Government sues, alleging contractor botched Coast Guard acquisition

Feds claim company misrepresented information in its Deepwater bids

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.


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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 Federal Computer Week.

Reader Comments

Wed, Oct 5, 2011 Jerome Little

I was involved with the Navy Patrol Coastal program and served on USS Cyclone PC-1 as the COB. Bollinger also built these ships. What is interesting to me and I think overlooked is this, I sailed in Cyclone from Norfolk to the Persian Gulf and back having gone through every sea state including two days of 20' seas off the coast of Aden. I will say honestly that most of the Commanding Officers viewed these ships as sports cars with guns. As a routine they would operate the ships in excess of the design limitations. The incident with USS Tempest PC-2 is what results when you exceed the design limitations. I would bet that the problem the Coast Guard had with the Island Class Cutters was a direct result of exceeding the design limitations and not a problem with the design. Like a plane, fly it outside the design envelope and bad things will happen.

Tue, Aug 23, 2011 rewelchjr

Wasn't Bollinger Shipyards the only one of the group in the hearing before Congress to acknowledge liability? Didn't a congressman/lawyer warn them about making such statements?

Mon, Aug 22, 2011 NJ

Thank God that the Coast Guard is going after these contractors. Their actions appear treasonous during a time of war. The US owes a huge debt of gratitude to the commenter - Mr. DeKort - for having the courage to bring this issue to the attention of the powers that be.

Sat, Aug 20, 2011 Jaime Gracia Washington, DC

The entire premise of the Deepwater program was misguided from the beginning, as the Coast Guard completely turned over any accountability and oversight to the ICGS. I worked on the Deepwater program for some time, and was shocked at the blatant negligence on the government's part to ensure a proper investment in taxpayer funds. Although I can not comment on the lawsuit, I am not surprised at the claims.

Fri, Aug 19, 2011 Michael DeKort

As many of you know, I have had many naysayers for years pointing out that the Coast Guard hadn’t openly vouched for my claims. Well, now they have clearly done so. This new government case, filed 5 years after my case, validates the claims in our own False Claims Act lawsuit in the Dallas federal court since 2006. We have been pursuing the Deepwater contractors on the defective 123s and other claims on behalf of the Coast Guard, the DOJ and the taxpayers for several years now. We are very glad that our efforts, which my law firms financed, have yielded monetary recoveries for the United States, as well as key discovery documentation and deposition testimony that aided the DOJ’s investigation for a case against Northrop Grumman’s subcontractor, Bollinger Shipyards and its JV partner. We look forward to working with the DOJ on the remainder of the case and several other fraudulent activities for which we are pursuing ICGS and Northrop Grumman. The 123 debacle is a national tragedy, and the money is sorely needed by the Coast Guard in these times of financial crisis. Additionally, we believe the fraudulent inducement of the government to award the whole Deepwater program to ICGS, and thus Northrop Grumman, requires a remedy, and we are pursuing that as well. It is our goal to provide a level playing field for the Coast Guard and the American taxpayer. Stay tuned, as there will be lots of justice in the future. The last chapter of our shared pursuit has not been written yet. We are still pursuing the main contractors, and we will assist the DOJ whenever possible in their case against the second tier subcontractors.

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