Office of Inspector General 

DEPARTMENT OF HOMELAND SECURITY 

OIG-07-27 February 2007

110′/123′ Maritime Patrol Boat 

Modernization Project 

United States Coast Guard 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528

 February 9, 2007 

MEMORANDUM FOR: Admiral Thad W. Allen 

 Commandant 

 United States Coast Guard 

 

FROM: Richard L. Skinner 

Inspector General 

 

SUBJECT: OIG Complaint Case Number 06-14270: 110′/123′ Maritime Patrol 

Boat Modernization Project, United States Coast Guard

On February 10, 2006, our office received a Hotline Complaint alleging that the Coast Guard's 123-

foot Island Class Patrol Boats (123' cutter) and short-range prosecutor (prosecutor) contained safety 

and security vulnerabilities. The 123' cutter is a modification of the 110' Island Class patrol boat and 

was phased into service as part of the Deepwater project. The original Deepwater plan projected the 

conversion of forty-nine 110' patrol boats into 123' patrol boats as a bridging strategy to meet patrol 

boat needs until the new Fast Response Cutter was introduced. The prosecutor is a 24' 6" small boat 

that can be deployed from the National Security Cutter, Fast Response Cutter, and Offshore Patrol 

Cutter. The revised Deepwater Implementation Plan calls for the acquisition of 91 prosecutors. The 

complaint said that these vulnerabilities were the result of the contractor's failure to comply with 

Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance 

(C4ISR) design requirements as defined in the Deepwater contract. Specifically, the complainant 

alleged that: 

• The safety of the 123′ cutter's crew was compromised by the contractor's failure to utilize low 

smoke cabling; 

• The contractor knowingly installed aboard the 123′ cutter and prosecutor external C4

ISR 

equipment that did not meet specific environmental requirements outlined in the Deepwater 

contract; 

• The cable installed during the upgrade to the cutter's C4

ISR system represented a security 

vulnerability; and, 

• The video surveillance system installed aboard the 123′ cutter does not meet the cutter's physical 

security requirements. 

Finally, the complainant provided information detailing his attempts, over a 2 1⁄2 year period, to 

compel the contractor to comply with Deepwater contract requirements. 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Page 2 

On February 16, 2006, we began our inquiry into the allegations of the hotline complaint. We 

analyzed documentation, reviewed test reports, conducted interviews, and attended briefings by key 

Deepwater Program staff. We also examined TEMPEST test results to determine the extent to which 

the C4

ISR systems installed aboard the 123' cutters met TEMPEST certification standards. 

TEMPEST is an unclassified short name referring to investigations and studies of compromising 

emanations. Compromising emanations are unintentional intelligence-bearing signals that, if 

intercepted and analyzed, will disclose classified information when they are transmitted, received, 

handled, or otherwise processed by any information processing equipment. The Coast Guard was 

responsive to all of our requests for interviews, briefings, information, and documentation requests 

associated with our review. 

Current Status of 123' Cutter Fleet 

For reasons unrelated to the issues identified in this report, operations of the 123' cutter fleet have 

been suspended. On November 30, 2006, the Coast Guard announced that it was suspending 

operations of all eight 123' cutters due to the continuing deformation of the hulls that in some 

instances resulted in hull breaches. These problems had previously resulted in the implementation of 

operating restrictions that severely undermined the mission effectiveness of 123' cutter fleet. 

However, these operating restrictions did not resolve the hull deformation problem but rather 

mitigated their impact on crew safety. Consequently, the Coast Guard had to consider whether to 

implement additional operational restrictions in order to meet minimum crew safety requirements or 

to suspend 123' cutter operations until a solution to these problems could be identified and 

implemented. The Coast Guard determined that additional operating limitations would have further 

undermined the operational effectiveness of the 123' cutter. For these reasons, 123' cutter fleet were 

withdrawn from service. Although the cutter operations have been suspended, the Coast Guard has 

not yet determined the final disposition of the 123' cutter fleet. 

