,000, the service must
commission from a third party an alternatives analysis of the
asset to be acquired. The alternatives analysis must include:
an assessment of the technical maturity of the asset; whether
different quantities or combinations of assets could meet the
service's mission needs; the safety record of the asset; and
the full life-cycle costs of the asset.
Sec. 210. Cost overruns and delays
This section specifies that for any acquisition with total
acquisition costs exceeding $100,000,000 or total life-cycle
costs exceeding $300,000,000, the Coast Guard must report to
Congress when a cost overrun of greater than 10 percent is
likely to occur, a delay of more than 180 days is likely to
occur, or a failure for a new asset or class of assets is
anticipated. The report must include a description of the cause
of the reportable event and a plan for fixing the issue.
If an acquisition with total acquisition costs exceeding
$100,000,000 or total life-cycle costs exceeding $300,000,000
is likely to experience a cost breach of more than 20 percent
or a delay of more than 12 months, the Coast Guard must certify
that the asset is essential to the service, that there are no
alternatives to the asset, that new cost or schedule estimates
are reasonable, and that the management structure for the asset
is adequate.
Sec. 211. Report on former Coast Guard officials employed by
contractors to the agency
This section requires the Comptroller General to report
annually on those Flag-level officers and Members of the Senior
Executive Service who have left the Coast Guard within the past
5 years and are now receiving compensation for employment with
a Coast Guard contractor.
A Coast Guard contractor is defined as any person receiving
at least $10,000,000 in contractor awards from the Coast Guard.
Sec. 212. Department of Defense consultation
This section requires the Commandant to make arrangements
as appropriate for assistance in contracting and acquisition
programming with the Secretary of Defense.
TITLE III--COAST GUARD PERSONNEL
Sec. 301. Chief Acquisition Officer
This section establishes the Chief Acquisition Officer
position within the Coast Guard. The section requires that the
person appointed to the position be either a Rear Admiral or a
civilian member of the Senior Executive Service. It requires
that the person appointed to the position have a Level III
Program Management certification and 10 years of acquisition
experience, of which at least four shall have been spent
managing a program with total acquisition costs exceeding
$100,000,000 or total life-cycle costs exceeding $300,000,000.
Further, this section requires that all Flag-level officers
serving in the Acquisition Directorate meet these same
standards. The section lists those types of positions (such as
program executive officer, program manager, and deputy program
manger) that constitute qualifying experience. These
requirements become effective beginning October 1, 2011 (which
is the same date when the use of the LSI is fully prohibited).
This section also requires that design and related
acquisition issues elevated to the Chief Acquisition Officer
for resolution be reported to Congress within 45 days of the
elevation.
Sec. 302. Improvements in Coast Guard acquisition management
This section makes a number of changes in the Coast Guard's
management of its acquisition personnel and policies, including
requiring: that anyone assigned to be the program manager of a
program with total acquisition costs exceeding $100,000,000 or
total life-cycle costs exceeding $300,000,000 be a Level III
certified program manager; the Commandant to maintain all
technical authorities for projects with total acquisition costs
exceeding $100,000,000 or total life-cycle costs exceeding
$300,000,000 and to designate positions in the acquisition
workforce and ensure that individuals assigned to these
positions have the expertise to carry them out; and further
requires the Coast Guard to report annually on the adequacy of
its acquisition workforce to meet anticipated acquisition
workloads in the coming year. In addition, this section states
that no preference for military personnel shall be shown in
appointments to the acquisition workforce--and this section
requires the Commandant to ensure that appropriate career paths
are available for military and civilian personnel in the
acquisition workforce. The Coast Guard is required to take into
account the need to maintain a balanced workforce in the
acquisition field in which women and members of racial and
ethnic minorities are appropriately represented.
Finally, the Coast Guard is required to issue guidance for
major systems acquisition programs on the qualifications,
responsibilities, tenure, and accountability of program
managers and to develop a comprehensive strategy to enhance the
role of program managers.
