Coast Guard Cutter Procurement: Background and Issues for Congress–Nov. 30, 2017

OPC “Placemat”

The Congressional Research Service has issued an updated report on Coast Guard Cutter procurement by Specialist in Naval Affair, Ronald O’Rourke. It is available in pdf format here or you can read it on the US Naval Institute site here.

Quoting from the Report,

Summary

The Coast Guard’s acquisition program of record (POR) calls for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs) as replacements for 90 aging Coast Guard cutters and patrol craft. The Coast Guard’s proposed FY2018 budget requests a total of $794 million in acquisition funding for the NSC, OPC, and FRC programs.

NSCs are the Coast Guard’s largest and most capable general-purpose cutters. They have an estimated average procurement cost of about $695 million per ship. The first six are now in service (the sixth was commissioned into service on April 1, 2017). The seventh, eighth, and ninth are under construction; the seventh and eighth are scheduled for delivery in 2018 and 2019, respectively. As part of its action on the Coast Guard’s FY2017 budget, Congress provided $95 million for procurement of long lead time materials (LLTM) for a 10th NSC. The Coast Guard’s proposed FY2018 budget requests $54 million in acquisition funding for the NSC program; this request does not include additional funding for a 10th NSC.

OPCs are to be smaller, less expensive, and in some respects less capable than NSCs. They have an estimated average procurement cost of about $421 million per ship. The first OPC is to be funded in FY2018 and delivered in 2021. On September 15, 2016, the Coast Guard announced that it was awarding a contract with options for building up to nine ships in the class to Eastern Shipbuilding Group of Panama City, FL. The Coast Guard’s proposed FY2018 budget requests $500 million in acquisition funding for the OCP program for the construction of the first OPC, procurement of LLTM for the second OPC, and certain other program costs.

FRCs are considerably smaller and less expensive than OPCs. They have an estimated average procurement cost of about $65 million per boat. A total of 44 have been funded through FY2017. The 24 th was commissioned into service on October 31, 2017. The Coast Guard’s proposed FY2018 budget requests $240 million in acquisition funding for the procurement of four more FRCs.The NSC, OPC, and FRC programs pose several issues for Congress, including the following:

  • whether to fully or partially fund the acquisition of a 10th NSC in FY2018;

  • whether to fund the acquisition of four FRCs in FY2018, as requested, or some other number, such as six, which is the maximum number that has been acquired in some prior fiscal years;

  • whether to use annual or multiyear contracting for procuring FRCs;

  • whether to use annual or multiyear contracting for procuring OPCs;

  • the procurement rate for the OPC program;

  • planned procurement quantities for NSCs, OPCS, and FRCs;

  • the cost, design, and acquisition strategy for the OPC; and

  • initial testing of the NSC.

Congress’s decisions on these programs could substantially affect Coast Guard capabilities and funding requirements, and the U.S. shipbuilding industrial base.

4 thoughts on “Coast Guard Cutter Procurement: Background and Issues for Congress–Nov. 30, 2017

  1. Quotes re. OPC

    “The detailed design for the OPC is now being developed. 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.”

    Also if reading between the lines, so might be wrong, Congress pork barrel politics pushing for more NSCs and fewer OPCs as the contract for the first nine is some way off (see options 3 & 4 below). USCG only asked for $54M for NSC, SAC requesting total of $701M for additional NSC.

    OPC build options suggested
    1)Increasing the production rate to three or four ships per year at Eastern Shipbuilding—an option that would depend on Eastern Shipbuilding’s production capacity;
    2) Introducing a second shipyard to build Eastern’s design for the OPC;
    3)Introducing a second shipyard (such as one of the other two OPC program finalists) to build its own design for the OPC—an option that would result in two OPC classes; or
    4) Building additional NSCs in the place of some of the OPCs—an option that might include descoping equipment on those NSCs where possible to reduce their acquisition cost and make their capabilities more like that of the OPC.

    • Contract for construction of the first OPC should be this year, but we still will not see a ship until 2021 and contract for the remaining eight are options rather than a block buy. Build rate is relatively slow. One for 2018, ’19, ’20, and then only two a year after that

      • I feel like every year, there’s a debate on whether the Coast Guard should use multiyear, block buying, annual, etc. Thoughts Chuck, especially on the OPC program?

      • Every year the Congressional Research Service suggests it, but the Coast Guard has so far failed to attempt it.

        We definitely should have put out the last contract for the Webber class WPCs as a Multi-year Procurement (MYP) contract. We might have had an opportunity for a truly competitive procurement. It was a mature program with a proven product, we just wanted to buy more than we could afford in one year. It was ideal for MYP but neither Congress, the Administration or the CG suggested it. https://chuckhillscgblog.net/2013/09/29/six-more-frcs-and-approval-of-full-rate-production-time-for-a-multi-year-contract/

        We probably should have gone MYP on the NSCs at some point, Probably about the time we contracted for the fourth or fifth ship. Again a proven product and an accepted plan that we would build eight.

        Block Buy is a bit different. It does not require that the product be tested and proven. Even so Congress has approved it for the OPC but so far the Coast Guard has stuck with options rather than Block Buy or MYP contracts. That does not mean we cannot go to one of these in the future, even before the existing options are all exercised.

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