Coast Guard Plunges Into Deepwater

This just in -- Dow Jones/Wall Street Journal is reporting:

Under mounting pressure from Congress, the Coast Guard has decided to remove Lockheed Martin Corp. (LMT) and Northrop Grumman Corp. (NOC) from overseeing the service's troubled modernization program, and assume the role itself, according to people familiar with the matter.

The Coast Guard is expected to announce the restructuring of its 25-year, $24-billion Deepwater program on Tuesday, a day before the next in a series of Capitol Hill hearings into the delays program to overhaul ships, helicopters, planes and communications. Last month, the Coast Guard presaged this move by stripping the Lockheed-Northrop joint venture of work developing a small, armed cutter vessel.

The failures of the Coast Guard Deepwater program may signal a long overdue acknowledgment in some quarters that defense contractors can not and should not be put in charge of running major government programs worth billions of dollars without adequate oversight. The primary goal of major companies like Lockheed and Northrop Grumman is to make money – a motivation that has repeatedly led to billions of dollars in cost overruns on almost any major venture undertaken by the private sector on behalf of government in recent years. That the federal government would turn a blind eye while defense contractors rummage around in the pockets of the American taxpayer is a ludicrous yet commonly-accepted norm today.

The decision to be announced tomorrow will appease the House Transportation and Infrastructure Committee which called for a restructuring on Friday. A hearing to be held on Wednesday in the Committee will present findings of its inquiry into the program:  “The Committee’s investigation uncovered facts previously undisclosed in other investigations and has raised serious concerns about contractor compliance with the Deepwater Program contract and about the ability of other Deepwater acquisitions to yield reliable assets.”

-- Beth Daley

Comments

[Michael DeKort]

Open call for assistance in Deepwater case:

Within the next few months we will be fighting the motions to dismiss from Lockheed, Northrop and ICGS. If we lose this round the case is over. That means there will be no refund and the contractors will not be held accountable for the Deepwater problem.

(In addition to that Northrop has signaled that the companies actually intend to seek damages from the Coast Guard for stopping the program. Text from Northrop motion to dismiss the Bollinger suit states the following:

"Presumably, Lockheed Martin could seek compensation from the Coast Guard under the CDA for C4ISR equipment and information delivery delays, if any, caused by the government. As the prime contractor, ICGS, not NGSS or Bollinger, could best determine whether Lockheed Martin or NGSS could assert a CDA claim against the government for delays experienced in delivering equipment or information to Bollinger. ICGS could also sponsor such a claim against the Coast Guard on behalf of Lockheed Martin.")

Additionally one of the tactics Northrop is using is to blame the Coast Guard for the 123 problems. They state that the Coast Guard abused these boats, did not operate nor not maintain them properly. From the motion:

"The Coast Guard decision to decommission vessels does not lead to the inescapable conclusion that the defendants committed fraud. To the contrary, there is strong evidence suggesting that the 123 structural issues were attributable to the Coast Guard's operation of the vessels beyond their performance parameters and failure to maintain the structural integrity of the vessels, not any nonconformance with contract requirements."

This is an open call for assistance. We are asking for the Coast Guard and even contractor personnel who read these blogs to get involved. We feel there should actually be very little trouble winning this motion but given the importance and finality of the event we believe it is prudent to not take anything for granted. If there was ever a time to act to ensure the refund is paid and the contractors are held responsible this may be the last opportunity. Finally I am calling on the Commandant himself to make a public and service wide call for the men and women who serve in the Coast Guard to assist in our efforts.

- Michael DeKort
[email protected]