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Congress's decisions on these programs could substantially affect Coast Guard capabilities and funding requirements, and the U.S. shipbuilding industrial base.
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's proposed FY2017 budget requests a total of $467 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 CRS testified on the Coast Guard's cutter acquisition programs on February 3, 2016.2 The Coast Guard's plans for modernizing its fleet of polar icebreakers are covered in a separate CRS report.3
Background Older Ships to Be Replaced by NSCs, OPCs, and FRCsThe 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).4 The Coast Guard's 12 Hamilton (WHEC-715) class high-endurance cutters entered service between 1967 and 1972.5 The Coast Guard's 29 medium-endurance cutters include 13 Famous (WMEC-901) class ships that entered service between 1983 and 1991,6 14 Reliance (WMEC-615) class ships that entered service between 1964 and 1969,7 and two one-of-a-kind cutters that originally entered service with the Navy in 1944 and 1971 and were later transferred to the Coast Guard.8 The Coast Guard's 49 110-foot Island (WPB-1301) class patrol boats entered service between 1986 and 1992.9
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.10
Missions of NSCs, OPCs, and FRCsNSCs, 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
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,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.18
The Coast Guard's Request for Proposal (RFP) for the program, released on September 25, 2012,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.
The Coast Guard's proposed FY2017 budget requests $100 million in acquisition funding for the OPC program for technical and project management ($28.5 million) and procurement of long lead time material (LLTM) for the first ship ($71.5 million).
FRC Program Fast Response Cutters (Figure 3), also called Sentinel (WPC-1101) class patrol boats, are(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/. FRCs are currently built by Bollinger Shipyards of Lockport, LA. Bollinger(millions of then-year dollars)
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
NSC program
FY13 budget
683
0
0
0
0
FY14 budget
616
710
38
0
45
FY15 budget
638
75
130
30
47
FY16 budget
91.4
132
95
30
15
FY17 budget
127
n/a
n/a
n/a
n/a
OPC program
FY13 budget
30
50
40
200
530
FY14 budget
25
65
200
530
430
FY15 budget
20
90
100
530
430
FY16 budget
18.5
100
530
430
430
FY17 budget
100
n/a
n/a
n/a
n/a
FRC program
FY13 budget
139
360
360
360
360
FY14 budget
75
110
110
110
110
FY15 budget
110
340
220
220
315
FY16 budget
340
325
240
240
325
FY17 budget
240
n/a
n/a
n/a
n/a
Total
FY13 budget
852
410
400
560
890
FY14 budget
716
885
348
640
585
FY15 budget
768
505
450
780
792
FY16 budget
449.9
557
865
700
370
FY17 budget
467
n/a
n/a
n/a
n/a
Source: Table prepared by CRS based on FY2013-FY2017 budget submissions. n/a means not available.
One issue for Congress is whether to fund the acquisition of a 10th NSC in FY2017. The Coast Guard is not requesting procurement of a 10th NSC. Consequently, fully funding the acquisition of a 10th NSC in FY2017 would require providing roughly $700 million in unrequested acquisition funding.
Opponents of funding the acquisition of a 10th NSC in FY2017 could argue that the Coast Guard's program of record calls for only 8 NSCs, that the Coast Guard's fleet mix analyses (see "Planned NSC, OPC, and FRC Procurement Quantities" below, as well as Appendix A) have not shown a potential need for more than 9 NSCs, and that providing roughly $700 million in unrequested acquisition funding for a 10th NSC could require making offsetting reductions in other Coast Guard or DHS programs, potentially adversely affecting those programs, and resultant Coast Guard or DHS capabilities. Supporters of funding the acquisition of a 10th NSC in FY2017 could argue that the program of record requests only about 58% as many new cutters as the Coast Guard has calculated would be required to fully perform the Coast Guard's anticipated missions in coming years (see "Planned NSC, OPC, and FRC Procurement Quantities" below, as well as Appendix A), that a 10th NSC funded in FY2017 could be produced in an efficient heel-to-toe manner with the 9th NSC that was funded in FY2016, that a 10th NSC could be acquired together with the 9th NSC under a block buy contract,32 reducing acquisition costs for both ships, and that it could be more difficult to secure funding for the acquisition of a 10th NSC in FY2018 and beyond, due to funding requirements in those years for acquisition of OPCs. Number of FRCs to Fund in FY2017 Another issue for Congress is whether to fund the acquisition of four FRCs in FY2017, as requested, or some other number, such as six, which was the number projected for FY2017 under the Coast Guard's FY2016 budget submission. As shown in Table 1, the Coast Guard's FY2017 budget requests $240 million for the procurement of four FRCs, rather than the $325 million for the procurement of six more FRCs that was projected for FY2017 in the Coast Guard's FY2016 budget submission.Supporters of funding the acquisition of six rather than four FRCs in FY2017 could argue that the Coast Guard's FY2016 budget submission projected the acquisition of six FRCs in FY2017, that procuring six rather than four would increase production economies of scale and thus reduce the unit acquisition cost of the ships, and that procuring six rather than four will help the Coast Guard to close more quickly a gap in patrol boat capacity that is limiting the Coast Guard's ability to interdict illegal drugs and carry out other missions.
