Carbon Capture and Sequestration: Research,
Development, and Demonstration at the U.S.
Department of Energy
Peter Folger
Specialist in Energy and Natural Resources Policy
June 10Coast Guard Cutter Procurement:
Background and Issues for Congress
Ronald O'Rourke
Specialist in Naval Affairs
July 3, 2013
Congressional Research Service
7-5700
www.crs.gov
R42496R42567
CRS Report for Congress
Prepared for Members and Committees of Congress
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Summary
In 2012 the U.S. Environmental Protection Agency (EPA) proposed a new rule that would limit
emissions of carbon dioxide (CO2) to no more than 1,000 pounds per megawatt-hour of
production from new fossil-fuel power plants with a capacity of 25 megawatts or larger. EPA
proposed the rule under Section 111 of the Clean Air Act. According to EPA, new natural gasfired combined-cycle power plants should be able to meet the proposed standards without
additional cost. However, new coal-fired plants would only be able to meet the standards by
installing carbon capture and sequestration (CCS) technology. EPA missed its original deadline
for issuing a final rule and has not indicated when it will publish the final rule.
The proposed rule sparked increased scrutiny of the future of CCS as a viable technology for
reducing CO2 emissions from coal-fired power plants. It also placed a new focus on whether the
U.S. Department of Energy’s (DOE’s) CCS research, development, and demonstration (RD&D)
program will achieve its vision of developing an advanced CCS technology portfolio ready by
2020 for large-scale CCS deployment.
Congress appropriated $3.4 billion from the American Recovery and Reinvestment Act (Recovery
Act) for CCS RD&D at DOE’s Office of Fossil Energy in addition to annual appropriations for
CCS. The large influx of funding for industrial-scale CCS projects may accelerate development
and deployment of CCS in the United States. Since enactment of the Recovery Act, DOE has
shifted its RD&D emphasis to the demonstration phase of carbon capture technology. However,
the future deployment of CCS may take a different course if the major components of the DOE
program follow a path similar to DOE’s flagship CCS demonstration project, FutureGen, which
has experienced delays and multiple changes of scope and design since its inception in 2003.
To date, there are no commercial ventures in the United States that capture, transport, and inject
industrial-scale quantities of CO2 solely for the purposes of carbon sequestration. However, CCS
RD&D has embarked on commercial-scale demonstration projects for CO2 capture, injection, and
storage. The success of these projects will likely influence the future outlook for widespread
deployment of CCS technologies as a strategy for preventing large quantities of CO2 from
reaching the atmosphere while U.S. power plants continue to burn fossil fuels, mainly coal.
Given the pending EPA rule, congressional interest in the future of coal as a domestic energy
source appears directly linked to the future of CCS. In the short term, congressional support for
building new coal-fired power plants could be expressed through legislative action to modify or
block the proposed EPA rule. One bill, H.R. 2127, would prohibit EPA from finalizing any rule
limiting the emission of CO2 from any existing or new source that is a fossil fuel-fired electric
utility generating unit unless and until CCS becomes technologically and economically feasible.
Congress has not yet acted on H.R. 2127.
Alternatively, congressional oversight of the CCS RD&D program could help inform decisions
about the level of support for the program and help Congress gauge whether it is on track to meet
its goals. A DOE Inspector General audit report identified several weaknesses in the DOE
management of awards made under the Industrial Carbon Capture and Storage (ICCS) program
funded by the Recovery Act. The audit report noted that addressing these management issues
would be important to future management of the program, given that DOE had only obligated
about $623 million of the $1.5 billion appropriated for the ICCS program under the Recovery Act
as of February 2013.
Congressional Research Service
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Contents
Introduction...................................................................................................................................... 1
Issues for Congress .......................................................................................................................... 2
EPA Proposed Rule Limiting CO2 Emissions from Power Plants ............................................. 2
New Power Plants ............................................................................................................... 2
Existing Power Plants.......................................................................................................... 3
Implications for CCS Research, Development, and Deployment ....................................... 3
Audit Report from the DOE Inspector General ......................................................................... 3
Legislation ................................................................................................................................. 4
113th Congress ..................................................................................................................... 4
112th Congress ..................................................................................................................... 4
111th Congress ..................................................................................................................... 5
CCS Research, Development, and Demonstration: Overall Goals .................................................. 5
Program Areas ........................................................................................................................... 6
Recovery Act Funding for CCS Projects: A Lynchpin for Success?................................................ 9
CCS Demonstrations: CCPI, ICCS, and FutureGen 2.0............................................................ 9
Reasons for Withdrawal from the CCPI Program ............................................................. 11
Reshuffling of Funding for CCPI ...................................................................................... 12
Industrial Carbon Capture and Storage Projects ............................................................... 13
FutureGen—A Special Case? ............................................................................................ 16
Geologic Sequestration/Storage: DOE RD&D for the Last Step in CCS ...................................... 18
Brief History of DOE Geological Sequestration/Storage Activities ........................................ 18
Current Status and Challenges to Carbon Sequestration/Storage ............................................ 20
Outlook .......................................................................................................................................... 21
Figures
Figure 1. Typical Trend in Cost Estimates for a New Technology As It Develops
from a Research Concept to Commercial Maturity ...................................................................... 8
Tables
Table 1. DOE Carbon Capture and Storage Research, Development, and Demonstration
Program Areas .............................................................................................................................. 7
Table 2. DOE CCS Demonstration Round 3 Projects.................................................................... 10
Table 3. DOE Industrial Carbon Capture and Storage (ICCS) Projects ........................................ 13
Table 4. Regional Carbon Sequestration Partnerships ................................................................... 19
Contacts
Author Contact Information........................................................................................................... 22
Congressional Research Service
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Introduction
Carbon capture and sequestration (or storage)—known as CCS—is a physical process that
involves capturing manmade carbon dioxide (CO2) at its source and storing it before its release to
the atmosphere. CCS could reduce the amount of CO2 emitted to the atmosphere while allowing
the continued use of fossil fuels at power plants and other large, industrial facilities. An integrated
CCS system would include three main steps: (1) capturing CO2 at its source and separating it
from other gases; (2) purifying, compressing, and transporting the captured CO2 to the
sequestration site; and (3) injecting the CO2 into subsurface geological reservoirs. Following its
injection into a subsurface reservoir, the CO2 would need to be monitored for leakage and to
verify that it remains in the target geological reservoir. Once injection operations cease, a
responsible party would need to take title to the injected CO2 and ensure that it stays underground
in perpetuity.
The U.S. Department of Energy (DOE) has pursued research and development of aspects of the
three main steps leading to an integrated CCS system since 1997.1 Congress has appropriated
approximately $6 billion in total since FY2008 for CCS research, development, and
demonstration (RD&D) at DOE’s Office of Fossil Energy: approximately $2.7 billion in total
annual appropriations (including FY2013), and $3.4 billion from the American Recovery and
Reinvestment Act (P.L. 111-5, enacted February 17, 2009, hereinafter referred to as the Recovery
Act).
The large and rapid influx of funding for industrial-scale CCS projects from the Recovery Act
may accelerate development and demonstration of CCS in the United States, particularly if the
RD&D pursued by DOE’s CCS program achieves its goals as outlined in the department’s 2010
RD&D CCS Roadmap.2 However, the future deployment of CCS may take a different course if
the major components of the DOE program follow a path similar to DOE’s FutureGen project,
which has experienced delays and multiple changes of scope and design since its inception in
2003.3
This report aims to provide a snapshot of the DOE CCS program, including its current funding
levels and the budget request for FY2014, together with some discussion of the program’s
achievements and prospects for success in meeting its stated goals. Other CRS reports provide
substantial detail on the technological aspects of CCS (CRS Report R41325, Carbon Capture: A
Technology Assessment) and information on various challenges to CCS deployment (CRS Report
1
U.S. Department of Energy, National Energy Technology Laboratory, Carbon Sequestration Program: Technology
Program Plan, Enhancing the Success of Carbon Capture and Storage Technologies, February 2011, p. 10,
http://www.netl.doe.gov/technologies/carbon_seq/refshelf/2011_Sequestration_Program_Plan.pdf.
2
In part, the roadmap was intended to lay out a path for rapid technological development of CCS so that the United
States would continue to use fossil fuels. U.S. Department of Energy, National Energy Technology Laboratory,
DOE/NETL Carbon Dioxide Capture and Storage RD&D Roadmap, December 2010, http://www.netl.doe.gov/
technologies/carbon_seq/refshelf/CCSRoadmap.pdf. Hereinafter referred to as the DOE 2010 CCS Roadmap.
3
As originally conceived in 2003, FutureGen would have been a 10-year project to build a coal-fired power plant that
would integrate carbon sequestration and hydrogen production while producing 275 megawatts of electricity, enough to
power about 150,000 average U.S. homes. The plant would have been a coal-gasification facility and would have
produced and sequestered between 1 million and 2 million tons of CO2 annually. FutureGen 2.0 differs from the
original concept for the plant, because it would retrofit an existing power plant in Meredosia, IL, with oxy-combustion
technology, and is funded largely by appropriations made available by the Recovery Act. See CRS Report R43028,
FutureGen: A Brief History and Issues for Congress, by Peter Folger.
Congressional Research Service
1
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
RL34621, Capturing CO2 from Coal-Fired Power Plants: Challenges for a Comprehensive
Strategy, and CRS Report RL34601, Community Acceptance of Carbon Capture and
Sequestration Infrastructure: Siting Challenges). In addition, one report focuses solely on the
FutureGen project (CRS Report R43028, FutureGen: A Brief History and Issues for Congress).
Issues for Congress
EPA Proposed Rule Limiting CO2 Emissions from Power Plants
New Power Plants
On March 27, 2012, the U.S. Environmental Protection Agency (EPA) proposed a new rule that
would limit emissions from new fossil-fuel power plants to no more than 1,000 pounds of CO2
per megawatt-hour of energy produced. It would apply to plants with a generating capacity of
greater than 25 megawatts.4 EPA proposed the rule under Section 111 of the Clean Air Act,
amending 40 C.F.R. Part 60. According to EPA, new natural gas-fired combined-cycle power
plants should be able to meet the proposed standards without additional cost. However, new coalfired plants would only be able to meet the standards by using CCS.5
The prospects for building new coal-fired electricity generating plants depend on many factors,
such as costs of competing fuel sources (e.g., natural gas), electricity demand, regulatory costs,
infrastructure (including rail) and electric grid development, and others. However, the EPA
proposed rule clearly identifies CCS as the essential technology required if new coal-fired power
plants are to be built in the United States.6
The proposed rule has sparked increased scrutiny of the future of CCS as a viable technology for
reducing CO2 emissions from coal-fired power plants. The proposed rule also places a new focus
on DOE’s CCS RD&D program—whether it will achieve its vision of “having an advanced CCS
technology portfolio ready by 2020 for large-scale CCS demonstration that provides for the safe,
cost-effective carbon management that will meet our Nation’s goals for reducing [greenhouse
gas] emissions.”7
The EPA missed its April 2013 deadline to issue the final rule on new fossil-fuel power plants and
did not give a date certain for when the rule would be finalized, citing in part its need to review
the more than 2 million comments the agency received.8
4
EPA Fact Sheet: Proposed Carbon Pollution Standard for New Power Plants, http://epa.gov/carbonpollutionstandard/
pdfs/20120327factsheet.pdf.
5
Ibid. According to EPA, new power plants that use CCS would have the option to use a 30-year average of CO2
emissions to meet the standard, rather than meeting the annual standard each year. Under this option, new plants would
be allowed to emit 1,800 pounds per megawatt-hour for the first 10 years of operation (a standard that should be
achievable by an efficient supercritical coal-fired facility or an integrated gasification combined-cycle plant), provided
that the facility committed to a 600 pound per megawatt-hour standard for the following 20 years of operation.
6
The proposed rule is for new power plants, and exempts existing power plants as well as plants that make
“modifications” as defined under EPA’s New Source Performance Standards. See 40 C.F.R. Part 60.
7
DOE 2010 CCS Roadmap, p. 3.
8
Jean Chemnick, “Questions Loom as EPA Misses Deadline for New Power Plant Rule,” Greenwire, April 15, 2013,
http://www.eenews.net/greenwire/stories/1059979488/search?keyword=1%2C000+pounds.
Congressional Research Service
2
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Existing Power Plants
The proposed rule would address only new power plants. However, in remarks to reporters, acting
EPA Administrator Robert Perciasepe stated that the EPA would also address limiting greenhouse
gas (GHG) emissions from existing power plants.9 Perciasepe also noted that the agency expects
to propose a standard for existing plants within 18 months of April 2013.
Implications for CCS Research, Development, and Deployment
Congress has appropriated funding for DOE to pursue CCS research and development since 1997
and signaled its interest in CCS technology by awarding $3.4 billion from the Recovery Act to
CCS programs at DOE. Given the pending EPA rule, congressional interest in the future of coal
as a domestic energy source appears directly linked to the future of CCS. In the short term,
congressional support for building new coal-fired power plants could be expressed through
legislative action to modify or block the proposed EPA rule. Alternatively, congressional
oversight of the DOE CCS RD&D program could help inform decisions about the level of
support for the program and help Congress gauge whether the program is on track to meet its
goals. The history of CCS RD&D at DOE and the pathway of some its signature programs, such
as FutureGen, invite questions about whether the RD&D results will enable widespread
deployment of CCS in the United States within the next decade.
Audit Report from the DOE Inspector General
The DOE Inspector General issued an audit report on March 21, 2013, that identified several
weaknesses in the DOE management of awards made under the Industrial Carbon Capture and
Storage Program funded by the Recovery Act.10 Its main findings were that DOE had not
adequately documented the approval and rationale to use $575 million of the $1.1 billion in
Recovery Act funding reviewed during the Inspector General’s audit to accelerate existing
projects rather than proceeding with new awards. According to the audit report, Recovery Act
funding guidance stipulated that funds be awarded to competitively selected projects within the
Industrial Carbon Capture and Storage Program. In its explanation, DOE officials told the
Inspector General that the department had not received the number of applications anticipated
under the competitive solicitation, and issuing another solicitation was not feasible due to time
constraints on obligating Recovery Act funding.11
The Inspector General report also identified several other weaknesses with the management of
Recovery Act awards. These included reimbursing award recipients nearly $17 million without
obtaining or reviewing adequate supporting documentation; awarding over $90 million to
recipients even though the merit review process identified significant financial and/or technical
issues; and assorted other findings. The audit report noted that addressing these management
9
John M. Broder, “E.P.A Will Delay Rule Limiting Carbon Emissions at New Power Plants,” New York Times, April
12, 2013, http://www.nytimes.com/2013/04/13/science/earth/epa-to-delay-emissions-rule-at-new-power-plants.html?
_r=0.
10
U.S. Department of Energy, Office of Inspector General, Audit Report: The Department of Energy’s Industrial
Carbon Capture and Storage Program Funded by the American Recovery and Reinvestment Act, OAS-RA-13-15,
March 2013.
11
Ibid., p. 1.
Congressional Research Service
3
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
issues would be important to future management of the program, given that DOE had only
obligated about $623 million of the $1.5 billion appropriated under ARRA as of February 2013.
Legislation
Although DOE has pursued aspects of CCS RD&D since 1997, the Energy Policy Act of 2005
(P.L. 109-58) provided a 10-year authorization for the basic framework of CCS research and
development at DOE.12 The Energy Independence and Security Act of 2007 (EISA, P.L. 110-140)
amended the Energy Policy Act of 2005 to include, among other provisions, authorization for
seven large-scale CCS demonstration projects (in addition to FutureGen) that would integrate the
carbon capture, transportation, and sequestration steps.13 (Large-scale demonstration programs
and their potential significance are discussed below.) It can be argued that, since enactment of
EISA, the focus and funding within the CCS RD&D program has shifted towards large-scale
capture technology development through these and other demonstration projects.
In addition to the annual appropriations provided for CCS RD&D, the legislation most significant
to federal CCS RD&D program activities since passage of EISA has been the Recovery Act (P.L.
111-5). As discussed below, $3.4 billion in funding from the Recovery Act was intended to
expand and accelerate the commercial deployment of CCS technologies to allow for commercialscale demonstration in both new and retrofitted power plants and industrial facilities by 2020.
113th Congress
A bill introduced on May 23, 2013, H.R. 2127, would prohibit the EPA from finalizing any rule
limiting the emission of CO2 from any existing or new source that is a fossil fuel-fired electric
utility generating unit unless and until CCS becomes technologically and economically feasible.
Per the discussion above, the legislation appears to be in response to the EPA proposed rule
limiting emissions from new fossil-fuel power plants to no more than 1,000 pounds of CO2 per
megawatt-hour of energy produced.
112th Congress
In the 112th Congress, a few bills were introduced that would have addressed aspects of CCS
RD&D. The Department of Energy Carbon Capture and Sequestration Program Amendments Act
of 2011 (S. 699) would have provided federal indemnification of up to $10 billion per project to
early adopters of CCS technology (large CCS demonstration projects).14 The New Manhattan
Project for Energy Independence (H.R. 301) would have created a system of grants and prizes for
a variety of technologies, including CCS, that would contribute to reducing U.S. dependence on
foreign sources of energy. Other bills introduced would have provided tax incentives for the use
of CO2 in enhanced oil recovery (S. 1321), or would have eliminated the minimum capture
requirement for the CO2 sequestration tax credit (H.R. 1023). Other bills were also introduced
that would have affected other aspects of CCS RD&D financing, such as loan guarantees. None
12
P.L. 109-58, Title IX, Subtitle F, §963; 42 U.S.C. 16293.
P.L. 110-140, Title VII, Subtitles A and B.
14
Among other provisions, the bill would also have amended EISA to expand the number of large CCS demonstration
projects from 7 to 10.
13
Congressional Research Service
4
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
of the bills introduced in the 112th Congress affecting federal CCS RD&D, other than the
continuing resolution (CR), was enacted.
111th Congress
In the 111th Congress, two bills that would have authorized a national cap-and-trade system for
limiting the emission of greenhouse gases (H.R. 2454 and S. 1733) also would have created
programs aimed at accelerating the commercial availability of CCS. The programs would have
generated funding from a surcharge on electricity delivered from the combustion of fossil fuels—
approximately $1 billion per year—and made the funding available for grants, contracts, and
financial assistance to eligible entities seeking to develop CCS technology. Another source of
funding in the bills was to come from a program that would distribute emission allowances to
“early movers,” entities that installed CCS technology on up to a total of 20 gigawatts of
generating capacity. The House of Representatives passed H.R. 2454, but neither bill was
enacted.
CCS Research, Development, and Demonstration:
Overall Goals
The U.S. Department of Energy states that the mission for the DOE Office of Fossil Energy is “to
ensure the availability of ultra-clean (near-zero emissions), abundant, low-cost domestic energy
from coal to fuel economic prosperity, strengthen energy security, and enhance environmental
quality.”15 Over the past several years, the DOE Fossil Energy Research and Development
Program has increasingly shifted activities performed under its Coal Program toward
emphasizing CCS as the main focus.16 The Coal Program represented 69% of total Fossil Energy
Research and Development appropriations in FY2012 and in FY2013, and 64% in the FY2014
request,17 indicating that CCS has come to dominate coal R&D at DOE. This reflects DOE’s view
that “there is a growing consensus that steps must be taken to significantly reduce [greenhouse
gas] emissions from energy use throughout the world at a pace consistent to stabilize atmospheric
concentrations of CO2, and that CCS is a promising option for addressing this challenge.”18
DOE also acknowledges that the cost of deploying currently available CCS technologies is very
high, and that to be effective as a technology for mitigating greenhouse gas emissions from power
plants, the costs for CCS must be reduced.19 The challenge of reducing the costs of CCS
15
DOE 2010 CCS Roadmap, p. 2.
The Coal Program contains CCS RD&D activities, and is within DOE’s Office of Fossil Energy, Fossil Energy
Research and Development, as listed in DOE detailed budget justifications for each fiscal year. See, for example, U.S.
Department of Energy, FY2014 Congressional Budget Request, volume 3, Fossil Energy Research and Development,
http://energy.gov/sites/prod/files/2013/04/f0/Volume3_1.pdf. The percentage of funding allocated to the Coal Program
is calculated based on the subtotal for Fossil Energy Research and Development prior to rescission of prior year
balances, which were $187 million for FY2012 and $42 million for FY2013, respectively.
17
U.S. Department of Energy, FY2013 Congressional Budget Request, volume 3, Fossil Energy Research and
Development, p. 411.
18
DOE 2010 CCS Roadmap, p. 3.
19
DOE states that the cost of deploying currently available CCS post-combustion technology on a supercritical
pulverized coal-fired power plant would increase the cost of electricity by 80%. DOE 2010 CCS Roadmap, p. 3.
16
Congressional Research Service
5
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
technology is difficult to quantify, in part because there are no examples of currently operating
commercial-scale coal-fired power plants equipped with CCS. Nor is it easy to predict when
lower-cost CCS technology will be available for widespread deployment in the United States.
Nevertheless, DOE observes that “the United States can no longer afford the luxury of
conventional long-lead times for RD&D to bear results.”20 Thus the coal RD&D program is
focused on achieving results that would allow for an advanced CCS technology portfolio to be
ready by 2020 for large-scale demonstration.
The following section describes the components of the CCS activities within DOE’s coal R&D
program and their funding history since FY2012. This report focuses on this time period because
during that time DOE obligated Recovery Act funding for its CCS programs, greatly expanding
the CCS R&D portfolio, which was expected to accelerate the transition of CCS technology to
industry for deployment and commercialization.21
Program Areas
The 2010 RD&D CCS Roadmap described 10 different program areas pursued by DOE’s Coal
Program within the Office of Fossil Energy: (1) Innovations for Existing Plants (IEP); (2)
Advanced Integrated Gasification Combined Cycle (IGCC); (3) Advanced Turbines; (4) Carbon
Sequestration; (5) Solid State Energy Conversion Fuel Cells; (6) Fuels; (7) Advanced Research;
(8) Clean Coal Power Initiative (CCPI); (9) FutureGen; and (10) Industrial Carbon Capture and
Storage Projects (ICCS).22 DOE changed the program structure after FY2010, renaming and
consolidating program areas. Table 1 shows the current program structure and indicates which
programs received Recovery Act funding.
Some program areas are directly focused on one or more of the three steps of CCS: capture,
transportation, and storage. For example, the Carbon Storage program area focuses on the third
step: evaluating prospective sites for long-term storage of CO2 underground. In contrast,
FutureGen from the outset was envisioned as combining all three steps: a zero-emission fossil
fuel plant that would capture its emissions and sequester them in a geologic reservoir.
RD&D is also divided among different industrial sectors in two program areas: the Clean Coal
Power Initiative (CCPI) program area and Industrial Carbon Capture and Storage Projects (ICCS)
program area. The CCPI program area focuses on the demonstration phase of carbon capture
technology for coal-based power plants. The ICCS program area demonstrates carbon capture
technology for the non-power plant industrial sector.23 Both these program areas focus on the
demonstration component of RD&D, and account for $2.3 billion of the $3.4 billion appropriated
for CCS RD&D in the Recovery Act in FY2009. From the budgetary perspective, the Recovery
Act funding shifted the emphasis of CCS RD&D to large, industrial demonstration projects for
carbon capture. The CCPI and ICCS program areas are discussed in more detail below.
20
DOE 2010 CCS Roadmap, p. 3.
Ibid., p. 2.
22
Ibid., p. 11.
23
Ibid., p. 12.
21
Congressional Research Service
6
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Table 1. DOE Carbon Capture and Storage Research, Development, and
Demonstration Program Areas
(funding in $ thousands, FY2012-FY2014, including Recovery Act funding)
Fossil Energy
Research and
Development Coal
Program Areas
CCS
Demonstrations
Program
FutureGen 2.0
FY2012
FY2013
(annualized
CR)a
FY2014
(Request)
1,000,000
0
0
0
Clean Coal Power
Initiative (CCPI)
800,000
0
0
0
Industrial Carbon
Capture and
Storage Projects
(ICCS)
1,520,000
0
0
0
80,000
0
0
0
Carbon Capture
—
66,986
69,320
112,000
Advanced Energy
Systems
—
97,169
100,554
48,000
Carbon Storage
—
112,208
116,116
61,095
Cross Cutting
Research
—
47,946
49,435
20,525
35,011
35,225
35,011
359,320
370,650
276,631
Site
Characterization,
Training, Program
Direction
Carbon Capture and
Storage, and Power
Systems
Recovery
Act
NETL Coal
Research and
Development
3,400,000
Source: U.S. Department of Energy, FY2013 Congressional Budget Request, volume 3, Fossil Energy Research and
Development, http://energy.gov/sites/prod/files/2013/04/f0/Volume3_1.pdf. U.S. Department of Energy, Carbon
Sequestration, Recovery Act, http://www.fe.doe.gov/recovery/index.html; U.S. Department of Energy, FY2014
Congressional Budget Request, volume 3, Fossil Energy Research and Development, http://energy.gov/sites/prod/
files/2013/04/f0/Volume3_1.pdf.
