Coast Guard Cutter Procurement:
Background and Issues for Congress
Ronald O'Rourke
Specialist in Naval Affairs
June 223, 2015
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 FY2016 budget requests a total of $449.9 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 four are now in
service, the fifth through seventh are in various stages of construction, and long lead time
materials (LLTM) are being procured for the eighthwas delivered on June 5, 2015, and is scheduled to be commissioned into service
in August 2015, the sixth and seventh are under construction, and the eighth was funded in
FY2015. The Coast Guard’s proposed FY2016 budget
requests $638 million for the NSC
program, including $91.4 million in acquisition funding for the
NSC program.
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 FY2017FY2018. The Coast Guard’s proposed FY2016 budget requests $18.5 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 32 have been funded through FY2015.
The 11th13th was commissioned into service on January 24, 2015, and the 12th is scheduled to be
commissioned in MarchJune 20, 2015. The Coast Guard’s proposed FY2016
budget requests $340 million
in acquisition funding for the FRC program.
The NSC, OPC, and FRC programs pose several oversight issues for Congress. Congress’s
decisions on these programs could substantially affect Coast Guard capabilities and funding
requirements, and the U.S. shipbuilding industrial base.
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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 ............................................................................................................................. 78
NSC, OPC, and FRC Funding in FY2013-FY2016 Budget Submissions ................................. 9
Issues for Congress ........................................................................................................................ 10
Planned NSC, OPC, and FRC Procurement Quantities........................................................... 10
Funding Level of Coast Guard’s Acquisition Account ............................................................ 15
Multiyear Procurement (MYP) and Block Buy Contracting ................................................... 1920
OPC Program: FY2016 Funding Request ............................................................................... 2021
OPC Program: Cost, Design, and Acquisition Strategy........................................................... 22
2012 Testimony ...................................NSC Program: Preliminary and Operational Testing .............................................................................. 22
2013 Testimony ........................ 23
NSC Program: Rotational Crewing ......................................................................................... 24
September 2012 GAO Report .26
FRC Program: Operational Testing .......................................................................................... 25
NSC Program: Preliminary and Operational Testing 27
Legislative Activity for FY2016 .............................................................. 29
FRC Program: Operational Testing ...................................... 30
Summary of Appropriations Action on FY2016 Acquisition Funding Request ................................................... 31
Legislative Activity for FY2016 30
FY2016 Department of Homeland Security (DHS) Appropriations Act (S. 1619) ................. 30
Senate ............................................................................................................... 33
Summary of Appropriations Action on FY2016 Acquisition Funding Request ...................... 33................. 30
Coast Guard Authorization Act of 2015 (H.R. 1987) .............................................................. 34
House................................................................................................................................. 34
Figures
Figure 1. National Security Cutter ................................................................................................... 3
Figure 2. Offshore Patrol Cutter (Generic Conceptual Rendering) ................................................. 5
Figure 3. Fast Response Cutter ........................................................................................................ 8
Figure 4. Projected Mission Demands vs. Projected Capability/Performance .............................. 13
Tables
Table 1. NSC, OPC, and FRC Funding in FY2013-FY2016 Budget Submissions ......................... 9 10
Table 2. Program of Record Compared to Objective Fleet Mix .................................................... 11
Table 3. POR Compared to FMAs 1 Through 4 ............................................................................ 1112
Table 4. Force Mixes and Mission Performance Gaps .................................................................. 12
Table 5. POR Compared to Objective Mixes in FMA Phases 1 and 2........................................... 14
Table 6. Funding in AC&I Account in FY2013-FY2016 Budgets ................................................ 1516
Table 7. Summary of Appropriations Action on FY2016 Acquisition Funding Request............... 3430
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Coast Guard Cutter Procurement: Background and Issues for Congress
Contacts
Author Contact Information........................................................................................................... 36
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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 FY2016 budget requests a total of $449.9 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. The Coast Guard’s FY2015FY2016 five-year Capital
Investment Plan (CIP) estimates the total acquisition cost of the eight ships at $5.504559 billion, or
an average of about $688695 million per ship.
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/.
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.
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NSCs are larger and technologically more advanced than Hamilton-class cutters.13 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.14
NSCs are built by Ingalls Shipbuilding of Pascagoula, MS, a shipyard that forms part of
Huntington Ingalls Industries (HII).
The four three NSCsfirst four are now in service, the fifth was delivered on June 5, 2015, and is scheduled to be
commissioned into service in August 2015, the sixth and seventh are under construction, and the
eighth was funded in FY2015.15 (the fourth was commissioned into service on December
6, 2014), the fifth through seventh are in various stages of construction, and the eighth was
funded in FY2015.
The Coast Guard’s proposed FY2016 budget requests $91.4 million in acquisition funding for the
NSC program for structural enhancements on the first two NSCs and post-delivery activities on
NSCs 5 through 8.
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 FY2015 five-year CIP, it
appears (based on programmed annual funding levels) that the first OPC is to be procured in
FY2018. The FY2015FY2016 CIP estimates the total acquisition cost of the 25 ships at $10.523 billion,
or an average of about $421 million per ship.
The Coast Guard’s Request for Proposal (RFP) for the program, released on September 25, 2012,
establishes an affordability requirement for the program of an average unit price of $310 million
per ship, or less, in then-year dollars (i.e., dollars that are not adjusted for inflation) for ships 4
through 9 in the program.1516 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,16 or
other program costs—such as those for program management, system integration, and logistics—
that contribute to the above-cited figure of $421 million per ship.17
17 or
13
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.
14
U.S. Coast Guard description of the NSC, accessed April 26, 2013, at http://www.uscg.mil/acquisition/nsc/
features.asp.
15
“Acquisition Update: Fifth National Security Cutter Delivered To Coast Guard,” June 5, 2015, accessed June 22,
2015, at http://www.uscg.mil/acquisition/newsroom/updates/nsc060515.asp.
16
Source: Section C.5 of the RFP, accessed October 31, 2012, at http://www.uscg.mil/ACQUISITION/newsroom/
updates/opc092512.asp.
1617
GFE is equipment that the government procures and then delivers to the shipyard for installation on the ship.
17
Source: Coast Guard emails to CRS dated June 25, 2013.
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other program costs—such as those for program management, system integration, and logistics—
that contribute to the above-cited figure of $421 million per ship.18
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 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.1819
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
18
19
Source: Coast Guard emails to CRS dated June 25, 2013.
Coast Guard fact sheet on the OPC accessed April 26, 2013, at http://www.uscg.mil/acquisition/opc/pdf/opc.pdf.
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(h) Phase II award is planned for FY16.... Phase II’s down selection will be accomplished by
by exercising one option with a single contractor for Detail Design (DD) with additional options
options for Long Lead Time Materials, lead ship and eight to ten follow ships. DD will start after
after option exercise and be complete upon delivery of the first ship. The contractor will present
present the OPC design at the Initial Critical Design Reviews (ICDR) and Final Critical Design
18
Coast Guard fact sheet on the OPC accessed April 26, 2013, at http://www.uscg.mil/acquisition/opc/pdf/opc.pdf.
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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 #9.1920
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;
•
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.2021
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....
1920
Source: Section C.1 of the RFP, accessed March 26, 2013, at http://www.uscg.mil/ACQUISITION/newsroom/
updates/opc092512.asp.
2021
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.
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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.2122
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.2223 On June 5, 2014, it was reported that
GAO had rejected the protests, and that the Coast Guard had directed Bollinger, Eastern, and
GD/BIW to resume their work.2324
The Coast Guard’s proposed FY2016 budget requests $18.5 million in acquisition funding for the
OPC program for technical and project management ($4.7 million) and design and development
work ($13.8 million). The Coast Guard states, “The Administration’s [FY2016 budget] request
includes a [proposed legislative] General Provision permitting a transfer [of additional funding] to
the OPC project if the program is ready to award the next phase of vessel acquisition in FY
2016.”24
FRC Program
Fast Response Cutters (Figure 3), also called Sentinel (WPC-1101) class patrol boats, are
considerably smaller and less expensive than OPCs, but are larger than the Coast Guard’s older
patrol boats.25 The Coast Guard’s POR calls for procuring 58 FRCs as replacements for the
service’s 49 Island-class patrol boats. The FY2015 CIP estimates the total acquisition cost of the
58 cutters at $3.928 billion, or an average of about $68 million per cutter.