Supporters of funding the acquisition of four FRCs in FY2017, as requested by the Coast Guard, could argue that adding the $85 million funding that would be needed to increase the FY2017 buy to six ships could require making offsetting reductions in other Coast Guard or DHS programs, potentially adversely affecting those programs, and resultant Coast Guard or DHS capabilities.
Annual or Multiyear Contracting for FRCsAnother issue for Congress is whether acquire the final 20 or 26 FRCs33 using annual contracting or multiyear contracting in the form of multiyear procurement (MYP) or block buy contracting. The Coast Guard currently plans to use a contract with options for procuring the final 26 FRCs. A contract with options may look like a form of multiyear contracting, but operates more like a series of annual contracts. Contracts with options do not achieve the reductions in acquisition costs that are possible with MYP and block buy contracting. Congress would need to grant authority to the Coast Guard to use MYP or block buy contracting in the FRC program.
At a February 3, 2016, hearing on Coast Guard cutter acquisition before the Coast Guard and Maritime Transportation Subcommittee of the House Transportation and Infrastructure Committee, CRS testified that using MYP or block buy contracting rather than a contract with options to procure the final 20 or 26 FRCs could reduce the total FRC acquisition costs by more than $100 million. CRS also testified that, as a general matter, using MYP or block buy contracting involves accepting certain tradeoffs, such as the following: reduced congressional control over year-to-year spending, and tying the hands of future Congresses; reduced flexibility for making changes in Coast Guard acquisition programs in response to unforeseen changes in strategic or budgetary circumstances (which can cause any needed funding reductions to fall more heavily on acquisition programs not covered by multiyear contracts); a potential need to shift funding from later fiscal years to earlier fiscal years to fund economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of components; the risk of having to make penalty payments to shipbuilders if multiyear contracts need to be terminated due to unavailability of funds needed for the continuation of the contracts; and the risk that materials and components purchased for ships to be procured in future years might go to waste if those ships are not eventually procured.34
Annual or Multiyear Contracting for OPCsAnother issue for Congress, similar to the FRC issue above, is whether acquire OPCs using annual contracting or multiyear contracting in the form of multiyear procurement (MYP) or block buy contracting. The Coast Guard currently plans to use a contract with options for procuring the first 9 to 11 OPCs. As stated in the FRC section above, a contract with options may look like a form of multiyear contracting, but operates more like a series of annual contracts. Contracts with options do not achieve the reductions in acquisition costs that are possible with MYP and block buy contracting.
