COAST GUARD 

CUTTERS

Depot Maintenance Is 

Affecting Operational 

Availability and Cost 

Estimates Should 

Reflect Actual 

Expenditures

Report to the Chairman, Subcommittee 

on Coast Guard and Maritime 

Transportation, Committee on 

Transportation and Infrastructure, 

House of Representatives

March 2017

GAO-17-218

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-218, a report to the 

Chairman, Subcommittee on Coast Guard and 

Maritime Transportation, Committee on 

Transportation and Infrastructure, House of 

Representatives

March 2017

COAST GUARD CUTTERS

Depot Maintenance Is Affecting Operational 

Availability and Cost Estimates Should Reflect Actual 

Expenditures

What GAO Found

Maintenance work for the Fast Response Cutter (FRC) and National Security 

Cutter (NSC) has lowered the operational availability of each fleet. Although both

cutters on average have met their minimum mission capable targets over the 

long term, increased depot maintenance has more recently reduced each 

cutter’s rates below targets. The FRC’s rate is lower, in part, because of a series 

of unanticipated drydock periods to correct issues covered by its 12-month

warranty. The NSC’s lower rate is primarily because of anticipated 2-year

maintenance and system upgrade periods performed on each newly delivered

NSC. Both cutters have experienced problems with the diesel engines, which

caused lost operational days and hindered operations while underway.

The Coast Guard’s 154-foot Fast Response Cutter and 418-foot National Security Cutter

The Coast Guard has initiated design changes on the FRC and NSC, but some 

of the NSC’s changes to address maintenance problems will not be installed until 

after each cutter is delivered. While the Coast Guard plans at least $17 million on 

FRC design changes, officials estimate the warranty has helped avoid $77 

million for repaired systems. This includes about $52 million to replace 20 diesel 

engines that have degraded FRC operations since first discovered in July 2013. 

Design changes on the NSCs are expected to cost the Coast Guard at least 

$260 million. In order to maintain production schedules, several changes will be 

completed after delivery of each NSC, including the ninth NSC, which has not yet 

begun construction. Thus, systems with known deficiencies are being installed, 

only to be replaced later. Officials stated this approach is more cost effective; 

however, the Coast Guard did not document its cost analyses, in accordance 

with GAO cost estimating best practices. Without such documentation, the Coast 

Guard cannot demonstrate that it is making cost-effective decisions.

Since 2010, depot maintenance expenditures for the FRC and NSC have been 

$106.6 million less than the Coast Guard estimated. This amount remains in a 

centrally managed account and is made available for other surface assets, such 

as aging, legacy vessels. Coast Guard officials stated that depot maintenance 

estimates are not adjusted or updated over the service life of an asset class.

Periodically updating depot maintenance cost estimates—in accordance with 

GAO cost estimating best practices—for each asset class could provide decision 

makers with much needed information with which to determine future budgets.

View GAO-17-218. For more information, 

contact Michele Mackin at (202) 512-4841 or 

mackinm@gao.gov.

Why GAO Did This Study

The Coast Guard is procuring the FRC

and NSC to replace its aging cutters. 

Both cutters have had operational 

problems—such as propulsion system 

issues—that are being addressed 

through maintenance. Prior GAO work 

identified issues related to 

performance and maintenance of these 

vessels, particularly related to the main 

diesel engines on both cutters.

The House Subcommittee on Coast 

Guard and Maritime Transportation, 

Committee on Transportation and 

Infrastructure asked that GAO examine 

maintenance of the FRC and NSC. 

This report addresses the extent to 

which (1) maintenance issues are 

affecting FRC’s and NSC’s operational

status, (2) design changes affect the 

maintenance of the cutters, and (3) the 

Coast Guard’s cost estimates reflect 

actual expenditures for maintenance 

for the FRC and NSC.

To conduct this work, GAO analyzed 

data on cutter maintenance and 

operations; analyzed the costs and 

timing of design changes; reviewed 

Coast Guard budgets and compared 

GAO best practices in cost estimating 

to the Coast Guard’s process for 

estimating depot maintenance costs;

and interviewed Coast Guard officials.

What GAO Recommends

To ensure that it effectively uses its 

resources, the Coast Guard should 

document cost analyses on the cost 

and timing of engineering design 

changes and periodically evaluate and 

update its depot maintenance cost 

estimates. The Department of 

Homeland Security agreed with both

recommendations and provided 

timeframes for actions to address 

them.
Page i GAO-17-218 Coast Guard Cutters

Letter 1

Background 3

Depot-Level Maintenance Is Lowering the Mission Capable Rates 

of the Fast Response Cutter and National Security Cutter 11

The Coast Guard Is Addressing Some Maintenance Problems 

through Engineering Design Changes, but Has Not 

Documented Key Cost Analysis 27

Cost Estimates for FRC and NSC Depot Maintenance Do Not 

Reflect Actual Expenditures and Estimates Are Not Regularly 

Updated 35

Conclusions 39

Recommendations for Executive Action 40

Agency Comments and Our Evaluation 41

Appendix 1 Objectives, Scope, and Methodology 42

Appendix II Fast Response Cutter and National Security Cutter Names 

and Delivery Dates 44

Appendix III Fast Response Cutter and National Security Cutter Operational 

Capabilities Compared to Legacy Vessels They Are Replacing 46

Appendix IV Major Maintenance Events for the Fast Response Cutter 

and National Security Cutter 48

Appendix V Comments from the U.S. Department of Homeland Security 50

Appendix VI GAO Contact and Staff Acknowledgments 52

Tables

Table 1: Differences between a Warranty and a Guaranty 10

Contents
Page ii GAO-17-218 Coast Guard Cutters

Table 2: Fast Response Cutter’s Average Asset Status from 

March 2012 to September 2016 12

Table 3: National Security Cutter’s Average Asset Status from 

November 2013 to September 2016 19

Table 4: Fast Response Cutter Design Changes with Estimated 

Costs over $1 Million as of September 2016 28

Table 5: Coast Guard Reported Costs Avoided Due to Fast 

Response Cutter Warranty as of August 2016 29

Table 6: National Security Cutter Design Changes with Costs over 

$1 Million as of September 2016 30

Table 7: Fast Response Cutter Hull Information (First 34 Cutters) 44

Table 8: National Security Cutter Hull Information 45

Table 9: Operational Capabilities of the Fast Response Cutter 

Compared to the 110’ Patrol Boat 46

Table 10: Operational Capabilities of the National Security Cutter 

Compared to the High Endurance Cutter 47

Figures

Figure 1: Organizational Structure of the Coast Guard’s Surface 

Forces Logistics Center 6

Figure 2: Notional Depiction of the Coast Guard’s Asset Status 9

Figure 3: Fast Response Cutter’s Cumulative Mission Capable 

Rates from March 2012 to September 2016 13

Figure 4: Monthly Mission Capable Rates for the Fast Response 

Cutter from October 2015 to September 2016 14

Figure 5: Fast Response Cutter’s Average Rates for Not Mission 

Capable Due to Maintenance and Supply from March 

2012 to September 2016 and October 2015 to 

September 2016 16

Figure 6: National Security Cutter’s Cumulative Mission Capable 

Rates from November 2013 to September 2016 20

Figure 7: Monthly Mission Capable Rates for the National Security 

Cutter from October 2015 to September 2016 21

Figure 8: National Security Cutter’s Average Not Mission Capable 

Rates Due to Maintenance and Supply from November 

2013 to September 2016 and October 2015 to 

September 2016 23

Figure 9: National Security Cutters’ Attempted and Successful Full 

Power Trials from 2012 to 2015 25

Figure 10: Selected National Security Cutter Systems Requiring 

Retrofitting after Production 32
Page iii GAO-17-218 Coast Guard Cutters

Figure 11: Depot Maintenance Expenditures and Estimates for the 

Fast Response Cutter and National Security Cutter 36

Figure 12: Timeline of the Major Maintenance Events for the Fast 

Response Cutter and National Security Cutter 48

Abbreviations

ABS American Bureau of Shipbuilding

ASW Auxiliary Seawater System

DHS Department of Homeland Security

EAL Electronic Asset Logbook

FRC Fast Response Cutter

NSC National Security Cutter

RCM Reliability Centered Maintenance

SFLC Surface Forces Logistics Center

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-17-218 Coast Guard Cutters

441 G St. N.W.

Washington, DC 20548

March 2, 2017

The Honorable Duncan Hunter

Chairman

Subcommittee on Coast Guard and Maritime Transportation

Committee on Transportation and Infrastructure

House of Representatives

Dear Mr. Chairman:

The acquisition of the Fast Response Cutters (FRC) and National 

Security Cutters (NSC) is an integral part of the Coast Guard’s plan to 

modernize its aging fleet of cutters to perform its missions that are vital to 

the security of the United States. These cutters are intended to be more 

capable than their predecessors—the 110-foot Island Class Patrol Boats 

and 378-foot High Endurance Cutters—with increased deployments and 

endurance and enhanced communications and surveillance systems. We 

reported on the condition of the legacy cutters in July 2012 and found that 

they had exceeded their expected service lives and their material 

condition was declining, which resulted in increased maintenance costs 

and a burden on the Coast Guard’s budget.1 The declining condition of its 

legacy cutters highlights the need for the Coast Guard to maintain its 

newer cutters on schedule and within budget so that they are available to 

conduct operations when needed and can meet or exceed their expected 

service lives. In May 2016, we found that deferring maintenance can lead 

to declining ship conditions and longer maintenance periods that can 

reduce a ship’s operational availability.2

While the Coast Guard tracks metrics related to the operations of the 

FRC and NSC, such as days away from home port, those metrics do not 

shed light on the maintenance issues that have plagued these cutters. 

We reported on the status of the FRC and NSC in June 2014 and found 

that problems with the FRC’s main diesel engines during initial testing 

had limited the amount of time that the cutter was available to conduct 

 1

GAO, Coast Guard: Legacy Vessels’ Declining Conditions Reinforce Need for More 

Realistic Operational Targets, GAO-12-741 (Washington, D.C.: July 31, 2012).

2

GAO, Military Readiness: Progress and Challenges in Implementing the Navy’s 

Optimized Fleet Response Plan, GAO-16-466R (Washington, D.C.: May 2, 2016).

Letter
Page 2 GAO-17-218 Coast Guard Cutters

operations to an unacceptable level.3 In January 2016, we found that 

maintenance issues with the NSC fleet had caused operational 

challenges for which the Coast Guard had not yet identified corrective 

actions.

4 These included problems with the cutter’s main diesel engines, 

which could not reach full power in warm waters, and generators that 

were overheating. We also found that the Coast Guard planned to 

conduct retrofits and design changes on the NSC fleet for problems 

identified during testing and operations.

Given these concerns, you requested that we examine the Coast Guard’s 

maintenance of the FRC and NSC. This report examines the extent to 

which (1) maintenance issues, equipment failures, and spare parts 

availability are affecting the asset status of the FRC and NSC; (2) design 

changes affect the maintenance of the FRC and NSC; and (3) the Coast 

Guard’s cost estimates reflect actual expenditures for maintenance for the 

FRC and NSC.

To assess the extent to which maintenance issues, equipment failures, 

and spare parts availability are affecting the asset status of the FRC and 

NSC, we reviewed Coast Guard mission capability data for both cutters 

and compared their rates to the target ranges established by the Coast 

Guard. We also gathered data on the Coast Guard’s top operational 

degraders and top maintenance cost drivers from 2014 to 2016 for the 

FRC and NSC and reviewed their engineering reports from 2012 to 2015 

to determine the top equipment issues the cutters were experiencing from 

the perspective of the cutter captains. To assess the Coast Guard’s 

design changes and how they are affecting maintenance, we reviewed 

the planned Coast Guard design changes for both cutters and spoke with 

program and engineering officials to understand the cost implications of 

these design changes and how decisions are made regarding when the 

changes are installed on the cutters. To assess how the Coast Guard’s 

cost estimates reflect actual maintenance expenditures, we reviewed the 

Coast Guard’s standard support levels, which are the estimated costs for 

depot-level maintenance each year over the course of an asset’s life 

cycle. We compared this information to actual depot-level maintenance 

expenditures from 2012 to 2016 for the FRC and 2010 to 2016 for the 

 3

GAO, Coast Guard Acquisitions: Better Information on Performance and Funding 

Needed to Address Shortfalls, GAO-14-450 (Washington, D.C.: June 5, 2014).