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.
21
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.
2225
GAO testified on May 14, 2015, that
The Coast Guard currently plans to begin construction on the lead ship in fiscal year 2018—
one year later than planned in its most recent program baseline—and deliver this ship in
2022. The Coast Guard attributes the schedule delay to procurement delays, including a bid
protest. The fiscal year 2016 Capital Investment Plan has $1.5 billion in funding for the
OPC, which funds the design work and construction of the first three vessels. After the first 3
of the planned fleet of 25 OPCs are built, the Coast Guard plans to increase its purchase to 2
OPCs per year until the final asset is delivered, currently scheduled for fiscal year 2035.26
22
“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.
23
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.
2324
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. For the text of the decision, see Government Accountability Office, Decision in
the Matter of Huntington Ingalls Industries, Inc.; VT Halter Marine, Inc., June 2, 2014.
24
Department of Homeland Security, United States Coast Guard, Fiscal Year 2016 Congressional Justification, p. CGAC&I-30.
25
FRCs are 154 feet long and have a full load displacement of 353 tons.
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FRCs will provide enhanced capabilities over the 110’s including improved C4ISR
capability and interoperability; stern launch and recovery (up through sea state 4) of a 40
knot, Over-the-Horizon, 7m cutter boat; a remote operated, gyro stabilized MK38 Mod 2,
25mm main gun; improved sea keeping; and enhanced crew habitability.26
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 FRC program received approval from DHS to enter full-rate production on September 18,
2013.27 A total of 32 FRCs have been funded through FY2015. The 11th was commissioned into
service on January 24, 2015, and the 12th is scheduled to be commissioned in March 2015.28
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 32 FRCs. (The Coast Guard
26
Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional Justification, p. CGAC&I-28 (pdf page 182 of 400).
27
“Acquisition Update: Sentinel-class Fast Response Cutter Project Achieves Acquisition Milestone,” September 18,
2013, accessed November 18, 2013, http://www.uscg.mil/acquisition/newsroom/updates/frc092413.asp.
28
“Acquisition Update: Coast Guard Commissions 11th Fast Response Cutter into Service,” January 27, 2015, accessed
March 6, 2015, http://www.uscg.mil/acquisition/newsroom/updates/frc012715.asp; and “Acquisition Update: 12th Fast
Response Cutter Delivered to Coast Guard,” January 16, 2015, accessed March 6, 2015, http://www.uscg.mil/
acquisition/newsroom/updates/frc011615.asp.
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on February 27, 2015, exercised a final option under the contract with Bollinger for ships 31 and
32.)2925
Department of Homeland Security, United States Coast Guard, Fiscal Year 2016 Congressional Justification, p. CGAC&I-30.
26
Government Accountability Office, Coast Guard Acquisitions[:] As Major Assets Are Fielded, Overall Portfolio
Remains Unaffordable, GAO-15-620T, May 14, 2015, p. 9.
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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.27 The Coast Guard’s POR calls for procuring 58 FRCs as replacements for the
service’s 49 Island-class patrol boats. The FY2016 CIP estimates the total acquisition cost of the
58 cutters at $3.764 billion, or an average of about $65 million per cutter.
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
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
27
FRCs are 154 feet long and have a full load displacement of 353 tons.
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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.28
The FRC program received approval from DHS to enter full-rate production on September 18,
2013.29 A total of 32 FRCs have been funded through FY2015. The 13th was commissioned into
service on June 20, 2015.30
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 32 FRCs. (The Coast Guard
on February 27, 2015, exercised a final option under the contract with Bollinger for ships 31 and
32.)31 Ship awards under that contract are now completed.
The Coast Guard holds the data rights for the Sentinel-class design and on February 27, 2015,
issued a Request for Proposals (RFP) for a contract that will include options for the acquisition of
up to 26 FRCs (i.e., the remaining 26 ships in the program). Proposals from bidders are due by
June 5, 2015.3032
The Coast Guard’s proposed FY2016 budget requests $340 million in acquisition funding for the
FRC program.
NSC, OPC, and FRC Funding in FY2013-FY2016 Budget
Submissions
Table 1 shows annual acquisition funding for the NSC, OPC, and FRC programs in the Coast
Guard’s FY2013-FY2016 budget submissions.
28
Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional Justification, p. CGAC&I-28 (pdf page 182 of 400).
29
“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.
30
“Acquisition Update: Coast Guard Commissions 13th Fast Response Cutter,” June 22, 2015, accessed June 22, 2015,
at http://www.uscg.mil/acquisition/newsroom/updates/frc062215.asp.
31
“Acquisition Update: Coast Guard Exercises Contract Option for Fast Response Cutters 31 And 32,” February 27,
2015, accessed March 6, 2015, at http://www.uscg.mil/acquisition/newsroom/updates/frc022815.asp.
32
“Acquisition Update: Coast Guard Issues Request for Proposal for Fast Response Cutters 33-58,” February 27, 2015,
accessed March 6, 2015, http://www.uscg.mil/acquisition/newsroom/updates/frc022915.asp.
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Table 1. NSC, OPC, and FRC Funding in FY2013-FY2016 Budget Submissions
(millions of then-year dollars)
NSC program
FY13 budget
FY14 budget
FY15 budget
FY16 budget
OPC program
FY13 budget
FY14 budget
FY15 budget
FY16 budget
FRC program
FY13 budget
FY14 budget
FY15 budget
FY16 budget
Total
FY13 budget
FY14 budget
FY15 budget
FY16 budget
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
FY2020
683
0
616
0
710
638
0
38
75
91.4
0
0
130
n/a
45
30
n/a
47
n/a
n/a132
45
30
95
47
30
15
200
200
90
18.5
530
530
100
n/a100
430
530
n/a
430
n/a
n/a530
430
430
430
360
110
340
340
360
110
220
n/a325
110
220
n/a
315
n/a
n/a240
315
240
325
560
348
505
449.9
890
640
450
n/a557
585
780
n/a
792
n/a
n/a865
792
700
370
30
139
852
50
25
360
75
410
716
40
65
20
360
110
110
400
885
768
Source: FY2013-FY2016 budget submissions; “n/a” = not available.
29
“Acquisition Update: Coast Guard Exercises Contract Option for Fast Response Cutters 31 And 32,” February 27,
2015, accessed March 6, 2015, http://www.uscg.mil/acquisition/newsroom/updates/frc022815.asp.
30
“Acquisition Update: Coast Guard Issues Request for Proposal for Fast Response Cutters 33-58,” February 27, 2015,
accessed March 6, 2015, http://www.uscg.mil/acquisition/newsroom/updates/frc022915.asp.
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Issues for Congress
Planned NSC, OPC, and FRC Procurement Quantities
One potential oversight issue for Congress concerns the Coast Guard’s planned NSC, OPC, and
FRC procurement quantities. The POR’s planned force of 91 NSCs, OPCs, and FRCs is about
equal in number to the Coast Guard’s legacy force of 90 high-endurance cutters, mediumendurance cutters, and 110-foot patrol craft. NSCs, OPCs, and FRCs, moreover, are to be
individually more capable than the older ships they are to replace. Even so, Coast Guard studies
have concluded that the planned total of 91 NSCs, OPCs, and FRCs would be considerably fewer
ships than the number that would be needed to fully perform the service’s statutory missions in
coming years, in part because Coast Guard mission demands are expected to be greater in coming
years than they were in the past. CRS first testified about this issue in 2005.3133
The Coast Guard estimates that with the POR’s planned force of 91 NSCs, OPCs, and FRCs, the
service would have capability or capacity gaps32 in 6 of its 11 statutory missions—search and
gaps34 in 6 of its 11 statutory missions—search and
33
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.
