In my post, Irresponsibly Rebuilding the Fleet-a Look at the Future, I talked about why it was essential that the Coast Guard build at least two Offshore Patrol Cutters (OPC) a year, when it finally starts building them in 2016. My concern is that there is still no wide spread support for funding the Coast Guard’s “Program of Record” which includes 25 OPCs in addition to eight National Security Cutters and 58 Fast Response Cutters.

The Coast Guard has recently gone public with similar concerns.

Studies are playing an important part in the effort to build consensus on what the Coast Guard’s fleet of Cutters should look like in the future and how to get there. May 28 of this year, we looked at the Executive Summary of the Offshore and Aviation Fleet Mix Study completed in 2009, but only recently made public. The Coast Guard completed a second phase of its Fleet Mix Study which looked at the effects of two funding levels on the procurement process in May 2011 and the Department of Homeland Security completed a “Cutter Study” in August 2011.

May 31, 2012 GAO released a report to Congressional Committees titled “Observations on the Coast Guard’s and the Department of Homeland Security’s Fleet Studies” [PDF] along with briefing slides provided on April 20, 2012. I’m going to quote GAO’s report and slides extensively.

GAO saw there objectives as to:

• “(1) What are the key results of the Coast Guard’s Fleet Mix Studies and DHS’s Cutter Study with respect to recapitalization and operations?
• “(2) How useful are these studies to DHS, the Office of Management and Budget (OMB), and the Coast Guard for informing recapitalization decisions?”

Fleet Mix Phase 1:

“Fleet Mix Analysis Phase One assessed surface, air, and information technology capabilities and mission demands in an unconstrained fiscal environment. The Coast Guard then added cost constraints to Fleet Mix Analysis Phase One, resulting in Fleet Mix Analysis Phase Two. Seeking information to aid in making trade-offs, DHS, at the suggestion of OMB, commissioned a Cutter Study looking at potential trade-offs within the Coast Guard’s major cutter fleet, comprised of National Security Cutters (NSCs) and Offshore Patrol Cutters (OPCs).”

“Coast Guard officials stated that the analysis (CG’s Fleet Mix Study-Chuck) supports the continued pursuit of the program of record. However, DHS Program Analysis & Evaluation (PA&E) and OMB officials told us that the analysis has limited utility without cost constraints and trade-offs.”

Fleet Mix Phase 2:

Fleet Mix Phase 2, completed by the Coast Guard in May 2011, is cost constrained and uses an upper and lower bounds of $1.2B and $1.64B per year in 2009 dollars. GAO considers this unrealistic because even 1.2B is more than the Coast Guard has received (fig. 4, page 22)(I found this hard to reconcile with what I know of prior year funding).

It, “Primarily assessed the rate at which the Coast Guard could acquire the program of record within a high and low bound of annual acquisition cost constraints.”

“Fleet Mix Phase Two considered two different funding scenarios and indicated that there may be opportunities to improve the affordability of the program of record by reducing capability, while still enhancing performance over the current fleet. The study illustrated that by 2034 (using the lower level of funding–Chuck), the performance of the planned fleet will be nearly 50 percent higher than performance projections for the Coast Guard’s fleet in 2014.

However, this level of performance will require an optimistic level of funding. The lower bound funding scenario used in the study, $1.2 billion (fiscal year 2009 dollars), is greater than the Coast Guard’s past 5 years of appropriations. The Coast Guard stated that the study’s results are useful because it found that if the Coast Guard receives less than $1.2 billion per year, they will not be able to buy the program of record before the next recapitalization begins. DHS PA&E officials stated that the usefulness of the Phase Two study is limited because it was based on the program of record. OMB officials added that the scenarios in the study were based on the program of record and only increase the total number of assets acquired.”

Using the upper bound ($1.64B/year) the Coast Guard estimated that they would complete the program of record by 2029 and during the years FY2029 through FY 2034 they would acquire one more NSC for a total of nine, eleven more OPCs for a total of 36 and 33 more FRCs for a total of 91.

Using the lower bound ($1.2B/year), the Coast Guard would not complete the Program of Record until 2034. What they did not address in their slide,  was the potential drop in performance between the years they did consider, 2014 and 2029.

There was also an interesting footnote on this slide, “For FY2007, FY2014, and FY2029, the study assumes the major cutters are operating 185 days away from homeport. The fleet in FY2034—the program of record—assumes the major cutters are operating 230 days away from homeport.”