Notes:
a.
According to DOE, the FY2013 column amounts reflect the continuing resolution (CR, P.L. 112-175) levels
annualized to a full year.
This shift in emphasis to the demonstration phase of carbon capture technology is not surprising,
and appears to heed recommendations from many experts who have called for large, industrialscale carbon capture demonstration projects.24 Primarily, the call for large-scale CCS
24
See, for example, the presentations given by Edward Rubin of Carnegie Mellon University, Howard Herzog of the
Massachusetts Institute of Technology, and Jeff Phillips of the Electric Power Research Institute, at the CRS seminar
(continued...)
Congressional Research Service
7
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
demonstration projects that capture 1 million metric tons or more of CO2 per year reflects the
need to reduce the additional costs to the power plant or industrial facility associated with
capturing the CO2 before it is emitted to the atmosphere. The capture component of CCS is the
costliest component, according to most experts.25 The higher costs of power plants with CCS,
compared to plants without CCS, and the uncertainty in cost estimates results in part from a
dearth of information about outstanding technical questions in carbon capture technology at the
industrial scale.26
In comparative studies of cost estimates for other environmental technologies, such as for power
plant scrubbers that remove sulfur and nitrogen compounds from power plant emissions (SO2 and
NOx), some experts note that the farther away a technology is from commercial reality, the more
uncertain is its estimated cost. At the beginning of the RD&D process, initial cost estimates could
be low, but could typically increase through the demonstration phase before decreasing after
successful deployment and commercialization. Figure 1 shows a cost estimate curve of this type.
Capital Cost per Unit of Capacity
Figure 1. Typical Trend in Cost Estimates for a New Technology As It Develops
from a Research Concept to Commercial Maturity
Research
Development Demonstration
Deployment
Mature Technology
Time or Cumulative Capacity
Source: Adapted from S. Dalton, “CO2 Capture at Coal Fired Power Plants—Status and Outlook,” 9th
International Conference on Greenhouse Gas Control Technologies, Washington, DC, November, 16-20, 2008.
(...continued)
Capturing Carbon for Climate Control: What’s in the Toolbox and What’s Missing, November 18, 2009. (Presentations
available from Peter Folger at 7-1517.) Rubin stated that at least 10 full-scale demonstration projects would be needed
to establish the reliability and true cost of CCS in power plant applications. Herzog also called for at least 10
demonstration plants worldwide that capture and sequester a million metric tons of CO2 per year. In his presentation,
Phillips stated that large-scale demonstrations are critical to building confidence among power plant owners.
25
For example, an MIT report estimated that the costs of capture could be 80% or more of the total CCS costs. John
Deutsch et al., The Future of Coal, Massachusetts Institute of Technology, An Interdisciplinary MIT Study, 2007,
Executive Summary, p. xi.
26
The Future of Coal, p. 97.
Congressional Research Service
8
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Deploying commercial-scale CCS demonstration projects—an emphasis within the DOE CCS
RD&D program—would therefore provide cost estimates closer to operational conditions rather
than laboratory- or pilot-plant-scale projects. In the case of SO2 and NOx scrubbers, efforts
typically took two decades or more to bring new concepts (such as combined SO2 and NOx
capture systems) to the commercial stage. As Figure 1 indicates, costs for new technologies tend
to fall over time with successful deployment and commercialization. It would be reasonable to
expect a similar trend for CO2 capture costs if the technologies become widely deployed.27
Recovery Act Funding for CCS Projects: A Lynchpin
for Success?
The bulk of Recovery Act funds for CCS ($3.32 billion, or 98%) was directed to three
subprograms organized under the CCS Demonstrations Programs; CCPI, ICCS, and FutureGen
(Table 1). Under the 2010 CCS Roadmap, and with the large infusion of funding from the
Recovery Act, DOE’s goal is to develop the technologies to allow for commercial-scale
demonstration in both new and retrofitted power plants and industrial facilities by 2020. The
DOE 2011 Strategic Plan sets a more specific target: to bring at least five commercial-scale CCS
demonstration projects online by 2016.28
It could be argued that in its allocation of Recovery Act funding, DOE was heeding the
recommendations of experts (see footnote 24) who identified commercial-scale demonstration
projects as the most important component, the lynchpin, for future development and deployment
of CCS in the United States. It could also be argued that much of the future success of CCS is
riding on these three programs. Accordingly, the following section provides a snapshot of the
CCPI, ICCS, and FutureGen programs, and a brief discussion of some of their accomplishments
and challenges.
CCS Demonstrations: CCPI, ICCS, and FutureGen 2.0
The Clean Coal Power Initiative (CCPI) was an ongoing program prior to the $800 million
funding increase from the Recovery Act. Recovery Act funding now is being used to expand
activities in this program area for CCPI Round 3 beyond developing technologies to reduce
sulfur, nitrogen, and mercury pollutants from power plants.29 After enactment of the Recovery
Act, DOE did not request additional funding for CCPI under its Fossil Energy program in the
annual appropriations process (Table 1 shows zeroes for FY2012-FY2014). Rather, in the
FY2010 DOE budget justification, DOE stated that funding for the these projects in CCPI Round
3 would be supported through the Recovery Act, and as a result “DOE will make dramatic
progress in demonstrating CCS at commercial scale using these funds without the need for
additional resources for demonstration in 2010.”30
27
For a fuller discussion of the relationship between costs of developing technologies analogous to CCS, such as SO2
and NOx scrubbers, see CRS Report R41325, Carbon Capture: A Technology Assessment, by Peter Folger.
28
U.S. Department of Energy, Strategic Plan, May 2011, p. 18, http://energy.gov/sites/prod/files/
2011_DOE_Strategic_Plan_.pdf.
29
DOE had solicited and awarded funding for CCPI projects in two previous rounds of funding: CCPI Round 1 and
Round 2. The Recovery Act funds were to be allocated CCPI Round 3, focusing on projects that utilize CCS
technology and/or the beneficial reuse of CO2. For more details, see http://www.fossil.energy.gov/programs/
powersystems/cleancoal/.
30
U.S. Department of Energy, Detailed Budget Justifications FY2010, volume 7, Fossil Energy Research and
(continued...)
Congressional Research Service
9
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
According to the 2010 DOE CCS Roadmap, Recovery Act funds are being used for these
demonstration projects to “allow researchers broader CCS commercial-scale experience by
expanding the range of technologies, applications, fuels, and geologic formations that are being
tested.”31 DOE selected six projects under CCPI Round 3 through two separate solicitations.32
The total DOE share of funding would have been $1.75 billion for the six projects in five states:
Alabama, California, North Dakota, Texas, and West Virginia (Table 2). However, the projects in
Alabama, North Dakota, and West Virginia withdrew from the program, and currently the DOE
share for the remaining three projects is $1.03 billion (of a total of over $6 billion for total
expected costs). With the withdrawal of three CCPI Round 3 projects, DOE’s share of the total
program costs shrank from over 22% to approximately 17%.
Table 2. DOE CCS Demonstration Round 3 Projects
Percent
DOE Share
Metric Tons of
CO2 Captured
Annually
(millions)
Project
Status
1,727
26%
2.7b
Active
408
4,028
10%
2.6
Active
Thompsons,
TX
167
338
50%
1.4
Active
AEP Mountaineer
Project
New Haven,
WV
334
668
50%
1.5
Withdrawn
Southern
Company Project
Mobile, AL
295
665
44%
1
Withdrawn
Basin Electric
Power Project
Beulah, ND
100
387
26%
0.9
Withdrawn
Total
1,754
7,813
22.4%
10.1
Total, Active
Projectsa
1,025
6,093
16.8%
6.7
Location
DOE Share of
Funding
($ millions)
Total Project
Cost
($ millions)
Penwell, TX
450
Hydrogen Energy
California Project
Kern County,
CA
NRG Energy
Project
Round 3
Project
Texas Clean
Energy Project
Sources: DOE Fossil Energy Techline; Environment News Service (March 12, 2010), http://www.ensnewswire.com/ens/mar2010/2010-03-12-093.html; NETL CCPI website, http://www.netl.doe.gov/technologies/
coalpower/cctc/ccpi/index.html; NETL Factsheet: Summit Texas Clean Energy, LLC, March
2012,http://www.netl.doe.gov/publications/factsheets/project/FE0002650.pdf; NETL Factsheet Hydrogen Energy
California Project, May 2013, http://www.netl.doe.gov/publications/factsheets/project/FE0000663.pdf; NETL
Factsheet BRG Energy: W.A. Parish Post Combustion CO2 Capture and Sequestration Project, March 2012,
http://www.netl.doe.gov/publications/factsheets/project/FE0003311.pdf.
Notes: DOE funding for the NRG Energy Project was initially announced as up to $154 million (see March 9,
2009, DOE Techline, http://www.fossil.energy.gov/news/techlines/2010/10005-
(...continued)
Development, p. 35, http://www.cfo.doe.gov/budget/10budget/Content/Volumes/Volume7.pdf.
31
DOE 2010 CCS Roadmap, p. 15.
32
The first solicitation closing date was January 20, 2009; the second solicitation closing date was August 24, 2009.
Thus the first set of project proposals were submitted prior to enactment of the Recovery Act. See
http://www.fossil.energy.gov/programs/powersystems/cleancoal/.
Congressional Research Service
10
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
NRG_Energy_Selected_to_Receive_DOE.html). A May 2010 DOE fact sheet indicates that funding for NRG is
$167 million (http://www.netl.doe.gov/publications/factsheets/project/FE0003311.pdf).
a.
Total include amounts that were reallocated from withdrawn projects to active projects.
b.
According to NETL, this amount could be up to 3 million metric tons annually.
Reasons for Withdrawal from the CCPI Program
Commercial sector partners identified a number of reasons for withdrawing from the CCPI
program, including finances, uncertainty regarding future regulations, and uncertainty regarding
the future national climate policy.
Southern Company—Plant Barry 160 MW Project
Southern Company withdrew its Alabama Plant Barry project from the CCPI program on
February 22, 2010, slightly more than two months after DOE Secretary Chu announced $295
million in DOE funding for the 11-year, $665 million project that would have captured up to
1 million tons of CO2 per year from a 160 megawatt coal-fired generation unit.33 According to
some sources, Southern Company’s decision was based on concern about the size of the
company’s needed commitment (approximately $350 million) to the project, and its need for
more time to perform due diligence on its financial commitment, among other reasons.34 Southern
Company continues work on a much smaller CCS project that would capture CO2 from a 25 MW
unit at Plant Barry.
Basin Electric Power—Antelope Valley 120 MW Project
On July 1, 2009, Secretary Chu announced $100 million in DOE funding for a project that would
capture approximately 1 million tons of CO2 per year from a 120 MW electric-equivalent gas
stream from the Antelope Valley power station near Beulah, ND.35 In December 2010, the Basin
Electric Power Cooperative withdrew its project from the CCPI program, citing regulatory
uncertainty with regard to capturing CO2, uncertainty about the project’s cost (one source
indicates that the company estimated $500 million total cost; DOE estimated $387 million—see
Table 2),36 uncertainty of environmental legislation, and lack of a long-term energy strategy for
the country.37 The project would have supplied the captured CO2 to an existing pipeline that
transports CO2 from the Great Plains Synfuels Plant near Beulah for enhanced oil recovery in
Canada’s Weyburn field approximately 200 miles north in Saskatchewan.
33
MIT Carbon Capture & Sequestration Technologies, Plant Barry Fact Sheet: Carbon Dioxide Capture and Storage
Project, http://sequestration.mit.edu/tools/projects/plant_barry.html.
34
Ibid.
35
U.S. DOE, Fossil Energy Techline, Secretary Chu Announces Two New Projects to Reduce Emissions from Coal
Plants, July 1, 2009, http://www.fossil.energy.gov/news/techlines/2009/09043-DOE_Announces_CCPI_Projects.html.
36
Lauren Donovan, “Basin Shelves Lignite’s First Carbon Capture Project,” Bismarck Tribune, December 17, 2010,
http://bismarcktribune.com/news/local/a5fb7ed8-0a1b-11e0-b0ea-001cc4c03286.html.
37
Daryl Hill and Tracie Bettenhausen, “Fresh Tech, Difficult Decisions: Basin Electric has a History of Trying New
Technology,” Basin Electric Power Cooperative newsletter, January-February 2011, http://www.basinelectric.com/
Miscellaneous/pdf/FeatureArticles/Fresh_Tech,_difficul.pdf.
Congressional Research Service
11
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
American Electric Power—Mountaineer 235 MW Project
In July 2011 American Electric Power decided to halt its plans to build a carbon capture plant for
a 235 MW generation unit at its 1.3 gigawatt Mountaineer power plant in New Haven, WV. The
project represented Phase 2 of an ongoing CCPI project. Secretary Chu had earlier announced a
$334 million award for the project on December 4, 2009.38 According to some sources, AEP
dropped the project because the company was not certain that state regulators would allow it to
recover the additional costs for the CCS project through rate increases charged to its customers.39
In addition, company officials cited broader economic and policy conditions as reasons for
cancelling the project.40 Some commentators suggested that congressional inaction on setting
limits on greenhouse gas emissions, as well as the weak economy, may have diminished the
incentives for a company like AEP to invest in CCS.41 One source concluded that “Phase 2 has
been cancelled due to unknown climate policy.”42
Reshuffling of Funding for CCPI
According to DOE, $140 million of the $295 million previously allotted to the Southern
Company Plant Barry project was divided between the Texas Clean Energy project and the
Hydrogen Energy California project. DOE provided additional funding, resulting in each project
receiving an additional $100 million above its initial awards.43 The remaining funding from the
canceled Plant Barry project (up to $154 million) was allotted to the NRG Energy project in
Texas (see Table 2).44
According to a DOE source, selection of the Basin Electric Power project was announced but a
cooperative agreement was never awarded by DOE.45 Funds that were to be obligated for the
Basin project could therefore have been reallocated within the department, but were rescinded by
Congress in FY2011 appropriations.
Some of the funding for the AEP Mountaineer project was rescinded by Congress in FY2012
appropriations legislation (P.L. 112-74). In the report accompanying P.L. 112-74, Congress
rescinded a total of $187 million of prior-year balances from the Fossil Energy Research and
Development account.46 The rescission did not apply to amounts previously appropriated under
38
U.S. DOE, Fossil Energy Techline, Secretary Chu Announces $3 Billion Investment for Carbon Capture and
Sequestration, December 4, 2009, http://www.fossil.energy.gov/news/techlines/2009/09081Secretary_Chu_Announces_CCS_Invest.html.
39
Matthew L. Wald and John M. Broder, “Utility Shelves Ambitious Plan to Limit Carbon,” New York Times, July 13,
2011, http://www.nytimes.com/2011/07/14/business/energy-environment/utility-shelves-plan-to-capture-carbondioxide.html?_r=1.
40
Michael G. Morris, chairman of AEP, quoted in New York Times article by Wald and Broder, July 13, 2011.
41
Wald and Broder, New York Times, July 13, 2011.
42
MIT Carbon Capture & Sequestration Technologies, AEP Mountaineer Fact Sheet: Carbon Dioxide Capture and
Storage Project, http://sequestration.mit.edu/tools/projects/aep_alstom_mountaineer.html.
43
Telephone conversation with Joseph Giove, DOE Office of Fossil Energy, March 19, 2012.
44
U.S. DOE Fossil Energy Techline, “Secretary Chu Announces Up To $154 Million for NRG Energy’s Carbon
Capture and Storage Project in Texas,” March 9, 2010, http://www.fossil.energy.gov/news/techlines/2010/10005NRG_Energy_Selected_to_Receive_DOE.html.
45
Telephone conversation with Joseph Giove, DOE Office of Fossil Energy, April 11, 2011.
46
U.S. Congress, House Committee on Appropriations, Subcommittee on Military Construction, Veterans Affairs, and
Related Agencies, Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2012,
(continued...)
Congressional Research Service
12
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
P.L. 111-5; however, funding for the AEP Mountaineer project that was provided by the Recovery
Act and not spent was returned to the Treasury and not made available to the CCPI program.47
Industrial Carbon Capture and Storage Projects
The original DOE ICCS program was divided into two main areas: Area 1, consisting of large
industrial demonstration projects; and Area 2, consisting of projects to test innovative concepts
for the beneficial reuse of CO2.48 Under Area 1, the first phase of the program consisted of 12
projects cost-shared with private industry, intended to increase investment in clean industrial
technologies and sequestration projects. Phase 1 projects averaged approximately seven months
in duration. Following Phase 1, DOE selected three projects for Phase 2 for design, construction,
and operation.49 The three Phase 2 projects are listed as large-scale demonstration projects in
Table 3. The total share of DOE funding for the three projects, provided by the Recovery Act, is
$686 million, or approximately 64% of the sum total Area 1 program cost of $1.075 billion.
Under Area 2, the initial phase consisted of $17.4 million in Recovery Act funding and $7.7
million in private-sector funding for 12 projects to engage in feasibility studies to examine the
beneficial reuse of CO2.50 In July 2010, DOE selected six projects from the original 12 projects
for a second phase of funding to find ways of converting captured CO2 into useful products such
as fuel, plastics, cement, and fertilizer. The six projects are listed under “Innovative
Concepts/Beneficial Use” in Table 3. The total share of DOE funding for the 6 projects, provided
by the Recovery Act, is $141.5 million, or approximately 71% of the sum total cost of $198.2
million.
Table 3. DOE Industrial Carbon Capture and Storage (ICCS) Projects
(showing DOE share of funding and total project cost)
DOE Share of
Funding
($ millions)
Total Project
Cost
($ millions)
Large-Scale
Demonstration
284
431
66%
Decatur, IL
Large-Scale
Demonstration
141
208
68%
Leucadia Energy,
LLC
Lake Charles,
LA
Large-Scale
Demonstration
261
436
60%
Alcoa, Inc.
Alcoa Center,
PA
Innovative
Concepts/Beneficial Use
ICCS Project
Name
Location
Type of Project
Air Products &
Chemicals, Inc.
Port Arthur,
TX
Archer Daniels
Midland Co.
13.5
16.9
Percent
DOE
Share
80%
(...continued)
conference report to accompany H.R. 2055, 112th Cong., 1st sess., December 15, 2011, H.Rept. 112-331 (Washington:
GPO, 2011), p. 851.
47
Telephone conversation with Joseph Giove, DOE Office of Fossil Energy, March 19, 2012.
48
Email from Regis K. Conrad, Director, Division of Cross-Cutting Research, DOE, March 20, 2012.
49
U.S. DOE, National Energy Technology Laboratory, Major Demonstrations, Industrial Capture and Storage (ICCS):
Area 1, http://www.netl.doe.gov/technologies/coalpower/cctc/iccs1/index.html#.
50
U.S. DOE, Recovery Act, Innovative Concepts for Beneficial Reuse of Carbon Dioxide, http://fossil.energy.gov/
recovery/projects/beneficial_reuse.html.
Congressional Research Service
13
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
DOE Share of
Funding
($ millions)
Total Project
Cost
($ millions)
Percent
DOE
Share
ICCS Project
Name
Location
Type of Project
Novomer, Inc.
Ithaca, NY
Innovative
Concepts/Beneficial Use
20.5
25.6
80%
Touchstone
Research Lab,
Ltd.
Triadelphia, PA
Innovative
Concepts/Beneficial Use
6.7
8.4
80%
Phycal, LLC
Highland
Heights, OH
Innovative
Concepts/Beneficial Use
51.4
65
80%
Skyonic Corp.
Austin, TX
Innovative
Concepts/Beneficial Use
28
39.6
70%
Calera Corp.
Los Gatos, CA
Innovative
Concepts/Beneficial Use
21.4
42.7
50%
Air Products &
Chemicals, Inc.
Allentown, PA
Advanced Gasification
Technologies
71.7
75
96%
Eltron Research
& Development,
Inc.
Boulder, CO
Advanced Gasification
Technologies
71.4
73.7
97%
Research
Triangle Institute
Research
Triangle Park,
NC
Advanced Gasification
Technologies
168.8
GE Energy
Schenectady,
NY
Advanced TurboMachinery
31.3
62.6
50%
Siemens Energy
Orlando, FL
Advanced TurboMachinery
32.3
64.7
50%
Clean Energy
Systems, Inc.
Rancho
Cordova, CA
Advanced TurboMachinery
30
42.9
70%
Ramgen Power
Systems
Bellevue, WA
Advanced TurboMachinery
50
79.7
63%
ADA-ES, Inc.
Littleton, CO
Post-Combustion
Capture
15
18.8
80%
Alstom Power
Windsor, CT
Post-Combustion
Capture
10
12.5
80%
Membrane
Technology &
Research, Inc.
Menlo Park, CA
Post-Combustion
Capture
15
18.8
80%
Praxair
Tonawanda,
NY
Post-Combustion
Capture
35
55.6
63%
Siemens Energy,
Inc.
Pittsburgh, PA
Post-Combustion
Capture
15
18.8
80%
Board of
Trustees U. of IL
Champaign, IL
Geologic Site
Characterization
5
6.5
77%
N. American
Power Group,
Ltd.
Greenwood
Village, CO
Geologic Site
Characterization
5
7.85
64%
Congressional Research Service
174
97%
14
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
ICCS Project
Name
DOE Share of
Funding
($ millions)
Total Project
Cost
($ millions)
Percent
DOE
Share
Location
Type of Project
Sandia
Technologies,
LLC
Houston, TX
Geologic Site
Characterization
4.38
5.63
78%
S. Carolina
Research
Foundation
Columbia, SC
Geologic Site
Characterization
5
6.25
80%
Terralog
Technologies
USA, Inc.
Arcadia, CA
Geologic Site
Characterization
5
6.25
80%
U. of Alabama
Tuscaloosa, AL
Geologic Site
Characterization
5
U. of Kansas
Center for
Research, Inc.
Lawrence, KS
Geologic Site
Characterization
5
6.29
80%
U. of Texas at
Austin
Austin, TX
Geologic Site
Characterization
5
6.25
80%
U. of Utah
Salt Lake City,
UT
Geologic Site
Characterization
5
7.23
69%
U. of Wyoming
Laramie, WY
Geologic Site
Characterization
5
5
Totals
1,422.4
10.8
2,038.4
46%
100%
70%
Source: Emails from Regis K. Conrad, Director, Division of Cross-Cutting Research, DOE, March 20 and March
27, 2012; U.S. DOE, National Energy Technology Laboratory, Major Demonstrations, Industrial Capture and Storage
(ICCS): Area 1, http://www.netl.doe.gov/technologies/coalpower/cctc/iccs1/index.html#; U.S. DOE, Carbon Capture
and Storage from Industrial Sources, Industrial Carbon Capture Project Selections, http://fossil.energy.gov/recovery/
projects/iccs_projects_0907101.pdf.
Notes: Table is ordered from top to bottom by type of project: Large-Scale Demonstration; Innovative
Concepts/Beneficial Use; Advanced Gasification Technologies; Advanced Turbo-Machinery; Post-Combustion
Capture; and Geologic Site Characterization. Totals may not add due to rounding.
Since its original conception, the DOE ICCS program has expanded with an additional 22
projects, funded under the Recovery Act, to accelerate promising technologies for CCS.51 In its
listing of the 22 projects, DOE groups them into four general categories: (1) Large-Scale Testing
of Advanced Gasification Technologies; (2) Advanced Turbo-Machinery to Lower Emissions
from Industrial Sources; (3) Post-Combustion CO2 Capture with Increased Efficiencies and
Decreased Costs; and (4) Geologic Storage Site Characterization.52 The total share of DOE
funding for the 22 projects, provided by Recovery Act, is $594.9 million, or approximately 78%
of the sum total cost of $765.2 million.
Overall, the total share of federal funding for all the ICCS projects combined is $1.422 billion, or
approximately 70% of the sum total cost of $2.038 billion.
51
Email from Regis K. Conrad, Director, Division of Cross-Cutting Research, DOE, March 20, 2012.