34
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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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.
31
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.
32
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.
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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).
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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
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until April 2011, when GAO presented them in testimony.3335 GAO again presented them in a July
2011 report.3436
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.
33
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.
34
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.3537
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
35
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.
36
Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater Program Remains
Unachievable, GAO-11-743, July 2011, p. 46.
37
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.
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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 Table 5 might thus also imply a decision to procure, operate, and support larger numbers of
Coast Guard aircraft, which would require billions of additional dollars. The FMA Phase 1 study
estimated the procurement cost of the objective fleet mix of 157 cutters and 479 aircraft at $61
billion to $67 billion in constant FY2009 dollars, or about 66% more than the procurement cost of
$37 billion to $40 billion in constant FY2009 dollars estimated for the POR mix of 91 cutters and
248 aircraft. The study estimated the total ownership cost (i.e., procurement plus life-cycle O&S
cost) of the objective fleet mix of cutters and aircraft at $201 billion to $208 billion in constant
FY2009 dollars, or about 53% more than the total ownership cost of $132 billion to $136 billion
in constant FY2009 dollars estimated for POR mix of cutters and aircraft.36
35
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.
36
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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38
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 should the Coast Guard’s statutory
missions be 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?
Funding Level of Coast Guard’s Acquisition Account
Another potential oversight issue for Congress concerns the funding level in the Coast Guard’s
acquisition account, known formally as the Acquisition, Construction, and Improvements (AC&I)
account. The Coast Guard has testified that acquiring the ships and aircraft in its POR on a timely
basis while also adequately funding other Coast Guard acquisition programs would require a
funding level for the AC&I account of roughly $1.5 billion to $2.5 billion per year.
As shown in Table 6 below, the Administration’s FY2013 budget submission programmed an
average of about $1.5 billion per year in the AC&I account. As also shown in the table,
38
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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subsequent budget submissions have reduced that figure to roughlybetween $1 billion orand $1.12 billion per
per year.
Table 6. Funding in AC&I Account in FY2013-FY2016 Budgets
Millions of dollars, rounded to nearest tenth
FY13 budget
FY13
FY14
FY15
FY16
FY17
1,217.3
1,429.5
1,619.9
1,643.8
1,722.0
951.1
1,195.7
901.0
1,024.8
1,030.3
1,084.2
1,103.0
1,128.9
1,180.4
1,228.7
1,017.3
n/a
n/a
n/a1,125.3
1,255.7
1,201.0
FY14 budget
FY15 budget
FY16 budget
FY18
FY19
FY20
Avg.
1,526.5
1,020.6
1,145.0
n/a
n/a1,294.6
1,178.8
Source: Coast Guard FY2013-FY2016 budget submissions; “n/a” = not available.
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Coast Guard Cutter Procurement: Background and Issues for Congress.
At a June 26, 2013, hearing on Coast Guard acquisition before the Coast Guard and Maritime
Transportation subcommittee of the House Transportation and Infrastructure Committee, CRS
testified that
The Coast Guard’s FY2014 Five Year (FY2014-FY2018) CIP includes a total of about $5.1
billion in acquisition funding, which is about $2.5 billion, or about 33%, less than the total of
about $7.6 billion that was included in the Coast Guard’s FY2013 Five Year (FY2013FY2017) CIP. (In the four common years of the two plans—FY2014-FY2017—the reduction
in funding from the FY2013 CIP to the FY2014 CIP is about $2.3 billion, or about 37%.)
This is one of the largest percentage reductions in funding that I have seen a five-year
acquisition account experience from one year to the next in many years.
About twenty years ago, in the early 1990s, Department of Defense (DOD) five-year
procurement plans were reduced sharply in response to the end of the Cold War—a largescale change in the strategic environment that led to a significant reduction in estimated
future missions for U.S. military forces. In contrast to that situation, there has been no
change in the Coast Guard’s strategic environment since last year that would suggest a
significant reduction in estimated future missions for the Coast Guard.3739
The Coast Guard has testified that funding the AC&I account at a level of about $1 billion per
to $1.2
billion per year would make it difficult to fund various Coast Guard acquisition projects,
including a new
polar icebreaker, and improvements to Coast Guard shore installations. Coast
Guard plans call for
procuring OPCs at an eventual rate of two per year. If each OPC costs
roughly $400 million,
procuring two OPCs per year in an AC&I account of about $1 billion to
$1.2 billion per year would leave about
$200 million to $400 million per year for all other AC&I-fundedIfunded programs.
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:
39
Statement of Ronald O’Rourke, Specialist in Naval Affairs, Congressional Research Service, before the House
Transportation and Infrastructure Committee, Subcommittee on Coast Guard and Maritime Transportation, Hearing on
Coast Guard Readiness: Examining Cutter, Aircraft, and Communications Needs, June 26, 2013, p. 1.
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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.
37
Statement of Ronald O’Rourke, Specialist in Naval Affairs, Congressional Research Service, before the House
Transportation and Infrastructure Committee, Subcommittee on Coast Guard and Maritime Transportation, Hearing on
Coast Guard Readiness: Examining Cutter, Aircraft, and Communications Needs, June 26, 2013, p. 1.
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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.3840
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.3941
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.”40
At a May 14, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the Homeland
Security Subcommittee of the Senate Appropriations Committee, Admiral Papp stated the
following regarding the difference between having about $1.0 billion per year rather than about
$1.5 billion per year in the AC&I account:
Well, Madam Chairman, $500 million—a half a billion dollars—is real money for the Coast
Guard. So, clearly, we had $1.5 billion in the [FY]13 budget. It doesn't get everything I
would like, but it—it gave us a good start, and it sustained a number of projects that are very
important to us.
When we go down to the $1 billion level this year, it gets my highest priorities in there, but
we have to either terminate or reduce to minimum order quantities for all the other projects
that we have going.
If we're going to stay with our program of record, things that have been documented that we
need for our service, we're going to have to just stretch everything out to the right. And when
3842
40
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.
4042
Source: transcript of hearing. Papp may have been referring to remarks he made to the press before giving his annual
state of the Coast Guard speech on February 23, 2012, in which reportedly stated that the Coast Guard would require
about $2 billion per year in acquisition funding to fully replace its current assets. (See Adam Benson, “Coast Guard
Cutbacks Will Cost 1,000 Jobs,” Norwich Bulletin, February 23, 2012, accessed May 31, 2012, at
http://www.norwichbulletin.com/news/x1138492141/Coast-Guard-cutbacks-will-cost-1-000-jobs#axzz1wSDAFCzX.
See also “Coast Guard Leader Calls For More Ships,” MilitaryFeed.com, February 24, 2012, accessed May 31, 2012, at
http://militaryfeed.com/coast-guard-leader-calls-for-more-ships-5/; Associated Press, “Coast Guard Commandant Calls
for New Ships,” TheLog.com, March 10, 2012, accessed May 31, 2012, at http://www.thelog.com/SNW/Article/CoastGuard-Commandant-Calls-for-New-Ships-to-Replace-Aging-Fleet; Mickey McCarter, “Congress Poised to Give Coast
Guard More Money Than Requested for FY 2013,” HSToday.us, May 10, 2012, accessed May 31, 2012, at
http://www.hstoday.us/focused-topics/customs-immigration/single-article-page/congress-poised-to-give-coast-guardmore-money-than-requested-for-fy-2013.html.) See also “Interview, Adm. Robert Papp, US Coast Guard
Commandant,” Defense News, November 11, 2013: 30.