4

GAO, National Security Cutter: Enhanced Oversight Needed to Ensure Problems 

Discovered during Testing and Operations Are Addressed, GAO-16-148 (Washington, 

D.C.: Jan. 12, 2016).
Page 3 GAO-17-218 Coast Guard Cutters

NSC.5 In addition, we spoke with Coast Guard officials to understand how 

these support levels are determined and what role they have in 

developing the budget. Appendix I contains more information regarding 

our scope and methodology.

We conducted this performance audit from February 2016 to March 2017 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The Coast Guard began a recapitalization effort in the late 1990s to 

modernize a significant portion of its entire surface and aviation fleets by 

rebuilding or replacing assets.6 This effort was formerly known as 

Deepwater, and included the FRC and NSC programs, among others. In 

2006, the Coast Guard acknowledged that it had relied too heavily on 

contractors and, citing cost increases, took over the role of lead systems 

integrator. The Coast Guard reorganized the programs that comprised 

Deepwater and since 2012 has referred to them broadly as the Coast 

Guard’s recapitalization.

The FRC and the NSC are two of the newest assets in the Coast Guard’s 

fleet. First delivered in 2012 and 2008, respectively, the cutters were 

designed to provide additional capability beyond that possessed by their 

predecessors. The FRC is intended to replace the current fleet of 49 110-

foot Island Class Patrol Boats—which were first built in the 1980s—with 

58 FRCs that provide the Coast Guard with additional capabilities, such 

as advanced intelligence, surveillance, and reconnaissance technology, 

and cutter boat deployment. The NSC is intended to replace the 12 High 

Endurance Cutters—which were first built in the 1960s—with a smaller 

 5

We used these time frames because these are the dates that the cutters first began 

using this metric.

6

The Coast Guard is a component within the Department of Homeland Security. Surface 

assets include cutters (vessels 65 feet and longer) and boats (vessels under 65 feet).

Background

History of the Fast 

Response Cutter and 

National Security Cutter
Page 4 GAO-17-218 Coast Guard Cutters

fleet of NSCs that provides the Coast Guard with additional capabilities, 

such as the ability to collect, analyze, and transmit classified information 

as well as to carry, launch, and recover unmanned aerial vehicles, among 

others. The Coast Guard originally planned eight NSCs to fulfill the 

capability gap left by retiring the High Endurance Cutter fleet, but 

Congress directed, in December 2015, that of the funds provided by the 

Consolidated Appropriations Act, 2016, not less than $640 million be 

immediately available and allotted to contract for the production of the 

ninth NSC.

7 Appendix II provides the current delivery schedule of FRCs 

and NSCs.

The FRCs conduct operations in coastal and high seas conditions up to 

200 nautical miles from the coast, enabling them to respond quickly to 

emerging situations. These cutters are expected to spend no more than 

185 days away from their homeport and conduct 2,500 operational hours 

each year, with each patrol lasting roughly 5 to 7 days.

Due to its larger crew—126 for the NSC compared to 24 for the FRC—

and size—418 feet for the NSC compared to 154 feet for the FRC—the 

NSC is able to patrol worldwide and conduct extended operations beyond 

the capabilities of the FRC. The NSCs are expected to conduct 

operations from at least 50 nautical miles from shore including in extreme 

climates, such as the Arctic. Coast Guard standards dictate that the 

NSCs will spend no more than 210 days away from their homeport and 

conduct 3,780 operational hours each year, with each patrol lasting 

longer than 60 days.8 Appendix III provides more detail of the FRC and 

NSC’s operational capabilities.

The Coast Guard defines the goal of cutter maintenance as ensuring 

optimal readiness to perform missions at the lowest cost over the asset’s 

service life. As with any ship, maintenance is a major portion of the total 

ownership costs for Coast Guard cutters. Unnecessary maintenance 

increases ownership costs and limits a cutter’s availability to conduct 

missions, decreasing its readiness.

 7

Pub. L. No. 114-113 (2015).

8

The Coast Guard plans to conduct a feasibility study of using rotating crews to increase 

the NSCs’ days away from home port to 230. Plans are to be finalized by December 2017 

and the test is scheduled to last for about 2 years, beginning in fiscal year 2019. For more 

information see GAO, Coast Guard: Timely Actions Needed to Address Risks in Using 

Rotational Crews, GAO-15-195 (Washington, D.C.: Mar. 6, 2015).

Maintenance of Coast 

Guard Cutters
Page 5 GAO-17-218 Coast Guard Cutters

In order to optimize the cutter fleet’s mission availability and decrease 

ownership costs, the Coast Guard employs Reliability Centered 

Maintenance (RCM), a process used to determine maintenance needs 

and ensure that maintenance is applicable and effective. RCM is at the 

center of the Coast Guard’s maintenance philosophy and guides 

maintenance decisions, determining scheduling and resource 

requirements. The RCM analysis, which is initiated during the program’s 

acquisition phase, is unique to each cutter class and is used to determine 

preventative maintenance requirements by identifying the likely functional 

failures of hardware and the failures’ impacts. Maintenance procedure 

cards, which provide detailed instructions on how to complete each 

maintenance task, including the expected amount of time the task will 

take to complete as well as the needed tools and parts, are one outcome 

of the RCM analysis.

The Coast Guard employs a bi-level maintenance strategy to meet the 

preventative maintenance requirements derived from the RCM analysis. 

Tasks are separated into either organizational-level maintenance or 

depot-level maintenance.

• Organizational-level maintenance: Maintenance that is performed 

by the operating units—i.e., the cutter crews. The Coast Guard 

assigns maintenance requirements at the operating unit level only if it 

has been determined that the task is within the ability of the crew to 

complete, taking into account additional demands such as training, 

and the availability of tools onboard to complete the assigned task.

• Depot-level maintenance: Maintenance that is beyond the capability 

of the crew, including changes and modifications to the cutters 

deemed too extensive to be performed by the crew.

The Surface Forces Logistics Center (SFLC), in Baltimore, MD, is 

responsible for completing the RCM analysis and determining the 

responsibility of maintenance tasks for the boats and cutters, including 

the FRC and NSC, in sustainment. In addition, SFLC is responsible for 

managing the supply of spare parts and developing maintenance 

schedules for each fleet. SFLC is divided into five distinct product lines, 

each of which acts as the point of contact for various maintenance needs 

of the Coast Guard fleets. Figure 1 shows the organizational structure of 

SFLC.
Page 6 GAO-17-218 Coast Guard Cutters

Figure 1: Organizational Structure of the Coast Guard’s Surface Forces Logistics Center

The product lines were created after SFLC was established in 2009 to 

optimize the technical, logistical, and depot-level maintenance support for 

surface assets. Each product line is intended to provide complete naval 

engineering and logistics support for all assigned surface assets. In order 

to plan for the individual maintenance needs of each cutter, SFLC 

generates and maintains a 5-year maintenance plan for each asset class 

depicting the major depot-level maintenance tasks. Each year, SFLC 

updates each cutter’s 5-year maintenance schedule to formulate short-
Page 7 GAO-17-218 Coast Guard Cutters

and long-term budgets, project shortfalls, and interface with operational 

commanders for scheduling purposes. Appendix IV shows the timeline of 

scheduled major maintenance events for the NSC and FRC.

The Coast Guard also performs unplanned maintenance, which occurs 

largely as a result of equipment failures, and is corrective in nature. 

Unplanned maintenance is performed as necessary by the crew, if 

possible; dockside by shore technicians; or if the unplanned maintenance 

is beyond the capabilities of the crew and dockside technicians or 

requires the cutter to be taken out of the water for repair, the cutter will 

undergo an emergency dockside or drydock event.

In addition to established maintenance procedures, the Coast Guard has 

several processes by which it can address problematic equipment 

systems. One such process is the Engineering Change Process, or 

design change. This process is governed by a process guide that 

provides detailed instructions on how the Coast Guard should initiate and 

implement an engineering design change. The Engineering Change 

Process is the vehicle for implementing changes to assets across the 

fleet to improve operational capabilities and increase supportability. This 

process is intended to facilitate configuration control of systems and 

equipment on all surface assets in an effort to reduce total operating cost 

over the life of the asset class. The Engineering Change Process includes 

numerous reviews of relevant product designs, budgets, and procedures 

and facilitates the delivery of engineering and/or logistics actions to the 

field.

The Coast Guard uses the Electronic Asset Logbook (EAL) program to 

record all maintenance and operational activities for surface assets, such 

as the FRC and NSC, among others. EAL records and tracks equipment 

failures and mission capable statuses, and is updated in real time by 

cutter crews to allow for total asset visibility across a cutter class. The 

EAL process is governed by a process guide that provides detailed 

instructions to product lines and cutter crews to ensure the EAL system is 

used uniformly across the fleets. The EAL program provides the product 

Mission Capable Rates for 

Cutters
Page 8 GAO-17-218 Coast Guard Cutters

lines insight into the percentage of time each cutter is capable of 

conducting missions by using five ratings:9

• fully mission capable,

• partially mission capable,

• not mission capable due to maintenance,

• not mission capable due to supply, and

• not mission capable due to depot maintenance.

Each cutter class has an acceptable target range for the percentage of 

time that the Coast Guard expects the asset to be mission capable. The 

target ranges are determined during the acquisition phase for each fleet 

using the Coast Guard’s employment standards, which dictate the limits 

for Days Away From Home Port and operational hours as well as the 

minimum number of depot-level maintenance time needed per year. 

Figure 2 depicts a notional visualization as to how asset status data is 

used to assess the health of the fleet from an engineering perspective.

 9

The Coast Guard plans to release revised guidance for designating not mission capable 

statuses in May 2017 seeking to add fidelity by ensuring that when a cutter is placed into a 

not mission capable status due to either maintenance or depot-level maintenance that 

maintenance is actively being performed on the cutter. Prior guidance required cutter 

crews to enter depot-level maintenance status any time they are not scheduled to be 

performing operations. This alteration in data entry may impact mission capable rates in 

the future, but the magnitude of this impact is not yet known. This updated guidance 

includes a sixth mission capable rating titled “not mission capable due to layup.” During 

our review, the Coast Guard only used the five ratings mentioned above. 
Page 9 GAO-17-218 Coast Guard Cutters

Figure 2: Notional Depiction of the Coast Guard’s Asset Status

The FRCs are expected to be mission capable 48 to 60 percent of the 

time, while the NSCs are expected to be mission capable 49 to 61 

percent of the time. In order to be considered fully mission capable, the 

cutter must be able to support all of its assigned missions. In order to be 

considered partially mission capable, the cutter must be able to effectively 

execute some of its assigned missions, but be unable to fully respond to 

at least one assigned mission due to an equipment system failure. Taken 

together, the fully mission capable status and the partially mission 

capable statuses comprise the cutter’s mission capable rate.

Influencing the mission capable rates are the three “not mission capable”

statuses. A cutter is considered not mission capable due to maintenance 

if it has an equipment failure that requires the cutter to return to port for 

maintenance during the period that the cutter was originally scheduled to 

be conducting operations. Once the source of the equipment failure has 

been determined and if the Coast Guard has to wait for a spare part, the 

cutter will be placed into the not mission capable due to supply status 

until the spare part is received and the correction can be implemented.

The cutter will be placed in not mission capable due to depot-level 

maintenance status if the cutter is unavailable to conduct operations due 

to planned depot maintenance (i.e., non crew conducted maintenance). 

