Coast Guard Cutter Procurement:
Background and Issues for Congress
Ronald O'Rourke
Specialist in Naval Affairs
June 527, 2014
Congressional Research Service
7-5700
www.crs.gov
R42567
Coast 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 FY2015 budget requests a total of $768 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 through seventh are in various stages of construction, and long lead time
materials (LLTM) are being procured for the eighth. The Coast Guard’s proposed FY2015 budget
requests $638 million for the NSC program, including $558.7 million for the eighth NSC.
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 FY2015 budget requests $20 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 30 have been funded through FY2014.
As of June 5, 2014, the first nine had been commissioned into service. (The tenth was delivered to
the Coast Guard on June 25, 2014, and is scheduled to be commissioned into service on
September 6, 2014.) The Coast Guard’s proposed FY2014 budget requests $110 million in
acquisition funding for two FRCs and associated program costs.
The NSC, OPC, and FRC programs pose several oversight issues for Congress. Congress’
decisions on these programs could substantially affect Coast Guard capabilities and funding
requirements, and the U.S. shipbuilding industrial baseThe Coast Guard’s
proposed FY2014 budget requests $110 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 adequacy of the Coast Guard’s planned NSC, OPC, and FRC procurement
quantities;
•
the potential for using multiyear procurement (MYP) in acquiring new cutters;
•
the Coast Guard’s FY2015 request for acquisition funding for two (rather than
four or six) FRCs;
•
the adequacy of FY2015 funding requested for the OPC program;
•
the Coast Guard’s acquisition strategy for the OPC;
•
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.
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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............................................................................................................................. 4
FRC Program ............................................................................................................................. 8
NSC, OPC, and FRC Funding in FY2013, FY2014, and FY2015 Budget Submissions ........ 10
Issues for Congress ........................................................................................................................ 1011
Adequacy of Planned NSC, OPC, and FRC Procurement Quantities ..................................... 1011
Multiyear Procurement (MYP) and Block Buy Contracting ................................................... 20
NSC Program: Preliminary and Operational Testing .............................................................. 20
FRC Program: FY2015 Request for Two (Rather than Four or Six) Ships ............................. 21
OPC Program: FY2015 Funding Request Less than Projected Under FY2014 Budget ......... 2123
FRC Program: Operational Testing ......................................................................................... 23
OPC Program: FY2015 Five-Year Funding Plan Defers Bulk of Funding for First
Ship by a Year, to FY2018.................................................................................................... 25
OPC Program: Cost, Design, and Acquisition Strategy........................................................... 2226
2012 Testimony ................................................................................................................. 2226
2013 Testimony ................................................................................................................. 2428
September 2012 GAO Report ........................................................................................... 2529
Alternative Force Mixes Equal in Cost to Program of Record ................................................ 2933
Information for Supporting Congressional Oversight of Procurement Programs ................... 3236
Legislative Activity for FY2015 .................................................................................................... 3438
Summary of Appropriations Action on FY2015 Acquisition Funding Request ...................... 3438
Coast Guard and Maritime Transportation Act of 2014 (H.R. 4005) ...................................... 3438
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 .............................. 14
Figure BC-1. Budget Item Justification Sheet (Exhibit P-40) .......................................................... 4254
Figure BC-2. Weapon System Cost Analysis Sheet (Exhibit P-5) ................................................... 4355
Figure BC-3. Ship Production Schedule (Exhibit P-27)................................................................... 4456
Tables
Table 1. NSC, OPC, and FRC Funding in FY2013, FY2014, and FY2015 Budget
Submissions ................................................................................................................................ 10
Table 2. Program of Record Compared to Objective Fleet Mix .................................................... 11
12
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Coast Guard Cutter Procurement: Background and Issues for Congress
Table 3. POR Compared to FMAs 1 Through 4 ............................................................................ 12
Table 4. Force Mixes and Mission Performance Gaps .................................................................. 13
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Coast Guard Cutter Procurement: Background and Issues for Congress
Table 5. POR Compared to Objective Mixes in FMA Phases 1 and 2........................................... 15
Table 6. Alternative Force Mixes Examined in DHS Cutter Study ............................................... 2934
Table 7. Summary of Appropriations Action on FY2015 Acquisition Funding Request............... 3438
Table CD-1. Navy Ship Force Structure Goal .................................................................................. 4557
Table DE-1. Navy FY2014 Five-Year (FY2014-FY2018) Shipbuilding Plan ................................. 4658
Table EF-1. Navy FY2014 30-Year (FY2014-FY2043) Shipbuilding Plan ..................................... 4759
Table EF-2. Projected Force Levels Resulting from FY2014 30-Year (FY2014-FY2043)
Shipbuilding Plan ....................................................................................................................... 4860
Appendixes
Appendix AB. Findings and Recommendations of DHS Cutter Study ............................................ 3951
Appendix BC. P-5, P-40, and P-27 Data Exhibits for Littoral Combat Ship (LCS) Program.......... 4153
Appendix CD. Navy Ship Force Structure Objective ....................................................................... 4557
Appendix DE. Navy FY2014 Five-Year Shipbuilding Plan ............................................................. 4658
Appendix EF. Navy FY2014 30-Year Shipbuilding Plan ................................................................. 4759
Contacts
Author Contact Information........................................................................................................... 4961
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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 FY2015 budget requests a total of $768 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—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 high-endurance cutters
entered service between 1967 and 1972.4 The Coast Guard’s 29 medium-endurance cutters
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.
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include 13 Famous (WMEC-901) class ships that entered service between 1983 and 1991,5 14
Reliance (WMEC-615) class ships that entered service between 1964 and 1969,6 and two one-ofa-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.)
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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).
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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
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).
The first three NSCs are now in service, the fourth through seventh are in various stages of
construction, and long lead time materials (LLTM) are being procured for the eighth. The Coast
Guard’s proposed FY2015 budget requests $638 million for the NSC program, including $558.7
million for the eighth NSC.
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 FY2014 five-year (FY2014FY2018) capital investment plan, the first OPC is to be procured in FY2017.
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
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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 [Department of Homeland Security] 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
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
17
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 13 (Figure 13).
18
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 15.
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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
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.
(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 #9.23
At least eight shipyards expressed interest in the program. The firms were:
•
Bollinger Shipyards of Lockport, LA;
•
Eastern Shipbuilding Group of Panama City, FL;
•
General Dynamics Bath Iron Works (GD/BIW) of Bath, ME;
•
Huntington Ingalls Industries (HII) of Pascagoula, MS;
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
Source: Section C.1 of the RFP, accessed March 26, 2013, at http://www.uscg.mil/ACQUISITION/newsroom/
updates/opc092512.asp.
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•
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.24
On February 11, 2014, the Coast Guard announced that it had awarded Phase I Preliminary and
Contract Design (P&CD) contracts to Bollinger, Eastern, and GD/BIW. A February 11, 2014,
Coast Guard news release on the award stated:
The U.S. Coast Guard today awarded three firm fixed-price contracts for preliminary and
contract design (P&CD) for the Offshore Patrol Cutter (OPC) acquisition project. The
contracts were awarded to Bollinger Shipyards Lockport LLC (Lockport, La.), Eastern
Shipbuilding Group Inc. (Panama City, Fla.), and General Dynamics, Bath Iron Works
(Bath, Maine). The total value of the award is approximately $65 million.
Awarding multiple design contracts ensures that competition is continued through to a
potential down-select for detailed design and construction, establishes a fixed-price
environment for the remainder of the contract, and incorporates a strategy to maximize
affordability. This strategy was developed by analyzing lessons learned from other major
government shipbuilding programs and through collaboration with industry on how to best
design and produce the most affordable OPC....
The Coast Guard issued the P&CD Request for Proposal (RFP) Sept. 25, 2012. Responses
were received in January 2013, and the Coast Guard conducted a thorough evaluation of
proposals based on technical, management, past performance and price factors. To support
the effort to acquire an affordable OPC, the Coast Guard engaged industry prior to RFP
release through industry day events, one-on-one meetings and providing opportunities for
potential offerors to review and comment on OPC draft technical packages, specifications
and solicitation language.25
HII and VT Halter Marine reportedly filed protests of the Coast Guard’s award decision on
February 24 and 25, respectively. The Coast Guard issued stop work orders to Bollinger, Eastern,
and GD/BIW pending GAO’s rulings on the protests.26 On June 5, 2014, it was reported that
24
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.”
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.
25
U.S. Coast Guard news release entitled, “Acquisition Update: U.S. Coast Guard Awards Three Contracts for
Offshore Patrol Cutter Preliminary and Contract Design,” February 11, 2014, accessed February 14, 2014, at
http://www.uscg.mil/hq/cg9/newsroom/updates/opc021114.asp.
