Coast Guard seeks Deepwater refund

Published 21 May 2007

Service hopes to recoup major losses and admits that performance-based acquisition requirements failed

More drama related to the Coast Guard’s Deepwater patrol boat program. We have been following the Northrop Grumman and Lockheed Martin-led project for some time now, noting recently that the Coast Guard had cancelled the program and the Justice Department had begun an investigation to find out if the effort’s cost overruns and engineering mishaps were more the result of fraud than outright incompetence. Two witnesses — one of them a former Lockheed engineer — testified that the Deepwater program suffered from problems beyond those normally associated with defense contracting. “They were informed, deliberate acts,” said Michael DeKort. Another witness, James Atkinson of the electrical engineering firm Granite Island Group, recommended “the committee consider debarring both companies until the fraud investigation is completed… Congress should pull the plug on the Coast Guard’s access to any classified network including the military’s secure IP network.”

These efforts continue, but in the meantime the Coast Guard is hoping to get its money back on the deal, some $30 to $80 million for eight craft. The news came in the form of an offficial letter to Integrated Coast Guard Systems — as the Lockheed/Northrop joint venture is known — explaining that the service was revoking acceptance of the boats due to severe structural flaws. The Coast Guard also announced recently that it would take over the role of lead systems integrator on the project, and late last week a senior official admitted that the service’s performance-based acquisition approach had not worked as planned. “The thought was that we’d simply lay out performance requirements for our assets and then allow industry the freedom to design and build assets that met those requirements,” said Admiral Gary Blore. “What we’ve found is that this approach doesn’t work in our complex systems acquisition.”