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At a May 14, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the Homeland
Security Subcommittee of the Senate Appropriations Committee, Admiral Papp stated the
following regarding the difference between having about $1.0 billion per year rather than about
$1.5 billion per year in the AC&I account:
Well, Madam Chairman, $500 million—a half a billion dollars—is real money for the Coast
Guard. So, clearly, we had $1.5 billion in the [FY]13 budget. It doesn't get everything I
would like, but it—it gave us a good start, and it sustained a number of projects that are very
important to us.
When we go down to the $1 billion level this year, it gets my highest priorities in there, but
we have to either terminate or reduce to minimum order quantities for all the other projects
that we have going.
If we're going to stay with our program of record, things that have been documented that we
need for our service, we're going to have to just stretch everything out to the right. And when
we do that, you cannot order in economic order quantities. It defers the purchase. Ship
builders, aircraft companies—they have to figure in their costs, and it inevitably raises the
cost when you're ordering them in smaller quantities and pushing it off to the right.
Plus, it almost creates a death spiral for the Coast Guard because we are forced to sustain
older assets—older ships and older aircraft—which ultimately cost us more money, so it eats
into our operating funds, as well, as we try to sustain these older things.
So, we'll do the best we can within the budget. And the president and the secretary have
addressed my highest priorities, and we'll just continue to go on the—on an annual basis
seeing what we can wedge into the budget to keep the other projects going.4143
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.4244
At a March 24, 2015, hearing on the Coast Guard’s proposed FY2016 budget before the
Homeland Security subcommittee of the House Appropriations Committee, Admiral Paul
Zukunft, Admiral Papp’s successor as Commandant of the Coast Guard, stated:
43
44
Transcript of hearing. The remarks were made in response to a question from Senator Mary Landrieu.
Transcript of hearing.
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I look back to better years in our acquisition budget when we had a—an acquisition budget
of—of $1.5 billion. That allows me to move these programs along at a much more rapid pace
and, the quicker I can build these at full-rate production, the less cost it is in the long run as
well. But there’s an urgent need for me to be able to deliver these platforms in a timely and
also in an affordable manner. But to at least have a reliable and a predictable acquisition
budget would make our work in the Coast Guard much easier. But when we see variances
of—of 30, 40% over a period of three or four years, and not knowing what the Budget
Control Act may have in store for us going on, yes, we are treading water now but any
further reductions, and now I am—I am beyond asking for help. We are taking on water.4345
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
41
Transcript of hearing. The remarks were made in response to a question from Senator Mary Landrieu.
Transcript of hearing.
43
Transcript of hearing. The remarks were made in response to a question from Representative John Culberson.
42
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ships. Observations that might be made in connection with this example based on the Coast
Guard and Navy budget submissions include the following:
•
Using figures from the FY2014 budget submission, the Coast Guard has about
12.9% as many active-duty personnel as the Navy.4446 If the amount of funding for
the surface ship acquisition and sustainment part of the AC&I account were
equivalent to 12.9% of the amount of funding in the Navy’s shipbuilding account,
thisthe surface ship acquisition and sustainment part of the AC&I account would be
about $1.8 billion per year.4547 Navy
surface ship acquisition, unlike Coast Guard
surface ship acquisition, includes
substantial numbers of large and complex
ships, including nuclear-powered
aircraft carriers, highly capable surface
combatants, and large amphibious and
auxiliary ships. Accounting for this
difference in Navy and Coast Guard surface
ship acquisition by reducing the $1.8
billion figure by, say, one-half or one-third
would produce an adjusted figure of
about $900 million to about $1.2 billion per
year year for surface ship acquisition and
sustainment.
•
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 activeduty personnel.4648 If Coast Guard funding for surface ship acquisition and
sustainment were equivalent to 51% of Coast Guard funding for military pay and
allowances, thisthe surface ship acquisition and sustainment part of the AC&I
account would be about $1.7 billion per year.47
49 Reducing the $1.8 billion figure
by, say, one-half or one-third to account for
differences in the types of surface
ships acquired by the Navy and Coast Guard
(see previous bullet point) would produce an adjusted figure of about $850
million to about $1.1 billion per year.
Multiyear Procurement (MYP) and Block Buy Contracting
Another potential oversight issue for Congress concerns the potential for using multiyear
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 or block buy contracting to reduce
procurement costs. Compared to the standard or default approach of annual contracting, MYP and
block buy contracting have the potential for reducing procurement costs by several percent.48
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,
44
(see previous bullet point) would
45
Transcript of hearing. The remarks were made in response to a question from Representative John Culberson.
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.
4547
The Navy’s proposed FY2014 budget requests $14,078 million for the Shipbuilding and Conversion, Navy (SCN)
appropriation account.
4648
The Navy’s proposed FY2014 budget requests $27,824 million for the Military Personnel, Navy (MPN)
appropriation account.
4749
The Coast Guard’s proposed FY2014 budget requests $3,425.3 million for military pay and allowances.
48
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.
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the parent department of the Coast Guard.4946
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produce an adjusted figure of about $850 million to about $1.1 billion per year
for surface ship acquisition and sustainment.
Multiyear Procurement (MYP) and Block Buy Contracting
Another potential oversight issue for Congress concerns the potential for using multiyear
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 or block buy contracting to reduce
procurement costs. Compared to the standard or default approach of annual contracting, MYP and
block buy contracting have the potential for reducing procurement costs by several percent.50
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.51 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.
Section 223 of the Howard Coble Coast Guard and Maritime Transportation Act of 2014 (S.
2444/P.L. 113-281 of December 18, 2014) states:
SEC. 223. 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,
United States Code, multiyear contracts for the procurement of Offshore Patrol Cutters and
associated equipment.
Potential oversight questions for Congress include the following:
•
Has the Coast Guard considered using MYP or block buy contracting for
procuring NSCs, OPCs, or FRCs? If not, why not?
•
What would be the potential savings of using MYP 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?
50
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.
51
10 U.S.C. 2306b(b)(2)(B).
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OPC Program: FY2016 Funding Request
Another potential oversight issue for Congress concerns the FY2016 funding request for the OPC
program. As shown in Table 1, the amount requested—$18.5 million—is $71.5 million less than
the $90 million that was projected for the OPC program for FY2016 under the FY2015 budget
submission. As also noted earlier, the Coast Guard states, “The Administration’s [FY2016 budget]
request includes a [proposed legislative] General Provision permitting a transfer [of additional
funding] to the OPC project if the program is ready to award the next phase of vessel acquisition
in FY 2016.” Potential oversight questions for Congress include the following:
49
•
Why was the program’s FY2016 funding request reduced from the $90 million
projected under the FY2015 budget submission to $18.5 million?
•
Who will determine whether “the OPC project if the program is ready to award
the next phase of vessel acquisition in FY 2016”? What criteria will be used to
make this determination?
•
If additional funding is not transferred to the OPC program, what effect will this
have on the program’s schedule?
10 U.S.C. 2306b(b)(2)(B).
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At a March 24, 2015, hearing on the Coast Guard’s proposed FY2016 budget before the
Homeland Security subcommittee of the House Appropriations Committee, the following
exchange occurred:
REPRESENTATIVE JOHN CARTER, CHAIRMAN (continuing):
Now, I‘ve got a question about this offshore patrol cutter situation. I told you in my opening
remarks that it’s going to be one of the largest, if not the largest, acquisition ever completed
by DHS. Over $130 million has been appropriated to the program since 2004, yet we will not
see an operational [O]PC until 2021. I am confused by your (inaudible) support of the
(inaudible) acquisition but there are no funding requests in the [FY]'16 budget. Why are
there no funds requested for a PC [sic: OPC] in [FY]'16? Your acquisition plans indicates a
contract award by late ‘16—FY ‘16. What would it impact if the contract award needed to be
shifted to FY ‘17?
