Order Code RS21019
Updated July 22, 2005
CRS Report for Congress
Received through the CRS Web
Coast Guard Deepwater Program:
Background and Issues for Congress
Ronald O’Rourke
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
The Deepwater program is a $24-billion, 25-year acquisition program to replace
or modernize 93 Coast Guard ships and 207 Coast Guard aircraft. The Coast Guard’s
FY2006 budget requests $966 million for the program. Some Members of Congress
have strongly criticized the Deepwater program on several grounds. The House version
of H.R. 2360, the FY2006 Department of Homeland Security (DHS) appropriations bill,
reduces the FY2006 Deepwater funding request to $500 million; the Senate version
reduces it to $905.6 million. This report will be updated as events warrant.
Background1
Introduction. The Coast Guard Deepwater program, known formally as the
Integrated Deepwater Systems (IDS) program, is a project to replace and modernize the
Coast Guard’s aging fleet of deepwater-capable ships and aircraft. It is the largest and
most complex acquisition effort in Coast Guard history. The issue for Congress is
whether to approve, reject, or modify the Administration’s funding requests and overall
approach for the program. Congress’ decisions on this issue could affect Coast Guard
capabilities and funding requirements, U.S. homeland security operations, and the U.S.
shipbuilding and aircraft industry.
Deepwater Missions. The Coast Guard performs a variety of missions in the
deepwater environment (which generally means waters more than 50 miles from shore),
including the following: drug interdiction, alien migrant interdiction, fisheries
enforcement, search and rescue, the International Ice Patrol in northern waters; overseas
maritime intercept (sanctions-enforcement) operations, overseas port security and defense,
overseas peacetime military engagement; general defense operations in conjunction with
the Navy; marine pollution law enforcement, enforcement of lightering (i.e., at-sea cargo-
1 For additional background information on the Deepwater program, see the program’s Internet
page at [http://www.uscg.mil/deepwater/].
Congressional Research Service ˜ The Library of Congress

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transfer) zones, and overseas inspection of foreign vessels entering U.S. ports. Deepwater
assets are also used closer to shore for various operations.
Legacy Deepwater-Capable Assets. When the Deepwater program began in
the late 1990s, the Coast Guard’s “legacy” assets for performing deepwater missions
included 93 aging cutters and patrol boats and 207 aging aircraft. Many of these ships and
aircraft are expensive to operate (in part because the cutters require large crews),
increasingly expensive to maintain, technologically obsolete, and in some cases poorly
suited for performing today’s deepwater missions.
Deepwater Program Competition and Contract Award. On June 25, 2002,
the Coast Guard announced that Integrated Coast Guard Systems (ICGS) — an industry
team led by Lockheed Martin and Northrop Grumman’s Ship Systems division — was
the winner of the Deepwater competition. IGCS was awarded a $16.95-billion, 20-year
contract. The contract may be extended up to 30 years, which would increase its value
beyond $17 billion.
Systems to Be Procured or Modernized. On March 25, 2005, the Coast
Guard submitted to Congress a revised Deepwater implementation plan. The Deepwater
program of record includes the acquisition or modernization over a 25-year period, at an
estimated cost of $24 billion, of the following ships and aircraft:
Ships, boats, and surface craft:
! 8 new National Security Cutters, or NSCs, displacing about 4,000 tons
each (i.e., ships analogous to today’s high-endurance cutters);
! 25 new Offshore Patrol Cutters, or OPCs, displacing about 3,200 tons
each (i.e., ships analogous to today’s medium-endurance cutters);
! 58 new Fast Response Cutters (FRCs) displacing 200 tons each;
! 33 Long Range Interceptor (LRI) craft displacing 15 tons each; and
! 91 Short Range Prosecutor (SRP) craft displacing 9 tons each.
Aircraft:
! 22 modernized HC-130H/J Long Range Search (LRS) aircraft;
! 36 new HC-235 Medium Range Search (MRS) aircraft, also known as
Maritime Patrol Aircraft (MPA), based on based on the European
Aeronautic Defence and Space Company (EADS) CASA HC-235
Persuader MPA aircraft design;
! 42 modernized HH-60J Medium Range Recovery (MRR) helicopters;
! 95 re-engined and modernized HH-65C Multi-Mission Cutter
Helicopters (MCHs);
! 45 new HV-911 Eagle Eye VTOL (vertical take-off or landing)
Unmanned Aerial Vehicles (VUAVs); and
! 4 leased RQ-4A Global Hawk High Altitude Endurance UAVs
(HAEUAVs).