U.S. DOE, Carbon Capture and Storage from Industrial Sources, Industrial Carbon Capture Project Selections,
http://fossil.energy.gov/recovery/projects/iccs_projects_0907101.pdf.
52
Congressional Research Service
15
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
FutureGen—A Special Case?
On February 27, 2003, President George W. Bush proposed a 10-year, $1 billion project to build a
coal-fired power plant that would integrate carbon sequestration and hydrogen production while
producing 275 megawatts of electricity, enough to power about 150,000 average U.S. homes. As
originally conceived, the plant would have been a coal-gasification facility and would have
produced and sequestered between 1 million and 2 million tons of CO2 annually. On January 30,
2008, DOE announced that it was “restructuring” the FutureGen program away from a single,
state-of-the-art “living laboratory” of integrated R&D technologies—a single plant—to instead
pursue a new strategy of multiple commercial demonstration projects.53 In the restructured
program, DOE would support up to two or three demonstration projects of at least 300 megawatts
that would sequester at least 1 million tons of CO2 per year.
In the Bush Administration’s FY2009 budget, DOE requested $156 million for the restructured
FutureGen program, and specified that the federal cost-share would only cover the CCS portions
of the demonstration projects, not the entire power system. However, after the Recovery Act was
enacted on February 17, 2009, Secretary Chu announced an agreement with the FutureGen
Alliance—an industry consortium—to advance construction of the FutureGen plant built in
Mattoon, IL, the site selected by the FutureGen Alliance in 2007.54 Further, DOE anticipated that
$1 billion of funding from the Recovery Act would be used to support the project.55
On August 5, 2010, then-Secretary of Energy Chu announced the $1 billion award, from
Recovery Act funds, to the FutureGen Alliance, Ameren Energy Resources, Babcock & Wilcox,
and Air Liquide Process & Construction, Inc., to build FutureGen 2.0.56 FutureGen 2.0 differs
from the original concept for the plant, because it would retrofit Ameren’s existing power plant in
Meridosia, IL, with oxy-combustion technology at a 202 MW, oil-fired unit,57 rather than build a
new state-of-the-art plant in Mattoon.58
Challenges to FutureGen—A Similar Path for Other Demonstration Projects?
A decade after the George W. Bush Administration announced FutureGen—its signature clean
coal power initiative—the program is still in early development. Among the challenges to the
development of FutureGen 2.0 are rising costs of production, ongoing issues with project
development, lack of incentives for investment from the private sector, time constraints, and
competition with foreign nations. Remaining challenges to FutureGen’s development include
securing private sector funding to meet increasing costs, purchasing the power plant for the
53
See http://www.fossil.energy.gov/news/techlines/2008/08003-DOE_Announces_Restructured_FutureG.html.
Prior to when DOE first announced it would restructure the program in 2008, the FutureGen Alliance announced on
December 18, 2007, that it had selected Mattoon, IL, as the host site from a set of four finalists. The four were Mattoon,
IL; Tuscola, IL; Heart of Brazos (near Jewett, TX); and Odessa, TX.
55
See DOE announcement on June 12, 2009, http://www.fossil.energy.gov/news/techlines/2009/09037DOE_Announces_FutureGen_Agreement.html.
56
See DOE Techline, http://www.netl.doe.gov/publications/press/2010/10033Secretary_Chu_Announces_FutureGen_.html.
57
Ameren had planned to replace the oil-fired boiler with a coal-fired boiler using oxy-combustion technology to allow
carbon capture. See http://www.futuregenalliance.org/pdf/FutureGen%20FAQ-General%20042711.pdf.
58
For more information about the history of FutureGen, and issues for Congress, see CRS Report R43028, FutureGen:
A Brief History and Issues for Congress, by Peter Folger.
54
Congressional Research Service
16
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
project, obtaining permission from DOE to retrofit the plant, performing the retrofit, and then
meeting the goal of 90% capture of CO2.
A question for Congress is whether FutureGen represents a unique case of a first mover in a
complex, expensive, and technically challenging endeavor, or whether it represents all large CCS
demonstration projects once they move past the planning stage. As discussed above,
approximately $3.3 billion of Recovery Act funding is committed to large demonstration projects,
including FutureGen. A rationale for committing such a substantial level of funding to
demonstration projects was to scale up CCS RD&D more quickly than had been the pace of
technology development prior to enactment of the Recovery Act. However, if all the CCS
demonstration projects encounter similar changes in scope, design, location, and cost as
FutureGen, the chances of meeting goals laid out in the DOE 2010 Strategic Plan—namely, to
bring at least five commercial-scale CCS demonstration projects online by 2016—may be in
jeopardy.
Alternatively, one could argue that FutureGen from its original conception was unique. None of
the other large-scale demonstration projects share the same original ambitious vision: to create a
new, one-of-a-kind, CCS plant from the ground up. Even though the individual components of
FutureGen—as originally conceived—were not themselves new innovations, combining the
capture, transportation, and storage components together into a 250-megawatt functioning power
plant could be considered unprecedented and therefore most likely to experience delays at each
step in development.
Scholars have described the stages of technological change in different schemes, such as
•
invention, innovation, adoption, diffusion;59 or
•
technology readiness levels (TRLs) ranging from TRL 1 (basic technology
research) to TRL 9 (system test, launch, and operations);60 or
•
conceptual design, laboratory/bench scale, pilot plant scale, full-scale
demonstration plant, and commercial process.61
FutureGen is difficult to categorize within these schemes, in part because the project spanned a
range of technology development levels irrespective of the particular scheme. The original
conception of the FutureGen project arguably had aspects of conceptual design through
commercial processes—all five components of the scheme listed as the third bullet above—which
meant that the project was intended to march through all stages in a linear fashion. As some
scholars have noted, however, the stages of technological change are highly interactive, requiring
learning by doing and learning by using, once the project progresses past its innovative stage into
larger-scale demonstration and deployment.62 The task of tackling all the stages of technology
59
E. S. Rubin, “The Government Role in Technology Innovation: Lessons for the Climate Change Policy Agenda,”
Institute of Transportation Studies, 10th Biennial Conference on Transportation Energy and Environmental Policy,
University of California, Davis, CA (August 2005).
60
National Aeronautics and Space Administration, “Definition of Technology Readiness Levels,” at
http://esto.nasa.gov/files/TRL_definitions.pdf.
61
For a more thorough discussion of different schemes describing stages of technology development, see chapter 4 of
CRS Report R41325, Carbon Capture: A Technology Assessment, by Peter Folger.
62
E. S. Rubin, “The Government Role in Technology Innovation: Lessons for the Climate Change Policy Agenda,”
Institute of Transportation Studies, 10th Biennial Conference on Transportation Energy and Environmental Policy,
University of California, Davis, CA (August 2005).
Congressional Research Service
17
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
development in one project—the original FutureGen—might have been too daunting and, in
addition to other factors, contributed to the project’s erratic progress since 2003. It remains to be
seen whether the current large-scale demonstration projects funded by DOE under CCPI Round 3
follow the path of FutureGen or instead achieve their technological development goals on time
and within their current budgets.63
Geologic Sequestration/Storage: DOE RD&D for the
Last Step in CCS
DOE has allocated $112 million and $116 million per year for its carbon sequestration/storage
activities in FY2012 and FY2013, respectively. The FY2014 request is for $61 million (See Table
1.) In contrast with the carbon capture technology RD&D, which received nearly all of the $3.4
billion from Recovery Act funding, carbon sequestration/carbon storage activities received
approximately $50 million in Recovery Act funds. Recovery Act funds were awarded for 10
projects to conduct site characterization of promising geologic formations for CO2 storage.64
Brief History of DOE Geological Sequestration/Storage Activities
DOE has devoted the bulk of its funding for geological sequestration/storage activities to RD&D
efforts for injecting CO2 into subsurface geological reservoirs. Injection and storage is the third
step in the CCS process following the CO2 capture step and CO2 transport step. One part of the
RD&D effort is characterizing geologic reservoirs (which received a $50 million boost from
Recovery Act funds, as noted above); however, the overall program is much broader than just
characterization, and has now reached the beginning of the phase of large-volume CO2 injection
demonstration projects across the country. According to DOE, these large-volume tests are
needed to validate long-term storage in a variety of different storage formations of different
depositional environments, including deep saline reservoirs, depleted oil and gas reservoirs, low
permeability reservoirs, coal seams, shale, and basalt.65 The large-volume tests can be considered
injection experiments conducted at a commercial scale (i.e., approximately 1 million tons of CO2
injected per year) that should provide crucial information on the suitability of different geologic
reservoirs; monitoring, verification, and accounting of injected CO2; risk assessment protocols for
long-term injection and storage; and other critical challenges.
In 2003 DOE created seven regional carbon sequestration partnerships (RCSPs), essentially
consortia of public and private sector organizations grouped by geographic region across the
United States and parts of Canada.66 The geographic representation was intended to match
63
Another possible source of uncertainty for FutureGen, and other large industrial CCS projects, is cost recovery
during the operating phase of the plant after the construction phase and initial capital investments are made. “Learning
by doing” should increase operating efficiency, but it is unclear by how much and over what time span. For more
discussion on cost trajectories and expected efficiency gains, see CRS Report R41325, Carbon Capture: A Technology
Assessment, by Peter Folger.
64
The total DOE share for the 10 projects is $46.6 million. See DOE, Recovery Act, http://fossil.energy.gov/recovery/
projects/site_characterization.html.
65
DOE 2010 CCS Roadmap, p. 55.
66
Four Canadian provinces are partners with DOE in two of the regional partnerships, and are members with other
participating organizations that are contributing funding and other support to the partnerships.
Congressional Research Service
18
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
regional differences in fossil fuel use and geologic reservoir potential for CO2 storage.67 The
RCSPs cover 43 states and four Canadian provinces and include over 400 organizations,
according to the DOE 2010 Strategic Plan. Table 4 shows the seven partnerships, the lead
organization for each, and the states and provinces included. Several states belong to more than
one RCSP.
The RCSPs have pursued their objectives through three phases beginning in 2003:
(1) Characterization Phase (2003 to 2005), an initial examination of the region’s potential for
geological sequestration of CO2; (2) Validation Phase (2005 to 2011), small-scale injection field
tests (less than 500,000 tons of CO2) to develop a better understanding of how different geologic
formations would handle large amounts of injected CO2; and (3) Development Phase (2008 to
2018 and beyond), injection tests of at least 1 million tons of CO2 to simulate commercial-scale
quantities of injected CO2.68 The last phase is intended also to collect enough information to help
understand the regulatory, economic, liability, ownership, and public outreach requirements for
commercial deployment of CCS.
Table 4. Regional Carbon Sequestration Partnerships
Regional Carbon
Sequestration Partnership
(RCSP)
Lead Organization
States and Provinces in the
Partnership
Big Sky Carbon Sequestration
Partnership (BSCSP)
Montana State University-Bozeman
MT, WY, ID, SD, eastern WA,
eastern OR
Midwest Geological Sequestration
Consortium (MGSC)
Illinois State Geological Survey
IL, IN, KY
Midwest Regional Carbon
Sequestration Partnership
(MRCSP)
Battelle Memorial Institute
IN, KY, MD, MI, NJ, NY, OH, PA,
WV,
Plains CO2 Reduction Partnership
(PCOR)
University of North Dakota Energy
and Environmental Research Center
MT, northeast WY, ND, SD, NE, MN,
IA, MO, WI, Manitoba, Alberta,
Saskatchewan, British Columbia
(Canada)
Southeast Regional Carbon
Sequestration Partnership
(SECARB)
Southern States Energy Board
AL, AS, FL, GA, LA, MS, NC, SC, TN,
TX, VA, portions of KY and WV
Southwest Regional Partnership
on Carbon Sequestration (SWP)
New Mexico Institute of Mining and
Technology
AZ, CO, OK, NM, UT, KS, NV, TX,
WY
West Coast Regional Carbon
Sequestration Partnership
(WESTCARB)
California Energy Commission
AK, AZ, CA, HI, OR, NV, WA, British
Columbia (Canada)
Source: DOE National Energy Technology Laboratory, Carbon Sequestration Regional Carbon Sequestration
Partnerships, http://www.netl.doe.gov/technologies/carbon_seq/infrastructure/rcsp.html.
67
DOE National Energy Technology Laboratory, Carbon Sequestration Regional Carbon Sequestration Partnerships,
http://www.netl.doe.gov/technologies/carbon_seq/infrastructure/rcsp.html.
68
Ibid.
Congressional Research Service
19
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
There are RD&D activities funded by DOE under its carbon sequestration/carbon storage
program activities other than the RCSPs, such as geological storage technologies; monitoring,
verification, and assessment; carbon use and reuse; and others. However, the RCSPs were
allocated approximately 70% of annual spending on carbon sequestration/carbon storage in
FY2012, and comprise 66% of that account in the FY2014 budget request. The RCSPs provide
the framework and infrastructure for a wide variety of DOE geologic sequestration/storage
activities.
Current Status and Challenges to Carbon Sequestration/Storage
The third phase—Development—is currently underway for all the RCSPs, and large-scale CO2
injection has begun for the SECARB and MGSC projects.69 The Development Phase large-scale
injection projects are arguably akin to the large-scale carbon capture demonstration projects
discussed above. They are needed to understand what actually happens to CO2 underground when
commercial-scale volumes are injected in the same or similar geologic reservoirs as would be
used if CCS were deployed nationally.
In addition to understanding the technical challenges to storing CO2 underground without leakage
over hundreds of years, DOE also expects that the Development Phase projects will provide a
better understanding of regulatory, liability, and ownership issues associated with commercialscale CCS.70 These nontechnical issues are not trivial, and could pose serious challenges to
widespread deployment of CCS even if the technical challenges of injecting CO2 safely and in
perpetuity are resolved. For example, a complete regulatory framework for managing the
underground injection of CO2 has not been developed in the United States. However, EPA
promulgated a rule under the authority of the Safe Drinking Water Act (SDWA) that creates a new
class of injection wells under the existing Underground Injection Control Program. The new class
of wells (Class VI) establishes national requirements specifically for injecting CO2 and protecting
underground sources of drinking water. EPA’s stated purpose in proposing the rule was to ensure
that CCS can occur in a safe and effective manner in order to enable commercial-scale CCS to
move forward.71
The development of the regulation for Class VI wells highlighted that EPA’s authority under the
SDWA is limited to protecting underground sources of drinking water but does not address other
major issues. Some of these include the long-term liability for injected CO2, regulation of
potential emissions to the atmosphere, legal issues if the CO2 plume migrates underground across
state boundaries, private property rights of owners of the surface lands above the injected CO2
plume, and ownership of the subsurface reservoirs (also referred to as pore space).72 Because of
these issues and others, there are some indications that broad community acceptance of CCS may
be a challenge. The large-scale injection tests may help identify the key factors that lead to
community concerns over CCS, and help guide DOE, EPA, other agencies, and the private sector
69
For details on the two large-scale injection experiments by SECARB, see http://www.secarbon.org/; for details on
the large-scale injection experiment by MGSC, see http://sequestration.org/.
70
DOE National Energy Technology Laboratory, Carbon Sequestration Regional Partnership Development Phase
(Phase III) Projects, http://www.netl.doe.gov/technologies/carbon_seq/infrastructure/rcspiii.html.
71
For more information on the EPA Class VI wells in particular, and the Safe Drinking Water Act generally, see CRS
Report RL34201, Safe Drinking Water Act (SDWA): Selected Regulatory and Legislative Issues, by Mary Tiemann.
72
For a discussion of several of these legal issues, see CRS Report RL34307, Legal Issues Associated with the
Development of Carbon Dioxide Sequestration Technology, by Adam Vann and Paul W. Parfomak.
Congressional Research Service
20
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
towards strategies leading to the widespread deployment of CCS. Currently, however, the general
public is largely unfamiliar with the details of CCS and these challenges have yet to be resolved.73
Outlook
The success of the Clean Coal Program will ultimately be judged by the extent to which emerging
technologies get deployed in domestic and international marketplaces. Both technical and
financial challenges associated with the deployment of new “high risk” coal technologies must be
overcome in order to be capable of achieving success in the marketplace. Commercial scale
demonstrations help the industry understand and overcome startup issues, address component
integration issues, and gain the early learning commercial experience necessary to reduce risk and
secure private financing and investment for future plants.74
The testimony quoted above from Scott Klara of the National Energy Technology Laboratory
sums up a crucial metric to the success of the federal CCS RD&D program, namely, whether CCS
technologies are deployed in the commercial marketplace. To date, there are no commercial
ventures in the United States that capture, transport, and inject large quantities of CO2 (e.g., 1
million tons per year or more) solely for the purposes of carbon sequestration.
However, the CCS RD&D program has embarked on commercial-scale demonstration projects
for CO2 capture, injection, and storage. The success of these demonstration projects will likely
bear heavily on the future outlook for widespread deployment of CCS technologies as a strategy
for preventing large quantities of CO2 from reaching the atmosphere while plants continue to burn
fossil fuels, mainly coal. Congress may wish to carefully review the results from these
demonstration projects as they progress in order to gauge whether DOE is on track to meet its
goal of allowing for an advanced CCS technology portfolio to be ready by 2020 for large-scale
demonstration and deployment in the United States.
In addition to the issues and programs discussed above, other factors might affect the
demonstration and deployment of CCS in the United States. The use of hydraulic fracturing
techniques to extract unconventional natural gas deposits recently has drawn national attention to
the possible negative consequences of deep well injection of large volumes of fluids. Hydraulic
fracturing involves the high-pressure injection of fluids into the target formation to fracture the
rock and release natural gas or oil. The injected fluids, together with naturally occurring fluids in
the shale, are referred to as produced water. Produced waters are pumped out of the well and
disposed of. Often the produced waters are disposed of by re-injecting them at a different site in a
different well. These practices have raised concerns about possible leakage as fluids are pumped
into and out of the ground, and about deep-well injection causing earthquakes. Public concerns
over hydraulic fracturing and deep-well injection of produced waters may spill over into concerns
about deep-well injection of CO2. How successfully DOE is able to address these types of
concerns as the large-scale demonstration projects move forward into their injection phases could
affect the future of CCS deployment.
73
For more information on the different issues regarding community acceptance of CCS, see CRS Report RL34601,
Community Acceptance of Carbon Capture and Sequestration Infrastructure: Siting Challenges, by Paul W. Parfomak.
74
Testimony of Scott Klara, Deputy Laboratory Director, National Energy Technology Laboratory, U.S. Department of
Energy, in U.S. Congress, Senate Energy and Natural Resources Committee, Carbon Capture and Sequestration
Legislation, hearing to receive testimony on carbon capture and sequestration legislation, including S. 699 and S. 757,
112th Cong., 1st sess., May 12, 2011, S.Hrg. 112-22.
Congressional Research Service
21
Carbon Capture and Sequestration: Research, Development, and Demonstration at DOE
Author Contact Information
Peter Folger
Specialist in Energy and Natural Resources Policy
pfolger@crs.loc.gov, 7-1517
Congressional Research Service
22Coast Guard Cutter Procurement: Background and Issues for Congress
Summary
The Coast Guard’s program of record (POR) calls for procuring 8 National Security Cutters
(NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs) as
replacements for 90 aging Coast Guard cutters and patrol craft. The NSC, OPC, and FRC
programs have a combined estimated acquisition cost of about $21.1 billion, and the Coast
Guard’s proposed FY2014 budget requests a total of $716 million in acquisition funding for the
three programs.
NSCs are the Coast Guard’s largest and most capable general-purpose cutters. They have an
estimated average procurement cost of about $684 million per ship. The first three are now in
service, the fourth and fifth are under construction, and the sixth has been funded. The Coast
Guard’s proposed FY2014 budget requests $616 million in acquisition funding for the seventh
NSC; it does not request any funding for long lead time materials (LLTM) for the eighth NSC,
which is scheduled to be procured in FY2015.
OPCs are to be smaller, less expensive, and in some respects less capable than NSCs. They have
an estimated average procurement cost of about $484 million per ship. The first OPC is to be
procured in FY2017. The Coast Guard’s proposed FY2014 budget requests $25 million in
acquisition funding for the OPC program.
FRCs are considerably smaller and less expensive than OPCs. They have an estimated average
procurement cost of about $73 million per boat. A total of 18 have been funded through FY2012,
and the first six had been delivered as of May 18, 2013. The Coast Guard’s proposed FY2014
budget requests $75 million in acquisition funding for two FRCs and associated program costs.
Potential oversight issues for Congress regarding the NSC, OPC, and FRC programs include the
following:
•
the impact on the NSC, OPC, and FRC programs of the March 1, 2013, sequester
on FY2013 funding;
•
the potential impact on the NSC, OPC, and FRC programs of a possible sequester
on FY2014 funding that might occur in late 2013 or early 2014 under the terms
of the Budget Control Act of 2011;
•
the adequacy of the Coast Guard’s planned NSC, OPC, and FRC procurement
quantities;
•
the lack of a request in the Coast Guard’s proposed FY2014 budget for
acquisition funding for long lead time materials (LLTM) to support the
procurement of an eighth NSC in FY2015;
•
the Coast Guard’s FY2014 request for acquisition funding for two (rather than
six) FRCs;
•
delays, cost growth, and testing issues in the FRC program;
•
the $25 million in acquisition funding requested for FY2014 for the OPC
program, which is one-half of the $50 million that was projected for FY2014
under the Coast Guard’s FY2013 budget submission;
•
the Coast Guard’s acquisition strategy for the OPC;
Congressional Research Service
Coast Guard Cutter Procurement: Background and Issues for Congress
•
the potential for using multiyear procurement (MYP) in acquiring new cutters;
•
whether 8 NSCs, 25 OPCs, and 58 FRCs is the best mix of cutters that could be
procured for roughly the same total amount of acquisition funding; and
•
the adequacy of information available to Congress to support review and
oversight of Coast Guard procurement programs, including cutter procurement
programs.
Congressional Research Service
Coast Guard Cutter Procurement: Background and Issues for Congress
Contents
Introduction...................................................................................................................................... 1
Background ...................................................................................................................................... 1
Older Ships to Be Replaced by NSCs, OPCs, and FRCs .......................................................... 1
Missions of NSCs, OPCs, and FRCs ......................................................................................... 2
NSC Program............................................................................................................................. 3
OPC Program............................................................................................................................. 5
FRC Program ............................................................................................................................. 7
NSC, OPC, and FRC Funding in FY2013 Five-Year Capital Investment Plan ......................... 9
Issues for Congress ........................................................................................................................ 10
Impact of March 1, 2013, Sequester on FY2013 Funding ...................................................... 10
Potential Impact of Possible Late 2013/Early 2014 Sequester on FY2014 Funding............... 10
Adequacy of Planned NSC, OPC, and FRC Procurement Quantities ..................................... 10
NSC Program: No Funding Requested in FY2014 for Long Lead Time Materials
(LLTM) for Eighth Ship ....................................................................................................... 19
FRC Program: FY2014 Request for Two (Rather than Six) Ships .......................................... 20
FRC Program: Delays, Cost Growth, and Testing ................................................................... 22
OPC Program: FY2014 Funding Request Less than Projected Under FY2013 Budget ......... 24
OPC Program: Cost, Design, and Acquisition Strategy........................................................... 24
2012 Testimony ................................................................................................................. 25
2013 Testimony ................................................................................................................. 26
September 2012 GAO Report ........................................................................................... 28
Multiyear Procurement (MYP)................................................................................................ 31
Alternative Force Mixes Equal in Cost to Program of Record ................................................ 32
Information for Supporting Congressional Oversight of Procurement Programs ................... 35
Legislative Activity for FY2014 .................................................................................................... 37
Summary of Appropriations Action on FY2014 Acquisition Funding Request ...................... 37
FY2014 DHS Appropriations Act (H.R. 2217) ....................................................................... 38
House................................................................................................................................. 38
Figures
Figure 1. National Security Cutter ................................................................................................... 3
Figure 2. Offshore Patrol Cutter (Generic Conceptual Rendering) ................................................. 5
Figure 3. Fast Response Cutter ........................................................................................................ 8
Figure 4. Projected Mission Demands vs. Projected Capability/Performance .............................. 13
Figure B-1. Budget Item Justification Sheet (Exhibit P-40) .......................................................... 45
Figure B-2. Weapon System Cost Analysis Sheet (Exhibit P-5) ................................................... 46
Figure B-3. Ship Production Schedule (Exhibit P-27)................................................................... 47
Congressional Research Service
Coast Guard Cutter Procurement: Background and Issues for Congress
Tables
Table 1. NSC Acquisition Funding, by Hull .................................................................................... 4
Table 2. FRC Acquisition Funding, by Hull .................................................................................... 8
Table 3. NSC, OPC, and FRC Funding in FY2013 and FY2014 Five-Year Capital
Investment Plans (CIPs) ............................................................................................................... 9
Table 4. Program of Record Compared to Objective Fleet Mix .................................................... 11
Table 5. POR Compared to FMAs 1 Through 4 ............................................................................ 12
Table 6. Force Mixes and Mission Performance Gaps .................................................................. 12
Table 7. POR Compared to Objective Mixes in FMA Phases 1 and 2........................................... 14
Table 8. Alternative Force Mixes Examined in DHS Cutter Study ............................................... 33
Table 9. Summary of Appropriations Action on FY2014 Acquisition Funding Request............... 37
Table C-1. Navy Ship Force Structure Goal .................................................................................. 48
Table D-1. Navy FY2014 Five-Year (FY2014-FY2018) Shipbuilding Plan ................................. 49
Table E-1. Navy FY2014 30-Year (FY2014-FY2043) Shipbuilding Plan..................................... 50
Table E-2. Projected Force Levels Resulting from FY2014 30-Year (FY2014-FY2043)
Shipbuilding Plan ....................................................................................................................... 51
Appendixes
Appendix A. Findings and Recommendations of DHS Cutter Study ............................................ 42
Appendix B. P-5, P-40, and P-27 Data Exhibits for Littoral Combat Ship (LCS) Program.......... 44
Appendix C. Navy Ship Force Structure Objective ....................................................................... 48
Appendix D. Navy FY2014 Five-Year Shipbuilding Plan............................................................. 49
Appendix E. Navy FY2014 30-Year Shipbuilding Plan ................................................................ 50
Contacts
Author Contact Information........................................................................................................... 52
Congressional Research Service
Coast Guard Cutter Procurement: Background and Issues for Congress
Introduction
This report provides background information and potential oversight issues for Congress on the
Coast Guard’s programs for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol
Cutters (OPCs), and 58 Fast Response Cutters (FRCs). These 91 planned cutters are intended as
replacements for 90 aging Coast Guard cutters and patrol craft. The Coast Guard began procuring
NSCs and FRCs a few years ago, and the first few NSCs and FRCs are now in service. The Coast
Guard plans to begin procuring OPCs within the next few years. The NSC, OPC, and FRC
programs have a combined estimated acquisition cost of about $21.1 billion, and the Coast
Guard’s proposed FY2014 budget requests a total of $716 million in acquisition funding for the
three programs.
