Lockheed, Northrop Asked to Pay For Bad Boats

Tuesday, January 08, 2008
The U.S. Coast Guard has asked a joint venture of Lockheed Martin Corp and Northrop Grumman Corp to pay $96.1 million for eight patrol boats that it modified, but that cannot be used. In the latest exchange between the Coast Guard and the venture, Integrated Coast Guard Systems (ICGS), the government said it concluded after reviewing thousands of documents that its revocation of acceptance of the patrol boats, was "not only timely, but was also technically and legally justified. Lockheed and Northrop, which began work in 2002 to lengthen the eight 110-foot patrol boats to 123 feet, had challenged the legality of the Coast Guard's decision to reject the boats this past summer, since the service initially accepted the boats. In April the Coast Guard announced it was decommissioning the boats because of structural problems and was taking back management responsibility for the overall $24 billion, 25-year modernization program known as Deepwater. The program, which was due to produce more than 91 new cutters, 195 new aircraft plus new communications and surveillance equipment, has been dogged by cost overruns and delays. She said the $96.1 million payment was not a final estimate, but could form the basis for a negotiated settlement with the venture. Lockheed Martin said the Coast Guard initially identified nine class-wide issues, of which five were under its area of responsibility. But in a subsequent letter, the service expressed concern about only one issue under Lockheed's watch involving certain topside equipment items.

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