Fleet Mix Phase 2 Found that Under the Lower Bound Constraint Performance Improves Prior to Achieving the Program of Record

Funding less than the lower bound would result in the “Program of Record” being incomplete when the next round of recapitalization should begin in 2036.

“Fleet Mix Phase 2 Found that Increasing Days Away from Homeport Improves Performance

• “Fleet Mix Phase 2 demonstrates that operating the NSCs and OPCs for 230 days away from homeport per the planned program of record, as opposed to the current fleet’s 185 days, increases performance.
• “However, Coast Guard officials told us that the Coast Guard is reevaluating its planned rotational crewing policy—four crews per three hulls to achieve 230 days away from homeport. Coast Guard analysis being conducted separate from Fleet Mix Phase 2 indicates that 230 days away from homeport, with its requisite rotational crewing strategy, may be difficult and/or costly to achieve.
• “Coast Guard officials noted that the analysis in Fleet Mix Phase 2 did not look at the effect of rotational crewing on training, logistics, shoreside billets, and other factors.”

In either case, it should be noted that completion of the program of record at any time before 2044 requires construction of more than one OPC a year. Assuming these dates were based on the previous assumption that NSCs #7 and #8 would be funded in 2014 and 2015, and that the first OPC would enter service in 2019 (now expected in 2020), completion of the program by 2029 would require a completion rate of 2.2 ships per year beginning in 2020. Completion of the program in 2034 would require a completion rate of 1.6 OPCs per year beginning in 2020.

Dept. of Homeland Security’s Cutter Study:

“The DHS Cutter Study primarily demonstrated that the performance of the Coast Guard’s future fleet is dependent upon the “effective presence” of the assets, which, according to the Coast Guard, means having the right assets and capabilities at the right place at the right time. For example, the study showed that the OPC will be able to launch small boats and helicopters in rougher waters than the current medium endurance cutter, which will increase the Coast Guard’s ability to be effectively present in all operating areas. However, the study did not fully consider how often the Coast Guard needs to operate in these rougher waters. The Cutter Study also examined the Coast Guard’s defense readiness mission and found that defense readiness is a key factor in determining the quantity of NSCs to purchase. Coast Guard officials stated that the Cutter Study supports the continued pursuit of the program of record. DHS PA&E and OMB have so far used the Cutter Study to inform the fiscal year 2013 budget. For example, DHS PA&E officials stated that the Cutter Study provided information that DHS and OMB used, in conjunction with other information sources, to inform the decision to not include the last two NSC hulls— hulls 7 and 8—in the FY2013-2017 capital investment plan.” (emphasis applied–Chuck)

The DHS study was completed in August 2011 and

• “Developed alternative cutter fleets that equaled the acquisition cost, at the time of the analysis, of the cutter fleet program of record.
• “Assessed the expected performance of these alternative fleets compared to the program of record.”

The DHS Cutter Study looked at alternatives to the OPC and alternate fleet mixes in the form of nine possible fleets in addition to the program of record, all with the same expected costs. Three of these alternative fleets  included only NSCs, OPCs, and FRCs. Three substituted modified, updated WMEC270s for OPCs resulting in numerically larger fleets, and three replaced some of the OPCs with Littoral Combat Ships on a one for one basis.

—Modified WMEC 270 as an OPC alternative:

The DHS study assumed 34 Modified WMEC270 would cost the same as 25 OPCs, but that they would be capable of boat and helicopter operations only in up to sea state Four, while OPCs were to be capable of boat and helicopter operations in sea state five.

“The DHS Cutter Study found that speed, seakeeping, range, and endurance are the key factors that contribute to effective presence. The study also states that there are other ways to increase presence operationally, for example by basing cutters closer to operating areas. While the number of cutters improves presence, presence is reduced if cutters cannot perform operations in sea state five.”

The DHS study found that the ability to conduct boat and helicopter operations in Sea State Five made a significant difference in cutter effectiveness.

“As seen in Figure 3, a sea state 5 OPC improves presence in all regions compared to a sea state 4 modernized 270-foot cutter”

This limitation would have applied to a lesser extent to the LCS as well.

—Littoral Combat Ship as an OPC alternative:

The DHS study apparently assumed the LCS would cost the same as the OPC.

