Coast Guard Cutter Procurement: Background and Issues for Congress




Coast Guard Cutter Procurement:
Background and Issues for Congress

Updated November 11, 2020
Congressional Research Service
https://crsreports.congress.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 high-endurance cutters, medium-endurance cutters, and
patrol craft. The Coast Guard’s proposed FY2021 budget requests a total of $597 million in
procurement funding for the NSC, OPC, and FRC programs. It also proposes a rescission of $70
million in FY2020 procurement funding that Congress provided for the NSC program.
NSCs are the Coast Guard’s largest and most capable general-purpose cutters; they are replacing
the Coast Guard’s 12 Hamilton-class high-endurance cutters. NSCs have an estimated average
procurement cost of about $670 million per ship. Although the Coast Guard’s POR calls for
procuring 8 NSCs to replace the 12 Hamilton-class cutters, Congress through FY2020 has fully
funded 11 NSCs, including the 10th and 11th in FY2018. In FY2020, Congress provided $100.5
million for procurement of long lead time materials (LLTM) for a 12th NSC, so as to preserve the
option of procuring a 12th NSC while the Coast Guard evaluates its future needs. The funding can
be used for procuring LLTM for a 12th NSC if the Coast Guard determines it is needed. The Coast
Guard’s proposed FY2021 budget requests $31 million in procurement funding for activities
within the NSC program; this request does not include further funding for a 12th NSC. The Coast
Guard’s proposed FY2021 budget also proposes a rescission of $70 million of the $100.5 million
that Congress provided for a 12th NSC, with the intent of reprogramming that funding to the
Coast Guard’s Polar Security Cutter (PSC) program. Eight NSCs have entered service; the
seventh and eighth were commissioned into service on August 24, 2019. The 9th through 11th are
under construction; the 9th is scheduled for delivery in 2020.
OPCs are to be less expensive and in some respects less capable than NSCs; they are intended to
replace the Coast Guard’s 29 aged medium-endurance cutters. Coast Guard officials describe the
OPC and PSC programs as the service’s highest acquisition priorities. OPCs have an estimated
average procurement cost of about $411 million per ship. The first OPC was funded in FY2018.
The Coast Guard’s proposed FY2021 budget requests $546 million in procurement funding for
the third OPC, LLTM for the fourth, and other program costs. On October 11, 2019, the
Department of Homeland Security (DHS), of which the Coast Guard is a part, announced that
DHS had granted extraordinary contractual relief to Eastern Shipbuilding Group (ESG) of
Panama City, FL, the builder of the first four OPCs, under P.L. 85-804 as amended (50 U.S.C.
1431-1435), a law that authorizes certain federal agencies to provide certain types of
extraordinary relief to contractors who are encountering difficulties in the performance of federal
contracts or subcontracts relating to national defense. ESG reportedly submitted a request for
extraordinary relief on June 30, 2019, after ESG’s shipbuilding facilities were damaged by
Hurricane Michael, which passed through the Florida panhandle on October 10, 2018. The Coast
Guard intends to hold a competition for a contract to build OPCs 5 through 15.
FRCs are considerably smaller and less expensive than OPCs; they are intended to replace the
Coast Guard’s 49 aging Island-class patrol boats. FRCs have an estimated average procurement
cost of about $65 million per boat. A total of 60 have been funded through FY2020, including
four in FY2020. Six of the 60 are to be used by the Coast Guard in the Persian Gulf and are not
counted against the Coast Guard’s 58-ship POR for the program, which relates to domestic
operations. Excluding these six FRCs, 54 FRCs for domestic operations have been funded
through FY2020. The 38th FRC was commissioned into service on July 15, 2020. The Coast
Guard’s proposed FY2021 budget requests $20 million in procurement funding for the FRC
program; this request does not include funding for any additional FRCs.
Congressional Research Service

link to page 5 link to page 5 link to page 5 link to page 6 link to page 7 link to page 8 link to page 8 link to page 11 link to page 12 link to page 14 link to page 15 link to page 16 link to page 16 link to page 16 link to page 18 link to page 19 link to page 19 link to page 19 link to page 19 link to page 20 link to page 20 link to page 20 link to page 21 link to page 22 link to page 23 link to page 24 link to page 24 link to page 24 link to page 25 link to page 26 link to page 26 link to page 26 link to page 27 link to page 27 link to page 27 link to page 28 link to page 28 link to page 7 link to page 9 link to page 10 link to page 10 link to page 11 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
Overview ............................................................................................................................. 4
Competition and September 2016 Contract Award ............................................................. 7
October 2019 Announcement of Contractual Relief and Follow-on Competition .............. 8
January 10, 2020, RFP for Industry Studies ..................................................................... 10
March 20, 2020, Contract Awards for Industry Studies ..................................................... 11
October 9, 2020, Release of Draft RFP for Follow-on Competition ................................ 12
Appendices with Additional Information .......................................................................... 12

