In this paper, a novel framework for networked estimation of multi-agent systems subject to presence of actuator faults is proposed. This framework is developed based on the notion of sub-observers where within a group of sub-observers each sub-observer estimates certain states that are conditioned on a given input, output, and other state information. We model the overall estimation process by a weighted estimation (WE) digraph. By selecting an appropriate path in the WE digraph, an assigned supervisor can select and configure a set of sub-observers to successfully estimate all the system states. In the presence of large intermittent disturbances, noise, and faults certain sub-observers may become invalid, and consequently the supervisor reconfigures the set of sub-observers by selecting a new path in the estimation digraph such that the impacts of these uncertainties are confined to only the local estimators. This will prevent the propagation of uncertainties on the estimation performance of the entire multi-agent system. Simulation results provided for a five satellite formation flight system in deep space confirm the validity and applicability of our proposed analytical work.