“DHS’s Cutter Study determined that the LCS is not well-suited for Coast Guard missions. For example, while the planned LCS has a higher speed than the planned OPC, its limitations include:

• “Limited range—requires more frequent refueling than the planned OPC (reducing its available mission time)
• “Inability to maintain effective presence—cannot operate boats or aircraft in as high a sea state”

Table 5: Comparison of Key Capabilities between the Planned OPC and LCS
————————————————–OPC—————————-LCS———-
Speed                                                 22-25 knots                   Greater Than 45 knots
Range                            8,500-9,500 nm @ 17 knots                 4,500 nm @ 14 knots
Endurance (days)                                   45-60                                        21
Boat maximum                 Sea State 5 (13.1’ waves)        Mid-Sea State 4 (6.8’ waves)
launch limit
Helo maximum                 Sea State 5 (13.1’ waves)       Almost Sea State 5 (12.1’ waves)
launch limit

–A Third (unexplored) Alternative–a “Mid-Capability” OPC

“DHS Cutter Study Indicates that a Mid-Capability OPC May Provide the Best Value.

“In the Cutter Study, the Center for Naval Analysis (CNA) recommends that DHS explore additional fleet mix options, including looking at a mid-capability OPC.

“The mid-capability OPC would reduce the speed and range of the objective OPC but otherwise maintain its presence capabilities including an ability to operate in sea state 5.

“A CNA official responsible for the analysis stated that other characteristics of this midcapability OPC could include removing or reducing the following from the objective OPC without affecting presence:

• Sensitive Compartmentalized Information Facility
• Air Search and Fire Control Radars (acquire the positions of targets and provide these data to a ship’s command and control and weapon systems)
• Electronic Warfare Support Measures
• Berthing space (114 instead of 122)
• Weapons suite (e.g., 25mm gun instead of 57mm)

“The CNA official also stated that CNA has not studied whether these changes to the objective OPC would otherwise affect mission performance.” (emphasis applied–Chuck)

DHS Cutter Study Found that Defense Operations is a Key Factor in Determining Quantity of NSCs Needed

• “In all three studies, the defense readiness mission is fully satisfied before other mission areas are assessed.10 In doing so, defense operations is the highest priority mission, only to be met through the use of NSCs.
• “As a result, the DHS Cutter Study found that a yearly availability of 3.5  NSCs is necessary to meet the defense operations presence requirement.
• “In reality, Coast Guard officials told us they do not give specific missions preeminent priority over any assets and actual mission planning is primarily determined through an analysis of the expected risks and the responsibility to respond to all statutory missions.
• “For example, the first NSC commissioned, BERTHOLF, is currently on its second deployment in the Alaska operations area primarily for missions other than defense operations.”

Conclusions of the GAO study:

“Concluding Observations:

• The Coast Guard completed Fleet Mix Phase 1 and 2 to examine its mix of assets, but neither acknowledged the federal budget pressures facing our country, limiting the usefulness of the studies for trade-off decisions.
• Fleet Mix Phase 2 found that the Coast Guard’s performance will increase once it acquires the program of record. However, whether that performance increase is affordable is not addressed in the study.
• More recently, DHS’s Cutter Study looked at trade-offs within the Coast Guard’s surface program of record and provides some useful information to decision makers as they consider OPC affordability and how many NSCs the Coast Guard needs. However, as the study indicates, examining trade-offs in the aviation portfolio could also provide additional insights.
• DHS PA&E and OMB officials said they are using information in the Cutter Study to inform discussions concerning the Coast Guard’s program of record, but the extent to which changes will be implemented is not yet known.
• Given that executing the program of record within original cost and schedule baselines is unachievable, DHS and the Coast Guard need to identify trade-off decisions that balance effectiveness with affordability, as previously recommended.

“In July 2010, following the completion of Fleet Mix Phase 1, we recommended that the Coast Guard present a comprehensive review of the Deepwater Program that clarifies the overall cost, schedule, quantities, and mix of assets required to meet mission needs, including trade-offs in light of fiscal constraints. DHS concurred, but has not yet implemented this recommendation. In 2011, we recommended that the Secretary of Homeland Security develop a working group that includes participation from DHS and the Coast Guard’s capabilities, resources, and acquisition directorates to review the results of multiple studies to identify cost, capability, and quantity trade-offs that would produce a program of record that fits within expected budget parameters. DHS concurred, but has yet to implement this recommendation.”

Commentary to Follow in Part 2.