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the government have something to learn from drug smugglers about
balancing risks and benefits?
The thought struck me after reading two contrasting reports on the
U.S. Coast Guard on the day after Mother's Day.
In the first, the Coast Guard reported making the biggest maritime
drug seizure in U.S. history. Crewmen from the 210-foot cutter,
Active, had boarded a Belize-flagged trawler in the Pacific
on May 3. A thorough search turned up 26,800 pounds of cocaine,
worth a half-billion dollars. The trawler's two Russian and 10 Ukrainian
crewmembers face 10 years in jail; the boat's owners, a $4 million
fine.
In the second, the General Accounting Office (GAO) tackled a plan
that the Coast Guard calls Deepwater, an innovative way to acquire
new equipment over the long term. In the past, the Coast Guard —
the fifth branch of the military service, with responsibility for
protecting 3.4 million square miles of the nation's coastal waters
— would simply buy new vessels and aircraft separately, in
common defense-acquisition practice. But Deepwater has a better
idea: It integrates systems to meet specific performance goals.
Those goals require both ships and planes (and other equipment,
too), to work together.
To this end, the Coast Guard has sought designs from three private-sector
teams, each under a lead contractor. The design phase is almost
complete, and the Coast Guard will award the winner a contract next
year. The cost: $500 million a year for 20 years, pocket change
next to most government programs, and, coincidentally, the same
amount as the cash value of the drugs seized by the Active.
Such integrative management is becoming common in the private sector.
But the approach has raised concerns among GAO's auditors, who worry
that having only one integrating contractor, rather than competing
ones after contracts are awarded, might lead to cost overruns.
As a fiscal conservative, I don't want to see government playing
high-stakes games with untested systems. But, on the other hand,
I would like to see government take some practical steps
toward innovation, technological improvement, and private-sector
management techniques. And the Coast Guard's Deepwater program fits
that bill. It seems just the right size for a new idea of this sort,
and the risks are actually low.
For one thing, the cost of replacing ships and aircraft on a one-for-one
basis is about $500 million a year for 20 years, anyway. And there
is no doubt that this re-capitalization is needed. An interagency
task force in 1999 reviewed the Coast Guard's burgeoning missions
and its fast-obsolescing fleet and said that replacing old assets
was a near-term national priority. From a technology standpoint,
today's Coast Guard is more Horatio Hornblower than James Bond.
Capt. Richard Kelly, the Coast Guard's chief of requirements for
Deepwater, has said his agency's ships "are basically blind, deaf
and dumb." They still depend mostly on lookouts, rather than sophisticated
sensing devices, to spot crash victims or refugees. And with an
average age of 36 years, they are slower than most of the drug boats
that they are charged to interdict. The Coast Guard's aircraft are
similarly relics of the past.
Age considerations last August forced Congress to provide a $77-million
supplemental appropriation to keep Coast Guard equipment running.
And, still, the agency had to cut back on missions to save wear
and tear both on equipment and its crewmembers.
Another factor in favor of moving ahead on Deepwater is that the
Coast Guard has demonstrated a can-do spirit in the face of a cutback
of 4,000 personnel during the Clinton years. It is one of only three
federal agencies in the last three years to earn an overall "A"
grade from the Federal Performance Project of George Washington
University's School of Public Administration. Also, the GAO has
given the Coast Guard high marks for its management of the design
stage and of near-term risks. In private business, success like
this earns both rewards and new responsibilities.
Finally, and perhaps most important, the Bush administration wisely
wants all federal agencies to begin implementing performance-based
budgeting for their contracts. The purpose is the same as that in
private business: to tie such spending to achieving specific goals.
The innovations in procurement pioneered by Deepwater could be applied
to other government operations, particularly the Pentagon's moribund
and costly acquisition programs.
All of these factors make Deepwater compelling. Success could lead
to a new model for procuring much more expensive systems in the
future, could save taxpayers tens of billions of dollars, while
raising the risks for drug smuggling. Congress would be wise to
set aside the anachronistic concerns of the GAO and fully fund Deepwater
the way the Coast Guard designed it.
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