59–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–270 

INTEGRATED DEEPWATER PROGRAM REFORM ACT 

JULY 30, 2007.—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 

together with 

[To accompany H.R. 2722] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Transportation and Infrastructure, to whom 

was referred the bill (H.R. 2722) to restructure the Coast Guard Integrated Deepwater Program, and for other purposes, having considered the same, reports favorably thereon with an amendment 

and recommends that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Integrated Deepwater Program Reform Act’’. 

SEC. 2. IMPLEMENTATION OF COAST GUARD INTEGRATED DEEPWATER ACQUISITION PROGRAM. 

(a) USE OF PRIVATE SECTOR ENTITY AS A LEAD SYSTEMS INTEGRATOR.— 

(1) IN GENERAL.—Except as otherwise provided in this subsection, the Secretary may not use a private sector entity as a lead systems integrator for procurements under, or in support of, the Deepwater Program beginning on the 

earlier of October 1, 2011, or the date on which the Secretary certifies in writing to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of 

the Senate that the Coast Guard has available and can retain sufficient contracting personnel and expertise within the Coast Guard, through an arrangement with other Federal agencies, or through contracts or other arrangements 

with private sector entities, to perform the functions and responsibilities of the 

lead system integrator in an efficient and cost-effective manner. 


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(2) COMPLETION OF EXISTING DELIVERY ORDERS AND TASK ORDERS.—The Secretary may use a private sector entity as a lead systems integrator to complete 

any delivery order or task order under the Deepwater Program that was issued 

to the lead systems integrator on or before the date of enactment of this Act. 

(3) ASSISTANCE OF OTHER FEDERAL AGENCIES.—In any case in which the Secretary is the systems integrator under the Deepwater Program, the Secretary 

may obtain any type of assistance the Secretary considers appropriate, with any 

systems integration functions, from any Federal agency with experience in systems integration involving maritime vessels and aircraft. 

(4) ASSISTANCE OF PRIVATE SECTOR ENTITIES.—In any case in which the Secretary is the systems integrator under the Deepwater Program, the Secretary 

may, subject to the availability of appropriations, obtain by grant, contract, or 

cooperative agreement any type of assistance the Secretary considers appropriate, with any systems integration functions, from any private sector entity 

with experience in systems integration involving maritime vessels and aircraft. 

(b) COMPETITION.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the Secretary shall use full and open competition for each class of asset acquisitions 

under the Deepwater Program for which an outside contractor is used, if the 

asset is procured directly by the Coast Guard or by the Integrated Coast Guard 

System acting under a contract with the Coast Guard. 

(2) EXCEPTION.—The Secretary may use a procurement method that is less 

than full and open competition to procure an asset under the Deepwater Program, if—

(A) the Secretary determines that such method is in the best interests of 

the Federal Government; and 

(B) by not later than 30 days before the date of the award of a contract 

for the procurement, the Secretary submits to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report explaining why such procurement is in the best interests of the Federal Government. 

(3) LIMITATION ON APPLICATION.—Paragraph (1) shall not apply to a contract, 

subcontract, or task order that was issued before the date of enactment of this 

Act, if there is no change in the quantity of assets or the specific type of assets 

procured. 

(c) REQUIRED CONTRACT TERMS.—The Secretary shall include in each contract, 

subcontract, and task order issued under the Deepwater Program after the date of 

the enactment of this Act the following provisions, as applicable: 

(1) TECHNICAL REVIEWS.—A requirement that the Secretary shall conduct a 

technical review of all proposed designs, design changes, and engineering 

changes, and a requirement that the contractor must specifically address all engineering concerns identified in the technical reviews, before any funds may be 

obligated. 

(2) RESPONSIBILITY FOR TECHNICAL REQUIREMENTS.—A requirement that the 

Secretary shall maintain the authority to establish, approve, and maintain technical requirements. 

(3) COST ESTIMATE OF MAJOR CHANGES.—A requirement that an independent 

cost estimate must be prepared and approved by the Secretary before the execution of any change order costing more than 5 percent of the unit cost approved 

in the Deepwater Program baseline in effect as of May 2007. 

(4) PERFORMANCE MEASUREMENT.—A requirement that any measurement of 

contractor and subcontractor performance must be based on the status of all 

work performed, including the extent to which the work performed met all cost, 

schedule, and mission performance requirements outlined in the Deepwater 

Program contract. 

(5) EARLY OPERATIONAL ASSESSMENT.—For the acquisition of any cutter class 

for which an Early Operational Assessment has not been developed—

(A) a requirement that the Secretary of the Department in which the 

Coast Guard is operating shall cause an Early Operational Assessment to 

be conducted by the Department of the Navy after the development of the 

preliminary design of the cutter and before the conduct of the critical design review of the cutter; and 

(B) a requirement that the Coast Guard shall develop a plan to address 

the findings presented in the Early Operational Assessment. 

(6) TRANSIENT ELECTROMAGNETIC PULSE EMANATION.—For the acquisition or 

upgrade of air, surface, or shore assets for which compliance with transient electromagnetic pulse emanation (TEMPEST) is a requirement, a provision speciVerDate Aug 31 2005 21:29 Aug 02, 2007 Jkt 059006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6621 E:\HR\OC\HR270.XXX HR270

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fying that the standard for determining such compliance shall be the air, surface, or shore asset standard then used by the Department of the Navy. 

(7) OFFSHORE PATROL CUTTER UNDERWAY REQUIREMENT.—For any contract 

issued to acquire an Offshore Patrol Cutter, provisions specifying the service 

life, fatigue life, days underway in general Atlantic and North Pacific Sea conditions, maximum range, and maximum speed the cutter shall be built to achieve. 

(8) INSPECTOR GENERAL ACCESS.—A requirement that the Department of 

Homeland Security’s Office of the Inspector General shall have access to all 

records maintained by all contractors working on the Deepwater Program, and 

shall have the right to privately interview any contractor personnel. 

(d) LIFE CYCLE COST ESTIMATE.—

(1) IN GENERAL.—The Secretary shall develop an authoritative life cycle cost 

estimate for the Deepwater Program. 

(2) CONTENTS.—The life cycle cost estimate shall include asset acquisition and 

logistics support decisions and planned operational tempo and locations as of 

the date of enactment of this Act. 

(3) SUBMITTAL.—The Secretary shall—

(A) submit the life cycle cost estimate to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate within 4 

months after the date of enactment of this Act; and 

(B) submit updates of the life cycle cost estimate to such Committees annually. 