26
Calvin Biesecker, “Coast Guard Issues Stop Work Orders On OPC Following Protests,” Defense Daily, February 28,
2014: 2-3. See also Christopher P. Cavas, “Ingalls Protesting US Coast Guard Cutter Contract,” DefenseNews.com,
February 26, 2014.
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GAO had rejected the protests, and that the Coast Guard had directed Bollinger, Eastern, and
GD/BIW to resume their work.27
The Coast Guard’s proposed FY2015 budget requests $20 million in acquisition funding for the
OPC program.
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.28 The Coast Guard’s POR calls for procuring 58 FRCs as replacements for the
service’s 49 Island-class patrol boats.
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/.
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
27
Calvin Biesecker, “Coast Guard Directs Design Work Continue On OPC After GAO Denies Protests,” Defense
Daily, June 5, 2014: 1; Christopher P. Cavas, “US Coast Guard Cutter Award Upheld,” Defense News
(www.defensenews.com), June 5, 2014.
28
FRCs are 154 feet long and have a full load displacement of 353 tons.
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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.29
The Coast Guard estimates the FRC program’s total acquisition cost at $4.243 billion, or an
average of about $73 million per boat.30 A total of 30 have been funded through FY2014. As of
June 5, 2014, the first nine had been commissioned into service (the ninth was commissioned on
May 10, 2014).31 The tenth was delivered to the Coast Guard on June 25, 2014, and is scheduled
to be commissioned into service on September 6, 2014.32 On September 18, 2013, the FRC
program received approval from DHS to enter
full-rate production.3233
FRCs are currently built by Bollinger Shipyards of Lockport, LA. Bollinger’s contract with the
Coast Guard originally included annual options for building a total of up to 34 FRCs through
FY2014, but some of the annual options were not exercised by the Coast Guard to their maximum
possible quantities, and Bollinger’s contract wound up covering the 30 FRCs. Ship awards under
that contract are now completed.
The Coast Guard holds the data rights for the Sentinel-class design and originally planned to hold
a competition for a contract to build the remaining 28 FRCs to be procured in FY2015 and
beyond. The Request for Proposals (RFP) for that competition, however, will not be issued soon
enough to include FRCs funded in FY2015.3334 Consequently, the Coast Guard now plans to issue a
sole-source contract to Bollinger for the construction of the FRCs that are funded in FY2015, and
then hold a competition for a contract for the construction of the remaining FRCs to be procured
in FY2016 and beyond. If two (or four or six) FRCs are funded in FY2015 and awarded to
Bollinger, then the competitively awarded contract for FRCs funded in FY2016 and beyond
would cover up to 26 (or 24 or 22) additional FRCs.34
The Coast Guard’s proposed FY2014 budget requests $110 million in acquisition funding for two
FRCs and associated program costs.
29
29
Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional Justification, p. CGAC&I-28 (pdf page 182 of 400).
30
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, p. 13 (Figure 13).
31
“Acquisition Update: Coast Guard Commissions Ninth Fast Response Cutter into Service,” May 10, 2014, accessed
June 5, 2014, at http://www.uscg.mil/acquisition/newsroom/updates/frc051314.asp.
32
“Acquisition Update: Tenth Fast Response Cutter Delivered to the Coast Guard,” June 26, 2014, accessed June 27,
2014, at http://www.uscg.mil/acquisition/newsroom/updates/frc062614.asp.
33
“Acquisition Update: Sentinel-class Fast Response Cutter Project Achieves Acquisition Milestone,” September 18,
2013, accessed November 18, 2013, at http://www.uscg.mil/acquisition/newsroom/updates/frc092413.asp.
3334
The Coast Guard released a draft version of the RFP on May 29, 2014, requesting that industry feedback on the draft
RFP be returned by August 14, 2014. See “Acquisition Update: Draft Request for Proposal for Second FRC Production
Phase Released,” May 30, 2014, accessed June 5, 2014, at http://www.uscg.mil/acquisition/newsroom/updates/
frc053014.asp; and Calvin Biesecker, “Coast Guard Releases Draft RFP For New FRC Competition,” Defense Daily,
June 3, 2014: 2-3.
34
Source: Telephone conversation with Coast Guard liaison office, June 3, 2014.
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Bollinger, then the competitively awarded contract for FRCs funded in FY2016 and beyond
would cover up to 26 (or 24 or 22) additional FRCs.35
The Coast Guard’s proposed FY2014 budget requests $110 million in acquisition funding for two
FRCs and associated program costs.
NSC, OPC, and FRC Funding in FY2013, FY2014, and FY2015
Budget Submissions
Table 1 shows annual acquisition funding for the NSC, OPC, and FRC programs in the Coast
Guard’s FY2013, FY2014, and FY2015 budget submissions.
Table 1. NSC, OPC, and FRC Funding in FY2013, FY2014, and FY2015 Budget
Submissions
(millions of then-year dollars)
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
683
0
0
0
0
616
710
38
0
45
638
n/a
n/a
n/a75
130
30
50
40
200
530
25
65
200
530
430
20
n/a
n/a
n/a90
100
530
360
360
360
360
75
110
110
110
110
110
n/a
n/a
n/a340
220
220
410
400
560
890
716
885
348
640
585
768
n/a
n/a
n/a505
450
780
FY2019
NSC program
FY13 budget
FY14 budget
FY15 budget
n/a47
OPC program
FY13 budget
30
FY14 budget
FY15 budget
n/a430
FRC program
FY13 budget
139
FY14 budget
FY15 budget
n/a315
Total
FY13 budget
852
FY14 budget
FY15 budget
n/a792
Source: FY2013, FY2014, and FY2015 budget submissions. As of June 5, 2014, data for FY2016-FY2019 for the
FY2015 budget submission were not available.
35
Source: Telephone conversation with Coast Guard liaison office, June 3, 2014.
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Issues for Congress
Adequacy of Planned NSC, OPC, and FRC Procurement Quantities
One potential 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,
medium-endurance 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
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be greater in coming years than they were in the past. CRS first testified about this issue in
2005.3536
The Coast Guard estimates that with the POR’s planned force of 91 NSCs, OPCs, and FRCs, the
service would have capability or capacity gaps36gaps37 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.”
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 2 compares planned numbers of NSCs, OPCs, and FRCs in the POR to those in
the objective fleet mix.
Table 2. 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.
35
36
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.
3637
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.
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Table 2. 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 2, 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 3 compares the POR to FMAs 1 through 4.
Table 3. 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 4 shows the POR and FMAs 1 through 4 in terms of their mission
performance gaps.
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Table 4. 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).
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.
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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 3 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 3 were
generally not included in public discussions of the Coast Guard’s future force structure needs
until April 2011, when GAO presented them in testimony.3738 GAO again presented them in a July
2011 report.3839
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 5 compares the POR to the objective fleet mix from FMA Phase
1 and the refined objective mix from FMA Phase 2.
3738
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.
3839
Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater Program Remains
Unachievable, GAO-11-743, July 2011, p. 46.
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Table 5. 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 5, 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 3 and Table 5 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.3940
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
in the POR mix. Stated the other way around, the POR includes about 52% as many aircraft as the
objective fleet mix. A decision to procure larger numbers of cutters like those shown in Table 3 and
and Table 5 might thus also imply a decision to procure, operate, and support larger numbers of Coast
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.40
3941
40
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.
4041
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.
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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.4142
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.4243 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 4.
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?].4344
Similarly, in commenting on a draft version of a September 2012 GAO report, the Coast Guard
stated in part:
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.4445
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
4142
Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater Program Remains
Unachievable, GAO-11-743, July 2011, summary page.
4243
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.
4344
Source: Transcript of hearing.
4445
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.
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the five years prior to FY2013.4546 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 based on the Coast Guard and Navy FY2014 budget submissions include the following:
•
TheUsing figures from the FY2014 budget submission, the Coast Guard has about
12.9% as many active-duty personnel as the Navy.46
47 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%
124% more than the $743.0 803.0
million than the Coast Guard requested for FY2014 for
FY2015 for surface ship acquisition
and sustainment programs.47
•
Funding in the Navy’s 48
•
Again using figures from the FY2014 budget submission, funding in the Navy’s
shipbuilding account is equivalent to about 51% of the
Navy’s funding for active-dutyactiveduty personnel.4849 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.4950
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
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) policy makers 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) policy makers 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) policy makers to alter the composition of the
federal budget over time to meet changing federal needs.
45
46
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.
4647
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.
4748
The Navy’s proposed FY2014 budget requests $14,078 million for the Shipbuilding and Conversion, Navy (SCN)
appropriation account.
4849
The Navy’s proposed FY2014 budget requests $27,824 million for the Military Personnel, Navy (MPN)
appropriation account.
4950
The Coast Guard’s proposed FY2014 budget requests $3,425.3 million for military pay and allowances.