ADMIRAL PAUL ZUKUNFT, COMMANDANT, U.S. COAST GUARD:
So we have partial funding to do—do final construction and design work for the OPC. The
work would actually begin following that. We're working very closely with the Department
of Homeland Security to provide the offset that will be needed to do full design work for the
offshore patrol cutter in [FY]2016. The underlying criteria is affordability. We have adhered
to very stable requirements. I revisited those and—and I am convinced that—that we will be
able to produce an affordable offshore patrol cutter using fixed priced contracting and we
have three very highly incentivized contractors competing to get this largest contract in Coast
Guard history.
CARTER:
So that’s the reason there’s no fund[ing] request in the [FY]'16 (inaudible).
ZUKUNFT:
No, sir. I requested full funding [for the OPC program]. I'm short about $69 million to
proceed forward with the final design of this. But, again, working very closely and with the
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great support of our secretary of Homeland Security to move this forward in [FY]2016. As
you mentioned, I cannot afford to let this date lapse. I need relief ships for our 50-year-old
ships today that will be 55-years-old by the time their relief arrives.5052
A bit later in the hearing, the following exchange occurred:
REPRESENTATIVE LUCILLE ROYBAL-ALLARD, RANKING MEMBER:
The FY 2016 request for continued development of the offshore patrol cutter is $18.5 million
which is substantially below the planned spending level in the FY 2015 CIP [i.e., five-year
Capital Investment Plan] which is the most recently CIP that we have. The budget request
proposes new bill language that would provide unlimited authority to transfer funding to the
Coast Guard for the OPC project. What can you tell us about the need for this new transfer
authority and the likelihood that the department would actually use it? And if there is a
reasonable expectation that more funding for the OPC will be needed, why not just include
the funding in the request?
50
Transcript of hearing.
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ZUKUNFT:
Yes, first and foremost, we have great support from the department and so that transfer
authority would be imperative for us to be able to have full funding in [FY]2016 to be able to
move this project forward. You will hear from our secretary two days from now, I believe, he
is testifying as well and—and, clearly, counterterrorism in the homeland is always a highest
priority for our Department of Homeland Security. But at the same time so is recapitalizing
in the Coast Guard, in the offshore patrol cutter. I have a very open and frank dialogue with
our secretary and I need to demonstrate to him that—that we can produce an affordable
offshore patrol cutter and I remain confident that I will be able to do that. And, with that, the
transfer authority would be very critical for us to meet this very important timeline short of
an additional appropriation for full funding to move this project forward.5153
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:
52
53
•
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 (for the
shipbuilder’s portion of the total cost of the ship). How was the $310 million
. 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?
Transcript of hearing.
Transcript of hearing.
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•
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 evaluate the preliminary and
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:
51
Transcript of hearing.
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When I came in as commandant, I realized that this [the OPC program] was the most
expensive project that the Coast Guard has ever taken on, honestly, as each [of the] 25 ships
are a significant investment. And I also understood looking out at the horizon and seeing the
storm clouds that restrict the budgets coming up there we needed to build a ship that was
affordable.
We rescrubbed the requirements. We have battled ourselves within the Coast Guard to make
sure we're asking for just exactly what we need, nothing more nothing less. And I have said
three things to my staff as we go on forward—affordable, affordable, affordable.
And now I'm very pleased to say that just last week that the department [DHS] has
reviewed—we passed a major milestone with acquisition decision event number two which
validated our requirements for the type of cutter that we’re looking for and we are ready to
go towards the preliminary and contract design work this next year.52
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.53 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.54
52
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.
54
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:
(continued...)
53
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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.55
(...continued)
Sir, realizing that this is going to be the largest acquisition project that the Coast Guard has ever
done and recognizing that these ships are going to last us 40 years, we’re taking the law beyond this
[sic: a long look at this?]. And I realize there are some people that feel like we have dragged our
feet a little bit or pushed this to the right a little bit, and I would say that’s just not the case. It is a
little delayed from where we started out.
But when I came in as commandant, I realized that we were going to be facing constrained budgets.
So I had the staff take a look at the OPC once again, scrub the requirements with a direction that
the primary requirement is affordability. We just could not afford everything that was in the
requirements before, so we set new thresholds for it.
But the most important is the sea-keeping capability because with a reduced number of national
security cutters, if we only have eight national security cutters replacing the 12 Hamilton class
cutters, we have to have a ship that’s capable of going up into the Gulf of Alaska, the Bering Sea,
the Western Pacific.
Our medium endurance cutters right now, and speaking as a captain of a 270-foot cutter, we
cannot—those ships cannot perform in the extreme weather conditions that you find sometimes in
the North Atlantic much less the Arctic, and the—the Bering Sea.
So keeping the requirements for sea state five for helicopter launching and boat launching, and the
Endurance were most important. And I'm really pleased to say that we have finally passed that
hurdle. We went through acquisition decision event number two with the Department of Homeland
Security last week, and they approved our requirements so we’re—we’re stepping out smartly now,
moving ahead.
(Transcript of hearing)
55
Transcript of hearing.
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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):56 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 5.57
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
56
57
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
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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•
C4ISR—the Coast Guard eliminated a minimum requirement for an integrated C4ISR
system and instead is requiring a system built with interfaces to communicate between
different software programs. According to Coast Guard officials, the Coast Guard now
plans to use a Coast Guard-developed software system—Seawatch—rather than the
more costly lead systems integrator-developed software system currently installed on
the National Security Cutter, even though this system does not provide the Coast Guard
with the capability to exchange near real-time battle data with DOD assets.
The improvements and affordability decisions that the Coast Guard has made in its
requirements development process for the Offshore Patrol Cutter are even more evident
when compared with the process for generating requirements for its other major cutter—the
National Security Cutter. Due to the nature of the lead systems integrator strategy that the
Coast Guard initially used to buy the National Security Cutter, Integrated Coast Guard
Systems developed the requirements, designed, and began producing the National Security
Cutter before the requirements document was completed. The Coast Guard did not have an
operational requirements document at the time the Coast Guard awarded the construction
contract for the first cutter in 2004, but the Coast Guard documented the requirements in
2006. Further, even as the third National Security Cutter was in production, Coast Guard was
refining the requirements and, in January 2010, made the decision to clarify some key
performance parameters such as anti-terrorism/force protection and underwater mine
detection because the existing requirements were not testable. To further remedy the lack of
clear requirements, Coast Guard officials stated that they are currently developing a second
version of the requirements document that improves the specificity and definition of many of
the National Security Cutter’s requirements and will be used as criteria during operational
testing. To date, the Coast Guard has not reduced the National Security Cutter’s capability
for the purpose of affordability as it has done for the Offshore Patrol Cutter. However,
according to Coast Guard officials, there is a revised acquisition program baseline under
review which will reflect an ongoing effort to lower the acquisition cost of the vessel.58
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
58
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
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.59
NSC 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:
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.
59
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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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
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
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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.60
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
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.
60
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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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 2015.61
Legislative Activity for FY2016
Summary of Appropriations Action on FY2016 Acquisition
Funding Request
Table 7 summarizes appropriations action on the Coast Guard’s request for FY2016 acquisition
funding for the NSC, OPC, and FRC programs.
61
Ibid., pp. 13-16.
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Table 7. Summary of Appropriations Action on FY2016 Acquisition Funding Request
Figures in millions of dollars, rounded to nearest tenth
Request
NSC program
OPC program
FRC program
TOTAL
Request
91.4
18.5
340
449.9
House
Appropriations
Committee
Senate
Appropriations
Committee
Final
Source: For request: Coast Guard FY2016 budget submission.A January 16, 2015, press report states:
Coast Guard Commandant Adm. Paul Zukunft on Thursday [January 15] said that his staff is
currently reviewing the requirements for its Offshore Patrol Cutter (OPC) with affordability
in mind.
The “biggest challenge that we’re facing right now is that this will not be affordable,”
Zukunft said at the annual Surface Navy Association conference in Arlington, Va. “I’ve
turned it back to industry…bring me a capable platform that is also affordable.”
