Reviewing the Status of Cutter Procurement

Belatedly, I have taken a look at the July 6, 2018 edition of the Congressional Research Service’s Naval Expert, Ronald O’Rourke’s Coast Guard Cutter Procurement: Background and Issues for Congress. It was published less than seven weeks after the previous edition.

Thought perhaps a short review of the status of the three programs addressed might be welcome.

NSC: The program of record was eight ships, but eleven ships have been funded through FY2018. Six have been commissioned. One additional delivery is expected each year, 2018, 2019, 2020 and presumably 2021 and 2022. The Senate sub-committee has expressed its intention to procure a twelfth NSC, but the FY2019 budget request did not include funding for an addition NSC. FY2020 would not be too late to fund NSC#12 and keep the delivery schedule at one per year.

OPCstarboardbow

OPC: The program of record is for 25 ships. The First ship was funded in FY2018. The Second ship is in the FY2019 budget request along with long lead time items for OPC#3. If all contract options are exercised, we should see one ship delivered each year 2021, 2022, and 2023. Beginning in 2024 the program anticipates delivery of two ships per year. If they hold to that modest rate, as planned, the last OPC will not be delivered until at least 2033 at which time the newest 270 will be 42 years old. Also at that rate, the newest 210 will be 60 years old when presumably, the last of the class is replaced in 2029. (If you think keeping 40 and 50 year old cutters operational is challenging, wait until you try a 60 year old. Particularly since the Coast Guard plans no major life extension work on the 210s.) 

FRC: The program of record is for 58 vessels. There is also a requirement for six more to replace the six Island class 110 foot cutters currently homeport in Bahrain as part of PATFORSWA, that are not included in the program of record. 50 Webber class have been funded through FY2018, with 28 currently in commission. Funding for four additional vessels was included in the FY2019 budget request. The Coast Guard is commissioning Webber class at the rate five vessels annually. The remaining 28 vessel will presumably be commissioned by 2024. Six additional for PATFORSWA would extend that through 2025. Apparently the Congress intends the DOD to fund the six that would go to FATFORSWA so presumably the last Coast Guard funding would be in the FY2020 budget.

If my understanding is correct, it is likely that major funding for the NSC and FRC programs will be complete in FY2020, the same year the third OPC should be funded. At some point, in the not too distant future, we will need to start the process of replacing the 87 foot WPBs, but hopefully we will find a way to accelerate the OPC procurement to something more than two a year.

18 thoughts on “Reviewing the Status of Cutter Procurement

  1. The 210’s were built in 4 different yards. So it would not be a new idea to take the plans and have a few built in other yards. Keep the industrial base busy.

  2. If Congress would continue with current funding levels for the acquisition line item, there is easily enough money from the completed NSC and FRC programs to build 3 OPCs per year starting in 2022, rather than 2 per year.

    I wonder if the 87s will be replaced with something larger, as has been done with all the other patrol cutter classes? Something around 30m perhaps?

    • “…enough money from the completed NSC and FRC programs to build 3 OPCs per year starting in 2022, rather than 2 per year.” That was sort of what I was implying. It is complicated by the Icebreaker program which looks like it will require uneven funding (high some years, almost none others) unless we start funding ship more like the Navy does aircraft carriers, not getting full funding up front in a single year.

      I do suspect the WPB replacement will be a bit larger and that they will be the true “fast response cutters,” unlike the Webber class they will be at the pier on standby, waiting for a call and then dash out, while the Webbers will be out cruising looking for smugglers or migrants. I expect like the Webbers they will also get a 25 mm Mk38.

  3. I have it on good authority that Eastern could build up to four OPCs annually in the yard they have currently dedicated to OPC construction.

    It appears that major NSC and FRC funding will be complete in FY2020. If so, the money we have been spending on those programs would fund three OPCs per year. If $2B PC&I becomes the norm, I think three perhaps even four per year would be possible. Best compromise might be first three as planned, then four funded in FY2021 and 2022 followed by three a year until completion. That would allow replacement of all 210s by 2026 and all MECs by 2030 three years earlier than currently planned,

    • I was looking at Eastern’s shipyard on Google Earth. I thought the same thing as far as capacity (4/yr possible), BUT that would mean Eastern has little to no room for other contracted vessels. It appears Eastern owns some empty land on what is the East side of the active shipyard. Not sure if they could utilize that somehow for fabricating ship modules before moving them to the assembly points…

      I’m afraid 4/year would be a stretch in 2021 and 2022 with icebreaker funding still going. My premise was that the icebreakers are outliers on the funding, because of their extra expense, the multiple-source funding, and their replacement interval. It makes sense to seperate them from normal procurement funding. However, I don’t think Congress would spring the money for a 4th OPC during “extra funding for icebreaker” years, either. Might get the money for 4th ships (per year) after the icebreakers are paid for…

  4. All respect to Eastern on their win and work so far, but (4-hull capacity or not) I’d like to see an effort to sub some of that work to another yard. At least give it a look.

    Is the House still trying to use the icebreaker money to build the wall?

    • We have an options contract with Eastern, not a multi-year.procurement or block buy–both defined by law. We can continue to exercise options up to the 9th OPC but if we wanted to build at a different rate, I presume there would be a recompetition. How that would be structured is open question.

      Not only did the House Appropriations Committee propose using the $750M for the icebreaker, they also want to take $700M in funds that were to fix infrastructure damaged in the recent hurricanes.

      Commandant says he is “guardedly optimistic” money for the icebreaker will be included in the budget. but I doubt we will see all the money restored.