Results of Review 

Aspects of the C4

ISR equipment installed aboard the 123′ cutters do not meet the design standards set 

forth in the Deepwater contract. Specifically, two of the four areas of concern identified by the 

complainant were substantiated and are the result of the contractor not complying with the design 

standards identified in the Deepwater contract. For example, the contractor did not install low smoke 

cabling aboard the 123' cutter, despite a Deepwater contract requirement that stated, “all shipboard 

cable added as a result of the modification to the vessel shall be low smoke.” The intent of this 

requirement was to eliminate the polyvinyl chloride jacket encasing the cables, which for years 

produced toxic fumes and dense smoke during shipboard fire. Additionally, the contractor installed 

C4

ISR topside equipment aboard both the 123' cutters and prosecutors, which either did not comply or 

was not tested to ensure compliance with specific environmental performance requirements outlined 

in the Deepwater contract. 

The remaining two areas of concern identified by the complainant were in technical compliance with 

the Deepwater contract and deemed acceptable by the Coast Guard. Specifically, while the type of 

cabling installed during the C4

ISR system upgrade to the 123’ cutter was not high-grade braided 

cable; the type of cable used met the Coast Guard's minimum-security standards as required by the 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Page 3 

Deepwater contract. Concerning the installation of the video surveillance system, while the system 

did not provide 360 degrees of coverage, it met minimum contract requirements. Specific concerns 

identified in the complaint are discussed below. 

Low Smoke Cabling (123′ Cutter). — Low smoke cabling was not used during the installation of 

the C4

ISR systems aboard the 123′ cutter, despite a Deepwater contract requirement that “all 

shipboard cable added as a result of the modification to the vessel shall be low smoke.” Although the 

contractor had previously requested a deviation from the low smoke requirements during May 2004, 

the request was not approved until December 2004. By then, several 123′ cutters had been delivered 

and accepted by the Coast Guard.

The contractor indicated in its May 2004 request for deviation that approximately 680 cables (or 85 

cables per cutter) did not meet the low smoke requirements identified in the contract, because the 

“cables are either vendor provided as part of the equipment suite, are vendor proprietary, and/or are 

not available in a low smoke configuration.” (See Enclosure 2.) The contractor's request for a 

deviation from the low smoke cable requirement identified the cable, its type, and its function. It did 

not, however, indicate the flammability and toxicity characteristics of the sub-standard cables 

installed. As a result: (1) the contractor installed non low smoke cable aboard at least four 123′

cutters before receiving a Coast Guard approved deviation from the low smoke cable requirements; 

(2) the contractor incorrectly self-certified compliance with low smoke requirements; and (3) the 

Coast Guard did not exercise due diligence in determining the flammability and toxicity 

characteristics of the replacement cables being installed prior to issuance of the deviation. 

C4

ISR Topside Equipment Installations (123′ Cutter and Short Range Prosecutor). —The 

contractor installed C4

ISR topside equipment aboard the 123′ cutter and prosecutor that do not meet 

minimum design and performance requirements as specified in the Deepwater contract. Specifically, 

30 C4ISR system components were installed aboard the 123′ cutter and 12 C4ISR system components 

were installed aboard the prosecutor that do not meet environmental requirements. Additionally, the 

contractor self-certified that the C4ISR system components installed aboard the 123′ cutter and 

prosecutors fleets complied with the contract environmental performance standards when, in fact, 

they did not. 

According to the Deepwater contract, the topside equipment aboard the 123′ cutters and prosecutors 

were required to meet the environmental performance specifications as defined by the Cutter 

Certification Matrix and the prosecutor performance specifications. The purpose of these 

requirements was to ensure that the C4ISR systems installed aboard the 123′ cutters and prosecutors 

remained fully operational when operated under extreme weather, sea, and atmospheric conditions. 

This is a critical requirement given the Coast Guard's propensity to operate their cutters and small 

boats under such conditions. 

