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Coast Guard adds catch to Deepwater contract

The Coast Guard on Monday awarded Lockheed Martin Corp. and Northrop Grumman Corp. a 43-month extension of the Deepwater modernization contract with one large caveat — that the service can review the team’s performance at 18 months and decide whether to continue the full 43 months, a spokesman said Tuesday.

Coast Guard officials announced that the new contract, an extension of the initial five-year base contract, was issued to Integrated Coast Guard Systems, the Arlington, Va.-based joint venture between Lockheed Martin Maritime Systems and Sensors and Northrop Grumman Ship Systems.

Although the Deepwater program has come under increased scrutiny from government watchdog agencies and Congress in the past three years, renewal of the contract was expected.

The original contract specified a potential for five additional award terms of up to 60 months each.

In May 2006, after reviewing the contract’s performance, the service decided that the first follow-on contract would be no longer than 43 months.

Earlier this month, Coast Guard Commandant Adm. Thad Allen told Congress that he would review performance after the first 18 months of the new contract.

“If everything is going well, we’ll continue. That’s been negotiated, and Congress has backed it,” Deepwater spokesman George Kardulias said Tuesday.

The Coast Guard is taking over the “systems integrator” role of the contract from ICGS, assuming stricter management and oversight of the program, which has been plagued by management problems, design concerns and failed construction.

According to Coast Guard officials, the new contract award does not guarantee future delivery or task orders for ICGS, nor is there a required minimum order under the contract period.

“The value of the contract will be determined by further government-industry negotiations as ICGS submits proposals for specific work planned as part of the award term,” according to a Coast Guard announcement.

“This is all part of the transition, of the Coast Guard leading and managing the program,” Kardulias said.

ICGS spokeswoman Margaret Mitchell-Jones said the two companies are pleased to continue supporting the Coast Guard’s modernization program.

“We look forward to continuing to build ships, aircraft, communications and support systems as determined by the Coast Guard, to continue the progress under this very important program,” Mitchell-Jones said.

The Deepwater program is estimated to last 25 years and be worth up to $24 billion.

When complete, Deepwater is expected to deliver at least 91 new ships, 195 aircraft and new electronics packages and equipment to the service.