“Report to Congress on Coast Guard Cutter Procurement” –CRS, Updated October 19, 2021″ –CRS

The Coast Guard Cutter Bertholf enters the San Francisco Bay en route to their Alameda, California homeport following a three-month multi-mission patrol, Oct. 3, 2020. Bertholf is one of four Legend-class national security cutters homeported in Alameda. (Photo by Pablo Fernicola)

The Congressional Research Service has again updated their “Report to Congress on Coast Guard Cutter Procurement”. (This link will always take you to the most recent edition of the report.) My last post on this evolving document was in reference to a 15 September, 2021 update. The questions raised in that report remain largely unanswered. I have reproduced the one page summary in full below. The summary does not appear to have changed, except to reflect the commissioning of the 45th FRC. But first I will highlight what I believe to be the changes since the last update. The significant changes reflect the Senate’s actions reported on pages 27 and 28.

Senate

The Senate Appropriations Committee, in the explanatory statement it released on October 18, 2021, for the FY2022 DHS Appropriations Act (S. XXXX), recommends the funding levels shown in the SAC column of Table 2. (PDF page 144 of 160) The explanatory statement states:

Offshore Patrol Cutter [OPC].—The Committee provides the requested amount of $597,000,000 for the construction of the fourth OPC and LLTM for the fifth OPC. While the Committee supports OPC procurements, the Committee remains concerned about costs for the program and continues the requirement for the Coast Guard to brief the Committee within one week prior to taking any procurement actions impacting estimated costs for the OPC program.

Fast Response Cutter [FRC] Program.—In accordance with the Coast Guard’s recapitalization plan, the Committee has completed funding for the replacement of legacy 110-foot Island Class patrol boats with FRCs that will operate similarly in the coastal zone. The Coast Guard is encouraged to notify the Committee if additional FRCs are necessary to support the Department of Defense in Patrol Forces Southwest Asia. (PDF page 69 of 160)

The explanatory statement also states:

Fleet Mix Analysis.—The Committee recognizes ongoing acquisition programs for various cutter classes that are responsible for many of, but not all, Coast Guard missions. While programs have correctly been prioritized around recapitalizing the oldest vessels in the fleet, several cutter classes are rapidly approaching the end of their service lives, while others have long surpassed their service lives. In order to best understand future capital investment needs, the Coast Guard shall provide to the Committee within 180 days of the date of enactment of this act, a comprehensive analysis that provides a fleet mix sufficient to carry out the assigned missions of the Coast Guard and other emerging mission requirements. The Coast Guard shall brief the Committee within 60 days of the date of enactment of this act on its plans to carry out this requirement.

Full-Funding Policy.—The Committee again directs an exception to the administration’s current acquisition policy that requires the Coast Guard to attain the total acquisition cost for a vessel, including long lead time materials [LLTM], production costs, and postproduction costs, before a production contract can be awarded. This policy has the potential to make shipbuilding less efficient, to force delayed obligation of production funds, and to require post-production funds far in advance of when they will be used. The Department should position itself to acquire vessels in the most efficient manner within the guidelines of strict governance measures.

Domestic Content.—To the maximum extent practicable, the Coast Guard shall utilize components that are manufactured in the United States when contracting for new vessels. Such components include: auxiliary equipment, such as pumps for shipboard services; propulsion equipment, including engines, reduction gears, and propellers; shipboard cranes; and spreaders for shipboard cranes. (PDF page 68 of 160)


Summary

The Coast Guard’s program of record (POR), which dates to 2004, 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 high-endurance cutters, medium-endurance cutters, and patrol craft. The Coast Guard’s proposed FY2022 budget requests a total of $695.0 million in procurement funding for the NSC, OPC, and FRC programs, including $597 million for the OPC program.

NSCs are the Coast Guard’s largest and most capable general-purpose cutters; they are replacing the Coast Guard’s 12 Hamilton-class high-endurance cutters. NSCs have an estimated average procurement cost of about $670 million per ship. Although the Coast Guard’s POR calls for procuring 8 NSCs to replace the 12 Hamilton-class cutters, Congress through FY2021 has fully funded 11 NSCs, including the 10th and 11th in FY2018. In FY2020, Congress provided $100.5 million for procurement of long lead time materials (LLTM) for a 12th NSC, so as to preserve the option of procuring a 12th NSC while the Coast Guard evaluates its future needs. The Coast Guard’s proposed FY2022 budget requests $78.0million in procurement funding for activities within the NSC program; this request does not include further funding for a 12th NSC. The Coast
Guard’s proposed FY2022 budget also proposes rescinding $65.0 million of the $100.5 million in FY2020 funding for LLTM for a 12th NSC, “allowing the Coast Guard to focus investments on building, homeporting, and crewing Polar Security Cutters and Offshore Patrol Cutters.” The remaining $35.5 million appropriated in FY2020 for LLTM would be used to pay NSC program costs other than procuring LLTM for a 12th NSC. Nine NSCs have entered service; the ninth was commissioned into service on March 19, 2021.

OPCs are to be less expensive and in some respects less capable than NSCs; they are intended to replace the Coast Guard’s 29 aged medium-endurance cutters. Coast Guard officials describe the OPC and PSC programs as the service’s highest acquisition priorities. OPCs have an estimated average procurement cost of about $411 million per ship. The first OPC was funded in FY2018. The Coast Guard’s proposed FY2022 budget requests $597.0 million in procurement funding for the fourth OPC, LLTM for the fifth, and other program costs. On October 11, 2019, the Department of Homeland Security (DHS), of which the Coast Guard is a part, announced that DHS had granted extraordinary contractual relief to Eastern Shipbuilding Group (ESG) of
Panama City, FL, the builder of the first four OPCs, under P.L. 85-804 as amended (50 U.S.C. 1431-1435), a law that authorizes certain federal agencies to provide certain types of extraordinary relief to contractors who are encountering difficulties in the performance of federal contracts or subcontracts relating to national defense. The Coast Guard is holding a full and open competition for a new contract to build OPCs 5 through 15. On January 29, 2021, the Coast Guard released a Request for Proposals (RFP) for this Stage 2 contract, as it is called. Responses to the RFP were due by May 28, 2021. The Coast Guard plans to award the Stage 2 contract in the second quarter of FY2022.

FRCs are considerably smaller and less expensive than OPCs; they are intended to replace the Coast Guard’s 49 aging Island-class patrol boats. FRCs have an estimated average procurement cost of about $65 million per boat. A total of 64 have been funded through FY2021, including four in FY2021. Six of the 64 are to be used by the Coast Guard in the Persian Gulf and are not counted against the 58-ship POR quantity for the program, which relates to domestic operations. As of October 19, 2021, 45 of the 64 have been commissioned into service. The Coast Guard’s proposed FY2022 budget requests $20.0 million in procurement funding for the FRC program; this request does not include funding for any additional FRCs

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