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Coast Guard throws contractors overboard

Coast Guard ship

TESS VIGELAND: Last fall, a disgruntled engineer at Lockheed Martin resorted to a new method of whistleblowing. He put a video of himself on YouTube. He claimed the company was allowing shoddy work to go on in a $24 billion government project called "Deepwater" to modernize the U.S. Coast Guard fleet.

At the time, Lockheed Martin said there was no merit to the claims, and promptly fired the engineer. Today the Coast Guard booted Lockheed Martin and Northrup Grumman for, among other things, building eight cutters that had issues with seaworthiness.

It's the latest in a series of developments suggesting the government may resume control of defense spending projects. Alisa Roth explains.


ALISA ROTH: Over the last couple of years, it's become more and more common for the government to hand over control of defense projects like Deepwater to the private sector. Advocates of the practice say it's a way to control the high overhead costs of developing new technologies. But critics say it's a cop-out.

Danielle Bryan heads the Project on Government Oversight.
DANIELLE BRYAN: You've outsourced the most important part of the decision-making process, essentially, to contractors.

It's still too early to tell how much it'll cost to fix the mistakes that were already made in the Deepwater program. And it's also unclear what the real impact of today's announcement will be. The government could take back oversight of program, but negotiate with Northrup and Lockheed to actually develop and even build the new equipment.

Bob Work of the Center for Strategic Studies says if that happens, not much will change.

Still, he says, today's announcement is proof of a shift in mind-set. And he expects to see much bigger shifts in government practice.

BOB WORK: What you would expect to see is both the Coast Guard and the Navy will build up the expertise, the in-house expertise to do design of ships and also have a more bulked-up or better management oversight capability.

Many in Congress have been complaining about delays and overspending on defense contracts. Today's announcement is a first step toward addressing the problems.

In New York, I'm Alisa Roth for Marketplace.

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