Coast Guard Resiliency in the 21st Century

James Landreth, P.E.

Former Secretary of State Dr. Condoleezza Rice and co-author Dr. Amy Zegart from the Hoover Institution published in the May-June 2016 Harvard Business Review a new framework for managing political risk in the 21st century. They defined three forces driving 21st-century political risk: the post-Cold War political environment, the supply chain revolution and the exponential growth of technology.

In an era of increasing global complexity, the framework enables organizations to perform sober assessments of readiness to meet the challenges imposed in the 21st century. To drive new thinking about the U.S. Coast Guard (USCG) in the new century, applying the Rice and Zegart framework unlocks insightful analysis and yields actionable recommendations for the Service’s exposure to long-term political risk.

Representing a country that, as President Trump said in his commencement address to the U.S. Naval Academy’s class of 2018, fundamentally identifies itself as a maritime nation, the USCG operates its cutter fleet with 45 bilateral agreements between the United States and partner nations on maritime counterdrug law enforcement, leverages international supply chains for vessel acquisition and sustainment, and employs increasingly sophisticated technology across its mission portfolio. These variables create a growing cross section for risk exposure, so the need for assessment using the 21st-century political risk framework is incredibly relevant. While the USCG and its sister Services are not political organizations, it is imperative that leaders advance new thinking about the USCG’s critical role in the 21st century and understand the nature and potential impact of the Service’s exposure to political risk.

Understanding Risk

Rice and Zegart define political risk with a broader brush than traditional definitions. Their definition includes the impacts not only of governments but also nontraditional actors, from multinational corporations to people with an internet connection. The USCG’s appetite for political risk has historically been low due to the need to effectively coordinate with state and local governments, within interagency operations, and with many partner nations in the execution of a wide range of missions. However, the USCG presents a large cross-section for risk exposure due to its numerous domestic and international partners, international supply chains and increasingly sophisticated technology portfolio. To ensure unity of effort in the face of challenging environments, the USCG publishes effective strategies consistent with the National Security Strategy and other national strategy documents.

Chancellor Merkel’s comments send a shiver through NATO and represent significant political risk to USCG acquisition and sustainment activities.

Because the USCG possesses such a large number of legal authorities to perform an incredibly diverse mission set on a global stage, all leadership echelons must maintain an awareness of the shifting sands of today’s extraordinarily volatile strategic landscape and guard against blind spots for political risk. As an example of modern political risk, German Chancellor Angela Merkel recently provided an explicit policy message stating that “We Europeans truly have to take our fate into our own hands,” which indicates a potential change in the dynamics of the NATO alliance.

Chancellor Merkel’s comments send a shiver through NATO and represent significant political risk to USCG acquisition and sustainment activities. Meanwhile, the established bond of NATO supports and continues to influence many acquisition decisions for the USCG. For instance, German vendors supplied a significant number of critical components for recent USCG acquisitions, which beget multidecade international relationships in cutter sustainment. The same vendors also supply other NATO and non-NATO navies and coast guards, which gives further pause when other non-NATO countries are known to use economic pressure as leverage on security issues. With an understanding of the USCG’s low appetite yet high cross-section for political risk, the chancellor’s remarks at the strategic level have definable operational and tactical implications.
Recommendation for USCG acquisition and sustainment authorities (CG-4 and CG-9):

• Identify whether integration of components from foreign vendors raises risk above acceptable levels over the life cycle of a cutter. Integrate assessment outcomes into published USCG strategies such as the Acquisition Directorate Strategic Plan.

Analyzing Risk

Amidst the noise in the mass media, USCG decision makers and leaders must use reliable and verifiable sources to maintain an awareness of any number of discrete variables with significant and immediate impact on acquisition and sustainment. For example, analysts may easily monitor currency exchange rates, potentials for strike in Germany’s unionized labor market, and market conditions for specific vendor’s goods and services. Also, maintaining technical relationships with vendors within the guidelines of the Federal Acquisition Regulations enable stakeholders to develop an intuitive sense of potential supply chain disturbances or labor shortages. As a member of the Intelligence Community (IC), the USCG ensures its equities receive rigorous interagency analysis at the strategic, operational and tactical levels. Additionally, the USCG’s successful implementation of the Cyber Strategy ensures readiness in the highly contented information domain. Though they are well fortified and staffed in intelligence and information domains, leaders must prudently and continuously examine supply lines and relationships that involve foreign partners in the manufacture, maintenance or overhaul of critical equipment such as propulsion components.

