The Coast Guard’s top two shipbuilding acquisitions continue to suffer from design challenges, raising the potential for further delays and cost increases, the Government Accountability Office (GAO) says in a new report that assesses many of the Department of Homeland Security’s major acquisition programs.
The offshore patrol cutter (OPC), which will replace aging legacy medium-endurance cutters, has not completed design of various “distributive systems” such as the heating, ventilation, and air conditioning system, which could lead to further delays, GAO warns. The lead OPC is currently scheduled for delivery by Eastern Shipbuilding Group this December, a nearly two-year delay.
Eastern Shipbuilding is building the first four OPCs under the Stage 1 contract. GAO highlighted that the design for the davit, which is used to lower and raise small boats from the ship, still has high risk challenges related to two technologies, the gear system and the electrical cabinet design.
As of June 2023, the estimated Acquisition Program Baseline (APB) for 25 OPCs includes $14.3 billion in procurement and construction costs, and a total life-cycle cost estimate (LCCE) of $64.6 billion versus the original $54 billion LCCE, GAO says.
The report says a new APB and LCCE were expected by January 2024. Austal is under a Stage 2 contract for OPCs six through 15.
For the polar security cutter (PSC), the Coast Guard’s current baseline calls for delivery of the first heavy icebreaker by June 2027, three years later than originally planned, and service officials have warned of further delays pending the results of a formal program review. Bollinger Shipyards is the prime contractor for the PSC.
As of June 2023, the estimated procurement and construction costs of three PSCs was $2.9 billion and the overall LCCE $12.1 billion. Originally, the upfront acquisition cost of the first ships was pegged at $3.2 billion with a $12.1 billion LCCE. The initial baseline in 2018 had an LCCE of $9.8 billion.
GAO says the cost estimates have increased due to an increase in ship size and more analysis of historical costs. The main reason for the schedule delay has been modifications to meet “complex design requirements of the icebreaker,” inexperience in designing and building icebreakers in the U.S., challenges with VT Halter Marine, the original shipbuilder before being acquired by Bollinger, and supply chain impacts from the COVID-19 pandemic.
Citing Coast Guard officials, GAO also says the war in Ukraine is also affecting the supply of materials. In addition to supply chain risks, the report says the other key program risks are “challenges with designing and integrating the control system with the propulsion system, which could delay delivery.”
“According to program officials, the shipbuilder likely underestimated the magnitude of design modifications required to meet the program’s requirements,” GAO says. “Additionally, the shipbuilder’s subcontractor made errors in its design calculations and underestimated the design scope, which required significant, late design revisions.”
A critical design review was planned for December 2023. The Coast Guard did not respond by our deadline to queries whether the design review took place. The report says that the service is expected to give Bollinger the go-ahead to begin construction of the first ship in March.