As noted earlier, Section 223 of the Howard Coble Coast Guard and Maritime Transportation Act of 2014 (S. 2444/P.L. 113-281 of December 18, 2014) grants authority to use MYP in the OPC program. MYP typically cannot be used on the first several ships in a shipbuilding program because the law that regulates MYP (10 USC 2306b) requires a stable design for an acquisition program to qualify for MYP. In a shipbuilding program, a stable design is typically demonstrated by completing the construction of the first ship in the class, by which time the first several ships in the class typically have been funded and put under contract. Block buy contracting, by comparison, can be used at the start of a shipbuilding program, beginning with the first ship. As with MYP, authority for using block buy contracting must be granted by Congress. Since Section 223 of P.L. 113-281 grants authority to use MYP but not block buy contracting, Congress would need to grant authority to the Coast Guard to use block buy contracting in the OPC program.35
At a February 3, 2016, hearing on Coast Guard cutter acquisition before the Coast Guard and Maritime Transportation Subcommittee of the House Transportation and Infrastructure Committee, CRS testified that if the Coast Guard were to use block buy contracting with economic order quantity (EOQ) purchases of components for acquiring the first several OPCs, and either MYP or block buy contracting with EOQ purchases for acquiring the remaining ships in the program, then the savings on the total acquisition cost of the 25 OPCs (compared to costs under contracts with options) could amount to roughly $1 billion. As with the FRCs discussed above, using MYP or block buy contracting involves accepting certain tradeoffs, such as the following: reduced congressional control over year-to-year spending, and tying the hands of future Congresses; reduced flexibility for making changes in Coast Guard acquisition programs in response to unforeseen changes in strategic or budgetary circumstances (which can cause any needed funding reductions to fall more heavily on acquisition programs not covered by multiyear contracts); a potential need to shift funding from later fiscal years to earlier fiscal years to fund economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of components; the risk of having to make penalty payments to shipbuilders if multiyear contracts need to be terminated due to unavailability of funds needed for the continuation of the contracts; and the risk that materials and components purchased for ships to be procured in future years might go to waste if those ships are not eventually procured.36
Planned NSC, OPC, and FRC Procurement Quantities Another 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, medium-endurance cutters, and 110-foot patrol craft. NSCs, OPCs, and FRCs, moreover, are to be individually more capable than the older ships they are to replace. Even so, Coast Guard studies have concluded that the planned total of 91 NSCs, OPCs, and FRCs would provide 58% of the cutters 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. For further discussion of this issue, about which CRS first testified 2005,37 see Appendix A. Funding Level of Coast Guard's Acquisition AccountAnother 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 2 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, subsequent budget submissions have reduced that figure to between $1 billion and $1.2 billion per year. Table 2. Funding in AC&I Account in FY2013-FY2017 BudgetsMillions of dollars, rounded to nearest tenth
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Avg.
% change compared to avg. for FY13 budget
FY13 budget
1,217.3
1,429.5
1,619.9
1,643.8
1,722.0
1,526.5
—
FY14 budget
951.1
1,195.7
901.0
1,024.8
1,030.3
1,020.6
-33.1%
FY15 budget
1,084.2
1,103.0
1,128.9
1,180.4
1,228.7
1,145.0
-25.0%
FY16 budget
1,017.3
1,125.3
1,255.7
1,201.0
1,294.6
1,178.8
-22.8%
FY17 budget
1,136.8
n/a
n/a
n/a
n/a
n/a
n/a
Source: Table prepared by CRS based on Coast Guard FY2013-FY2017 budget submissions. n/a means not available.
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 (FY2013-FY2017) 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 large-scale 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.38
For further discussion of this issue, see Appendix B. OPC Program: Cost, Design, and Acquisition StrategyAnother potential oversight issue for Congress concerns the cost, design, and acquisition strategy for the OPC. Potential oversight questions for Congress include the following:
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.39
NSC Program: Initial TestingAnother potential oversight issue for Congress concerns the results of initial testing of the NSC. A January 2016 GAO report stated:
The U.S. Navy, the Coast Guard's independent test agent, completed initial testing for the National Security Cutter (NSC) in April 2014 and rated the NSC as operationally effective and suitable. Still, testing revealed 10 major deficiencies.... Initial testing is an event designed to verify performance of critical systems to ensure assets are capable of meeting mission requirements. The event tests critical operational issues and key performance parameters. The NSC fully met 12 of 19 key performance parameters. Tests of one key performance parameter, as well as other critical systems, were deferred to follow-on testing. The Coast Guard and the U.S. Navy disagree on the NSC's requirements for cutter boat operations. Without clear requirements the Navy and Coast Guard will not have a basis for determining actions to resolve any performance issues. Coast Guard officials acknowledged that clarifying these requirements would be beneficial.
The Coast Guard plans to begin follow-on testing in fall 2016. It must submit corrective action plans to the U.S. Navy to close any deficiencies. According to Coast Guard documentation, it may choose not to correct all deficiencies due to the cost of changes. Department of Homeland Security (DHS) acquisition guidance does not specify the timing of follow-on testing or the actions to be taken in response to the findings. Without a definite time frame DHS risks encountering the same problems as the NSC program experienced with future acquisitions and fielding assets without knowing the full capabilities.