FRC Program .......................................................................................................................... 12
Funding in FY2013-FY2021 Budget Submissions ................................................................. 14
Issues for Congress ........................................................................................................................ 15
Potential Impact of COVID-19 (Coronavirus) Situation ........................................................ 15
Procurement Funding for 12th NSC ......................................................................................... 15
Number of FRCs to Procure in FY2021 .................................................................................. 15
Procurement Cost Growth on OPCs 1 Through 4 ................................................................... 16
Contractual Relief and Follow-on Competition for OPC Program ......................................... 16

Overall Course of Action .................................................................................................. 16
Contractual Relief ............................................................................................................. 17
Follow-On Competition .................................................................................................... 18
Notional Schedule ............................................................................................................. 19
November 25, 2019, House Committee Letter Regarding OPC Program ........................ 20
Risk of Procurement Cost Growth on OPCs 5-25 ................................................................... 20
Annual OPC Procurement Rate............................................................................................... 20
Annual or Multiyear (Block Buy) Contracting for OPCs ....................................................... 21
Planned NSC, OPC, and FRC Procurement Quantities .......................................................... 22
Legislative Activity for FY2021 .................................................................................................... 22
Summary of Appropriations Action on FY2021 Procurement Funding Request .................... 22
FY2021 DHS Appropriations Act (H.R. 7669/S. XXXX) ...................................................... 23
House ................................................................................................................................ 23
Senate ................................................................................................................................ 23

FY2021 National Defense Authorization Act (H.R. 6395) ..................................................... 24
House ................................................................................................................................ 24

Figures
Figure 1. National Security Cutter ................................................................................................... 3
Figure 2. Offshore Patrol Cutter ...................................................................................................... 5
Figure 3. Offshore Patrol Cutter ...................................................................................................... 6
Figure 4. Offshore Patrol Cutter ...................................................................................................... 6
Figure 5. Offshore Patrol Cutter ...................................................................................................... 7
Congressional Research Service

link to page 13 link to page 17 link to page 35 link to page 18 link to page 27 link to page 33 link to page 33 link to page 34 link to page 36 link to page 40 link to page 32 link to page 39 link to page 45 link to page 48 link to page 50 link to page 56 link to page 58 Coast Guard Cutter Procurement: Background and Issues for Congress

Figure 6. OPC Functional Design ................................................................................................... 9
Figure 7. Fast Response Cutter ...................................................................................................... 13

Figure A-1. Projected Mission Demands vs. Projected Capability/Performance .......................... 31

Tables
Table 1. NSC, OPC, and FRC Funding in FY2013-FY2021 Budget Submissions ....................... 14
Table 2. Summary of Appropriations Action on FY2021 Procurement Funding Request ............ 23

Table A-1. Program of Record Compared to Objective Fleet Mix ................................................ 29
Table A-2. POR Compared to FMAs 1 Through 4 ........................................................................ 29
Table A-3. Force Mixes and Mission Performance Gaps .............................................................. 30
Table A-4. POR Compared to Objective Mixes in FMA Phases 1 and 2 ...................................... 32
Table B-1. Funding in PC&I Account in FY2013-FY2020 Budgets ............................................. 36

Appendixes
Appendix A. Planned NSC, OPC, and FRC Procurement Quantities ........................................... 28
Appendix B. Funding Levels in PC&I Account ............................................................................ 35
Appendix C. Information on NSC, OPC, and FRC Programs from GAO Report ........................ 41
Appendix D. Some Considerations Relating to Warranties in Shipbuilding ................................. 44
Appendix E. Impact of Hurricane Michael on OPC Program at Eastern Shipbuilding................. 46
Appendix F. November 25, 2019, House Committee Letter Regarding OPC Program ................ 52

Contacts
Author Information ........................................................................................................................ 54

Congressional Research Service

Coast Guard Cutter Procurement: Background and Issues for Congress

Introduction
This report provides background information and potential oversight issues for Congress on the
Coast Guard’s programs for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol
Cutters (OPCs), and 58 Fast Response Cutters (FRCs). The Coast Guard’s proposed FY2021
budget requests a total of $597 million in procurement funding for the NSC, OPC, and FRC
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 other CRS reports dating back to 1998 that are now
archived.1 CRS testified on the Coast Guard’s cutter acquisition programs most recently in
October and November of 2018.2 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 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).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
included 13 Famous (WMEC-901) class ships that entered service between 1983 and 1991,6 14