This can include conducting both anticipated and unanticipated 

maintenance.
Page 10 GAO-17-218 Coast Guard Cutters

Warranties and guarantees are contract mechanisms to address the 

correction of shipbuilder-responsible defects, but they differ in key ways. 

Warranty provisions are outlined in the Federal Acquisition Regulation 

and were used for the FRC, whereas the Navy typically uses guaranty 

provisions, as did the Coast Guard for the NSC contract.10 We reported 

on the differences of the FRC’s warranty and the NSC’s guaranty in 

March 2016 and found that the FRC’s warranty resulted in improved cost 

and quality by requiring the shipbuilder to pay to repair defects. In 

contrast, guarantees—such as that for the NSC—did not help improve the 

cost or quality outcomes of shipbuilding and the government generally 

paid the shipbuilder to correct problems.11 Table 1 outlines the differences 

between a warranty and a guaranty.

Table 1: Differences between a Warranty and a Guaranty

Warranty Guaranty

Description Used to correct shipbuilder-responsible 

defects after delivery, usually at the 

shipbuilder’s expense.

Used to correct shipbuilder-responsible 

defects after delivery, but the responsibility 

for paying for these corrections varies 

depending on contract terms.

Length Limited to a specific period of time—

typically 12 months.

Limited to a specific period of time, which 

generally ranges from 8 to 12 months.

Liability limitations Typically has no cost limits on the 

shipbuilder’s financial responsibility for 

correcting defect claims.

Uses a limitation of liability: the shipbuilder 

is not necessary financially responsible for 

costs associated with the work. Once an 

agreed-upon threshold is reached, the 

shipbuilder is no longer contractually 

obligated to perform additional work to 

correct any additional defects, even if the 

ship is still within the guaranty period.

Source: GAO analysis of the Federal Acquisition Regulation and Coast Guard data. | GAO-17-218

 10The NSC contract uses the term warranty to describe its mechanism, but given that it 

functions more like a Navy’s guaranty, we refer to the NSC’s mechanism as a guaranty, 

rather than a warranty. See also GAO, Navy and Coast Guard Shipbuilding: Navy Should 

Reconsider Approach to Warranties for Correcting Construction Defects, GAO-16-71 

(Washington, D.C.: Mar. 3, 2016).

11GAO-16-71.

A Warranty or Guaranty 

Can Affect Program Costs
Page 11 GAO-17-218 Coast Guard Cutters

Over the past few years, when the FRC and NSC began using their 

current mission capable metrics, they have both met their minimum 

targets on average. However, from October 2015 to September 2016, 

both cutters fell below their minimum targets due to depot-level 

maintenance. During this time frame, the FRC program began a phased 

drydock maintenance period for the first 13 cutters, which is primarily 

intended to address problems with equipment systems still covered by its 

12-month warranty. From January 2016 to November 2019, at least one 

FRC will be completely unavailable to conduct missions at any given time. 

For the NSCs, an approximate 2-year post-delivery maintenance period is 

affecting mission capable rates. During this period, the NSCs undergo a 

series of depot-level maintenance events and system upgrades to bring 

the cutter to full operational capability, but will limit their ability to conduct 

missions. Since the Coast Guard will be receiving NSCs until at least the 

end of year 2020, these post-delivery maintenance periods are expected 

to affect the NSC’s mission capable rates until at least the end of year 

2022. In addition, both the FRC and NSC have experienced numerous 

equipment problems that have hindered operations, but these have not 

substantially lowered the average fleet mission capable rates.

Since March 2012, when the Coast Guard began tracking this metric for 

the FRC, the cutters have met their minimum mission capable target rate 

(48 percent), on average. However, from October 2015 to September 

2016, the cutters have demonstrated an average mission capable rate 

below the minimum target. According to Coast Guard officials, this is 

primarily because of an increase in the amount of time the first 13 cutters 

are spending in depot maintenance for warranty drydock work, which has 

reduced the FRC’s ability to conduct operations. Table 2 shows the asset 

status for the FRCs from March 2012 to September 2016.

Depot-Level 

Maintenance Is 

Lowering the Mission 

Capable Rates of the 

Fast Response Cutter 

and National Security 

Cutter

FRCs Are Meeting 

Minimum Mission Capable 

Rates on Average, but 

Recent Unanticipated 

Warranty Depot-Level 

Maintenance Is Affecting 

Mission Capable Rates
Page 12 GAO-17-218 Coast Guard Cutters

Table 2: Fast Response Cutter’s Average Asset Status from March 2012 to September 2016

Asset status

Percent of time 

in asset status

March 2012 –

September 2016

Percent of time 

in asset status

October 2015 –

September 2016

Fully mission capable 47 39.5

Partially mission capable 2.3 3.3

Total mission capable 49.3 42.8

Not mission capable due to maintenance (equipment failures) 9.9 4.1

Not mission capable due to supply 0.3 0.1

Not mission capable due to depot-level maintenance 40.5 53.0

Total not mission capable 50.7 57.2

Source: GAO analysis of Coast Guard data. | GAO-17-218

According to Coast Guard data, from March 2012 to September 2016, the 

FRC fleet had a cumulative average mission capable rating of 49.3 

percent, just above the minimum goal of 48 percent. See figure 3.

The FRCs Have Met Their 

Minimum Mission Capable 

Rate on Average Since 2012
Page 13 GAO-17-218 Coast Guard Cutters

Figure 3: Fast Response Cutter’s Cumulative Mission Capable Rates from March 2012 to September 2016

A cutter is deemed mission capable if it operates in either a fully mission 

capable or partially mission capable status. The FRCs have operated in a 

partially mission capable status 2.3 percent of the time since March 2012. 

This is at least partially due to the short duration of the FRC’s patrol 

schedule of roughly 5 to 7 days at sea and the capabilities of the cutter. 

Additionally, the smaller size of the FRCs as compared to the NSCs limits 

both the crew size and capabilities aboard the cutter making it less likely 

that the FRC will be able to meet the criteria for partially mission capable, 

which is the ability to fulfill at least one of its designated missions. For 

example, the FRC holds one cutter boat, and Coast Guard safe-to-sail 

equipment requirements dictate that this cutter boat must be operational 

or the FRC is deemed not mission capable.
Page 14 GAO-17-218 Coast Guard Cutters

While the cumulative average monthly mission capable rate for the FRC 

is above the target since March 2012, when we eliminated prior years and 

analyzed the FRC’s cumulative average monthly mission capable rate 

over a more recent time period—October 2015 to September 2016—we 

found that the average mission capable rate was 42.8 percent, which is 

below its minimum target (48 percent). This lower rate can be attributed to 

increased time spent in depot-level maintenance. Figure 4 shows the 

monthly mission capable rates for the FRC from October 2015 to 

September 2016 as well as the Coast Guard’s target range.

Figure 4: Monthly Mission Capable Rates for the Fast Response Cutter from October 2015 to September 2016

According to Coast Guard officials, the decrease in monthly mission 

capable rates below the minimum target is primarily because of a phased 

warranty repair drydock period that was not initially anticipated. These 

warranty repair drydocks, affecting cutters 1 through 13, began in January 

2016 and are scheduled to conclude in November 2019. The average 

drydock period will last approximately 15 weeks, with at least one FRC 

not mission capable due to depot-level maintenance at all times from 

January 2016 to November 2019. Coast Guard officials stated that while 

Recent Unanticipated DepotLevel Maintenance Is Causing 

FRC Mission Capable Rates to 

Fall below Target
Page 15 GAO-17-218 Coast Guard Cutters

these warranty repair drydock periods are scheduled in advance, the 

repairs were not anticipated when the planned major maintenance 

schedule was first established for the fleet during the acquisition process. 

Instead, these drydocks were triggered by continuing structural and 

equipment problems installed during production, including unreliable 

connectors that provide the structural integrity of the cutter and continued 

failures with the main diesel engine. The FRCs will undergo repairs on 

systems that are still covered by the FRC’s warranty and remain the 

financial responsibility of the shipbuilder, Bollinger Shipyards. According 

to the FRC’s contracting officer, Bollinger Shipyards and the FRC 

program decided to schedule these drydock periods in order to complete 

several warranty items at one time for each of the 13 cutters. Given that 

only a few FRCs have completed the warranty drydock to date, it is 

difficult to determine whether the overall fleet’s mission capable rate will 

meet its target range once the drydocks are completed.

Additionally, Coast Guard officials said that they negotiated an agreement 

with Bollinger Shipyards to allow the Coast Guard to conduct routine 

maintenance during these warranty repair drydocks at the Coast Guard’s 

expense.12 This routine maintenance includes, for example, a main diesel 

engine overhaul that is scheduled to occur roughly every 6,000 

operational hours. According to Coast Guard officials, the Coast Guard 

plans to complete this overhaul even though, as of July 2016, the engines 

have yet to be accepted as contractually compliant. Coast Guard officials 

explained that routine preventative maintenance on warranty covered 

systems, such as the main diesel engine overhaul, is the responsibility of 

the Coast Guard so as to not void the FRC’s warranty.

The time spent correcting equipment failures and awaiting spare parts 

has been minimal and, unlike depot maintenance, has not significantly 

affected the FRC’s mission capable rate. The FRC’s not mission capable 

rates due to maintenance (equipment failures) and supply have been 

below the Coast Guard’s target of no more than 12 percent on average 

since March 2012. Figure 5 shows the average rates for these not 

mission capable rates from March 2012 to September 2016 as well as a 

breakout of the last year of this time frame.

 12The Coast Guard estimates that it has avoided about $13 million in potential costs by 

combining Coast Guard responsible maintenance with the warranty drydock period, which 

is mostly due to the shipbuilder paying to drydock the cutters for the warranty work.

Equipment Failures and 

Difficulties Obtaining Spare 

Parts Are Minimally Impacting 

Mission Capable Rates
Page 16 GAO-17-218 Coast Guard Cutters

Figure 5: Fast Response Cutter’s Average Rates for Not Mission Capable Due to 

Maintenance and Supply from March 2012 to September 2016 and October 2015 to 

September 2016

The Coast Guard has managed its not mission capable rates due to 

maintenance (equipment failures) by utilizing the RCM approach, which 

includes a failure analysis used to develop the required maintenance list. 

According to Coast Guard officials, the required maintenance list is 

updated if directed by the results of a maintenance effectiveness review, 

which is completed on a rolling basis for each equipment system aboard 

the cutter. From the required maintenance list, maintenance procedure 

cards are developed that ensure maintenance is conducted uniformly 

across the fleet. Regarding not mission capable for supply, Coast Guard 

officials stated that the industry standard is 5 percent or less. In order to 

meet the industry standards, Coast Guard officials report using a complex 

algorithm to determine the appropriate level of inventory for each spare 

part, which takes into account failure rates, time required to obtain the 

part, and Navy historical data for similar fleets. In addition to this 

algorithm, the Coast Guard ensured the parts needed to complete 

scheduled maintenance were available to the maintainers, which involved 

packaging all necessary tools and parts for an upcoming scheduled 

maintenance event on a particular FRC from the central inventory 
Page 17 GAO-17-218 Coast Guard Cutters

warehouse at SFLC. These packages, according to Coast Guard officials, 

were then shipped in advance of the maintenance to the home port of the 

cutter. Coast Guard officials expect the percentage of time the FRC fleet 

spends not mission capable due to supply to increase slightly once the 

warranty expires, as the Coast Guard will have to rely on the commercial 

market to obtain parts as opposed to these parts being provided by 

Bollinger Shipyards. Coast Guard officials noted however, that they do 

not expect this increase to exceed the industry standard of 5 percent.

The three equipment systems with the most problems from 2014 to 2016 

resulted in about 827 combined lost operational days and partially 

mission capable days for the FRC. 13 These three equipment systems 

include:

• the main diesel engine,

• the C4ISR system, and

• the ventilation system.