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ability of the congressional (and executive branch) policy makers 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.5051
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.5152
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.”52
5053
51
Source: Transcript of hearing.
David Perera, “The Coast Guard Is Shrinking,” FierceHomelandSecurity.com, April 18, 2012, accessed July 20,
2012, at http://www.fiercehomelandsecurity.com/story/coast-guard-shrinking/2012-04-18.
5253
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
(continued...)
51(continued...)
52
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At a March 12, 2014, hearing on the Coast Guard’s proposed FY2015 budget before the
Homeland Security subcommittee of the House Appropriations Committee, Admiral Papp stated:
Well, that’s what we've been struggling with, as we deal with the five-year plan, the capital
investment plan, is showing how we are able to do that. And it will be a challenge,
particularly if it sticks at around $1 billion [per year]. As I've said publicly, and actually, I
said we could probably—I've stated publicly before that we could probably construct
comfortably at about 1.5 billion [dollars] a year. But if we were to take care of all the Coast
Guard’s projects that are out there, including shore infrastructure that that fleet that takes
care of the Yemen [sic: inland] waters is approaching 50 years of age, as well, but I have no
replacement plan in sight for them because we simply can't afford it. Plus, we need at some
point to build a polar icebreaker. Darn tough to do all that stuff when you're pushing down
closer to 1 billion [dollars per year], instead of 2 billion [dollars per year].
As I said, we could fit most of that in at about the 1.5 billion [dollars per year] level, but the
projections don't call for that. So we are scrubbing the numbers as best we can.5354
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 4? 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 4, 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 4 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 4?
•
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?
(...continued)(...continued)
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.) See also “Interview, Adm. Robert Papp, US Coast Guard
Commandant,” Defense News, November 11, 2013: 30.
5354
Transcript of hearing.
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Coast Guard Cutter Procurement: Background and Issues for Congress
•
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
aircraft force levels, and consequently Coast Guard mission capability and
capacity, over the long run?
Multiyear Procurement (MYP) and Block Buy Contracting
Another potential oversight issue for Congress concerns the potential for using multiyear
procurement (MYP), also known as multiyear contracting, in acquiring new cutters. With
contracting (i.e., multiyear procurement (MYP) or block buy 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
FY2013 budget submission, for example, the Navy requested (and Congress approved) authority
for using MYP arrangements for DDG-51 destroyers to be procured in FY2013-FY2017, for
Virginia-class submarines to be procured in FY2014-FY2018, and for V-22 Osprey tilt-rotor
aircraft to be procured in FY2013-FY2017 aircraft, and other items employ MYP or block buy contracting to reduce
procurement costs. Compared to the standard or default approach of
annual contracting, MYP hasand
block buy contracting have the potential for reducing procurement costs by several percent.5455
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.55 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.56
56 Congress also has the option of providing the Coast
Guard with authority to use block buy contracting, as it has done for the Navy. All three of the
Navy’s year-to-year shipbuilding programs—the Virginia-class attack submarine program, the
DDG-51 destroyer program, and the Littoral Combat Ship (LCS) program—currently use MYP
or block buy contracting. In contrast, the Coast Guard has not used MYP or block buy contracting
for any of its cutter procurement programs.
Potential oversight questions for Congress include the following:
•
Has the Coast Guard considered using MYP for or block buy contracting for
procuring NSCs, OPCs, or
FRCs? If not, why not?
•
What would be the potential savings of using MYP for or block buy contracting 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 or block buy contracting
for procuring NSCs,
OPCs, or FRCs?
54
For more on MYPNSC Program: Preliminary and Operational Testing
Another potential oversight issue for Congress concerns the results of preliminary and operational
testing of the NSC. A June 2014 GAO report stated:
55
For more on MYP and block buy contracting, 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.
55
10 U.S.C. 2306b(b)(2)(B).
56
Michael Fabey, “HII: U.S. Non-Nuclear Shipbuilding Facing More Uncertainty Than Nuclear,” Aerospace Daily &
Defense Report, May 10, 2013: 4.
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10 U.S.C. 2306b(b)(2)(B).
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The Coast Guard has some knowledge about the performance of the National Security
Cutter, gained through operational deployments and preliminary test events, and the field
portion of operational testing was recently conducted. The Coast Guard has been operating
the vessel since 2008, conducted a preliminary operational test in 2011, and has received
certifications to fully operate and maintain helicopters as well as, according to officials, to
use the cutter’s information technology systems on protected networks. In addition, Coast
Guard program officials stated that the National Security Cutter has demonstrated most of its
key performance parameters through a myriad of non-operational tests and assessments, but
a few key performance parameters, such as those relating to the endurance of the vessel and
its self-defense systems have yet to be assessed. Verification of an asset’s ability prior to
operational testing may be beneficial, but, as we have previously found, only operational
testing can ensure that an asset is ready to meet its missions.
Prior to testing, the Coast Guard encountered several issues that require retrofits or design
changes to meet mission needs based upon operations, certifications, and non-operational
testing. The total cost of these changes is not yet known, but changes identified to date have
totaled approximately $140 million, about one-third of the production cost of a single
National Security Cutter. The Coast Guard must pay for all of these and future changes due
to the contract terms under which the first three ships were constructed and because the
warranty on the remaining ships does not protect the Coast Guard against defects costing
more than $1 million. Table 4 lists the retrofits and design changes costing more than $1
million. The table does not include all changes because the Coast Guard did not have data for
some of the modifications. In addition to the $140 million in identified changes, the Coast
Guard has established a program to supply the National Security Cutter with cutter small
boats for an additional $52.1 million because the small boats originally planned to be
delivered with the vessel did not meet requirements.
Additional changes may be needed because the Coast Guard has not fully validated the
capabilities of the National Security Cutter, though seven vessels have been delivered or are
in production. This situation could result in the Coast Guard having to spend even more
money in the future, beyond the current changes, to ensure the National Security Cutter fleet
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meets requirements and is logistically supportable. For example, the cutter is experiencing
problems operating in all intended environments. The National Security Cutter requirements
document states that the cutter will conduct assigned missions in a full spectrum of climate
and maritime weather conditions, to include tropical, dry, temperate, and arctic climates.
This document adds that although the National Security Cutter will operate in regions in
which ice is frequently encountered, it will not have an ice-breaking mission. However,
Coast Guard engineering reports from December 2012 discuss problems operating in both
warm and cold climates. These reports discuss several warm weather problems, including
cooling system failures, excessive condensation forming “considerable” puddles on the deck
of the ship, and limited redundancy in its air conditioning system—which, among other
things, prevents the use of information technology systems when the air conditioning system
needs to be serviced or repaired. In addition, according to operational reports, during a recent
deployment, the Commanding Officer of a National Security Cutter had to impose speed
restrictions on the vessel because of engine overheating when the seawater temperature was
greater than 77 degrees. Cold climate issues include the National Security Cutter not having
heaters to keep oil and other fluids warm during operations in cold climates, such as the
arctic. Further, Coast Guard operators state that operating near ice must be done with
extreme caution since the ice can move quickly and can “spell disaster” if the National
Security Cutter comes in contact with it. Senior Coast Guard officials acknowledged that
there are issues to address and stated that the Coast Guard has not yet determined what, if
any, fixes are necessary and that it depends on where the cutter ultimately operates....
The Coast Guard has also encountered several issues with the C4ISR [command and control,
communications, computers, intelligence, surveillance, and reconnaissance] system that have
required significant and costly changes, including replacing the original system. The original
C4ISR system, which cost $413 million to develop and field, was designed and built as a
tightly integrated system bundling large commercial and government software programs with
contractor-proprietary software, which made it difficult and costly to maintain—primarily
due to its unique characteristics and large size. For example, according to program officials,
the Coast Guard relied on the contractor to conduct even basic system updates, which
required new software code because of how the system was integrated.
As a result, in 2010, the Coast Guard began replacing the C4ISR software in two steps. First,
to address immediate issues, the Coast Guard separated the weapons and command and
control/navigation portions of the software but maintained the ability to share data between
these portions of the system. Second, the Coast Guard has developed and is now installing a
new software package that shares data between proven systems, which makes the system
easier to maintain. For example, the communication/navigation system is largely based upon
the Navy’s Global Command and Control System, a long-standing system maintained by
DOD. In addition, the combat system is adapted from the Navy’s Aegis system. While the
previous version of the C4ISR system also contained this software, the Coast Guard’s new
configuration keeps these systems independent to improve performance and maintenance,
while still allowing data to be passed back and forth between the software packages within
the system.