Zukunft, who became commandant last May, is doing more than leave it to industry to
design and produce a new and affordable medium endurance cutter for the Coast Guard. He
told Defense Daily after his speech that he directed his “staff do a deep scrub on every one of
the line items and so there are some line items in there that struck me.”
For example, he said, what is the required water pressure for firefighting? If the requirement
is set too high, that affects “piping, it affects weight, [and] how big of a pump do you need.”
Zukunft said it’s this level of detail that is being scrubbed to figure out what is needed.
Zukunft describe[d] the requirements review as an “open dialogue” that is “fully transparent”
with the shipbuilders competing for the 25-ship OPC buy free to weigh in.
The “competitors are very incentivized to come up with an affordable product for us as
well,” Zukunft said.54
NSC 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:
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
54
Calvin Biesecker, “With Affordability In Mind, Zukunft Reviewing OPC Requirements,” Defense Daily, January 16,
2015: 4.
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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
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
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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.55
GAO testified on May 14, 2015, that
The Coast Guard has all 8 NSCs on contract or delivered as of May 2015, and, as we
reported in April 2015, completed operational test and evaluation in April 2014. All 8 NSCs
are planned to be fully operational by 2020 and the Coast Guard is phasing out the legacy
378’-foot high endurance cutters as the NSCs become operational. We are currently
conducting a detailed review of the NSC’s recent test event at the request of this
subcommittee. We reported in April 2015, however, that during this initial operational
55
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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testing, the NSC was found to be operationally effective and suitable, but with several major
deficiencies. For example, the NSC’s small boat—which is launched from the back of the
cutter—is not suited to operate in rough waters (sea state 5) as intended. Coast Guard
officials told us they planned to test a new small boat by March 2015. In addition, the Coast
Guard deferred testing for several key capabilities on the cutter, such as cybersecurity, the
use of unmanned aerial systems, or its ability to handle certain classified information. Coast
Guard officials said follow-on operational tests will be conducted between fiscal years 2015
and 2017. While future tests will be key to understanding the NSC’s capabilities, any
necessary changes resulting from these tests will have to be retrofit onto all 8 NSCs since
they are all either built or under contract. In June 2014, we found that the NSC program had
at least $140 million in retrofits and design changes to fund and implement on the NSC fleet.
As we also reported in June 2014, further changes may be needed due to issues discovered
through operating the NSC, which could result in the Coast Guard having to spend even
more money in the future to ensure the NSC fleet meets requirements and is logistically
supportable. For example, the cutter is experiencing problems operating in warm climates,
including cooling system failures, excessive condensation forming puddles on the deck of
the ship, and limited redundancy in its air conditioning system affecting use of information
technology systems. According to operational reports from a 2013 deployment, the
Commanding Officer of an NSC had to impose speed restrictions on the vessel because of
engine overheating when the seawater temperature was greater than 68 degrees. In addition,
cold climate issues on the cutter include a lack of 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 the NSC could sustain significant damage if it comes in contact with the ice. In June
2014 we reported that while senior Coast Guard officials acknowledged that there were
issues to address, they 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.56
NSC Program: Rotational Crewing
A March 2015 GAO report stated that
The Coast Guard has delayed the feasibility test for using the crew rotation concept (CRC) to
achieve increased operational days at sea with its National Security Cutters (NSC) until
2019. In 2006, the Coast Guard decided to use the CRC for its NSCs and that
implementation would begin in 2011. However, the Coast Guard has postponed CRC testing
because of delays in NSC deliveries and needed structural enhancements. In fiscal year 2013,
the Coast Guard began implementing an interim plan to increase the NSCs’ operational
performance, not by rotating crews, but by adding crew members to help bear the increased
workload. However, the added crew members do not have the skill mix recommended by a
2011 manpower requirements analysis. Without the appropriate crew members with the right
skill mix, the NSCs may not be able to complete all mission requirements or required
maintenance.
The Coast Guard has not fully addressed a variety of risks that could affect the success of its
planned CRC feasibility test and goal to increase NSC operational days away from home
port (DAFHP) from 185 to 230 days per year using the CRC. Further, the Coast Guard could
56
Government Accountability Office, Coast Guard Acquisitions[:] As Major Assets Are Fielded, Overall Portfolio
Remains Unaffordable, GAO-15-620T, May 14, 2015, pp. 7-8.
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not provide us with complete details about whether the CRC plan, to be completed by the
end of 2017, will include actions to address and effectively mitigate various risks, to include
• determining the appropriate number and skill mix of NSC crew members and support
personnel and whether they will be in place in time for the CRC test;
• incorporating actual NSC maintenance needs when developing NSC maintenance schedules
and goals;
• testing the CRC under realistic circumstances, such as addressing the misalignment of the
crewing concept to be tested as compared to the NSC homeporting plan;
• addressing the potential impacts of wide variations between alternative deployment
schedules using the CRC; and
• implementing a training infrastructure and providing training support for off-cycle rotating
crews.
As the Coast Guard continues to develop its CRC plan, establishing interim milestones for
carrying out the actions needed to address and effectively mitigate these risks would help
ensure that it addresses the risks in a timely manner.
The Coast Guard’s current measure does not accurately quantify the operational performance
of the NSC fleet. The Coast Guard primarily uses the DAFHP measure across its major
cutter fleet; however, this measure includes days when a cutter is undergoing maintenance
away from its home port and, as a result, will likely overstate the number of operational
days. The Coast Guard has known of the measure’s limitation for years and is exploring
alternatives. However, since the CRC plan is premised on achieving 230 DAFHP per year—
and that other Coast Guard vessels, such as the Offshore Patrol Cutter, also plan to use the
DAFHP metric—implementing alternative measures prior to CRC testing will better ensure
the test results are benchmarked against a more appropriate goal to quantify the operational
performance of its fleet of NSCs and its planned fleet of Offshore Patrol Cutters.57
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
57
Government Accountability Office, Coast Guard[:] Timely Actions Needed to Address Risks in Using Rotational
Crews, GAO-15-195, summary page.
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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
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 2015.58
GAO testified on May 14, 2015, that
As we reported in June 2014, operational testers within the Department of the Navy
determined in July 2013 that the FRC, without the cutter’s small boat, is operationally
effective—meaning that testers determined that the asset enables mission success. However,
these operational testers also determined that the FRC 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, Navy and DHS testers as well as
Coast Guard program officials all agreed that the FRC is a capable vessel, and the Coast
Guard plans to confirm that it has resolved these issues during follow-on testing planned to
be completed by the end of fiscal year 2015.59
58
Government Accountability Office, Coast Guard Acquisitions[:] Better Information on Performance and Funding
Needed to Address Shortfalls, GAO-14-450, June 2014, pp. 13-16.
59
Government Accountability Office, Coast Guard Acquisitions[:] As Major Assets Are Fielded, Overall Portfolio
Remains Unaffordable, GAO-15-620T, May 14, 2015, pp. 8-9.
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Legislative Activity for FY2016
Summary of Appropriations Action on FY2016 Acquisition
Funding Request
Table 7 summarizes appropriations action on the Coast Guard’s request for FY2016 acquisition
funding for the NSC, OPC, and FRC programs.
Table 7. Summary of Appropriations Action on FY2016 Acquisition Funding Request
Figures in millions of dollars, rounded to nearest tenth
Request
NSC program
OPC program
FRC program
TOTAL
Request
91.4
18.5
340
449.9
House
Appropriations
Committee
Senate
Appropriations
Committee
731.4
18.5
230.0
979.9
Final
Source: For request: Coast Guard FY2016 budget submission. For Senate Appropriations Committee: S.Rept.
114-68, p. 80.
