The Department of Justice yesterday filed suit against shipbuilder Bollinger Shipyards alleging the company made material false statements to the Coast Guard related to the conversion of existing 110-foot Island class patrol boats to 123-feet under the Deepwater Program.
“An investigation by the Coast Guard and the [Deepwater] prime contractor, Integrated Coast Guard Systems (ICGS), concluded that the calculation of hull strength reported by Bollinger to the Coast Guard prior to the conversion was false,” the DoJ said in a statement.
In a statement to the media yesterday, Bollinger noted that it has built every Coast Guard patrol boat since 1984, 122 in all. The company said it is “disappointed” in the DoJ suit, saying that “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.”
Before awarding the eventual contract to begin the extension program, the Coast Guard was concerned about structural integrity issues stemming from any extensions, specifically due to hull degradation issues on the 110-foot boats, the DoJ says in its suit filed with the United States District Court in Washington, D.C. In response, Bollinger did a strength analysis that showed the safety factor for the 123-foot conversion was 2.3 times greater than required.
However, in the complaint, the DoJ says the values reported to the Coast Guard by Bollinger were based on a thicker hull plating than actually existed in the 110-foot boats.
“Bollinger did not tell the Coast Guard that it had used thicker hull plating in its calculations,” according to the complaint. “Since there was no provision in the proposal for replacing the hull plating on the 110-Ft WPBs with thicker hull plating during the conversion, using this thicker hull plating was not reasonable.”
A subsequent analysis by Bollinger that was submitted to the Coast Guard also failed to “reflect the actual structural characteristics of the converted vessels,” the DoJ says.
And, even though Bollinger told the Coast Guard that the American Bureau of Shipping (ABS) would review the company’s compliance with ABS structural rules, the DoJ says that the ABS “did not review or certify” Bollinger’s calculations.
After the first converted patrol boat, the Matagorda, experience hull buckling in September 2004, Bollinger vice president T.R. Hamblin sent the company’s CEO an Oct. 13, 2004 e-mail saying, “we did lead the Coast Guard into a false sense of security by telling them early on that the Section Modulus for a 123 would be 5230 [sic] inches cubed as opposed to the real number, just above 2600,” the DoJ says in the complaint.
The hull integrity issues prompted by the hull buckling on the Matagorda prompted one fix after another but still didn’t solve the problems. The Coast Guard had planned to extend the length of 49 of its Island-class patrol boats to extend the service life, improve crew accommodations, add a stern launch and recovery small boat ramp, enhance C4ISR systems and make structural enhancements. In all, Bollinger converted eight hulls for the Coast Guard, none of which are usable.
Bollinger was under subcontract to Northrop Grumman [NOC] for the conversions. Northrop Grumman was one-half of a joint venture with Lockheed Martin [LMT] called ICGS, which was the lead systems integrator for Deepwater. Bollinger was also the builder of all 54 Island-class patrol boats for the Coast Guard.
The Coast Guard paid ICGS $78 million for the task orders awarded to Bollinger for the conversion work. It’s unclear what the final financial impact to Bollinger would be if it loses the lawsuit, but the potential damages appear to reach into the hundreds of millions of dollars based on the thresholds permitted under the False Claims Act. In addition, the government is charging the company with several other violations of fraud, misrepresentation and unjust enrichment.
In late 2007 the Coast Guard sent a letter to ICGS inviting the joint venture to settle the 110-foot conversion issue out of court for $96 million (Defense Daily, Jan. 8, 2008). No settlement was reached.
Bollinger is currently building the replacement cutters for the 110-foot patrol boats, the 153-foot Fast Response Cutter.
In addition to Bollinger, the DoJ complaint includes Halter Bollinger Joint Venture. VT Halter Marine is also a shipbuilder.