The issue for Congress is whether to approve, reject, or modify the Coast Guard’s funding
requests and acquisition strategies for the NSC, OPC, and FRC programs. Congress’s decisions
on these three programs could substantially affect Coast Guard capabilities and funding
requirements, and the U.S. shipbuilding industrial base.
The NSC, OPC, and FRC programs have been subjects of congressional oversight for several
years, and were previously covered in an earlier CRS report that is now archived.1 The Coast
Guard’s plans for modernizing its fleet of polar icebreakers are covered in a separate CRS report.2
Background
Older Ships to Be Replaced by NSCs, OPCs, and FRCs
The 91 planned NSCs, OPCs, and FRCs are intended to replace 90 older Coast Guard ships—the
service’s 12 high-endurance cutters (WHECs), 29 medium-endurance cutters (WMECs), and 49
110-foot patrol craft (WPBs).3 The Coast Guard’s 12 Hamilton (WHEC-715) class highendurance cutters entered service between 1967 and 1972.4 The Coast Guard’s 29 mediumendurance cutters include 13 Famous (WMEC-901) class ships that entered service between 1983
1
The earlier report was CRS Report RL33753, Coast Guard Deepwater Acquisition Programs: Background, Oversight
Issues, and Options for Congress, by Ronald O'Rourke. From the late 1990s until 2007, the Coast Guard’s efforts to
acquire NSCs, OPCs, and FRCs were parts of a larger, integrated Coast Guard acquisition effort aimed at acquiring
several new types of cutters and aircraft that was called the Integrated Deepwater System (IDS) program, or Deepwater
for short. In 2007, the Coast Guard broke up the Deepwater effort into a series of individual cutter and aircraft
acquisition programs, but continued to use the term Deepwater as a shorthand way of referring collectively to these
now-separated programs. In its FY2012 budget submission, the Coast Guard stopped using the term Deepwater entirely
as a way of referring to these programs. Congress, in acting on the Coast Guard’s proposed FY2012 budget, did not
object to ending the use of the term Deepwater. Reflecting this development, CRS Report RL33753, Coast Guard
Deepwater Acquisition Programs: Background, Oversight Issues, and Options for Congress was archived in early
2012, following final congressional action on the FY2012 budget, and remains available to congressional readers as a
source of historical reference information on Deepwater acquisition efforts.
2
CRS Report RL34391, Coast Guard Polar Icebreaker Modernization: Background and Issues for Congress, by
Ronald O'Rourke.
3
In the designations WHEC, WMEC, and WPB, W means Coast Guard ship, HEC stands for high-endurance cutter,
MEC stands for medium-endurance cutter, and PB stands for patrol boat.
4
Hamilton-class cutters are 378 feet long and have a full load displacement of about 3,400 tons.
Congressional Research Service
1
Coast Guard Cutter Procurement: Background and Issues for Congress
and 1991,5 14 Reliance (WMEC-615) class ships that entered service between 1964 and 1969,6
and two one-of-a-kind cutters that originally entered service with the Navy in 1944 and 1971 and
were later transferred to the Coast Guard.7 The Coast Guard’s 49 110-foot Island (WPB-1301)
class patrol boats entered service between 1986 and 1992.8
Many of these 90 ships are manpower-intensive and increasingly expensive to maintain, and have
features that in some cases are not optimal for performing their assigned missions. Some of them
have already been removed from Coast Guard service: eight of the Island-class patrol boats were
removed from service in 2007 following an unsuccessful effort to modernize and lengthen them
to 123 feet; the one-of-a-kind cutter that originally entered service with the Navy in 1944 was
decommissioned in 2011; and Hamilton-class cutters are being decommissioned as new NSCs
enter service. A July 2012 Government Accountability Office (GAO) report discusses the
generally poor physical condition and declining operational capacity of the Coast Guard’s older
high-endurance cutters, medium-endurance cutters, and 110-foot patrol craft.9
Missions of NSCs, OPCs, and FRCs
NSCs, OPCs, and FRCs, like the ships they are intended to replace, are to be multimission ships
for routinely performing 7 of the Coast Guard’s 11 statutory missions, including
•
search and rescue (SAR);
•
drug interdiction;
•
migrant interdiction;
•
ports, waterways, and coastal security (PWCS);
•
protection of living marine resources;
•
other/general law enforcement; and
•
defense readiness operations.10
5
Famous class cutters are 270 feet long and have a full load displacement of about 1,800 tons.
Reliance class cutters are 210 feet long and have a full load displacement of about 1,100 tons.
7
The two one-of-a-kind cutters are the Acushnet (WMEC-167), which originally entered service with the Navy in
1944, and the Alex Haley (WMEC-39), which originally entered service with the Navy in 1971. The Acushnet served in
the Navy from until 1946, when it was transferred to the Coast Guard. The ship was about 214 feet long and had a
displacement of about 1,700 tons. The Alex Haley served in the Navy until 1996. It was transferred to the Coast Guard
in 1997, converted into a cutter, and re-entered service with the Coast Guard in 1999. It is 282 feet long and has a full
load displacement of about 2,900 tons.
8
Island-class boats are 110 feet long and have a full load displacement of about 135 to 170 tons.
9
Government Accountability Office, Coast Guard[:]Legacy Vessels’ Declining Conditions Reinforce Need for More
Realistic Operational Targets, GAO-12-741, July 2012, 71 pp.
10
The four statutory Coast Guard missions that are not to be routinely performed by NSCs, OPCs, and FRCs are
marine safety, aids to navigation, marine environmental protection, and ice operations. These missions are performed
primarily by other Coast Guard ships. The Coast Guard states, however, that “while [NSCs, OPCs, and FRCs] will not
routinely conduct [the] Aids to Navigation, Marine Safety, or Marine Environmental Protection missions, they may
periodically be called upon to support these missions (i.e., validate the position of an Aid to Navigation, transport
personnel or serve as a Command and Control platform for a Marine Safety or Marine Environmental Response
mission, etc.).” (Source: Coast Guard information paper provided to CRS on June 1, 2012.)
6
Congressional Research Service
2
Coast Guard Cutter Procurement: Background and Issues for Congress
Smaller Coast Guard patrol craft and boats contribute to the performance of some of these seven
missions close to shore. NSCs, OPCs, and FRCs perform them both close to shore and in the
deepwater environment, which generally refers to waters more than 50 miles from shore.
NSC Program
National Security Cutters (Figure 1), also known as Legend (WMSL-750) class cutters,11 are the
Coast Guard’s largest and most capable general-purpose cutters.12 The Coast Guard’s program of
record (POR)—the service’s list, established in 2004, of planned procurement quantities for
various new types of ships and aircraft—calls for procuring 8 NSCs as replacements for the
service’s 12 Hamilton class high-endurance cutters.
Figure 1. National Security Cutter
Source: U.S. Coast Guard photo accessed May 2, 2012, at http://www.flickr.com/photos/coast_guard/
5617034780/sizes/l/in/set-72157629650794895/.
Although the NSC program’s official total acquisition cost estimate is $4.749 billion, or an
average of about $594 million per ship,13 the Coast Guard more recently estimated the combined
11
In the designation WMSL, W means Coast Guard ship and MSL stands for maritime security cutter, large. NSCs are
being named for legendary Coast Guard personnel.
12
The Coast Guard’s three polar icebreakers are much larger than NSCs, but are designed for a more specialized role of
operations in polar waters.
13
Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional Justification, p. CGAC&I-12 (pdf page 166 of 400).
Congressional Research Service
3
Coast Guard Cutter Procurement: Background and Issues for Congress
procurement cost of the eight ships at $5.474 billion, or an average of about $684 million per
ship, assuming the seventh and eighth ships were funded in FY2014 and FY2015, respectively.14
The first three NSCs are now in service, the fourth and fifth are under construction, and the sixth
was funded in FY2013.
NSCs are larger and technologically more advanced than Hamilton-class cutters.15 The Coast
Guard states that
Of the Coast Guard’s white-hull patrol cutter fleet, the NSC is the largest and most
technologically sophisticated in the Coast Guard. Each NSC is capable of operating in the
most demanding open ocean environments, including the hazardous fisheries of the North
Pacific and the vast approaches of the Southern Pacific where much of the American
narcotics traffic occurs. With robust Command, Control, Communication, Computers,
Intelligence, Surveillance and Reconnaissance (C4ISR) equipment, stern boat launch and
aviation facilities, as well as long-endurance station keeping, the NSCs are afloat
operational-level headquarters for complex law enforcement and national security missions
involving multiple Coast Guard and partner agency participation.16
NSCs are built by Ingalls Shipbuilding of Pascagoula, MS, a shipyard that forms part of
Huntington Ingalls Industries (HII).
Table 1 summarizes acquisition funding for the first six NSCs.
Table 1. NSC Acquisition Funding, by Hull
Millions of then-year dollars, rounded to nearest million
Hull
Fiscal years funded
Total acquisition
funding (millions)
Production contract
award date
Entered service
1
FY02-FY09 and FY15
$701
FY04
August 2008
2
FY04-FY09 and FY15
$528
FY05
May 2010
March 2012
3
FY04-FY09
$551
FY07
4
FY04-FY10, FY13, FY15-FY16
$690
FY11 (1st Quarter)
5
FY10-FY11
$697
FY11 (4th Quarter)
6
FY12 and FY13
$735a
Source: Coast Guard e-mail to CRS, December 9, 2011, and FY2013 Coast Guard budget submission.
a.
Includes $77 million in FY2012 and $658 million requested for FY2013. The FY2013 funding request for the
NSC program also includes $25 million for post-production activities for the fourth NSC to replace $25
million in funding for post-production activities provided in FY2010.
The Coast Guard’s proposed FY2014 budget requests $616 million in acquisition funding for the
seventh NSC; it does not request any funding for long lead time materials (LLTM) for the eighth
NSC, which is scheduled to be procured in FY2015.
14
Source: Coast Guard information paper on NSC procurement costs provided to CRS on May 14, 2012.
The NSC design is 418 feet long and has a full load displacement of about 4,500 tons. The displacement of the NSC
design is about equal to that of Navy’s Oliver Hazard Perry (FFG-7) class frigates, which are 453 feet long and have a
full load displacement of about 4,200 tons.
16
U.S. Coast Guard description of the NSC, accessed April 26, 2013, at http://www.uscg.mil/acquisition/nsc/
features.asp.
15
Congressional Research Service
4
Coast Guard Cutter Procurement: Background and Issues for Congress
OPC Program
Offshore Patrol Cutters (Figure 2) are to be smaller, less expensive, and in some respects less
capable than NSCs. The Coast Guard’s POR calls for procuring 25 OPCs as replacements for the
service’s 29 medium-endurance cutters. Under the Coast Guard’s FY2013 five-year (FY2013FY2017) capital investment plan, the first OPC was to be procured in FY2017.
Figure 2. Offshore Patrol Cutter (Generic Conceptual Rendering)
Source: U.S. Coast Guard generic conceptual rendering accessed May 3, 2012, at http://www.uscg.mil/hq/cg9/
opc/default.asp.
The Coast Guard estimates the OPC program’s total acquisition cost at $12.101 billion, or an
average of about $484 million per ship. These figures reflect a revised OPC program baseline that
was approved in April 2012; they represent a 49% increase over the previous figures of $8.098
billion and $324 million, respectively.17 A September 2012 GAO report states that
The initial Deepwater baseline included an $8 billion estimate for the Offshore Patrol Cutter
program. However, program officials stated they did not have good data for how the lead
systems integrator for the Deepwater program generated the original estimate, and that the
current estimate approved by DHS in April 2012—with a threshold of approximately $12
billion—is higher likely because the original estimate was developed before the program
requirements were established. Program officials also cited delays in the program, and the
corresponding inflation associated with those delays, as additional reasons for the cost
increase. Even though the Coast Guard used the original 2007 Deepwater Baseline estimate
of $8 billion to characterize the expected cost of the program multiple times to Congress, it
17
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 13 (Figure 13).
Congressional Research Service
5
Coast Guard Cutter Procurement: Background and Issues for Congress
now characterizes the revised acquisition program baseline as the initial cost estimate for the
program.18
The Coast Guard’s Request for Proposal (RFP) for the program, released on September 25, 2012,
establishes an affordability requirement for the program of an average unit price of $310 million
per ship, or less, in then-year dollars (i.e., dollars that are not adjusted for inflation) for ships 4
through 9 in the program.19 This figure represents the shipbuilder’s portion of the total cost of the
ship; it does not include the cost of government-furnished equipment (GFE) on the ship,20 or
other program costs—such as those for program management, system integration, and logistics—
that contribute to the above-cited figure of $484 million per ship.21
The service states that OPCs
will complement the Coast Guard’s current and future fleet to extend the service’s
operational capabilities. The OPC will replace the service’s 210-foot and 270-foot Medium
Endurance Cutters. It will feature increased range and endurance, powerful weapons, a larger
flight deck, and improved command, control, communications, computers, intelligence,
surveillance and reconnaissance (C4ISR) equipment. The OPC will accommodate aircraft
and small boat operations in all weather.22
At least eight shipyards have expressed interest in the program.23 The Coast Guard’s acquisition
strategy for the first 9 to 11 ships in the program is as follows:
The OPC procurement shall implement a two-phase down select strategy. Phase I entails a
full and open competition for Preliminary and Contract Design (P&CD) awarded to a
maximum of three offerors. The Coast Guard intends to competitively award the Phase I
contract in Fiscal Year (FY) 2013. P&CD will culminate in a Contract Design Review
(KDR). After KDR, the three contractors will submit proposals which will result in a down
selection to one contractor to continue with Phase II.
18
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 15.
19
Source: Section C.5 of the RFP, accessed October 31, 2012, at http://www.uscg.mil/ACQUISITION/newsroom/
updates/opc092512.asp.
20
GFE is equipment that the government procures and then delivers to the shipyard for installation on the ship.
21
Source: Coast Guard emails to CRS dated June 25, 2013.
22
Coast Guard fact sheet on the OPC accessed April 26, 2013, at http://www.uscg.mil/acquisition/opc/pdf/opc.pdf.
23
The firms are General Dynamics Bath Iron Works (GD/BIW) of Bath, ME; Bollinger Shipyards of St. Rose, LA;
Eastern Shipbuilding Group of Panama City, FL; Huntington Ingalls Industries (HII) of Pascagoula, MS; Marinette
Marine Corporation of Marinette, WS; General Dynamics National Steel and Shipbuilding Company (GD/NASSCO)
of San Diego, CA; Vigor Shipyards of Seattle, WA; and VT Halter Marine of Pascagoula, MS. Source: U. S. Coast
Guard Offshore Patrol Cutter (OPC) List of Interested Contractors Updated July 2012, accessed online October 23,
2012, at http://www.uscg.mil/ACQUISITION/opc/pdf/companiesinterested.pdf; and Kevin Brancato and Anne
Laurent, Coast Guard’s $12 Billion Cutter Competition Spurs Eight Shipyards to Dive In, Bloomberg Government
Study, November 8, 2012, 6 pp. The Coast Guard document states that these firms “expressed interest in the Offshore
Patrol Cutter acquisition and have agreed to their names provided on the Coast Guard website.” The Bloomberg
Government Study states that “Marinette Marine, owned by Italian shipbuilder Fincantieri, may build its bid based on
its version of the Littoral Combat Ship for the U.S. Navy. Vigor Industrial will propose a derivative of a commercial
curved-hull design by Norwegian ship maker Ulstein. VT Halter will use Paris-based DCNS as design partner.” See
also Stew Magnuson, “New Coast Guard Cutter Sparks Fierce Competition Among Shipbuilders,” National Defense
(www.nationaldefensemagazine.org), April 2013, accessed March 26, 2013, at
http://www.nationaldefensemagazine.org/archive/2013/April/Pages/
NewCoastGuardCutterSparksFierceCompetitionAmongShipbuilders.aspx.
Congressional Research Service
6
Coast Guard Cutter Procurement: Background and Issues for Congress
(h) Phase II award is planned for FY.... Phase II’s down selection will be accomplished by
exercising one option with a single contractor for Detail Design (DD) with additional options
for Long Lead Time Materials, lead ship and eight to ten follow ships. DD will start after
option exercise and be complete upon delivery of the first ship. The contractor will present
the OPC design at the Initial Critical Design Reviews (ICDR) and Final Critical Design
Review (FCDR) followed by a Production Readiness Review (PRR). During Phase II
contract performance, the contractor will be encouraged to submit a fixed price proposal
(before construction begins on the Hull #6) for option Hulls #6 through #11 (LRIP 2). If the
priced effort is deemed fair and reasonable the contractor shall be eligible for Hulls #10 and
#11. If not, the contract will continue with the FPI structure and the contract will end with
Hull #9.24
The Coast Guard’s proposed FY2014 budget requests $25 million in acquisition funding for the
OPC program, to be used for technical and project management.
FRC Program
Fast Response Cutters (Figure 3), also called Sentinel (WPC-1101) class patrol boats, are
considerably smaller and less expensive than OPCs, but are larger than the Coast Guard’s older
patrol boats.25 The Coast Guard’s POR calls for procuring 58 FRCs as replacements for the
service’s 49 Island-class patrol boats.
The Coast Guard states that
The planned fleet of FRCs will conduct primarily the same missions as the 110’ patrol boats
being replaced. In addition, the FRC will have several increased capabilities enhancing
overall mission execution. The FRC is designed for rapid response, with approximately a 28
knot speed capability, and will typically operate in the coastal zones. Examples of missions
that FRCs will complete include SAR, Migrant Interdiction, Drug Interdiction and Ports
Waterways and Coastal Security.
FRCs will provide enhanced capabilities over the 110’s including improved C4ISR
capability and interoperability; stern launch and recovery (up through sea state 4) of a 40
knot, Over-the-Horizon, 7m cutter boat; a remote operated, gyro stabilized MK38 Mod 2,
25mm main gun; improved sea keeping; and enhanced crew habitability.26
The Coast Guard estimates the FRC program’s total acquisition cost at $4.243 billion, or an
average of about $73 million per boat.27 A total of 18 FRCs have been funded through FY2012.
The first entered service on April 14, 2012, and a total of six had been delivered as of May 18,
2013.
FRCs are currently built by Bollinger Shipyards of Lockport, LA. Bollinger’s contract with the
Coast Guard originally included options to build up to 34 FRCs, but some of the options were not
24
Source: Section C.1 of the RFP, accessed March 26, 2013, at http://www.uscg.mil/ACQUISITION/newsroom/
updates/opc092512.asp.
25
FRCs are 154 feet long and have a full load displacement of 353 tons.
26
Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional Justification, p. CGAC&I-28 (pdf page 182 of 400).
27
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 13 (Figure 13).
Congressional Research Service
7
Coast Guard Cutter Procurement: Background and Issues for Congress
fully exercised by the Coast Guard, so Bollinger’s contract can now cover up to 30 FRCs. The
builder of the remaining 28 planned FRCs has not yet been determined. The Coast Guard holds
the data rights for the Sentinel-class design and plans to hold a competition in 2015 for the
contract to build the remaining boats in the class.28
Figure 3. Fast Response Cutter
(With an older Island-class patrol boat behind)
Source: U.S. Coast Guard photo accessed May 4, 2012, at http://www.flickr.com/photos/coast_guard/
6871815460/sizes/l/in/set-72157629286167596/.
Table 2 summarizes acquisition funding for the first 18 FRCs.
Table 2. FRC Acquisition Funding, by Hull
Millions of then-year dollars, rounded to nearest million
28
Quantity
Hulls
Fiscal years funded
Total acquisition
funding (millions)
Average unit
cost (millions)
0
n/a
FY07 and prior years
$2
n/a
4
1 to 4
FY05, FY07, FY09
$267
$66.75
4
5 to 8
FY2010
$243
$60.75
4
9 to 12
FY2011
$240
$60.00
4a
13 to 16a
FY2012
$358b
$59.00b
Mike McCarthy, “House Markup Would Avoid Slipping USCG’s New Cutters,” Defense Daily, May 15, 2012: 3.
Congressional Research Service
8
Coast Guard Cutter Procurement: Background and Issues for Congress
Source: Coast Guard e-mail to CRS, December 9, 2011, and FY2013 Coast Guard budget submission.
a.
The FY2012 budget funded the procurement of six boats (numbers 13 through 18). The Coast Guard’s
FY2013 budget proposed deferring the procurement of boats 17 and 18 to FY2013, which would reduce
the FY2012 figure to 4 boats (hulls 13 to 16). Under this proposal, of the $358 million provided for the
program in FY2012, $95 million provided for boats 17 and 18 would be, in effect, transferred to FY2013.
b.
Includes $27 million for FRC reprocurement data and licensing package (RDLP) and $95 million to be used
for procuring two additional FRCs (numbers 17 and 18) in FY2013. These two sums are excluded from the
unit cost calculation.
The Coast Guard’s proposed FY2014 budget requests $75 million in acquisition funding for two
FRCs, associated contact line items, and project management costs.
NSC, OPC, and FRC Funding in FY2013 Five-Year Capital
Investment Plan
Table 3 shows annual acquisition funding for the NSC, OPC, and FRC programs in the Coast
Guard’s FY2013 and FY2014 Five Year Capital Investment Plans (CIPs).
Table 3. NSC, OPC, and FRC Funding in FY2013 and FY2014 Five-Year Capital
Investment Plans (CIPs)
(millions of then-year dollars)
FY2013
FY2014
FY2015
FY2016
FY2017
683a
0
0
0
0
616
710
38
0
+616
+710
+38
0
50
40
200b
530c
FY14 CIP
25
65
200
530
Difference (common years)
-25
+25
0
0
360
360
360
360
75
110
110
110
-285
-250
-250
-250
410
400
560
890
716
885
348
640
+306
+485
-212
-250
FY2018
NSC program
FY13 CIP
FY14 CIP
Difference (common years)
45
OPC program
FY13 CIP
30
430
FRC program
FY13 CIP
139d
FY14 CIP
Difference (common years)
110
Total
FY13 CIP
FY14 CIP
Difference (common years)
852
585
Source: FY2013 CIP, as shown in Department of Homeland Security, United States Coast Guard, Fiscal Year 2013
Congressional Justification, p. CG-AC&I-12 (pdf page 166 of 400); and FY2014 CIP, accessed May 13, 2013, at
http://www.uscg.mil/posturestatement/docs/USCG_Capital%20Investment%20Plan_FY14-18.pdf.
a.
