Justice Department investigates Deepwater fraud

Uh, oh. Just days after the Coast Guard announced that it would cancel Northrop Grumman and Lockheed Martin’s Deepwater contracts (a development anticipated last month), those close to the project admitted that the Justice Department was conducting an investigation to find out if the effort’s cost overruns and engineering mishaps were more the result of fraud than outright incompetence. According to a spokeswoman for the Integrated Coast Guard Systems — as the Lockheed-Northrop joint venture is known — the Justice Department notified the two companies of the investigation back in December 2006 and warned them not to destroy any documents related to it.

In recent hearings of the House Transportation and Infrastructure Committee, FCW reports that two witness — 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,” FCW reported him as saying.