FY2006 Funding Request. The Coast Guard’s proposed FY2006 budget
requests $966 million for the program.

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Issues for Congress2
Adequacy Of Program Information Provided To Congress. Some
Members of the Coast Guard oversight committees have strongly and repeatedly criticized
DHS this year for providing incomplete and inadequately detailed information about the
Deepwater program. As a result of incomplete and inadequate information, some
Members have argued, the revised implementation plan is insufficient in terms of
transparency and accountability. Inadequate program information was a primary issue
cited by the House Appropriations Committee in recommending a deep reduction in the
program’s FY2006 funding request (see Legislative Activity below). In response to this
criticism, the Coast Guard supplemented the March 25 revised implementation plan with
additional program information on April 29 and May 31.
Four Plans Rather Than One. The March 25 revised implementation plan
included four versions of the Deepwater program. The Coast Guard proposed spending
either $19 billion over 20 years to acquire a somewhat smaller total number of platforms
than outlined above, or $24 billion over 25 years to acquire the platforms outlined above.
And for either option, the Coast Guard proposed two funding profiles — a profile called
CIP (Capital Investment Plan) Only or an alternative funding profile called CIP Plus.
Under CIP Only, annual Deepwater funding would be used to pay for both new
Deepwater assets and sustainment and modernization of legacy Deepwater assets. Under
CIP Plus, spending on legacy Deepwater assets would be financed with DHS funding
outside the Deepwater program. Some Members reacted negatively to the presentation
of four versions of the Deepwater program rather than a single plan. The House
Appropriations Committee directed the Coast Guard to pick one of the four as the official
program of record by July 14, so that the Committee could use it as the basis for
reviewing the program at a July 21 oversight hearing. The Coast Guard picked the $24-
billion, 25-year, CIP Only plan as the official program of record.
Program Affordability. At the July 21 oversight hearing, members of the
Committee expressed doubts about the affordability of the $24-billion plan, and indicated
that they might explore options for reducing the scope and cost of the program.
Program Management. The Government Accountability Office (GAO) has on
multiple occasions expressed concerns about the Coast Guard’s ability to manage the
large and complex Deepwater program, in part because of the potential risks to the
government of the Coast Guard’s acquisition strategy for the program, under which an
industry team (i.e., ICGS) acts as the lead integrator for the entire project.3 Some
2 For additional discussion of some of these issues, see Statement of Ronald O’Rourke, Specialist
in National Defense, Congressional Research Service, Before the Senate Commerce, Science, and
Transportation Committee Subcommittee on Fisheries and the Coast Guard Hearing on the Coast
Guard’s Revised Deepwater Implementation Plan, June 21, 2005.
3 See Government Accountability Office, COAST GUARD[:] Preliminary Observations on the
Condition of Deepwater Legacy Assets and Acquisition Management Challenges, GAO-05-307T,
Apr. 20, 2005; Government Accountability Office, Coast Guard[:] Observations on Agency
Priorities in Fiscal Year 2006 Budget Request, GAO-05-364T, Mar. 2005; General Accounting
Office, Contract Management: Coast Guard’s Deepwater Program Needs Increased Attention
(continued...)

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Members have strongly criticized the Coast Guard’s management of the program,
particularly with regard to its plans for maintaining legacy assets until they are replaced
by new Deepwater assets.
Adequacy of Proposed Assets. The original (1998) Deepwater implementation
plan reflected a pre-9/11 understanding of future Coast Guard mission demands. The
March 25 revised implementation plan reflects a new, post-9/11 analysis of Coast Guard
mission demands. Since 9/11 led to an increase in Coast Guard homeland security
operations without reducing other Coast Guard responsibilities, many observers expected
that the revised implementation plan would include greater numbers of ships and aircraft
than the original plan. A 2004 RAND Corporation report recommended substantially
increasing the number of numbers of cutters and aircraft to be acquired under the
program.4 The revised plan, however, does not substantially increase ship and aircraft
numbers. Coast Guard officials state that the revised force would have considerably more
capability than the originally planned force because the ships and aircraft would be
individually more capable than under the 1998 plan. Some Members of Coast Guard
oversight committees have questioned whether, even with increased individual platform
capability, the revised plan includes enough ships and aircraft to adequately perform all
post-9/11 Coast Guard missions. Coast Guard officials have acknowledged that the
revised force would not have enough capacity to meet long-term (FY2005-FY2009)
Government Performance and Review Act (GPRA) goals.