Includes $658 million to complete acquisition funding for the sixth NSC, and $25 million in post-production
activities for the fourth NSC.
Congressional Research Service
9
Coast Guard Cutter Procurement: Background and Issues for Congress
b.
Includes funding for detailed design and long-lead time materials for the first OPC.
c.
Includes funding to complete the acquisition cost of the first OPC.
d.
The Coast Guard’s FY2013 budget proposes to shift an additional $95 million in FY2012 funding to FY2013,
resulting in a total of $234 million available to the FRC program in FY2013.
Issues for Congress
Impact of March 1, 2013, Sequester on FY2013 Funding
One issue for Congress concerns the impact on NSC, OPC, and FRC programs of the March 1,
2013, sequester on FY2013 funding, particularly in terms of the Coast Guard’s ability to execute
construction work on the sixth NSC and the FRCs that were funded in FY2013.
Potential Impact of Possible Late 2013/Early 2014 Sequester on
FY2014 Funding
Another potential issue for Congress concerns the potential impact on the NSC, OPC, and FRC
programs of a possible sequester on FY2014 funding that might occur in late 2013 or early 2014
under the terms of the Budget Control Act of 2011 (S. 365/P.L. 112-25 of August 2, 2011).
Adequacy of Planned NSC, OPC, and FRC Procurement Quantities
Another oversight issue for Congress concerns the adequacy of the Coast Guard’s planned NSC,
OPC, and FRC procurement quantities. The POR’s planned force of 91 NSCs, OPCs, and FRCs is
about equal in number to the Coast Guard’s legacy force of 90 high-endurance cutters, mediumendurance cutters, and 110-foot patrol craft. NSCs, OPCs, and FRCs, moreover, are to be
individually more capable than the older ships they are to replace. Even so, Coast Guard studies
have concluded that the planned total of 91 NSCs, OPCs, and FRCs would be considerably fewer
ships than the number that would be needed to fully perform the service’s statutory missions in
coming years, in part because Coast Guard mission demands are expected to be greater in coming
years than they were in the past. CRS first testified about this issue in 2005.29
The Coast Guard estimates that with the POR’s planned force of 91 NSCs, OPCs, and FRCs, the
service would have capability or capacity gaps30 in 6 of its 11 statutory missions—search and
rescue (SAR); defense readiness; counter-drug operations; ports, waterways, and coastal security
(PWCS); protection of living marine resources (LMR); and alien migrant interdiction operations
(AMIO). The Coast Guard judges that some of these gaps would be “high risk” or “very high
risk.”
29
See Statement of Ronald O’Rourke, Specialist in National Defense, Congressional Research Service, Before the
Senate Commerce, Science, and Transportation Committee, Subcommittee on Fisheries and the Coast Guard, Hearing
on The Coast Guard’s Revised Deepwater Implementation Plan, June 21, 2005, pp. 1-5.
30
The Coast Guard uses capability as a qualitative term, to refer to the kinds of missions that can be performed, and
capacity as a quantitative term, to refer to how much (i.e., to what scale or volume) a mission can be performed.
Congressional Research Service
10
Coast Guard Cutter Procurement: Background and Issues for Congress
Public discussions of the POR frequently mention the substantial improvement that the POR
force would represent over the legacy force. Only rarely, however, have these discussions
explicitly acknowledged the extent to which the POR force would nevertheless be smaller in
number than the force that would be required, by Coast Guard estimate, to fully perform the
Coast Guard’s statutory missions in coming years. Discussions that focus on the POR’s
improvement over the legacy force while omitting mention of the considerably larger number of
cutters that would be required, by Coast Guard estimate, to fully perform the Coast Guard’s
statutory missions in coming years could encourage audiences to conclude, contrary to Coast
Guard estimates, that the POR’s planned force of 91 cutters would be capable of fully performing
the Coast Guard’s statutory missions in coming years.
In a study completed in December 2009 called the Fleet Mix Analysis (FMA) Phase 1, the Coast
Guard calculated the size of the force that in its view would be needed to fully perform the
service’s statutory missions in coming years. The study refers to this larger force as the objective
fleet mix. Table 4 compares planned numbers of NSCs, OPCs, and FRCs in the POR to those in
the objective fleet mix.
Table 4. Program of Record Compared to Objective Fleet Mix
From Fleet Mix Analysis Phase 1 (2009)
Ship type
Program of
Record (POR)
Objective Fleet Mix
compared to POR
Objective
Fleet Mix
From FMA
Phase 1
Number
%
NSC
8
9
+1
+13%
OPC
25
57
+32
+128%
FRC
58
91
+33
+57%
Total
91
157
+66
+73%
Source: Fleet Mix Analysis Phase 1, Executive Summary, Table ES-8 on page ES-13.
As can be seen in Table 4, the objective fleet mix includes 66 additional cutters, or about 73%
more cutters than in the POR. Stated the other way around, the POR includes about 58% as many
cutters as the objective fleet mix.
As intermediate steps between the POR force and the objective fleet mix, FMA Phase 1
calculated three additional forces, called FMA-1, FMA-2, and FMA-3. (The objective fleet mix
was then relabeled FMA-4.) Table 5 compares the POR to FMAs 1 through 4.
Congressional Research Service
11
Coast Guard Cutter Procurement: Background and Issues for Congress
Table 5. POR Compared to FMAs 1 Through 4
From Fleet Mix Analysis Phase 1 (2009)
Ship type
Program of
Record
(POR)
FMA-1
FMA-2
FMA-3
FMA-4
(Objective
Fleet Mix)
NSC
8
9
9
9
9
OPC
25
32
43
50
57
FRC
58
63
75
80
91
Total
91
104
127
139
157
Source: Fleet Mix Analysis Phase 1, Executive Summary, Table ES-8 on page ES-13.
FMA-1 was calculated to address the mission gaps that the Coast Guard judged to be “very high
risk.” FMA-2 was calculated to address both those gaps and additional gaps that the Coast Guard
judged to be “high risk.” FMA-3 was calculated to address all those gaps, plus gaps that the Coast
Guard judged to be “medium risk.” FMA-4—the objective fleet mix—was calculated to address
all the foregoing gaps, plus the remaining gaps, which the Coast Guard judge to be “low risk” or
“very low risk.” Table 6 shows the POR and FMAs 1 through 4 in terms of their mission
performance gaps.
Table 6. Force Mixes and Mission Performance Gaps
From Fleet Mix Analysis Phase 1 (2009)—an X mark indicates a mission performance gap
Risk levels of
these
performance
gaps
Program
of
Record
(POR)
Search and Rescue (SAR)
capability
Very high
X
Defense Readiness capacity
Very high
X
Counter Drug capacity
Very high
X
Ports, Waterways, and Coastal
Security (PWCS) capacitya
High
X
X
Living Marine Resources (LMR)
capability and capacitya
High
X
X
PWCS capacityb
Medium
X
X
X
LMR capacityc
Medium
X
X
X
Alien Migrant Interdiction
Operations (AMIO) capacityd
Low/very low
X
X
X
X
PWCS capacitye
Low/very low
X
X
X
X
Missions with performance
gaps
FMA-1
FMA-2
FMA-3
FMA-4
(Objective
Fleet Mix)
[all gaps
addressed]
Source: Fleet Mix Analysis Phase 1, Executive Summary, page ES-11 through ES-13.
Notes: In the first column, The Coast Guard uses capability as a qualitative term, to refer to the kinds of
missions that can be performed, and capacity as a quantitative term, to refer to how much (i.e., to what scale or
volume) a mission can be performed.
a.
This gap occurs in the Southeast operating area (Coast Guard Districts 7 and 8) and the Western operating
area (Districts 11, 13, and 14).
Congressional Research Service
12
Coast Guard Cutter Procurement: Background and Issues for Congress
b.
This gap occurs in Alaska.
c.
This gap occurs in Alaska and in the Northeast operating area (Districts 1 and 5).
d.
This gap occurs in the Southeast and Western operating areas.
e.
This gap occurs in the Northeast operating area.
Figure 4, taken from FMA Phase 1, depicts the overall mission capability/performance gap
situation in graphic form. It appears to be conceptual rather than drawn to precise scale. The black
line descending toward 0 by the year 2027 shows the declining capability and performance of the
Coast Guard’s legacy assets as they gradually age out of the force. The purple line branching up
from the black line shows the added capability from ships and aircraft to be procured under the
POR, including the 91 planned NSCs, OPCs, and FRCs. The level of capability to be provided
when the POR force is fully in place is the green line, labeled “2005 Mission Needs Statement.”
As can be seen in the graph, this level of capability is substantially below a projection of Coast
Guard mission demands made after the terrorist attacks of September 11, 2001 (the red line,
labeled “Post-9/11 CG Mission Demands”), and even further below a Coast Guard projection of
future mission demands (the top dashed line, labeled “Future Mission Demands”). The dashed
blue lines show future capability levels that would result from reducing planned procurement
quantities in the POR or executing the POR over a longer time period than originally planned.
Figure 4. Projected Mission Demands vs. Projected Capability/Performance
From Fleet Mix Analysis Phase 1, Executive Summary
Source: Fleet Mix Analysis Phase 1, Executive Summary, Figure ES-1 on p. ES-2.
FMA Phase 1 was a fiscally unconstrained study, meaning that the larger force mixes shown in
Table 5 were calculated primarily on the basis of their capability for performing missions, rather
than their potential acquisition or life-cycle operation and support (O&S) costs.
Although the FMA Phase 1 was completed in December 2009, the figures shown in Table 5 were
generally not included in public discussions of the Coast Guard’s future force structure needs
Congressional Research Service
13
Coast Guard Cutter Procurement: Background and Issues for Congress
until April 2011, when GAO presented them in testimony.31 GAO again presented them in a July
2011 report.32
The Coast Guard completed a follow-on study, called Fleet Mix Analysis (FMA) Phase 2, in May
2011. Among other things, FMA Phase 2 includes a revised and updated objective fleet mix called
the refined objective mix. Table 7 compares the POR to the objective fleet mix from FMA Phase
1 and the refined objective mix from FMA Phase 2.
Table 7. POR Compared to Objective Mixes in FMA Phases 1 and 2
From Fleet Mix Analysis Phase 1 (2009) and Phase 2 (2011)
Ship type
Program of
Record
(POR)
Objective
Fleet Mix
from FMA
Phase 1
Refined
Objective
Mix from
FMA Phase 2
NSC
8
9
9
OPC
25
57
49
FRC
58
91
91
Total
91
157
149
Source: Fleet Mix Analysis Phase 1, Executive Summary, Table ES-8 on page ES-13, and Fleet Mix Analysis Phase
2, Table ES-2 on p. iv.
As can be seen in Table 7, compared to the objective fleet mix from FMA Phase 1, the refined
objective mix from FMA Phase 2 includes 49 OPCs rather than 57. The refined objective mix
includes 58 additional cutters, or about 64% more cutters than in the POR. Stated the other way
around, the POR includes about 61% as many cutters as the refined objective mix.
Compared to the POR, the larger force mixes shown in Table 5 and Table 7 would be more
expensive to procure, operate, and support than the POR force. Using the average NSC, OPC, and
FRC procurement cost figures presented earlier (see “Background”), procuring the 58 additional
cutters in the Refined Objective Mix from FMA Phase 2 might cost an additional $10.7 billion, of
which most (about $7.8 billion) would be for the 24 additional FRCs. (The actual cost would
depend on numerous factors, such as annual procurement rates.) O&S costs for these 58
additional cutters over their life cycles (including crew costs and periodic ship maintenance costs)
would require billions of additional dollars.33
The larger force mixes in the FMA Phase 1 and 2 studies, moreover, include not only increased
numbers of cutters, but also increased numbers of Coast Guard aircraft. In the FMA Phase 1
study, for example, the objective fleet mix included 479 aircraft—93% more than the 248 aircraft
31
Government Accountability Office, Coast Guard[:]Observations on Acquisition Management and Efforts to
Reassess the Deepwater Program, Testimony Before the Subcommittee on Coast Guard and Maritime Transportation,
Committee on Transportation and Infrastructure, House of Representatives, Statement of John P. Hutton, Director
Acquisition and Sourcing Management, GAO-11-535T, April 13, 2011, p. 10.
32
Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater Program Remains
Unachievable, GAO-11-743, July 2011, p. 46.
33
The FMA Phase 1 and Phase 2 studies present acquisition and life-cycle ownership cost calculations for force mixes
that include not only larger numbers of NSC, OPCs, and FRCs, but corresponding larger numbers of Coast Guard
aircraft.
Congressional Research Service
14
Coast Guard Cutter Procurement: Background and Issues for Congress
in the POR mix. A decision to procure larger numbers of cutters like those shown in Table 5 and
Table 7 might thus also imply a decision to procure, operate, and support larger numbers of Coast
Guard aircraft, which would require billions of additional dollars. The FMA Phase 1 study
estimated the procurement cost of the objective fleet mix of 157 cutters and 479 aircraft at $61
billion to $67 billion in constant FY2009 dollars, or about 66% more than the procurement cost of
$37 billion to $40 billion in constant FY2009 dollars estimated for the POR mix of 91 cutters and
248 aircraft. The study estimated the total ownership cost (i.e., procurement plus life-cycle O&S
cost) of the objective fleet mix of cutters and aircraft at $201 billion to $208 billion in constant
FY2009 dollars, or about 53% more than the total ownership cost of $132 billion to $136 billion
in constant FY2009 dollars estimated for POR mix of cutters and aircraft.34
The POR was originally defined in 2004 as the optimal mix of assets that could be acquired for a
total estimated acquisition cost of about $24 billion, and the $24 billion figure is often referenced
as a baseline in discussing Coast Guard plans for acquiring new deepwater-capable ships and
aircraft. GAO’s July 2011 report, for example, notes that the total estimated acquisition cost of
the POR has grown to as much as $29.3 billion, or about $5 billion more than the original
estimate of $24.2 billion, and that there could be additional cost growth beyond that figure.35
GAO has expressed strong doubts, given growth in the estimated acquisition cost of the POR and
the amounts of acquisition funding that the Coast Guard has received in recent years, about the
Coast Guard’s ability to afford the POR, let alone any larger force mix, and has recommended in
its July 2011 report and subsequent work that the Coast Guard instead examine force mixes that
are smaller than the POR.36 Force mixes that are smaller than the POR might lead to overall
capability levels similar to those shown by the dashed blue lines in Figure 4, and mission
performance gaps that are greater in magnitude than those indicated for the POR force in Table 6.
At a March 7, 2012, hearing before the Oceans, Atmosphere, Fisheries, and Coast Guard
subcommittees of the Senate Commerce, Science, and Transportation Committee, Admiral Robert
J. Papp, the Commandant of the Coast Guard, in commenting on GAO’s July 2011 report, stated
in part:
And I think part of the GAO report as I read it was also saying maybe we need to recalculate
getting fewer ships or whatever else. But what I don’t have is people taking—giving us
fewer missions. Our missions continue to increase so I remain committed to the original
baseline of the eight national security cutters, the 25 OPCs and others [other systems] as they
are in the projects [sic: POR?].37
Similarly, in commenting on a draft version of a September 2012 GAO report, the Coast Guard
stated in part:
34
Fleet Mix Analysis Phase 1, Executive Summary, Table ES-11 on page ES-19, and Table ES-10 on page ES-18. The
life-cycle O&S cost was calculated through 2050.
35
Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater Program Remains
Unachievable, GAO-11-743, July 2011, summary page.
36
See, for example, Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater
Program Remains Unachievable, GAO-11-743, July 2011, p. 46; and Government Accountability Office, Observations
on the Coast Guard’s and the Department of Homeland Security’s Fleet Studies, GAO-12-751R, May 31, 2012.
37
Source: Transcript of hearing.
Congressional Research Service
15
Coast Guard Cutter Procurement: Background and Issues for Congress
The assets required to meet Coast Guard statutorily required missions do not change on the
basis of budgetary constraints. While changes in the fiscal environment may impact the rate
and efficiency at which the Coast Guard can acquire new cutters, aircraft, boats and C4ISR
systems to replace aging and failing equipment, it does not reduce or otherwise change the
needs of the Service.38
The September 2012 GAO report refers multiple times to a need for the Coast Guard, in
managing its acquisition programs, to work within “realistic fiscal constraints” and “expected
funding levels,” which the report appears to define as an amount of acquisition funding level
similar to the Coast Guard’s FY2013 request and to the amounts that the Coast Guard received in
the five years prior to FY2013.39 Although the annual amounts of acquisition funding that the
Coast Guard has received in recent years are one potential guide to what Coast Guard acquisition
funding levels might or should be in coming years, there may be other potential guides. For
example, one could envision potential guides that focus on whether Coast Guard funding for ship
acquisition and sustainment is commensurate with Coast Guard funding for the personnel that in
many cases will operate the ships. Observations that might be made in connection with this
example include the following:
•
The Coast Guard has about 12.9% as many active-duty personnel as the Navy.40
If the amount of funding for surface ship acquisition and sustainment in the Coast
Guard’s budget were equivalent to 12.9% of the amount of funding in the Navy’s
shipbuilding account, it would be about $1.8 billion per year, or about 142%
more than the $743.0 million that the Coast Guard is requesting for FY2014 for
surface ship acquisition and sustainment programs.41
•
Funding in the Navy’s shipbuilding account is equivalent to about 51% of the
Navy’s funding for active-duty personnel.42 If Coast Guard funding for surface
ship acquisition and sustainment were equivalent to 51% of Coast Guard funding
for military pay and allowances, it would be about $1.7 billion per year.43
It is not clear whether either of the two above observations would be appropriate as guides for
determining appropriate levels of funding for Coast Guard surface ship acquisition and
sustainment in coming years, or more appropriate than other guides. But it might also be argued
that it is not clear that recent Coast Guard acquisition funding levels are the sole or most
appropriate guide for determining appropriate levels of such funding in coming years, particularly
since the Coast Guard has entered a period where it is seeking to replace multiple classes of
38
Letter dated September 13, 2012, from Jim H. Crumpacker, Director, [DHS] Departmental GAO-OIG Liaison
Office, to John P. Hutton, Director, Acquisition Sourcing Management, U.S. Government Accountability Office, as
reprinted in Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve
Major Acquisition Outcomes, GAO-12-918, September 2012, p. 53.
39
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 22-23, including Figure 7 on p. 23.
40
The Coast Guard for FY2014 appears to be requesting an active-duty end strength—the number of active-duty
military personnel—of 41,594 (measured by the Coast Guard in full-time equivalent [FTE] positions); the Navy for
FY2014 is requesting an active-duty end strength of 323,600.
41
The Navy’s proposed FY2014 budget requests $14,078 million for the Shipbuilding and Conversion, Navy (SCN)
appropriation account.
42
The Navy’s proposed FY2014 budget requests $27,824 million for the Military Personnel, Navy (MPN)
appropriation account.
43
The Coast Guard’s proposed FY2014 budget requests $3,425.3 million for military pay and allowances.
Congressional Research Service
16
Coast Guard Cutter Procurement: Background and Issues for Congress
assets. Although prior-year funding levels are often used in federal budgeting to determine what
might be a realistic funding level for a program area for coming years, it might also be argued
that a sole reliance on such a standard could short-circuit the policymaking process and limit
options available to congressional (and executive branch) policymakers by in effect ruling out the
option of deciding, as a matter of policy, that a program area is a high-enough priority that
funding for it should be increased above prior-year levels, even while overall federal funding
remains constrained. Supporters of this perspective might argue that what constitutes a realistic
level of funding in coming years for a given program area is a policy question for congressional
(and executive branch) policymakers to decide, and that an unvarying approach of basing futureyear funding for various program areas on their prior-year funding levels would hamper the
ability of the congressional (and executive branch) policymakers to alter the composition of the
federal budget over time to meet changing federal needs.
At an October 4, 2011, hearing on the Coast Guard’s major acquisition programs before the Coast
Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure
Committee, the following exchange occurred:
REPRESENATIVE FRANK LOBIONDO:
Can you give us your take on what percentage of value must be invested each year to
maintain current levels of effort and to allow the Coast Guard to fully carry out its missions?
ADMIRAL ROBERT J. PAPP, COMMANDANT OF THE COAST GUARD:
I think I can, Mr. Chairman. Actually, in discussions and looking at our budget—and I’ll
give you rough numbers here, what we do now is we have to live within the constraints that
we’ve been averaging about $1.4 billion in acquisition money each year.
If you look at our complete portfolio, the things that we’d like to do, when you look at the
shore infrastructure that needs to be taken care of, when you look at renovating our smaller
icebreakers and other ships and aircraft that we have, we’ve done some rough estimates that
it would really take close to about $2.5 billion a year, if we were to do all the things that we
would like to do to sustain our capital plant.
So I’m just like any other head of any other agency here, as that the end of the day, we’re
given a top line and we have to make choices and tradeoffs and basically, my tradeoffs boil
down to sustaining frontline operations balancing that, we’re trying to recapitalize the Coast
Guard and there’s where the break is and where we have to define our spending.44
An April 18, 2012, blog entry stated:
If the Coast Guard capital expenditure budget remains unchanged at less than $1.5 billion
annually in the coming years, it will result in a service in possession of only 70 percent of the
assets it possesses today, said Coast Guard Rear Adm. Mark Butt.
Butt, who spoke April 17 [2012] at [a] panel [discussion] during the Navy League Sea Air
Space conference in National Harbor, Md., echoed Coast Guard Commandant Robert Papp
in stating that the service really needs around $2.5 billion annually for procurement.45
44
Source: Transcript of hearing.
David Perera, “The Coast Guard Is Shrinking,” FierceHomelandSecurity.com, April 18, 2012, accessed July 20,
(continued...)
45
Congressional Research Service
17
Coast Guard Cutter Procurement: Background and Issues for Congress
At a May 9, 2012, hearing on the Coast Guard’s proposed FY2013 budget before the Homeland
Security subcommittee of the Senate Appropriations Committee, Admiral Papp testified, “I’ve
gone on record saying that I think the Coast Guard needs closer to $2 billion dollars a year [in
acquisition funding] to recapitalize—[to] do proper recapitalization.”46
Potential oversight questions for Congress include the following:
•
Under the POR force mix, how large a performance gap, precisely, would there
be in each of the missions shown in Table 6? What impact would these
performance gaps have on public safety, national security, and protection of
living marine resources?
•
How sensitive are these performance gaps to the way in which the Coast Guard
translates its statutory missions into more precise statements of required mission
performance?
•
Given the performance gaps shown in Table 6, should planned numbers of Coast
Guard cutters and aircraft be increased, or the Coast Guard’s statutory missions
reduced, or both?
•
How much larger would the performance gaps in Table 6 be if planned numbers
of Coast Guard cutters and aircraft are reduced below the POR figures?
•
Has the executive branch made sufficiently clear to Congress the difference
between the number of ships and aircraft in the POR force and the number that
would be needed to fully perform the Coast Guard’s statutory missions in coming
years? Why has public discussion of the POR focused mostly on the capability
improvement it would produce over the legacy force, and rarely on the
performance gaps it would have in the missions shown in Table 6?
•
Why was the POR designed to fit within an originally estimated acquisition cost
of about $24 billion? What analysis led to the selection of $24 billion as the
appropriate total acquisition cost target for the POR?
•
Are recent Coast Guard acquisition funding levels the sole or most appropriate
guide in determining future Coast Guard acquisition funding levels? If recent
Coast Guard acquisition funding levels are used as a guide in setting future Coast
Guard acquisition funding levels, how would that affect Coast Guard ship and
(...continued)
2012, at http://www.fiercehomelandsecurity.com/story/coast-guard-shrinking/2012-04-18.
46
Source: transcript of hearing. Papp may have been referring to remarks he made to the press before giving his annual
state of the Coast Guard speech on February 23, 2012, in which reportedly stated that the Coast Guard would require
about $2 billion per year in acquisition funding to fully replace its current assets. (See Adam Benson, “Coast Guard
Cutbacks Will Cost 1,000 Jobs,” Norwich Bulletin, February 23, 2012, accessed May 31, 2012, at
http://www.norwichbulletin.com/news/x1138492141/Coast-Guard-cutbacks-will-cost-1-000-jobs#axzz1wSDAFCzX.