The Coast Guard has spent nearly $2 million to develop this new system, called Seawatch,
which will have to be further developed for each asset on which it is fielded. For example, it
will cost an additional $88.5 million in acquisition funds to purchase the software and
hardware needed to field the system on the National Security Cutters.57
57
Government Accountability Office, Coast Guard Acquisitions[:] Better Information on Performance and Funding
Needed to Address Shortfalls, GAO-14-450, June 2014, pp. 17-21.
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FRC Program: FY2015 Request for Two (Rather than Four or Six)
Ships
Another potential oversight issue for Congress concerns the Coast Guard’s FY2015 request for
acquisition funding for two (rather than four or six) FRCs. Compared to a procurement rate of
four or six boats per year, a procurement rate of two per year would increase unit procurement
costs and lengthen the time needed to complete the 58-boat program (which in turn would require
the Coast Guard to either operate and maintain older Island-class patrol boats for a longer period
of time or accept a reduction in patrol boat capacity while the 58-boart FRC program was being
completed). A similar issue arose in connection with the Coast Guard’s FY2014 budget
submission, which also requested funding for the procurement of two FRCs. As part of its action
on the Coast Guard’s FY2014 budget, Congress provided funding for six FRCs.
At a March 26, 2014, hearing on the proposed FY2015 budget for the Coast Guard and maritime
transportation programs before the Coast Guard and Maritime Transportation subcommittee of
the House Transportation and Infrastructure Committee, Admiral Robert Papp, the commandant
of the Coast Guard, when asked about the impact on unit cost of procuring two FRCs in FY2015
as opposed to a larger number, stated:
What we’re hopeful in negotiating with the ship yard is we'll be able to buy those two, just
about at the same price that we've been buying them when we order them six a year.
They can spread their workforce [to achieve] an average [build rate], [taking into account]
the boats that are on order right now, they can average that out to five a year in terms of
actually building them and when we add the two in there, they should be able to keep the
price per boat about the same. I'm hopeful at least but we'll get back to the subcommittee
once we finalize the negotiations on that.57
OPC Program: FY2015 Funding Request Less than Projected Under
FY2014 Budget
Another potential oversight issue for Congress concerns the $20 million in acquisition funding
requested for FY2015 for the OPC program. As shown in Table 1, this figure is less than onethird of the $65 million that was projected for FY2015 under the Coast Guard’s FY2014 budget
submission. At a March 26, 2014, hearing on the proposed FY2015 budget for the Coast Guard
and maritime transportation programs before the Coast Guard and Maritime Transportation
subcommittee of the House Transportation and Infrastructure Committee, Admiral Robert Papp,
the commandant of the Coast Guard, when asked whether the requested amount of FY2015
funding for the OPC would sufficient to keep the OPC program on its current timeline, replied in
in the affirmative.58
57
58
Transcript of hearing.
Transcript of hearing.
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FRC Program: Operational Testing
Another potential oversight issue for Congress concerns the results of operational testing of the
FRC. A June 2014 report on Coast Guard acquisition programs states that
DHS approved the Fast Response Cutter and [the] HC-144 [maritime patrol aircraft] for fullrate production in September 2013 and October 2012, respectively. However, neither asset
met all key requirements during initial operational testing. The Fast Response Cutter
partially met one of six key requirements while the HC-144 met or partially met four of
seven. The Fast Response Cutter was found to be operationally effective (with the exception
of its cutter boat) though not operationally suitable, and the HC-144 was found to be
operationally effective and suitable. As we have previously found for Department of Defense
(DOD) programs, continuing with full-rate production before ensuring that assets meet key
requirements risks replicating problems in each new asset until such problems are corrected.
DHS officials stated that they approved both assets for full-rate production because the
programs had plans in place to address most major issues identified during testing, such as
supplying the Fast Response Cutter with a small boat developed for the National Security
Cutter. However, DHS and Coast Guard acquisition guidance are not clear regarding when
the minimum performance standards should be met, such as prior to entering full-rate
production. For example, DHS and Coast Guard guidance provide that the Coast Guard
58
Transcript of hearing.
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should determine if the capability meets the established minimum performance standards,
but do not specify when this determination should be made. By comparison, DOD
acquisition guidance requires that specific minimum performance standards, which are
defined at the time assets are approved for system development, be met prior to entering fullrate production.
In addition, DHS and Coast Guard acquisition guidance do not clearly specify how agency
officials determine when a breach occurs and what triggers the need for a program manager
to submit a performance breach memo. According to DHS and Coast Guard acquisition
guidance, when programs fail to meet key performance parameters, program managers are
required to file breach memorandums stating that the program did not demonstrate the
required capability. Even though threshold key performance parameters on the HC-144 and
Fast Response Cutter were not met during operational testing, the Coast Guard did not report
that a breach had occurred. Acquisition guidance is unclear as to whether or not failing to
meet key requirements during operational testing constitutes a breach. According to Coast
Guard officials, if the Coast Guard plans to re-test or re-design a deficiency in order to meet
the threshold value, then a breach has not yet occurred. For example, the Fast Response
Cutter small boat did not meet the threshold seakeeping requirement, but a new cutter small
boat has since been tested on its own and fielded to all Fast Response Cutters. The Coast
Guard plans to test this new cutter small boat with the Fast Response Cutter during follow on
testing. Program officials are confident that the cutter’s new small boat meets this
requirement and that—therefore—a breach has not occurred. DHS acquisition guidance
specifies the performance criteria used to determine whether or not a breach has occurred,
but does not identify a triggering event for determining when a breach occurs. DHS’s
Program Accountability and Risk Management officials stated that a program breach is not
necessarily related to its performance during initial operational testing, which they state is a
snapshot of a single asset’s performance during a defined test period. Without clear
acquisition guidance, it is difficult to determine when or by what measure an asset has
breached the threshold values of its key performance parameters and—therefore—when to
notify DHS and certain congressional committees....
COTF [Commander, Operational Test and Evaluation Force] determined in July 2013 that
the Fast Response Cutter, without the cutter’s small boat, is operationally effective—
meaning that testers determined that the asset enables mission success. The cutter’s small
boat was determined to not be seaworthy in minimally acceptable sea conditions and—
therefore—could not support the cutter’s mission set. Further, COTF determined that the
Fast Response Cutter is not operationally suitable because a key engine part failed, which
lowered the amount of time the ship was available for missions to an unacceptable level.
Despite the mixed test results, COTF and DHS testers as well as Coast Guard program
officials all agree that the Fast Response Cutter is a capable vessel. Ultimately, COTF
recommended that the Coast Guard proceed to field the vessel, but also recommended that
the issues with the cutter’s small boat be remedied expeditiously and that follow-on
operational testing be conducted once corrective actions have been implemented. Since the
test, the Coast Guard has delivered a new small boat that meets the Fast Response Cutter’s
needs and determined that the engine part failure was an isolated event.
The Navy also examined the extent to which the Fast Response Cutter meets key
requirements. The test demonstrated that it partially met only one out of its six key
requirements; the other five requirements did not meet minimum performance levels or were
not tested. Table 2 displays each key performance parameter for the Fast Response Cutter,
the test results, and a discussion of these results.
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The Coast Guard proactively sought to test the Fast Response Cutter early in the acquisition
process, but early testing limited the ability to fully examine the vessel. For example, the
Coast Guard did not test the top speed of the vessel due to a fuel oil leak. As noted above,
DHS approved the Fast Response Cutter for full-rate production, but directed the program to
develop corrections for the issues identified during operational testing and to verify those
corrections through follow-on operational testing by the end of fiscal year 2015.59
OPC Program: FY2015 Five-Year Funding Plan Defers Bulk of
Funding for First Ship by a Year, to FY2018
Another potential oversight issue for Congress concerns the five-year funding profile for the OPC
program. As shown in Table 1, the bulk of the acquisition funding for the first OPC has been
shifted from FY2017 under the FY2014 budget submission to FY2018 under the FY2015 budget
submission, suggesting a possible one-year deferral in the schedule for acquiring the first OPC
(and by implication, possible similar deferrals for the schedules for acquiring the next few OPCs
after that).
At a March 26, 2014, hearing on the proposed FY2015 budget for the Coast Guard and maritime
transportation programs before the Coast Guard and Maritime Transportation subcommittee of
59
Government Accountability Office, Coast Guard Acquisitions[:] Better Information on Performance and Funding
Needed to Address Shortfalls, GAO-14-450, June 2014, pp. 13-16.
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the House Transportation and Infrastructure Committee, Admiral Robert Papp, the commandant
of the Coast Guard, when asked whether the requested amount of FY2015 funding for the OPC
would sufficient to keep the OPC program on its current timeline, replied in in the affirmative.60
This answer appeared to refer specifically to the program’s requested funding for FY2015. At the
time Admiral Papp made this statement, the Coast Guard’s FY2015 five-year (FY2015-FY2019)
Capital Investment Plan (CIP) had not yet been submitted to Congress. As a consequence,
projected funding figures for the OPC program for FY2016-FY2019 were not yet available. The
FY2015 CIP was delivered to Congress in June 2014.61
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 awardevaluate the 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
contract design (P&CD) proposals 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?