While the not mission capable rates due to maintenance—from 

equipment failures—and supply are important metrics in understanding 

the effectiveness of the Coast Guard’s maintenance planning, they alone 

do not convey the complete health of the FRC fleet. As such, the Coast 

Guard tracks the equipment systems that result in lost operational days 

for the cutters. Failures associated with the main diesel engine have been 

particularly problematic. The engine is still covered by the warranty clause 

for each FRC, but problems resulted in roughly 355 days spent not 

mission capable due to maintenance. The FRC’s contracting officer 

stated that as of October 2016, all of the 18 operational FRCs have 

undergone various corrective repairs on their main diesel engines, 

including replacing engines on 6 of the cutters. While Coast Guard 

officials report that Bollinger Shipyards has resolved many of the 

concerns surrounding the main diesel engines, design changes to satisfy 

unresolved problems are ongoing. One such problem is the harmful 

buildup of soot in the exhaust while traveling at low speed. Once an 

acceptable solution has been determined, the new equipment will be 

retrofitted onto the other FRCs at the shipbuilder’s expense. Coast Guard 

officials have not identified an anticipated timeframe for a solution.

 13The Coast Guard classifies lost operational days as the number of days in which a cutter 

was either not mission capable due to an equipment failure or not mission capable due to 

a lack of spare parts.

Equipment Failures Have 

Resulted in Lost Operational 

Days for the FRC
Page 18 GAO-17-218 Coast Guard Cutters

In addition to tracking the systems that resulted in lost operational delays, 

the Coast Guard also solicits feedback annually from each cutter’s crew 

in an engineering report to identify trends in equipment systems that are 

hindering the cutters while underway. The engineering reports provide a 

forum for the cutter’s commanding officer to provide his or her opinion of 

the cutter’s top equipment issues, overall summary of the cutter’s 

structural condition, and the top human performance problems 

experienced by the cutter over the preceding 12 months. Officials at the 

Patrol Boat Product Line review all of the FRC’s engineering reports for 

the fleet to identify trends and to take corrective action where necessary. 

The Patrol Boat Product Line then consolidates the top 5 equipment 

concerns noted by the FRC commanding officers and provides a 

response explaining the corrective actions to be taken or the rationale for 

inaction.

Our analysis of FRC engineering reports from 2012 through 2015 found 

that the top three equipment concerns that occurred most frequently were

• a lack of maintenance procedure cards,

• issues with the Machinery Control and Monitoring System, and

• paint and corrosion on board the cutters.

For example, the engineering reports mentioned that inaccurate or 

incomplete maintenance procedure cards interfered with the crew’s ability 

to complete maintenance as these maintenance procedure cards provide 

detailed instructions on how to complete maintenance activities for each 

of the equipment systems. Coast Guard officials noted that inaccuracies 

found in maintenance procedure cards are largely due to incorrect part 

numbers for pieces of equipment as these numbers can change, for 

example, due to obsolescence. According to Coast Guard officials, as of 

July 2016, 89 percent of the maintenance procedure cards for the FRC 

have been published and the majority of those unpublished are 

conditional cards that have not been published because the triggering 

condition, most likely a system failure, has not yet occurred in order to 

validate the maintenance procedure cards.
Page 19 GAO-17-218 Coast Guard Cutters

Similar to the FRCs, the NSCs have met their minimum mission capable 

target range (49 percent) on average since the Coast Guard began 

tracking this metric in November of 2013 until September of 2016. 

However, over the last 12 months of this timeframe, from October 2015 to 

September 2016, the cutters demonstrated an average mission capable 

rate below the minimum target. This is primarily due to the increase in 

depot maintenance associated with post shakedown availabilities on the 

newly delivered NSCs (Hamilton and James).14 See table 3.

Table 3: National Security Cutter’s Average Asset Status from November 2013 to September 2016

Asset status

Percentage of time in 

asset status

November 2013 –

September 2016

Percentage of time in 

asset status

October 2015 –

September 2016

Fully mission capable 31.8 27.2

Partially mission capable 22.4 9.9

Total mission capable rate 54.2 37.2

Not mission capable due to maintenance (equipment failures) 2.1 2.8

Not mission capable due to supply 0.2 0.1

Not mission capable due to depot-level maintenance 43.4 60

Total not mission capable rate 45.8 62.8

Source: GAO analysis of Coast Guard data. | GAO-17-218

Note: The total percentage may not equal the sum of the individual asset statuses due to rounding.

According to Coast Guard data, from November 2013 until September 

2016, the NSC fleet had a cumulative average mission capable rating of 

54.2 percent, above the minimum goal of 49 percent. See figure 6.

 14The post-delivery shakedown period consists of the planned maintenance where work is 

performed to install upgrades, perform maintenance, and correct construction deficiencies.

NSCs Are Meeting 

Minimum Mission Capable 

Rates on Average, but 

Post-Delivery Depot-Level 

Maintenance Period Has 

Recently Led to a 

Downward Trend

The NSCs Have Met Their 

Minimum Mission Capable 

Rate on Average Since 

November 2013
Page 20 GAO-17-218 Coast Guard Cutters

Figure 6: National Security Cutter’s Cumulative Mission Capable Rates from November 2013 to September 2016

A cutter is deemed mission capable if it operates in either a fully mission 

capable or partially mission capable status. The NSCs have operated in a 

partially mission capable status 22.4 percent of the time since November 

2013, which is more than the FRC. This is at least partially due to the 

complexity of the NSC’s mission set and operational schedule. For 

example, the NSC was designed to support 8 of the 11 Coast Guard 

statutory missions and, if even 1 of the 8 missions is unable to be 

performed, the NSC will operate under the partially mission capable 

status. Additionally the NSCs are scheduled for patrols lasting roughly 2 

to 3 months in duration as opposed to the FRCs, which are scheduled for 

patrols lasting about 5 to 7 days, making it much more likely that the 

NSCs will be conducting missions in a partially mission capable status at 
Page 21 GAO-17-218 Coast Guard Cutters

some point during their lengthy patrol. The size of the NSC allows for 

additional capabilities to be available during patrols. For example, the 

NSC is equipped with three cutter boats, and known failures with the 

dual-point davit crane launch system frequently render at least one of the 

three cutter boats inoperable, causing the NSC to become not fully 

mission capable. Instead, the NSC becomes partially mission capable as 

it is able to conduct operations with the remaining two cutter boats.

While the cumulative average monthly mission capable rate for the NSC 

is above the target since November 2013, when we eliminated prior years 

and analyzed the NSC’s cumulative average monthly mission capable 

rate over a more recent time period—October 2015 to September 2016—

we found that the NSC’s average mission capable rate was 37.2 percent, 

which is below its minimum target of the range of 49 percent. Figure 7 

shows the monthly mission capable rates for the NSC from October 2015 

to September 2016.

Figure 7: Monthly Mission Capable Rates for the National Security Cutter from October 2015 to September 2016

Recent Anticipated Post 

Delivery Depot-Level 

Maintenance Is Reducing the 

NSC’s Mission Capable Rates
Page 22 GAO-17-218 Coast Guard Cutters

From October 2015 to September 2016, the not mission capable rate due 

to depot maintenance was 60 percent. While both the FRC’s and NSC’s 

inability to meet its mission capable target rate is attributable to the 

increase in depot-level maintenance, the cause differs. Unlike the FRC’s 

mission capable rates, which are influenced by the warranty repair 

drydock periods, the NSCs mission capable rates are influenced by the 

roughly 2-year post-delivery period called the post shakedown availability, 

which is scheduled for each newly delivered NSC. During this time the 

cutters will undergo depot-level maintenance and other activities to bring 

the cutter to full operational capability. Further, whereas the FRC’s 

warranty repair drydock periods were unanticipated, the NSC’s 

shakedown periods were planned during the acquisition phase.

During this shakedown period, the NSC will be rendered not mission 

capable due to depot-level maintenance for a majority of its time. For 

example, from January 2015 until September 2016, the NSC Hamilton

spent 70.9 percent of its time in depot-level maintenance, and the NSC 

James spent 82.6 percent of its time in depot-level maintenance from 

September 2015 to September 2016. With only five NSCs in operation as 

of September 2016, having two cutters spend the majority of their time 

not mission capable due to depot-level maintenance is having a negative 

effect on the overall fleet’s mission capable rates. This will continue as 

the Coast Guard introduces new NSCs into the fleet and the last cutter 

completes its 2-year post shakedown period—scheduled for 2022 as the 

ninth cutter is scheduled for delivery in 2020. While the first three NSCs 

achieved their mission capable rate targets on average from January 

2014 to September 2016, it is uncertain if the overall fleet mission 

capable rate will increase once all NSCs complete their post shakedown 

availabilities.

The average time spent correcting equipment failures or waiting for 

supplies has been below the Coast Guard’s target of no more than 12 

percent since November 2013. Figure 8 shows the average not mission 

capable rates due to maintenance— from equipment failures— and 

supply from November 2013 to September 2016 as well as the last 12 

months of this time frame.

Equipment Failures and 

Difficulties with Obtaining 

Spare Parts Have Marginal 

Effect on NSC Mission 

Capable Rates
Page 23 GAO-17-218 Coast Guard Cutters

Figure 8: National Security Cutter’s Average Not Mission Capable Rates Due to 

Maintenance and Supply from November 2013 to September 2016 and October 2015 

to September 2016

From November 2013 to September 2016, the NSC fleet achieved an 

average not mission capable rate due to maintenance (equipment 

failures) of 2.1 percent. In the last year of this time frame, the average not 

mission capable rate due to maintenance (equipment failures) was 2.8 

percent. The Coast Guard keeps this metric low by using its RCM 

analysis and by arranging for the NSC’s drydock periods to conduct 

preventative maintenance based on equipment failure risk. This enables 

the cutter to receive maintenance that potentially avoids equipment 

failures while conducting missions. According to the Coast Guard, this is 

accomplished by performing the drydock in such a way that equipment 

systems not believed to be in need of repair are included as optional 

items in the depot maintenance contract. These optional items can be 

exercised as needed at a previously negotiated fixed price.

The NSC fleet has met the industry standard of less than 5 percent for not 

mission capable rates due to supply. The Coast Guard employs the same 

algorithm and pre-positioning of parts as discussed above with regard to 
Page 24 GAO-17-218 Coast Guard Cutters

the FRC to meet both its internal and industry standards for not mission 

capable due to supply rates.

The three equipment systems with the most problems from 2014 to 2016 

resulted in 993 combined lost operational days and partially mission 

capable days for the NSC over this period of time. These systems include 

the cutter boat launch and recovery system and the reliability of the ship 

service diesel generator and the main diesel engine. Unlike the FRC’s 

warranty, the Coast Guard is required to pay a portion of the cost for 

equipment problems corrected under the NSC’s guaranty. Nearly all of 

these lost operational days resulted from the NSCs operating in a partially 

mission capable status due to the equipment problems. The cutter boat 

launch and recovery system, which includes the gantry crane and dual 

point davit, have rendered the fleet in a partially mission capable status 

for 278 days from 2014 to 2016.15 Across the fleet, overheating bearings 

in the ship service diesel generator have resulted in the crew’s inability to 

use one or more of the generators. According to the Coast Guard policy, 

the NSC requires at least two (one specific generator and either of the 

remaining two) of its three generators to be operational in order to 

conduct missions. The cost to repair this issue is substantial, with each 

bearing costing roughly $100,000 to resolve.

In addition, the NSCs continue to experience failures associated with the 

main diesel engines. The main diesel engines used by the NSCs are 

manufactured by MTU, the same manufacturer responsible for the main 

diesel engines employed on the FRCs, and have been problematic since 

the NSC fleet became operational.16 As we found in January 2016, the 

engines overheat in waters above 74 degrees Fahrenheit, which 

constitutes a portion of the NSC’s operating area given that they are 

intended to be deployed worldwide.17 This can cause the cutters to 

operate 2 to 4 knots below their top speed of 28 knots, which could hinder 

the cutter in successfully conducting operations. The NSC’s inability to 

achieve top speed in warm waters has inhibited the cutters’ ability to 

complete their regularly scheduled full power trials, which are periodic 

 15The gantry crane is a crane on the rear of the cutter that aides in deploying the NSC’s 

cutter boat. The dual point davit is used to lift cutter boats for launch and recovery from 

the side of the cutter.