See also “Coast Guard Leader Calls For More Ships,” MilitaryFeed.com, February 24, 2012, accessed May 31, 2012, at
http://militaryfeed.com/coast-guard-leader-calls-for-more-ships-5/; Associated Press, “Coast Guard Commandant Calls
for New Ships,” TheLog.com, March 10, 2012, accessed May 31, 2012, at http://www.thelog.com/SNW/Article/CoastGuard-Commandant-Calls-for-New-Ships-to-Replace-Aging-Fleet; Mickey McCarter, “Congress Poised to Give Coast
Guard More Money Than Requested for FY 2013,” HSToday.us, May 10, 2012, accessed May 31, 2012, at
http://www.hstoday.us/focused-topics/customs-immigration/single-article-page/congress-poised-to-give-coast-guardmore-money-than-requested-for-fy-2013.html.)
Congressional Research Service
18
Coast Guard Cutter Procurement: Background and Issues for Congress
aircraft force levels, and consequently Coast Guard mission capability and
capacity, over the long run?
NSC Program: No Funding Requested in FY2014 for Long Lead
Time Materials (LLTM) for Eighth Ship
Another potential oversight issue for Congress is the lack of a request in the Coast Guard’s
proposed FY2014 budget for acquisition funding for long lead time materials (LLTM) to support
the procurement of an eighth NSC in FY2015. Providing this funding—which might amount to
about $77 million, based on the amount of LLTM funding provided in FY2012 for NSC 6—
would improve the construction sequence for NSC 8 and thereby reduce its total acquisition cost
by $30 million to $35 million, the Coast Guard estimates.47
At an April 16, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the
Homeland Security subcommittee of the House Appropriations Committee, the following
exchange occurred:
REPRESENTATIVE DAVID PRICE: Thank you. I‘m certainly not inclined to question
your commitment to the National Security Cutter number seven and giving that priority. Are
we mistaken though to see the omission of the long lead time materials [for the eighth NSC]
as a—as a setback or at least a—a—an omission that—that really is going to—if not throw
number eight into doubt, at least greatly increases the [ship’s] cost and the delay the
timeframe [for building it].
ADMIRAL ROBERT PAPP, COMMANDANT OF THE COAST GUARD: Now, there’s no
doubt that the omission of long lead money for number eight will increase the [ship’s] cost.
We had the same discussion last year and I was very grateful that the Subcommittee put in
the long lead money for number seven. It helped us out greatly. It kept the project going. It’s
predictability for the shipyard and enables them to give us a better prices we negotiate [sic].
And we have negotiated some very good prices on number six and I know we will on
number seven. So it’s a disappointment to me that we‘re unable to put the long lead for
number eight in there but it’s just one of those tough decisions I had to make based upon
priorities on other projects that we have ongoing.48
Similarly, at an April 16, 2013, hearing before the Coast Guard and Maritime Transportation
subcommittee of the House Transportation and Infrastructure Committee on the FY2014 budget
for the Coast Guard and maritime transportation, Admiral Papp testified:
So I'm grateful for the fact that we now have the money for National Security Cutter number
seven in the budget. But that was helped quite frankly last year by both the House and the
Senate, providing long lead money for number seven. Getting long lead money in the
construction of the National Security Cutter saves us money in the long run, gives the
shipyard predictability so they can—they can plan out economically and helps us in our
negotiating position when we—when we work towards the contract on the next cutter.49
47
Source: Coast Guard briefing to CRS, June 14, 2013.
Transcript of hearing.
49
Transcript of hearing.
48
Congressional Research Service
19
Coast Guard Cutter Procurement: Background and Issues for Congress
Similarly, at a May 14, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the
Homeland Security subcommittee of the Senate Appropriations Committee, Admiral Papp
testified:
The—the wisdom of having [funding for] long lead materials is demonstrated though [the
budget request for] this year. We had long lead materials for [NSC number] seven. In the
F.Y. ‘12 budget, we were able to take that $30 million in cost avoidance and we actually
worked that into our computations when we produced the ‘14 budget and the—and the level
that we asked for to do the construction on number seven.
So, that—that validation that long lead materials works, but I will take the money for the
ship [i.e., NSC number eight] whatever way I can get it, and, right now, it’s—it’s with the
full funding in next year’s budget [i.e., FY2015].50
FRC Program: FY2014 Request for Two (Rather than Six) Ships
Another potential oversight issue for Congress concerns the Coast Guard’s FY2014 request for
acquisition funding for two (rather than six) FRCs. At an April 16, 2013, hearing before the Coast
Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure
Committee on the FY2014 budget for the Coast Guard and maritime transportation, Admiral
Robert Papp, the Commandant of the Coast Guard, stated the following when asked where the
Coast Guard would apply any additional acquisition funding, above the Coast Guard’s FY2014
request, that Congress might make available:
Well, I'd be happy to address at least a large portion of that, sir. You know, first of all, last
year when we sign up the capital improvement plan, there was no National Security Cutter
number seven in it for the ‘14 budget, none for National Security Cutter number eight in a
subsequent budget....
After that, of course, the Fast Response Cutter. The shipyard is set up to construct six or
receive orders for six Fast Response Cutters a year. We only had money for to the last year.
We're grateful for the Congress, put money for four more so that we are potentially able to
order six in fiscal year ‘13. But as the stance now, I only have enough money left within our
(inaudible) accounts to offer up two.
Next dollars I would spend would be on the Fast Response Cutter because ordering two per
year, first of all is below the minimum quantity. We have to renegotiate the contract, which
ultimately ends up in higher cost, building them in a slower rate and stretches out that
program probably over the course of about 15 years at a much higher cost as our current
patrol boat fleet is failing us rapidly and we're not getting the number of hours we need on
them.
So continuing the construction on the National Security Cutter and the Fast Response Cutters
are my next highest priority.51
Similarly, at an April 16, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the
Homeland Security subcommittee of the House Appropriations Committee, the following
exchange occurred:
50
51
Transcript of hearing.
Transcript of hearing.
Congressional Research Service
20
Coast Guard Cutter Procurement: Background and Issues for Congress
REPRESENTATIVE JOHN CARTER (continuing): Let me ask a couple of questions about
the Fast Response Cutter. Your FY ‘14 budget request includes just two Fast Response
Cutters even though Congress denied the same short sighted—sort of short sighted proposal
last year. We bailed out the flawed request and fully funded all six cutters. I guess that’s
maybe what some others anticipating they want us to do this year.
As I understand it, by only requesting two cutters, you're squandering up to 30 million
[dollars] in savings per year when compared to the procurement of six per year. Can you
explain why you made this decision and you have to some extent already and do you plan to
increase the procurement in our out-years so that we do not continue to squander savings and
delay capability.
The current requirements to patrol boat hours is 174,000 per year, but this budget supports
less than half that requirement. Will we ever close the capability gap from what is funded to
what is required for patrol boat hours, also what areas are most impacted by these gaps?
ADMIRAL PAPP: Sir, I'd like to be maximizing our production of the Fast Response Cutter,
I understand fully and I agree and I agree that it costs more when we don't order an economic
order quantities.
Where our contract calls for a minimum order of four, maximum order of six, the shipyard is
geared up to do six a year. They—they have to have some sort of consistency and
predictability in terms of their production rate. But once again, this was one of those tough
decisions that I face in the current fiscal environment putting in as many as I can while trying
to keep other projects going and being focused on my highest priority.
Fast Response Cutter is one of my highest priorities. Now [sic: National] Security Cutter is
my highest priority, so starting with that, I was only able to fit two Fast Response Cutters in.
That gives us two options. We could renegotiate the contract to change the minimum order to
two and as you recognized that ends up being a more expensive proposition.
In analyzing the FY ‘13 appropriation and the multi-year nature of the funding for those six,
I believe we can spread out evenly an order of four in FY ‘13 and order—and take two of the
funding for two and move that into FY ‘14 and do four per year. That’s my second option at
this point.52
Later in the hearing, when asked where the Coast Guard would apply would apply any additional
acquisition funding, above the Coast Guard’s FY2014 request, that Congress might make
available, Admiral Papp replied:
Well, Sir, clearly, if there were additional funds, the first thing I would them to is the Fast
Response Cutter. We absolutely need that boat. We—I acknowledge the patrol boat hour gap
but the the hour gap is sort of species argument in my estimation because we assign so many
hours per the number of hulls that we have out there. Frankly, some of those hulls
particularly on the Island class are not able to do all the hours that they are supposed to do.
In fact, we have one [Island class] boat right now, the Chinkatig (ph) [sic: Chincoteague],
which is laid up. It is—the hull is so deformed, we can't operate the ship. It would cost $3
million to get the ship back in condition so it could operate and that’s just not money that’s
wisely spent. Yet, we've been unable to decommission any of the older patrol boats simply
52
Transcript of hearing.
Congressional Research Service
21
Coast Guard Cutter Procurement: Background and Issues for Congress
because we're trying to keep our numbers which then feed sort of—an artificial—artificial
level of patrol boat hours that are out there.
What we really need are the hulls. And ultimately, we need to get all 58 of those fast
response cutters built, not only because they performed the patrol boat mission but because
they're also more capable ship. They interface with the Offshore Patrol Cutter which is our
next big project and the National Security Cutter which ultimately give us fewer large ships
in the offshore environment. But hopefully with a little bit more capability from these patrol
boats, we'd be able to eliminate that gap.53
Similarly, at a May 14, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the
Homeland Security subcommittee of the Senate Appropriations Committee, Admiral Papp
testified:
The first option is to award those six [FRCs] in F.Y. ‘13, which was our original intent, and
then renegotiate with the shipyard to see if we can go to a minimal order—[a] quantity of
two for F.Y. ‘14.
We're at that point now where we can renegotiate. The fact of the matter is that renegotiating
to build only two a year will increase the price. Our—our estimate [of the increase] is
probably anywhere between $10 million and $20 million per ship. More when we go down
to only two. Plus—plus it pushes out the replacement program to 18 years to get all those
boats built. We'll be having to put the first one through a mid-life renovation before the last
one is constructed.
So that’s just the realities of what we're confronted with.
The other—the other option is to try and balance out [the procurement rate at] four [FRCs]
per year [in FY2013 and FY2014] and I understand that’s a little unfair to the ship builder,
because they gear up, they bring people on board, they invest in their infrastructure based
upon the—the prediction of six per year. And, as—as I've said in the past, we think if we
build six a year our estimate is we get at least $30 million in cost avoidance.
I—I wanted to make sure that I was very clear and understood that, and I've had my people
go back and take a look [as the estimated cost avoidance at a procurement rate of six per
year]. I really think it’s more than $30 million a year, but we start getting into competition
sensitive information and things like that when we get any more detailed than that, but it’s
clear that when you use the economic order quantity, you will get those savings.54
FRC Program: Delays, Cost Growth, and Testing
Another potential oversight issue for Congress concerns delays, cost growth, and testing issues in
the FRC program. A March 2012 report on the FRC program by Office of the Inspector General
(OIG) of the Department of Homeland Security (DHS—the parent department of the Coast
Guard) stated:
The Coast Guard’s oversight of the Fast Response Cutter acquisition has helped ensure that
the provisions of the contract reflect the Coast Guard’s operational requirements and that the
53
54
Transcript of hearing.
Transcript of hearing.
Congressional Research Service
22
Coast Guard Cutter Procurement: Background and Issues for Congress
contractor is meeting the contract’s provisions. However, the Coast Guard has executed an
aggressive, schedule-driven strategy that allowed construction of the Fast Response Cutters
to start before operational, design, and technical risks were resolved. Consequently, six
cutters under construction required rework that resulted in at least 270 days of schedule
delays for each cutter and a total cost increase of $6.9 million for the acquisition. This
aggressive acquisition strategy also allowed the Coast Guard to procure 12 Fast Response
Cutters before testing the lead cutter in actual operations. It is uncertain whether the Fast
Response Cutter will perform as intended until it completes operational test and evaluation in
actual maritime environments.
If operational test and evaluation on the lead Fast Response Cutter reveals deficiencies, the
Fast Response Cutters may incur additional costly rework and delays, or the Coast Guard
may have to accept Fast Response Cutters that do not fully meet its mission requirements.
This may hinder the Coast Guard’s ability to fill the critical shortages in its patrol boat
fleet.55
The report also stated:
Recommendations
We recommend that the Assistant Commandant for Acquisitions, U.S. Coast Guard:
Recommendation #1: Ensure that future acquisitions employ a knowledge-based acquisition
strategy to the maximum extent practicable by revising the U.S. Coast Guard’s Major
Systems Acquisition Manual to allow for a schedule-driven acquisition strategy to be
employed only when it is properly authorized and supported by the results of a risk
assessment and cost-benefit analysis.
Recommendation #2: Improve low-rate initial production decisions for the U.S. Coast
Guard Surface Acquisition programs by issuing a policy memorandum that requires that it
achieve a specific level of design maturity at Critical Design Review.
Recommendation #3: Issue a policy memorandum that requires authorization to proceed
with low-rate initial production be supported by the reported results of operational
assessments.
Recommendation #4: Revise the Coast Guard’s acquisition policy to require a documented
risk assessment when low-rate initial production quantity exceeds 10%, or other Coast Guard
established minimum, of the total quantity approved for the acquisition.
Recommendation #5: Mitigate risk by executing plans for an operational assessment prior
to delivery of the lead FRC and take immediate action to implement recommendations from
the operational assessment. Any recommendations not implemented should be supported by
the results of a risk assessment and cost-benefit analysis.56
55
Department of Homeland Security, Office of Inspector General, U.S. Coast Guard’s Acquisition of the Sentinel Class
– Fast Response Cutter, OIG-12-68, March 2012, p. 1. Accessed June 29, 2012, at http://www.oig.dhs.gov/assets/
Mgmt/2012/OIG_12-68_Mar12.pdf. See also Calvin Biesecker, “Coast Guard’s Aggressive Schedule On FRC Carries
Technical Risks, IG Cautions,” Defense Daily, April 13, 2012: 3-4.
56
Department of Homeland Security, Office of Inspector General, U.S. Coast Guard’s Acquisition of the Sentinel Class
– Fast Response Cutter, OIG-12-68, March 2012, p. 13.
Congressional Research Service
23
Coast Guard Cutter Procurement: Background and Issues for Congress
The Coast Guard partially concurred with the first three recommendations and concurred with the
final two.57
OPC Program: FY2014 Funding Request Less than Projected Under
FY2013 Budget
Another potential oversight issue for Congress concerns the $25 million in acquisition funding
requested for FY2014 for the OPC program. This figure is one-half of the $50 million that was
projected for FY2014 under the Coast Guard’s FY2013 budget submission. Compared to the
FY2013 CIP, the FY2014 CIP in effect shifts $25 million in OPC acquisition funding from
FY2014 to FY2015 (see Table 3). The Coast Guard states that this change in the funding profile
reflects a refined estimate of the cost of the work to be done on the OPC program in FY2014 and
FY2015, and does not change the program’s schedule.58
OPC Program: Cost, Design, and Acquisition Strategy
Another potential oversight issue for Congress concerns the Coast Guard’s acquisition strategy
for the Offshore Patrol Cutter. Potential oversight questions for Congress include the following:
•
Has the Coast Guard fully incorporated into the OPC acquisition strategy lessons
learned from the NSC and FRC programs? What, in the Coast Guard’s view, are
those lessons?
•
As mentioned earlier, the Coast Guard’s RFP for the OPC program establishes an
affordability requirement of an average unit price of $310 million per ship, or
less, in then-year dollars for ships 4 through 9 in the program. How was the $310
million figure determined?
•
What process is the Coast Guard using to evaluate tradeoffs in OPC performance
features against this target construction price? What performance features have
been reduced or eliminated to meet the target construction price?
•
How much confidence does the Coast Guard have that the OPC that emerges
from the tradeoff process could be built within the Coast Guard’s target
construction price?
•
As mentioned earlier, the Coast Guard plans to award preliminary and contract
design (P&CD) contracts as many as three competitors in FY2013. Is the number
of potential P&CD contracts too high, too low, or about right? How did the Coast
Guard arrive at this number?
•
As also mentioned earlier, the Coast Guard plans to evaluate the P&CD efforts
and then award one of the competitors a contract for detailed design development
and ship construction. What process does the Coast Guard plan to use in
evaluating the P&CD efforts? What evaluation factors does the Coast Guard plan
to use, and how much weight will be assigned to each?
57
Department of Homeland Security, Office of Inspector General, U.S. Coast Guard’s Acquisition of the Sentinel Class
– Fast Response Cutter, OIG-12-68, March 2012, pp. 14-17.
58
Source: Coast Guard briefing to CRS, June 14, 2013.
Congressional Research Service
24
Coast Guard Cutter Procurement: Background and Issues for Congress
2012 Testimony
Some of the above questions have been discussed over the past two years at hearings on the Coast
Guard’s proposed FY2013 and FY2014 budgets. For example, at a March 6, 2012, hearing on the
Coast Guard’s proposed FY2013 budget before the Homeland Security Committee of the House
Appropriations Committee, Admiral Robert J. Papp, Jr., the Commandant of the Coast Guard,
stated:
When I came in as commandant, I realized that this [the OPC program] was the most
expensive project that the Coast Guard has ever taken on, honestly, as each [of the] 25 ships
are a significant investment. And I also understood looking out at the horizon and seeing the
storm clouds that restrict the budgets coming up there we needed to build a ship that was
affordable.
We rescrubbed the requirements. We have battled ourselves within the Coast Guard to make
sure we're asking for just exactly what we need, nothing more nothing less. And I have said
three things to my staff as we go on forward—affordable, affordable, affordable.
And now I'm very pleased to say that just last week that the department [DHS] has
reviewed—we passed a major milestone with acquisition decision event number two which
validated our requirements for the type of cutter that we’re looking for and we are ready to
go towards the preliminary and contract design work this next year.59
Later in the hearing, the following exchange occurred:
ADERHOLT:
And there has been a discussion as to the capability of the OPC with objective design being
more capable than the—than the threshold capability.60 What is the current plan and
capability of the OPC and what capability thresholds are you considering?
PAPP:
We—the driving one as I said is affordability, but having said that—and I’m not—I’m not
trying to be funny here, but the—the sea-keeping capability being, you know, to operate in
Sea State 5 is probably the most important to us right now because with fewer national
security cutters, at least fewer than the hindrance posed that we have right now.
None of our medium endurance cutters—the 210 foot and 270 foot [medium-endurance]
cutters that we have—can operate in the Gulf of Alaska and the Bering Sea and they do not
have the long legs to be able to send them out in the—on some of the longer deployments
that we do in the Pacific.
So it has to be able to launch the aircraft and boats in Sea State 5, you know, which is
standard offset in the Bering Sea and also have endurance that we’ll be able to keep it out
there on station. And I believe it was 45 days [of operation at sea] we’re looking for without
refueling.61
59
Source: Transcript of hearing.
In the design of many U.S. weapon systems, threshold refers to a minimally acceptable level of capability, and
objective refers to a higher (but also more expensive or technically challenging) level of capability.
61
Source: Transcript of hearing. At a March 7, 2012, hearing on the proposed FY2013 budgets for the Coast Guard and
(continued...)
60
Congressional Research Service
25
Coast Guard Cutter Procurement: Background and Issues for Congress
2013 Testimony
At an April 16, 2013, hearing before the Coast Guard and Maritime Transportation subcommittee
of the House Transportation and Infrastructure Committee on the FY2014 budget for the Coast
Guard and maritime transportation, the following exchange occurred:
REPRESENTATIVE DON YOUNG: Admiral, I understand this morning you told the
corporation you're going to reconsider the requirement for the Offshore Patrol Cutter and
reopen the design competition; if that is correct, how long will this delay construction of
much of the needy cutters, I mean, how long was—what will happen?
ARMIRAL ROBERT PAPP, COMNMANDANT OF THE COAST GUARD: Sir, that
wasn't quite an accurate report, I said that we remain committed to the Offshore Patrol Cutter
and I was asked if the ability to operate in Sea State-5 was hard and fast and I said the
highest requirement for the Offshore Patrol Cuter is affordability and as we evaluate the
candidate vessels we may need to go back and look at some of the requirements, I'm hopeful
that we don't have to.
I think we hammered off these requirements, in fact reduce some of them when I came in as
(inaudible) [sic: Commandant?] because I want to make sure this ship is affordable and I've
(...continued)
maritime transportation programs before the Coast Guard and Maritime Transportation subcommittee of the House
Transportation and Infrastructure Committee, the following similar exchange occurred:
REPRESENATIVE LARSEN:
Admiral Papp, some questions about the offshore patrol cutter. Obviously, we’re—we’re a little bit
(inaudible) before that’s operational. And I have a question about whether or not the requirements
for the OPC will prioritize one set of factors over a different set of factors. (inaudible) and
Endurance, that might be more helpful in the Pacific versus speed, armament, and other
requirements. How are you approaching the requirement—setting requirements to the OPC?
PAPP:
Sir, realizing that this is going to be the largest acquisition project that the Coast Guard has ever
done and recognizing that these ships are going to last us 40 years, we’re taking the law beyond this
[sic: a long look at this?]. And I realize there are some people that feel like we have dragged our
feet a little bit or pushed this to the right a little bit, and I would say that’s just not the case. It is a
little delayed from where we started out.
But when I came in as commandant, I realized that we were going to be facing constrained budgets.
So I had the staff take a look at the OPC once again, scrub the requirements with a direction that
the primary requirement is affordability. We just could not afford everything that was in the
requirements before, so we set new thresholds for it.
But the most important is the sea-keeping capability because with a reduced number of national
security cutters, if we only have eight national security cutters replacing the 12 Hamilton class
cutters, we have to have a ship that’s capable of going up into the Gulf of Alaska, the Bering Sea,
the Western Pacific.
Our medium endurance cutters right now, and speaking as a captain of a 270-foot cutter, we
cannot—those ships cannot perform in the extreme weather conditions that you find sometimes in
the North Atlantic much less the Arctic, and the—the Bering Sea.
So keeping the requirements for sea state five for helicopter launching and boat launching, and the
Endurance were most important. And I'm really pleased to say that we have finally passed that
hurdle. We went through acquisition decision event number two with the Department of Homeland
Security last week, and they approved our requirements so we’re—we’re stepping out smartly now,
moving ahead.
(Transcript of hearing)
Congressional Research Service
26
Coast Guard Cutter Procurement: Background and Issues for Congress
reported to this subcommittee and other sub-committees that we are intent on making this an
affordable ship for the Coast Guard.
If we had opened it up to revise the see keeping capability there probably would be a delay
but I have no intent to open that up at this point, we'd have to evaluate all the candidates that
we have and I'm hopeful that we'll find three candidates that look affordable because we're
going to need to operate this ship in Alaska and it’s going to need to be able to launch and
recover boats and aircraft while operating the barring sea.62
Similarly, at an April 16, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the
Homeland Security subcommittee of the House Appropriations Committee, the following
exchange occurred:
REPRESENTATIVE (UNKNOWN):63 Thank you, Mr. Chairman. Admiral, there’s been
much discussion as to the capability of the OPC specifically the requirement to operate at sea
state 5. Admiral, why is this requirement important? And if the current proposals come in too
high, will you decrease the sea state requirement in order to meet the target price?
ADMIRAL PAPP: I would not like to do that because that would probably delay the process,
but we may have to recomplete the request for proposals by changing that standard. The
reason we need the standard is because we'll have only eight National Security Cutters and
while they are tremendously capable ships, they can't be in the same places as 12 high
endurance cutters were that they are replacing.
We've been comfortable with 12 high endurance cutters because that gave us enough to
operate in the Bering Sea and in the Gulf of Alaska and the broad ranges of the—of the
Pacific given the fact that we'll have fewer ships, in fact, we'll only have six National
Security Cutters out on the West Coast because we need to keep two on the East Coast. We
need to make sure that the offshore patrol cutters are capable of operating in Alaska.
The 270-foot medium endurance cutters that we have were originally intended to be able to
operate everywhere. We've tried to operate them in Alaska. You can't launch and recover
boats and you can't launch and recover aircraft. They just aren't—cannot survive the sea state
up there. And that is our—that is our world of work. We have to be able to launch boats for
our boarding teams to go aboard fishing vessels. We need to be able to launch helicopters for
search and rescue.
So this requirement for sea state 5 has been our highest priority on that ship. I'm sorry. It’s
not been the highest priority. The highest priority has been affordability. And when people
have asked me what are the three most important things about the offshore patrol cutter, I've
constantly said, affordability, affordability, affordability. So that will be the driving factor on
our down select for these three candidates and I'm hopeful that all three will not only be
affordable but be able to survive in sea state 5—I'm sorry, not survive, but operate in sea
state 5.64
62
Transcript of hearing.