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, 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
60
61
Transcript of hearing.
The Coast Guard delivered the funding table for the FY2015 CIP to CRS on June 16, 2014.
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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
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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.5962
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.6063 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
5964
62
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.
6164
Source: Transcript of hearing. At a March 7, 2012, hearing on the proposed FY2013 budgets for the Coast Guard and
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,
(continued...)
60(continued...)
63
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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
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?
(...continued)65
(...continued)
[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)
6265
Transcript of hearing.
63
The transcript of the hearing shows the speaker as “unknown.”
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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):66 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 5.6467
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
66
67
The transcript of the hearing shows the speaker as “unknown.”
Transcript of hearing.
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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
64
Transcript of hearing.
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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:
•
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.
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Coast Guard Cutter Procurement: Background and Issues for Congress
•
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
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Coast Guard Cutter Procurement: Background and Issues for Congress
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.6568
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
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
68
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, pp. 28-31.
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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
65
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, pp. 28-31.
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Coast Guard Cutter Procurement: Background and Issues for Congress
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
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
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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
66
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, pp. 31, 33-35.
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Coast Guard Cutter Procurement: Background and Issues for Congress69
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 2011.6770
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.6871
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).6972 (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 6 shows
the nine alternative force mixes examined by the DHS Cutter Study, along with the POR mix.
Table 6. 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
67
69
Government Accountability Office, Coast Guard[:] Portfolio Management Approach Needed to Improve Major
Acquisition Outcomes, GAO-12-918, September 2012, pp. 31, 33-35.
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.
6871
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.
6972
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.
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Table 6. 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.7073
The synopsis stated that exercising both of the above alternatives in tandem would lead to Fleet
4.7174 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....
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
7073
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.
7174
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.
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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.7275
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.7376 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.”7477 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)
The CNA official also stated that CNA has not studied whether these changes to the
objective OPC would otherwise affect mission performance.7578
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?
72
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.
7376
Government Accountability Office, Observations on the Coast Guard’s and the Department of Homeland Security’s
Fleet Studies, GAO-12-751R, May 31, 2012.
7477
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.
7578
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.
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•
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 BC 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;
•
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 CD);
•
an annual five-year Navy shipbuilding plan that shows planned annual
procurement quantities for each type of ship being procured (see Appendix DE);
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).
F).
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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;
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•
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,7679 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.
•
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.
76
79
For the FY2013 budget, this is Department of Homeland Security, United States Coast Guard, Fiscal Year 2012
Congressional Justification, 400 pp.
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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 FY2015
Summary of Appropriations Action on FY2015 Acquisition
Funding Request
Table 7 summarizes appropriations action on the Coast Guard’s request for FY2015 acquisition
funding for the NSC, OPC, and FRC programs.
Table 7. Summary of Appropriations Action on FY2015 Acquisition Funding Request
Figures in millions of dollars, rounded to nearest tenth
Request
NSC program
OPC program
FRC program
TOTAL
Request
638
20
110
768
House
Appropriations
Committee
Senate
Appropriations
Committee
Final
Source: For request: Coast Guard FY2015 budget submission
630.347
10
205
845.347
Senate
Appropriations
Committee
638
20
318
976
Final
Source: For request: Coast Guard FY2015 budget submission. For House Appropriations Committee: H.Rept.
113-481, p. 79. For Senate Appropriations Committee: S.Rept. 113-198, p. 89.
Coast Guard and Maritime Transportation Act of 2014 (H.R. 4005)
H.R. 4005 was introduced on February 6, 2014; reported (amended) by the House Transportation
and Infrastructure Committee on March 25, 2014 (H.Rept. 113-384 of March 25, 2014); and
agreed to as amended by the House by voice vote on April 1, 2014. Section 215 of the bill as
agreed to by the House states:
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SEC. 215. MULTIYEAR PROCUREMENT AUTHORITY FOR OFFSHORE PATROL
CUTTERS.
In fiscal year 2015 and each fiscal year thereafter, the Secretary of the department in which
the Coast Guard is operating may enter into, in accordance with section 2306b of title 10,
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United States Code, multiyear contracts for the procurement of Offshore Patrol Cutters and
associated equipment.
Regarding Section 215, H.Rept. 113-384 states:
Sec. 215. Multiyear procurement authority for Offshore Patrol Cutters
This section would expressly authorize the Secretary of Homeland Security to enter into a
multiyear contract for the procurement of the OPC. The OPC is the most expensive
acquisition in Coast Guard history. The Navy has successfully used multiyear procurement
contracts to achieve savings in at least two of its major ship acquisition programs. (Page 36)
Section 216 states:
SEC. 216. MAINTAINING MEDIUM ENDURANCE CUTTER MISSION CAPABILITY.
Not later than 30 days after the date of enactment of this Act, the Secretary of the department
in which the Coast Guard is operating shall submit to the Committee on Transportation and
Infrastructure of the House of Representatives and the Committee on Commerce, Science,
and Transportation of the Senate a report that includes—
(1) a schedule and plan for decommissioning, not later than September 30, 2029, each of the
210-foot, Reliance-Class Cutters operated by the Coast Guard on the date of enactment of
this Act;
(2) a schedule and plan for enhancing the maintenance or extending the service life of each
of the 270-foot, Famous-Class Cutters operated by the Coast Guard on the date of enactment
of this Act—
(A) to maintain the capability of the Coast Guard to carry out sea-going missions with
respect to such Cutters at the level of capability existing on September 30, 2013; and
(B) for the period beginning on the date of enactment of this Act and ending on the date on
which the final Offshore Patrol Cutter is scheduled and planned to be commissioned under
paragraph (4);
(3) an identification of the number of Offshore Patrol Cutters capable of sea state 5
operations that, if 8 National Security Cutters are commissioned, are necessary to return the
sea state 5 operating capability of the Coast Guard to the level of capability that existed prior
to the decommissioning of the first High Endurance Cutter in fiscal year 2011;
(4) a schedule and plan for commissioning the number of Offshore Patrol Cutters identified
under paragraph (3); and
(5) a schedule and plan for commissioning, not later than September 30, 2034, a number of
Offshore Patrol Cutters not capable of sea state 5 operations that is equal to—
(A) 25; less
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(B) the number of Offshore Patrol Cutters identified under paragraph (3).
Regarding Section 216, H.Rept. 113-384 states:
Sec. 216. Maintaining medium endurance cutter mission capability
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The 210 foot and 270 foot MECs first entered service nearly 50 years ago. The OPC will
eventually be acquired to replace the MECs. However, both GAO and the Congressional
Research Service have noted that under current funding levels, the MEC fleet’s operational
capacity will significantly diminish before the OPC acquisition is complete. GAO has also
identified the pending acquisition of the OPC as the largest contributor to anticipated cost
escalation and delays in the Coast Guard’s major acquisition program of record.
The OPC is currently in preliminary design. This phase in the acquisition process is critical
to ensuring the Coast Guard acquires an affordable platform that meets mission
requirements. The Coast Guard is planning on acquiring 25 OPCs capable of operating in
Sea State 5 conditions. The planned OPC fleet coupled with the planned fleet of eight
National Security Cutters would provide the Coast Guard with 33 Sea State 5 capable
cutters. The Coast Guard has historically had a fleet of 12 vessels capable of operating in Sea
State 5 conditions.
This section requires the Secretary of Homeland Security to provide the Committee with a
plan for decommissioning the 210 foot MECs; extending the life of the 270 foot MECs to
ensure the Coast Guard can maintain mission capability through the OPC acquisition;
identifying the number of OPCs necessary to maintain historical Sea State 5 capability; and
acquiring OPCs that maintain historical Sea State 5 capability, as well as OPCs that do not
maintain such capability. (Page 36)
In addition to Sections 216 and 216, Section 209 states:
SEC. 209. MISSION NEED STATEMENT.
(a) In General- Section 569 of title 14, United States Code, is amended to read as follows:
`Sec. 569. Mission need statement
`(a) In General- On the date on which the President submits to Congress a budget for fiscal
year 2016 under section 1105 of title 31, on the date on which the President submits to
Congress a budget for fiscal year 2019 under such section, and every 4 years thereafter, the
Commandant shall submit to the Committee on Transportation and Infrastructure of the
House of Representatives and the Committee on Commerce, Science, and Transportation of
the Senate an integrated major acquisition mission need statement.
