THE COAST GUARD IN “DEEPWATER”

In June of 2002, the US Coast Guard launched its Deepwater acquisition program, a projected $24 billion project to buy a system of boats and aircraft from Integrated Coast Guard Systems (ICGS), a joint venture between two big players in the defense industry, Lockheed Martin and Northrop Grumman. With much fanfare, the Coast Guard promoted the Deepwater program as a new paradigm for managing large government contracts. Instead of the rigid regulations and red tape that all too often killed contracts through a thousand small wounds, Deepwater would be a cooperative partnership between the Coast Guard and ICGS, backed by state-of-the-art management practices like performance incentives, integrated product teams, and earned value management. The contract gave ICGS broad responsibilities and discretion for achieving the objectives and desired outcomes, with the promise that better performance would be rewarded with financial bonuses and renewed contracts. Over the contract’s early years, ICGS delivered some new and upgraded assets – more powerful helicopters for sea rescue; faster ships and planes to hunt down drug traffickers; and the foundations for new information technology that would integrate all these assets into a seamless system. In May 2006, four years into the partnership, the Coast Guard rewarded ICGS for progress in meeting early objectives by renewing the Deepwater contract for an additional three-and-a-half years.