The USCGC Argus, the first ship of the Heritage class of medium-endurance offshore patrol cutters, enters the water during a christening ceremony in Panama City, Fla., Oct. 27, 2023. The Government Accountability Office is recommending in a report that the Coast Guard improve oversight of its offshore patrol cutter acquisition program. (Brandon Giles/U.S. Coast Guard)

An estimated $20 billion Coast Guard shipbuilding program that has failed to put a cutter into service amid ballooning costs and lengthy delays must have better oversight, according to a government watchdog agency.

Stabilizing the design of the planned 25 Heritage-class offshore patrol cutters should be a top priority before the service authorizes construction of more vessels, the Government Accountability Office said in a 72-page report last week.

The estimated total costs for the program rose from $12.5 billion in 2012 to $19.6 billion in 2023, a 57% increase, the GAO said in the Nov. 25 report. The current cost estimate for the program is being worked out now.

“The risk of continued delays and cost overruns is likely,” it added, noting that the design still is not finished and that the ships have yet to be delivered.

Delivery of the first ship, Argus, isn’t expected until at least December 2026, more than five years behind schedule.

Heritage-class ships are needed to replace the aging medium-endurance cutters used for search and rescue, interdiction of drugs and migrants, and securing ports, waterways and coastal areas, among other operations.

The older ships have exceeded their 30-year design service lives and are increasingly difficult to maintain, the GAO pointed out.

The Coast Guard aims to acquire the new cutters in three stages. Stage one includes four ships being built by Florida-based Eastern Shipbuilding Group with Austal USA in Alabama constructing nearly a dozen ships in the second phase.

The shipbuilder for the third and final stage of 10 ships has not yet been determined, the GAO said.

A Coast Guard Heritage-class offshore patrol cutter to is shown in this artist's rendering. The Government Accountability Office said in a Nov. 25 report that the Coast Guard should better manage its estimated $20 billion offshore patrol cutter acquisition program, which has yet to yield any ships. (Austal USA)

At least three of the ships are under construction even though the design of key systems, such as a crane to onload and offload small boats, still is incomplete, the GAO noted. That status threatens the ability of shipbuilders to meet program requirements and deadlines, the report stated.

The Coast Guard is part of the Homeland Security Department, which pushed back on the report, saying that the service already had updated its acquisition process to better align with leading shipbuilding practices.

“Before authorizing construction for a second stage of the cutters in August 2025, the program achieved a design maturity of 94%,” Jeffrey Bobich, DHS director of financial management, wrote in a Sept. 18 letter.

DHS also disagreed with the report’s recommendation that the Coast Guard and Navy need to iron out an agreement on coordinating evaluation of the performance of Austal, which is slated to build as many as 11 of the cutters. The Navy is helping to supervise the cutter building program.

DHS pumped hundreds of millions of dollars more into the Heritage-class program, in part to shore up the financial stability of ESG after its facilities were devastated by a 2018 hurricane as the company started construction on Argus.

That financial boost is the biggest contributor to the program’s skyrocketing costs, according to the GAO.

The Coast Guard also offered financial incentives to ESG for meeting key deadlines, but the company has made incremental progress on the first two cutters. In July, the Coast Guard canceled the remaining two ships in the contract, the GAO said.

Last month, ESG announced it had stopped work on the cutters, citing financial strain caused by the program’s conditions, USNI News reported Nov. 18.

DHS agreed with two other GAO recommendations, including that the cutter program should revise its baseline expenses to include cost goals for each stage of ship construction.

That methodology would allow decision-makers to better monitor progress and hold the program and shipbuilders accountable for ship deliveries, according to the report.

The agency also agreed that the Coast Guard should develop a plan for how operational testing in the first two phases of cutter building would be incorporated into the final stage of procurement.