79–006 

1 Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (P.L. 

110–329). 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 111–215 

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. 

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 


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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 


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2Press 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. 

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

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; 


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4Defense Acquisition University, Quick Look Study: United States Coast Guard Deepwater 

Program (2007). 5Press 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/). 

• 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

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

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 nomiVerDate Nov 24 2008 02:58 Jul 21, 2009 Jkt 079006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR215.XXX HR215

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nated 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, 


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6GAO, Coast Guard: Change in Course Improves Deepwater Management and Oversight, but 

Outcome Still Uncertain 3 (2008). 7 Id. 

8 Id. at 4. 

9 Id. at 13–14. 

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 IIIcertified 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

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

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 investigaVerDate Nov 24 2008 02:58 Jul 21, 2009 Jkt 079006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR215.XXX HR215

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tive 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-byasset 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 proVerDate Nov 24 2008 02:58 Jul 21, 2009 Jkt 079006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR215.XXX HR215

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jected 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 


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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. 


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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, 


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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 acquisi- tion 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. 


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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. 


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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. 


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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 reVerDate Nov 24 2008 02:58 Jul 21, 2009 Jkt 079006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\HR215.XXX HR215

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quirements. 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 longterm 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 pursuVerDate Nov 24 2008 02:58 Jul 21, 2009 Jkt 079006 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\HR215.XXX HR215

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ant 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. 

* * * * * * * 

§ 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.— 


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(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 OFFI- CER.—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. 

* * * * * * * 


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CHAPTER 11—PERSONNEL 

* * * * * * * 

§ 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 considerationø, and the number of officers the board may recommend for promotion¿ shall be given to the 

service at large. 

* * * * * * * 

§ 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 withø:¿— 

(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. 

§ 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. 

* * * * * * * 

§ 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 


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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. 

* * * * * * * 


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