Government sues, alleging contractor botched Coast Guard acquisition

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.