During operations, the NSC has experienced performance issues that were not identified during initial testing, and the Coast Guard has planned design changes to some of the cutters' equipment.... However, the Coast Guard has not yet found the causes for problems affecting the NSC's propulsion systems. As a result of these and other equipment failures, the NSC has been operating in a degraded condition in some mission areas. DHS has no plans for additional acquisition review boards for the NSC, which would provide oversight going forward. Continued management-level oversight by DHS would help ensure that problems identified during testing and operations are addressed.40
NSC Program: Rotational CrewingA 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 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.41
Legislative Activity for FY2017 Summary of Appropriations Action on FY2017 Acquisition Funding Request Table 3 summarizes appropriations action on the Coast Guard's request for FY2017 acquisition funding for the NSC, OPC, and FRC programs. Table 3. Summary of Appropriations Action on FY2016 Acquisition Funding RequestFigures in millions of dollars, rounded to nearest tenth
Request
Request
House Appropriations Committee
Senate Appropriations Committee
Final
NSC program
127.0
OPC program
100.0
FRC program
240.0
TOTAL
467.0
Source: Table prepared by CRS based on Coast Guard's FY2017 budget submission and committee and conference reports.
This appendix provides further discussion on the issue of the Coast Guard's planned NSC, OPC, and FRC procurement quantities.
The Coast Guard estimates that with the POR's planned force of 91 NSCs, OPCs, and FRCs, the service would have capability or capacity gaps42 in 6 of its 11 statutory missions—search and rescue (SAR); defense readiness; counter-drug operations; ports, waterways, and coastal security (PWCS); protection of living marine resources (LMR); and alien migrant interdiction operations (AMIO). The Coast Guard judges that some of these gaps would be "high risk" or "very high risk."
Public discussions of the POR frequently mention the substantial improvement that the POR force would represent over the legacy force. Only rarely, however, have these discussions explicitly acknowledged the extent to which the POR force would nevertheless be smaller in number than the force that would be required, by Coast Guard estimate, to fully perform the Coast Guard's statutory missions in coming years. Discussions that focus on the POR's improvement over the legacy force while omitting mention of the considerably larger number of cutters that would be required, by Coast Guard estimate, to fully perform the Coast Guard's statutory missions in coming years could encourage audiences to conclude, contrary to Coast Guard estimates, that the POR's planned force of 91 cutters would be capable of fully performing the Coast Guard's statutory missions in coming years.
In a study completed in December 2009 called the Fleet Mix Analysis (FMA) Phase 1, the Coast Guard calculated the size of the force that in its view would be needed to fully perform the service's statutory missions in coming years. The study refers to this larger force as the objective fleet mix. Table A-1 compares planned numbers of NSCs, OPCs, and FRCs in the POR to those in the objective fleet mix. Table A-1. Program of Record Compared to Objective Fleet MixFrom Fleet Mix Analysis Phase 1 (2009)
Ship type
Program of Record (POR)
Objective Fleet Mix From FMA Phase 1
Objective Fleet Mix compared to POR
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.
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.
From Fleet Mix Analysis Phase 1 (2009)—an X mark indicates a mission performance gap
Missions with performance gaps
Risk levels of these performance gaps
Program of Record (POR)
FMA-1
FMA-2
FMA-3
FMA-4 (Objective Fleet Mix)
Search and Rescue (SAR) capability
Very high
X
Defense Readiness capacity
Very high
X
Counter Drug capacity
Very high
X
High
X
X
High
X
X
[all gaps addressed]
Medium
X
X
X
Medium
X
X
X
Low/very low
X
X
X
X
Low/very low
X
X
X
X
Source: Fleet Mix Analysis Phase 1, Executive Summary, page ES-11 through ES-13.
Notes: In the first column, The Coast Guard uses capability as a qualitative term, to refer to the kinds of missions that can be performed, and capacity as a quantitative term, to refer to how much (i.e., to what scale or volume) a mission can be performed.
a. This gap occurs in the Southeast operating area (Coast Guard Districts 7 and 8) and the Western operating area (Districts 11, 13, and 14). b. This gap occurs in Alaska. c. This gap occurs in Alaska and in the Northeast operating area (Districts 1 and 5). d. This gap occurs in the Southeast and Western operating areas. e. This gap occurs in the Northeast operating area. Figure A-1, taken from FMA Phase 1, depicts the overall mission capability/performance gap situation in graphic form. It appears to be conceptual rather than drawn to precise scale. The black line descending toward 0 by the year 2027 shows the declining capability and performance of the Coast Guard's legacy assets as they gradually age out of the force. The purple line branching up from the black line shows the added capability from ships and aircraft to be procured under the POR, including the 91 planned NSCs, OPCs, and FRCs. The level of capability to be provided when the POR force is fully in place is the green line, labeled "2005 Mission Needs Statement." As can be seen in the graph, this level of capability is substantially below a projection of Coast Guard mission demands made after the terrorist attacks of September 11, 2001 (the red line, labeled "Post-9/11 CG Mission Demands"), and even further below a Coast Guard projection of future mission demands (the top dashed line, labeled "Future Mission Demands"). The dashed blue lines show future capability levels that would result from reducing planned procurement quantities in the POR or executing the POR over a longer time period than originally planned.Figure A-1. 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.