Sec. 303. Recognition of Coast Guard personnel for excellence in the
acquisition of products and services
This section requires the Commandant to implement a program
to recognize excellent performance by individuals and teams
that have contributed to the long-term success of a Coast Guard
acquisition effort.
Sec. 304. Enhanced status quo officer promotion system
This section provides the Coast Guard the authority to
retain and promote officers that have specialized skills to
meet the needs of the service. The current Coast Guard
promotion system provides the Coast Guard with generalists and
does not readily allow for officer specialties.
Sec. 305. Acquisition workforce expedited hiring
This section allows the Commandant to designate acquisition
positions as ``shortage category positions'' and to use the
authorities in 5 U.S.C. 3304, 5333, and 5753 to recruit and
appoint highly qualified people directly to these positions.
This provision sunsets on September 30, 2012.
Legislative History and Committee Consideration
H.R. 1665 is based, in part, on legislation considered in
the 110th Congress. On June 14, 2007, Representative Cummings
introduced H.R. 2722, the ``Integrated Deepwater Program Reform
Act''. On June 26, 2007, the Subcommittee on Coast Guard and
Maritime Transportation met in open session and ordered the
bill, as amended, reported favorably to the Committee on
Transportation and Infrastructure by voice vote with a quorum
present. On June 28, 2007, the Committee on Transportation and
Infrastructure met in open session and ordered the bill, as
amended, reported favorably to the House by voice vote with a
quorum present. On July 30, 2007, the Committee reported the
bill, as amended, favorably to the House. H. Rept. 110-270. On
July 31, 2007, the House passed H.R. 2722 by a vote of 426-0.
On September 23, 2008, Chairman Cummings introduced H.R.
6999, the ``Integrated Deepwater Program Reform Act of 2008''.
On September 27, 2008, the House passed H.R. 6999 by voice vote
with a quorum present. The Senate did not complete action on
the legislation.
In the 111th Congress, Chairman Cummings introduced H.R.
1665 on March 23, 2009. On April 2, 2009, the Committee on
Transportation and Infrastructure met in open session and
ordered the bill reported favorably to the House by voice vote
with a quorum present.
Record Votes
Clause 3(b) of rule XIII of the House of Representatives
requires each committee report to include the total number of
votes cast for and against on each record vote on a motion to
report and on any amendment offered to the measure or matter,
and the names of those members voting for and against. There
were no recorded votes taken in connection with consideration
of H.R. 1665 or ordering the bill reported. A motion to order
H.R. 1665 reported favorably to the House was agreed to by
voice vote with a quorum present.
Committee Oversight Findings
With respect to the requirements of clause 3(c)(1) of rule
XIII of the Rules of the House of Representatives, the
Committee's oversight findings and recommendations are
reflected in this report.
Cost of Legislation
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives does not apply where a cost estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974 has been timely submitted prior to the filing of the
report and is included in the report. Such a cost estimate is
included in this report.
Compliance With House Rule XIII
1. With respect to the requirement of clause 3(c)(2) of
rule XIII of the Rules of the House of Representatives, and
308(a) of the Congressional Budget Act of 1974, the Committee
references the report of the Congressional Budget Office
included in the report.
2. With respect to the requirement of clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, the
performance goals and objective of this legislation are to
strengthen the management of Coast Guard acquisition processes.
3. With respect to the requirement of clause 3(c)(3) of
rule XIII of the Rules of the House of Representatives and
section 402 of the Congressional Budget Act of 1974, the
Committee has received the enclosed cost estimate for H.R. 1665
from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 15, 2009.
Hon. James L. Oberstar,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1665, the Coast
Guard Acquisition Reform Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Deborah Reis.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 1665--Coast Guard Acquisition Reform Act of 2009
H.R. 1665 addresses the contracting practices used by the
U.S. Coast Guard (USCG) to acquire capital assets such as
vessels and aircraft. The legislation would restrict the Coast
Guard's reliance on private entities to manage such contracts
and would require the agency to revise other procurement
practices to rectify problems identified by the Department of
Defense, the Department of Homeland Security, and the
Government Accountability Office. It also would require that
many future acquisitions be open to competition and be subject
to specified testing, analysis, and certification requirements.