(e) CONTRACT OFFICERS.—The Secretary shall assign a separate contract officer 

for each class of cutter and aircraft acquired or rehabilitated under the Deepwater 

Program, including the National Security Cutter, the Offshore Patrol Cutter, the 

Fast Response Cutter A, the Fast Response Cutter B, maritime patrol aircraft, the 

aircraft HC–130J, the helicopter HH–65, the helicopter HH–60, and the vertical unmanned aerial vehicle. 

(f) TECHNOLOGY RISK REPORT.—The Secretary shall submit to the Committee on 

Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report identifying 

the technology risks and level of maturity for major technologies used on each class 

of asset acquisitions under the Deepwater Program, including the Fast Response 

Cutter A (FRC–A), the Fast Response Cutter B (FRC–B), the Offshore Patrol Cutter 

(OPC), and the Vertical Unmanned Aerial Vehicle (VUAV), not later than 90 days 

before the date of award of a contract for such an acquisition. 

(g) SUBMISSION OF ASSESSMENT RESULTS AND PLANS TO CONGRESS.—The Commandant of the Coast Guard shall submit to the Committee on Transportation and 

Infrastructure of the House of Representatives and the Committee on Commerce, 

Science, and Transportation of the Senate—

(1) the results of each Early Operational Assessment conducted pursuant to 

subsection (c)(5)(A) and the plan approved by the Commandant pursuant to subsection (c)(5)(B) for addressing the findings of such assessment, within 30 days 

after the Commandant approves the plan; and 

(2) a report describing how the recommendations of each Early Operational 

Assessment conducted pursuant to subsection (c)(5)(A) on the first in class of 

a new cutter class have been addressed in the design on which construction is 

to begin, within 30 days before initiation of construction. 

SEC. 3. CHIEF ACQUISITION OFFICER. 

(a) IN GENERAL.—Chapter 3 of title 14, United States Code, is amended by adding 

at the end the following: 

‘‘§ 55. Chief Acquisition Officer 

‘‘(a) ESTABLISHMENT OF AGENCY CHIEF ACQUISITION OFFICER.—The Commandant 

shall appoint or designate a career reserved employee as Chief Acquisition Officer 

for the Coast Guard, who shall—

‘‘(1) have acquisition management as that official’s primary duty; and 

‘‘(2) report directly to the Commandant to advise and assist the Commandant 

to ensure that the mission of the Coast Guard is achieved through the management of the Coast Guard’s acquisition activities. 

‘‘(b) AUTHORITY AND FUNCTIONS OF THE CHIEF ACQUISITION OFFICER.—The functions of the Chief Acquisition Officer shall include—

‘‘(1) monitoring the performance of acquisition activities and acquisition programs of the Coast Guard, evaluating the performance of those programs on the 

basis of applicable performance measurements, and advising the Commandant 

regarding the appropriate business strategy to achieve the mission of the Coast 

Guard; 


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‘‘(2) increasing the use of full and open competition in the acquisition of property 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 or service procured; 

‘‘(3) ensuring the use of detailed performance specifications in instances in 

which performance-based contracting is used; 

‘‘(4) making acquisition decisions consistent with all applicable laws and establishing clear lines of authority, accountability, and responsibility for acquisition decisionmaking within the Coast Guard; 

‘‘(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 professional workforce; 

and 

‘‘(7) as part of the strategic planning and performance evaluation process required under section 306 of title 5 and sections 1105(a)(28), 1115, 1116, and 

9703 of title 31—

‘‘(A) assessing the requirements established for Coast Guard personnel 

regarding knowledge and skill in acquisition resources management and 

the adequacy of such requirements for facilitating the achievement of the 

performance goals established for acquisition management; 

‘‘(B) in order to rectify any deficiency in meeting such requirements, developing strategies and specific plans for hiring, training, and professional 

development; and 

‘‘(C) reporting to the Commandant on the progress made in improving acquisition management capability.’’. 

(b) CLERICAL AMENDMENT.—The table of sections at the beginning of such chapter 

is amended by adding at the end the following: 

‘‘55. Chief Acquisition Officer.’’. 

(c) SPECIAL RATE SUPPLEMENTS.—

(1) REQUIREMENT TO ESTABLISH.—Not later than 1 year after the date of enactment of this Act and in accordance with part 9701.333 of title 5, Code of Federal Regulations, the Commandant of the Coast Guard shall establish special 

rate supplements that provide higher pay levels for employees necessary to 

carry out the amendment made by this section. 

(2) SUBJECT TO APPROPRIATIONS.—The requirement under paragraph (1) is 

subject to the availability of appropriations. 

SEC. 4. TESTING AND CERTIFICATION. 

(a) IN GENERAL.—The Secretary shall—

(1) cause each cutter, other than a National Security Cutter, acquired by the 

Coast Guard and delivered after the date of enactment of this Act to be classed 

by the American Bureau of Shipping, before acceptance of delivery; 

(2) cause the design and construction of each National Security Cutter, other 

than National Security Cutter 1 and 2, to be certified by an independent third 

party with expertise in vessel design and construction certification to be able 

to meet a 185-underway-day requirement under general Atlantic and North Pacific sea conditions for a period of at least 30 years; 

(3) cause all electronics on all aircraft, surface, and shore assets that require 

TEMPEST certification and that are delivered after the date of enactment of 

this Act to be tested and certified in accordance with TEMPEST standards and 

communications security (COMSEC) standards by an independent third party 

that is authorized by the Federal Government to perform such testing and certification; and 

(4) cause all aircraft and aircraft engines acquired by the Coast Guard and 

delivered after the date of enactment of this Act to be certified for airworthiness 

by an independent third party with expertise in aircraft and aircraft engine certification, before acceptance of delivery. 

(b) FIRST IN CLASS OF A MAJOR ASSET ACQUISITION.—The Secretary shall cause 

the first in class of a major asset acquisition of a cutter or an aircraft to be subjected to an assessment of operational capability conducted by the Secretary of the 

Navy. 

(c) FINAL ARBITER.—The Secretary shall be the final arbiter of all technical disputes regarding designs and acquisitions of vessels and aircraft for the Coast Guard. 


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SEC. 5. NATIONAL SECURITY CUTTERS. 

(a) NATIONAL SECURITY CUTTERS 1 AND 2.—

(1) REPORT ON OPTIONS UNDER CONSIDERATION.—The Secretary shall submit 

to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of 

the Senate—

(A) within 120 days after the date of enactment of this Act, a report describing in detail the cost increases that have been experienced on National 

Security Cutters 1 and 2 since the date of the issuance of the task orders 

for construction of those cutters and explaining the causes of these cost increases; and 

(B) within 180 days after the date of enactment of this Act, a report on 

the options that the Coast Guard is considering to strengthen the hulls of 

National Security Cutter 1 and National Security Cutter 2, including—

(i) the costs of each of the options under consideration; 

(ii) a schedule for when the hull strengthening repairs are anticipated to be performed; and 

(iii) the impact that the weight likely to be added to each the cutter 

by each option will have on the cutter’s ability to meet both the original 

performance requirements included in the Deepwater Program contract 

and the performance requirements created by contract Amendment 

Modification 00042 dated February 7, 2007. 