16MTU is a German based manufacturing company that the shipbuilders contracted with 

to produce the diesel engines on the NSC and FRC.

17GAO-16-148.

Equipment Failures Have 

Resulted in Lost Operational 

Days for the NSC
Page 25 GAO-17-218 Coast Guard Cutters

tests of the propulsion plant operated at maximum rated power. Figure 9 

depicts the number of attempted and successful full power trials 

conducted by the NSCs from 2012 to 2015.

Figure 9: National Security Cutters’ Attempted and Successful Full Power Trials 

from 2012 to 2015

Note: The full power trial is a periodic test of the cutter’s propulsion plant operated at maximum rated 

power.

The full power trial results advise operating and maintenance personnel 

of the cutter’s full power performance characteristics and the results can 

provide the basis for maintenance activity.18 From 2012 to 2015, the 

operational NSCs conducted 7 full power trials out of 14 total possible 

tests. Of those 7 tests, 4 were considered successful. In order for a full 

power trial to be considered successful, the cutter must complete the trial 

requirements, which include testing at a specific engine speed and 

minimum water depth, while not exceeding design pressures, 

 18The full power trials are annual tests of a cutter’s propulsion system.
Page 26 GAO-17-218 Coast Guard Cutters

temperature, and other operating parameters. Performance issues or 

equipment failures with the propulsion system were listed as the most 

frequent cause for not conducting the full power trial or for unsuccessful 

tests.

We previously recommended in January 2016 that the Department of 

Homeland Security (DHS) conduct an acquisition review board once the 

Coast Guard concludes a root cause analysis on both the main diesel 

engines and the generators.19 DHS concurred with this recommendation 

and plans to hold an acquisition review board no later than December 

2017. In an attempt to resolve the continued propulsion plant problems, 

DHS issued an Acquisition Decision Memorandum to the Coast Guard in 

April 2016 directing, among other actions, that the Coast Guard conduct a 

propulsion study to develop a permanent solution to the main diesel 

engine failures by December 2017. The Coast Guard has a propulsion 

study underway with MTU America, Inc. that is on track to meet the 

Acquisition Decision Memorandum’s deadline according to program 

officials.

Pending the completion of the propulsion study and identification of 

corrective actions, the Coast Guard issued an engineering advisory to the 

NSCs in January 2016 in an effort to ensure the main diesel engine 

service life expectations are met, improve the engine’s operational 

reliability, maximize the engine’s performance, and minimize the engine’s 

maintenance costs. This advisory provides actionable steps the NSC 

crews can take while underway to achieve the aforementioned goals, 

such as to ensure the quality of the lubricating oil used and monitored 

regularly, to use harbor mode—which only engages one of the two diesel 

engines when operating below 10 knots—and to minimize engine idle 

time, to name a few. The Coast Guard is also in the process of 

developing prototype components to address issues with the main diesel 

engine in advance of the completion of the propulsion study.

Similar to the FRC, the Coast Guard also solicits feedback annually from 

each NSC’s crew in an engineering report to identify trends in equipment 

systems that are hindering the cutters while underway. Officials at the 

Long Range Enforcer Product Line review all of the engineering reports 

for the NSC fleet to identify any trends and to take corrective action where 

necessary. This product line then provides a response to each of the 

 19GAO-16-148.
Page 27 GAO-17-218 Coast Guard Cutters

commanding officers’ equipment concerns explaining the corrective 

actions to be taken or the rationale for inaction. The top three equipment 

problems that occurred most frequently in the NSC’s engineering reports 

from 2012 to 2015 are the Auxiliary Seawater System (ASW), the 

propulsion plant reliability, and the stern doors/gantry crane. For example, 

issues with the ASW included piping failures, ill-fitting valves, and 

corrosion. To address these issues, the Coast Guard has begun an 

engineering design change to reduce the flow rate throughout the ASW 

system that it plans to implement in three phases due to the dispersed 

nature of the system throughout the cutter.

During operations and testing, the FRC and NSC have experienced 

problems that require engineering design changes or repairs. Some of 

these design changes are being implemented to correct issues 

discovered during testing, while others are being conducted to make 

systems less maintenance-intensive or to increase the reliability of the 

systems. The FRC program has identified several design changes that it 

is installing on the cutters at the expense of the Coast Guard. The FRC’s 

warranty is also covering several repairs, which the FRC’s contracting 

officer stated avoided at least $77 million in potential maintenance costs. 

Replacing the FRC’s engines, which contributed to the cutter’s lost 

operational days, represented about $52 million of the costs avoided. The 

NSC program is also implementing several design changes, the cost of 

which is the Coast Guard’s responsibility. The estimated cost for the NSC 

design changes has increased $57.6 million since January 2016. In 

addition, at least three design changes on the NSC are being conducted 

post-delivery for all nine NSCs, meaning that the Coast Guard will have to 

spend time and money conducting maintenance on systems with known 

defects until the cutters are retrofitted. Further, the cost analysis 

supporting the decision to install these three design changes postdelivery was not documented, which entails risk that the Coast Guard 

may not be choosing the most cost effective path forward.

The Coast Guard has encountered several issues on systems aboard the 

FRC that were discovered during operations and testing and require 

design changes and retrofits to correct. Some of these design changes 

are being conducted during the FRC’s ongoing warranty repair drydock. 

According to Coast Guard documentation, the Coast Guard is responsible 

for paying for these design changes as they are outside the scope of the 

program’s warranty. Table 4 shows the list of design changes for the FRC 

valued at $1 million or greater.

The Coast Guard Is 

Addressing Some 

Maintenance 

Problems through 

Engineering Design 

Changes, but Has 

Not Documented Key 

Cost Analysis

The FRCs Are Undergoing 

Several Design Changes 

and Several Repairs 

Covered by Warranty
Page 28 GAO-17-218 Coast Guard Cutters

Table 4: Fast Response Cutter Design Changes with Estimated Costs over $1 

Million as of September 2016

Retrofits and design changes

Estimated cost 

(dollars in millions)

Structural enhancements 6.9

Rudder replacement 5.9

Watertight door replacement 1.8

Escape kick out panels 1.3

Anchor redesign 1.1

Total cost 17.0

Source: GAO analysis of Coast Guard data. | GAO-17-218

The cost for some of these design changes, such as the structural 

enhancements, has already been incurred, while other design changes 

have only recently begun to be incurred. According to program officials, 

the structural enhancements were identified early in the production of the 

FRCs during a review of the standards that were used to build the cutter, 

which resulted in the Coast Guard increasing the strength of the hull by 

installing extra supports to ensure its safety.20 These enhancements were 

retrofitted on the first seven FRCs and were then included in production 

beginning with the eighth FRC. The rudder replacement is intended to 

reduce fuel consumption, reduce paint failures, and lengthen the part’s 

lifespan, which will reduce sustainment costs. This design change is 

planned to be retrofitted on the first 20 FRCs and then incorporated into 

production with subsequent cutters.

In addition to the design changes listed above, repairs are being 

conducted on the FRC that are covered by the program’s warranty and 

are being performed at no additional cost to the Coast Guard. According 

to the FRC’s contracting officer, as of August 2016 the FRC’s warranty 

has avoided about $77 million in potential maintenance costs for the 

Coast Guard. Table 5 shows the systems on the FRC that have been 

repaired or replaced under the warranty at no additional cost to the Coast 

Guard.

 20The Coast Guard used the American Bureau of Shipbuilding (ABS) Guide for Building 

and Classing High Speed Naval Craft 2007 for the design, construction, and classification 

of the FRC. However, the Coast Guard is not maintaining the FRCs according to ABS 

standards. The NSC was not built using ABS standards.
Page 29 GAO-17-218 Coast Guard Cutters

Table 5: Coast Guard Reported Costs Avoided Due to Fast Response Cutter Warranty as of August 2016

Fast Response Cutter’s major warranty items Number of replaced systemsa

Coast Guard’s estimate of total 

cost avoidance due to warranty 

(dollars in millions)

Main diesel engines 20 51.8

Exhaust manifold assembly 32 9.6

Automatic oil filter assembly 32 6.4

Reduction gears 8 5.6

High pressure relief valve modification 32 3.2

Fuel oil injectors 230 0.5

Total cost 77.0

Source: GAO presentation of Coast Guard data. | GAO-17-218

Note: The total cost may not equal the total amount of the individual warranty items when added 

together due to rounding.

a

This includes a mixture of systems replaced on cutters and replaced spares.

As was mentioned previously, issues with the FRC’s main diesel engines 

were one of the systems that led to the most lost operational days. This 

problem was first reported in the cutter’s Initial Operational Test and 

Evaluation report in July 2013. The Navy’s Commander of Operational 

Test and Evaluation Force, which serves as the Coast Guard’s 

independent test agent, found multiple problems with the main diesel 

engines that resulted in 275 lost operational hours during the test event. 

These problems have continued, with a total of 20 diesel engines being 

replaced as of August 2016. Most recently, the diesel engines were 

replaced on the Joseph Tezanos (the 18th FRC) and the Benjamin Dailey

(the 23rd FRC) in May 2016 during production, indicating that the 

problems with the diesel engines are ongoing. Additionally, the problems 

with the diesel engines have varied widely, making it difficult and timeconsuming for MTU and the Coast Guard to identify a definitive root 

cause that could solve the issues fleet-wide. Most issues have required 

fleet-wide retrofits, which can reduce the cutters’ mission capable rates 

due to the increased depot maintenance work required to install 

corrections. According to Coast Guard officials, the FRC contracting team 

holds monthly meetings with MTU to review the corrective actions and 

hold this manufacturer accountable. The program estimates that 60 

percent of the current problems have been resolved with retrofits 

complete. However, the variation in the issues experienced thus far make 

it difficult for the Coast Guard to predict future failures, and the problem 

may continue to affect the operational availability of the FRC.
Page 30 GAO-17-218 Coast Guard Cutters

The NSC is also undergoing several design changes for issues 

discovered during operations and testing, including those that require 

additional maintenance above what was expected. The total cost of these 

changes has increased $57.6 million from the amount we found in 

January 2016, for a total of almost $260 million.21 Program officials 

attributed the increase to the revised cost of structural enhancements on 

NSCs 1 and 2 based on actual contract values and the addition of the 

ninth NSC. Table 6 shows the list of design changes for the NSC 

estimated to cost at least $1 million.

Table 6: National Security Cutter Design Changes with Costs over $1 Million as of September 2016

Design changes

January 2016 

estimated costs 

(in millions)

September 2016 

estimated costs 

(in millions)

Change in 

estimated costs 

(in millions)

Percentage cost 

growth

Structural enhancements $38.0 $70.6 $32.6 85.8%

C4ISR upgradea $88.5 $98.3 $9.8 11.1%

Gantry crane replacement $31.0 $34.9 $3.9 12.6%

Single-point davit replacement $12.5 $14.0 $1.5 12.0%

Communications upgrade $12.3 $13.5 $1.2 9.8%

Upgrade two ammunition hoists $6.3 $7.0 $0.7 11.1%

Update cutter monitoring system $6.3 $6.6 $0.3 4.8%

Breathing apparatus replacement $1.6 $1.8 $0.2 12.5%

Remove Aircraft Ship Integrated Secure and 

Traverse tracks in flight deckb $5.6 $5.6 $0.0 0.0%

Diesel engine modifications to address high 

engine temperatures n/a $3.6 $3.6 n/a

Generator modifications to address overheating 

bearings n/a $2.7 2.7 n/a

Stern ramp boat launch modifications n/a $1.1 $1.1 n/a

Total cost $202.1 $259.7c $57.6 28.5%

Source: GAO analysis of Coast Guard data. | GAO-17-218

Note: The Coast Guard reported these numbers for all nine hulls. However, not all retrofit designs are 

currently being implemented because they have not all been finalized.

a

C4ISR stands for Command, Control, Communications, Computers, Intelligence, Surveillance, and 

Reconnaissance.

b

In January 2011, Coast Guard officials canceled the Aircraft Ship Integrated Secure and Traverse—a 

system intended to automate the procedure to land, lock down, and move the HH-65 helicopter from 

the deck to the hangar on the National Security Cutter—after significant deficiencies were identified 

during testing conducted by the U.S. Naval Air Warfare Center. The Coast Guard invested 

 21GAO-16-148.