In the case of the 123′ cutter Matagorda, the contractor incorrectly indicated on the self-certification 

documentation that there were no applicable requirements stipulated in regard to weather environment 

requirements, and that the certification is “not really beneficial.” (See Enclosure 3.) However, the 

self-certification documentation references MIL-STD 1399C, Section 302, as the weather 

environment standard for certification requirements, which clearly stipulates minimum and maximum 

weather environment limits. (See Enclosure 4.) Additionally, the certificates of conformance 

provided with the eight 123′ cutters and eight prosecutors did not indicate that the Coast Guard had 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Page 4 

previously approved any deviation or waiver from the environmental performance requirements 

identified in the contract. According to the Coast Guard, they were unaware that the 123′ cutters and 

prosecutors were not compliant with the environmental performance specifications until July 2005. 

By then, seven 123' cutters had been delivered to and accepted by the Coast Guard. A working group 

composed of contract and Coast Guard personnel was subsequently established to resolve these 

contract discrepancies. To date, these discrepancies remain unresolved. 

On August 29, 2006, Coast Guard received a letter from the contractor indicating that the C4ISR 

topside equipment installed aboard the 123′ cutters and the prosecutors either did not meet minimum 

environmental requirements as specified in the Deepwater contract or had not been evaluated against 

environmental performance requirements specified in the Deepwater contract prior to installation. 

According to the contractor, testing each of these components would be “time consuming, expensive, 

and of limited value.” Instead the contractor stated its intention to submit Request For Waivers for 

each of the topside components whose performance either did not meet contract requirements or had 

not been evaluated against contract environmental performance requirements. The contractor stated 

that the Request For Waivers presented “an acceptable and reasonable approach, since most of the 

environmental specifications guard against weather conditions the 123′ [cutter] and [prosecutors] will 

likely never experience in their assigned duties, and due to the fact the environmental requirements 

were clarified after the 123′ [cutters] were produced and deployed.” (See Enclosure 5.) 

However, we identified the following facts and circumstances: 

• The C4ISR topside equipment requirements for the 123′ cutter were clearly defined in the Cutter 

Certification Matrix. If the contractor was unclear about the requirements, it was incumbent on 

them to obtain the necessary clarification before purchasing, installing, and certifying the 

installation as meeting the requirements; 

• At the time the topside equipment was purchased and installed, the Coast Guard planned to deploy 

the 123′ cutters and prosecutors along the U.S. Atlantic, Pacific, and Gulf coasts. The contractor 

could not have known that structural design problems would later force the Coast Guard to deploy 

all eight 123′ cutters to Key West, Florida; and 

• The Coast Guard's original and revised Deepwater Implementation Plans called for the acquisition 

of at least 91 prosecutors, the majority of which were to be deployed aboard the 123′ cutter, the 

National Security Cutter, and the Fast Response Cutter. These cutters were originally intended to 

form the nucleus of the Coast Guard's Deepwater surface fleet. Given the Coast Guard's intention 

to deploy the National Security Cutter and Fast Response Cutter (or its replacement), offshore 

along the U.S. Atlantic, Pacific, and Gulf coasts, the contractor's assertion that prosecutors would 

not be operated in areas where severe environmental conditions could affect performance, is not 

accurate. 

To date, the Coast Guard has not indicated whether they will grant the contractor's request for 

waiver. Regardless of their decision, the outcome is unlikely to be satisfactory. For example, 

should the Coast Guard decide to enforce the contract, 123′ cutters, and to a lesser extent the 

prosecutors, will have to be withdrawn from service while the necessary modifications are made, 

further exacerbating the patrol boat capability gap. However, should the Coast Guard grant the 

contractor's request for waiver, they will be accepting the additional crew safety and operational 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Page 5 

limitations associated with the operation of equipment that does not meet Deepwater contract or 

Deepwater mission requirements. 

Shielded Cable (123' Cutter). — The contractor used Aluminum/Mylar shielded cable as part of the 

cutter upgrade. While the installation of this type of cable met minimum Deepwater contract 

requirements for shielded cable, it does not have the mechanical durability afforded braided metallic 

shielded cable. According to Coast Guard, Aluminum/Mylar shielded cable is not as good as braided 

cable for applications required to meet TEMPEST requirements. However, the contract required the 

use of only “shielded” - not “braided metallic shielded” - cable, as recommended by the National 

Security Telecommunications and Information Systems Security Advisory Memorandum 

TEMPEST/2-95, RED/BLACK Installation Guidance: “To reduce radiation of CE [compromising 

emissions], metallic cables should have a minimum of one overall braided metallic shield, with the 

shield terminated at both ends to the grounding network.” 