(2) DESIGN ASSESSMENT.—Not later than 30 days before the Coast Guard 

signs any contract, delivery order, or task order to strengthen the hull of either 

of National Security Cutter 1 or 2 to resolve the structural design and performance issues identified in the Department of Homeland Security Inspector General’s report OIG–07–23 dated January 2007, the Secretary shall submit to the 

Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate all results of an assessment of the proposed hull strengthening design conducted by the Naval Surface Warfare Center, Carderock Division, including a 

description in detail of the extent to which the hull strengthening measures to 

be implemented on those cutters will enable the cutters to meet a 185-underway-day requirement under general Atlantic and North Pacific sea conditions 

for a period of at least 30 years. 

(b) NATIONAL SECURITY CUTTERS 3 THROUGH 8.—Not later than 30 days before 

the Coast Guard signs any contract, delivery order, or task order authorizing construction of National Security Cutters 3 through 8, the Secretary shall submit to 

the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate 

all results of an assessment of the proposed designs to resolve the structural design, 

safety, and performance issues identified by the Department of Homeland Security 

Office of Inspector General report OIG–07–23 for the hulls of those cutters conducted by the Naval Surface Warfare Center, Carderock Division, including a description in detail of the extent to which such designs will enable the cutters to meet 

a 185-underway-day requirement under general Atlantic and North Pacific sea conditions. 

SEC. 6. MISCELLANEOUS REPORTS. 

(a) IN GENERAL.—The Secretary shall submit the following reports to the Committee on Transportation and Infrastructure of the House of Representatives and 

the Committee on Commerce, Science, and Transportation of the Senate: 

(1) Within 4 months after the date of enactment of this Act, a justification 

for why 8 National Security Cutters are required to meet the operational needs 

of the Coast Guard, including—

(A) how many days per year each National Security Cutter will be underway at sea; 

(B) where each National Security Cutter will be home ported; 

(C) the amount of funding that will be required to establish home port 

operations for each National Security Cutter; 

(D) the extent to which 8 National Security Cutters deployed without 

vertical unmanned aerial vehicles (VUAV) will meet or exceed the mission 

capability (including surveillance capacity) of the 12 Hamilton-class high 

endurance cutters that the National Security Cutters will replace; 

(E) the business case in support of constructing National Security Cutters 

3 through 8, including a cost-benefit analysis; and 

(F) an analysis of how many Offshore Patrol Cutters would be required 

to provide the patrol coverage provided by a National Security Cutter. 

(2) Within 4 months after the date of enactment of this Act, a report on—


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(A) the impact that deployment of a National Security Cutter and other 

cutter assets without the vertical unmanned aerial vehicle (VUAV) will 

have on the amount of patrol coverage that will be able to be provided during missions conducted by the National Security Cutter and all other cutters planned to be equipped with a VUAV; 

(B) how the coverage gap will be made up; 

(C) an update on the current status of the development of the VUAV; and 

(D) the timeline detailing the major milestones to be achieved during development of the VUAV and identifying the delivery date for the first and 

last VUAV. 

(3) Within 30 days after the elevation to flag-level for resolution of any design 

or other dispute regarding the Deepwater Program contract or an item to be 

procured under that contract, including a detailed description of the issue and 

the rationale underlying the decision taken by the flag officer to resolve the 

issue. 

(4) Within 4 months after the date of enactment of this Act, a report detailing 

the total number of change orders that have been created by the Coast Guard 

under the Deepwater Program before the date of enactment of this Act, the total 

cost of these change orders, and their impact on the Deepwater Program schedule. 

(5) Within 180 days after the date of enactment of this Act, a report detailing 

the technology risks and level of maturity for major technologies used on maritime patrol aircraft, the HC–130J, and the National Security Cutter. 

(6) Not less than 60 days before signing a contract to acquire any vessel or 

aircraft, a report comparing the cost of purchasing that vessel or aircraft directly from the manufacturer or shipyard with the cost of procuring it through 

the Integrated Coast Guard System. 

(7) Within 30 days after the Program Executive Officer of the Deepwater Program becomes aware of a likely cost overrun exceeding 5 percent of the overall 

asset acquisition contract cost or schedule delay exceeding 5 percent of the estimated asset construction period under the Deepwater Program, a report by the 

Commandant containing a description of the cost overrun or delay, an explanation of the overrun or delay, a description of Coast Guard’s response, and a 

description of significant delays in the procurement schedule likely to be caused 

by the overrun or delay. 

(8) Within 90 days after the date of enactment of this Act, articulation of a 

doctrine and description of an anticipated implementation of a plan for management of acquisitions programs, financial management (including earned value 

management and cost estimating), engineering and logistics management, and 

contract management, that includes—

(A) a description of how the Coast Guard will cultivate among uniformed 

personnel expertise in acquisitions management and financial management; 

(B) a description of the processes that will be followed to draft and ensure 

technical review of procurement packages, including statements of work, for 

any class of assets acquired by the Coast Guard; 

(C) a description of how the Coast Guard will conduct an independent 

cost estimating process, including independently developing cost estimates 

for major change orders; and 

(D) a description of how Coast Guard will strengthen the management of 

change orders. 

(9) Within 4 months after the date of enactment of this Act, a report on the 

development of a new acquisitions office within the Coast Guard describing the 

specific staffing structure for that directorate, including—

(A) identification of all managerial positions proposed as part of the office, 

the functions that each managerial position will fill, and the number of employees each manager will supervise; and 

(B) a formal organizational chart and identification of when managerial 

positions are to be filled. 

(10) Ninety days prior to the issuance of a Request for Proposals for construction of an Offshore Patrol Cutter, a report detailing the service life, fatigue life, 

maximum range, maximum speed, and number of days underway under general 

Atlantic and North Pacific Sea conditions the cutter shall be built to achieve. 

(11) The Secretary shall report annually on the percentage of the total 

amount of funds expended on procurements under the Deepwater Program that 

has been paid to each of small businesses and minority-owned businesses. 

(12) Within 120 days after the date of enactment of this Act, a report on any 

Coast Guard mission performance gap due to the removal of Deepwater Program assets from service. The report shall include the following: 


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(A) A description of the mission performance gap detailing the geographic 

regions and Coast Guard capabilities affected. 

(B) An analysis of factors affecting the mission performance gap that are 

unrelated to the Deepwater Program, including deployment of Coast Guard 

assets overseas and continuous vessel shortages. 

