Posted on Fri, May. 09, 2008

WASHINGTON -- After repeated delays and cost overruns, the Coast Guard on Thursday accepted the first in a series of massive ships built by Lockheed Martin and Northrop Grumman that are the cornerstone of a multibillion-dollar fleet modernization.

But at least one lawmaker immediately expressed concern about the decision, citing a U.S. Navy inspection last month that found numerous problems with the vessel. The Coast Guard itself acknowledged some issues with secure communications and other systems still need to be resolved on the Bertholf cutter.

In March, Coast Guard officials said tests of the ship's systems identified problems with safety, launch and recovery applications and communications. Until some of those glitches could be fixed, the agency had delayed acceptance of the 418-foot, 4,300-ton National Security Cutter currently stationed in Pascagoula.

Now that the Bertholf has been accepted, the agency will run operational trials for up to 24 months.

"I am greatly concerned that the (material inspection and receiving report) would be signed in spite of... several deficiencies that have been 'starred' by U.S. Navy ship inspectors due to their potential to significantly impair the ship's operation," said Rep. Elijah Cummings, D-Md., chairman of the House subcommittee on Coast Guard and maritime transportation.

Navy inspectors identified eight issues to be specifically addressed, including those with the computer system that enables automated operation of the ship's main propulsion and electrical systems, maintenance and realignment of the bearings that support the ship's propeller shafts, and assorted flight deck deficiencies.

Jan van Tol, a senior fellow at the Center for Strategic and Budgetary Assessments and a retired Navy captain, said none of the issues appeared to be major, although the hardware and software modifications needed for automated operations could be tricky. "It's when fixing one component reveals trouble in another serially that timelines start to extend," he said.

The Coast Guard faces ample challenges either way, by its own assessment, but said the remaining six significant issues identified by the Navy inspectors would be fixed by the end of the month.

Elsewhere, some classified communications systems may not be certified before the cutter leaves the shipyard in mid-June, so temporary systems will be used, Rear Adm. Gary Blore said Thursday.

It will be "several months" before all of the communications, surveillance and reconnaissance systems are certified and no systems will be operated with classified information until that happens, said Blore, assistant commandant for acquisition.

In about a year, following resolution of all identified deficiencies and contract liens, final acceptance of the Bertholf will occur, he said.

The agency last summer acknowledged the combined cost of the first two cutters more than doubled to roughly $1.14 billion. The first of the eight planned ships cost more than $640 million. The second cutter, which is expected to cost $495.7 million, had been slated for acceptance in October, but also is being pushed back as lessons learned from the first ship are applied, agency officials said in March.

"Given the millions of taxpayer dollars that have already been wasted on the Deepwater project, I will be closely watching to ensure that the Coast Guard addresses these serious deficiencies while also encouraging (the Coast Guard Commandant) not to move to final acceptance of this vessel before all outstanding deficiencies are resolved," Cummings said Thursday.

Integrated Coast Guard Systems, a joint venture between Lockheed Martin Corp. and Northrop Grumman Corp., was awarded the original Deepwater contract in 2002, but has been criticized for its role in the delays.

ICGS spokeswoman Megan Mitchell said Thursday it was an "exciting day" for the companies and the agency, and "we look forward to seeing Bertholf in the service of the U.S. Coast Guard and our nation for many years to come."

Though ICGS in January said it was open to negotiating a refund for faulty ships it provided the Coast Guard, it did not agree with the $96.1 million the agency has requested. The Coast Guard last May revoked its acceptance of eight 123-foot patrol boats due to hull buckling. A month later problems also were identified with other equipment and systems.

The Coast Guard does not yet have a refund but said Thursday negotiations continue.

Northrop Grumman builds the ships and Lockheed Martin provides communications equipment and other technology.

The eight ships were removed from the waters off Florida in late 2006 and permanently decommissioned in April 2007. Some electronics issues on them were first identified in 2003 by Michael DeKort, a former Lockheed Martin employee, who later chronicled his complaints in a YouTube video.

DeKort, who testified before Congress about Deepwater issues last April, on Thursday said more testing of Bertholf's classified systems for two more years is just a convenient way to appease critics and defuse scrutiny. "Things are going to get worse," he said.

The Justice Department, which is investigating the Deepwater contract, has told the contractors not to destroy certain documents, and the companies have said they are cooperating.

The 25-year, $24 billion Deepwater program will modernize 91 cutters, 195 aircraft, computer and communication equipment, and integrated logistics capabilities.

Shares of Bethesda, Md.-based Lockheed Martin fell 8 cents to $105.84 Thursday; Los Angeles-based Northrop Grumman gained 40 cents to $74.67.