The Coast Guard noted in its visual inspection of the first 123′ cutter (Matagorda), that the 

Aluminum/Mylar cable might pose a TEMPEST hazard. However, the Coast Guard elected to accept 

the risk associated with this type of shielded cable. 

The complaint also alleged that the use of non-braided cable would limit the 123’ cutter’s ability to 

meet TEMPEST testing requirements. However, TEMPEST testing conducted on the Matagorda and 

Padre between February 2004 and July 2006 indicated the cabling installed during the C4

ISR upgrade 

was not a source of compromising emissions. 

Video Surveillance System (123' Cutter). — The video surveillance system currently installed on 

the 123′ cutter does not provide a 360-degree field of view. According to the Coast Guard, the Cutter 

performance specification contained in the Deepwater contract specified only that a video 

surveillance system be installed. It did not state the number of cameras to be installed or a 

requirement that the system provide 360-degrees of coverage. As a result, the installation consists of 

a four-camera system (with coverage gaps) that meets minimum Deepwater contract requirements but 

may not meet all of the 123’ cutter’s surveillance and security requirements. According to Coast 

Guard, the current configuration of the video surveillance system, supplemented by the intrusion 

detection alarm system, satisfies its cutter surveillance and security requirements. We are concerned 

that: 

• The contractor would knowingly design and install a video surveillance system aboard the 123′

cutter that had coverage gaps, which could cause security vulnerabilities; and 

• That the Coast Guard would accept delivery of a shipboard video surveillance system containing 

such vulnerabilities. 

We are also concerned that vague and unspecified requirements in the Deepwater contract could lead 

to the installation of video surveillance systems aboard the National Security Cutter, Fast Response 

Cutter, and Offshore Patrol Cutter that meet Deepwater contract requirements but contain similar 

security vulnerabilities. If the Coast Guard believes that the video surveillance systems aboard its 

Deepwater cutters should provide 360-degrees of coverage, they should ensure that future Deepwater 

contracts reflect that requirement. 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

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Conclusions and Recommendations

Our review raises many concerns about Coast Guard's program and technical oversight of the 

Deepwater contractor responsible for the 110′/123′ Modernization Project. For example, the 

contractor purchased and installed hundreds of non low smoke cables prior to Coast Guard's approval 

of the Request for Deviation. Additionally, we are concerned that Coast Guard accepted delivery and 

operated four 123' cutters without knowing the extent of the hazards associated with the use of the 

non low smoke cabling. The contractor also purchased and installed hundreds of C4ISR topside 

components aboard the 123’ cutter and prosecutor knowing that they either did not meet contract 

performance requirements or compliance with the requirements had not been verified. Had Coast 

Guard reviewed the contractor's self-certification documentation the fact that the contractor had not 

complied with the stated weather environment standard would not have escaped its attention. For 

these reasons, we are concerned that similar safety and performance issues could impact the 

operational effectiveness of C4ISR system upgrades recently installed aboard its legacy fleet of 

cutters. 

To address the contract execution and technical oversight concerns and to help prevent similar issues 

from occurring in the future, we recommend to the Commandant, U.S. Coast Guard: 

1. Investigate and address the low smoke cabling and C4

ISR topside equipment installation issues 

identified in the Hotline Complaint. The response should include a description of the 

circumstances and conditions underlying these issues as well as the steps being taken or 

contemplated by the Coast Guard to prevent similar technical oversight issues from affecting the 

remaining surface assets to be modernized or acquired through the Deepwater Program. 

2. Develop and implement a plan to improve the process for reviewing and adjudicating contractor 

Requests for Deviations/Waivers. The plan should ensure that all waiver requests are resolved 

prior to implementation and that the rationale underlying these decisions is formally documented. 