(C) A description of measures being taken in the near term to fill the mission performance gap, including what those measures are and when they 

will be implemented. 

(D) A description of measures being taken in the long term to fill the mission performance gap, including what those measures are and when they 

will be implemented. 

(E) A description of the potential alternatives to fill the mission performance gap, including any acquisition or lease considered and the reasons 

they were not pursued. 

(b) REPORT REQUIRED ON ACCEPTANCE OF DELIVERY OF INCOMPLETE ASSET.— (1) IN GENERAL.—If the Secretary accepts delivery of an asset after the date 

of enactment of this Act for which a contractually required certification cannot 

be achieved within 30 days after the date of delivery or with any system that 

is not fully functional for the mission for which it was intended, the Secretary 

shall submit to the Committee on Transportation and Infrastructure of the 

House of Representatives and the Committee on Commerce, Science, and Transportation of the United States Senate within 30 days after accepting delivery 

of the asset a report explaining why acceptance of the asset in such a condition 

is in the best interests of the United States Government. 

(2) CONTENTS.—The report shall— (A) specify the systems that are not able to achieve contractually required 

certifications within 30 days after the date of delivery and the systems that 

are not fully functional at the time of delivery for the missions for which 

they were intended; 

(B) identify milestones for the completion of required certifications and to 

make all systems fully functional; and 

(C) identify when the milestones will be completed, who will complete 

them, and the cost to complete them. 

SEC. 7. USE OF THE NAVAL SEA SYSTEMS COMMAND, THE NAVAL AIR SYSTEMS COMMAND, 

AND THE SPACE AND NAVAL WARFARE SYSTEMS COMMAND TO ASSIST THE COAST 

GUARD IN EXERCISING TECHNICAL AUTHORITY FOR THE DEEPWATER PROGRAM 

AND OTHER COAST GUARD ACQUISITION PROGRAMS. 

(a) FINDINGS.—Congress finds that the Coast Guard’s use of the technical, contractual, and program management oversight expertise of the Department of the 

Navy in ship and aircraft production complements and augments the Coast Guard’s organic expertise as it procures assets for the Deepwater Program. 

(b) INTER-SERVICE TECHNICAL ASSISTANCE.—The Secretary may enter into a 

memorandum of understanding or a memorandum of agreement with the Secretary 

of the Navy to provide for the use of the Navy Systems Commands to assist the 

Coast Guard with the oversight of Coast Guard major acquisition programs. Such 

memorandum of understanding or memorandum of agreement shall, at a minimum 

provide for—

(1) the exchange of technical assistance and support that the Coast Guard 

Chief Engineer and the Coast Guard Chief Information Officer, as Coast Guard 

Technical Authorities, may identify; 

(2) the use, as appropriate, of Navy technical expertise; and 

(3) the temporary assignment or exchange of personnel between the Coast 

Guard and the Navy Systems Commands to facilitate the development of organic capabilities in the Coast Guard. 

(c) TECHNICAL AUTHORITIES.—The Coast Guard Chief Engineer, Chief Information 

Officer, and Chief Acquisition Officer shall adopt, to the extent practicable, procedures that are similar to those used by the Navy Senior Acquisition Official to ensure the Coast Guard Technical Authorities, or designated Technical Warrant Holders, approve all technical requirements. 

(d) COORDINATION.—The Secretary, acting through the Commandant of the Coast 

Guard, may coordinate with the Secretary of the Navy, acting through the Chief of 

Naval Operations, to develop processes by which the assistance will be requested 

from the Navy Systems Commands and provided to the Coast Guard. 

(e) REPORT.—Not later than 120 days after the date of enactment of this Act and 

every twelve months thereafter, the Commandant of the Coast Guard shall report 

to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate 

on the activities undertaken pursuant to such memorandum of understanding or 

memorandum of agreement. 


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SEC. 8. DEFINITIONS. 

In this Act: 

(1) DEEPWATER PROGRAM.—The term ‘‘Deepwater Program’’ means the Integrated Deepwater Systems Program described by the Coast Guard in its report 

to Congress entitled ‘‘Revised Deepwater Implementation Plan 2005’’, dated 

March 25, 2005. The Deepwater Program primarily involves the procurement of 

cutter and aviation assets that operate more than 50 miles offshore. 

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the department 

in which the Coast Guard is operating. 

PURPOSE OF THE LEGISLATION

H.R. 2722, as amended, restructures the Integrated Deepwater 

Program of the U.S. Coast Guard. The bill establishes new acquisitions management systems under civilian leadership within the 

Coast Guard to enable the Coast Guard to effectively manage its 

Deepwater procurement program, to assume the role of lead systems integrator for the program, and to ensure that all assets produced under the program meet the highest quality standards. 

BACKGROUND AND NEED FOR THE LEGISLATION

The Deepwater Program is a series of procurements intended to 

renew the Coast Guard’s fleet of cutters and aircraft. Currently expected to cost $24 billion and to require 25 years to complete, the 

program encompasses 91 cutters, 124 small surface craft, 244 new 

or converted aircraft, including both helicopters and fixed-wing airplanes, and command, control, communication, computer, intelligence, surveillance, and reconnaissance (‘‘C4ISR’’) systems. The 

procurements conducted under Deepwater are intended to create a 

‘‘system of systems’’—meaning a suite of assets that are fully integrated and inter-operable. 

On June 25, 2002, the Coast Guard awarded the contract for the 

Deepwater Program to Integrated Coast Guard Systems (‘‘ICGS’’), 

a joint venture comprised of Lockheed Martin and Northrop Grumman. The contract awarded in 2002 was an indefinite delivery, indefinite quantity contract with a five-year baseline ending in 2007. 

In June 2007, the Coast Guard announced the award of a new 43- 

month term to ICGS; however, the award did not include guaranteed work and the Coast Guard indicated at the time of the announcement that no task orders issued under the new award would 

exceed 18 months. 

Significant problems have been encountered in procurements 

conducted under Deepwater, including structural buckling of the 

eight 110-foot patrol boats that were lengthened to 123 feet, failure 

of the first design for the new Fast Response Cutter, and failure 

of the initial design effort of the vertical unmanned aerial vehicle. 

Most recently, the Department of Homeland Security’s Office of the 

Inspector General (‘‘OIG’’) has found that the hull fatigue life on 

the National Security Cutter (‘‘NSC’’), the most expensive asset to 

be procured under the Deepwater Program, may not meet contractual requirements. The Coast Guard does not agree that the NSC 

will be unable to meet contractual requirements because its interpretation of contractual requirements differs from the OIG’s interpretation of these requirements. However, the Coast Guard does 

agree that there are problems associated with the fatigue life of the 

hulls of the NSCs and will utilize a design for the construction of 

NSC 3 that is different from that utilized for NSCs 1 and 2. 


