When the Coast Guard's first large cutter in 35 years was christened in November at Northrop Grumman's Pascagoula, Miss., shipyard, it was a...

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WASHINGTON — When the Coast Guard’s first large cutter in 35 years was christened in November at Northrop Grumman’s Pascagoula, Miss., shipyard, it was a gleaming symbol of the service’s ambitious $24 billion Deepwater program to update its aging fleet.

Six months later, Deepwater is listing under a storm of congressional criticism for design mistakes, cost overruns and lax oversight. A botched program to lengthen existing patrol boats from 110 feet to 123 feet has forced the Coast Guard to cancel the conversions and scrap eight ships.

The Pascagoula-built National Security Cutter, at 418 feet the crown jewel of the Deepwater program, is under scrutiny for metal fatigue that critics say shortens its 30-year life to less than five years.

Four government audits have criticized management of the project, which involves 91 new ships and 240 aircraft. Some of those vessels would be based in Washington state waters.

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The Coast Guard has responded to the hammering from lawmakers by taking oversight of Deepwater from the contractor, Integrated Coast Guard Systems (ICGS), a joint venture between Lockheed Martin and Northrop Grumman; canceling the conversions; and making design modifications to the National Security Cutter.

Thursday, the service announced at a House Homeland Security Committee hearing that it had taken the first legal step to recoup the $100 million loss of the eight cutters from the contractor. ICGS said it is evaluating the Coast Guard letter demanding a refund.

But many members of Congress are pressing for more.

Rep. Gene Taylor, D-Miss., calls the failed 110-foot conversion program “the poster child” of what’s wrong with Deepwater.

“They stopped after ruining eight boats,” said Taylor, a former Coast Guard reservist who commanded patrol boats. “What angers me is we have eight ruined boats, $100 million spent and no one is held accountable. No one has been demoted.”

The 13-foot section added to lengthen the ships ended up causing the hull to buckle under the stress of rough waters.

In addition, whistle-blowers alerted congressional investigators that small search-and-rescue boats that the 123-foot vessel carried had radios that were not waterproof, a finding Taylor said was “bizarre.”

The company vigorously defends its performance.

“Lockheed Martin and Northrop Grumman, along with more than 600 suppliers from over 41 states and many best-of-breed manufacturers from around the world, form the industry team that is committed to supporting the Coast Guard’s Deepwater program,” said Margaret Mitchell-Jones, ICGS communications director.

“ICGS and its suppliers are meeting the terms contracted by the Coast Guard. While costs and capabilities have expanded due to post 9/11 requirements, these are not cost overruns to the baseline contract, but rather reflect changes necessitated by new mission requirements.” The program, she said, “has achieved significant progress.”

Coast Guard Commandant Adm. Thad Allen, who assumed control of the service last year, announced the program changes last month. “We’ve relied too much on contractors to do the work of government as a result of tightening budgets, a dearth of contracting expertise in the federal government and a loss of focus on critical governmental roles and responsibilities in the management and oversight of acquisition programs,” he said.

Allen appeared to be trying to head off legislation, but the Senate Commerce Committee last month approved a bill authored by Sen. Maria Cantwell, D-Wash., chair of the committee’s oceans, atmosphere, fisheries and Coast Guard subcommittee. The legislation would prevent Coast Guard reliance on a private contractor, open the bidding process and impose more oversight from government agencies.

Material from The Seattle Times archives is included in this report.

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