`(b) Definitions- In this section, the following definitions apply:
`(1) INTEGRATED MAJOR ACQUISITION MISSION NEED STATEMENT- The term
`integrated major acquisition mission need statement’ means a document that—
`(A) identifies current and projected gaps in Coast Guard mission capabilities using mission
hour targets;
`(B) explains how each major acquisition program addresses gaps identified under
subparagraph (A) if funded at the levels provided for such program in the most recently
submitted capital investment plan; and
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`(C) describes the missions the Coast Guard will not be able to achieve, by fiscal year, for
each gap identified under subparagraph (A).
`(2) MAJOR ACQUISITION PROGRAM- The term `major acquisition program’ has the
meaning given that term in section 569a(e).
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`(3) CAPITAL INVESTMENT PLAN- The term `capital investment plan’ means the plan
required under section 663(a)(1).’.
(b) Clerical Amendment- The analysis for chapter 15 of title 14, United States Code, is
amended by striking the item relating to section 569 and inserting the following:
`569. Mission need statement.’.
Regarding Section 209, H.Rept. 113-384 states:
Sec. 209. Mission need statement
This section directs the Coast Guard to submit to the Committee a single, new MNS covering
all of its major acquisition programs with the submission of the FY 2016 and 2019 budget
request to Congress and every four years thereafter. It further requires the Coast Guard to
base the MNS on the funding provided in the CIP submitted for the fiscal year in which a
MNS is required to be submitted. Finally, the Coast Guard is required to describe which
missions it will not be able to achieve for any year in which a gap exists between the MNS
mission hour targets and projected mission hours from new and legacy assets. (Page 35)
H.Rept. 113-384 also states:
Coast Guard mission performance
As the Coast Guard’s own data shows, the Service is not meeting its mission performance
targets. In FY 2012, the Coast Guard met less than half of its mission performance measures.
Over the last five fiscal years, the Service never scored better than 61 percent. Other metrics
of mission performance paint an equally bleak picture. For instance, the Coast Guard has
reported that since FY 2005, the total number of flight hours for aircraft and underway hours
for cutters has declined by over 110,000 hours or 14 percent.
The reduction in these and other metrics that judge mission performance are largely
attributable to the fact that the Coast Guard’s fleets of aircraft and vessels are not reliably
available to conduct missions. Most Coast Guard assets have surpassed their service lives
and become increasingly prone to failures. This fact coupled with the decommissioning of
assets before their replacements arrive and cuts to maintenance funds as a result of the
sequester have significantly reduced operational readiness and undermined mission
performance. The only way to reverse the decline in the Coast Guard’s mission performance
is to make the necessary investments to acquire new and improved assets and maintain
sufficient and reliable funding for operations.
The Service is nearly half way through its 20- to 25-year major acquisition program to
recapitalize most of its aging vessels and aircraft, as well as to modernize its information
technology systems. The Coast Guard has undertaken a series of acquisition reforms in
recent years which have helped to stabilize the major acquisition program and enabled the
Service to begin taking delivery of new and improved assets in a cost-effective manner.
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While the Committee commends the Coast Guard for its reform efforts, it continues to have
several concerns with the major acquisition program of record. First, the document the Coast
Guard relies on to justify and guide its major acquisition program of record represents an
outdated assessment of its mission needs and capability gaps. Second, current fiscal year
funding levels and projected funding levels over the next five fiscal years for Coast Guard
acquisitions jeopardize the Service’s ability to complete the major acquisition program of
record on schedule and on budget. Finally, once the major acquisition program of record is
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completed, the Service will continue to suffer from significant capability gaps in its
missions.
In 1996, the Coast Guard developed a Mission Need Statement (MNS) to establish a baseline
for the numbers, types, and capabilities of new and recapitalized assets that would be needed
to meet the Service’s mission requirements and to identify how its $24 billion major
acquisition program of record would address capability gaps in its missions. In 2005, the
Coast Guard revised the 1996 MNS to accommodate additional capabilities needed to meet
post-September 11th mission requirements. Although the Service has reviewed the impact
different mixes of assets would have on mission capability gaps, it has not reviewed the
underlying mission needs since the MNS was last updated in 2005.
In July 2011, the Government Accountability Office (GAO) reported that funding requested
by current and past administrations has not been sufficient to meet acquisition timelines in
the MNS (GAO–11–743). The GAO reported that at least $1.9 billion in ac quisition funding
would be required each year to build all of the assets included in the major acquisition
program of record on schedule. Appropriated funding for the Coast Guard’s Acquisition,
Construction, and Improvement (AC&I) account has never exceeded $1.6 billion.
Furthermore, in recent fiscal years, the administration has proposed to cut AC&I funding by
over 40 percent from enacted levels.
Projected funding requests for the Coast Guard acquisitions also falls significantly short of
what is required to build the acquisition program of record on schedule. The Service’s FY
2014–2018 Capital Investment Plan (CIP) identifies funding requests for major acquisition
programs over the next five fiscal years. Funding requests for the AC&I account do not
exceed $1.19 billion for any fiscal year in the CIP. Under the funding projections provided in
the CIP, the gaps between the 2005 MNS mission hour targets and projected mission hours
from new and legacy assets will not close.
However, even if sufficient funding was requested and appropriated, the program of record
does not provide the capability necessary to meet mission performance targets. Building the
program of record still leaves the Coast Guard tens of thousands of hours short of what is
needed to meet its post-September 11th mission requirements. GAO has faulted the Coast
Guard for not conducting a comprehensive reanalysis of its current major acquisition
program of record to examine trade-offs between budget constraints, timelines, capabilities,
and asset quantities.
H.R. 4005 addresses these concerns in several ways. First, the bill authorizes over $1.5
billion in AC&I funding for each of the FYs 2015 and 2016. Although less than the $1.9
billion target level identified by GAO, this level of funding rejects the irresponsible cuts
proposed by the administration in recent years and will help keep the major acquisition
program of record on a more sustainable footing. Second, the bill requires the Service to
provide the Committee with a plan to maintain operational capability for its legacy Medium
Endurance Cutter (MEC) fleet while it transitions to the replacement Offshore Patrol Cutter
(OPC), and would require the Service to reexamine OPC capabilities to control acquisition
and operations costs. Third, the bill authorizes the use of innovative acquisition strategies to
reduce the cost of the OPC. Finally, the bill directs the Coast Guard to submit to the
Committee a single, new MNS covering all of its major acquisition programs on a regular
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basis; to base the MNS on the funding provided in the CIP; and to describe which missions it
will not be able to achieve for any year in which a gap exists between the MNS mission hour
targets and projected mission hours from new and legacy assets. (Pages 24-25)
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Appendix AFY2015 DHS Appropriations Act (H.R. 4903/S. 2534)
House
H.R. 4903 as reported by the House Appropriations Committee (H.Rept. 113-481 of June 19,
2014) appropriates funds for the Coast Guard’s Acquisition, Construction, and Improvements
(AC&I) appropriation account provided, among other things,
That the funds provided by this Act shall be immediately available and allotted to contract
for the production of the eighth National Security Cutter notwithstanding the availability of
funds for post-production costs: Provided further, That the Commandant of the Coast Guard
shall submit to the Committees on Appropriations of the House of Representatives and the
Senate and the Committee on Transportation and Infrastructure of the House of
Representatives, at the time the President’s budget proposal for fiscal year 2016 is submitted
pursuant to section 1105(a) of title 31, United States Code, a future-years capital investment
plan for the Coast Guard that identifies for each requested capital asset—
(1) the proposed appropriations included in that budget;
(2) the total estimated cost of completion, including and clearly delineating the costs of
associated major acquisition systems infrastructure and transition to operations;
(3) projected funding levels for each fiscal year for the next 5 fiscal years or until acquisition
program baseline or project completion, whichever is earlier;
(4) an estimated completion date at the projected funding levels; and
(5) a current acquisition program baseline for each capital asset, as applicable, that—
(A) includes the total acquisition cost of each asset, subdivided by fiscal year and including a
detailed description of the purpose of the proposed funding levels for each fiscal year,
including for each fiscal year funds requested for design, pre-acquisition activities,
production, structural modifications, missionization, post-delivery, and transition to
operations costs;
(B) includes a detailed project schedule through completion, subdivided by fiscal year, that
details—
(i) quantities planned for each fiscal year; and
(ii) major acquisition and project events, including development of operational requirements,
contracting actions, design reviews, production, delivery, test and evaluation, and transition
to operations, including necessary training, shore infrastructure, and logistics;
(C) notes and explains any deviations in cost, performance parameters, schedule, or
estimated date of completion from the original acquisition program baseline and the most
recent baseline approved by the Department of Homeland Security’s Acquisition Review
Board, if applicable;
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(D) aligns the acquisition of each asset to mission requirements by defining existing
capabilities of comparable legacy assets, identifying known capability gaps between such
existing capabilities and stated mission requirements, and explaining how the acquisition of
each asset will address such known capability gaps;
(E) defines life-cycle costs for each asset and the date of the estimate on which such costs are
based, including all associated costs of major acquisition systems infrastructure and
transition to operations, delineated by purpose and fiscal year for the projected service life of
the asset;
(F) includes the earned value management system summary schedule performance index and
cost performance index for each asset, if applicable; and
(G) includes a phase-out and decommissioning schedule delineated by fiscal year for each
existing legacy asset that each asset is intended to replace or recapitalize:
Provided further, That the Commandant of the Coast Guard shall ensure that amounts
specified in the future-years capital investment plan are consistent, to the maximum extent
practicable, with proposed appropriations necessary to support the programs, projects, and
activities of the Coast Guard in the President’s budget proposal for fiscal year 2016,
submitted pursuant to section 1105(a) of title 31, United States Code: Provided further, That
any inconsistencies between the capital investment plan and proposed appropriations shall be
identified and justified: Provided further, That the Director of the Office of Management and
Budget shall not delay the submission of the capital investment plan referred to by the
preceding provisos: Provided further, That the Director of the Office of Management and
Budget shall have no more than a single period of 10 consecutive business days to review the
capital investment plan prior to submission: Provided further, That the Secretary of
Homeland Security shall notify the Committees on Appropriations of the House of
Representatives and the Senate and the Committee on Transportation and Infrastructure of
the House of Representatives one day after the capital investment plan is submitted to the
Office of Management and Budget for review and the Director of the Office of Management
and Budget shall notify the Committees on Appropriations of the House of Representatives
and the Senate and the Committee on Transportation and Infrastructure of the House of
Representatives when such review is completed: Provided further, That subsections (a) and
(b) of section 6402 of P.L. 110-28 shall apply with respect to the amounts made available
under this heading.80
80
Subsections (a) and (b) of Section 6402 of H.R. 2206/P.L. 110-28 of May 25, 2007, the U.S. Troop Readiness,
Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, state:
SEC. 6402. (a) IN GENERAL- Any contract, subcontract, task or delivery order described in
subsection (b) shall contain the following:
(1) A requirement for a technical review of all designs, design changes, and engineering change
proposals, and a requirement to specifically address all engineering concerns identified in the
review before the obligation of further funds may occur.