The Coast Guard Is 

Conducting Design 

Changes on the NSC, but 

Not All Design Changes 

Will Be Incorporated 

during Production
Page 31 GAO-17-218 Coast Guard Cutters

approximately $27 million to install the system on three National Security Cutters, including putting 

tracks in the flight deck that were later removed.

c

The Coast Guard is using acquisition funding and operations and maintenance funding to pay for 

these corrections.

The design change with the largest cost increase is the structural 

enhancements, with a cost estimate of $70.6 million. This involves cutting 

into large sections of the hull in order to add reinforcing metal so that the 

first two NSCs are more likely to meet their full 30-year service life. This 

design change was incorporated into production on the third NSC. The 

original estimate of $38 million for this work was established in January 

2014, and the Coast Guard awarded the contract in February 2016. The 

current contract value of over $70 million represents a cost increase of 

about 86 percent from the original estimate. According to NSC program 

officials, the large cost increase is due to a better understanding of the 

work that would be required to complete this effort, such as the costs 

associated with getting the cutter into a drydock, removing sensitive 

equipment, and the technical complexity of the task. They also stated that 

the contractor factored risk into its bid for completing this technically 

difficult work. In order to complete this work, the Coast Guard will place 

the first two NCSs in a not mission capable due to depot maintenance 

status for at least 11 months each to correct structural deficiencies.22 The 

Coast Guard plans to conduct additional design changes, such as the 

gantry crane and single-point davit replacements, during this period as 

well to save money.

In order to minimize the cost increase for some of these design changes 

and to adhere to their production schedule, the Coast Guard plans to 

maintain the original equipment during production for all NSCs and then 

later conduct retrofits after accepting delivery of the cutters. This means 

that systems with known defects or deficiencies will be installed during 

production only to be replaced later, requiring maintenance on some of 

these systems until the retrofits are complete. Figure 10 shows selected 

systems that will require retrofits after all nine cutters are built.

 22The Coast Guard plans to place the first two NSCs in not mission capable due to layup 

status during the structural enhancement work. This is a new mission capable status that 

will be introduced with the updated EAL guidance, which the Coast Guard plans to issue 

in May 2017. Not mission capable due to layup means that the asset is laid up in 

temporary storage or a cutter is in an extended depot maintenance period.
Page 32 GAO-17-218 Coast Guard Cutters

Figure 10: Selected National Security Cutter Systems Requiring Retrofitting after Production

The following equipment will be included on the cutters currently being 

built or under contract and later removed or upgraded:

• Gantry Crane Replacement: The gantry crane was not designed for 

a maritime environment and is inadequately sealed to prevent water 

intrusion, leading to accelerated corrosion and the need for excessive 

repairs that are not considered sustainable over the NSC’s life cycle. 

Post-operational reports stated that the gantry crane requires 

hundreds of man-hours to keep it operational. This design change 

was initiated in January 2010 and, according to Coast Guard officials, 

the new crane system has been successfully prototyped on the 

Stratton and has been approved for fleet-wide replacement. However, 

all of the remaining NSCs to be produced will be built with the gantry 

crane installed and will then have it removed during their postshakedown periods when the new crane system will be installed. 

Problems with the gantry crane have plagued the NSC since it began 

operations and are expected to continue until all cutters have their 

gantry crane replaced, which is not planned to be completed for 

several years. The fleet-wide replacement of the gantry crane is 
Page 33 GAO-17-218 Coast Guard Cutters

anticipated to cost $34.9 million, which represents a cost increase of 

about 13 percent since January 2016.

• Single-Point Davit Replacement: The single-point davit, which is 

used to lift cutter boats for launch and recovery from the starboard

side of the cutters, is unable to reliably lift the cutter boats in high 

seas. This has caused the crews of the NSC to express concern 

about the safety of the single-point davit system when operating in 

higher sea state conditions.23 All of the NSCs have been or will be 

delivered from the shipbuilder with the single-point davit system 

installed, despite this design change being initiated in March 2010. 

The replacement of the single-point davit will be installed during the 

remaining cutters’ post-shakedown period and is expected to cost the 

Coast Guard $14.0 million, which includes a cost increase of about 12 

percent since January 2016.24

• Upgrades to Two Ammunition Hoists: According to Coast Guard 

officials, the ammunition hoists are difficult to use in their current 

configuration, and the crew of the NSC prefers to carry ammunition for 

the Close-in Weapon System by hand rather than use the hoist. As a 

result, the Coast Guard plans to modify the design of this equipment. 

Despite the Coast Guard initiating this design change in October 

2012, beginning with NSC 4, the remaining NSCs are being built 

without ammunition hoists and instead are delivered with a vacant 

space, which officials stated resulted in savings to the Coast Guard. 

The Coast Guard is installing the new ammunition hoists post-delivery 

on all NSCs. These changes are expected to cost the Coast Guard a 

total of $7.0 million, which represents a cost increase of about 11 

percent since January 2016.

Coast Guard officials stated that no formal analysis is developed or 

documented to determine whether a design change should be installed 

during production or post-delivery. Instead, they used the professional 

judgment of Coast Guard and shipyard officials to determine the most 

cost efficient timing of when to install design changes. Keeping the NSC 

delivery dates on schedule was one of the primary reasons officials gave 

 23Sea state refers to the height, period, and character of waves on the surface of a large 

body of water.

24The replacement for the single-point davit is the dual-point davit, which, as was 

previously discussed, was one of the systems with the most lost operational days for the 

NSC.

The Coast Guard Did Not 

Document a Key Cost 

Analysis for Its Design 

Changes
Page 34 GAO-17-218 Coast Guard Cutters

for not installing the three design changes noted above during production 

on the NSCs that have not yet been delivered (NSC 6-9). Given that the 

program has been aware of these three design changes for many years, 

the Coast Guard had an opportunity to install the design changes during 

production instead of during the post delivery period.

According to Coast Guard officials, one hindrance to installing systems 

during production is that the shipyard would likely want to revalidate any 

engineering work on the design change that was conducted by Coast 

Guard officials since the shipyard is responsible for delivering a ship that 

meets the specifications of the contract. This revalidation work could 

delay the production schedule and lead to cost increases. They also 

stated that it is more cost effective to install these three design changes 

post-delivery for all NSCs, but were unable to produce any documents 

supporting this claim. For example, officials explained that installing 

replacement systems for the gantry and single-point davit cranes during 

production would have cost an additional $7 million to $10 million per 

cutter. This is compared to their estimates of $4.5 million to $5 million to 

conduct these changes post-delivery. However, officials could not provide 

documentation supporting their analysis. Further, the Coast Guard’s Joint 

Surface Engineering Change Process Guide, which governs the design 

change process and provides instructions for how design changes should 

be planned and installed, does not require such cost analyses to be 

documented. Federal internal control standards state that significant 

decisions should be documented in a manner that allows documentation 

to be available for examination.25 In addition, GAO best practices state 

that cost estimates should be documented for management to make an 

informed decision regarding a program’s affordability.26 With the Joint 

Surface Engineering Change Process Guide not requiring that a cost 

analysis be performed and documented to support its decision on when to 

install design changes, the Coast Guard cannot be certain that it is 

making the most cost-effective decision when determining the optimal 

time to install design changes.

 25GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014).

26GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009).
Page 35 GAO-17-218 Coast Guard Cutters

The FRC’s and NSC’s annual depot-level expenditures have generally 

been well below their estimated levels since 2010. Combined, these 

cutters have used $106.6 million less than estimated since 2012 and 

2010, respectively. The Coast Guard has used this $106.6 million to pay 

for maintenance on legacy vessels and other assets. The Coast Guard 

uses its standard support level to estimate the annual depot-level 

maintenance needs of each asset. However, officials stated that standard 

support levels are not updated on a regular basis with information on 

actual expenditures, which can hinder the Coast Guard’s ability to 

determine what its actual depot budget needs are.

The Coast Guard’s annual estimates for depot-level maintenance—

known as standard support levels—consistently do not reflect actual 

expenditures for the FRC and NSC.27 Depot maintenance expenditures 

from 2012 to 2016 for the FRC and 2010 to 2016 for the NSC were 

$106.6 million less than estimated. Figure 11 shows the estimated and 

actual maintenance expenditures for the FRC and NSC since 2012 and 

2010, respectively.28

 27An expenditure is the actual spending of money; an outlay. GAO, A Glossary of Terms 

Used in the Federal Budget Process, GAO-05-734SP (Washington, D.C.: September 

2005).

28This figure only includes the expenditures for the hull, mechanical, and electrical 

systems on the cutters. We attempted to review the Coast Guard’s organizational-level 

maintenance (maintenance conducted by the crew) but were unable to do so because 

Coast Guard officials stated they do not break out organizational-level maintenance costs 

from a cutter’s operating budget, which, in addition to operational maintenance, includes 

costs such as fuel and life jackets.

Cost Estimates for 

FRC and NSC Depot 

Maintenance Do Not 

Reflect Actual 

Expenditures and 

Estimates Are Not 

Regularly Updated

Coast Guard’s Annual 

Depot-Level Maintenance 

Estimates Do Not Match 

Expenditures for the FRC 

and NSC
Page 36 GAO-17-218 Coast Guard Cutters

Figure 11: Depot Maintenance Expenditures and Estimates for the Fast Response Cutter and National Security Cutter

Note: The depot maintenance estimates increased as the number of cutters in the fleet increased.

Expenditures for the FRC program from 2012 to 2016 were $66.4 million 

less than expected for depot maintenance—85 percent under its standard 

support level—and expenditures for the NSC program from 2010 to 2016 

were $40.1 million less—26 percent under its standard support level. 

Coast Guard officials stated that early in a cutter’s life cycle, the depotlevel expenditures are expected to be less than what is planned for in the 

standard support level since the cutters are not conducting all of their 

regularly scheduled depot-level maintenance yet. Then, as an asset ages, 

its expenditures will gradually meet or exceed its standard support level in 

certain years when a cutter has an increased amount of planned depotlevel maintenance. The FRC has yet to meet or exceed its estimates and 

officials attributed the large disparity between the FRC’s expenditures and 

its standard support level to the program’s warranty, saying that they are 

not fully responsible for conducting all maintenance yet. The Coast Guard 

does not expect the FRC’s depot-level expenditures to match its 

estimates until after the 15-week warranty repair drydock for the first 13 

cutters is complete in late 2019.
Page 37 GAO-17-218 Coast Guard Cutters

The NSC exceeded its estimates only one time—in 2014—which 

coincided with the first scheduled drydock event on the Bertholf.

29 NSC 

officials stated that drydocks are the most expensive depot-level 

maintenance event. However, the Stratton had its first scheduled drydock 

in fiscal year 2016 and the NSC expenditures did not exceed its standard 

support level in that fiscal year, indicating that the NSCs estimates may 

have excess capacity that is not needed in order to conduct all depot 

maintenance. The NSC fleet had its largest difference between its 

estimates for depot-level maintenance and actual expenditures in fiscal 

year 2016, which was also the first year that all five operational NSCs 

were included in the program’s standard support level.