1 This CRS report was first published on June 13, 2012. The earlier CRS reports were Coast Guard Deepwater
Acquisition Programs: Background, Oversight Issues, and Options for Congress, by Ronald O’Rourke (first version
December 18, 2006, final [i.e., archived] version January 20, 2012); CRS Report RS21019, Coast Guard Deepwater
Program: Background and Issues for Congress, by Ronald O’Rourke
(first version September 25, 2001, final [i.e.,
archived] version December 8, 2006); and CRS Report 98-830 F, Coast Guard Integrated Deepwater System:
Background and Issues for Congress
, by Ronald O’Rourke (first version October 5, 1998, final [i.e., archived] version
June 1, 2001). 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 as a way of referring to these programs.
2 See CRS Testimony TE10030, Icebreaker Acquisition and the Need for a National Maritime Strategy, by Ronald
O'Rourke, November 29, 2018, which includes discussions of the NSC, OPC, and FRC programs in Appendix E, and
CRS Testimony TE10029, Building the Fleets of the Future: Coast Guard and NOAA Fleet Recapitalization, by
Ronald O'Rourke, October 11, 2018.
3 CRS Report RL34391, Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for
Congress
, by Ronald O'Rourke.
4 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.
5 Hamilton-class cutters are 378 feet long and have a full load displacement of about 3,400 tons.
6 Famous-class cutters are 270 feet long and have a full load displacement of about 1,800 tons.
Congressional Research Service

1

Coast Guard Cutter Procurement: Background and Issues for Congress

Reliance (WMEC-615) class ships that entered service between 1964 and 1969,7 and 2 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: 8 of the Island-class patrol boats were
removed from service in 2007 following an unsuccessful effort to modernize and lengthen them
to 123 feet; additional Island-class patrol boats are being decommissioned as new FRCs enter
service; the one-of-a-kind medium-endurance 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 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.11
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.

7 Reliance-class cutters are 210 feet long and have a full load displacement of about 1,100 tons.
8 These were 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 reentered service with the Coast Guard in 1999. It is 282 feet long and has a full load displacement of
about 2,900 tons.
9 Island-class boats are 110 feet long and have a full load displacement of about 135 to 170 tons.
10 Government Accountability Office, Coast Guard[:]Legacy Vessels’ Declining Conditions Reinforce Need for More
Realistic Operational Targets
, GAO-12-741, July 2012, 71 pp.
11 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.)
Congressional Research Service

2

link to page 7
Coast Guard Cutter Procurement: Background and Issues for Congress

NSC Program
National Security Cutters (Figure 1)—also known as Legend (WMSL-750)12 class cutters
because they are being named for legendary Coast Guard personnel13—are the Coast Guard’s
largest and most capable general-purpose cutters.14 They are larger and technologically more
advanced than Hamilton-class cutters, and are built by Huntington Ingalls Industries’ Ingalls
Shipbuilding of Pascagoula, MS (HII/Ingalls).
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/.

12 In the designation WMSL, W means Coast Guard ship and MSL stands for maritime security cutter, large.
13 For a Coast Guard news release that mentions the naming rule for the class, see U.S. Coast Guard, “Acquisition
Update: Keel Authenticated for the Fifth National Security Cutter,” May 17, 2013.
14 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 now-retired Oliver Hazard Perry (FFG-7) class frigates, which were 453 feet
long and had a full load displacement of about 4,200 tons. 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 Coast Guard states that
The largest and most technologically advanced of the Coast Guard’s newest classes of cutters, the
NSCs replace the aging 378-foot high endurance cutters, which have been in service since the
1960s. Compared to legacy cutters, the NSCs’ design provides better sea-keeping and higher
sustained transit speeds, greater endurance and range, and the ability to launch and recover small
boats from astern, as well as aviation support facilities and a flight deck for helicopters and
unmanned aerial vehicles.
(“National Security Cutter,” accessed April 19, 2018, at https://www.dcms.uscg.mil/Our-
Organization/Assistant-Commandant-for-Acquisitions-CG-9/Programs/Surface-Programs/National-
Security-Cutter/.)
Congressional Research Service

3

link to page 45 link to page 9 link to page 10 link to page 10 link to page 11 link to page 13 Coast Guard Cutter Procurement: Background and Issues for Congress

