The Justice Department on Wednesday said that Bollinger Shipyards agreed to pay an $8.5 million fine to settle claims that the shipbuilder “misrepresented” the quality of its work for a Coast Guard patrol boat conversion program that the service ultimately terminated.
Bollinger in 2002 received a potential $78 million subcontract to begin a portion of the Coast Guard’s fleet of 54 110-foot Island class patrol vessels to 123 feet to extend their lives, but in 2005 the service stopped the work after eight boats were converted due to structural issues. The subcontract was awarded by the Coast Guard’s former lead systems integrator, Integrated Coast Guard Systems (ICGS), which was responsible for managing the recapitalization of its surface and air assets.
In 2011 the Justice Department sued Bollinger alleging the company made material false statements related to the conversion program, saying then that an investigation by the Coast Guard and ICGS “concluded that the calculation of hull strength reported by Bollinger to the Coast Guard prior t the conversion was false (Defense Daily, Aug. 18, 2011).”
On Wednesday the DoJ said “The False Claims Act suit alleges that Bollinger misrepresented the longitudinal strength of patrol boats it delivered to the Coast Guard that resulted in the boats buckling and failing once they were put into service.” The department said that Bollinger told the Coast Guard that the longitudinal strength of the boats was twice what it really was and that the company allegedly also didn’t’ follow required quality control procedures that would have ensured against the engineering miscalculations.
The Coast Guard revoked its acceptance of the eight converted Island class vessels. To date, five of the vessels have been disposed of, a Coast Guard spokesman told Defense Daily on Thursday. The three remaining vessels were maintained for evidentiary purposes at the Coast Guard’s yard in Baltimore, MD. The Coast Guard has permission to begin disposal of the remaining three ships, the spokesman said.
Bollinger built the original fleet of Island-class cutters and is the incumbent shipbuilder on the follow-on vessel, the 154-foot Fast Response Cutter (FRC). Bollinger is under contract to build 32 FRCs for nearly $1.5 billion and has delivered 15 vessels so far. The service has a requirement for 58 of the vessels and is conducting a competition for the remaining 26 boats.
The Coast Guard in 2007 sought to settle the Island-class conversion dispute out of court with ICGS for $96 million but no settlement was reached. ICGS was a joint venture between Northrop Grumman [NOC] and Lockheed Martin [LMT].
The DoJ said that the claims resolved by the settlement with Bollinger were only allegations that that there has been no determination of liability.