Webber Class FRCs, Multiyear Procurement in the Future?

File:Proposed modification to the Damen Stan patrol vessel for the USCG.jpg

MarineLog and gCaptain have both recently reported that the Coast Guard has exercised an option for six more Webber class Fast Response Cutters. These will be units 13 through 18 of the class. These are, I believe, all from FY2012 money. The Coast Guard had intended to defer ordering two of these to combine them with two being requested in FY2013 to keep the shipyard working at a consistent minimally sustainable rate of four units per year. That may be what they end up doing anyway, delivering one boat every three months.

I thought it was about time to review the status of the Fast Response Cutter project and look at the future. Where are we and where are we going with this project?

Phase One:

The third vessel of the class, William Flores (WPC-1103), was delivered to the Coast Guard August 17th, and is expected to be commissioned in November. If boats are delivered at three month intervals, the last of the FY2012 boats will be delivered May of 2016. If instead, the shipyard immediately begins to deliver boats at the two month interval they should be capable of, the 18th boat will deliver in February 2015.

The existing contract included options for up to 34 vessels, but because all options were not exercised, the maximum number that can be built under the existing contract would be 30. Two option years remain, FY 2013 and 2014, but because of funding difficulties, it appears unlikely that options will be exercised for all twelve units remaining in the existing contract. The FY2013 budget request included only two vessels, rather than the six that would be provided under full rate production.

So, there will be a second phase procurement aimed at building at least 28 vessels and probably more, perhaps as many as 36, if only two are funded in FY 2013 and two in 2014.

The DHS Inspector General has raised some questions about the progress of the Fast Response Cutter Program. The report faults the Coast guard for accelerating production before the completion of operational test and evaluation, which is not expected to be completed until March 2013. Considering that the program was well behind schedule in terms of replacing 110s, some urgency appears justified. Risk areas the DHS IG pointed out were the stern launching system for the ship’s boat, and that “the service has not verified that the FRC is capable of stowing all its gear.” Since the boat launch arrangement follows that used successfully on the last of the Navy’s Cyclone class PCs, and the vessels have much more volume than the 110s they replaced, it seems unlikely either of these is going to be a real problem.

Phase Two:

In October 2011 the Acquisition Directorate, CG-9, had already begun market research (pdf) for the second phase procurement of Fast Response Cutters that is expected to be awarded in FY2015. I am hoping the Coast Guard will seek Congressional approval to make this a “Multiyear Procurement” as defined here:

“Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress” (pdf), Congressional Research Service (CRS), Ronald O’Rourke and Moshe Swartz, June 27, 2012 (Sorry you will need to copy and paste: http://www.fas.org/sgp/crs/natsec/R41909.pdf)

These types of contracts originated in the DOD, but have now been extended to other branches as well. The FRC project seems to meet all the requirements for this type of procurement. This is different from what was done in phase one, which was an annual contract with options for future years. A multiyear procurement offers the Coast Guard at least three possible advantages.

  • Savings as a result of the longer term of the contract,
  • Savings as a result of increased competitiveness in the contract award, and
  • Long term commitment by the Congress and Administration.

The longer term of these contracts, which can commit the government for up to five years, frequently means increased efficiency which can be passed along to the government. The CRS report identifies two primary reasons for the increased efficiency:

  • Contractor can optimize their workforce and production facilities.
  • Long-leadtime components can be procured in Economic order quantity (EOQ)

While it is difficult to know the true savings these advantages offer, they are estimated to be several percentage points.

“Compared with estimated costs under annual contracting, estimated savings for programs being proposed for MYP have ranged from less than 5% to more than 15%, depending on the particulars of the program in question, with many estimates falling in the range of 5% to 10%. In practice, actual savings from using MYP rather than annual contracting can be difficult to observe or verify because of cost growth during the execution of the contract due to changes in the program independent of the use of MYP rather than annual contracting.”

In February 2012, the Coast Guard exercised a $27.2M option to purchase the “Procurement and Data License Package” for the Webber class Fast Response Cutters, so when it is time to award phase two, the Coast Guard can allow other shipyards to bid to build follow-on ships of the same class.

If we don’t go to a multiyear procurement, the current contractor, Bollinger, will certainly have a massive advantage in an annual award process. Awarding a multiyear contract could go a long way toward leveling the playing field, in that other shipyards would see the benefit  in optimizing their facilities for the larger contract.

And last, but by no means least, this strategy would commit the Congress and the Administration to a constant, long term support of the program that is mature and obviously needed.