FY2016 Department of Homeland Security (DHS) Appropriations
Act (S. 1619)
Senate
In S. 1619 as reported by the Senate Appropriations Committee (S.Rept. 114-68 of June 18,
2015), the paragraph that appropriates funds for the Coast Guard’s Acquisition, Construction, and
Improvements (AC&I) account includes a provision that states:
Provided, That, of the funds provided by this Act, not less than $640,000,000 shall be
immediately available and allotted to contract for the production of the ninth National
Security Cutter notwithstanding the availability of funds for postproduction costs....
Section 516 of the bill 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.
Section 559 of the bill as reported states:
Sec. 559. Notwithstanding the limitations as to threshold, time, and condition of section 503
of this Act, the Secretary may propose to reprogram or transfer to the Coast Guard for the
Offshore Patrol Cutter Project: (1) discretionary appropriations made available by this Act,
to remain available until September 30, 2017, and (2) the unobligated balances of
discretionary appropriations made available by prior Department of Homeland Security
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Appropriations Acts: Provided, That any amounts proposed for reprogramming or transfer
under this section shall not be available for obligation until the Committees on
Appropriations of the Senate and the House of Representatives approve of such
reprogramming or transfer: Provided further, That this section shall not apply to amounts that
were (1) classified as being in the revised security category, as defined under section
250(c)(4)(D) of the Balanced Budget and Emergency Deficit Control Act of 1985, as
amended (BBEDCA); (2) designated by the Congress for Overseas Contingency
Operations/Global War on Terrorism or as an emergency requirement pursuant to the
Concurrent Resolution on the Budget or BBEDCA; or (3) designated as being for disaster
relief pursuant to section 251(b)(2)(D) of BBEDCA.
S.Rept. 114-68 states:
As an extension of our border security needs, the Coast Guard’s vessel and air fleets are
vital. Yet, the age of those fleets and their antiquated capabilities beg recapitalization and
modernization. Year after year, the President’s budget requests short-change Coast Guard’s
acquisition needs and year after year, the Coast Guard’s Commandants indicate before
Congress that their annual acquisition budget is insufficient. As the Coast Guard proceeds
towards selecting a final design for the Offshore Patrol Cutter [OPC], the Committee sees an
opportunity for a ninth National Security Cutter [NSC] in the interim. The most capable
vessel ever commissioned by the Coast Guard, the NSC will replace aging high endurance
cutters which were state-of-the-art nearly a half-century ago. In addition to cutter needs, the
Committee continues its acquisition and sustainment investments in the Coast Guard’s
icebreaking fleet, directs further guidance from the Coast Guard on their air fleet mix, and
increases investments in critical shore facilities. (Page 6)
S.Rept. 114-68 also states:
BERING SEA COVERAGE
The Committee is concerned that adequate cutter coverage in the Bering Sea and Arctic
Region will become increasingly difficult to achieve as the medium endurance cutter Alex
Haley and high endurance cutter Munro have both exceeded 40 years of service life under
extremely demanding conditions.
Not later than 60 days after the date on enactment of this act, the Secretary shall submit to
Congress a report on the plans of the Coast Guard to ensure that at least one cutter capable of
operating in and patrolling the Bering Sea and Arctic Region maintains a presence in the
Bering Sea and Arctic Region at all times during the 10-year period beginning on the date of
such submittal. This report shall include the following:
(1) For each cutter of the Coast Guard involved in patrolling the Bering Sea and Arctic
Region on the day before the date of enactment of this act that the Secretary considers a
legacy cutter, the date on which the Secretary expects to decommission the cutter;
(2) For each cutter described in (1), the date on which the Secretary expects to replace the
cutter;
(3) The Committee expects the replacement cutters to meet or exceed the current capabilities
of the legacy assets, keeping in mind the growing presence of China and Russia; and
(4) The Coast Guard’s plan to ensure there are no gaps in coverage during this 10-year
period. (Pages 75-76)
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S.Rept. 114-68 also states:
COMMITTEE RECOMMENDATIONS
The Committee recommends $1,573,269,000 for Acquisition, Construction, and
Improvements, including $24,500,000 from the Oil Spill Liability Trust Fund. This is
$556,000,000 above the amount requested and $348,046,000 above the amount provided in
fiscal year 2015.
The increase above the President’s request is a reflection of what the Committee views as an
underfunded recapitalization effort which simply cannot provide new assets at the pace
required. The sheer age of the Coast Guard’s assets is staggering, including high endurance
cutters from the 1960s, a dry dock at the Coast Guard Yard which had its heyday during
World War II, and C–130H aircraft which will continue to age without necessary upgrades as
they await transfer or replacement. The Coast Guard cutter Reliance celebrated its 50th
anniversary in 2014 and in 2015 was at the Coast Guard Yard in the dry dock Oakridge for
repairs. The combined age of these two assets was over 120 years. This poses questions
about not only mission efficacy but also of crew safety.
In addition to recapitalizing aging infrastructure and vessels, the Committee is concerned
about the Coast Guard’s air fleet mix. While the Coast Guard inducts the C–27J it has
prudently paused the C–144A but has not indicated to Congress whether it still requires
additional C–130Js. How the Coast Guard expects to transition to an all ‘‘J’’ fleet by the
mid-2020s is unclear, and the Coast Guard’s Capital Investment Plan [CIP] for 2016–2020 is
silent. Similarly troubling is the neglect of the unmanned aircraft systems [UAS]
procurement. The Coast Guard will procure its first operational UAS in 2015 at the direction
of Congress despite having already commissioned four National Security Cutters with which
they should be paired. (Pages 79-80)
S.Rept. 114-68 also states:
NATIONAL SECURITY CUTTER
The National Security Cutter [NSC] is the largest and most technologically advanced cutter
the Coast Guard has ever placed into service. Built to replace the aging 378-foot high
endurance cutters commissioned in the late 1960s and early 1970s, the NSC has no peer
within the Coast Guard and is effectively a floating sector, equally capable of search and
rescue in the Bering Sea or counternarcotics enforcement in the South Pacific. It is also
currently the only vessel within the Coast Guard capable of detecting and defending its crew
against chemical, biological and radiological attacks and its suite of sensors and secure
communications capabilities make its domain awareness unmatched in the fleet.
Since commissioning of the first NSC in 2008 the Legend-class cutters have demonstrated
their efficacy continuously. In 2012, a newly commissioned NSC was dispatched to the
Arctic tasked with monitoring exploratory drilling and performing domain awareness,
operational response, and command and control functions. In subsequent years, the NSC had
led multinational coalitions in the biannual Rim of the Pacific Exercise and continues to
seize thousands of pounds of illicit drugs bound for the United States.
In 2011, a cutter study commissioned by the Coast Guard indicated that ‘‘the NSC has a
mature design, stable requirements, demonstrated operational performance and predictable
costs’’. And given the Coast Guard’s experience with its current fleet of high endurance
cutters with an average age of 46 years old, it’s likely that the Coast Guard will have the
NSCs it procures now for decades to come. The Coast Guard has also stated that central to its
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plan to replace its legacy high endurance cutters is a new crew rotation concept [CRC] which
would ultimately increase days away from home port for the new NSCs. Unfortunately, the
Coast Guard has yet to fully test the CRC and will not understand its feasibility until 2019
meaning that the Coast Guard’s goal of meeting or exceeding operational performance of the
legacy high endurance cutters within the NSCs Program of Record may fall well short of
mission needs.
For these reasons, the Committee recommends $640,000,000 for award and production costs
associated with a ninth National Security Cutter, notwithstanding future costs for postdelivery activities.
FULL FUNDING POLICY
The Committee again directs an exception to the administration’s current acquisition policy
that requires the Coast Guard to attain total acquisition cost for a vessel, including long lead
time materials [LLTM], production costs, and post-production costs, before a production
contract can be awarded. This has the potential to create shipbuilding inefficiencies, force
delayed obligation of production funds, and require post-production funds far in advance of
when they will be used. The Department should be in a position to acquire vessels in the
most efficient manner within the guidelines of strict governance measures. 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 $230,000,000 for the Coast Guard’s Fast Response Cutter
[FRC]. This funding will allow the Coast Guard to acquire four FRC hulls (33–36) and
supports base award of the phase II re-compete FRC production contract. This contract will
allow options for four, five, or six cutters.
