- The Washington Times - Wednesday, May 28, 2008

The U.S. Coast Guard yesterday said it is suspending its investigation into the 123-foot national-security cutters that it says contractors ruined and instead will support a Justice Department investigation of the contract.

The 110-foot ships were modified by Integrated Coast Guard Systems (ICGS), operating under a contract with the Coast Guard to add 13-foot ramps to their sterns. But the modified 123-footers were declared unseaworthy, pulled out of service in 2006 and are now moored in Baltimore.

The Coast Guard had sought a nearly $100 million refund from ICGS, which is a joint operation of Lockheed Martin Corp. and Northrop Grumman Corp. ICGS is leading the Coast Guard’s $24 billion, 25-year acquisition contract, dubbed “Deepwater.”

The Justice Department and the Department of Homeland Security’s Office of Inspector General are taking over the investigation, said Rear Adm. Gary T. Blore, assistant commandant for acquisition and chief acquisition officer, at a press briefing at Coast Guard headquarters.

“We’re taking a step back from contractual remedies,” Adm. Blore said, referring to alternative dispute resolutions. “Government equities are best represented by having DOJ” handle the investigation, he said.

Adm. Blore said the Coast Guard will provide technical support on the investigation.

Previously, the Coast Guard said it would pursue a refund from the contractors, and it began the process with a letter to the contractors, revoking acceptance and asking for the taxpayer money back.

The ships became symbolic of the problems with the Deepwater contract, which critics said was too large and handed over too much decision-making authority to contractors.

Since then, the Coast Guard has taken control of decision-making and larger aspects of the contract.

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