When analyzing risk, USCG leaders must ensure that the organizations strategic investments harmonize with operational intentions. The latest USCG acquisitions, the National Security Cutter, the Offshore Patrol Cutter, and the new heavy ice breaker class, all tackle missions far from homeport. As USCG planners accept higher levels of operational risk combating transnational criminal organizations in the Eastern Pacific—or breaking ice in the increasingly important Polar Regions—equipment reliability, availability and maintainability standards must be adjusted during source selection. Also, leaders from the Engineering and Logistics Directorate must coordinate with the training community to ensure that units possess the needed skills to maintain equipment in order to minimize dependency on positive relationships with foreign original equipment manufacturers (OEMs).

Recommendations for USCG acquisition and sustainment authorities (CG-4 and CG-9):

• Seek counsel from USCG intelligence and cyber subject-matter experts (CG-2 and CG-6) to assess and update risk portfolios associated with the manufacture, maintenance or overhaul of critical equipment supplied by foreign vendors.
• Coordinate with operational planners (Area Commander staff and Combatant Command liaisons) and the training community (Force Readiness Command or FORCECOM) to ensure that USCG technicians possess the needed skills to perform repairs on critical equipment.

Mitigating Risk

The USCG and many interagency partners face similar issues. These interagency partners should identify ways to establish and collaborate with communities of interest in order to pool and mitigate political risks. Since before the 1933 passage of the Buy American Act (BAA), the U.S. Government maintained meticulous accounts on the percentage and nature of goods and services procured from foreign sources. However, contemporary concerns over a shrinking U.S. defense industrial base and domestic manufacturing sector prompted renewed focus via Presidential Executive Order (EO) 13788 and the Office of Management and Budget (OMB) Memorandum M-17-27. While these documents reinforce the pre-existing BAA, long-term sustainment programs will require continued relationships with foreign vendors for the life cycle of existing programs. For USCG cutters with lifespans measured in decades, foreign vendor relationships must be carefully overseen, particularly when they involve critical components or performance issues during equipment operation.

While the incredibly deep security relationship between Germany and the United States tempered Merkel’s remarks, even small political perturbations impact international supply chains. High-cost items, long lead replacements, or customized parts that require OEM technical support impact the USCG engineering and logistical support enterprise. Interagency partners, such as the U.S. Navy, share many of the same vulnerabilities, and the USCG should actively seek to share information, extract lessons learned and pool risk. Over the past decade, the increasing ubiquity of automation and computerized systems on traditionally analog components, such as diesel engines, magnify the pain points in already complex supply chains. Compelling vendors to ensure computerized components meet legally mandated cybersecurity measures require significant resources not originally accounted for in life-cycle cost estimates.

Recommendations for USCG acquisition and sustainment authorities (CG-4 and CG-9):

• If selecting a foreign vendor, ensure the benefits provided outweigh any long-term political risks. Qualifying benefits must deliver critical capabilities not obtainable from domestic vendors.
• Define and enforce tolerances for foreign vendors to retain administrator access and privileges to computer control systems.
• Coordinate with communities of interest to share lessons learned and aggregate wisdom on foreign vendor issues.
• When domestic markets fail to produce goods and services necessary for critical capabilities, the USCG must communicate these demand signals to congressional leaders (via USCG Office of Government and Legislative Affairs and via Department of Homeland Security [DHS] Office of Legislative Affairs) as well as to industry in order to promote competition.

The USCG recognizes that, when consolidating gains, a winning team must continually learn and improve or latent vulnerabilities metastasize.

Responding to Risk

The USCG’s recent past contains near misses, such as the Integrated Deepwater System (IDS) acquisition program of the early 2000s that attracted the ire of congressional reviews and the Government Accountability Office (GAO). Since 2007, decisive leadership within the USCG righted the course, and USCG leaders now confidently highlight the reputation of acquisition professionals and five consecutive clean financial audits. Hard-won gains over a decade are now yielding significant rewards with meaningful budget increases for growth and recapitalization of assets.

