Video: Is the Coast Guard fleecing America?

By Lisa Myers Senior investigative correspondent
NBC News
updated 1/29/2007 7:49:03 PM ET 2007-01-30T00:49:03

The massive 418-foot Coast Guard ship "Bertholf" was christened on Nov. 11, 2006, hailed as a crucial new weapon in the war on terror.

But Monday a report by the Department of Homeland Security's inspector general says the "National Security Cutter" has significant design flaws likely to shorten its useful life, increase maintenance costs, and limit its ability to venture far from U.S. shores.

And the cost of building just two of these ships has roughly doubled — to almost $1 billion.  

"This is one of the worst examples of wasteful spending in government contracting that we've ever seen, especially since it relates to national security," says Thomas Schatz, president of Citizens Against Government Waste.

What's more, investigators say some of the Coast Guard’s own experts warned years ago of serious design flaws that could lead to "catastrophic hull ... collapse," but their bosses decided to build the ship anyway.    

"Somebody knew that there was a problem, and no one tried to fix it," says Rep. Bennie Thompson, D-Miss., chairman of the House Homeland Security Committee. "They went right on through with performing their work, as if everything was fine."

This is merely the latest debacle in a $24 billion program known as "Deepwater" to upgrade the Coast Guard fleet. Eight cutters overhauled at a cost of almost $100 million are no longer seaworthy. Radios placed in open boats shorted out because they weren't waterproof.

Who's to blame?

On this ship, the report says the Coast Guard failed to oversee the technical design and hold contractors accountable. Others see a larger problem in the agency that oversees the Coast Guard.

"We had assumed that the Department of Homeland Security was shipshape, but in reality they're just ships of fools," says Thompson.

Monday night, one contractor, Northrop Grumman, says its ship is well-built and structurally sound. The Coast Guard also argues that the ship does not pose any "immediate concern," and claims the report is based on outdated data.

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