OFFSHORE PATROL CUTTER
The recommendation includes $18,500,000 for the OPC, as requested. Funding is provided
to support Preliminary and Contract Design [P&CD] deliverables to complete the P&CD
phase and related support for the acquisition. The Committee also includes language
whereby the Department may propose a reprogramming or transfer of $70,500,000 to award
Detailed Design, should the Coast Guard be prepared to award in fiscal year 2016....
UNMANNED AIRCRAFT SYSTEMS
The Committee is concerned that the Coast Guard will commission its fifth NSC in the
summer of 2015, but have only one UAS pair to support deployments. Since the early days
of Coast Guard recapitalization under the Deepwater Program, UAS were integral to the
overall ‘‘system of systems.’’ Over a decade later, the Coast Guard still appears unsure of
how to incorporate UAS technology despite examples of such integration within DHS and
across the Federal Government.
The Committee expects the Coast Guard to continue its longstanding plan to conduct vertical
take-off and landing UAS flight demonstrations. The Coast Guard has reported to the
Committee that this system would enhance the surveillance capabilities of the NSC and
estimates a significant increase in the number of prosecutions achieved by the cutter. The
Committee continues to be very supportive of the use of vertical take-off UAS aboard Coast
Guard cutters and strongly encourages the Coast Guard to ensure that the acquisition
schedule is not delayed for this enhanced surveillance capability. The Committee is
encouraged by the successful results of the Coast Guard’s cutter-based testing and evaluation
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completed in December, 2014. The Coast Guard is directed to provide a report outlining its
plans to acquire and utilize this capability with the fiscal year 2017 budget request. (Pages
82-83)
Coast Guard Authorization Act of 2015 (H.R. 1987)
House
Section 206 of H.R. 1987 as reported by House Transportation and Infrastructure Committee
(H.Rept. 114-115 of May 15, 2015) states:
SEC. 206. Long-term major acquisitions plan.
Section 2903 of title 14, United States Code, as redesignated and otherwise amended by this
Act, is further amended—
(1) by redesignating subsection (e) as subsection (f); and
(2) by inserting after subsection (d) the following:
“(e) Long-Term major acquisitions plan.—Each report under subsection (a) shall include a
plan that describes for the upcoming fiscal year, and for each of the 20 fiscal years
thereafter—
“(1) the numbers and types of cutters and aircraft to be decommissioned;
“(2) the numbers and types of cutters and aircraft to be acquired to—
“(A) replace the cutters and aircraft identified under paragraph (1); or
“(B) address an identified capability gap; and
“(3) the estimated level of funding in each fiscal year required to—
“(A) acquire the cutters and aircraft identified under paragraph (2);
“(B) acquire related command, control, communications, computer, intelligence,
surveillance, and reconnaissance systems; and
“(C) acquire, construct, or renovate shoreside infrastructure.”.
Regarding Section 206, H.Rept. 114-115 states:
Sec. 206. Long term major acquisitions plan.
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Under current law, the Navy provides Congress with a long-term plan for its shipbuilding
requirements. The Coast Guard does not conduct a similar long-term planning effort for its
major assets. This section would improve oversight of the Coast Guard’s effort to
recapitalize its major assets by requiring the Service to develop a long-term plan for its
acquisition needs and the funding levels to support them. (Page 30)
H.Rept. 114-115 also states:
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Investment in Coast Guard capabilities
The Committee has long had concerns about the adequacy of capital investment in Coast
Guard assets and infrastructure. Enforcing federal laws in, under, over the high seas and
waters subject to the jurisdiction of the United States is a complicated task requiring a
workforce that is highly trained in many areas from marine and aviation operations to marine
safety. It also requires a substantial number of physical assets from cutters and aircraft, to
buoys and shoreside facilities. The Coast Guard and GAO have both done estimates of what
is required in annual Coast Guard capital investment. These estimates range from $1.5 to
more than $2.0 billion depending on whether the goal is to maintain existing capability or to
achieve capabilities closer to those imagined in the 2005 Mission Need Statement (MNS), or
in the approved acquisition program of record. In recent years, administration budget
requests have fallen woefully short of even meeting minimum needs and appropriations have
only been able to make up a fraction of the shortfall. In fiscal year 2016, the President is
requesting $1 billion for the Coast Guard’s Acquisition, Construction, and Improvement
(AC&I) account. This represents a cut of over $200 million or 17 percent from the FY 2015
enacted level.
Section 215 of P.L. 113–2816228160 requires the submission of a revised MNS which explains
how each major acquisition program addresses identified mission hour gaps, and describes
the missions the Coast Guard will be unable to fully achieve for each gap identified. The
Committee will do oversight based on this MNS when it is submitted in July 2015. Pending
that updated information, H.R. 1987 authorizes the Coast Guard’s AC&I account at $1.5
billion for each of the fiscal years 2016 and 2017, approximately $500 million more than the
President’s FY 2016 request. The Committee believes long-term funding at this level will
allow the Coast Guard to maintain current mission capability. However, the Committee
acknowledges that even at the level of capital funding proposed in this authorization, certain
Coast Guard missions simply will not be done or will be done at an operations tempo far
short of what is needed to adequately carry them out. The Committee looks forward to
continuing to work with the Coast Guard for the remainder for the 114th Congress to
determine how to better align missions and assets under current budget constraints and to
identify those missions which may be best handled by other entities.
As mentioned, section 215 of P.L. 113–281 requires the Coast Guard to update its 2005
MNS which provides the underlying justification for its asset recapitalization program. H.R.
1987, as amended, builds on that requirement by adding a review of Coast Guard manpower
needs. Without a sufficient number of trained servicemembers operating assets, readiness
and mission performance suffers. Without trained Coast Guard inspectors and environmental
responders, maritime safety and environmental response regulations have no real world
effect. The Committee believes these documents will assist in our oversight and our efforts
to improve Coast Guard mission performance. (Pages 21-22)
6260
S. 2444/P.L. 113-281, the Howard Coble Coast Guard and Maritime Transportation Act of 2014 of December 18,
2014.
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H.Rept. 114-115 also states:
Section 101. Authorizations
This section authorizes $8.7 billion in discretionary funds for the Coast Guard for each of the
fiscal years 2016 and 2017. This is the same level of funding that was authorized for the
Coast Guard in section 101 of P.L. 113–281. It also authorizes an end-of-year strength for
active duty Coast Guard personnel of 43,000 and sets military training student loads for each
of the fiscal years 2016 and 2017.
The President’s budget for FY 2016 includes a request to transfer an undefined amount of
money from an undefined source within the Department of Homeland Security to the Coast
Guard to complete detailed design of the Offshore Patrol Cutter (OPC). The Committee is
very concerned with this erratic approach to budgeting. This approach is especially troubling
for the OPC as the need for the cutter has been well and thoroughly documented and the
requirements for which have been widely and extensively vetted. Failure to enter into a
contract for detailed design of the OPC before the end of FY 2016 will significantly increase
the cost and substantially delay this vital acquisition. The Committee is very concerned that
further delays in the initiation of the procurement will only exacerbate existing gaps in Coast
Guard mission capabilities. This section authorizes sufficient funds within the Coast Guard’s
AC&I account to enter into a contract for detailed design of the OPC in FY 2016. The
Committee expects the Coast Guard to ensure, to the maximum extent practicable, that it
awards a contract for detailed design of the OPC at the earliest possible date. (Pages 28-29)
Author Contact Information
Ronald O'Rourke
Specialist in Naval Affairs
rorourke@crs.loc.gov, 7-7610
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