The Troubled Waters Of "Deepwater"

Congressman: The Country Is Less Safe Than Before $24 Billion Refurbishment

This segment was originally broadcast on May 17, 2007. It was updated on Aug. 14, 2007.

After 9/11, few government entities were as poorly prepared to take on an expanded role as the U.S. Coast Guard. Already charged with sea rescues, drug interdictions and immigration enforcement, the Coast Guard became the primary maritime force for homeland security, tasked with protecting 95,000 miles of coastline and 361 ports with an old and antiquated fleet.

So five years ago the Coast Guard undertook a massive modernization program called "Deepwater" and ended up way over its head. As correspondent Steve Kroft reports, the $24 billion project has turned into a fiasco that has set new standards for incompetence, and triggered a Justice Department investigation.

A promotional video for the biggest project the Coast Guard had ever taken on looked impressive enough: "Deepwater" would include 91 new ships and 124 smaller boats, plus new planes and helicopters.

But five years into the program, the Coast Guard has fewer boats and ships now than it did before it started. Congressman Elijah Cummings, chairman of the Coast Guard oversight subcommittee calls the program, "a mess."

"Here it goes to the national security of this country," Rep. Cummings says. "That's serious business. Particularly after 9/11. And so, you know, it pains me. It really does."

Asked if he thinks the Coast Guard in worse shape now than it was before it began Deepwater, the congressman tells Kroft, "They say they're not. But I think they are."

You can begin with the fact that the Coast Guard spent nearly $100 million to ruin eight patrol boats. The plan was to take the aging workhorses of the fleet, the 110-foot Island Class patrol boats, and lengthen them by 13 feet, adding a launch ramp for small inflatable boats and expanding the superstructure. But something went drastically wrong at the Bollinger Shipyard near New Orleans, where the first eight boats were extended.

"What you see is a lot of buckling. In the floor. And spaces where you know something is bending that shouldn't be bending in other words it should be flat," Cummings recalls.

After just a few weeks on the water, all eight boats experienced severe structural problems and had to be pulled out of service. They are currently tied up at a pier at the Coast Guard's Baltimore yard waiting to be decommissioned. Their problems, the Coast Guard says, are too serious to be fixed.

Rep. Cummings wanted to show Kroft the cracks and buckling himself, but the Coast Guard refused to let him take 60 Minutes on its base.

"We should not allow situations to occur where you spend $14 million for a boat that doesn't float," Cummings says.

"You don't think it was seaworthy?" Kroft asks.

"No. And they don't either. That's why when I say 'they,' I'm referring to the Coast Guard," the congressman replies.

How does that happen?

Says Cummings, "I don't know. The thing I'll tell you and I think I know partly. It started with some people not either paying attention. Or people who didn't care. Or people who were greedy. Or people who were incompetent. Or people who lacked integrity. Or a combination of all."

That pretty much sums up the sentiments of just about every government organization that has taken the time to investigate Deepwater and its problems, which go far beyond the patrol boats.

And there has been no shortage of whistleblowers shouting "Mayday." Some of the blame can be traced to the original Deepwater contract.

From the outset, the Coast Guard didn't have the resources to run a $24 billion project. So it outsourced the entire program to the private sector--not just the construction--but the day-to-day management of the contract. It went to a company called Integrated Coast Guard Systems, a joint venture of Lockheed Martin and Northrop Grumman that had been formed specifically for this job. Not surprisingly, the joint venture picked Lockheed Martin and Northrop Grumman to do the lion's share of the work.

One of the first people to send up a warning flare about the contract was Captain Kevin Jarvis, who, until his retirement last fall, commanded of the Coast Guard's Engineering and Logistics Center.

"People have told us, 'Look, the people that were supposedly managing the contractors were, in many cases, the contractors themselves.' The same companies. Correct?" Kroft asks.

"Correct. Correct. People say that this is like the fox watching the henhouse. And it's worse than that," Capt. Jarvis says. "It's where the government asked the fox to develop the security system for the henhouse. Then told 'em, 'You're gonna do it. You know, by the way, we'll give you the security code to the system and we'll tell you when we're on vacation.'"