The difference in funds from a cutter’s standard support level and its 

actual expenditures is used by the Coast Guard to help cover the depot 

maintenance costs of legacy assets. According to Coast Guard officials, 

the combined difference of $106.6 million in depot maintenance funds 

from the FRC and NSC remained in a centrally managed surface asset 

depot maintenance account, which is available for use on other Coast 

Guard surface assets, such as the High Endurance Cutter, which officials 

explained requires additional maintenance funding over what was 

originally planned.30

The standard support levels used to create an asset’s annual estimates 

for depot-level maintenance are created early in an asset’s acquisition life 

cycle and are established as part of the program’s life cycle cost estimate. 

Once the standard support level is established, it is then used as part of 

the initial budgeting process for the cutter class. However, Coast Guard 

officials stated that annual depot-level maintenance budgets are based on 

previous years’ enacted appropriations rather than actual expenditures or 

standard support levels. The previous years’ enacted budgets are 

adjusted for the assets that were added and those that were removed 

 29The Stratton had an unscheduled emergency drydock event in 2012 for a hull failure 

when water was found to be coming into the cutter through small holes in the hull.

30In recent years the Coast Guard has provided the total amount of deferred maintenance 

to Congress. From fiscal year 2014 to fiscal year 2016 the Coast Guard’s list of deferred 

depot maintenance that it reported to Congress totaled $100 million, although the amount 

decreased from $38 million in fiscal year 2014 to $28 million in fiscal year 2016. Deferred 

maintenance is the amount of scheduled maintenance on a vessel that must be 

postponed so funds can be used for unscheduled maintenance. Such deferrals can occur 

when the Coast Guard does not have enough money to cover unexpected maintenance 

and still perform all of its scheduled maintenance, thus creating a backlog.

Standard Support Levels 

Are Not Updated on a 

Regular Cycle
Page 38 GAO-17-218 Coast Guard Cutters

from Coast Guard service and then the budget is submitted to Congress. 

This means that the annual Coast Guard budgets do not reflect the actual 

needs of the assets. Further, the surface asset depot-level maintenance 

budget line in the annual Coast Guard budget submission does not 

include the details for any asset class. Officials explained that attempting 

to do so would be unnecessarily difficult and would not help the Coast 

Guard manage its depot maintenance funds. Officials further explained 

that the Coast Guard manages its surface asset depot maintenance as a 

portfolio. The diverse portfolio of surface assets includes brand new 

vessels under warranty as well as 50-year old vessels that often demand 

significant unplanned maintenance to keep them operational.

While standard support levels are created early in an asset’s acquisition 

life cycle, Coast Guard officials stated that they are not normally adjusted 

or updated over the lifespan of an asset class except for major program 

events, such as a service life extension program.31 In July 2012, we found 

that the standard support levels for at least two legacy cutter classes had 

not been updated in more than 20 years while another cutter’s standard 

support level had not been updated in almost 50 years.32 According to 

Coast Guard officials, they plan to update the NSC’s standard support 

level to account for the addition of a ninth NSC, which was not a part of 

the original program of record. In July 2012 we also found that the Coast 

Guard’s process to create standard support levels did not fully meet best 

practices. We recommended that this process conform to cost-estimating 

best practices, with which the Coast Guard concurred. DHS’s response 

raised three issues that we found could limit the Coast Guard’s 

implementation of the recommendation. First, DHS stated that cost 

estimating best practices are most applicable to new acquisitions. We 

disagreed, stating that our cost estimating guide is intended to be 

applicable to programs and assets in all stages of their life cycles, 

including maintenance and support. Updating standard support levels 

periodically would lower the Coast Guard’s budgetary risk by using actual 

data to better inform future depot maintenance estimates. Second, DHS 

described how sustainment and maintenance costs can be uncertain and 

 31The Coast Guard indicated that it increases standard support levels using non-pay 

inflation, but it does not do so on an annual basis.

32GAO-12-741. The High Endurance Cutter’s standard support level was last updated 

around 1992 after the Coast Guard conducted a service life extension program between 

1987 and 1992. These cutters were first commissioned in 1967. The standard support 

level for the Medium Endurance Cutters (first commissioned in 1964) and the 110-foot 

patrol boat (first commissioned in 1986) had not been updated as of July 2012.
Page 39 GAO-17-218 Coast Guard Cutters

challenging to estimate, which the Coast Guard mitigates through 

centralized management of its depot-level maintenance funds for all 

assets. We again disagreed, stating that best practices can help ensure 

that cost estimates are comprehensive and accurate, which can help 

ensure that funds will be available when needed. Third, DHS explained 

that given the fiscal environment, the Coast Guard would focus on 

improvements that do not require additional resources. We stated that a 

well-documented cost estimating process and the use of accurate 

historical data should enable the Coast Guard to operate more efficiently.

By not updating the standard support levels with information on actual 

expenditures, the Coast Guard does not know what the actual depot-level 

maintenance needs are of its assets. GAO best practices state that 

programs should be monitored continuously for their cost effectiveness by

comparing planned and actual performance against the approved 

baseline.33 Effective program and cost control requires ongoing revisions 

to the cost estimate, budget, and projected estimates at completion. 

Further, a competent cost estimate is the key foundation of a sound 

budget. Not updating the estimated costs with actual expenditures could 

lead to ineffective planning by those responsible for conducting depotlevel maintenance. Coast Guard officials stated that they do not update 

their depot maintenance estimates with actual expenditures because 

doing so would cause individual budget line items to constantly change. 

Nonetheless, by not reviewing and updating the standard support levels 

for the FRC and NSC, the Coast Guard cannot accurately know what the 

actual depot maintenance needs are for each asset class. This can hinder 

decision makers as they seek to wisely spend scarce taxpayer dollars in 

support of more modern and capable Coast Guard assets.

As the Coast Guard continues to field FRCs and NSCs with improved 

capabilities over legacy cutters in an effort to modernize its fleet, it is 

important that these cutters are ready to support the Coast Guard’s 

missions when needed and with the capabilities expected when they were 

developed. The FRC and NSC both have met their mission capable target 

rates over the long term, and there are factors that explain the recent 

declines below their respective target ranges. While Coast Guard officials 

have stated that these factors are temporary, it is too soon to tell whether 

the FRC’s and NSC’s mission capable rates will meet their target ranges 

 33GAO-09-3SP.

Conclusions
Page 40 GAO-17-218 Coast Guard Cutters

once these temporary periods are complete. Further, while maintaining 

production schedules for the NSC is important, this should not be the 

overriding factor when considering when to implement design changes. 

Rather, the Coast Guard should take into account all factors and costs 

when considering its options. Visibility into decisions on how and when to 

implement planned design changes on the NSCs—including those not yet 

constructed—is currently limited because the Coast Guard’s guidance 

does not require programs to perform and document cost analyses that 

support the cost and timing of when the changes should be incorporated.

The Coast Guard’s estimates for depot-level maintenance costs are out of 

step with actual spending. The difference in estimated and actual depot 

maintenance costs realized from the FRC and NSC fleets since 2012 and 

2010, respectively, indicates that standard support levels should be 

reviewed and updated to more closely reflect the actual expenditures. Not 

having an updated assessment of depot maintenance costs for each 

asset limits the information decision makers have to determine future 

budget needs, and limits transparency into which of the Coast Guard’s 

many surface assets, such as aging legacy assets that require additional 

maintenance funding, are benefitting from any differences between depotlevel maintenance estimates and actual costs. A more thorough 

accounting for both the potential costs of design changes and the actual 

costs of keeping these cutters in service could improve information used 

by decision makers on how to spend scarce taxpayer dollars in support of 

a modern, capable Coast Guard surface fleet.

To ensure that the Coast Guard makes effective use of its resources, 

specifically regarding its budget, we recommend the Secretary of DHS 

direct the Commandant of the Coast Guard to take the following two 

actions:

• Update the Joint Surface Engineering Change Process Guide to 

require a documented cost analysis to provide decision makers 

adequate data to make informed decisions regarding the expected 

costs and when it is most cost effective to install design changes.

• Periodically update standard support levels to account for actual 

expenditures so that the Coast Guard follows best practices and to 

provide decision makers an understanding of the actual depot-level 

maintenance funds required for Coast Guard assets.

Recommendations for 

Executive Action
Page 41 GAO-17-218 Coast Guard Cutters

We provided a draft of this report to DHS for review and comment. DHS 

concurred with both of our recommendations and provided a date by 

which the actions will be complete. DHS’s written comments are reprinted 

in appendix V. DHS and the Coast Guard also provided technical 

comments that we incorporated into the report as appropriate.

As agreed with your office, unless you publically announce the contents 

of the report, we plan no further distribution of it until 30 days from the 

date of this letter. We are sending copies of this report to the Secretary of 

Homeland Security and the Commandant of the Coast Guard. In addition, 

the report is available on our website at http://gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-4841 or mackinm@gao.gov. Contact points for our Office 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix VI.

Sincerely yours,

Michele Mackin

Director, Acquisition and Sourcing Management

Agency Comments 

and Our Evaluation
Appendix 1: Objectives, Scope, and 

Methodology

Page 42 GAO-17-218 Coast Guard Cutters

To examine the maintenance, equipment failures, and spare parts 

availability for the Fast Response Cutter (FRC) and National Security 

Cutter (NSC), we reviewed the mission capability data provided from the 

Coast Guard from the Electronic Asset Logbook (EAL) database for both 

cutters and compared their rates to the target ranges for each cutter 

established by the Coast Guard over at least a 12-month time frame as 

Coast Guard officials stated was the most meaningful use of the data. We 

reviewed this data from when each cutter class first began to use the 

metric (March 2012 for the FRC and November 2013 for the NSC) to 

September 2016. We also assessed the reliability of the data from the 

EAL system to determine the extent to which we could use the data to 

support our findings and found that it was reliable for our purposes. We 

gathered data on the Coast Guard top operational degraders (lost 

operational days) from 2014 to 2016 and reviewed the FRC’s and NSC’s 

engineering reports from 2012 to 2015 to determine the top equipment 

issues the cutters experienced from the perspective of the cutter 

captains.1 We also reviewed the Patrol Boat Product Line’s response to 

the FRC’s engineering reports and the Long Range Enforcer Product 

Line’s response to the NSC’s engineering reports to see how the Coast 

Guard planned to remedy the issues the cutters were experiencing. We 

interviewed officials with the Coast Guard Office of Naval Engineering; 

the Surface Forces Logistics Center in Baltimore, MD; the Long Range 

Enforcer Product Line in Alameda, CA; and the Patrol Boat Product Line 

in Norfolk, VA. We also toured the NSC Stratton while it was in drydock at 

Mare Island Drydock in Vallejo, CA; Coast Guard Base Miami Beach to 

view FRC maintenance; and the Coast Guard Yard in Baltimore, MD to 

understand the Coast Guard’s ability to conduct drydocks and to 

understand how it plans for, stocks, and ships spare parts to cutters in the

deployed locations. We also interviewed officers from the NSC Stratton, 

FRC Bernard Webber, FRC Margaret Norvell, and officials at Coast 

Guard Base Miami Beach that operate and conduct maintenance on the 

FRCs.

To examine how design changes are affecting the maintenance of the 

FRC and NSC, we reviewed the list of Coast Guard design changes over 

$1 million for both cutters. For the FRC, we met with the contracting 

officer to determine the extent to which the program’s warranty covered 

systems that had design changes and to determine whether the 

 1

The 2016 engineering reports were not available until January 2017 at the earliest, which 

was after our cutoff date to end data collection.