(2) A requirement that the Coast Guard maintain technical warrant holder authority, or the
equivalent, for major assets.
(3) A requirement that no procurement subject to subsection (b) for lead asset production or the
implementation of a major design change shall be entered into unless an independent third party
with no financial interest in the development, construction, or modification of any component of
the asset, selected by the Commandant, determines that such action is advisable.
(4) A requirement for independent life-cycle cost estimates of lead assets and major design and
engineering changes.
(5) A requirement for the measurement of contractor and subcontractor performance based on the
(continued...)
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Section 516 of H.R. 4903 as reported states:
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 conversion 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.
In addition to the recommended funding levels shown in Table 7, H.Rept. 113-481 states:
National Security Cutter
The Committee recommends $630,347,000 for the NSC program, a decrease of $7,653,000
below the amount requested, but $1,347,000 above the amount provided in fiscal year 2014.
The recommendation includes a decrease of $10,000,000 for unjustified cost growth on the
production price of NSC 8 and $3,953,000 for activities requested ahead of need. The
recommendation also defers $42,362,000 through a rescission for contract savings on NSC 7
and because post-delivery activities for NSC 8 are requested unnecessarily ahead of need. An
increase of $6,300,000 is included for a small-UAS [unmanned aircraft system] to provide
persistent tactical surveillance in counterdrug operations.
Fast Response Cutter
The Committee recommends $205,000,000 for the acquisition of four Fast Response Cutters
(FRCs), $95,000,000 above the amount requested and $105,000,000 below the amount
provided in fiscal year 2014. The recommendation defers $20,080,000 through a rescission
for post-delivery activities that are requested ahead of need.
For the third year in a row, the budget request included funding for only two FRCs. Due to
economies of scale, limiting procurement to two FRCs per year drives up the unit cost and
results in the loss of $15,000,000 in savings compared to an order of four FRCs per year and
a loss of almost $30,000,000 in savings compared to an order of six FRCs per year. In
(...continued)
status of all work performed. For contracts under the Integrated Deepwater Systems program, such
requirement shall include a provision that links award fees to successful acquisition outcomes
(which shall be defined in terms of cost, schedule, and performance).
(6) A requirement that the Commandant of the Coast Guard assign an appropriate officer or
employee of the Coast Guard to act as chair of each integrated product team and higher-level team
assigned to the oversight of each integrated product team.
(7) A requirement that the Commandant of the Coast Guard may not award or issue any contract,
task or delivery order, letter contract modification thereof, or other similar contract, for the
acquisition or modification of an asset under a procurement subject to subsection (b) unless the
Coast Guard and the contractor concerned have formally agreed to all terms and conditions or the
head of contracting activity for the Coast Guard determines that a compelling need exists for the
award or issue of such instrument.
(b) CONTRACTS, SUBCONTRACTS, TASK AND DELIVERY ORDERS COVEREDSubsection (a) applies to—
(1) any major procurement contract, first-tier subcontract, delivery or task order entered into by the
Coast Guard;
(2) any first-tier subcontract entered into under such a contract; and
(3) any task or delivery order issued pursuant to such a contract or subcontract.
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addition, the proposed procurement rate significantly delays the delivery of much needed
capability.
This serves as clear evidence of the fiscal and operational shortsightedness of proposing
unrealistically low AC&I budgets. It is unclear how the Department plans to close the
various gaps in needed capability if it continues to make such ineffective and inadequate
requests.
Offshore Patrol Cutter
The Committee recommends $10,000,000 for the Offshore Patrol Cutter program, a decrease
of $10,000,000 from the request and $13,000,000 below the amount provided in fiscal year
2014. The reduction is a result of significant unobligated balances within the program and
delays in excess of nine months in the program schedule over the last year. Although the
fiscal year 2014 budget planned for a contract award in September 2013, the award did not
occur until mid-February 2014 and was again delayed due to a protest which was resolved
just this month. The recommended funds, combined with funds previously appropriated, are
sufficient to sustain the program through fiscal year 2015. (Page 80)
H.Rept. 113-481 also states:
Capital Investment Plan
The Coast Guard is directed to submit a five-year CIP, in accordance with the specified
requirements listed in the bill, in conjunction with the budget submission for fiscal year
2016. The Committee is concerned by the Coast Guard’s repeated noncompliance with the
requirement in annual appropriations Acts to submit a CIP to Congress with the submission
of the budget. To address these concerns, and consistent with prior years, the Committee
withholds $150,000,000 from Coast Guard Headquarters offices until the fiscal year 2016
CIP is submitted. Additionally, the Committee includes bill language limiting the time OMB
is permitted to review the CIP. The Committee continues to believe the CIP serves as the
primary means of oversight for tracking the Coast Guard’s recapitalization efforts and
therefore must be submitted in accordance with mandated timelines. The failure of the Coast
Guard to submit the required information in a timely manner hinders the Committee’s
oversight responsibility and forces budgetary decisions to be made with limited program
information. (Pages 79-80)
H.Rept. 113-481 also states:
Mission Needs Statement
The Committee directs the Commandant to conduct a new mission needs statement (MNS),
to be submitted with the fiscal year 2016 budget, which takes into account the funding
proposed in the five-year Capital Investment Plan (CIP) submitted for that fiscal year. The
MNS shall describe which missions the Coast Guard will not be able to achieve for any year
in which a gap exists between the mission hour targets and projected mission hours for new
and legacy assets based on the proposed CIP. (Page 76)
Senate
S. 2534 as reported by the Senate Appropriations Committee (S.Rept. 113-198 of June 26, 2014)
appropriates funds for the Coast Guard’s Acquisition, Construction, and Improvements (AC&I)
appropriation account provided, among other things,
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That the funds provided by this Act shall be immediately available and allotted to contract
for the production of the eighth National Security Cutter notwithstanding the availability of
funds for post-production costs: Provided further, That the Commandant of the Coast Guard
shall submit to the Committees on Appropriations of the Senate and the House of
Representatives, at the time the President’s budget proposal for fiscal year 2016 is submitted
pursuant to section 1105(a) of title 31, United States Code, a future-years capital investment
plan for the Coast Guard that identifies for each requested capital asset—
(1) the proposed appropriations included in that budget;
(2) the total estimated cost of completion, including and clearly delineating the costs of
associated major acquisition systems infrastructure and transition to operations;
(3) projected funding levels for each fiscal year for the next 5 fiscal years or until acquisition
program baseline or project completion, whichever is earlier;
(4) an estimated completion date at the projected funding levels; and
(5) a current acquisition program baseline for each capital asset, as applicable, that—
(A) includes the total acquisition cost of each asset, subdivided by fiscal year and including a
detailed description of the purpose of the proposed funding levels for each fiscal year,
including for each fiscal year funds requested for design, pre-acquisition activities,
production, structural modifications, missionization, post-delivery, and transition to
operations costs;
(B) includes a detailed project schedule through completion, subdivided by fiscal year, that
details—
(i) quantities planned for each fiscal year; and
(ii) major acquisition and project events, including development of operational requirements,
contracting actions, design reviews, production, delivery, test and evaluation, and transition
to operations, including necessary training, shore infrastructure, and logistics;
(C) notes and explains any deviations in cost, performance parameters, schedule, or
estimated date of completion from the original acquisition program baseline and the most
recent baseline approved by the Department of Homeland Security’s Acquisition Review
Board, if applicable;
(D) aligns the acquisition of each asset to mission requirements by defining existing
capabilities of comparable legacy assets, identifying known capability gaps between such
existing capabilities and stated mission requirements, and explaining how the acquisition of
each asset will address such known capability gaps;
(E) defines life-cycle costs for each asset and the date of the estimate on which such costs are
based, including all associated costs of major acquisitions systems infrastructure and
transition to operations, delineated by purpose and fiscal year for the projected service life of
the asset;
(F) includes the earned value management system summary schedule performance index and
cost performance index for each asset, if applicable; and
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(G) includes a phase-out and decommissioning schedule delineated by fiscal year for each
existing legacy asset that each asset is intended to replace or recapitalize:
Provided further, That the Commandant of the Coast Guard shall ensure that amounts
specified in the future-years capital investment plan are consistent, to the maximum extent
practicable, with proposed appropriations necessary to support the programs, projects, and
activities of the Coast Guard in the President’s budget proposal for fiscal year 2016,
submitted pursuant to section 1105(a) of title 31, United States Code: Provided further, That
any inconsistencies between the capital investment plan and proposed appropriations shall be
identified and justified: Provided further, That subsections (a) and (b) of section 6402 of P.L.
