The Coast Guard’s $17 billion, 20-year Deepwater modernization effort is offering tremendous potential as a market for aircraft, ships and even unmanned aerial vehicles (UAVs).

Leading foreign defense manufacturers view the program as a way of expanding their position in the United States, while some projects such as cutters may offer potential benefits for American manufacturers in developing new products for possible export.

Contractors can take comfort from the fact that the effort has strong support inside Congress. Support is growing for an acceleration of the program and even its possible expansion since it was conceived before the Sept. 11, 2001 terrorist attacks. The Bush administration requested $678 million for Deepwater in fiscal 2005, $10 million more than the 2004 funding. In its consideration of the 2005 budget, the House Transportation and Infrastructure Committee authorized $1.1 billion for the program. While that funding level is unlikely to pass in the final appropriations act, it is indicative of the strong level of support for the program.

Rather than seeking to buy equipment piecemeal as in the past, the Coast Guard is pursuing an integrated approach for the sake of interoperability and optimum performance of the system as a whole. Significantly, improvement capabilities will be added in command, control, communications, intelligence, surveillance and reconnaissance.

To ensure this “systems of systems” approach, the Coast Guard selected a lead systems integrator, Integrated Coast Guard Systems, a joint venture of Lockheed Martin Corp. and Northrop Grumman, responsible for carrying out the $11 billion modernization of the ships, aircraft, command-and-control and logistics systems.

Lockheed Martin is focusing on the aircraft and systems integration requirements, while Northrop Grumman is acting as the lead in modernizing the fleet.

In the modernization effort, the Integrated Coast Guard Systems joint venture is seeking to attract new suppliers. It issued an industry-wide directive in May seeking to find innovative technology for the program, particularly in command, control, communications, computers, intelligence, surveillance and reconnaissance.

The partners also turned overseas in their search for suppliers. In February, EADS North America, based in Washington, DC, sold two CN-235 medium range surveillance maritime patrol aircraft valued at $87.4 million to the Coast Guard in what the company hopes will be the first step of a multiyear, 35-aircraft acquisition. EADS executives, who are expanding the U.S.-based subsidiary of the Netherlands-headquartered company, see the Coast Guard program as an important milestone in their efforts to build greater trust in the United States and, ultimately, to enter the US military market in a serious way.

Yet the number of CN-235 aircraft to be purchased remains in doubt. The Coast Guard is now evaluating Lockheed Martin’s HC-130 transport aircraft as part of the mix.

The unmanned component

In addition to aircraft, the Deepwater plan includes several types of UAVs. The Bell Helicopter Textron Eagle Eye vertical takeoff-and-landing UAV will be introduced as the Coast Guard’s first such aircraft. The Eagle Eye completed its preliminary design review in March. The Department of Homeland Security’s 2005 budget request includes the purchase of two of the aircraft. Deepwater calls for the purchase of a total of approximately 69.

The Northrop Grumman RQ-4A Global Hawk High Altitude Endurance UAV will be introduced in approximately 2016 under the current plan, which would involve the acquisition of seven of the UAVs.

Construction of the first ship, a 421-foot national security cutter, is set to begin at Northrop Grumman’s Ingalls Shipyard in Pascagoula, Miss. Deepwater plans call for the construction of eight of the ships by 2013.

A second Deepwater vessel, the 341-foot offshore patrol cutter, may offer the potential to meet Israeli needs for its future offshore patrol vessels, so discussions are underway about a joint design effort between the Israeli Navy and the Coast Guard. Current Coast Guard plans call for the purchase of 10 of the cutters from 2005 through 2009 with an overall purchase of 25.

The third Deepwater cutter, a 150-foot composite ship designed for high-speed interception and support of Navy special forces operations, has been approved for study by Northrop Grumman Ship Systems. Current plans call for the first of the fast-response cutters to be acquired in 2006, with a total of five purchased by 2009. HST

Philip Finnegan is director of corporate analysis at the Teal Group, a firm based in Fairfax, Va., that provides strategic and market analysis to major corporations. Prior to joining Teal Group he was a reporter for Defense News.