A report the Department of Home Affairs warned it might try to suppress has found significant failings in the management of a coastal patrol fleet Australia uses to intercept asylum seekers.

Internal documents released last month showed the department had warned the auditor general it might try to suppress parts of his investigation of the Cape-class patrol boats on “national security grounds”.

The $330m boats were delivered in 2015 and began to monitor Australia’s coastline to intercept asylum seeker boats and stop illegal activity. The fleet was an upgrade on Australia’s ageing Bay-class vessels but has repeatedly failed to meet performance targets, and experienced problems with freshwater systems, overall capability and berthing arrangements.

A previous report by the auditor general into a $1.3bn arms deal was partially suppressed earlier this year after a complaint by the multinational arms manufacturer Thales.

This week, the auditor general’s report into the Cape-class boats was released, without redaction. It made several damning findings about the performance of the fleet. The patrol boats have repeatedly failed to meet their required number of patrol days. Last financial year, it achieved only 61% of its targeted 3,320 patrol days.

The audit found the department was failing to properly manage the fleet as it became operational.

It found governance arrangements were flawed and not yet effective, and that “risks to the achievement of the performance and availability targets have not been effectively managed”.

The report also revealed that Austal, the shipbuilder providing in-service support for the boats, was spending extra money to ensure the boats met their targets. The company said this was creating “significant and unreasonable cost to Austal which it is not prepared to support in the future”.

It had taken over the in-service support contract from another firm, DMS Maritime.

“The costs arise because the [in-service support] contract is under-resourced in critical areas, in part because there are significant gaps in the ISS scope of work,” the report said. “These gaps arise from erroneous assumptions which were made by the parties regarding the effort required to maintain the [Cape-class patrol boats].”

The department has accepted all of the auditor’s recommendations except one, which related to flaws in how it was managing its contract with Austal.

It is unclear why the department did not follow through on its warning of a possible suppression to the audit report.

Last month, the Labor MP Julian Hill said home affairs appeared to have “cottoned on” to its ability to suppress critical audit reports following the Thales case and warned of a “chilling effect” on the auditor general.

“The media, the public, and the parliament should all be concerned if agencies start threatening section 37 [suppression] applications to avoid or reduce public scrutiny,” he said.