Coast Guard seeks refund for faulty ships

WASHINGTON — The discovery of faulty communications and navigation equipment on eight Coast Guard ships built by Lockheed Martin and Northrop Grumman signal a potentially wider problem for the agency's $24 billion fleet modernization.

The agency sent a letter to the companies — from whom it seeks multimillion-dollar refunds — outlining dozens of components on these ships that were problematic.

Lockheed previously said it would not be financially affected by the government's refund request because the faulty ships had structural, not equipment, problems — meaning only Northrop was to blame.

But the Coast Guard's June 5 letter, a copy of which was viewed by The Associated Press, questions that assessment.

Lockheed is willing to resolve the issues "for which we are responsible," company spokesman Troy Scully said Monday. "We are willing to negotiate with the Coast Guard."

Coast Guard spokesman George Kardulias declined to provide details about the agency's communication with the company.

The Coast Guard on May 17 revoked its acceptance of eight 123-foot patrol boats due to hull buckling. Then, in the June 5 letter sent to Integrated Coast Guard Systems, a joint venture between Lockheed Martin Corp. and Northrop Grumman Corp., the agency said its revocation was partly based on equipment and systems that failed to meet contract requirements, including "class wide issues ... which remain unresolved."

Northrop Grumman has about 1,250 employees in Utah.

The agency's letter also said it was forced to fix an electronic engine problem and make a software upgrade at its own expense after the contractors failed to do so.

"That's a warning sign," said Jim Krouse, vice president of sales strategy at Government Sales Force LLC, which consults businesses in the federal technology market. "It's distinctly possible" the same equipment issues could arise on other ships being built as part of the Coast Guard's Deepwater modernization program, he added.

The eight faulty ships were removed from the waters off Florida late last year and permanently decommissioned in April. Some of the electronics problems were first identified in 2003, a year after the joint venture was awarded the contract.

Among the problems identified in the Coast Guard's letter were: a radio direction finder used for navigation that did not meet accuracy requirements, emergency power system deficiencies, and data lines that failed to transmit video back to shore.