The transcript of the hearing shows the speaker as “unknown.”
64
Transcript of hearing.
63
Congressional Research Service
27
Coast Guard Cutter Procurement: Background and Issues for Congress
September 2012 GAO Report
Regarding the Coast Guard’s requirements development process for the OPC, a September 2012
GAO report states:
Coast Guard Took Positive Steps to Improve Requirements Development and Consider
Affordability for the Offshore Patrol Cutter
The Coast Guard took some steps to improve the requirements development process for the
Offshore Patrol Cutter—the largest acquisition in DHS’s acquisitions portfolio and,
according to officials, the first acquisition in the Deepwater surface fleet in which the Coast
Guard had complete control over the requirements development process. The Coast Guard
undertook studies and analysis that, in part, considered the measurability and testability as
required by guidance of the following four key performance parameters: operating range,
operational sustainment and crew, speed, and patrol endurance. For example, the range
requirement, which is the distance the cutter can travel between refueling, is clearly stated as
a minimum acceptable requirement of 8,500 nautical miles at a constant speed of 14 knots to
a maximum level of 9,500 nautical miles. Although cutters typically transit at various speeds
over the course of a patrol, the Coast Guard conducted analysis to determine that the 14
knots speed at the minimum and maximum ranges would provide enough days between
refueling given the percentage of time that the Coast Guard normally operates at certain
speeds. By developing a measurable range requirement, the Coast Guard helped to promote a
clear understanding of Offshore Patrol Cutter performance by potential shipbuilders and
sought to balance the cost of additional range with the value that it provides. Furthermore,
officials at the independent test authority—the Navy’s Commander Operational Test and
Evaluation Force—told us that they have been actively involved through the requirements
development process and many of their questions regarding testability have been resolved.
Two other key performance parameters—seakeeping and interoperability—are not as
consistent with the Coast Guard’s guidelines of measurability and testability as identified in
the Major Systems Acquisition Manual. For example the seakeeping key performance
parameter described in the requirements document states that the Offshore Patrol Cutter shall
be able to launch small boats and helicopters in 8.2- to 13.1-foot waves. However, in the
specifications document, which is used to translate the requirements document into a level of
detail from which contractors can develop a reasonably priced proposal, the Coast Guard
states that the Offshore Patrol Cutter shall be able to launch small boats and helicopters in no
more than 10.7 foot waves while transiting in a direction that minimizes the pitch and roll of
the vessel—an important detail not specified in the requirements document. Further, the
interoperability key performance parameter states that the Coast Guard must be able to
exchange voice, video, and data with the Department of Defense and Homeland Security
agencies. However, it does not list specific external partners or substantial details regarding
the systems required to exchange data and the types and size of these data that could be
examples of measurability and testability. This key performance parameter does not make
this distinction between parts of the military that the Coast Guard operates with most often,
such as the U.S. Navy and the intelligence community, and simply requires interoperability
with all of DOD. Similarly, the interoperability key performance parameter does not specify
the DHS agencies for which the Coast Guard must exchange data with, which makes this
parameter difficult to test. Coast Guard’s independent testing officials agreed that this key
performance parameter, as currently written, is not testable in a meaningful way and stated
that there are ongoing efforts to improve the clarity of this requirement.
During the requirements development process for the Offshore Patrol Cutter, the Coast
Guard also made some decisions with respect to affordability. The following are examples
where the Coast Guard made capability trades that are expected to help lower the program’s
acquisition cost:
Congressional Research Service
28
Coast Guard Cutter Procurement: Background and Issues for Congress
•
Speed—after a series of analyses, the Coast Guard decided to reduce the minimum
acceptable speed from 25 to 22 knots thereby, according to officials, potentially
eliminating the need for two diesel engines. According to a study completed by the
Coast Guard, this trade could reduce the acquisition cost of each cutter by $10 million.
•
Stern Launch—the Coast Guard removed the stern launch ramp capability from the
Offshore Patrol Cutter design. While this trade-off may inhibit the launch and recovery
of small boats in certain conditions, such as substantial roll or side-to-side movement of
the vessel, Coast Guard officials stated that it will reduce the cost of the cutter because a
stern launch ramp requires the cutter to be heavier, thus adding cost.
•
C4ISR—the Coast Guard eliminated a minimum requirement for an integrated C4ISR
system and instead is requiring a system built with interfaces to communicate between
different software programs. According to Coast Guard officials, the Coast Guard now
plans to use a Coast Guard-developed software system—Seawatch—rather than the
more costly lead systems integrator-developed software system currently installed on
the National Security Cutter, even though this system does not provide the Coast Guard
with the capability to exchange near real-time battle data with DOD assets.
The improvements and affordability decisions that the Coast Guard has made in its
requirements development process for the Offshore Patrol Cutter are even more evident
when compared with the process for generating requirements for its other major cutter—the
National Security Cutter. Due to the nature of the lead systems integrator strategy that the
Coast Guard initially used to buy the National Security Cutter, Integrated Coast Guard
Systems developed the requirements, designed, and began producing the National Security
Cutter before the requirements document was completed. The Coast Guard did not have an
operational requirements document at the time the Coast Guard awarded the construction
contract for the first cutter in 2004, but the Coast Guard documented the requirements in
2006. Further, even as the third National Security Cutter was in production, Coast Guard was
refining the requirements and, in January 2010, made the decision to clarify some key
performance parameters such as anti-terrorism/force protection and underwater mine
detection because the existing requirements were not testable. To further remedy the lack of
clear requirements, Coast Guard officials stated that they are currently developing a second
version of the requirements document that improves the specificity and definition of many of
the National Security Cutter’s requirements and will be used as criteria during operational
testing. To date, the Coast Guard has not reduced the National Security Cutter’s capability
for the purpose of affordability as it has done for the Offshore Patrol Cutter. However,
according to Coast Guard officials, there is a revised acquisition program baseline under
review which will reflect an ongoing effort to lower the acquisition cost of the vessel.65
Regarding the potential accuracy of the Coast Guard’s estimated procurement cost for the OPC,
given the known procurement cost of the NSC, the September 2012 GAO report states:
Major Cutter Requirements and Missions Have Similarities, but Costs Vary Greatly
and Concerns Remain about Affordability
The requirements and missions for the National Security Cutter and the Offshore Patrol
Cutter programs have similarities, but the actual cost for one National Security Cutter
compared to the estimated cost of one Offshore Patrol Cutter varies greatly. Even though the
Coast Guard took steps to consider affordability while developing the requirements for the
65
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, pp. 28-31.
Congressional Research Service
29
Coast Guard Cutter Procurement: Background and Issues for Congress
Offshore Patrol Cutter, those affordability decisions do not explain the magnitude in the
difference between these two costs....
This comparison raises questions whether the Offshore Patrol Cutter could be a less
expensive, viable substitute for the National Security Cutter or whether there are
assumptions built into the Offshore Patrol Cutter cost estimate, not related to requirements,
which are driving the estimated costs down. With respect to the first, DHS, motivated by
concerns about the affordability of the National Security Cutter program, completed a Cutter
Study in August 2011 which included an analysis to examine the feasibility of varying the
combination of objective—or optimal performing—Offshore Patrol Cutters and National
Security Cutters in the program of record. Through this analysis, DHS found that defense
operations is a key factor in determining the quantity of National Security Cutters needed
and that the Coast Guard only needs 3.5 National Security Cutters per year to fully satisfy
the planned requirement for defense-related missions. DHS concluded that with six National
Security Cutters the Coast Guard can meet its goals for defense operations and mitigate some
of the near-term capacity loss of the five National Security Cutter fleet modeled in the Cutter
Study. DHS Program Analysis and Evaluation officials stated that this, in conjunction with
other information, helped to inform the decision to not include the last two National Security
Cutter hulls—hulls 7 and 8—in the fiscal years 2013-2017 capital investment plan. However,
the DHS Cutter Study also notes that the time line for the two acquisitions makes a trade-off
between the National Security Cutter and the Offshore Patrol Cutter difficult since the
National Security Cutter program is in production whereas the Offshore Patrol Cutter
program is only in the design phase. Similarly, we have reported that the Coast Guard may
face an operational gap in its ability to perform missions using major cutters due to the
condition of the legacy fleet.
With respect to the second possibility that there are assumptions built into the Offshore
Patrol Cutter cost estimate that are driving the estimated costs down, the Coast Guard
included three key assumptions in the Offshore Patrol Cutter’s life cycle cost estimate,
generally not related to the cutter’s key requirements, which lower the estimated cost in
comparison to the actual cost of the National Security Cutter. These three assumptions are:
•
Learning Curve. The Coast Guard assumes that the shipyard(s) will generally continue
to reduce the labor hours required to build the Offshore Patrol Cutter through the
production of all 25 vessels. This may prove optimistic, particularly for later ships in the
class, because the amount of additional learning per vessel–or efficiencies gained during
production due to improving the manufacturing process to build the ship in a way that
requires fewer labor hours–typically decreases over time in a shipbuilding program.
•
Military versus Commercial Standards. The life cycle cost estimate assumes that
certain areas of the Offshore Patrol Cutter’s construction and material would reflect an
average of 55 percent commercial standards—or construction standards that are
typically used for military sealift ships that provide ocean transportation—and 45
percent military standards—or construction standards typically used for Navy combat
vessels. Any changes in this assumption could have a significant effect on the cost
estimate because military standards require more sophisticated construction
applications, particularly in the areas of shock hardening and signature reduction, to
prepare a ship to survive battle. Such sensitivity could help to explain the difference in
costs between the Offshore Patrol Cutter program and the National Security Cutter
program and officials stated that the latter program is being built to about 90 percent
military standards.
•
Production Schedule. The cost estimate reflects the Coast Guard’s plan to switch from
building one Offshore Patrol Cutter per year to building two Offshore Patrol Cutters per
year beginning with the fourth and fifth vessel in the class. If the Coast Guard cannot
Congressional Research Service
30
Coast Guard Cutter Procurement: Background and Issues for Congress
achieve or maintain this build rate due to budget constraints, it may choose to stretch the
schedule for the program which in turn could increase costs.
Coast Guard program officials generally agreed that these three variables are important to the
cost of the Offshore Patrol Cutter and are key reasons why the Coast Guard expects one
Offshore Patrol Cutter to cost less than half of one National Security Cutter. However, these
officials recognized that the cost estimate for the Offshore Patrol Cutter is still uncertain
since the cutter has yet to be designed—thus, the National Security Cutter’s actual costs are
more reliable. Coast Guard program officials also added that the cost estimate for the
Offshore Patrol Cutter is optimistic in that it assumes that the cutter will be built in
accordance with the current acquisition strategy and planned schedule. They noted that any
delays, design issues, or contract oversight problems—all of which were experienced during
the purchase of the National Security Cutter—could increase the eventual price of the
Offshore Patrol Cutter.66
Multiyear Procurement (MYP)
Another potential oversight issue for Congress concerns the potential for using multiyear
procurement (MYP), also known as multiyear contracting, in acquiring new cutters. With
congressional approval, certain Department of Defense (DOD) programs for procuring ships,
aircraft, and other items employ MYP as a way of reducing procurement costs. As part of its
Navy’s FY2013 budget submission, for example, the Navy requested (and Congress approved)
authority for using MYP arrangements for DDG-51 destroyers to be procured in FY2013FY2017, for Virginia-class submarines to be procured in FY2014-FY2018, and for V-22 Osprey
tilt-rotor aircraft to be procured in FY2013-FY2017. Compared to the standard or default
approach of annual contracting, MYP has the potential for reducing procurement costs by several
percent.67
The statute that governs the use of MYP—10 U.S.C. 2306b—makes MYP available with
congressional approval not only to DOD, but to other government departments, including DHS,
the parent department of the Coast Guard.68 Unlike the Navy and other DOD services, however,
the Coast Guard is not using MYP for any of its ship or aircraft procurement programs.
A May 10, 2013, press report quotes Michael Petters, the CEO of Huntington Ingalls Industries
(the builder of NSCs), as stating:
We basically have proposed that if we really want to save some money, we should do multiyears on [the] National Security Cutter. We’ve not had any commitment to that from the
Congress, and so those [contracts] are one ship at a time.69
Potential oversight questions for Congress include the following:
66
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, pp. 31, 33-35.
67
For more on MYP, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense
Acquisition: Background and Issues for Congress, by Ronald O'Rourke and Moshe Schwartz.
68
10 U.S.C. 2306b(b)(2)(B).
69
Michael Fabey, “HII: U.S. Non-Nuclear Shipbuilding Facing More Uncertainty Than Nuclear,” Aerospace Daily &
Defense Report, May 10, 2013: 4.
Congressional Research Service
31
Coast Guard Cutter Procurement: Background and Issues for Congress
•
Has the Coast Guard considered using MYP for procuring NSCs, OPCs, or
FRCs? If not, why not?
•
What would be the potential savings of using MYP for procuring the final two or
three NSCs, for procuring OPCs, or for procuring FRCs?
•
What are the potential risks or downsides of using MYP for procuring NSCs,
OPCs, or FRCs?
Alternative Force Mixes Equal in Cost to Program of Record
Another potential oversight issue for Congress is whether 8 NSCs, 25 OPCs, and 58 FRCs is the
best mix of cutters that could be procured for the roughly the same total amount of acquisition
funding. This issue was explored in a DHS Cutter Study that was completed in August 2011.70
The study’s synopsis states that
In 2010, DHS was directed to conduct a study of USCG’s major cutter recapitalization plan.
The goal of this study was to evaluate whether an alternative cutter fleet mix could improve
USCG’s performance while maintaining current acquisition costs of the recapitalization
program of record (POR). This question was motivated by the current fiscal environment and
the increasing cost of the National Security Cutter (NSC), which in turn generated questions
about its affordability and cost-effectiveness. However, the desired outcome was to provide
insight into determining the most cost-effective fleet to execute USCG missions both near
term and well into the future....
The study was led by DHS Program Analysis and Evaluation (PA&E) with contract support
from Center for Naval Analysis (CNA) and MicroSystems Integration (MSI)....
The starting assumption for this study was that available USCG recapitalization funding is
fixed at the cost of the POR. The study then identified and assessed the performance of
alternative cutter fleets of equal acquisition cost, and compared the performance of these
alternatives to the POR.71
The DHS Cutter Study examined force mixes that included not only NSCs, OPCs, and FRCs, but
also two other ship-acquisition options—a modernized version of the Coast Guard’s 270-foot
Famous (WMEC-901) class medium-endurance cutter (“Mod-270” for short), and the Navy’s
Littoral Combat Ship (LCS).72 (In recent years, some observers have suggested that the Coast
Guard should procure the LCS in lieu of planned cutters, while other observers have suggested
that the Navy should procure a modified version of the NSC in lieu of the LCS.) Table 8 shows
the nine alternative force mixes examined by the DHS Cutter Study, along with the POR mix.
70
Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet, Performance
Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, 392 pp., accessed online October 23, 2012, at
http://assets.fiercemarkets.net/public/sites/govit/dhscoastguardcutterstudy.pdf.
71
Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet, Performance
Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, Synopsis of Results, p. 1.
72
For more on the LCS program, see CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background
and Issues for Congress, by Ronald O'Rourke.
Congressional Research Service
32
Coast Guard Cutter Procurement: Background and Issues for Congress
Table 8. Alternative Force Mixes Examined in DHS Cutter Study
Group A
Group B
Group C
Ship
type
POR
Fleet 1
Fleet 2
Fleet 3
Fleet 4
Fleet 5
Fleet 6
Fleet 7
Fleet 8
Fleet 9
NSC
8
5
7
9
5
7
8
8
8
8
OPC
25
30
26
23
0
0
0
22
19
16
Mod270
0
0
0
0
41
37
34
0
0
0
LCS
0
0
0
0
0
0
0
3
6
9
FRC
58
58
62
59
60
58
58
58
58
58
Source: Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet,
Performance Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, p. 2
Regarding these alternative force mixes, the synopsis stated:
Several alternative fleets were found to improve performance in certain missions and regions
when compared to the POR. However, any improvements in mission performance over the
POR came at a cost to mission performance in other areas. Thus, the study found that if DHS
is willing to accept lower performance than the POR in selected missions and regions, it has
two alternatives to the major cutter recapitalization POR:
[Fleet 1]: Increase Offshore Patrol Cutter (OPC) fleet size in lieu of acquiring NSCs 6-8.
[Fleet 6]: Increase OPC fleet size while selectively reducing OPC capability.73
The synopsis stated that exercising both of the above alternatives in tandem would lead to Fleet
4.74 The synopsis stated that
Both alternatives [Fleets 1 and 6] improve several end-state Coast Guard-wide measures of
performance... without increasing USCG’s major cutter acquisition costs. Moreover, these
options are not mutually exclusive, and can be implemented in tandem. However, both
alternatives require tradeoffs, and before selecting an alternative fleet recapitalization plan,
DHS must determine whether the general performance benefits... are sufficient to offset these
particular tradeoffs....
Compared to the POR, the increased performance for these alternatives would likely not be
seen, until the early 2030s, whereas some of the decreases in capability for [Fleet 1] would
begin in 2018 and for [Fleet 6] by 2020. Also, [Fleet 1’s] cumulative performance
improvement will not meet and exceed the POR’s until 2055....
73
Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet, Performance
Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, Synopsis of Results, pp. 1-2.
74
Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet, Performance
Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, Synopsis of Results, p. 2.
Congressional Research Service
33
Coast Guard Cutter Procurement: Background and Issues for Congress
While the study did not model the performance of a six-NSC fleet, the near-term impacts
were analyzed. Adding a sixth NSC to [Fleet 1] mitigates some of the near-term capacity loss
when compared to the Program of Record, and mitigates some risk to performance of
Defense Operations and Homeland Security Contingency response.
This study also evaluated the potential for Navy’s Littoral Combat Ship (LCS) to costeffectively replace or augment the OPC fleet. An analysis of alternative cutter fleets that
incorporated small numbers of LCS in the most favorable operating conditions showed that
the LCS is not well-suited to USCG operations due to its limited range and ensuing inability
to maintain effective presence. While the LCS has advanced capabilities, most notably its
top-end speed, this does not offset its reduced presence. Therefore, based on acquisition costs
used in this study, the OPC is clearly more cost-effective at executing USCG’s major cutter
mission set.75
GAO reviewed the DHS Cutter Study, as well as the Coast Guard’s FMA Phase 1 and Phase 2
studies, and provided some observations on the three studies in a May 2012 report.76 GAO states
that “DHS PA&E and OMB [Office of Management and Budget] have so far used the Cutter
Study to inform the fiscal year 2013 budget. For example, DHS PA&E officials stated that the
Cutter Study provided information that DHS and OMB used, in conjunction with other
information sources, to inform the decision to not include the last two NSC hulls—hulls 7 and
8—in the FY2013-2017 capital investment plan.”77 GAO further states that
In the Cutter Study, the Center for Naval Analysis (CNA) recommends that DHS explore
additional fleet mix options, including looking at a mid-capability OPC.
The mid-capability OPC would reduce the speed and range of the objective OPC but
otherwise maintain its presence capabilities including an ability to operate in sea state 5.
A CNA official responsible for the analysis stated that other characteristics of this midcapability OPC could include removing or reducing the following from the objective OPC
without affecting presence:
•
Sensitive Compartmentalized Information Facility
•
Air Search and Fire Control Radars (acquire the positions of targets and provide these
data to a ship’s command and control and weapon systems)
•
Electronic Warfare Support Measures
•
Berthing space (114 instead of 122)
•
Weapons suite (e.g., 25mm gun instead of 57mm)
75
Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet, Performance
Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, Synopsis of Results, pp. 2-3.
76
Government Accountability Office, Observations on the Coast Guard’s and the Department of Homeland Security’s
Fleet Studies, GAO-12-751R, May 31, 2012.
77
Government Accountability Office, Observations on the Coast Guard’s and the Department of Homeland Security’s
Fleet Studies, GAO-12-751R, May 31, 2012, p. 3.
Congressional Research Service
34
Coast Guard Cutter Procurement: Background and Issues for Congress
The CNA official also stated that CNA has not studied whether these changes to the
objective OPC would otherwise affect mission performance.78
Potential oversight questions for Congress include the following:
•
What role, exactly, did the DHS Cutter Study play in the executive branch
decision to not include funding for the seventh and eighth NSC in the Coast
Guard’s FY2013 five-year capital investment plan? Does the DHS Cutter Study
provide a sufficient analytical basis for such a decision?
•
Is the Coast Guard’s currently planned mix of 8 NSCs, 25 OPCs, and 58 FRCs
the best mix of cutters that could be procured for the roughly the same amount of
acquisition funding? What were the conclusions of the DHS Cutter Study
regarding the levels of overall mission effectiveness of the nine alternative forces
mixes relative to one another, and to the POR mix?
•
What is the Coast Guard’s assessment of the option of developing and procuring
a modified version of the 270-foot Famous-class medium-endurance cutter?
•
What is the Coast Guard’s assessment of the option suggested by the CNA
official for acquiring a “mid-capability OPC” as described in the GAO report?
Information for Supporting Congressional Oversight of
Procurement Programs
Another oversight issue for Congress concerns the adequacy of information available to Congress
to support review and oversight of Coast Guard procurement programs, including cutter
procurement programs. The Coast Guard has entered a period where, like the Navy, it is
requesting significant funding each year from Congress to execute multiple ship procurement and
modernization programs. Congress, however, lacks ready access to basic information exhibits on
Coast Guard shipbuilding programs that are equivalent to those that support congressional review
and oversight of Navy ship procurement programs.
Basic information exhibits readily available to Congress that support congressional review and
oversight of Navy ship procurement programs include but are not limited to the following:
•
annual Budget Item Justification Sheets (P-40 Exhibits), Weapon System
Cost Analysis sheets (P-5 Exhibits), and Ship Production Schedules (P-27
Exhibits) for each Navy shipbuilding program—exhibits that present detailed
information on year-to-year program funding, unit procurement costs, and
production schedules (see Appendix B for examples);
•
annual Selected Acquisition Reports (SARs) that DOD prepares for major DOD
acquisition programs, which present supplementary data on program cost
estimates, annual funding, and contract;
78
Government Accountability Office, Observations on the Coast Guard’s and the Department of Homeland Security’s
Fleet Studies, GAO-12-751R, May 31, 2012, briefing slide 18.
Congressional Research Service
35
Coast Guard Cutter Procurement: Background and Issues for Congress
•
a concise statement of the Navy’s ship force structure goal—the Navy’s current
force structure goal is to achieve and maintain a fleet of about 310-316 battle
force ships, consisting of certain types and numbers of ships (see Appendix C);
•
an annual five-year Navy shipbuilding plan that shows planned annual
procurement quantities for each type of ship being procured (see Appendix D);
and
•
an annual 30-year Navy shipbuilding plan that shows annual procurement
quantities and projected Navy ship force levels over the next 30 years (see
Appendix E).
These information exhibits assist Congress in doing the following, among other things, in
reviewing and conducting oversight on Navy shipbuilding programs:
•
identifying and evaluating cost growth and schedule delays in the execution of
shipbuilding programs;
•
understanding the relationship between annual procurement rates and unit
procurement cost;
•
evaluating whether programs are achieving satisfactory production learning
curves over time;
•
evaluating whether proposed sequences of annual procurement quantities for
programs would be efficient to execute from an industrial standpoint;
•
evaluating stability in Navy shipbuilding planning by tracking year-to-year
changes in the five-year shipbuilding plan;
•
identifying potential financial and industrial-base linkages between shipbuilding
programs that are being funded in overlapping years;
•
identifying and evaluating Navy assumptions concerning service lives and
retirement dates for existing ships;
•
evaluating whether ship procurement needs are being pushed into the future,
potentially creating an expensive ship procurement “bow wave” in coming years;
and
•
understanding when the Navy will achieve its ship force level goals, and whether
the Navy will experience ship inventory shortfalls relative to those goals that
could affect the Navy’s ability to perform its missions in coming years.
Although the Coast Guard and the Department of Homeland Security submit substantial budgetrelated information to Congress each year, Congress lacks ready access to the five sources of
detailed program information listed above:
•
Although the Coast Guard’s annual budget submission includes a budgetjustification book,79 the entries in that book for the Coast Guard’s ship
procurement programs do not present information as detailed and structured as
that presented in the P-40, P-5, and P-27 exhibits.