The Coast Guard’s acquisition 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 FY2020 budget submission estimated the total acquisition cost of a nine-ship NSC
program at $6.030 billion, or an average of about $670 million per ship.15
Although the Coast Guard’s POR calls for procuring 8 NSCs to replace the 12 Hamilton-class
cutters, Congress through FY2020 has fully funded 11 NSCs, including the 10th and 11th in
FY2018. In FY2020, Congress provided $100.5 million for procurement of long lead time
materials (LLTM) for a 12th NSC, so as to preserve the option of procuring a 12th NSC while the
Coast Guard evaluates its future needs. The funding can be used for procuring LLTM for a 12th
NSC if the Coast Guard determines it is needed. The Coast Guard’s proposed FY2021 budget
requests $31 million in procurement funding for activities within the NSC program; this request
does not include further funding for a 12th NSC. The Coast Guard’s proposed FY2021 budget also
proposes a rescission of $70 million of the $100.5 million that Congress provided for a 12th NSC,
with the intent of reprogramming that funding to the Coast Guard’s Polar Security Cutter (PSC)
program. The remaining $30.5 million would be used for procuring mission equipment for the
10th and 11th NSCs.16
Eight NSCs have entered service; the seventh and eighth were commissioned into service on
August 24, 2019. The 9th through 11th are under construction; the 9th is scheduled for delivery in
2020. For additional information on the status and execution of the NSC program from a May
2018 GAO report, see Appendix C.
OPC Program
Overview
Coast Guard officials describe the Offshore Patrol Cutter program and the Coast Guard’s Polar
Security Cutter (PSC) program17 as the service’s two highest acquisition priorities. The Coast
Guard’s POR calls for procuring 25 OPCs as replacements for the service’s 29 medium-
endurance cutters. The first four ships in the OPC program are being built by Eastern
Shipbuilding Group (ESG) of Panama City, FL.
OPCs (Figure 2, Figure 3, Figure 4, Figure 5, and Figure 6)—also known as Heritage
(WMSM-915)18 class cutters because they are being named for past cutters that played a
significant role in the history of the Coast Guard and the Coast Guard’s predecessor
organizations19—are to be less expensive and in some respects less capable than NSCs.20 OPCs

15 Source: Coast Guard Five-Year (FY2020-FY2024) Capital Investment Plan (CIP) funding table for the Procurement,
Construction and Improvements (PC&I) account.
16 Source: Email from Coast Guard liaison office to CRS, February 26, 2020.
17 For more on the PSC proram, see CRS Report RL34391, Coast Guard Polar Security Cutter (Polar Icebreaker)
Program: Background and Issues for Congress
, by Ronald O'Rourke.
18 In the designation WMSM, W means Coast Guard ship and MSM stands for maritime security cutter, medium.
19 For the naming rule for the class and a list of the names of the first 11 OPCs, see U.S. Coast Guard, “The Offshore
Patrol Cutter (OPC) Is The Coast Guard’s Highest Investment Priority and Will Play A Critical Role in the Service’s
Future,” undated, accessed August 15, 2017, at http://www.dcms.uscg.mil/Our-Organization/Assistant-Commandant-
for-Acquisitions-CG-9/Newsroom/OPC_Day/. See also Sam LaGrone, “Coast Guard Celebrates Birthday by Naming
11 Planned Offshore Patrol Cutters,” USNI News, August 4, 2017 (updated August 5, 2017).
20 The service states that OPCs
Congressional Research Service

4

link to page 13
Coast Guard Cutter Procurement: Background and Issues for Congress

are to have a length of 360 feet, which will make them about 86% as long as NSCs, which have a
length of 418 feet. OPCs were earlier estimated to have a full load displacement of 3,500 tons to
3,730 tons, which would have made them about 80% as large in terms of full load displacement
as NSCs, which have a full load displacement of about 4,500 tons21 As the OPC design has
matured, however, its estimated displacement has grown to about 4,500 tons, making it
essentially as large as the NSC in terms of full load displacement.22
Figure 2. Offshore Patrol Cutter
Artist’s rendering

Source: Photograph accompanying Kirk Moore, “Coast Guard’s Birthday Present: Naming the Next Cutters,”
WorkBoat, August 4, 2017. A caption to the rendering credits the rendering to Eastern Shipbuilding Group.

The OPCs will provide the majority of offshore presence for the Coast Guard’s cutter fleet,
bridging the capabilities of the 418-foot national security cutters, which patrol the open ocean, and
the 154-foot fast response cutters, which serve closer to shore. The OPCs will conduct missions
including law enforcement, drug and migrant interdiction, search and rescue, and other homeland
security and defense operations. Each OPC will be capable of deploying independently or as part of
task groups and serving as a mobile command and control platform for surge operations such as
hurricane response, mass migration incidents and other events. The cutters will also support Arctic
objectives by helping regulate and protect emerging commerce and energy exploration in Alaska.
(“Offshore Patrol Cutter,” accessed April 20, 2018, https://www.dcms.uscg.mil/Our-Organization/
Assistant-Commandant-for-Acquisitions-CG-9/Programs/Surface-Programs/Offshore-Patrol-
Cutter/Offshore-Patrol-Cutter-Program-Profile/.)
21 As of May 26, 2017, the OPC’s light ship displacement (i.e., its “empty” displacement, without fuel, water, ballast,
stores, and crew) was preliminarily estimated at about 2,640 to 2,800 tons, and its full load displacement was
preliminarily estimated at about 3,500 to 3,730 tons. (Source: Figures provided to CRS by Cost Guard liaison office,
May 26, 2017.) In terms of full load displacement, this would have made OPCs roughly 80% as large as NSCs.
22 Source: Email from Coast Guard liaison office to CRS, November 25, 2019. See also Figure 6.
Congressional Research Service

