updated 4/18/2007 9:22:13 PM ET 2007-04-19T01:22:13

The Justice Department is investigating a much-criticized Coast Guard contract managed by Lockheed Martin and Northrop Grumman over design flaws in cutters that are central to the $24 billion (euro17.68 billion) modernization project, a member of Congress and a representative for the companies said Wednesday.

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A spokeswoman for a joint venture between Lockheed Martin Corp. and Northrop Grumman Corp. said the Justice Department notified the companies in December of an "investigation" into the so-called Deepwater program. The Justice Department told Lockheed, Northrop and other contractors not to destroy any documents related to command and control systems, the conversion of 123-foot (37.5-meter) cutters and National Security Cutters, the spokeswoman for Integrated Coast Guard Systems, Margaret Mitchell-Jones, said.

Mitchell-Jones said the joint venture was cooperating with the Justice Department, but "is not allowed to comment if any subpoena has been received."

On Tuesday, the Coast Guard said it was taking over management of the contract from ICGS, following criticism on Capitol Hill for skyrocketing costs, design flaws and lax contract oversight.

Also on Wednesday, government and industry witnesses told lawmakers that the U.S. Coast Guard and the contractors it hired to run the modernization program ignored repeated internal warnings about the design and electronics flaws in the cutters.

A House Transportation and Infrastructure Committee hearing focused on the results of an inquiry conducted by its oversight staff on the 123-foot (37.5-meter) patrol boat conversion project. The project is part of the Deepwater program that operates under a contract awarded in 2002 to ICGS.

Committee Chairman James L. Oberstar said the Justice Department was "conducting its own inquiry into this matter."

Coast Guard response
A Coast Guard spokesman said the agency had no reason to believe the Justice Department had "undertaken any wide-ranging investigation of Deepwater," and no reason to believe "any action taken in connection with Deepwater by anyone raises any inference of criminal conduct."

The spokesman referred all further questions to the Justice Department. The agency did not immediately return calls seeking comment.

The eight 123-foot (37.5-meter) patrol boats, which were the first to be lengthened and outfitted with new computer and navigation systems, had been removed from service patrolling Florida's waters late last year because of hull problems.

"The initial problem of not increasing the strength of the 123 was a serious oversight of basic naval architecture and their failure was predicted," Scott Sampson, who is responsible for recommending repairs on Coast Guard vessels, said in prepared testimony. "Despite the offering of applicable experience and lessons learned, ICGS and the Coast Guard failed to take advantage of them and suffered a devastating setback to the program and its mission capability."

The Department of Homeland Security's inspector general concluded in a February report that Lockheed also knowingly equipped the ships with unauthorized electronics. That investigation was prompted by Michael DeKort, a former Lockheed Martin employee who detailed additional electronics safety and security issues in the cutters beginning in 2003, and later chronicled his complaints in a YouTube video. He said the problems identified were "not simply mistakes."

"They were informed deliberate acts," DeKort said.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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