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Costs increase 40% for new fleet of Coast Guard cutters

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The price tag for a fleet of U.S. Coast Guard cutters has increased 40% over the last decade to $17.6 billion after a hurricane, design changes and delays.

The cost of the Coast Guard’s Offshore Patrol Cutter Program increased from $12.5 billion to $17.6 billion from 2012 to 2022, according to a report from the U.S. Government Accountability Office.

The program to build a fleet of 25 Offshore Patrol Cutters is the Coast Guard’s top priority and largest acquisition. The Offshore Patrol Cutters will replace a fleet of 28 Medium Endurance Cutters that have exceeded their service lives. The new cutters will be used for patrols for homeland security, law enforcement and search and rescue operations, according to the report.

Florida-based Eastern Shipbuilding Group Inc. was scheduled to deliver the lead ship this month, but Coast Guard officials said that is no longer feasible.

Hurricane Michael in 2018 was one of the reasons for the delays and cost increases. The Category 5 hurricane hit the Florida panhandle in October 2018 killing 74 people in the U.S. and Central America and causing an estimated $25 billion in damages. In the aftermath of the hurricane, the Acting Secretary of Homeland Security determined that the Offshore Patrol Cutters program was essential for national defense and authorized up to $659 million in extraordinary contractual relief to Eastern Shipbuilding Group for the design and construction of up to four Offshore Patrol Cutters, which the Coast Guard refers to as stage 1. The remaining 21 cutters were re-bid. In 2022, Coast Guard awarded a contract to Alabama-based shipbuilder Austal USA LLC with options to build up to 11 cutters, which the Coast Guard refers to as stage 2. Eastern Shipbuilding Group has protested that bid.

The Government Accountability Office report found other issues. It said that the Coast Guard’s approach to shipbuilding was risky.

“In general, concurrency or overlap between the technology development, design, and construction phases of shipbuilding typically results in poor acquisition outcomes, including cost growth and schedule delays that disrupt multiple ships in the class,” according to the report.

The report “also found indicators that the shipbuilder’s significant level of complex, uncompleted work may lead to further delays,” according to a summary.

The Government Accountability Office made five new recommendations to the Coast Guard, including that it develop a technology plan for the davit, a crane that lifts and lowers equipment such as boats into the water. The davit has been a major challenge for the cutter program.

“Six times since July 2018, the Coast Guard has sent what it refers to as ‘letters of concern’ to [Eastern Shipbuilding Group] related to poor performance in developing the davit, most recently in March 2022,” according to the report.

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