5



Coast Guard Cutter Procurement: Background and Issues for Congress

Figure 3. Offshore Patrol Cutter
Artist’s rendering

Source: “Offshore Patrol Cutter Notional Design Characteristics and Performance,” accessed September 16,
2016, at https://www.dcms.uscg.mil/Portals/10/CG-9/Surface/OPC/OPC%20Placemat%2036x24.pdf?ver=2018-10-
02-134225-297.
Figure 4. Offshore Patrol Cutter
Artist’s rendering

Source: Eastern Shipbuilding Group (http://www.easternshipbuilding.com/), accessed September 9, 2019.
The Coast Guard’s FY2020 budget submission estimated the total acquisition cost of the 25 ships
at $10.270 billion, or an average of about $411 million per ship.23 The first OPC was funded in
FY2018. The Coast Guard’s proposed FY2021 budget requests $546 million in procurement
funding for the third OPC, LLTM for the fourth, and other program costs.


23 Source: Coast Guard Five-Year (FY2020-FY2024) Capital Investment Plan (CIP) funding table for the Procurement,
Construction and Improvements (PC&I) account.
Congressional Research Service

6


Coast Guard Cutter Procurement: Background and Issues for Congress

Figure 5. Offshore Patrol Cutter
Artist’s rendering

Source: Image received from Coast Guard liaison office, May 25, 2017.
The Coast Guard’s Request for Proposal (RFP) for the OPC program, released on September 25,
2012, established 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.24 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,25 or other program costs—such as those for program management, system integration, and
logistics—that contribute to the above-cited figure of $411 million per ship.26
Competition and September 2016 Contract Award
In response to the September 25, 2012, RFP, at least eight shipyards expressed interest in the OPC
program.27 On February 11, 2014, the Coast Guard announced that it had awarded Preliminary

24 Source: Section C.5 of the RFP, accessed October 31, 2012, at http://www.uscg.mil/ACQUISITION/newsroom/
updates/opc092512.asp.
25 GFE is equipment that the government procures and then delivers to the shipyard for installation on the ship.
26 Source: Coast Guard emails to CRS dated June 25, 2013.
27 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,
Congressional Research Service

7

Coast Guard Cutter Procurement: Background and Issues for Congress

and Contract Design (P&CD) contracts to three of those eight firms—Bollinger Shipyards of
Lockport, LA; Eastern Shipbuilding Group (ESG) of Panama City, FL; and General Dynamics’
Bath Iron Works (GD/BIW) of Bath, ME.28
On September 15, 2016, the Coast Guard announced that it had awarded the detail design and
construction (DD&C) contract to ESG. The contract covered detail design and production of up
to 9 OPCs and had a potential value of $2.38 billion if all options were exercised.29
October 2019 Announcement of Contractual Relief and Follow-on Competition
On October 11, 2019, the Department of Homeland Security (DHS), of which the Coast Guard is
a part, announced that DHS had granted extraordinary contractual relief to ESG under P.L. 85-
804 as amended (50 U.S.C. 1431-1435), a law originally enacted in 1958 that authorizes certain
federal agencies to provide certain types of extraordinary relief to contractors who are
encountering difficulties in the performance of federal contracts or subcontracts relating to
national defense.30