Program Acceleration. Since 2002, some Members have expressed an interest
in accelerating procurement of Deepwater assets and thereby compressing the Deepwater
acquisition period to 15 or 10 years, so as to reduce total Deepwater acquisition costs over
time and more quickly increase Coast Guard mission capabilities. Some of these
Members have expressed disappointment that the Coast Guard’s new plan instead
lengthens the originally proposed 20-year acquisition period by five years. Compressing
the Deepwater procurement period to 15 or 10 years would require increasing Deepwater
acquisition funding to something between $1 billion and $2 billion per year. GAO has
cautioned that accelerating the Deepwater program could increase program-management
risks, but has also acknowledged that accelerating selected parts of the program might be
more feasible. Accelerating and expanding procurement of NSCs and OPCs is an option
for bolstering the industrial base that builds surface combatants for the Navy.5
Legacy Platforms. Some Members have criticized the Coast Guard for what they
view as poor planning regarding how certain legacy deepwater assets (110-foot patrol
3 (...continued)
to Management and Contractor Oversight, GAO-04-380, Mar. 2004; and General Accounting
Office, Coast Guard: Deepwater Program Acquisition Schedule Update Needed, GAO-04-695,
June 2004.
4 John Birkler, et al., The U.S. Coast Guard’s Deepwater Force Modernization Plan: Can It Be
Accelerated? Will It Meet Changing Security Needs? RAND, National Security Research
Division, MG-114, 2004.
5 For additional discussion of this issue, see CRS Report RS21059, Navy DD(X) and CG(X)
Programs: Background and Issues for Congress, by Ronald O’Rourke; and CRS Report
RL32109, Navy DD(X), CG(X), and LCS Ship Acquisition Programs: Oversight Issues and
Options for Congress, by Ronald O’Rourke.

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boats and certain fixed-wing aircraft) are to be maintained until replaced by new
Deepwater assets, and for proposing to spend what they view as an excessive portion of
Deepwater funding on legacy assets. The Coast Guard says decisions regarding the plan
for these legacy assets have been made or will soon be made, and that proposed spending
on legacy assets is not as great as some have suggested, particularly since some of this
spending is to modernize legacy assets that are to form part of the final Deepwater force.
Legislative Activity in 2005
H.R. 2360, FY2006 DHS Appropriations Bill. The House Appropriations
Committee report on H.R. 2360 (H.Rept. 109-79 of May 13, 2005) reduces the FY2006
Deepwater funding request to $500 million, a $466-million reduction. (Page 63) Section
526 of the bill as reported rescinds $84 million in FY2004-FY2005 Deepwater funding
for modernization of 110-foot legacy patrol boats and reappropriates these funds for either
procuring new 110-foot patrol boats or conducting major maintenance work on the current
110-foot patrol boat fleet. (Pages 121-122) The report expresses several strong concerns
and criticisms about the program (pages 63-66 and 67), stating in part:
The Committee is wholly disappointed in the Coast Guard’s management of this
program and its utter disregard for the legislative direction included in P.L. 108-334,
intended to clarify the program’s total cost, acquisition timeline, and implementation
schedule.... While the Committee remains supportive of the replacement of the Coast
Guard’s aging cutters and aircraft, it is not confident in the Deepwater programmatic
model as means to achieve this goal at this point in time....
Recognizing that Deepwater was at a crossroads and despite ostensible reluctance by
the Coast Guard, the Committee required the service to re-baseline the entire program
in the fiscal year 2005 appropriations bill (P.L. 108 — 334).... The Coast Guard’s
failure to comply with this legislative directive suggests not only a fundamental
disregard for the Committee and Congress, but also brings into question how the
Coast Guard itself is able to manage its own future.... The Coast Guard has spent
considerable time and effort attempting to rationalize a flawed and incomplete
re-baseline plan, rather than adhering to the Congressional mandate and updating the
previously submitted and approved 20-year plan or providing any justification for why
such a re-baseline cannot be done.