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.
A December 7, 2015, press report states:
The Coast Guard's No. 2 officer said the small size and advanced age of its fleet is limiting the service's ability to carry out crucial missions in the Arctic and drug transit zones or to meet rising calls for presence in the volatile South China Sea.
"The lack of surface vessels every day just breaks my heart," VADM Charles Michel, the Coast Guard's vice commandant, said Dec. 7.
Addressing a forum on American Sea Power sponsored by the U.S. Naval Institute at the Newseum, Michel detailed the problems the Coast Guard faces in trying to carry out its missions of national security, law enforcement and maritime safety because of a lack of resources.
"That's why you hear me clamoring for recapitalization," he said.
Michel noted that China's coast guard has a lot more ships than the U.S. Coast Guard has, including many that are larger than the biggest U.S. cutter, the 1,800-ton [sic:4,800-ton] National Security Cutter. China is using those white-painted vessels rather than "gray-hull navy" ships to enforce its claims to vast areas of the South China Sea, including reefs and shoals claimed by other nations, he said.
That is a statement that the disputed areas are "so much our territory, we don't need the navy. That's an absolutely masterful use of the coast guard," he said.
The superior numbers of Chinese coast guard vessels and its plans to build more is something, "we have to consider when looking at what we can do in the South China Sea," Michel said.
Although they have received requests from the U.S. commanders in the region for U.S. Coast Guard cutters in the South China Sea, "the commandant had to say 'no'. There's not enough to go around," he said.47
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 A-3? What impact would these performance gaps have on public safety, national security, and protection of living marine resources?This appendix provides further discussion of the issue of funding levels in the Coast Guard's Acquisition, Construction, and Improvements (AC&I) account.
The Coast Guard has testified that funding the AC&I account at a level of about $1 billion 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-funded 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:
REPRESENATIVE FRANK LOBIONDO:
Can you give us your take on what percentage of value must be invested each year to maintain current levels of effort and to allow the Coast Guard to fully carry out its missions?
ADMIRAL ROBERT J. PAPP, COMMANDANT OF THE COAST GUARD:
I think I can, Mr. Chairman. Actually, in discussions and looking at our budget—and I'll give you rough numbers here, what we do now is we have to live within the constraints that we've been averaging about $1.4 billion in acquisition money each year.
If you look at our complete portfolio, the things that we'd like to do, when you look at the shore infrastructure that needs to be taken care of, when you look at renovating our smaller icebreakers and other ships and aircraft that we have, we've done some rough estimates that it would really take close to about $2.5 billion a year, if we were to do all the things that we would like to do to sustain our capital plant.
So I'm just like any other head of any other agency here, as that the end of the day, we're given a top line and we have to make choices and tradeoffs and basically, my tradeoffs boil down to sustaining frontline operations balancing that, we're trying to recapitalize the Coast Guard and there's where the break is and where we have to define our spending.48
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.49
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."50
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.51
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.52
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:
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.53
Although the annual amounts of acquisition funding that the Coast Guard has received in recent years are one potential guide to what Coast Guard acquisition funding levels might or should be in coming years, there may be other potential guides. For example, one could envision potential guides that focus on whether Coast Guard funding for ship acquisition and sustainment is commensurate with Coast Guard funding for the personnel that in many cases will operate the ships. Observations that might be made in connection with this example based on the Coast Guard and Navy budget submissions include the following:
Author Contact Information
The earlier report was CRS Report RL33753, Coast Guard Deepwater Acquisition Programs: Background, Oversight Issues, and Options for Congress, by [author name scrubbed]. 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, by [author name scrubbed], 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.
See CRS Testimony TE10004, The Status of Coast Guard Cutter Acquisition Programs, by [author name scrubbed].
CRS Report RL34391, Coast Guard Polar Icebreaker Modernization: Background and Issues for Congress, by [author name scrubbed].