24 thoughts on “Webber Class FRCs, Multiyear Procurement in the Future?

  1. I think if the US Coast Guard is going to buy more FRC to replace their 110 Patrol Boats. I think they should start doing a one for one, where for every 110 we decom and sell to allies such as Iraq or the Philippines. We buy an FRC and use the money from the sale of the 110 Patrol Boats to buy more FRC’s or Finance the cost of the OPC.

    • It was a thought and question, if the US Coast Guard did sell their old 110 Patrol boats, who or what country would want a used 110 Patrol Boat from the US Coast Guard

      • I would say that the only countries that would be interested would be those with some ship repair facilities and low labor costs, so that they could invest a lot of work in keeping them going at a relatively low cost. That might include the Philippines, but they have other alternatives that may be more attractive. The Japanese have offered them some patrol boats, possibly new.

      • So if you were a betting man, who would you be betting if the US Coast Guard were to sell or give a used 110 Patrol Boats to. I would think the Iraqi Navy, Philippine navy or the Liberia navy.

    • What about Caribbean countries want to build up a naval fleet such as the Dominican republic. What about even the Iraqi Navy, I could see us giving them our 110’s and getting FRC’s instead of shipping them back to the states

  2. some of these 110’s have been ridden pretty hard and put away wet and may not be worth the money needed to keep them going. especially when there are quite a few relatively low cost alternatives out there. they are all way past their designed service lives.

  3. Nicky, The topic on the 110’s has been covered many times in the past conversations that were part of it seems like when I hear selling them you offer the same thing and the response is the same. It’s like ground hogs day every time.

    • Agreed. The disposition of the decommissioned boats is irrelevant to the acquisition of new ones. The timing will be interesting however.

      • And let me remind everyone that ALL of the 110s were supposed to be gone YEARS ago. ALL of them are still in service covering for the 123s which were supposed to let the 110s be decommissioned by now (with 17 needing MEP which the USCG paid instead of hitting ICGS up for coverage on the performance guaranty) The delays are due for the most part because of problems ICGS caused. The original FRC composite hull debacle, the NSC hull design longevity issue and the 123 problems all caused the delay. Before you respond back with my being a broken record etc – realize this is what the contractors and USCG senior leadership want you to think. Let’s all move on etc. Well the SAME people are in charge at those contractors. Given that no one has been held accountable for the issues mentioned above (we settled on the electronics part which was a some accountability) and the same people are in charge that doesn’t bode well for ACTUALLY putting it all behind us and getting it right now. Do you really think you can teach an old dog new tricks?

  4. I am all for the good folks in southern Louisiana getting work. The problem is that no one has been held accountable at Bollinger for the 123 debacle – and that includes Bollinger holding it’s self accountable.
    The DoJ suit shows emails where Bollinger officers discussed falsifying the hull strength calculations so they could hide the fact that they used thinned steel than they should have. All to save money. This made the hulls weak and unable to meet requirements. After this Bollinger and its parents ICGS etc said the 123s failed because the CG abused them – among several bogus responses. Bollinger intended to sell 49 of these boats in exactly that condition. Then to make matters worse they charged for the “repairs” and actually offered to replace the rest of the 110s, after they ruined the first 4, with a NEW 123. All under the guise that the design and workmanship were sound. This was no mistake. It was a calculated and intentional conspiracy to defraud the CG and the country, all post 9/111, to save MONEY. Of course to make matters worse the legal system takes forever and the USCG senior leadership and elected officials rolled over and in doing so help perpetuate the debacle. (Admiral Papp actually said to the press the DoJ v Bollinger suit was the DoJs idea not his)
    The same Bollinger officials that ran the 123 program and running the FRC program. No accountability, no one has taken responsibility, no one fired, no refund paid etc. All of this should be cleared up before we funnel more money to a company that put profit ahead of people’s lives – all post 9/11.

  5. Pingback: Six more FRCs and Approval of Full Rate Production–Time for a Multi-year Contract | Chuck Hill's CG Blog

  6. Pingback: CG issues Draft RFP for Second Phase of FRC Procurement | Chuck Hill's CG Blog

  7. Pingback: RFP for Webber Class Cutters #33-58 | Chuck Hill's CG Blog

  8. Pingback: Document Alert: Jan.27, 2016 Congressional Research Service report, Coast Guard Cutter Procurement: Background and Issues for Congress | Chuck Hill's CG Blog

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