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Numerous studies on Deepwater issued by the OIG, the Government Accountability Office, and the Defense Acquisitions University have analyzed problems in the Deepwater contract and shortcomings in the Coast Guard’s management of the contract that 

have contributed to the problems encountered in the procurement. 

Among other factors, these groups have criticized the issuance of 

a performance-based contract that lacked clear standards for assessing performance and that ceded too much authority for technical decisions from the Coast Guard and to the ICGS contractor. 

Analysts have also criticized the lack of in-house management and 

technical oversight capacity within the Coast Guard. 

On January 30, 2007, the Subcommittee on Coast Guard and 

Maritime Transportation held its first oversight hearing of the 

110th Congress on the Deepwater Program. The Subcommittee received testimony from Admiral Thad Allen, Commandant of the 

United States Coast Guard; Dr. Leo Mackay, President of Integrated Coast Guard Systems; and Mr. Phillip Teel, President of 

Northrop Grumman Ship Systems. 

In his testimony, Admiral Allen stated that the Coast Guard is 

creating a new acquisitions directorate to professionalize the management of acquisitions efforts in the Coast Guard and the management of human capital. The Commandant also announced that 

the Coast Guard would serve as the final technical authority on acquisitions efforts. Further, he testified that the Coast Guard would 

put business practices into place intended to guarantee contractor 

performance, allow clear assignment of responsibility and accountability, and address problems that had arisen from contractor selfcertification. 

Admiral Allen indicated that he did not agree with the conclusion of the OIG claim that the contract for Deepwater required the 

National Security Cutter to be built to be underway for at least 230 

days per year. Admiral Allen stated that the contract requires the 

ship to be built to be away from its home port for 230 days per year 

but to be able to serve only 170- to 180-mission days. He further 

argued that building a ship to be operating in a mission area for 

230 days per year would require construction of a ship much heavier and more expensive than the Coast Guard actually needs. 

In his testimony, Mr. Teel discussed the changes that are occurring in techniques for forecasting the fatigue life of vessels and indicated that current techniques for developing such forecasts continue to be refined. In response to questions about the NSC, he indicated that he could not be certain when or if a crack would occur 

in the NSC. 

On March 8, 2007, the Subcommittee on Coast Guard and Maritime Transportation held a hearing on the Coast Guard’s fiscal 

year 2008 budget, including the budget for the Deepwater Program. 

The Subcommittee received testimony from Admiral Thad Allen, 

the Commandant of the United States Coast Guard; Master Chief 

Petty Officer Charles W. Bowen, the Master Chief Petty Officer of 

the Coast Guard; Mr. Richard Skinner, the Inspector General of 

the Department of Homeland Security; and Mr. Stephen Caldwell 

of Government Accountability Office. 

Admiral Allen testified that he was uncertain if the Coast Guard 

could complete the Deepwater Program within the currently projected $24 billion budget. He further testified regarding the NSC 


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that Northrop Grumman felt they had met the contractual requirements for the ship but the Coast Guard did not agree. 

Mr. Skinner testified that the Inspector General’s office had conducted four audits of Deepwater over the past two and one-half 

years and these audits revealed the dominant influence of expediency over performance quality, flaws with the terms and conditions 

of the contract, and that the Coast Guard lacks the appropriate 

number of people and the right mix of expertise to manage the 

Deepwater Program. Mr. Skinner indicated that the Coast Guard 

was moving to correct all of these problems—but that the implementation of corrections would require a change of culture within 

the service. He further stated that one of the most important practices to ensuring the success of performance-based contracting is 

continuity in personnel. The appointment of military personnel to 

oversee acquisitions is directly contrary to this objective because it 

ensures turnover. Further, he indicated that there is no career 

path in the Coast Guard for military personnel who aspire to manage acquisitions to receive the work experience and training that 

they will need to be able to manage any acquisition program, particularly one as complicated as Deepwater. 

Mr. Caldwell testified that there were many areas of uncertainty 

in the Deepwater contract that could cause the program to exceed 

$24 billion in costs, including continued growth in the costs of individual assets. He also supported the point that civilians could bring 

needed continuity to the Deepwater Program. 

On April 18, 2007, the Committee on Transportation and Infrastructure held an investigative hearing to examine contractor compliance with the requirements of the Deepwater contract, particularly on the 123-foot patrol boat program. The Committee received 

testimony from 13 witnesses, including two former employees of 

Lockheed Martin, five current or former employees of the Coast 

Guard, Admiral Gary Blore, who will head the Coast Guard’s new 

acquisitions directorate, and Vice Admiral Paul Sullivan, Commander of the United States Navy’s Naval Sea Systems Command. 

The Committee heard testimony indicating that the ICGS team 

installed non-conforming topside equipment, non-low-smoke cabling, cameras that did not provide a 360-degree field of coverage, 

and non-shielded cabling. Further, the Committee heard testimony 

indicating that the Coast Guard may not have followed all standard procedures in obtaining transient electromagnetic pulse emanation (‘‘TEMPEST’’) certifications for the vessels. The Coast 

Guard maintains that no data was transmitted over non-TEMPEST 

standard communications equipment. 

During the April 18, 2007 hearing, the Committee also examined 

the circumstances regarding the decisions made by the Coast 

Guard to implement the ICGS proposal to lengthen the hulls of 

110-foot patrol boats to 123 feet. Specifically, the Committee heard 

testimony indicating that the Coast Guard decided to move ahead 

with the lengthening effort despite warnings from the United 

States Navy that the proposed design for the lengthened boat was 

flawed and could lead to problems with the hulls. The U.S. Navy 

was correct and the boats have subsequently been determined 

unseaworthy. 

Ms. Cathy Martindale, a contracting officer for the Coast Guard, 

testified that there were an insufficient number of contracting offiVerDate Aug 31 2005 21:29 Aug 02, 2007 Jkt 059006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR270.XXX HR270

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cers assigned to oversee the major procurement programs within 

Deepwater during its early years. Other witnesses indicated that, 

at the time of the 123-foot patrol boat program, the Coast Guard 

did not have the necessary personnel in place to effectively manage 

contractor performance. 

On June 12, 2007, the Subcommittee on Coast Guard and Maritime Transportation held a hearing to assess changes made in the 

Coast Guard’s management of Deepwater. The Subcommittee received testimony from Admiral Thad Allen, Commandant of the 

United States Coast Guard; and Mr. Richard Skinner, the Inspector General of the Department of Homeland Security. 