The current state of the Deepwater program includes a myriad of questions
ranging from an absence of a cogent policy on the future of the Coast Guard’s patrol
boats to a lack of a definitive maritime patrol aircraft solution to an alarmingly high
increase in legacy asset sustainment....
The confluence of issues surrounding Deepwater has made fiscal year 2006 the
tipping point for this program. Therefore, the Committee requires a completely
revised Deepwater implementation plan that includes: a comprehensive acquisition
timeline for the entire Deepwater program based upon the revised mission needs
statement that is compared against the original Deepwater timeline; an exhaustive
asset-by-asset breakdown of the entire program, aligned with the comprehensive
acquisition timeline and revised mission statement that clearly shows the details of the
phaseout of legacy assets and the phase-in of new, replacement assets; an aggregate
total cost and timeline of the entire program that aligns with the acquisition timeline
and asset-by-asset breakdown; the revised, post-9/11 mission needs statement (MNS);
a detailed progress report of the C4ISR equipment upgrades that have been installed

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on currently operational Deepwater assets and a complete, aggregate timeline for
when such equipment will be installed on all legacy Deepwater assets; and a detailed
projection of the remaining operational lifespan of every type of legacy cutter and
aircraft. The Committee believes this report to be essential to the fiscal year 2007
appropriations process, just as the previously requested re-baselining request was
inextricably linked to the fiscal year 2006 appropriation. The Committee restricts
$50,000,000 of funds available for obligation until a revised Deepwater
implementation plan, which fully complies with the outlined statutory requirements,
has been received.
The Senate Appropriations Committee report on H.R. 2360 (S.Rept. 109-83 of
June 16) reduces the FY2006 Deepwater funding request to $905.6 million, a $60.4-
million reduction. The report expresses several strong concerns and criticisms about the
program (pages 60-61), stating in part:
The Committee is extremely disappointed with the poor congressional justifications
accompanying the President’s budget request for fiscal year 2006. Despite clear
instruction in both the bill and report language in fiscal year 2005, the documents
submitted and the lack of timeliness in which they were provided, both at the time of
the President’s budget submission and in answer to subsequent requests for
justification materials, is unacceptable. Lack of information about the future of
Deepwater brings into serious question the wisdom of funding this program at the
level requested in the President’s Budget. It is only through information provided from
outside the Department that the Committee has been able to satisfy only a basic level
of knowledge regarding the assets which it has funded. Despite the Committee’s
disappointment with the program as a whole and the way it has been managed,
$905,602,000 for Deepwater is provided by the Committee. The Committee directs
the Coast Guard to update the Deepwater plan submitted to Congress on May 31,
2005, to include the total cost for each asset that will be procured and each legacy
asset that will be maintained. The updated plan should also describe how the Coast
Guard will meet operational requirements under the lower-tiered funding level versus
the higher-tiered level included in the May 31, 2005, revised plan. The Committee
expects the updated plan to be submitted to the Committee no later than 60 days
following enactment of this Act.
Operational Gap Analysis. — The revised Deepwater plan submitted to Congress on
March 25, 2005, does not include a plan to address the gap between current
operational capabilities and those required to meet operational requirements.... The
Committee, therefore, directs the Coast Guard to conduct an operational gap analysis
for all Deepwater assets and provide an action plan on how the revised Deepwater
plan addresses the shortfalls between current operational capabilities and operational
requirements applying advanced analytical methods for forecasting future needs. This
plan should be submitted concurrently with the submission of the Coast Guard’s fiscal
year 2007 budget request.
S. 1280 (FY2006-FY2007 Coast Guard Authorization Bill). Section 212 of
S. 1280 requires the Coast Guard, in consultation with GAO, to submit a report on the
status of Coast Guard efforts to implement GAO recommendations for improving
management of the Deepwater program. Section 213 requires the Coast Guard to submit,
in conjunction with the FY2007 budget to be submitted in February 2006, a revised
Deepwater baseline that includes a justification for proposed Deepwater platform numbers
and capabilities, and information relating to the option of compressing the Deepwater
acquisition period to 15 or 10 years.

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