Coast Guard’s Deepwater program generates homeland sales

Deepwater is the largest recapitalization
effort in the Coast Guard’s history. It envisages a modernization
effort for the equipment used by the Coast Guard in deepwater missions
or those typically more than 50 miles offshore. The plan includes the
acquisition of up to 91 ships, 35 fixed-wing aircraft, 34 helicopters
and 76 unmanned surveillance aircraft. It also involves the upgrade of
49 existing cutters and 93 helicopters, as well improved systems for
communications, surveillance and command and control.

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.

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