Finally, the bill would require the Coast Guard to hire
additional contracting and management personnel and to produce
various reports on its acquisition activities.
Assuming appropriation of the necessary amounts, CBO
estimates that the USCG would spend less than $5 million over
the next two or three years, mostly to develop life-cycle cost
estimates for capital assets. We estimate that other
administrative costs for additional required testing and
certification would not significantly affect the agency's
annual budget. Enactment of the bill would not affect direct
spending or revenues.
The contracting reforms required by H.R. 1665 could result
in lower procurement expenditures in the future. Much of the
long-term savings, however, might occur even in the absence of
the legislation because the Coast Guard is already implementing
many of the required reforms, including hiring additional
contracting personnel. CBO cannot estimate the likely size of
cost savings from improving procurement practices or clearly
identify what proportion of such savings would be attributable
to the legislation and what share would result from changes
that the Coast Guard is already implementing under current law.
Any annual costs or savings realized by the Coast Guard as
a result of the legislation would depend on future changes in
the level of discretionary appropriations for capital
acquisitions. Annual funding for Coast Guard acquisition has
risen rapidly in recent years--from about $640 million in
fiscal year 2002 to nearly $1.6 billion to date for 2009. (The
2009 figure includes nearly $100 million provided by the
American Recovery and Reinvestment Act of 2009.) Most of the
increase over this period stems from new funding for the
Integrated Deepwater Initiative, which will be used to replace
many of the agency's vessels, aircraft, and other assets and is
expected to cost between $25 billion to $30 billion over the
next 25 years.
H.R. 1665 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Deborah Reis.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Compliance With House Rule XXI
Pursuant to clause 9 of rule XXI of the Rules of the House
of Representatives, H.R. 1665 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI
of the Rules of the House of Representatives.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, committee reports on a bill or joint
resolution of a public character shall include a statement
citing the specific powers granted to the Congress in the
Constitution to enact the measure. The Committee on
Transportation and Infrastructure finds that Congress has the
authority to enact this measure pursuant to its powers granted
under article I, section 8 of the Constitution.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act (P.L. 104-4).
Preemption Clarification
Section 423 of the Congressional Budget Act of 1974
requires the report of any Committee on a bill or joint
resolution to include a statement on the extent to which the
bill or joint resolution is intended to preempt state, local,
or tribal law. The Committee states that H.R. 1665 does not
preempt any state, local, or tribal law.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act are created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (P.L. 104-1).
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 14, UNITED STATES CODE
* * * * * * *
CHAPTER 3--COMPOSITION AND ORGANIZATION
Sec.
41. Grades and ratings.
* * * * * * *
55. Chief Acquisition Officer.
* * * * * * *
Sec. 55. Chief Acquisition Officer
(a) Establishment of Chief Acquisition Officer.--There shall
be in the Coast Guard a Chief Acquisition Officer selected by
the Commandant who shall be a Rear Admiral or civilian from the
Senior Executive Service (career reserved) and who meets the
qualifications set forth under subsection (b). The Chief
Acquisition Officer shall serve at the Assistant Commandant
level and have acquisition management as that individual's
primary duty.
(b) Qualifications.--
(1) The Chief Acquisition Officer and any Flag
Officer serving in the Acquisitions Directorate shall
be an acquisition professional with a program manager
level III certification and must have at least 10 years
experience in an acquisition position, of which at
least 4 years were spent in one of the following
qualifying positions:
(A) Program executive officer.
(B) Program manager of a Level 1 or Level 2
acquisition.
(C) Deputy program manager of a Level 1 or
Level 2 acquisition.
(D) Project manager for a Level 1 or Level 2
acquisition.
(E) Any other acquisition position of
significant responsibility in which the primary
duties are supervisory or management duties.
