Learning Before Building: GAO’s Offshore Patrol Cutter Report and Its Lessons for Federal Contractors
The U.S. Government Accountability Office’s (GAO) November 2025 report, Offshore Patrol Cutter: Coast Guard Should Gain Key Knowledge Before Buying More Ships (GAO-26-107583), led by Director Shelby S. Oakley and her team, examines one of the Coast Guard’s largest and most troubled acquisition programs: the $17-billion Offshore Patrol Cutter (OPC) fleet. The Coast Guard plans to procure 25 OPCs in three stages to replace aging Medium Endurance Cutters that have exceeded their design life and are increasingly difficult and expensive to maintain.
GAO finds that, despite the urgent operational need, the Coast Guard has repeatedly moved into construction without achieving design stability. Stage 1, awarded to Eastern Shipbuilding Group, began building the first four cutters before completing key functional and distributive-system designs. The result has been extensive rework, out-of-sequence construction, and cascading delays. Delivery of the lead ship is now more than five years late, and the Coast Guard has terminated construction of OPCs 3 and 4 for default. This early concurrency was compounded by an immature “critical technology” – a novel davit system intended to launch and recover small boats in rough sea state 5 conditions – which remains below the technological readiness level GAO recommends for new ship programs.
Stage 2, awarded to Austal USA, incorporates more leading commercial practices. The Coast Guard and Austal have leveraged existing designs, minimized changes, used a robust in-house design workforce, and relied heavily on collaborative 3D model reviews to identify integration problems early. Nonetheless, the Coast Guard again authorized construction of the lead Stage 2 ship (OPC 5) with incomplete safety and distributive-system drawings and without fully maturing its davit technology. GAO cautions that this decision replicates the same structural risk observed in Stage 1: building before the design is stable.
On cost and performance, GAO concludes that the program is unlikely to meet its current acquisition goals. The OPC life-cycle cost estimate has already risen significantly compared to initial projections, yet cost goals were set using outdated data and reported only in aggregate for all 25 ships rather than by stage. GAO recommends reporting cost goals separately for each stage, stabilizing the Stage 2 design before authorizing additional hulls, and documenting a Stage 3 acquisition plan that explicitly uses operational test results and embeds shipbuilding leading practices before committing to more cutters. DHS concurred with two of the four recommendations and disputed two, but GAO maintains that all are warranted.
For federal contractors—especially shipyards, systems integrators, and major subcontractors—the report is a case study in how design immaturity, technology risk, and optimistic cost baselines can erode the benefits of fixed-price incentive contracts and invite heightened oversight. It signals that future DHS and Coast Guard procurements are likely to put greater emphasis on demonstrable technology readiness, rigorous design reviews, and stage-specific cost accountability. Contractors who can show disciplined adherence to commercial leading practices, realistic pricing, and transparent risk management will be better positioned not only for OPC Stage 3 competition, but for complex, multi-ship and multi-stage federal acquisitions more broadly.
Disclaimer: This blog post is for informational and educational purposes only, reflects a summary and interpretation of GAO-26-107583, and does not constitute legal, financial, or other professional advice. Readers should consult qualified counsel for advice tailored to their specific circumstances.