At a time when every federal penny (seemingly) should count, the U.S. Department of Justice is embarking on an ill-advised, potentially expensive and ultimately counterproductive legal action against the U.S. Coast Guard’s primary shipbuilding contractor. Go figure…
Showing questionable wisdom, the United States and its justice department have filed suit against Bollinger Shipyards Inc., Bollinger Shipyards Lockport LLC and Halter Bollinger Joint Venture LLC. In general terms, the government alleges that the Louisiana shipbuilder misrepresented the hull strength of a series of vessels that it was improving and lengthening about five years ago. The first converted cutter, according to the government, suffered hull failure when put into service. Eventually, said the U.S. Justice Department in a prepared statement, “Efforts to repair the Matagorda and the other converted vessels were unsuccessful. The cutters are unseaworthy and have been taken out of service.”
As the government seeks damages from Bollinger for the loss of the eight vessels – the upgrades alone said to be worth about $95 million – the Coast Guard itself continues to struggle in an effort to renew an aging fleet and related equipment. Ten years after launching the aggressive, $25 billion so-called “Deepwater” program to do just that, the nation’s fifth military, uniformed service has little to show for the $7 billion already spent. The latest DOJ action, coming years after the work itself was complete, cannot hope to hide those failures.
Bollinger Responds
For its part, Bollinger responded to the suit by saying in a prepared statement dated August 17, “Since its founding, Bollinger Shipyards has operated on the principle that ‘quality is remembered long after the price is forgotten.’ Three generations of the Bollinger family have earned a spotless record for honest and fair dealing with every customer, including the U.S. Navy and Coast Guard, our largest client. Since 1984, Bollinger has built every patrol boat the Coast Guard has purchased; to date some 122 have been delivered.”
The statement went on to say, “We are disappointed with the Department of Justice’s decision to file a complaint related to work completed in 2006. Throughout this process, Bollinger has been open and cooperative with the government, and we remain committed to providing the government all necessary information and assistance to bring this matter to a close. Bollinger has tried to find a way to resolve this matter short of litigation, but we are fully prepared to defend our good name aggressively in a court of law. As we have for the last 65 years, Bollinger will continue to deliver the highest quality and contract-compliant products to the United States Coast Guard and to each and every customer.”
Indeed, and as if to underscore their response, Bollinger this week also noted the launch of the U.S. Coast Guard’s second, 154-foot Fast Response Cutter from its Lockport, LA shipyards last Thursday. The event – according to the Coast Guard itself – marks a significant milestone in the Coast Guard’s acquisition of the Sentinel-class patrol boats. And, the third Fast Response Cutter is tentatively scheduled to be launched Nov. 10. Let’s sum up: 122 Coast Guard patrol boats delivered since 1984, an ongoing relationship with the Coast Guard (Bollinger’s largest client) and a continued record of typically delivering what the Coast Guard wants in a timely fashion. Not bad for an outfit now accused of misrepresenting the facts.
Blame Game
From where I sit, there is probably plenty of blame to go around, but don’t take my word for it. The recent (28 July) GAO Report about the Coast Guard’s Deepwater program is also telling. The 86-page Report, GAO-11-173, “Coast Guard: Action Needed As Approved Deepwater Program Remains Unachievable,” says, among other things, “The Deepwater Program continues to exceed the cost and schedule baselines approved by DHS in 2007.” None of that is any secret, of course, and the report goes on to list numerous problem and setbacks associated with the star-crossed efforts.
Central to the Coast Guard’s troubles in the Deepwater effort was its own failure to properly oversee the effort from the beginning. Coast Guard Commandant ADM Robert Papp himself was recently quoted as saying, "I'll be the first to admit, we weren't prepared to start spending this money and supervising a project this big." Leaving the details and supervision of the projects to the contractors themselves, the Coast Guard eventually lost control of the multi-billion dollar project. Today, a cash-strapped Congress is pushing back against what they characterize as inadequate steps by the Coast Guard to right their wildly off-course and over budget effort.
The government’s action against Bollinger also comes as a cost-conscious Congress, led by Rep. Frank Lobiondo (R - NJ), are on record as saying that they will no longer provide a “blank check” to the Coast Guard. And, while that makes sense on many levels, it also comes at a time when the Coast Guard’s efforts in the rapidly thawing Arctic are also ramping up significantly, with inadequate resources – particularly in way of icebreakers that can cost up to $1 billion each – to do the job.
Catch 22
In numerous interviews over the past few years, especially where it comes to Deepwater and ship acquisition efforts, the Coast Guard leadership has opted to look ahead, not behind. The party line has become, “Don’t look at where we’ve been; instead look how far we’ve come.” Fair enough. Today, however, and as the Coast Guard implores Congress to forget the past, the Department of Justice seems just as intent upon dredging it up. But, it doesn’t seem right to let them have it both ways, does it? Bollinger certainly won’t be afforded that luxury.
At the end of the day, you have to wonder how much it will cost Bollinger and ultimately, the U.S. taxpayers, to defend and prosecute a case from which virtually nothing good can come. Did the shipyard drop the ball or was the Coast Guard deficient in their contract administration? I honestly have no idea. Five years down the road, it is a curious time to be finding out. It will also be expensive. How many patrol boats could we be building with that money? Finally, and perhaps most importantly, who will build these boats and others, if and when, years from now, the government triumphs? – MarPro.
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Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.