Deepwater contractors face Justice probe

Key House lawmakers Wednesday questioned whether the Coast Guard has the ability to turn around its troubled $24 billion fleet modernization program, whose prime contractors disclosed that they are now targets of a Justice Department investigation.

The lawmakers' concerns were aired one day after the Coast Guard commandant, Adm. Thad Allen, announced his agency will take over as lead systems integrator for all assets and acquisitions under Deepwater, the massive program to upgrade aging vessels, aircraft and communications systems.

"I don't know they have the capability of doing it," House Transportation and Infrastructure Committee ranking member John Mica, R-Fla., said during a hearing in which industry and government officials were required to testify under oath.

Transportation and Infrastructure Coast Guard Subcommittee Chairman Elijah Cummings, D-Md., called Allen's announcement "a step in the right direction" but said the committee is not ruling out drafting legislation to correct the troubled program.

"We're going to see what comes out of this hearing and then we're going to make some determinations where we go from here," Cummings told CongressDaily.

"The admiral has made a statement. We applaud it. The question is whether or not he went far enough and whether or not within the Coast Guard is the capability to do what he said they're going to do," Cummings added. "You don't want to shift from one situation to another and make things necessarily worse."

"You've got to have the personnel and the expertise within the Coast Guard to effectively carry that out," he said.

The Coast Guard's announcement was a blow to defense giants Lockheed Martin Corp. and Northrop Grumman Corp., which were awarded the contract to manage the program in 2002 through a joint venture called Integrated Coast Guard Systems.

Company officials disclosed to reporters Wednesday that the Justice Department has launched an investigation into the Deepwater program.

The department notified the joint venture, its partners and Bollinger Shipyards of Lockport, La., of the investigation Dec. 13, and has ordered the companies to preserve all documents related to the program, the officials said.

Government auditors reported last year on major design flaws in converting eight 110-foot patrol boats to 123-foot patrol boats.

The Justice Department investigation is looking into work done on communications systems, the conversion of boats and building new national security cutters, the company officials said.

The officials added that they were not allowed to disclose whether the Justice Department has issued subpoenas.

Michael DeKort, a former Lockheed project manager who blew the whistle on Deepwater's troubles, appeared at Wednesday's House committee hearing to release a series of e-mail exchanges dating back to 2003 documenting his notifications to Lockheed company officials about problems in the program.

Testifying publicly for the first time, DeKort told lawmakers he was told by company officials to stop looking into any irregularities.

DeKort said he also reported his concerns to the Coast Guard, the Homeland Security Department's inspector general and Congress. Due to a lack of action, DeKort went public last August by posting a 10-minute video of his allegations on the popular video sharing Web site, YouTube.com.

"At its essence, I did not want a crew to come into harm's way down the road and to know that I could have done something about it. It's just that simple," DeKort said when asked why he went public. "I didn't want to have that on my conscience."

House Transportation and Infrastructure Chairman James Oberstar, D-Minn., said his committee plans more hearings. And he said the panel will reserve judgment on whether crimes were committed.

"One thing is certain, we're going to stay on top of it," he said.