Management Comments and OIG Analysis

We obtained written comments on the draft of this report from the Coast Guard on January 31, 2007. 

In its comments, the Coast Guard concurred with principle findings of this report as well as the two 

recommendations. We have included a copy of the comments in their entirety in Enclosure 1 of this 

report. 

Recommendation #1: 

Investigate and address the low smoke cabling and C4ISR topside equipment installation issues 

identified in the Hotline Complaint. The response should include a description of the 

circumstances and conditions underlying these issues as well as the steps being taken or 

contemplated by the Coast Guard to prevent similar technical oversight issues from affecting 

the remaining surface assets to be modernized or acquired through the Deepwater Program. 

Coast Guard Response: Concur
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

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Comments Specific to Low Smoke Cabling 

Coast Guard Comment: Coast Guard indicated that no further action is required for the low smoke 

cabling by Integrated Coast Guard Systems or the Coast Guard. According to the Coast Guard, the 

cables installed during the modification either meet the low smoke requirement or, if they do not meet 

the low smoke requirement, they are covered by the Request for Deviation. 

OIG Response: We appreciate Coast Guard's response to the low smoke cabling concerns addressed 

in the report. However, Coast Guard's response does not detail the underlying circumstances and 

conditions that resulted in: (1) non low smoke cabling being installed prior to approval of the request 

for deviation, (2) incorrect certification of compliance with low smoke requirements, and (3) Coast 

Guard's subsequent approval of the Request for Deviation without determining the flammability and 

toxicity characteristics of the replacement cables being installed. An understanding of the chain of 

events that contributed to the aforementioned circumstances is key to the success of any plan that is 

put into place to prevent similar mistakes from occurring during the course of the National Security 

Cutter, Fast Response Cutter, and Offshore Patrol Cutter acquisitions. Finally, we remain concerned 

that Coast Guard is still not fully aware of the extent that the hazards the non low smoke cables 

represent should the Coast Guard decide to place the 123' cutters back into operational service. 

Comments Specific to C4

ISR Equipment Installation 

Coast Guard Comment: Coast Guard indicated that Integrated Coast Guard Systems is attempting to 

determine to what extent the 42 topside equipment installations on each 123' cutter meet the 

requirements of the Deepwater contract. According to Coast Guard, they are working to resolve the 

contractor's request for deviation in conjunction with the 123' cutter program closeout. 

OIG Response: We appreciate Coast Guard's response to the C4ISR topside equipment installation 

concerns addressed in the report. However, Coast Guard's response does not detail the underlying 

circumstances and conditions that resulted in: (1) the contractor not being aware of the topside 

equipment requirements for the 123’ cutter that were identified in the Deepwater contract, and (2) the 

contractor incorrectly certifying that the 123’ cutter was compliant with all topside equipment 

requirements when in fact, it was not. The response also does not explain what actions are being 

taken or planned to resolve the topside equipment issues associated with the short range prosecutor. 

Once again, an understanding of the chain of events that contributed to the aforementioned 

circumstances is key to the success of any plan that is put into place to prevent similar mistakes from 

occurring during the course of the National Security Cutter, Fast Response Cutter and Offshore 

Patrol Cutter acquisitions. We remain concerned about the operational readiness of the 123’ cutter 

and the short range prosecutor in the event that either vessel is placed back into service and deployed 

to regions that exceed the environmental limitations of their C4

ISR equipment. 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

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Comments Specific to the Steps Taken to Prevent Similar Oversight Issues 

Coast Guard Comment: Coast Guard indicated that it has already taken steps to increase contractual 

and program management oversight within all follow on cutter programs modernized or acquired 

through the Integrated Deepwater System. Some of the more significant steps that Coast Guard has 

indicated that it plans to implement are: 

• Increased the number of staff that provides on-site technical and contractual oversight within its 

Program Management Representative Office, Gulf Coast; 

• Incorporating lessons learned from the 123' cutter modernization program to reduce the risk of 

similar problems with the National Security Cutter, Off Shore Patrol Cutter, and Fast Response 

Cutter programs; 

• Intention to minimize the extent of contractor self-certification of compliance with contractual 

requirements; 

• Designated the Assistant Commandant for Engineering and Logistics Resources as the Technical 

Authority for Deepwater; 

• Consolidation of Coast Guards acquisition activities; and, 

• Use of independent third party evaluations of new asset designs. 

