Editorial: Vital contract a nightmare

Friday, Dec. 15, 2006 | 7:17 a.m.

If defense contractors Lockheed Martin and Northrop Grumman consistently built military equipment with the same efficiency as they lobby Congress, the U.S. Coast Guard would now be well on its way toward modernizing its fleet.

As it stands, however, the Coast Guard has very little to show for itself more than four years into a 20-year, $24 billion contract with the two companies.

The contract's record is replete with cost overruns (the initial contract was for $17 billion over 20 years), failed designs and management blunders, according to a New York Times story on Saturday.

While most military equipment is produced by private contractors, the privatization model chosen by the Coast Guard - where the companies were essentially left on their own to oversee deadlines and designs - is inherently flawed.

The Times quoted Anthony D'Armiento, a systems engineer who worked on the contract: "This is the fleecing of America. It is the worst contract arrangement I've seen in all my 20-plus years in naval engineering."

As a consequence of the lack of oversight, the Coast Guard - at a time when its duties have been vastly increased by the Homeland Security Department - is falling short in its mission of patrolling the nation's coastlines and harbors.

The plan behind the contract was to modernize the Coast Guard by replacing nearly its entire fleet of ships, planes and helicopters with new ones. The initial phase, building new patrol boats and ships, however, has run aground amid deliveries of boats with cracked hulls and engine failures, and ships with structural flaws.

Part of the reason the Coast Guard turned to the two companies was for their lobbying power. Officers understood that big defense contractors were better positioned than they were to pry money from Congress - a sad reality.

Unfortunately, after the contract was awarded, the private companies were essentially trusted to take the money and deliver the equipment as ordered.

The Times article cited instances where Coast Guard engineers warned of impending design failures by the two companies, but were overruled by higher-ranking officers whose faith in two of the biggest names in defense contracting turned out to be misplaced. Adm. Thad Allen, Coast Guard commandant since May, says he has learned from this experience. He has promised to make changes.

Private contractors have long designed and built equipment for our military branches. But to allow them to police themselves constitutes negligence of the first order. Military engineers and accountants should be supervising the contracts during all phases. For the sake of taxpayers and national security, they should use the leverage they have, which is to cancel the contract in the event of inexcusable cost overruns or quality control issues.