The Congressional Research Service has once again updated their look at the Polar Security Cutter (heavy icebreaker) program. (See the latest version here.) My last look at this evolving document was in regard to the August 17, 2021 revision.
It appears this new edition was prompted by an update to the projected cost for the program. The following is a note attached to Table 1 (page 6), which I have also reproduced below.
Source: U.S. Navy information paper on PSC program, August 18, 2021, received from Navy Office of Legislative Affairs, August 31, 2021, which states that costs shown are from the PSC program 2020 Life Cycle Cost Estimate.
Table 1. Estimated PSC Procurement Costs
(In millions of then-year dollars)
Cost element 1st PSC 2nd PSC 3rd PSC Total
Target contract price 746 544 535 1,825
Program costs (including GFE) 218 175 228 621
Post-delivery costs 46 47 49 142
Costs for Navy-Type, Navy- 28 28 29 85 Owned (NTNO) equipment
TOTAL 1,038 794 841 2,673
There was also this additional note attached to Table 1.
Notes: Target contract price includes detail design, construction, and long lead-time materials (LLTM), and does not reflect potential costs rising to the contract ceiling price. GFE is government-furnished equipment— equipment that the government procures and then provides to the shipbuilder for installation on the ship. NTNO equipment is GFE that the Navy provides—such as combat weapons systems, sensors and communications equipment and supplies—for meeting Coast Guard/Navy naval operational capabilities wartime readiness requirements. (For additional discussion, see Coast Guard Commandant Instruction (COMDTINST) 7100.2G, May 16, 2013, accessed August 31, 2021, at https://media.defense.gov/2017/Mar/15/2001716816/-1/-1/0/ CI_7100_2G.PDF.)
Below is the one page summary:
The Coast Guard Polar Security Cutter (PSC) program is a program to acquire three new PSCs (i.e., heavy polar icebreakers), to be followed years from now by the acquisition of up to three new Arctic Security Cutters (ASCs) (i.e., medium polar icebreakers). The PSC program has received a total of $1,754.6 million (i.e., about $1.8 billion) in procurement funding through FY2021, including $300 million that was provided through the Navy’s shipbuilding account in FY2017 and FY2018. With the funding the program has received through FY2021, the first two PSCs are now fully funded.
The Coast Guard’s proposed FY2022 budget requests $170.0 million in procurement funding for the PSC program, which would be used for, among other things, procuring long leadtime materials (LLTM) for the third PSC.
The Navy and Coast Guard in 2020 estimated the total procurement costs of the PSCs in then year dollars as $1,038 million (i.e., about $1.0 billion) for the first ship, $794 million for the second ship, and $841 million for the third ship, for a combined estimated cost of $2,673 million (i.e., about $2.7 billion). Within those figures, the shipbuilder’s portion of the total procurement cost is $746 million for the first ship, $544 million for the second ship, and $535 million for the third ship, for a combined estimated shipbuilder’s cost of $1,825 million (i.e., about $1.8 billion).
On April 23, 2019, the Coast Guard-Navy Integrated Program Office for the PSC program awarded a $745.9 million fixed-price, incentive-firm contract for the detail design and construction (DD&C) of the first PSC to VT Halter Marine of Pascagoula, MS, a shipyard owned by Singapore Technologies (ST) Engineering. VT Halter was the leader of one of three industry teams that competed for the DD&C contract. The first PSC is scheduled to begin construction in 2021 and be delivered in 2024, though the DD&C contract includes financial incentives for earlier delivery.
The DD&C contract includes options for building the second and third PSCs. If these options are exercised, the total value of the contract would increase to $1,942.8 million (i.e., about $1.9 billion). The figures of $745.9 million and $1,942.8 million cover only the shipbuilder’s costs; they do not include the cost of government-furnished equipment (GFE), which is equipment for the ships that the government purchases and then provides to the shipbuilder for incorporation into the ship, post-delivery costs, costs for Navy-specific equipment, or government program management costs.
The operational U.S. polar icebreaking fleet currently consists of one heavy polar icebreaker, Polar Star, and one medium polar icebreaker, Healy. In addition to Polar Star, the Coast Guard has a second heavy polar icebreaker, Polar Sea. Polar Sea, however, suffered an engine casualty in June 2010 and has been nonoperational since then. Polar Star and Polar Sea entered service in 1976 and 1978, respectively, and are now well beyond their originally intended 30-year service lives. The Coast Guard plans to extend the service life of Polar Star until the delivery of at least the second PSC. The Coast Guard is using Polar Sea as a source of spare parts for keeping Polar Star operational.
On August 18, 2020, an electrical fire occurred in one of Healy’s main propulsion motors as the ship was 60 miles off Seward, AK, en route to the Arctic. As a result of the fire, the ship’s starboard propulsion motor and shaft became nonoperational. The ship canceled its deployment to the Arctic and returned to its homeport in Seattle for inspection and repairs.
There’s about a $50M difference between PSC 2 and 3, and it’s not in shipbuilder’s cost, which is listed as decreasing. If not shipbuilder’s cost, and it’s not apparent in GFE, which stays virtually the same, but is buried in ‘Program Costs’. Can someone explain to me how the program costs can increase for what is to date supposed to be the last of that short series of class? Seems to me that ‘Program Costs’ is just a way to hide something. Question is what?
Pingback: “Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress” –CRS, September 15, 2021 | Chuck Hill's CG Blog