Admiral Allen testified that he was in the process of hiring 50 

additional personnel to work in the Deepwater Program management office. He indicated that the Coast Guard would move the integration functions currently being performed in the Systems Integration Program Office to Coast Guard Headquarters as part of the 

ongoing reorganization. However, he estimated it would take six to 

12 months to accomplish the reorganization. 

Admiral Allen testified that the Coast Guard had moved to rescind acceptance of the delivery of the 123-foot patrol boats, which 

have been removed from service due to hull buckling. Admiral 

Allen further testified that the American Bureau of Shipping would 

classify the new Fast Response Cutter being procured directly by 

the Coast Guard. He stated that changes that the Coast Guard anticipates making in the hull of NSC 1 to strengthen the hull’s fatigue life will be made at government expense because Northrop 

Grumman believes that it has met the requirements of the Deepwater contract. 

Inspector General Skinner testified that a transitional period—

perhaps lasting two to three years—will be required before the 

Coast Guard is ready to assume the role of lead systems integrator. 

He further emphasized the need to ensure continuity on the integrated teams created under Deepwater and stated that civilians 

can bring such continuity to the program. Inspector General Skinner testified that he is concerned that the Coast Guard may have 

difficulty resolving the structural design and performance issues 

associated with NSCs 1 and 2 as well as NSCs 3 through 8. He also 

stated that he believes that the cost and operational impact of 

structural modifications to all of the cutters should be identified 

and evaluated fully before the Coast Guard authorizes construction 

of any new NSC. 

SUMMARY OF THE LEGISLATION

Section 1. Short title 

Section 1 cites the Act as the ‘‘Integrated Deepwater Program 

Reform Act’’. 

Section 2. Implementation of Coast Guard Integrated Deepwater Acquisition Program 

Section 2 prohibits the use of a private firm as a lead systems 

integrator for procurements under, or in support of, the Deepwater 

Program on the earlier of October 1, 2011, or the date on which the 

Secretary certifies in writing to the Committees that the Coast 

Guard has available and can retain sufficient contracting personnel 


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and expertise within the Coast Guard to perform the functions and 

responsibilities of the lead system integrator. The Coast Guard can 

continue to use a private sector lead systems integrator to complete 

any delivery order or task order issued on or before the date of enactment of this Act. 

This section also requires the Secretary to use full and open competition for each class of asset acquisitions under the Deepwater 

Program except when the Secretary determines that it is in the 

best interests of the Federal Government to use a different procurement method and he reports to the Committees on why such procurement is in the best interests of the Federal Government. 

In addition, this section sets forth a number of specific requirements to be included in any future contracts, delivery orders, or 

task orders issued under Deepwater, including requirements subjecting designs to certain technical reviews and mandating the development of independent cost estimates. This section: • Requires the Coast Guard to maintain the authority to establish, approve, and maintain technical requirements and requires that any measurement of contractor and subcontractor 

performance be based on the status of all work performed; • Specifies that Department of the Navy TEMPEST standards are to be cited in contracts for the acquisition of all assets 

that require TEMPEST certifications; • Requires that an Early Operational Assessment be performed for any new asset class after the development of the 

primary design and before the conduct of the critical design review of the cutter; • Requires any contract issued for an Offshore Patrol Cutter 

to clearly specify the service life, fatigue life, days underway 

under general Atlantic and North Pacific Sea conditions, maximum range, and maximum speed the cutter shall be built to 

achieve; and • Requires that all contracts include provisions guaranteeing 

that the OIG has the right to privately interview all contractor 

personnel working on Deepwater and providing the OIG with 

access to all records maintained by contractors working on 

Deepwater. 

Finally, section 2 requires the Coast Guard to develop and update annually a life-cycle cost estimate that includes asset acquisition and logistics support decisions and to assign separate contract 

officers for each class of cutter and aircraft acquired or rehabilitated under the Deepwater Program. 

Section 3. Chief Acquisition Officer 

Section 3 amends chapter 3 of title 14, United States Code, to require the appointment of a civilian, career reserved employee as 

Chief Acquisition Officer, reporting directly to the Commandant of 

the Coast Guard. The section also specifies a number of authorities 

specifically reserved to the Chief Acquisition Officer and functions 

to be performed by that position. 

The Committee believes that the appointment of a civilian with 

extensive professional experience in acquisitions management to 

head the Deepwater acquisitions effort will provide the senior-level 

expertise and technical skills necessary to effectively and efficiently 

manage the Deepwater Program. 


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Section 4. Testing and certification 

Section 4 establishes new standards for the testing and certification of assets procured under the Deepwater Program. The section requires all cutters, other than the NSCs, to be classed by the 

American Bureau of Shipping (‘‘ABS’’) before acceptance of delivery. 

It requires the design and construction of NSCs 3 through 8 to be 

certified by an independent third party, such as the ABS or Navy, 

to be able to be underway for at least 185 days per year for 30 

years. Similarly, the section requires that all aircraft be certified 

by an independent third party and requires all electronics that require TEMPEST certification to be certified in accordance with 

TEMPEST standards by an independent third party. 

Section 5. National security cutters 

Section 5 requires the Secretary to submit specific reports to the 

Committee on Transportation and Infrastructure and the Committee on Commerce, Science, and Transportation. Specifically, the 

section requires the Coast Guard to submit to the Committees a report detailing cost increases experienced during the acquisition of 

the NSCs and a report on options under consideration by the Coast 

Guard to strengthen the hulls of NSCs 1 and 2. This section also 

requires that, not later than 30 days before the Coast Guard signs 

any contract, delivery order, or task order to strengthen the hull 

of either NSC 1 or 2, the Coast Guard shall submit to the Committees all results of an assessment of the proposed hull strengthening 

design conducted by the Naval Surface Warfare Center (Carderock 

Division), including a description of the extent to which such measures will enable NSCs 1 and 2 to meet a 185-underway-day requirement for at least 30 years. Similarly, the section requires 

that, not later than 30 days before the Coast Guard signs any contract, delivery order, or task order authorizing construction of NSC 

3 through 8, the Coast Guard shall submit to the Committees all 

results of an assessment of the proposed designs to resolve the 

structural design, safety, and performance issues identified by the 

OIG, including a description of the extent to which such designs 

will enable NSCs 3 through 8 to meet a 185-underway-day requirement. 

Section 6. Miscellaneous reports 

Section 6 requires the submission of a number of reports on the 

Deepwater Program, including the following: 

• A justification for why eight NSCs is the appropriate number of NSCs to meet the Coast Guard’s operational needs; 

• A report on the impact that deployment of the NSCs without vertical unmanned aerial vehicles will have on the amount 

of patrol coverage that will be able to be provided during missions conducted by NSCs; 

• A report on the total number and cost of change orders 

created under the Deepwater contract and their impact on the 

Deepwater Program schedule; 

• A report comparing the costs of purchasing assets through 

ICGS or directly from the manufacturer or shipyard; 

• A report on specific cost overruns and schedule delays 

encountered under Deepwater; 


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• A report on how the Coast Guard will develop acquisitions 

management and financial management expertise among its 

personnel; and, 

• An annual report on the percentage of total funding expended on Deepwater Program procurements that has been 

awarded to small businesses and minority-owned businesses. 

