Under mounting pressure from Congress, the Coast Guard on Tuesday has announced that Northrop Grumman and Lockheed Martin no longer will manage the $24 billion modernization of its fleet. The Coast Guard’s decision to dump Lockheed Martin and Northrop Grumman from managing the service’s modernization program is the latest indication that the government wants to reassert its domination over defense contractors in complex weapons development. According to Department of Homeland Security officials and congressional staffers, the Coast Guard is scheduled to announce today that it will assume management of the 25-year, $24 billion Deepwater program that aims to overhaul ships, aircraft and communications.
The move is widely perceived as a strategy to conciliate congressional demands for greater oversight of Deepwater. However, the decision is a huge embarrassment for the contractors, Lockheed Martin and Northrop Grumman, which had formed a partnership to oversee the delivery of 91 new ships and more than 240 new or rebuilt aircraft.
All three major classes of ships that Lockheed and Northrop have worked on after clinching the contract in 2002 have had serious problems. Admiral Thad W. Allen has said that eight renovated 123-foot patrol boats were so unseaworthy they would be permanently retired. The setbacks have destabilized earlier contention that private contractors, not the government, are best proficient to manage such a complex project.
However, Lockheed and Northrop will still perform a crucial role in the program, known as Deepwater, with the Coast Guard serving as what Admiral Allen described as the ’system integrator.’ Admiral Allen further said, ‘The Coast Guard will no longer presume that Northrop and Lockheed, and subcontractors they hire, will be in charge of designing and building the new ships and planes under the 25-year program.’
As an alternative, the Coast Guard will think about hiring the contractors directly and will assume a much more important role in assessing the design for each new class of ships and planes, he added. The Coast Guard is also planning to appoint outside experts to review the planned designs in an attempt to discover flaws before the ships and planes are built.
Allen speaking over the decision said that numerous factors including failure to understand the needs of the industry and government, to predict and control costs and balancing competition and technology offerings from the private sector have been contributing factors.
