Judge dismisses fraud case against Bollinger

A federal judge has dismissed the government’s case against Bollinger Shipyards Inc. over the stretching of eight U.S. Coast Guard cutters saying the U.S. failed to prove any fraud in the $80 million project.

The Department of Justice presented no facts “that allow the inference that Bollinger acted knowingly or with reckless disregard or deliberate ignorance of the truth,” U.S. District Judge Sarah Vance said Monday in a 29-page order.

The government sued Bollinger in 2011 alleging the Lockport, La., shipyard submitted false data about the hull strength of the 110′ Island-class patrol boats (WPBs) that were lengthened to 123′. The U.S. said Bollinger wanted results “high enough to avoid further Coast Guard scrutiny and ABS [American Bureau of Shipping] review of the vessel’s structural integrity.” The government said the vessels, which Bollinger built originally, weren’t seaworthy and took them out of service.

The Coast Guard took delivery of the Matagorda and other cutters and “continued issuing payments for Bollinger’s work for more than two years after the structural failure of the Matagorda,” Judge Vance said. “These circumstances suggest that the government knew that the reported section modulus might be incorrect and was willing to pay anyway. There can be no FCA [False Claims Act] liability in such circumstances.”

After the ruling, yard president Chris Bollinger said in a written statement, “All of us in the Bollinger Shipyards family are gratified by the court’s thorough and well-reasoned decision dismissing with prejudice the Department of Justice’s allegations against Bollinger relating to our work on the Deepwater project. We look forward to putting this chapter behind us and to focusing our efforts on best serving our customers’ needs, including those of the Coast Guard and our other customers.”

The Justice Department did not respond to a request for comment Tuesday morning.

Bollinger recently was awarded a $250 million contract to build six more Fast Response Cutters (FRC) for the Coast Guard. Seven of the Sentinel-class FRCs, which are replacing the 110s, have been delivered to date. Bollinger was picked in 2008 to build up to 34 FRCs under a USCG contract worth up to $1.5 billion if all options are exercised.

 

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