Section 7. Use of the Naval Sea Systems Command, the Naval Air 

Systems Command, and the Space and Naval Warfare Systems 

Command to assist the Coast Guard in exercising technical authority for the Deepwater Program and other Coast Guard Acquisition Programs 

Section 7 authorizes the Secretary to enter into a memorandum 

of understanding or a memorandum of agreement with the Secretary of the Navy to provide for the use of the Navy Systems Command to assist the Coast Guard with the oversight of Coast Guard 

major acquisition programs. Such memorandum shall provide for 

the exchange of technical assistance and support, the use of Navy 

technical expertise, and the temporary assignment or exchange of 

personnel between the Coast Guard and the Navy Systems Commands to facilitate the development of organic capabilities in the 

Coast Guard. The section requires the Coast Guard Chief Engineer, 

Chief Information Officer, and Chief Acquisition Officer to adopt, to 

the extent practicable, procedures that are similar to those used by 

the Navy Senior Acquisition Official to ensure the Coast Guard 

Technical Authorities approve all technical requirements. The section requires the Coast Guard to report to the Committees annually on the activities undertaken pursuant to such memorandum. 

Section 8. Definitions 

Section 8 defines the term ‘‘Deepwater Program’’ as the Integrated Deepwater Systems Program described by the Coast Guard 

in its March 25, 2005 report to Congress entitled ‘‘Revised Deepwater Implementation Plan 2005’’. The Deepwater Program primarily involves the procurement of cutter and aviation assets that 

operate more than 50 miles offshore. 

The section defines the term ‘‘Secretary’’ as the Secretary of the 

department in which the Coast Guard is operating. 

LEGISLATIVE HISTORY AND COMMITTEE CONSIDERATION

To date, the Committee on Transportation and Infrastructure 

has held four hearings on the Deepwater Program in the 110th 

Congress. On January 30, 2007, the Subcommittee on Coast Guard 

and Maritime Transportation held its first oversight hearing of the 

110th Congress on the Deepwater Program. On March 8, 2007, the 

Subcommittee on Coast Guard and Maritime Transportation held 

a hearing on the Coast Guard’s fiscal year 2008 budget, including 

the budget for the Deepwater Program. On April 18, 2007, the 

Committee on Transportation and Infrastructure held an investigative hearing to examine contractor compliance with the requirements of the Deepwater contract, particularly on the 123-foot patrol boat program. On June 12, 2007, the Subcommittee on Coast 

Guard and Maritime Transportation held a hearing to assess 

changes made in the Coast Guard’s management of Deepwater. 


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On June 14, 2007, Subcommittee on Coast Guard and Maritime 

Transportation Chairman Elijah E. 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 to consider H.R. 2722. 

During consideration of the bill, the Subcommittee adopted three 

amendments. First, the Subcommittee adopted, by voice vote, an 

amendment requiring a report on the Coast Guard performance 

gap due to the removal of Deepwater Program assets from service 

and a clear description of the actions being taken by the Coast 

Guard to fill the mission performance gap. Second, the Subcommittee adopted an amendment that changed the deadline for 

prohibiting the use of a private sector lead systems integrator 

under the Deepwater program. H.R. 2722, as introduced, prohibited 

the use of a private sector lead systems integrator for procurements 

under, or in support of, the Deepwater Program beginning two 

years after the date of enactment of the Act. The Subcommittee 

adopted, by voice vote, an amendment that prohibits the use of a 

private firm as a lead systems integrator for procurements under, 

or in support of, the Deepwater Program on the earlier of October 

1, 2011, or the date on which the Secretary certifies in writing to 

the Committees that the Coast Guard has available and can retain 

sufficient contracting personnel and expertise within the Coast 

Guard to perform the functions and responsibilities of the lead system integrator. The amendment also clarified that the Coast Guard 

may acquire from private entities any necessary assistance to carry 

out systems integration functions. Finally, the Subcommittee 

adopted, by voice vote, an amendment that authorizes the Department of Homeland Security to create pay supplements for Coast 

Guard acquisitions personnel. Specifically, the amendment requires 

the Coast Guard to establish special pay rate supplements that 

provide higher pay levels for employees necessary to carry out acquisitions functions. The Subcommittee recommended the bill, as 

amended, favorably to the Committee on Transportation and Infrastructure by voice vote. 

On June 28, 2007, the Committee on Transportation and Infrastructure met in open session to consider H.R. 2722, as recommended favorably by the Subcommittee. The Committee adopted, by voice vote, an amendment that authorizes the Secretary to 

enter into a memorandum of understanding or a memorandum of 

agreement with the Secretary of the Navy to provide for the use 

of the Navy Systems Command to assist the Coast Guard with the 

oversight of Coast Guard major acquisition programs. The Committee ordered the bill, as amended, reported favorably to the 

House by voice vote. 

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 any amendment offered to H.R. 

2722 or with ordering H.R. 2722 reported. A motion to order H.R. 


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2722, as amended, 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(d)(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 objectives of H.R. 2722 are to restructure the Coast Guard Integrated Deepwater Program alter the Coast Guard’s management 

of the Deepwater acquisitions program. 

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 

following cost estimate for H.R. 2722 from the Director of the Congressional Budget Office. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, July 17, 2007. 

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. 2722, the Integrated 

Deepwater Program Reform Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Deborah Reis. 

Sincerely, 

PETER R. ORSZAG, Director. 

Enclosure. 

H.R. 2722—Integrated Deepwater Program Reform Act 

Summary: H.R. 2722 addresses the contracting practices used by 

the United States Coast Guard (USCG) for the Integrated Deepwater Program (IDP), a 25-year, $24 billion initiative to replace 

many of the agency’s vessels, aircraft, and other assets. 


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Assuming appropriation of the necessary amounts, CBO esti- mates that the USCG would spend $5 million over the next two 

years for additional contracting personnel and to develop a lifecycle cost estimate for the IDP, as required by the legislation. That 

increase in spending would probably be more than offset by savings 

in future years. 

Several provisions of H.R. 2722 could increase other costs of administering contracts under the IDP, but those provisions and 

other reforms required by the bill also could result in lower procurement expenditures. Moreover, many of the bill’s required reforms may be carried out by the USCG even in the absence of legislation. CBO expects that implementing those reforms (whether 

under current law or as a result of enacting H.R. 2722) would reduce the long-term cost of the program, but we cannot estimate the 

likely size of that cost savings or clearly identify what proportion 

of any long-term savings would be attributable to this legislation 

and what share would result from changes that the Coast Guard 

would implement under current law. 

