November 12, 2020

New GAO Report Reinforces Bipartisan Concerns over Multi-Billion Dollar Coast Guard Shipbuilding Contract

Washington, DC – The U.S. Government Accountability Office (GAO) has issued a new report that reinforces the bipartisan concerns of Transportation and Infrastructure Committee leaders related to the U.S. Coast Guard’s (USCG) $12 billion plan and initial contract to build a new class of cutter, the Offshore Patrol Cutter (OPC).
GAO undertook the study at the request of the Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR), Full Committee Ranking Member Sam Graves (R-MO), Chair of the House Subcommittee on Coast Guard and Maritime Transportation Sean Patrick Maloney (D-NY), and Subcommittee Ranking Member Bob Gibbs (R-OH).
The GAO report highlights issues and concerns about the OPC design process, deficiencies in the construction schedule, and the potential for program delays and cost increases under the contract that was awarded by the USCG and Department of Homeland Security (DHS). GAO confirmed that while these problems have been exacerbated by the damage from Hurricane Michael, they also existed prior to the storm. The full GAO report is available here.
“Our Committee is committed to helping the U.S. Coast Guard fulfill its critical missions, and that means we must raise hard questions when the numbers don’t add up. This kind of congressional oversight is key not only to the success of the OPC acquisition program, but also to the integrity of the entire multi-decade $29 billion enterprise to recapitalize the Coast Guard’s fleets of offshore cutters— the single largest acquisition in the Service’s 230-year history,” said DeFazio. “I appreciate the GAO for providing its thorough analysis of the issue and expect leaders of both the Coast Guard and DHS to provide the Committee with a better understanding of how they plan to get this process back on track, ensure mission readiness, and protect the interests of U.S. taxpayers.”
“This multi-billion dollar cutter replacement program is absolutely vital to ensuring the Coast Guard can adequately carry out its critical national security missions, such as drug and migrant interdiction and maritime border protection,” said Graves. “GAO concerns about the OPC design process and procurement, the initial capability of the winning bidder to fulfill the contract, and DHS’s decision to provide extraordinary relief to the shipbuilder to carry out the original contract underscore bipartisan Committee concerns. It is my hope that the Coast Guard learns from these mistakes as the construction and recompete processes move forward. They must also work constructively with the Committee to address the mission gap caused by these delays. The Committee stands united in helping the Service achieve these shared goals.”
“The Offshore Patrol Cutter is a vital tool to advancing the Coast Guard’s mission,” said Maloney. “The GAO’s concerns outlined in this report reinforce the bipartisan concerns of our Committee. The Coast Guard must learn from this report and move forward in a financially responsible and efficient way on this process.”
“The results of GAO’s study are disappointing, but not surprising. Our Committee has continuously pressed the Coast Guard and DHS regarding procurement of the Offshore Patrol Cutter (OPC), and today’s GAO report reiterated our concerns,” said Gibbs. “The report detailed concerns regarding the winning bidder’s ability to meet contract design process and procurement, and the initial capability to fulfill the contract. I look forward to continuing to work with members of this Committee on a bipartisan basis to address this issue, and I hope this study will lead to change. All parties involved must now work toward a fiscally responsible and mission orientated solution.”

Background Information on the OPC contract:
The USCG has begun the process of replacing its older fleet of Medium Endurance Cutters with 25 new Offshore Patrol Cutters (OPC). The first OPC is now under construction. However, within a month of signing the contract to build the first nine to eleven OPCs, the contracted shipyard was damaged and much of the surrounding area destroyed by Hurricane Michael in October 2018. 
Subsequently, in order to build the first four OPCs more quickly, the USCG and DHS made the controversial decision to provide the shipyard extraordinary relief from having to meet its contract terms. On November 25, 2019, the Committee leaders wrote to the Acting DHS Secretary with questions about how the Department justified this determination.
The updated plan is to recompete the program after production of the fourth cutter and ultimately step up production to two OPCs per year. If this timetable cannot be met, the USCG faces a significant mission capability gap as the old Medium Endurance Cutters— several of which were built in the 1960s— reach the end of their useful life and are finally decommissioned.