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.
Hamilton-class cutters are 378 feet long and have a full load displacement of about 3,400 tons.
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.
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.
Island-class boats are 110 feet long and have a full load displacement of about 135 to 170 tons.
Government Accountability Office, Coast Guard[:]Legacy Vessels' Declining Conditions Reinforce Need for More Realistic Operational Targets, GAO-12-741, July 2012, 71 pp.
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.)
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.
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.
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.
U.S. Coast Guard description of the NSC, accessed April 26, 2013, at http://www.uscg.mil/acquisition/nsc/features.asp.
"Acquisition Update: Coast Guard Commissions Fifth National Security Cutter," August 10, 2015, accessed September 24, 2015, at http://www.uscg.mil/acquisition/newsroom/updates/nsc081015.asp.
"Acquisition Update: Sixth National Security Cutter Launched," September 15, 2015, accessed September 24, 2015, at http://www.uscg.mil/acquisition/newsroom/updates/nsc091515.asp. See also "Acquisition Update: Coast Guard Christens Sixth National Security Cutter," November 16, 2015, accessed January 27, 2016, at http://www.uscg.mil/acquisition/newsroom/updates/nsc111615.asp.
Coast Guard fact sheet on the OPC accessed April 26, 2013, at http://www.uscg.mil/acquisition/opc/pdf/opc.pdf.
Source: Section C.5 of the RFP, accessed October 31, 2012, at http://www.uscg.mil/ACQUISITION/newsroom/updates/opc092512.asp.
GFE is equipment that the government procures and then delivers to the shipyard for installation on the ship.
Source: Coast Guard emails to CRS dated June 25, 2013.
Source: Section C.1 of the RFP, accessed March 26, 2013, at http://www.uscg.mil/ACQUISITION/newsroom/updates/opc092512.asp.
The firms were the following: 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. (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.)
"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.
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. (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.) 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. (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.)
"Offshore Patrol Cutter," last modified May 27, 2015, accessed September 24, 2015, at http://www.uscg.mil/acquisition/opc/default.asp.
FRCs are 154 feet long and have a full load displacement of 353 tons.
Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional Justification, p. CG-AC&I-28 (pdf page 182 of 400).
"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.
"Acquisition Update: Coast Guard Commissions 16th Fast Response Cutter," March 14, 2016, accessed March 22, 2016, at http://www.uscg.mil/acquisition/newsroom/updates/frc031416.asp.
"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.
"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.
For more on block buy contracting, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress, by [author name scrubbed] and [author name scrubbed], and CRS Testimony TE10004, The Status of Coast Guard Cutter Acquisition Programs, by [author name scrubbed].
The difference between 20 and 26 relates to whether the six FRCs funded in FY2016 are included in this discussion.
See CRS Testimony TE10004, The Status of Coast Guard Cutter Acquisition Programs, by [author name scrubbed].
See CRS Testimony TE10004, The Status of Coast Guard Cutter Acquisition Programs, by [author name scrubbed].
See Statement of [author name scrubbed], 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.
Statement of [author name scrubbed], 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.
Calvin Biesecker, "With Affordability In Mind, Zukunft Reviewing OPC Requirements," Defense Daily, January 16, 2015: 4.
Government Accountability Office, National Security Cutter[:]Enhanced Oversight Needed to Ensure Problems Discovered during Testing and Operations Are Addressed, GAO-16-148, January 2016, summary page.
Government Accountability Office, Coast Guard[:] Timely Actions Needed to Address Risks in Using Rotational Crews, GAO-15-195, summary page.
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.
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.
Government Accountability Office, Coast Guard[:]Action Needed As Approved Deepwater Program Remains Unachievable, GAO-11-743, July 2011, p. 46.
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.
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.
Otto Kreisher, "'Not Enough' USCG Vessels to Meet Demand for Presence in South China Sea, Arctic," Seapower, December 7, 2015.
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.
Transcript of hearing. The remarks were made in response to a question from Senator Mary Landrieu.
Transcript of hearing.
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.
The Navy's proposed FY2014 budget requests $14,078 million for the Shipbuilding and Conversion, Navy (SCN) appropriation account.
The Navy's proposed FY2014 budget requested $27,824 million for the Military Personnel, Navy (MPN) appropriation account.
The Coast Guard's proposed FY2014 budget requested $3,425.3 million for military pay and allowances.