Any annual costs or savings realized by the agency as a result 

of the legislation would depend on future changes in the level of 

discretionary appropriations for this initiative. Enacting this legislation would not affect revenues or direct spending. 

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would not affect the budgets of state, local, or tribal governments. 

Major provisions: H.R. 2722 would restrict the Coast Guard’s reliance on private entities to manage IDP and would require the 

agency to revise other procurement practices to rectify problems 

identified by the Department of Defense (DoD), the Department of 

Homeland Security (DHS), and the Government Accountability Office. The bill also would require that many future acquisitions for 

the program be open to competition and be subject to new 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. 

Estimated impact on the Federal budget: CBO estimates that 

complying with the requirements of H.R. 2722 would increase 

USCG’s cost to administer IDP by $5 million over the next two 

years, assuming appropriation of the necessary amounts. We expect 

that the USCG would spend most of this amount to create a position for new chief acquisition officer, to hire and compensate new 

contract officers for each class of cutter and aircraft acquired under 

IDP, and to perform a comprehensive cost estimate for the initiative. We estimate that the cost of implementing other administrative requirements, such as testing and certifying vessels to meet 

U.S. Navy standards, would not add significantly to the costs of the 

Deepwater initiative. 

The budgetary impact of other provisions of the bill is uncertain—as is the cost of the deepwater initiative under existing law. 

According to the DHS Inspector General, the Coast Guard’s most 

recent cost estimate for the program—$24 billion—is likely to be 

too low because it does not take into account costs of hundreds of 

millions of dollars resulting from delays, design failures, and other 


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problems. H.R. 2722 would seek to address those problems by requiring greater agency supervision and more reliance on competitive bidding. CBO expects that those reforms would result in savings, but we cannot estimate the magnitude of such savings or predict the extent to which some savings would be realized by implementing similar reforms under current law. 

Pending acquisitions 

CBO expects that implementing the bill would not directly affect 

pending acquisitions of certain classes of assets, such as the national security cutter and the maritime patrol aircraft, two assets 

that the USCG has already begun acquiring from its chosen contractor. The bill would exempt those and other specified projects 

from its requirements on management and competitive bidding if 

certain conditions are met. The administrative burden of meeting 

those conditions could cause delays in acquiring some fleet replacements and thus result in additional operating and maintenance 

costs over the next few years for existing assets. Similar delays, 

however, may occur under current law; the Coast Guard has already had to begin revising the design of those assets to address 

known problems. 

Future acquisitions 

H.R. 2722 would require that future phases of IDP be subject to 

open competition and other reforms. The resulting savings from 

such reforms could be significant—perhaps hundreds of millions of 

dollars—but cannot be estimated with any precision. Moreover, 

many of the contracting changes may occur even in the absence of 

legislation. For example, the Coast Guard recently announced that 

it intends to begin managing the program itself rather than relying 

on a private systems integrator. The agency has also begun implementing some of the other reforms suggested by DHS, such as 

more reliance on competition and independent analysis. 

Any costs or savings that result from implementing the bill 

would depend on corresponding changes in annual appropriation 

acts. Annual funding for acquisitions under the program has varied 

widely—from $320 million in fiscal year 2002 to more than $1.1 billion to date for 2007. The President’s budget request for 2008 includes nearly $840 million for the program. 

Intergovernmental and private-sector impact: H.R. 2722 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would not affect the budgets of state, local, or tribal 

governments. 

Previous CBO cost estimate: On May 10, 2007, CBO transmitted 

a cost estimate for S. 924, the Integrated Deepwater Program Reform Act, as ordered reported by the Senate Committee on Commerce, Science, and Transportation on April 25, 2007. H.R. 2722 

and S. 924 address similar issues. CBO estimates that the up-front 

administrative cost of complying with H.R. 2722 would be less than 

those to comply with S. 924 because the House legislation would 

not require the Coast Guard to contract with a third party to perform a major analysis of IDP. 

Estimate prepared by: Federal costs: Deborah Reis; Impact on 

state, local, and tribal governments: Elizabeth Cover; Impact on 

the private sector: Craig Cammarata. 


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Estimate approved by: Peter H. Fontaine, 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. 2722, the Integrated Deepwater Program Reform Act, 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 

(Public Law 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. 2722, as amended, 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 were 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 (Public Law 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 (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 


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TITLE 14, UNITED STATES CODE 

* * * * * * * 

PART I—REGULAR COAST GUARD 

* * * * * * * 

CHAPTER 3—COMPOSITION AND ORGANIZATION 

Sec. 

41. Grades and ratings. 

* * * * * * * 

55. Chief Acquisition Officer. 

* * * * * * * 

§ 55. Chief Acquisition Officer 

(a) ESTABLISHMENT OF AGENCY CHIEF ACQUISITION OFFICER.—

The Commandant shall appoint or designate a career reserved employee as Chief Acquisition Officer for the Coast Guard, who shall—

(1) have acquisition management as that official’s primary 

duty; and 

(2) report directly to the Commandant to advise and assist 

the Commandant to ensure that the mission of the Coast Guard 

is achieved through the management of the Coast Guard’s acquisition activities. 

(b) AUTHORITY AND FUNCTIONS OF THE CHIEF ACQUISITION OFFICER.—The functions of the Chief Acquisition Officer shall include—

(1) monitoring the performance of acquisition activities and 

acquisition programs of the Coast Guard, evaluating the performance of those programs on the basis of applicable performance measurements, and advising the Commandant regarding 

the appropriate business strategy to achieve the mission of the 

Coast Guard; 

(2) increasing the use of full and open competition in the acquisition of property 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 or service procured; 

(3) ensuring the use of detailed performance specifications in 

instances in which performance-based contracting is used; 

(4) making acquisition decisions consistent with all applicable laws and establishing clear lines of authority, accountability, and responsibility for acquisition decisionmaking within the Coast Guard; 

(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 professional workforce; and 


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(7) as part of the strategic planning and performance evaluation process required under section 306 of title 5 and sections 

1105(a)(28), 1115, 1116, and 9703 of title 31— (A) assessing the requirements established for Coast 

Guard personnel regarding knowledge and skill in acquisition resources management and the adequacy of such requirements for facilitating the achievement of the performance goals established for acquisition management; 

(B) in order to rectify any deficiency in meeting such requirements, developing strategies and specific plans for hiring, training, and professional development; and 

(C) reporting to the Commandant on the progress made 

in improving acquisition management capability. 

* * * * * * * 


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