(2) The Commandant shall periodically publish a list
of the positions designated under this subsection.
(c) Authority and Functions of the Chief Acquisition
Officer.--The functions of the Chief Acquisition Officer shall
include--
(1) monitoring the performance of programs and
projects on the basis of applicable performance
measurements and advising the Commandant, through the
chain of command, regarding the appropriate business
strategy to achieve the missions of the Coast Guard;
(2) maximizing the use of full and open competition
at the prime contract and subcontract levels in the
acquisition of property, capabilities, assets, and
services by the Coast Guard by establishing policies,
procedures, and practices that ensure that the Coast
Guard receives a sufficient number of sealed bids or
competitive proposals from responsible sources to
fulfill the Government's requirements, including
performance and delivery schedules, at the lowest cost
or best value considering the nature of the property,
capability, asset, or service procured;
(3) making acquisition decisions in concurrence with
the technical authority of the Coast Guard, as
designated by the Commandant, and consistent with all
other applicable laws and decisions establishing
procedures within the Coast Guard;
(4) ensuring the use of detailed performance
specifications in instances in which performance based
contracting is used;
(5) managing the direction of acquisition policy for
the Coast Guard, including implementation of the unique
acquisition policies, regulations, and standards of the
Coast Guard;
(6) developing and maintaining an acquisition career
management program in the Coast Guard to ensure that
there is an adequate acquisition workforce;
(7) assessing the requirements established for Coast
Guard personnel regarding knowledge and skill in
acquisition resources and management and the adequacy
of such requirements for facilitating the achievement
of the performance goals established for acquisition
management;
(8) developing strategies and specific plans for
hiring, training, and professional development; and
(9) reporting to the Commandant, through the chain of
command, on the progress made in improving acquisition
management capability.
* * * * * * *
CHAPTER 11--PERSONNEL
* * * * * * *
Sec. 253. Selection boards; notice of convening; communication with
board
(a) Before a board is convened under section 251 of this
title, notice of the convening date, the promotion zone to be
considered, and the officers eligible for consideration[, and
the number of officers the board may recommend for promotion]
shall be given to the service at large.
* * * * * * *
Sec. 258. Selection boards; information to be furnished boards
(a) In General.--The Secretary shall furnish the appropriate
selection board convened under section 251 of this title
with[:]--
(1) * * *
* * * * * * *
(b) Provision of Direction and Guidance.--
(1) In addition to the information provided pursuant
to subsection (a), the Commandant may furnish the
selection board--
(A) specific direction relating to the needs
of the Coast Guard for officers having
particular skills, including direction relating
to the need for a minimum number of officers
with particular skills within a specialty; and
(B) any other guidance that the Commandant
believes may be necessary to enable the board
to properly perform its functions.
(2) Selections made based on the direction and
guidance provided under this subsection shall not
exceed the maximum percentage of officers who may be
selected from below the announced promotion zone at any
given selection board convened under section 251 of
this title.
Sec. 259. Officers to be recommended for promotion
(a) A selection board convened to recommend officers for
promotion shall recommend those eligible officers whom the
board, giving due consideration to the needs of the Coast Guard
for officers with particular skills so noted in specific
direction furnished to the board by the Commandant under
section 258 of this title, considers best qualified of the
officers under consideration for promotion. No officer may be
recommended for promotion unless he receives the recommendation
of at least a majority of the members of a board composed of
five members, or at least two-thirds of the members of a board
composed of more than five members.
* * * * * * *
Sec. 260. Selection boards; reports
(a) * * *
(b) A board convened under section 251 of this title shall
certify that, in the opinion of at least a majority of the
members if the board has five members, or in the opinion of at
least two-thirds of the members if the board has more than five
members, the officers recommended for promotion are the best
qualified for promotion to meet the needs of the service (as
noted in specific direction furnished the board by the
Commandant under section 258 of this title) of those officers
whose names have been furnished to the board.
* * * * * * *