Inspector General Sounds Alarm on Coast Guard’s Risky Fast Response Cutter Program

Faced with mounting pressures to replace its rapidly aging 110-foot ships, the Coast Guard embarked on an accelerated program to build a new fleet of Fast Response Cutters.

The Department of Homeland Security inspector general now says that gamble may end up costing the service and taxpayers more money than originally planned.

“The Coast Guard has executed an aggressive, schedule-driven strategy that allowed construction of the Fast Response Cutters to start before operational, design and technical risks were resolved,” the IG report stated.

The Coast Guard awarded a fixed-price contract to Bollinger Shipyards LLC in 2008 to build the first of the new cutters for $88.2 million. Since then, the Coast Guard spent $597 million on contract options for an additional 12 cutters.

Six of those cutters under construction have already required rework totaling an extra 270 days for each ship, and an additional $7 million to rectify the problems, the IG said.   

Work proceeded despite the fact that the first ship had not carried out a series of operational tests that could find potential problems, the report said.

“It is uncertain whether the Fast Response Cutters will perform as intended until it completes operational test and evaluation in actual maritime environments,” the report said.

The Coast Guard took steps to mitigate the risk, the report acknowledged. The FRC was based on a proven design, the service followed the American Bureau of Shipping classification requirements, and there were in-design reviews and shore-based testing.

The IG suggested that the Coast Guard went against its own “Major System Acquisition Manual,” which stated that production be minimally sustained until operational test and evaluation is completed.

There are two potential pitfalls as the program moves forward without sufficient operational tests, the IG cautioned.

The small boat stern-launch system, which the Coast Guard has deemed essential for FRC operations, may not work as planned. Also, the service has not verified that the FRC is capable of stowing all its gear.

If all does not go well for these two systems, the program may incur additional costly rework and delays.

Meanwhile, Bollinger delivered Jan. 30 the first of the FRCs 11 days late, which earned it a $200,000 penalty. A revised baseline schedule is not due until this summer, and operational tests won’t be finished until March 2013.

The Coast Guard plans to buy 34 of the cutters. Contracting for 12 in a low-rate initial production contract constituted 35 percent of the fleet. The Navy, in contrast, only allows for 10 percent of its buys to enter low-rate initial production before test and evaluation is complete, the report noted.

The Coast Guard, in its written response to the report, acknowledged that the program has an “aggressive” schedule, but it maintained that it properly followed the Coast Guard and DHS knowledge-based acquisition management practices and policies.

The IG report was just the latest bump in the road for the Coast Guard’s years-long effort to replace the 110-foot boats. The FRC-A, proposed by former lead contractors Northrop Grumman and Lockheed Martin, did not meet requirements, and its designs were scrapped. An $87 million project to convert eight legacy 110-foot patrol boats as stop-gaps ended with all being taken out of service because of structural problems.

Topics: Homeland Security, DHS Budget, MaritimePort Security