    • POTUS said on Wednesday he was considering a government shut-down to coerce Congress into funding the wall. He is pondering whether to do that sooner or wait and see what happens with the mid-term elections… If he gets his way, perhaps funding on icebreakers would be restored. Perhaps…

  5. I think it would make sense to introduce another yard into the OPC procurement process. Eastern is a fine yard, and they’re not likely to give up their commercial contracts which they’re very proud of, to build 4 OPC’s per year. 2 is reasonable. Maybe Bollinger can get back into the picture, particularly when the FRC contracts are running out.

    • From what I understand, Eastern has expanded sufficiently that they could build up to four OPCs per year while continuing their commercial work, but that does not mean we might not benefit from having two yards building the class simultaneously.

  6. Highlights from the GAO, Home Security Acquisitions report; Leveraging Programs’ results Could Further DHS’s Progress to Improve Portfolio Management, May 2018, GAO-18-339SP, pp. 93/94.

    OPC

    Costs 06/2017
    Procurement $10,449M / 25 = $418 million per ship
    O& M Costs $36,204M / $10,449M = 3.5 X cost of procurement

    Marginal change from original cost estimate of $421 million per ship, though was taken aback reading the O&M costs of 3.5X compared to the NSC O&M costs of 2.4X, would have assumed as OPC as a newer generation ship would have lower O&M costs.

    ” The OPC’s initial LCCE [life-cycle cost estimate] was based in large part on the estimated weight of each ship. However, in November 2017, USCG officials said the ship is expected to weigh up to 35 percent more than originally estimated. Nevertheless, USCG officials expect to procure all 25 OPCs for the program’s APB objective cost of $10.5 billion because the contractor identified cost efficiencies to compensate for the increased weight.”

    Surprised at the weight increase of 35%, would have thought current state of art naval architecture software would come within 5% of actual weight, very, very odd.

    States O&M costs estimate largely based on ships weight which sounds very simplistic and would question if gives accurate figures, Italian Navy targeting a one third reduction in O&M costs with each new generation ship class using new design and tech, from the Maestrale class frigate (3,000 t) to the FREMM frigate (6,700 t) to the new PPA frigates (5.820/6.270 t) the Italian Navy is achieving its target, impressed.

    The GAO complimentary in that USCG completing the design of the OPC before starting construction, which is in-line with GAO shipbuilding best practices, first ship build due to start in FY2019.

    GAO raised questions about the OPC’s affordability and its effect on other USCG acquisition programs, such as the Heavy Polar Icebreaker.

    https://www.gao.gov/assets/700/691817.pdf

    • Ok if the O&M cost remains the same but the procurement cost goes down, then the ratio of O&M to cost goes up. O&M is primarily manning and fuel. Procurement costs for OPC are about half to 2/3 that of an NSC, but manning and fuel for the OPCs are close to that of the NSC so naturally the ratio is higher. Manning and fuel cost for an OPC will not be that much different from that of an NSC. If you started with a ratio of 2.5 for the NSC and O&M costs were the same but procurement costs for the OPC were half that of the NSC then you would expect the (O&M)/Procurement ratio would be 5.0.

      Projecting O&M costs based on displacement is not only crude, it is certain to be inaccurate. fuel costs to displacement are not a linear relationship and manning is largely unrelated to displacement. Very large cruse carriers have a smaller crew than a 210.

      The FRCs are less than one 12th the size of the NSC but their O&M is probably closer to 1/6 that of an NSC. They have a crew of 24 about 1/5 that of an NSC and they have almost 12,000 HP (more than twice as much as a 210) half as much as the cruise diesels on the NSCs so their fuel consumption is going to be much more than 12th that of an NSC.

      • Thanks for reply and your point of the procurement cost in relation to the O&M cost factor.

        As you say the main cost drivers for operations are crew and fuel. If GAO reported crew numbers correct, NSC is 129 v. OPC is 92, so OPC will operate with 37 fewer crew – 29% less, presume excludes helicopter crew.

        No figures for fuel consumption, would need to know percentage of time at various operational speeds, so unable to calculate how long the OPC will be able operate propulsion with its electric motor using its DGs which are more fuel efficient than using its main diesels (may be an argument for spending more on higher power electric motors for higher speed range, as pay back in thru life costs could be substantial).

        Also assuming the OPC will not require equivalent maintenance costs associated with the NSC re-work for structural enhancement on the first two ships, the replacement of the gantry crane, cracked cylinder heads and overheating generator bearings.

        With the latest estimate of NSC LCCE/O&M at $1,585 million per ship based on hard numbers would expect OPC to better by at least ~20% to 25%, 20% would be $1,268 million as opposed to USCG estimate of $1,448 million which will bring O&M cost to procurement cost factor to 3 (1268/418).

        Why think stressing importance lowering the LCCE/O&M costs is that IF budget remains stable USCG will be able to build and operate higher number of ships.

      • Lowering operating cost is a real concern because while long term the NSCs may cost less to operate than the 378s, it is very likely the OPC and FRC will cost more, perhaps much more to operate than the ships they replace. The only bright spot in this comparison is that in some respects the FRCs are doing the jobs of 210s which certainly cost more to operate. It also looks like while there will be fewer OPCs than MECs, there will also be many more FRCs than the 110s they replace. We may however go through a period when MECs are decommissioned faster than they are replaced. This will help the O&M budget short term but it will mean a sharp rise later.

        I do think it was a mistake not going for the higher powered electric cruise motors for the OPCs. If it is as I understand that the motors we are getting are good for up to 9 knots, but the motors we could have had would have been good for up to 13 knots, then while what we are getting will work for loitering in a patrol area, the higher powered motors would have made it possible to cruise long distances at a reasonable speed using only the ship’s service generators and the electric motors. This would have saved wear and tear on the main prop diesels, saved fuel, been quieter, been easier on the engineers, and potentially improved their potential as ASW ships. Would have also meant the ships were quieter much of the time improving the working environment.

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