110-28 shall hereafter apply with respect to the amounts made available under this heading.81
Section 516 of S. 2534 as reported states:
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 conversion 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.
In addition to the recommended funding levels shown in Table 7, S.Rept. 113-198 states:
Despite warnings from the outgoing Commandant of a coming “death spiral” for legacy
assets, the request also continues to propose harmful reductions to the Coast Guard’s capital
budget. The Coast Guard operates one of the oldest naval fleets in the world, yet the request
cuts cutter and aircraft acquisitions in fiscal year 2015 that are critical to the agency’s future.
The request also has the impact of cutting over 1,000 jobs from important shipbuilding and
aviation acquisition programs. The country is not best served by having the Coast Guard
operate assets that are nearing 50 years of age and reaching obsolescence. (Page 81)
S.Rept. 113-198 also states:
NATIONAL SECURITY CUTTER
The Committee recommendation includes $638,000,000, as requested, for NSC-8. The Coast
Guard operates a fleet of 378-foot high endurance cutters [HECs] that are over 46 years old
on average, and are increasingly unreliable and expensive to maintain. By comparison, the
average Navy ship is 20 years old. The Coast Guard’s program of record is to acquire 8
national security cutters [NSCs] to replace 12 HECs (of which 5 have been decommissioned
with the arrival of the first 3 NSCs). To date, approximately $4,365,744,000 has been
appropriated for seven NSCs and long lead time materials [LLTM] for NSC–8. Three NSCs
have been delivered to the Coast Guard, the fourth is expected to be delivered in late fiscal
year 2014, the fifth in late fiscal year 2015, the sixth in fiscal year 2017, the seventh in fiscal
year 2018, and the eighth in fiscal year 2019.
FULL FUNDING POLICY
The Committee is concerned that the Administration’s current acquisition policy requires the
Coast Guard to attain total acquisition cost for a vessel, including long lead time materials,
production costs, and post-production costs, before a production contract can be awarded.
81
For the text of subsections (a) and (b) of Section 6402 of H.R. 2206/P.L. 110-28 of May 25, 2007, the U.S. Troop
Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, see footnote 80.
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This has the potential to create shipbuilding inefficiencies, force delayed obligation of
production funds, and require postproduction funds far in advance of when they will be used.
As an example of such inefficiency, the fiscal year 2013 budget request proposed a rescission
and reappropriation of $25,000,000 in funds previously appropriated for NSC–4 postproduction that would have expired before they could be spent. The Department should be in
a position to acquire vessels in the most efficient manner within the guidelines of strict
governance measures. Therefore, the Committee includes language in the bill specifying that
funds made available by this act shall be immediately available and allotted to contract for
production of the eighth and final NSC notwithstanding the availability of funds for postproduction costs. The Committee expects the Administration to adopt a similar policy for the
acquisition of the Offshore Patrol Cutter [OPC].
FAST RESPONSE CUTTER
The Committee recommends $318,000,000 for the Coast Guard’s Fast Response Cutter
[FRC]. This funding will allow the Coast Guard to acquire six FRC hulls (31–36). Procuring
six FRCs in fiscal year 2015 will maximize the production line and generate cost savings of
at least $5,000,000 per hull for a total savings to the taxpayers of $30,000,000. Funding six
boats instead of two will also allow the Coast Guard to advance the replacement of the aging
110-foot Island Class Patrol Boats, which are already beyond the end of their projected
service lives and very expensive to maintain. Each FRC will provide 2,500 annual operating
hours and improved sea keeping ability, resulting in better habitability and full mission
capability in higher sea states.
OFFSHORE PATROL CUTTER
The recommendation includes $20,000,000 for the OPC, as requested. Funding is provided
to support technical reviews of preliminary and contract designs for the OPC class, which is
intended to replace the Coast Guard’s aging fleet of medium endurance cutters. The
Committee approves of the steps taken by the Coast Guard to implement Phase I of the OPC
procurement. Going forward, the Committee encourages the Coast Guard to continue
aggressively pursuing the timeline necessary to field the required fleet of OPCs by moving to
Phase II of the OPC acquisition in the previously outlined twenty four month timeframe. The
Committee supports the Coast Guard’s efforts in this procurement. (Pages 91-92)
S.Rept. 113-198 also states:
CAPITAL INVESTMENT PLAN
The Capital Investment Plan [CIP] is essential for the Committee to carry out its oversight
function of the Coast Guard, especially at a time when recapitalization of aging assets has
become so critical for the service. All of the information required by the Committee is in
accordance with the Coast Guard’s Major Systems Acquisition Manual and applicable DHS
management directives. The fiscal year 2016–2019 plan is to be submitted with the fiscal
year 2016 congressional budget justification. The Committee is extremely displeased that it
received the 2015–2019 CIP on June 13, 2014, over 3 months after it was due. This tardiness
renders the plan unusable by the Committee when formulating its fiscal year 2015
recommendations. As a result, $125,000,000 is withheld from the Headquarters Directorate
of the Coast Guard until the fiscal year 2016–2020 plan is submitted. The Committee again
directs the Coast Guard to ensure that the CIP clearly explains any deviations in cost,
performance parameters, schedule, or estimated date of completion from the original
acquisition program to the current plan. The Coast Guard needs to make every effort to
clearly identify which procurements will be delayed or scaled back, which ones will be
canceled, which ones will remain on track, and the impact these decisions have on extending
the service life of the Coast Guard’s already aging and unreliable fleet and shore facilities.
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The Committee expects this level of transparency in the CIP accompanying the fiscal year
2016 budget request.
ANALYSIS OF MISSION REQUIREMENTS
To ensure the out-year CIP adequately meets Coast Guard operational needs, the Coast
Guard shall conduct an analysis of mission requirements. This analysis should assume that
the Coast Guard needs the capability to continue to carry out all of its 11 statutory missions.
In this analysis, the Coast Guard should also outline options for acquisition plans that
consider reasonable combinations of alternative capabilities of surface assets (including an
icebreaker) and air assets to determine the most cost effective method of executing mission
needs as determined in the analysis described above. (Pages 89-90)
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Appendix B. 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.
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•
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.77
7782
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.
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Appendix BC. 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.
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Figure BC-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-4254
Figure BC-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-4355
Figure BC-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).
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Appendix CD. Navy Ship Force Structure Objective
Table CD-1 presents the Navy’s current ship force structure objective.
Table CD-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.
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Appendix DE. Navy FY2014 Five-Year
Shipbuilding Plan
Table DE-1 presents the Navy’s FY2014 five-year (FY2014-FY2018) shipbuilding plan.
Table DE-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.
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Appendix EF. Navy FY2014 30-Year
Shipbuilding Plan
Table EF-1 shows the Navy’s proposed FY2014 30-year (FY2014-FY2043) shipbuilding plan.
Table EF-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.
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Table EF-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 E1F1.
Table EF-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.
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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
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