79
For the FY2013 budget, this is Department of Homeland Security, United States Coast Guard, Fiscal Year 2012
Congressional Justification, 400 pp.
Congressional Research Service
36
Coast Guard Cutter Procurement: Background and Issues for Congress
•
Reports on Coast Guard programs equivalent to DOD’s SAR reports are not
readily available to Congress.
•
The Coast Guard’s POR is a statement of desired procurement quantities for
certain procurement programs, but not a concise statement of the Coast Guard’s
overall ship force structure objective, which would take into account continued
service of existing ships that are not in need of immediate replacement.
•
The Coast Guard’s five-year capital investment plan shows annual funding
amounts for individual programs, but not annual procurement quantities, and
annual procurement quantities are not always easy to discern from annual
funding amounts.
•
The Coast Guard’s budget submission does not include an equivalent of the
Navy’s 30-year shipbuilding plan.
A lack of ready access to these five sources of detailed program information can make it more
difficult for Congress to conduct similar evaluations of Coast Guard programs. As a consequence,
programs might, for example, be more likely to be reviewed over shorter time horizons, or in
isolation from one another.
A potential issue for Congress is whether to require the Coast Guard and the Department of
Homeland Security to provide equivalents to some or all of the five information sources listed
above. Opponents of this option might argue that the Coast Guard and DHS already provide
substantial budget-justification information to Congress, and that preparing Coast Guard
equivalents to some or all of these five information sources would be an expensive and timeconsuming proposition. Supporters of this option might argue that the cost of preparing and
submitting this information would be small relative to the combined total acquisition cost the
NSC, OPC, and FRC programs, and that information of this kind has proven to be of value in
supporting congressional review and oversight of Navy shipbuilding programs.
Legislative Activity for FY2014
Summary of Appropriations Action on FY2014 Acquisition
Funding Request
Table 9 summarizes appropriations action on the Coast Guard’s request for FY2014 acquisition
funding for the NSC, OPC, and FRC programs.
Table 9. Summary of Appropriations Action on FY2014 Acquisition Funding Request
Figures in millions of dollars, rounded to nearest tenth
Request
House
Appropriations
Committee
NSC program
616
603.6a
OPC program
25
25
FRC program
75
205b
Request
Congressional Research Service
Senate
Appropriations
Committee
Conference
37
Coast Guard Cutter Procurement: Background and Issues for Congress
Request
TOTAL
Request
House
Appropriations
Committee
716
833.6
Senate
Appropriations
Committee
Conference
Source: For House Appropriations Committee: H.Rept. 113-91 of May 29, 2013, p. 71.
a.
The exact figure is $603.553 million. Within this total, $77 million is to be used for long lead time materials
(LLTM) for NSC 8.
b.
Recommended increase of $130 million is for two additional FRCs.
FY2014 DHS Appropriations Act (H.R. 2217)
House
In addition to recommending the funding amounts shown in Table 9, the House Appropriations
Committee states the following in its report (H.Rept. 113-91 of May 29, 2013) on H.R. 2217:
The President’s fiscal year 2014 budget for DHS’s fiscal year 2014 proposes to [among other
things]:
• Reduce Coast Guard staffing by—850 military personnel; [and]...
• Reduce the Coast Guard’s recapitalization and acquisitions by—40 percent;....
Beyond these proposed reductions, further analysis reveals that the President’s fiscal year
2014 budget request for DHS will have the following performance impacts [among others]:
• The lowest level of drug interdiction effectiveness in the past five years; [and]
• A complete inability of the Coast Guard to fulfill its patrol boat mission requirements;...
In short, the fiscal year 2014 budget request for DHS proposes to not only reduce the
immediate resources of the Department’s most critical frontline components, it proposes to
substantially diminish the long-term security capabilities of our Nation.
The Committee categorically rejects this flawed budget request for DHS.
... the bill [as reported] supports essential security operations by [among other things]:
• Restoring nearly all of the proposed reductions to the Coast Guard’s operating and
acquisition budgets and increases funding for counternarcotics operations and sustainment of
aging assets;... (Pages 4-5)
The report also states:
Over the last several years, the Department has continually requested a substantial reduction
in funding that would degrade the Coast Guard’s operational capabilities and military
workforce without proposing a compensatory proposal to rebuild the depleted capacity in the
long term by investing in recapitalized assets. Those proposals had obvious, adverse
implications for the Coast Guard’s critical statutory missions of maritime safety, coastal
security, and drug interdiction; ignored current threat activity and the ramifications for the
Congressional Research Service
38
Coast Guard Cutter Procurement: Background and Issues for Congress
Department’s broader security and response efforts; and were resoundingly rejected by
Congress.
The fiscal year 2014 proposal is even more egregious, and gives the impression that this
Administration does not appropriately value the work of the Coast Guard. It includes the
lowest level of drug interdiction effectiveness in the past five years and reduces
recapitalization funding to unsustainable levels. Over the past decade when our Nation has
called for help, the Coast Guard has responded: they responded on the morning of 9/11 by
helping untold numbers of people evacuate the devastation of lower Manhattan; they
responded during the aftermath of Katrina by saving survivors stranded on rooftops; they
responded by being the first to arrive in Haiti after an earthquake hit the country and killed
thousands; and more recently, they responded to the worst oil spill in the history of our
Nation. If the country intends for the Coast Guard of tomorrow to be as effective as the Coast
Guard we have today, and have depended on for decades, these reductions must be
resoundingly rejected. Within the recommendation, the Committee has made targeted
increases to address the inadequacy of the Department’s request—adding capacity to the
Coast Guard for today and for tomorrow. (Pages 66-67)
The report also states:
Mission Needs Statement
No Administration has ever proposed a budget that begins to close the mission hour gap the
Coast Guard created on paper when it rebaselined its acquisition programs after 9/11. As
highlighted by the GAO, the Coast Guard acquisition program is unachievable—particularly
if the Coast Guard will be limited to a Capital Investment Plan (CIP) that is less than
$1,000,000,000 per year for the next five years as is provided in the current plan. The Coast
Guard’s acquisition budget has grown dramatically in the years since 9/11, but, particularly
in light of the steep and dramatic cuts proposed in this year’s CIP, there is no reason to
believe the gaping space between the 1998 baseline and the 2004 baseline will ever close in
any significant way for aircraft or patrol boats. The mission hour target dropped for major
cutters in the 2004 rebaselining, but remains unattainable through 2030 since it appears to
assume the production of two Offshore Patrol Cutters (OPC) per year. However, even if the
OPC currently under source selection meets the requirements laid out in the Coast Guard’s
Operational Requirements Document, it seems unlikely at the levels included in the CIP that
such a program would be sustainable. Therefore, the Committee directs the Coast Guard to
begin the process of developing a new mission needs statement that takes into account
today’s fiscal environment. If the Administration truly plans for the Coast Guard funding
level to be what was presented in the Fiscal Year 2014 CIP, then this process should also
address what missions the Coast Guard will no longer be able to achieve. The Committee
notes that in the Fiscal Year 2014 Coast Guard Budget Hearing, the Commandant
commented that the patrol boat hour requirement was “specious”. The Committee cannot
continue to accept a requirements document that is doubted by the senior leader of the Coast
Guard. In order to plan for the future, the Coast Guard must match requirements to resources
and provide an achievable plan. (Pages 67-68)
Regarding the Coast Guard’s Acquisition, Construction, and Improvements (AC&I) account, the
report states:
The Committee recommends significant restructuring of numerous programs to align funding
with the requirements in the fiscal year of need.80 Further, the recommendation provides
80
The report similarly states on page 7 that “The Committee continues to press reform of inefficient budgeting for
(continued...)
Congressional Research Service
39
Coast Guard Cutter Procurement: Background and Issues for Congress
funding for programs that have a proven track record, are low risk, have known costs, and
provide increased capability. The Committee recommends a net reduction of $12,447,000
requested for the National Security Cutter (NSC)....
The Committee recommends the following increases [among others] above the amount
requested: an increase of $130,000,000 above the amount requested for two additional FRCs;
... and an increase of $77,000,000 for long lead time materials for NSC 8. (Pages 70 and 71)
The funding table on page 71 of the committee’s report shows a total of $603.553 million for the
NSC program, reflecting the above-mentioned net reduction of $12.447 million from the Coast
Guard’s request. The implication is that the $77 million in funding for LLTM for NSC 8 is not in
addition to, but rather forms part of, the total recommended appropriation for the NSC program of
$603.553 million. This appears to be confirmed by another passage from the committee’s report,
which states:
National Security Cutter
The Committee recommends $603,553,000 for the NSC program to include long lead time
material for NSC 8, $12,447,000 below the amount requested and $75,068,000 below the
amount provided in fiscal year 2013. The recommendation includes a decrease of
$12,447,000 for contract savings associated with the contract for the sixth NSC. The
recommendation also defers funding for post-delivery activities that are requested
unnecessarily ahead of need.
Fast Response Cutter
The Committee recommends $205,000,000 for the acquisition of four FRCs, $130,000,000
above the amount requested and $129,665,000 below the amount provided in fiscal year
2013. The fiscal year 2014 budget request included funding for only two FRCs. This
represents almost $30,000,000 in savings that will not be realized and delays the delivery of
much needed capability. This is the same type of budget gimmickry the Department
proposed and Congress rejected in fiscal year 2013. It is unclear as to how the Department
plans to close the various gaps in needed capability if it continues to make such ineffective
and unjustified budget requests. (Page 73)
The section of H.R. 2217 as reported that appropriates funds for the Coast Guard’s Acquisition,
Construction, and Improvements (AC&I) account includes several provisos, including the
following:
... Provided, That the funds provided by this Act shall be immediately available and allotted
to contract for the production of the seventh National Security Cutter notwithstanding the
availability of funds for post-production costs: Provided further, That the funds provided by
this Act shall be immediately available and allotted to contract for long lead time materials,
components, and designs for the eighth National Security Cutter notwithstanding the
availability of funds for production costs or post-production costs:...
Section 516 of the bill as reported states:
(...continued)
Coast Guard acquisitions by aligning funding to requirements based on the fiscal year of need.”
Congressional Research Service
40
Coast Guard Cutter Procurement: Background and Issues for Congress
Sec. 516. Any funds appropriated to Coast Guard `Acquisition, Construction, and
Improvements’ for fiscal years 2002, 2003, 2004, 2005, and 2006 for the 110-123 foot patrol
boat conversion81 that are recovered, collected, or otherwise received as the result of
negotiation, mediation, or litigation, shall be available until expended for the Fast Response
Cutter program.
Section 568 of the bill as reported rescinds certain prior-year Coast Guard Acquisition,
Construction, and Improvement (AC&I) account funding. Regarding these rescissions, the
committee’s report states:
The Committee recommends the following rescissions [among others] in Title V of this bill
[Section 568 as reported] from prior year accounts:... from funds provided in fiscal year
2011,... $12,612,000 for excessive antecedent liability and economic price adjustment
funding in the Fast Response Cutter (FRC) program; from funds provided in fiscal year
2012,... $29,500,000 from funds for the FRC to include $22,500,000 for excessive
antecedent liability and economic price adjustment funding; and from funds provided in
fiscal year 2013, $22,000,000 for excessive antecedent liability and economic price
adjustment funding in the FRC program, $10,480,000 from the NSC program to include
$5,000,000 for a post shakedown availability for NSC 4, $1,882,000 for a gantry crane and
davit for NSC 6, and $3,598,000 for waterfront changes associated with NSC 6. (Page 71)
The committee’s report also states:
Full Funding
The Committee included a new general provision in fiscal year 2013 to address the lack of
clarity in certain programs with respect to budgeting for long lead-time materials, end items,
outfitting, post-delivery activities, spares, program management, and contract closeout.
However, it is clear that the Department has chosen to ignore that direction based on this
year’s request for the NSC. Similar to the fiscal year 2013 request, the fiscal year 2014
request for the NSC includes funding for post-delivery activities of the seventh NSC that will
not occur until fiscal year 2019 and does not request funding for the long lead time materials
for NSC 8, even though the Department plans to procure an eighth NSC in fiscal year 2015.
Section 557 of Public Law 113–6 specifically addressed these issues by mandating the
Department develop a fiscal policy that prescribes budgetary policies, procedures, and
technical direction necessary to comply with the section’s definitions of full funding. To
further address this issue, the Committee includes a new provision in Title V of this bill
[Section 548 as reported] directing the Department to provide a report with the submission
of the President’s fiscal year 2015 budget that details its compliance with section 557 of
Public Law 113–6. (Pages 72-73)
81
This is a reference to a canceled Coast Guard program to modernize the Coast Guard’s 110-foot Island class patrol
boats with a work package that would, among other things, lengthen the boats to 123 feet.
Congressional Research Service
41
Coast Guard Cutter Procurement: Background and Issues for Congress
Appendix A. Findings and Recommendations of
DHS Cutter Study
This appendix reprints the findings and recommendations of the August 2011 DHS Cutter study.
They are as follows:
Findings
These are our major findings:
•
Replacing some NSCs with OPCs has a small, positive impact on OpEff
[operational effectiveness]. Differences are on the order of 5 percent from POR [the
program of record] and scale with the difference in cutter availability.
•
Replacing all OPCs with mod-270 has a significant positive impact on OpEff. It
increases drug interdiction by roughly 20 percent over POR. The increase in
performance is much less than the increase in cutters. Performance in missions other
than counter-drug and in regions outside the southeast is comparable to or slightly below
POR.
•
Replacing OPCs with LCSs reduces OpEff significantly. Given that LCS acquisition
cost will be at least as much as OPC, we cannot construct a cost-effective way to use
LCS to increase UCSG mission performance.
•
Moving away from POR adds uncertainty. Reducing the number of NSCs may limit
USCG ability to support defense operations (DEFOPS), and switching to a mod-270
[cutter design] creates a fleet that has trouble operating in poor weather.
•
Long-term total ownership cost is similar for all excursions. Group B [alternative
fleets 4, 5, and 6] is most expensive, due to higher personnel costs.
•
Updated or changed assumptions could change OpEff significantly. More efficient
patrol patterns could increase POR OpEff by 5 percentage points at no cost, while a
potential “mid-capability” OPC could narrow the OpEff gap between group B and POR
by another 5 percentage points. With both changes, group A [alternative fleets 1, 2, and
3] and group B should have about equal OpEff.
Recommendations
Based on our findings, we make the following recommendations.
•
USCG should quantify the DEFOPS requirement to assess the impact of reducing
NSC numbers. A 2.0 NSC presence will be difficult to support with only 5 NSC if they
are also supporting other missions.
•
DHS PA&E should work with USCG to quantify distant, poor-weather operating
areas to inform or mitigate the limitations of the mod-270. Additional NSCs could
offset some of the range and seakeeping deficiencies of the mod-270. Further study is
necessary to see if it would be cost-effective.
Congressional Research Service
42
Coast Guard Cutter Procurement: Background and Issues for Congress
•
DHS PA&E should explore additional fleet mix options. Cost data should be updated
as new information becomes available to confirm that the modeled excursions are still
feasible. New options, such as a “mid-capability” OPC could improve fleet OpEff or
decrease cost.
•
USCG should optimize its cutter basing and CONOPS. Choosing cutter homeports
and operating patterns to maximize on-station patrol time will get the most out of a costlimited fleet.
•
DHS PA&E should commission a similar study for aircraft. This study did not
consider changes in aviation, which could have significant impact on performance.
There may be opportunities to trade off air and surface assets to maximize total OpEff.
•
DHS PA&E should track long-term acquisition profiles and recapitalization
priorities. The multi-year spending profile for cutter acquisition has periods of
significantly higher- and lower-than-average expenditure, which could have significant
interplay with other DHS acquisition priorities.82
82
Alarik Fritz, Raymond Gelhaus, and Kent Nordstrom, Options for the Future USCG Cutter Fleet, Performance
Trade-Offs with Fixed Acquisition Cost, IPR 14297, August 2011, pp. 2-3.
Congressional Research Service
43
Coast Guard Cutter Procurement: Background and Issues for Congress
Appendix B. P-5, P-40, and P-27 Data Exhibits for
Littoral Combat Ship (LCS) Program
This appendix presents the Budget Item Justification Sheet (Exhibit P-40), Weapon System Cost
Analysis sheet (Exhibit P-5), and Ship Production Schedule (Exhibit P-27) for the Navy’s Littoral
Combat Ship (LCS) program, as examples of the kind of information that is available each year to
support congressional review and oversight of Navy shipbuilding programs.
Congressional Research Service
44
Coast Guard Cutter Procurement: Background and Issues for Congress
Figure B-1. Budget Item Justification Sheet (Exhibit P-40)
For Navy Littoral Combat Ship (LCS) Program
Source: Department of the Navy Fiscal Year (FY) 2013 Justification of Estimates, Shipbuilding and Conversion, Navy, February 2012, p. 11-1 (pdf page 156 of 246).
CRS-45
Coast Guard Cutter Procurement: Background and Issues for Congress
Figure B-2. Weapon System Cost Analysis Sheet (Exhibit P-5)
For Navy Littoral Combat Ship (LCS) Program
Source: Department of the Navy Fiscal Year (FY) 2013 Justification of Estimates, Shipbuilding and Conversion, Navy, February 2012, p. 11-2 (pdf page 157 of 246).
CRS-46
Coast Guard Cutter Procurement: Background and Issues for Congress
Figure B-3. Ship Production Schedule (Exhibit P-27)
For Navy Littoral Combat Ship (LCS) Program
Source: Department of the Navy Fiscal Year (FY) 2013 Justification of Estimates, Shipbuilding and Conversion, Navy, February 2012, p. 11-2 (pdf page 159 of 246).
CRS-47
Coast Guard Cutter Procurement: Background and Issues for Congress
Appendix C. Navy Ship Force Structure Objective
Table C-1 presents the Navy’s current ship force structure objective.
Table C-1. Navy Ship Force Structure Goal
Ship type
Force Structure
Objective
Ballistic missile submarines (SSBNs)
12
Cruise missile submarines (SSGNs)
0
Attack submarines (SSNs)
48
Aircraft carriers
11
Cruisers and destroyers
88
Littoral Combat Ships (LCSs)
52
Amphibious ships
33
Combat logistics (resupply) ships
29
Joint High Speed Vessels (JHSVs)
10
Other (includes support ships)
23
Total battle force ships
306
Sources: Department of the Navy, Report to Congress [on] Navy Combatant Vessel Force Structure Requirement,
January 2013, 3 pp. The cover letters for the report were dated January 31, 2013.
Congressional Research Service
48
Coast Guard Cutter Procurement: Background and Issues for Congress
Appendix D. Navy FY2014 Five-Year
Shipbuilding Plan
Table D-1 presents the Navy’s FY2014 five-year (FY2014-FY2018) shipbuilding plan.
Table D-1. Navy FY2014 Five-Year (FY2014-FY2018) Shipbuilding Plan
(Battle force ships—i.e., ships that count against 306-ship goal)
Ship type
FY14
FY15
FY16
FY17
Ford (CVN-78) class aircraft carrier
FY18
Total
1
1
Virginia (SSN-774) class attack submarine
2
2
2
2
2
10
Arleigh Burke (DDG-51) class destroyer
1
2
2
2
2
9
Littoral Combat Ship (LCS)
4
4
2
2
2
14
LHA(R) amphibious assault ship
0
0
0
1
0
1
Fleet tug (TATF)
0
0
0
2
1
3
Mobile Landing Platform (MLP)/Afloat Forward
Staging Base (AFSB)
1
0
0
0
0
1
TAO(X) oiler
0
0
1
0
1
2
TOTAL
8
8
7
9
9
41
Source: FY2014 Navy budget submission.
Notes: The MLP/AFSB is a variant of the MLP with additional features permitting it to serve in the role of an
AFSB.
Congressional Research Service
49
Coast Guard Cutter Procurement: Background and Issues for Congress
Appendix E. Navy FY2014 30-Year
Shipbuilding Plan
Table E-1 shows the Navy’s proposed FY2014 30-year (FY2014-FY2043) shipbuilding plan.
Table E-1. Navy FY2014 30-Year (FY2014-FY2043) Shipbuilding Plan
FY
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
CVN
1
1
1
1
1
1
LSC
1
2
2
2
2
2
2
2
3
3
2
3
2
3
3
3
2
2
2
2
2
2
2
2
3
3
3
3
3
2
SSC
4
4
2
2
2
3
3
3
3
3
3
3
1
1
1
1
1
4
4
4
4
4
3
3
SSN
2
2
2
2
2
2
2
2
2
2
1
2
1
2
1
1
1
2
1
1
1
1
1
2
2
1
2
1
2
1
SSBN
AWS
CLF
Supt
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
2
1
1
2
2
3
2
1
1
1
2
2
3
2
2
Total
8
8
7
9
9
10
10
10
11
14
11
11
6
8
10
8
9
9
11
9
7
5
4
8
10
8
11
8
9
8
Source: FY2014 30-year (FY2014-FY2043) shipbuilding plan.
Key: FY = Fiscal Year; CVN = aircraft carriers; LSC = surface combatants (i.e., cruisers and destroyers); SSC
= small surface combatants (i.e., Littoral Combat Ships [LCSs]); SSN = attack submarines; SSGN = cruise
missile submarines; SSBN = ballistic missile submarines; AWS = amphibious warfare ships; CLF = combat
logistics force (i.e., resupply) ships; Supt = support ships.
Congressional Research Service
50
Coast Guard Cutter Procurement: Background and Issues for Congress
Table E-2 shows the Navy’s projection of force levels for FY2014-FY2043 that would result
from implementing the FY2014 30-year (FY2014-FY2043) shipbuilding plan shown in Table E1.
Table E-2. Projected Force Levels Resulting from FY2014 30-Year (FY2014-FY2043)
Shipbuilding Plan
CVN
LSC
SSC
SSN
SSGN
SSBN
AWS
CLF
Supt
Total
11
88
52
48
0
12
33
29
33
306
FY14
10
85
26
55
4
14
31
31
26
282
FY15
10
78
23
55
4
14
28
29
29
270
FY16
11
82
27
53
4
14
29
29
31
280
FY17
11
83
29
50
4
14
30
29
33
283
FY18
11
84
33
52
4
14
31
29
33
291
FY19
11
86
38
52
4
14
31
29
35
300
FY20
11
87
37
49
4
14
31
29
33
295
FY21
11
88
37
49
4
14
31
29
33
296
FY22
12
87
39
48
4
14
31
29
33
297
FY23
12
87
38
48
4
14
31
29
34
297
FY24
12
89
40
48
4
14
32
29
34
302
FY25
11
88
42
47
4
14
34
29
34
303
FY26
11
89
45
46
2
14
33
29
33
302
FY27
11
91
48
45
1
13
33
29
33
304
306 ship plan
FY28
11
90
51
43
0
12
33
29
33
302
FY29
11
88
52
42
0
11
33
29
33
299
FY30
11
86
52
43
0
11
32
29
33
297
FY31
11
82
52
44
0
11
32
29
33
294
FY32
11
81
52
45
0
10
32
29
34
294
FY33
11
81
52
46
0
10
33
29
34
296
FY34
11
80
52
47
0
10
34
29
34
297
FY35
11
82
52
48
0
10
33
29
34
299
FY36
11
84
52
50
0
10
33
29
34
303
FY37
11
86
52
51
0
10
34
29
33
306
FY38
11
88
52
50
0
10
33
29
34
307
FY39
11
90
52
50
0
10
33
29
33
308
FY40
10
90
52
50
0
10
32
29
33
308
FY41
10
90
52
49
0
11
33
29
33
307
FY42
10
88
52
51
0
12
32
29
33
307
FY43
10
88
52
51
0
12
31
29
33
306
Source: FY2014 30-year (FY2014-FY2043) shipbuilding plan.
Note: Figures for support ships include five JHSVs transferred from the Army to the Navy and operated by the
Navy primarily for the performance of Army missions.
Congressional Research Service
51
Coast Guard Cutter Procurement: Background and Issues for Congress
Key: FY = Fiscal Year; CVN = aircraft carriers; LSC = surface combatants (i.e., cruisers and destroyers); SSC
= small surface combatants (i.e., frigates, Littoral Combat Ships [LCSs], and mine warfare ships); SSN = attack
submarines; SSGN = cruise missile submarines; SSBN = ballistic missile submarines; AWS = amphibious
warfare ships; CLF = combat logistics force (i.e., resupply) ships; Supt = support ships.
Author Contact Information
Ronald O'Rourke
Specialist in Naval Affairs
rorourke@crs.loc.gov, 7-7610
Congressional Research Service
52