Appendix 1: Objectives, Scope, and 

Methodology
Appendix 1: Objectives, Scope, and 

Methodology

Page 43 GAO-17-218 Coast Guard Cutters

shipbuilder or the Coast Guard was responsible for the costs of the 

repairs and design changes. For the NSC, we compared the cost of the 

design changes to the costs we previously found in January 2016 to 

determine the extent to which costs had changed. In addition, we 

reviewed the Coast Guard’s Joint Surface Engineering Change Process 

Guide and interviewed officials from FRC and NSC program offices and 

the Coast Guard’s Office of Naval Engineering and the Office of Budget 

and Programs.2 We compared the Coast Guard process for designing 

and implementing engineering changes to GAO’s best practices for cost 

estimating and to the internal control standards for the federal 

government.3

To examine the extent to which the Coast Guard’s cost estimates for 

depot maintenance reflects actual expenditures for the FRC and NSC, we 

reviewed the Coast Guard’s standard support levels, which are the 

estimated costs for depot-level maintenance each year over the course of 

an asset’s life cycle, and compared that to the depot-level maintenance 

expenditures for both cutters from fiscal years 2012 to 2016 for the FRC 

and from 2010 to 2016 for the NSC. We also reviewed the process 

whereby the Coast Guard creates standard support levels and 

interviewed officials from the Coast Guard’s Office of Budget and 

Programs to determine how the standard support levels are used in the 

annual budget development process. We compared the Coast Guard’s 

process for creating and updating standard support levels to GAO’s best 

practices for cost estimating.4

We conducted this performance audit from February 2016 to March 2017 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 2

Department of Homeland Security, United States Coast Guard, Joint Surface 

Engineering Change Process Guide, CGTO PG-85-00-900-G (Baltimore, MD: June 1, 

2016).

3

GAO-09-3SP; GAO-14-704G.

4

GAO-09-3SP.
Appendix II: Fast Response Cutter and 

National Security Cutter Names and Delivery 

Dates

Page 44 GAO-17-218 Coast Guard Cutters

As of September 2016, the Coast Guard planned to acquire a total of 58 

Fast Response Cutters (FRC) and 9 National Security Cutters (NSC) in 

an effort to modernize its aging fleet. The Coast Guard took delivery of 

the first NSC in 2008 with the delivery of the first FRC occurring in 2012. 

As of September 2016 the Coast Guard has received 5 NSCs and 19 

FRCs. Tables 7 and 8 depict the anticipated delivery dates of the first 34 

FRCs and all 9 NSCs.

Table 7: Fast Response Cutter Hull Information (First 34 Cutters)

Hull # Hull name Delivery date Hull # Hull name Delivery date

1101 Bernard C. Webber February 2012 1118 Joseph Tezanos June 2016

1102 Richard Etheridge May 2012 1119 Rollin Fritch August 2016

1103 William Flores August 2012 1120 Lawrence Lawson October 2016

1104 Robert Yered November 2012 1121 John McCormick December 2016

1105 Margaret Norvell March 2013 1122 Bailey Barco February 2017

1106 Paul Clark May 2013 1123 Benjamin Dailey April 2017

1107 Charles David Jr. August 2013 1124 Oliver Berry June 2017

1108 Charles Sexton December 2013 1125 Jacob Poroo September 2017

1109 Kathleen Moore March 2014 1126 Joseph Gerczak November 2017

1110 Raymond Evans June 2014 1127 Richard Snyder January 2018

1111 William Trump November 2014 1128 Nathan Bruckenthal April 2018

1112 Isaac Mayo January 2015 1129 Forrest Rednour June 2018

1113 Richard Dixon April 2015 1130 Robert Ward August 2018

1114 Heriberto Hernandez July 2015 1131 Terrell Horne October 2018

1115 Joseph Napier October 2015 1132 Benjamin Bottoms January 2019

1116 Winslow Griesser December 2015 1133 Joseph O. Doyle March 2019

1117 Donald Horsley March 2016 1134 William C. Hart June 2019

Source: GAO presentation of Coast Guard data. | GAO-17-218

Note: The Coast Guard awarded the Phase 2 contract in May 2016 to acquire the remaining 26 

FRCs. The Coast Guard only provided hull names and delivery dates for the first two of the cutters 

under the Phase 2 contract, the Joseph O. Doyle and the William C. Hart.

Appendix II: Fast Response Cutter and 

National Security Cutter Names and Delivery 

Dates
Appendix II: Fast Response Cutter and 

National Security Cutter Names and Delivery 

Dates

Page 45 GAO-17-218 Coast Guard Cutters

Table 8: National Security Cutter Hull Information

Hull # Hull name Delivery date

750 Bertholf May 2008

751 Waesche November 2009

752 Stratton September 2011

753 Hamilton September 2014

754 James June 2015

755 Munro December 2016

756 Kimball February 2018

757 Midgett February 2019

758 Stone 2020

Source: GAO presentation of Coast Guard data. | GAO-17-218
Appendix III: Fast Response Cutter and 

National Security Cutter Operational 

Capabilities Compared to Legacy Vessels They 

Are Replacing

Page 46 GAO-17-218 Coast Guard Cutters

The Fast Response Cutters (FRC) and National Security Cutters (NSC) 

were designed to provide the Coast Guard with modernized capabilities 

above those already provided by aging assets. Tables 9 and 10 highlight 

the capabilities of the FRCs and NSCs in comparison to the legacy vessel 

the cutters are planned to replace.

Table 9: Operational Capabilities of the Fast Response Cutter Compared to the 110’ Patrol Boat

Fast Response Cutter 110’ Patrol Boat

Year Delivered 2012 1986

Number in fleet 58 planned (20 operational) 41 (26 operational)a

Crew size 24 16

Length 154 feet 110 feet

Operational tempo 2,500 operational hours per year 1,800 operational hours per year

Maximum time at sea without reprovisioning 5 days 5 days

Range 2,500 nautical miles 1,900 nautical miles

Maximum speed 28 knots 28 knots

Draft 10 feet 7.5 feet

Weapons One cannon gyro-stabilized remote 

operated weapon with an optical targeting 

sensor and four machine guns

One cannon crew-served weapon and two 

machine guns

Aircraft capabilities Not flight deck equipped Not flight deck equipped

Cutter boat capabilities Carries 1 stem-mounted cutter boat Carries 1 cutter boat

Source: GAO presentation of Coast Guard data. | GAO-17-218

a

The 110-foot Island Class Patrol Boat fleet originally included 49 vessels. The Coast Guard 

converted 8 of the cutters into 123-foot patrol boats, but discontinued further conversions in 2005 and 

decommissioned the 123 foot patrol boats in 2007 because they were experiencing technical 

difficulties, such as hull buckling, and were not able to meet post-September 11, 2001 mission 

requirements.

Appendix III: Fast Response Cutter and 

National Security Cutter Operational 

Capabilities Compared to Legacy Vessels 

They Are Replacing
Appendix III: Fast Response Cutter and 

National Security Cutter Operational 

Capabilities Compared to Legacy Vessels They 

Are Replacing

Page 47 GAO-17-218 Coast Guard Cutters

Table 10: Operational Capabilities of the National Security Cutter Compared to the High Endurance Cutter

National Security Cutter High Endurance Cutter

Year Delivered 2008 1967

Number in fleet 9 planned (5 operational) 12 (5 operational)

Crew size 126 166

Length 418 feet 378 feet

Operational tempo 230 days per yeara 185 days per year

Maximum time at sea without 

reprovisioning

60 days 45 days

Range 12,000 nautical miles 14,000 nautical milesb

Maximum speed 28 knots 29 knotsc

Draft 22 feet 19 feet

Weapons Gun weapon system and close-in weapon 

system, six machine guns, and two 

countermeasure launching systems

Gun weapon system and close-in weapon 

system, four machine guns, and two 

countermeasure launching systems

Aircraft capabilities Flight deck with 2 aircraft hangars Flight deck with 1 aircraft hangar

Cutter boat capabilities Carries 3 cutter boats: 2 astern and 1 

starboard side

Carries 2 cutter boats

Source: GAO presentation of Coast Guard data. | GAO-17-218

a

To achieve 230 days away from homeport, the Coast Guard plans to use a “crew rotational concept”

in which four crews staff and operate three cutters on a rotating basis.

b

According to the Coast Guard, High Endurance Cutters can achieve a 14,000 nautical mile range 

only if they ballast their fuel tanks once the tanks are depleted, a procedure that is rarely undertaken. 

High Endurance Cutters have a range of 9,600 nautical miles under normal circumstances.

c

According to the Coast Guard, the age and condition of the High Endurance Cutters, coupled with 

renovation and modernization modifications made to these vessels over the years, make many High 

Endurance Cutters unable to achieve a maximum speed of 29 knots.
Appendix IV: Major Maintenance Events for the 

Fast Response Cutter and National Security 

Cutter

Page 48 GAO-17-218 Coast Guard Cutters

In order to plan for the individual maintenance needs of each cutter, the 

Coast Guard’s Surface Forces Logistics Center (SFLC) generates and 

maintains a 5-year maintenance plan for each asset class depicting the 

major depot-level maintenance tasks. Each year, SFLC updates and adds 

to each cutter’s 5-year maintenance schedule to formulate short- and 

long-term budgets, project shortfalls, and interface with operational 

commanders for scheduling purposes. Figure 12 shows the timeline of 

scheduled major maintenance events for the Fast Response Cutter (FRC) 

and National Security Cutter (NSC).

Figure 12: Timeline of the Major Maintenance Events for the Fast Response Cutter and National Security Cutter

Note: The maintenance events on the timelines are different for the FRC and NSC since they have 

different expected service lives. The FRC is expected to be in service for 20 years while the NSC is 

expected to be in service for 30 years.

Each cutter has a number of anticipated major maintenance events 

throughout its life cycle. Some of those include:

• Drydock: This refers to a period of time, lasting between 2 to 4 

months for the FRCs and NSCs, when the cutter is hoisted out of the 

water to conduct maintenance. Maintenance conducted during this 

time period is only capable of being done on dry land and includes 

items such as repainting of the hull and shaft removal and 

reinstallation among others. Drydocks for the FRCs occur every 4 

years while drydocks for the NSCs occur every 5 years.

• Main Diesel Engine change out: This maintenance event involves 

the replacement of the main diesel engines, which occurs every 

12,000 hours of engine operations for the FRC and every 24,000 

Appendix IV: Major Maintenance Events for 

the Fast Response Cutter and National 

Security Cutter
Appendix IV: Major Maintenance Events for the 

Fast Response Cutter and National Security 

Cutter

Page 49 GAO-17-218 Coast Guard Cutters

hours of engine operations for the NSC. Operating the FRCs at no 

more than 2,500 hours per year would mean the cutters should expect 

to undergo a main diesel engine change out at a minimum of just 

under 5 years, while operating at no more than 3,780 hours per year, 

the NSCs should expect to undergo a main diesel engines change out 

at a minimum of just over every 6 years.

• Ship Structure and Machinery Evaluation Board: This review is 

designed to examine the cutter’s material condition and provide 

information on the remaining service life of the cutter. The first Ship 

Structure and Machinery Evaluation Board is completed when the 

lead ship of the class reaches the 10-year mark and at a 5-year 

interval thereafter. According to officials, one of the possible outcomes 

of this review is that a midlife maintenance availability is triggered for 

the cutter to enable it to reach its expected service life.

• Midlife Maintenance Availability: This maintenance event is 

designed to correct system obsolescence issues and maintain asset 

reliability and supportability throughout the remainder of the cutter’s 

service life. This is completed near a cutter’s midpoint, which would 

be roughly 10 years into the FRC’s planned 20 year operational life 

and 15 years into the NSC’s planned 30-year operational life.
Appendix V: Comments from the U.S. 

Department of Homeland Security

Page 50 GAO-17-218 Coast Guard Cutters

Appendix V: Comments from the U.S. 

Department of Homeland Security
Appendix V: Comments from the U.S. 

Department of Homeland Security

Page 51 GAO-17-218 Coast Guard Cutters
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 52 GAO-17-218 Coast Guard Cutters

Michele Mackin, (202) 512-4841 or mackinm@gao.gov.

In addition to the contact above, Richard A. Cederholm, Assistant 

Director; Katherine Trimble, Assistant Director; Peter W. Anderson; 

Charles W. Bausell Jr.; Erin Butkowski; John Crawford; Kristine 

Hassinger; Jenna Tischler; and Roxanna T. Sun made key contributions 

to this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments

GAO Contact 

Staff 

Acknowledgments

(100649)
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