The USCG recognizes that, when consolidating gains, a winning team must continually learn and improve or latent vulnerabilities metastasize. For example, engaged with its parent agency, DHS, and supported by analysts from the RAND Corporation, the USCG recently performed a thorough investigation to identify methods to improve its cost-analysis capability in order to better inform major acquisition decisions. While consulting independent analysts, USCG leaders also formalized mechanisms for assessment, inspection and audit (AIA) to ensure that internal practices promote fair, transparent, and repeatable methods of self-reflection. By placing such a valuable and transparent focus on continuous learning at a headquarters level, the USCG’s resiliency in the face of 21st-century political risk will only grow. Acting on the recommendation of Chief of Naval Operations ADM John Richardson, the USCG seeks to engrain accountability at every level by performing honest assessments and adjusting as required.

Recommendations for all USCG Senior Leaders:

• Assessment authorities (FORCECOM) must continue to promote the fair, transparent and repeatable methods of self-reflection established in the AIA program.
• Operational Commanders (Unit Commanders and above) must capitalize on the value provided by the AIA process and external feedback to promote a Service-wide culture of continuous learning and improvement.

Strategic Foresight or Paranoia?

While few contest the need for a framework of managing the evolving nature of 21st-century political risk, many correlate Merkel’s remarks with the recent change of leadership within the U.S. Executive and Legislative Branches. Some analysts interpret the BAA, EO 13788, and OMB Memo M-17-27 as protectionist movements that unnecessarily limit market choice and damage relationships with NATO allies.

While enforcement of legislation labeled as protectionist now impacts relationships with NATO allies, the periodic shifts of power in the U.S. political system need not register on the multi-decade life cycle of a USCG cutter given the long history with our NATO allies. While noticing fluctuations, the analyst must recognize that the United States and Germany not only share a deep security relationship as NATO allies, but Germany hosts thousands of U.S. military and civilians at two combatant command headquarters, U.S. European Command and U.S. Africa Command, and numerous subcomponents. Germany also regularly deploys troops and ships in support of the NATO alliance, so tensions originating from trade imbalances should not be misperceived as an alteration in enduring and strategic German security interests.

In the constant ebb and flow of U.S. political trends, the USCG must continuously evaluate whether a given procurement option from a foreign vendor makes a program more robust or more fragile. If the risk imposed creates a symmetric or an asymmetric disadvantage for operators and maintainers of USCG cutters, then leaders must perform a thorough analysis of alternatives. In most cases, foreign multinational firms deal directly with numerous other countries’ defense departments and maintain subsidiary relationships in order to access larger and larger markets. German vendors, while typically subject to regulation by the German government, lack any obligation to deal with the USCG if the interests of their business alter their course. Definitively, the use of foreign suppliers for critical equipment raises USCG risk exposure to changes in politics, global supply chains and the technology revolution.

Conclusion

Frederick the Great’s classic observation was that straining the logistical supply lines of an enterprise can destroy effectiveness. This axiom’s importance only escalates under the 21st-century framework identified by Rice and Zegart. The Post-Cold War political environment, increasingly global supply chains and exponential growth in technology require all organizations to soberly assess for vulnerabilities. The USCG’s strategic importance in maintaining the U.S. status as a maritime nation must be reflected in its approach to cutter acquisition and sustainment decisions. Due to the USCG’s low appetite for but high exposure to forms of 21st-century political risk, USCG leaders must maintain an awareness of shifts in the political landscape, such as the one suggested by Chancellor Merkel, and examine how such events impact USCG cutter acquisition and sustainment activities. In the context of the deep security relationship between the United States and Germany, mature leaders must be prepared to interpret Merkel’s remarks in the context of long-term trends and determine whether the use of foreign vendors for critical equipment remains in the best interest of a maritime nation.

Read the full issue of
Defense Acquisition magazine

LANDRETH is the Lead Mechanical Engineer for the U.S. Coast Guard (USCG) National Security Cutter propulsion system at the USCG’s Surface Forces Logistics Center in Daniel Island, South Carolina. He is the USCG’s “2018 Engineer of the Year.” The views expressed herein are those of the author and do not reflect the views of the Commandant or of the USCG.

The author can be contacted at [email protected].

The views expressed in this article are those of the author alone and not the Department of Defense. Reproduction or reposting of articles from Defense Acquisition magazine should credit the authors and the magazine.