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/articles/2013/4/1/2013april-new-coast-guard-cutter-sparks-fierce-
competition-among-shipbuilders.)
28 “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 https://www.dcms.uscg.mil/Portals/10/CG-9/Newsroom/
In%20The%20News%20Archives/2014/opc021114.pdf?ver=2017-05-23-145011-727. 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 (http://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.)
29 “Acquisition Update: Coast Guard Selects Offshore Patrol Cutter Design,” September 15, 2016; “Acquisition
Update: Coast Guard Moves Forward To Next Phase Of OPC Acquisition,” October 5, 2016. See also “Coast Guard
Exercises Long Lead Time Materials Option For First Offshore Patrol Cutter,” September 7, 2017.
30 50 U.S.C. 1431 states in part
The President may authorize any department or agency of the Government which exercises
functions in connection with the national defense, acting in accordance with regulations prescribed
by the President for the protection of the Government, to enter into contracts or into amendments or
modifications of contracts heretofore or hereafter made and to make advance payments thereon,
without regard to other provisions of law relating to the making, performance, amendment, or
modification of contracts, whenever he deems that such action would facilitate the national defense.
The authority conferred by this section shall not be utilized to obligate the United States in an
amount in excess of $50,000 without approval by an official at or above the level of an Assistant
Secretary or his Deputy, or an assistant head or his deputy, of such department or agency, or by a
Contract Adjustment Board established therein.
For more on P.L. 85-804 as amended, see CRS Report 76-261, Extraordinary Contractual Relief Under Public Law 85-
804
, April 28, 1976, by Andrew C. Mayer. The report was prepared at the request of the House Armed Services
Committee and converted by the committee into a committee print (70-905 O), dated May 10, 1976, that can be viewed
at https://ufdc.ufl.edu/AA00022546/00001/1j. See also David H. Peirez, “Public Law 85-804: Contractual Relief for the
Government Contractor,” Administrative Law Review, Vol. 16 (Summer 1964): 248-264, accessed October 11, 2019, at
Congressional Research Service

8


Coast Guard Cutter Procurement: Background and Issues for Congress

Figure 6. OPC Functional Design
“Placemat” summary from Coast Guard

Source: Slide 11 from Coast Guard presentation at OPC Industry Day, December 11, 2019, updated December
13, 2019, accessed December 17, 2019, at https://beta.sam.gov/opp/bf0b9b0a1fe2428e9a73043259641c13/view.
ESG reportedly submitted a request for extraordinary relief on June 30, 2019, after ESG’s
shipbuilding facilities were damaged by Hurricane Michael, which passed through the Florida
panhandle on October 10, 2018. The Coast Guard announced that the contractual relief is limited
to the first four hulls in the OPC program. DHS stated that the Coast Guard would immediately
transition to conducting a follow-on competition for subsequent ships in the OPC program,31
identified later as ships 5 through 15 in the program. Under P.L. 85-804 as amended, Congress
had 60 days of continuous session to review the announced contractual relief, with the 60-day
period in this case starting October 11.32

https://www.jstor.org/stable/40708469; and “Presidential Power: Public Law 85-804 (50 U.S.C. §§ 1431-35),” Brennan
Center for Justice, undated, accessed October 11, 2019, at https://www.brennancenter.org/sites/default/files/analysis/
50%20USC%201431-1435.pdf. (Although it is undated, it appears to have been written no earlier than 2014, as it
includes three references to the year 2014, including one that states, “As of 2014….”) The text of P.L. 85-804 as
originally enacted is posted at https://www.govinfo.gov/content/pkg/STATUTE-72/pdf/STATUTE-72-Pg972.pdf.
31 Department of Homeland Security, “DHS Extends Contract Relief for Offshore Patrol Cutter,” October 11, 2019;
U.S. Coast Guard, “Department of Homeland Security Approves Limited Extraordinary Relief for Offshore Patrol
Cutter Contract,” October 11, 2019; “DHS, Coast Guard Extend Limited Contract Relief for Offshore Patrol Cutter,”
Coast Guard News (coastguardnews.com), October 11, 2019.
32 50 U.S.C. 1431 states in part
Congressional Research Service

9

Coast Guard Cutter Procurement: Background and Issues for Congress

January 10, 2020, RFP for Industry Studies
On January 10, 2020, the Coast Guard released a request for proposals (RFP) for industry studies
in connection with its intended follow-on competition for ships 5 through 15 in the OPC program.
Responses to the RFP were due by January 31, 2020.
The RFP posting included an attached notional timeline for the follow-on effort. Under this
notional timeline, the contracts for industry studies were to be awarded in early March 2020 (they
were awarded on March 20—see next section), and the studies are to be completed by October
10, 2020. A draft RFP for the detail design and construction (DD&C) contract for ships 5 through
15 is to be released around July 31, 2020; the final RFP is to be released around October 10,
2020; and proposals under the RFP are to be submitted by a date late in the third quarter of
FY2021.
Under the Coast Guard’s notional timeline, the DD&C contract is to be awarded on January 30,
2022. Ships 1 through 7 in the 25-ship program are to be built at a rate of one per year, with
OPC-1 completing construction in FY2022 and OPC-7 completing construction in FY2028. The
remaining 18 ships are to be built at a rate of two per year, with OPC-8 completing construction
in FY2029 and OPC-25 completing construction in FY2038. These dates are generally 10 months
to about 2 years later than they would have been under the Coast Guard’s previous (i.e., pre-
October 11, 2019) timeline for the OPC program.33
Under the new notional timeline, the Coast Guard’s 14 Reliance-class 210-foot medium-
endurance cutters would be replaced when they would be (if still in service) about 54 to 67 years
old, and the Coast Guard’s 13 Famous-class 270-foot medium-endurance cutters would be
replaced when they would be (if still in service) about 42 to 52 years old.34

