Coast Guard | The Contracting Education Academy

The federal government is seeking financial damages from Bollinger Shipyards Inc. and accusing the company of falsifying statements to the Coast Guard that resulted in eight “unseaworthy” boats being delivered under the Deepwater acquisition program, the Justice Department announced.

Bollinger proposed to convert existing the Coast Guard’s 110-foot patrol boats into 123-foot boats by extending the hulls. The Coast Guard awarded a contract to convert eight vessels; however, the first completed vessel suffered hull failure when put into service.

In investigation concluded that Bollinger exaggerated the hull strength that would be achieved in the reconstructed vessels, the department said in statement released Aug. 17.

“The calculation of hull strength reported by Bollinger to the Coast Guard prior to the conversion was false,” Justice said in the statement.

The government’s lawsuit seeks damages from Bollinger under the False Claims Act for the “loss of the eight now unseaworthy vessels,” the statement said.

The amount of damages being sought was not specified. However, the Coast Guard, in the lawsuit, said it had paid Bollinger $78 million to date, according to an article in the New Orleans Times-Picayune.

“Companies which make false statements to win Coast Guard contracts do a disservice to the men and women securing our borders,” Tony West, assistant attorney general for Justice’s civil division, said in the statement. “We will take action against those who undermine the integrity of the public contracting process by providing substandard equipment to our armed services personnel.”

The Times-Picayune also obtained a statement from Bollinger, in which the company denied any wrongdoing.

Bollinger has a “spotless record for honest and fair dealing with every customer, including the U.S. Navy and Coast Guard, our largest customer,” the company said in the statement, according to the news report. “Throughout this process, Bollinger has been open and cooperative with the government, and we remain committed to providing the government all necessary information and assistance to bring this matter to a close,” the statement said. “Bollinger has tried to find a way to resolve this matter short of litigation, but we are fully prepared to defend our good name aggressively in a court of law.”

The Coast Guard began the multibillion-dollar Deepwater program in 2002 to modernize its fleet of ships, cutters, boats and other assets. A contract for lead systems integration was awarded to a joint venture owned by Lockheed Martin Corp. and Northrop Grumman Corp. Bollinger was awarded a number of construction contracts under the Deepwater umbrella.

After the hull failures of the converted 123-foot cutters, the Coast Guard took the eight converted boats out of service in 2007. Facing other difficulties and rising costs, the agency also took over the lead systems integrator role over the troubled program.

According to a report from the Government Accountability Office, the latest cost estimate for Deepwater assets is $29 billion, up from $24 billion in 2007.

— About the Author: Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Washington Technology. Published Aug. 18, 2011 at http://washingtontechnology.com/articles/2011/08/18/coast-guard-false-claims-lawsuit-bollinger.aspx?s=wtdaily_190811

Total costs for the Coast Guard’s Deepwater boat and ship replacement program could rise by another $5 billion and even higher, according to a new report from the Government Accountability Office.

The Coast Guard took over as lead systems integrator for the troubled contracting program in 2007 and established a $24.2 billion program baseline. The Coast Guard recently indicated that total acquisition costs could be as much as $29.3 billion, according to the report from the GAO released July 28.

But even that larger estimate likely falls short of the true total costs because the Coast Guard has not revised baselines for all assets, including the Offshore Patrol Cutter, one of the costliest assets in the program, the auditors said.

Also, the agency has further revised its schedule, which has not been fully reflected in the most recent cost estimate, the GAO report states. Furthermore, the reliability of cost estimates for some assets is questionable because the Coast Guard did not follow best practices.

“The Deepwater Program as a whole continues to exceed the cost and schedule baselines approved by DHS in May 2007, but several factors preclude a solid understanding of the true cost and schedule of the program,” the GAO report states, adding that “additional cost growth is looming.”

“The Coast Guard and Homeland Security Department officials agreed that the annual funding needed to support all approved Deepwater acquisition program baselines exceeds current and expected funding levels, particularly in this constrained fiscal climate,” the GAO said.

Coast Guard acquisition officials expect that up to $1.9 billion a year would be needed to support the stated baseline, while anticipating a maximum of $1.2 billion a year. As such, the Deepwater program goals are “unachievable.”

GAO auditors said the situation of managing a portfolio expected to exceed the appropriated budget is likely to lead to “unhealthy competition for funding” among programs within the portfolio.

“Over the past four years, the Coast Guard has strengthened its acquisition management capabilities in its role as lead systems integrator and decision maker for Deepwater acquisitions,” the GAO report states. “Now, the Coast Guard needs to take broader actions to address the cost growth, schedule delays, and expected changes to planned capabilities that have made the Deepwater program, as presented to Congress, unachievable.”

The GAO made nine recommendations, including that the Coast Guard consider identifying tradeoffs to the planned Deepwater fleet and take other actions to increase confidence that assets would meet mission needs. DHS officials agreed with the recommendations.

About the Author: Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Defense Systems. This article was published 7/29/2011 at http://defensesystems.com/articles/2011/07/29/deepwater-costs-rising.aspx?sc_lang=en.

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