“Coast Guard Cutter Procurement: Background and Issues for Congress” –CRS, October 16, 2019, A New Version Only Five Days After the Last

Congressional Research Service has again updated their review of the Coast Guard’s Cutter acquisition programs and the changes are significant. You can see it here.

Again the significant changes begin on page 8, with the section labeled “October 2019 Announcement of Contractual Relief and Follow-on Competition.” It looks at the authority for contract relief. It goes on to discuss the “60-Day Congressional Review Period That Started on October 11” on page 9. This is followed by quotation of various press reports about the decision through page 11. Discussion of the OPC resumes on page 14 in the “Issues for Congress” section under the title, “Contractual Relief and Follow-on Competition for OPC Program.” These include questions that might be asked during the 60 day Congressional Review period. This continues through page 16

It quotes the Commandant as saying, “the first ship now delayed 10 to 12 months and the three subsequent ships about nine to 10 months each from that point,” and that “If DHS decided to reopen the competition immediately, that would probably mean a three year delay before a new vendor delivers the first OPC.” (I expect a minimum of four years.) and “If another vendor is selected through a re-competition, it’s unlikely the new shipbuilder would be tasked with building multiple ships per year immediately, Schultz said.”

The Coast Guard’s rights to Eastern’s OPC design data are discussed. My position would be that relief should be granted only if Eastern conveyed rights to all design data to the Coast Guard upon final grant of contract relief. 

The possibility of procuring a twelfth National Security as a means of ameliorating the effects of the delays to the OPCs program was discussed on page 17. (It is not addressed here, but delays in the OPC program also argue strongly for fully funding the FRC fleet to 64 units.)

The form of the follow-on contract, either annual or multi-year, was discussed on page 17 and 18. (A block buy could encourage more competition, offering stable work and to a degree offsetting Eastern’s learning curve edge in a re-compete, possibly resulting savings that might approach $1B.)

OPC procurement rate is addressed on pages 18 and 19. This question was raised in all previous editions of the report, but may gain additional urgency because of the delays associated with contract relief and because the program was supposed to transition from one ship per year to two ships per year with OPC #4 and #5 in FY2021.

If I had my druthers, we would fund NSC#12 in addition to OPC#3 in FY2020, then in FY2021 award two block buy contracts for ten ships each over five years (1, 2, 2, 2, 3) to two different shipyards. Assuming award near the end of FY2021 we might have all 20 plus the four currently planned from Eastern by the end of FY2029, five years earlier than previously planned. That could mean the last 270 would only be 38 years old when decommissioned, and we might not need to do as much work on old ships to keep the operational. That would give us 36 large ships (12 NSCs and 24 OPCs), more than the original Program of Record. That would mean funding three OPCs in FY2021, one to Eastern and one to each of the two new shipyard contracts.

“Appendix E. Impact of Hurricane Michael on OPC Program at Eastern Shipbuilding Group (ESG)” provides additional background on the decision to provide contract relief.

Incidentally, on page 20, the House Appropriations Committee is reported to have recommended funding five FRCs in FY2020 and on page 21 the Senate Appropriations Committee is reported to have recommended funding four FRCs instead of the two requested by the administration.

2 thoughts on ““Coast Guard Cutter Procurement: Background and Issues for Congress” –CRS, October 16, 2019, A New Version Only Five Days After the Last

  1. Thanks for these updates on the OPC program Chuck…it’s been very interesting watching it unfold over these past years. I agree with your proposal on awarding block buys. As someone else had mentioned before in a previous post, precedent is certainly provided for in this case, considering both the 210s and 270s were built by multiple shipyards. As you pointed out, it would allow for a much quicker acquisition schedule than if the OPC was constructed at one location. Of course, that option depends on how this re-competing process turns out. I think the opportunity for this strategy is ripe.

  2. The keys here are design and timing. If they’re utilizing the same design at a second shipyard, then I’d bid out 4 of those now to a second yard. Eastern is going to have a learning curve and production advantage by the time they finish their 4th vessel. A second yard isn’t going to be able to compete on the same design unless they too have had the opportunity to get up to similarly get up to speed.

    If it’s a different design, that’s a whole new ballgame. I doubt that the CG will procure two separate OPC designs, after watching the LCS experience.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s