Additionally, Coast Guard indicates that it has taken steps to improve contractual oversight in the new 

award term criteria, which requires additional reporting mechanisms, includes new IPT performance 

measures, and additional insight into the contractor's actions in controlling cost, schedule and 

performance. 

 

OIG Response: We appreciate Coast Guard's response, which details the steps it has taken, or plans 

to take, to address the technical and program management oversight issues identified in this report. If 

fully implemented, these changes should significantly increase the level of technical oversight 

exercised over the Deepwater Program. Overall, we find the changes that the Coast Guard has 

detailed in its response to this report to be very encouraging and a step in the right direction. We look 

forward to working closely with the Coast Guard to continue the improvement of the efficiency, 

effectiveness, and economy of the Deepwater Program. 

Recommendation #1 will remain open until Coast Guard provides the information behind the 

circumstances and conditions that contributed to the low smoke cable and C4

ISR external 

equipment concerns and the specific steps taken by Coast Guard to prevent reoccurrence of 

similar problems. 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Page 9 

Recommendation #2: 

Develop and implement a plan to improve the process for reviewing and adjudicating 

contractor Requests for Deviations/Waivers. The plan should ensure that all waiver requests 

are resolved prior to implementation and that the rationale underlying these decisions is 

formally documented. 

Coast Guard Response: Concur 

Coast Guard Comment: Coast Guard indicated that it has developed a new Class I Engineering 

Change Proposal/Request for Deviation/Request for Waiver Review Process to improve facilitation 

and oversight of recommended changes and deviations to existing Deepwater Asset requirements. 

The new procedures include a Joint Configuration Control Board made up of technical experts and 

contracting officers who will review and resolve Engineering Change Proposals, Request for 

Deviations, and Request for Waivers prior to implementation. The new process is scheduled to go 

before the Joint Configuration Control Board and then to the Program Management Team during the 

second quarter FY07 for approval. 

OIG Response: We appreciate Coast Guard's response, which details the steps it has taken to review 

and adjudicate Engineering Change Proposals, Request for Deviations, and Request for Waivers. We 

find the new procedures detailed in Coast Guard's response to this report to be very encouraging and a 

step in the right direction. We look forward to the opportunity to review the new procedures in 

conjunction with closing Recommendation #2. 

Recommendation #2 will remain open until Coast Guard fully implements the procedures that 

it describes in its response and until we have had opportunity to review them. 

Note: We conducted this inquiry into the allegations of the hotline complaint pursuant 

to our authority under the Inspector General Act of 1978, as amended. This inquiry 

was not conducted in accordance with generally accepted government auditing 

standards. 
110'/123' Maritime Patrol Boat Modernization Project, U.S. Coast Guard 

Enclosure (1) 
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Enclosure (1) 
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Enclosure (2) 
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Enclosure (3) 
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Enclosure (4) 
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Enclosure (4) 
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Enclosure (4) 
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Enclosure (4) 
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Enclosure (4) 
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Enclosure (5)
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Enclosure (5)
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Enclosure (5)
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Enclosure (5)
Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General (OIG) at 

(202) 254-4100, fax your request to (202) 254-4285, or visit the OIG web site at 

www.dhs.gov/oig. 

OIG Hotline 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal

or noncriminal misconduct relative to department programs or operations, call the 

OIG Hotline at 1-800-323-8603; write to DHS Office of Inspector General/MAIL 

STOP 2600, Attention: Office of Investigations - Hotline, 245 Murray Drive, SW, 

Building 410, Washington, DC 20528, fax the complaint to (202) 254-4292; or email 

DHSOIGHOTLINE@dhs.gov. The OIG seeks to protect the identity of each writer 

and caller.