Northrop, Lockheed Lose Lead on Project

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The Coast Guard is removing Northrop Grumman Corp. and Lockheed Martin Corp. from management roles on its $24 billion Deepwater modernization project.


Lawmakers had called for the Coast Guard to take over the contract, which has been plagued by spiraling costs and delays. The contract was awarded nearly five years ago to a Lockheed-Northrop joint venture named Integrated Coast Guard Systems.


Commander Admiral That Allen said the Coast Guard will take “full responsibility” for the troubled program. He refused to comment on how much revenue the companies would lose as a result of being removed.


“We’ve relied too much on contractors to do the work of government,” Allen added. “A useful balance can be achieved, but it requires due diligence on our part.”


The Deepwater program includes contracts to design and build 91 cutters, more than 100 small surface ships and 244 new or converted helicopters and airplanes.


Bethesda, Ma.-based Lockheed and Los Angeles-based Northrop will continue to build ships and aircraft for Deepwater as needed, the Coast Guard said.


Lawmakers introduced legislation earlier this year calling for an open competition for future Deepwater contracts and an end to the Coast Guard’s reliance on the Northrop/Lockheed partnership.


Shares in Northrop were up 28 cents to $7473 in afternoon trading Tuesday on the New York Stock Exchange.

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