(Bloomberg) — Lockheed Martin Corp. is under orders from the U.S. Navy to correct quality control failures in building its version of the littoral combat ship, an issue that has delayed deliveries and resulted in three citations from the service’s shipbuilding inspectors.

The Navy’s supervisor of shipbuilding issued “Corrective Action Requests” in May, June and July of 2015, with one of the three withdrawn after the contractor’s plan to resolve the issue was accepted, Dale Eng, a spokesman for the service, said in an e-mail.

The quality questions, which hadn’t been disclosed previously, add to concerns about the $29 billion program that Defense Secretary Ash Carter has reduced to 40 vessels from 52. The citations also could hurt Lockheed’s chances in a future competition with Austal Ltd., which builds another version of the ship. No corrective action requests have been issued against Austal, according to Eng.

The Pentagon plans to choose one of the two companies by 2019 to build as many as nine ships in a new, heavier version intended to be more armed and survivable, like a frigate. The littoral combat ship, intended for missions such as mine-clearing in shallow coastal waters, has been criticized as too vulnerable to attack in combat.

‘Systemic’ Deficiencies

The Defense Contract Management Agency found Lockheed has “systemic quality deficiencies” at the Marinette Marine yard in Wisconsin, where it builds the ships, agency spokesman Mark Woodbury said in an e-mail.

The citations to Lockheed were for inadequate oversight of vessel propulsion systems, an “inability to adequately control critical system cleanliness” on those systems for the USS Milwaukee and USS Detroit and a failure by the company and its subcontractor, the marine unit of Fincantieri SpA, “to ensure adequate subcontractor oversight,” according to Eng.

The citation for inadequate oversight of the propulsion system was withdrawn on April 7 after the Navy and the contract management agency concluded Lockheed’s corrective action plan was adequate, but the other two remain in effect, Eng said. Lockheed “has been diligently working their plan of action and milestones schedule toward closure” of the remaining citations by mid-September, he said.

Lockheed spokesman John Torrisi said in an e-mail that the company takes each “Corrective Action Request very seriously, as each one identifies manufacturing and training improvements, which our industry team implements, in close coordination with the Navy.”

He said all three Lockheed-built littoral combat ships delivered to the Navy so far “have met or exceeded Navy specifications for quality and performance prior to acceptance” and that the Bethesda, Md.-based contractor and its industry partners have invested more than $100 million to improve the Wisconsin shipyard, hire more staff and train its workforce.

Lockheed’s quality shortfalls were the main cause of a three-month delay in delivering one of the ships, the Milwaukee, which was damaged during preparations for a trial at sea when the starboard propulsion shaft was “inadvertently operated without proper lubrication,” according to Eng. The Milwaukee was sidelined less than two months after its eventual October delivery by an apparently unrelated gear issue. Similarly, the Lockheed-made Fort Worth suffered extensive damage at dockside in Singapore in January when its crew failed to follow proper lubrication procedures.

GAO Report

Broader questions about the littoral combat ship also persist. In a draft report stamped “For Official Use Only,” the U.S. Government Accountability Office recommended that Congress “consider not funding” either of the two vessels requested by the Pentagon for next year “because of unresolved concerns with lethality and survivability,” the Navy’s lack of funding “to make needed improvements and the current schedule performance of the shipyards.” The Navy is reviewing the report.

But congressional support for the ship, and the shipbuilding jobs it provides, remains strong. In H.R. 4909, its version of the defense authorization bill for fiscal 2017, the House Armed Services Committee added a third ship. The House Appropriations defense subcommittee, which often follows the policy panel’s lead, acts on the defense bill Wednesday. The Senate Armed Services panel also will craft its version of the authorization measure this week.

The GAO also recommended that Carter not approve the Navy’s current procurement strategy until "it completes a significant portion” of detailed design for the future frigate-like ships before soliciting competitive bids.

Captain Thurraya Kent, a Navy spokeswoman, said in a statement that she wouldn’t comment on the GAO’s draft report because she didn’t “know what changes may or may not be made” before it is made final and because the Navy’s views will be incorporated in a Pentagon response.

Schedule Delays

Aside from Lockheed’s quality issues, there have been “significant schedule delays” at its Wisconsin shipyard and at Australia-based Austal’s facility in Alabama, according to the GAO draft. “Our analysis of Navy contracting and budget documents identified that actual or planned deliveries of almost all LCS under contract” through the 26th ship “were delayed by as much as 19 months” from their original delivery dates.

With delays, “there is not a schedule imperative to awarding additional LCS in fiscal 2017 as the shipyards will both have work remaining from prior contract awards — not including any other work from other Navy or commercial contracts,” GAO said.

Three more of Lockheed’s Freedom-class vessels are already projected to be six or seven months each behind their original schedules, according to the GAO. Four Austal vessels are estimated to be as much as 15 months late, the GAO said.