The authority conferred by this section may not be utilized to obligate the United States in any
amount in excess of $25,000,000 unless the Committees on Armed Services of the Senate and the
House of Representatives have been notified in writing of such proposed obligation and 60 days of
continuous session of Congress have expired following the date on which such notice was
transmitted to such Committees. For purposes of this section, the continuity of a session of
Congress is broken only by an adjournment of the Congress sine die at the end of a Congress, and
the days on which either House is not in session because of an adjournment of more than 3 days to
a day certain, or because of an adjournment sine die other than at the end of a Congress, are
excluded in the computation of such 60-day period
33 Source for ships 1-4: An October 15, 2019, press report states
Under the new plan, the Coast Guard intends for Eastern Shipbuilding Group (ESG) to build up to
four OPCs rather than the minimum of nine contracted for a year ago, with the first ship now
delayed 10 to 12 months and the three subsequent ships about nine to 10 months each from that
point, Shultz said at an event hosted by the Center for Strategic and International Studies. Delivery
of the first OPC, which began construction in January, has been pushed back to 2022.
(Cal Biesecker, “Decision To Reopen OPC Competition Will Stretch Out Acquisition,” Defense
Daily
, October 15, 2019. See also Gina Harkins, “Despite Hurricane Damage, Coast Guard
Pressing On with Next-Gen Cutter Construction,” Military.com, October 15, 2019; Ben Werner,
“Coast Guard Seeks To Bring Bidders Onto Modified Offshore Patrol Cutter Contract,” USNI
News
, October 15, 2019.)
Source for ships 5 through 25: CRS comparison of notional timeline’s completion dates with those shown in Figure 4
on page 17 of Government Accountability Office, Coast Guard Recapitalization[:] Matching Needs and Resources
Continue to Strain Acquisition Efforts
, GAO-17-654 T, June 7, 2017. (Testimony Before the Subcommittee on Coast
Guard and Maritime Transportation, Committee on Transportation and Infrastructure, House of Representatives,
Statement of Marie A. Mak, Director, Acquisition and Sourcing Management.)
34 Source: CRS estimate based on replacement sequence shown in Government Accountability Office, Coast Guard
Recapitalization[:] Matching Needs and Resources Continue to Strain Acquisition Efforts
, GAO-17-654 T, June 7,
Congressional Research Service

10

Coast Guard Cutter Procurement: Background and Issues for Congress

An October 18, 2019, Coast Guard request for information (RFI) for the follow-on effort stated
that “it is assumed that Shipbuilders would utilize the mature parts of the existing OPC functional
design—to the maximum extent possible—and mature any incomplete aspects of the [OPC] detail
design.” This suggests that the Coast Guard envisioned that the fifth and subsequent OPCs would
be built to a design that is largely similar to that of ESG’s design for the first four OPCs.
March 20, 2020, Contract Awards for Industry Studies
On March 20, 2020, the Coast Guard announced that it had awarded nine industry study contracts
in support of the follow-on competition for the OPC program. The contracts were awarded to
 Austal USA of Mobile, AL;
 General Dynamics/Bath Iron Works (GD/BIW) of Bath, ME;
 Bollinger Shipyards Lockport of Lockport, LA;
 Eastern Shipbuilding Group (ESG) of Panama City, FL;
 Fincantieri Marinette Marine (F/MM) of Marinette, WS;
 General Dynamics/National Steel and Shipbuilding Company (GD/NASSCO) of
San Diego, CA;
 Huntington Ingalls Industries/Ingalls Shipbuilding (HII/Ingalls) of Pascagoula,
MS:
 Philly Shipyard of Philadelphia, PA;
 VT Halter Marine Inc. of Pascagoula, MS.
Most of the contracts have a base award value of $2.0 million and a total potential value of $3.0
million. The exceptions are the contract awarded to ESG, which has a base award value of $1.1
million and a total potential value of $1.2 million (a difference that appears to reflect ESG’s
status as the builder of the first OPCs), and the contract awarded to VT Halter, which has a total
potential value of $2.9 million.
The Coast Guard stated in its contract-award announcement that
Under their respective contracts, the awardees will assess OPC design and technical data,
provided by the Coast Guard, and the program’s construction approach. Based on their
analyses, the awardees will recommend to the Coast Guard potential strategies and
approaches for the follow-on detail design and construction (DD&C). The awardees will
also discuss how they would prepare the OPC functional design for production. The
awardees may also identify possible design or systems revisions that would be
advantageous to the program if implemented, with strategies to ensure those revisions are
properly managed.
The Coast Guard will use the industry studies results to further inform its follow-on
acquisition strategy and promote a robust competitive environment for the DD&C award.
Participation in industry studies is not a pre-requisite for submitting a DD&C proposal.35

