Lawmakers scold Lockheed, Grumman

Democratic lawmakers on Monday scolded Lockheed Martin and Northrop Grumman for balking at the Coast Guard's refund request for faulty ships.

"We deserve to have every dime of our money back," Rep. Elijah Cummings of Maryland said in a phone interview. Cummings, who chairs the House subcommittee on Coast Guard and Maritime Transportation, added: "I am hoping they will rethink this situation."

The Coast Guard in May revoked its acceptance of eight 123-foot patrol boats due to structural problems, and said it would seek damages. The ships were removed from the waters off Florida late last year and permanently decommissioned in April.

But in a June 27 letter, Integrated Coast Guard Systems, the joint venture between Lockheed Martin Corp. and Northrop Grumman Corp., said the Coast Guard's request for a refund is not "supported as a matter of fact or law."

Sen. John Kerry, D-Mass., said the companies were "trying to duck responsibility for building defective boats."

The Coast Guard has said it lost up to $60 million on the eight cutters that are part of the $24 billion Deepwater modernization program, but hasn't specified the amount of damages it will seek.

ICGS spokeswoman Margaret Mitchell-Jones called the issue a "contractual matter" between the two sides "that we will not debate in the media."

The Coast Guard is expecting a more detailed response from ICGS later this month, said agency spokesman George Kardulias.

Lockheed Martin has said it is responsible for the aviation, command and control and logistics elements of Deepwater, not shipbuilding, and did not expect a financial hit from the refund request.

Northrop Grumman spokesman Bill Glenn said the root cause of the hull problems must be certified before "accountability and corrective action" can be determined. The company will share its findings with the Coast Guard when its analysis of the data is complete, he added.

The Coast Guard last month extended the contract with ICGS for 43 months despite internal and congressional scrutiny of the 25-year program. The deal does not guarantee the award of any future task orders and the value of the contract will be determined by further negotiations as the companies submit specific work proposals.

ICGS said earlier this year that the Justice Department is investigating the Deepwater contract. The agency told Lockheed Martin, Northrop Grumman and other contractors not to destroy certain documents. The companies have said they are cooperating with the investigation.

Shares of Bethesda, Md.-based Lockheed Martin rose 33 cents to $96.96 Monday, while Los Angeles-based Northrop Grumman fell 51 cents to $77.93.