2017. (Testimony Before the Subcommittee on Coast Guard and Maritime Transportation, Committee on
Transportation and Infrastructure, House of Representatives, Statement of Marie A. Mak, Director, Acquisition and
Sourcing Management.)
35 U.S. Coast Guard, “Coast Guard Awards Nine Contracts for Offshore Patrol Cutter Industry Studies,” March 20,
2020.
Congressional Research Service

11

link to page 45 link to page 50 link to page 56 link to page 17 Coast Guard Cutter Procurement: Background and Issues for Congress

October 9, 2020, Release of Draft RFP for Follow-on Competition
On October 9, 2020, the Coast Guard released a draft request for proposals (RFP) for the follow-
on competition for OPCs 5 through 15, which the Coast Guard refers to as Stage 2 of the OPC
program. Responses to the draft RFP, which will help inform the Coast Guard’s drafting of the
final version of the RFP, are due by November 23, 2020. The notional schedule that accompanied
the draft RFP calls for long leadtime materials (LLTM) for OPC 5 to be procured at the end of
FY2022/start of FY2023, for construction of OPC 5 to begin at the end of FY2023, and for
construction to be complete at the end of FY2026. OPCs 6 through 15 follow in annual quantities
of 1-1-2-2-2-2, with LLTM for OPCs 14 and 15 to be procured at the start of the fourth quarter of
FY2029, and for construction of those two ships to be complete by the start of the fourth quarter
of FY2032.
Appendices with Additional Information
For additional general information on the status and execution of the OPC program from a May
2018 GAO report, see Appendix C. For additional background information on the impact of
Hurricane Michael on the OPC program at ESG, see Appendix E. For the text of a November 25,
2019, letter to the Acting Secretary of DHS from the Chair and Ranking Member of the House
Transportation and Infrastructure Committee and the Chair and Ranking Member of that
committee’s Coast Guard and Maritime Transportation subcommittee regarding the restructuring
of the OPC program under P.L. 85-804, see Appendix F.
FRC Program
Fast Response Cutters (Figure 7)—also called Sentinel (WPC-1101)36 class patrol boats because
they are being named for enlisted leaders, trailblazers, and heroes of the Coast Guard and its
predecessor services of the U.S. Revenue Cutter Service, U.S. Lifesaving Service, and U.S.
Lighthouse Service37—are considerably smaller and less expensive than OPCs, but are larger than
the Coast Guard’s older patrol boats.38 FRCs are built by Bollinger Shipyards of Lockport, LA.
The Coast Guard’s POR calls for procuring 58 FRCs as replacements for the service’s 49 Island-
class patrol boats.39 The POR figure of 58 FRCs is for domestic operations. The Coast Guard,

36 In the designation WPC, W means Coast Guard ship and PC stands for patrol craft.
37 Source for class naming rule: U.S. Coast Guard bulletin, “ALCOAST 349/17 - Nov 2017 New Fast Response Cutters
Named for Coast Guard heroes,” November 22, 2017, accessed November 20, 2017, at
https://content.govdelivery.com/accounts/USDHSCG/bulletins/1c6c844.
38 FRCs are 154 feet long and have a full load displacement of 353 tons.
39 The Coast Guard states that
The planned fleet of FRCs will conduct primarily the same missions as the 110’ patrol boats being
replaced. In addition, the FRC will have several increased capabilities enhancing overall mission
execution. The FRC is designed for rapid response, with approximately a 28 knot speed capability,
and will typically operate in the coastal zones. Examples of missions that FRCs will complete
include SAR, Migrant Interdiction, Drug Interdiction and Ports Waterways and Coastal Security.
FRCs will provide enhanced capabilities over the 110’s including improved C4ISR capability and
interoperability; stern launch and recovery (up through sea state 4) of a 40 knot, Over-the-Horizon,
7m cutter boat; a remote operated, gyro stabilized MK38 Mod 2, 25mm main gun; improved sea
keeping; and enhanced crew habitability.
(Department of Homeland Security, United States Coast Guard, Fiscal Year 2013 Congressional
Justification
, p. CG-AC&I-28 (pdf page 182 of 400).)
Congressional Research Service

12