“Report to Congress on Coast Guard Cutter Procurement, Updated July 22, 2022″ –CRS

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 an October, 19, 2021 update. I have reproduced the one page summary in full below.

This is not new information, but I thought it worth repeating:

Notional Construction Schedule and Resulting Ages of Ships Being Replaced

The posting for the RFP for the Stage 2 industry studies included an attached notional timeline for building the 25 OPCs. Under the timeline, OPCs 1 through 7 (i.e., OPCs 1-4, to be built by ESG, plus OPCs 5-7, which are the first three OPCs to be built by the winner of the Stage 2 competition) are to be built at a rate of one per year, with OPC-1 completing construction in FY2022 and OPC-7 completing construction in FY2028. The remaining 18 OPCs (i.e., OPCs 8 through 25) are to be built at a rate of two per year, with OPC-8 completing construction in FY2029 and OPC-25 completing construction in FY2038.

Using these dates—which are generally 10 months to about two years later than they would have been under the Coast Guard’s previous (i.e., pre-October 11, 2019) timeline for the OPC program37—the Coast Guard’s 14 Reliance-class 210-foot medium-endurance cutters would be replaced when they would be (if still in service) about 54 to 67 years old, and the Coast Guard’s 13 Famous-class 270-foot medium-endurance cutters would be replaced when they would be (if still in service) about 42 to 52 years old.

It would be gratifying is OPC#1 is in fact delivered in FY2022, which is less than ten weeks away.

The Congressional request for a new Fleet Mix Study still has not been answered. (pp 17-19) This may be tied up in DHS. I would note that the latest Navy Force Structure Study apparently bypassed DOD.

“The requirement in the bill was designed to have the report bypass the Office of the Secretary of Defense and go directly to Congress, several legislative sources have told USNI News. OSD took a more active role in crafting the Navy’s force structure under former Secretary of Defense Mark Esper and senior leadership has continued to be involved in the force structure process.”

I would think that DHS should be allowed to comment on the next USCG Force Structure Study they should not be allowed to withhold it from Congress. The Fleet Mix Study was intended to report how effective in meeting the Coast Guard’s stutory missions various force levels would be. It does not advocate for any particular force level. A new Fleet Mix would probably be the best information available to make rational decisions about force levels.

Despite two additional FRCs (#65 & 66) being added and funded in the FY2022 budget. It seems uncertain if they will actually be built. (p. 20)

The question of building a twelth NSC is apparently still an open question, though I find it hard to believe that will happen, but building another would get us more new ships faster and it could be justified by reducing the OPC fleet from 25 to 24. (p. 20)

The impact of inflation is discussed on p. 21.

May 2022 Coast Guard Testimony

At a May 12, 2022, hearing before the Homeland Security subcommittee of the House Appropriations Committee on the Coast Guard’s proposed FY2023 budget, Coast Guard Commandant Karl Schultz testified (emphasis added)

“I appreciate the significant investments for surface, aviation, and shore maintenance included in the FY 2022 Appropriation; however, the desired impacts of these investments are greatly diminished by the historic inflation we experience today. In recent years, the Coast Guard has been hamstrung by increasing maintenance backlogs resulting in hundreds of lost patrol days for cutters and thousands of lost flight hours for aircraft. This means that cutters, boats, and aircraft are unable to deploy for planned operations, our people are unable to complete their mission, and our partners are left without full Coast Guard support. Rising inflation and supply chain issues continue to increase costs throughout the life cycle for our assets.

“For example, in the past year the price for steel to build our ships has increased 48%, fuel costs have increased 20% with an additional adjustment on the horizon, and the price for select critical parts to maintain our Medium Endurance Cutters have increased 37%. These increasing costs for operating and sustaining our fleet negatively impact our ability to perform our missions and our combined efforts to restore service readiness.”

Action on Appropriations FY2023 Procurement Funding Request

Since my October 19, 2022 commentary, the administration’s FY2023 budget has been published, and the House Appropriations Committee (HAC) has acted on the FY2023 DHS Appropriations Act (H.R. 8257) making a start on what will be the FY2023 appropriation (pp 25/26). Here is how we stand for each of the three cutter programs, figures in millions of dollars, rounded to nearest tenth.

  • NSC: Requested,   60.0; HAC, 147.0
  • OPC: Requested, 650.0; HAC, 650.0
  • FRC: Requested,   16.0; HAC, 131.0

National Security Cutter (NSC).—The Committee provides $147,000,000, which is $87,000,000 above the request, for the NSC program. This funding will support postdelivery activities to missionize and operationalize NSCs 10 and 11.

Fast Response Cutter (FRC).—The recommendation provides $131,000,000 for the FRC program, an increase of $115,000,000 above the request for FRCs funded in prior years to cover class-wide activities, including economic price adjustments related to the rise in material and labor costs and for post-delivery missionization costs.

So neither bump in funding, for the NSC or FRC, would provide addtional hulls.

Coast Guard Authorization Act of 2022 (H.R. 6865) 

The report also notes House Action on the Coast Guard Authorization Act of 2022. This is what it says

House

Section 104(a) and (b) of H.R. 6865 as passed by the House on March 29, 2022, states SEC. 104.

AVAILABILITY OF AMOUNTS FOR ACQUISITION OF ADDITIONAL CUTTERS.

(a) In General.—Of the amounts authorized to be appropriated under—

(1) section 4902(2)(A)(i) of title 14, United States Code, as amended by section 101 of this title, for fiscal year 2022;

(A) $300,000,000 shall be authorized for the acquisition of a twelfth National Security Cutter; and

(B) $210,000,000 shall be authorized for the acquisition of 3 Fast Response Cutters; and

(2) section 4902(2)(A)(ii) of title 14, United States Code, as amended by section 101 of this title, for fiscal year 2023;

(A) $300,000,000 shall be authorized for the acquisition of a twelfth National Security Cutter; and

(B) $210,000,000 shall be authorized for the acquisition of 3 Fast Response Cutters.

(b) Treatment Of Acquired Cutter.—Any cutter acquired using amounts authorized under subsection (a) shall be in addition to the National Security Cutters and Fast Response Cutters approved under the existing acquisition baseline in the program of record for the National Security Cutter and Fast Response Cutter.

Section 212 states

SEC. 212. STUDY ON LAYDOWN OF COAST GUARD CUTTERS.

Not later than 120 days after the date of enactment of this Act, the Secretary of Homeland Security, in consultation with the Secretary of Transportation, shall conduct a study on the laydown of Coast Guard Fast Response Cutters to assess Coast Guard mission readiness and to identify areas of need for asset coverage.

 

I have a hard time understanding why a Authorization Bill even exists particularly in regard to specifying amounts of money, since it provides not money. Nominally it provides guidance on spending, but the real guidance is in the appropriation.

This passed the House on March 29, but the Department of Homeland Security FY2022 appropriation, which included the Coast Guard budget, had been signed into law two weeks earlier, on March 15, 2022.

Anyway, the “Summary” is quoted below and it provides a good picture of where we are in the recapitalization process.


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 64 Fast Response Cutters (FRCs) as replacements for 90 aging Coast Guard high-endurance cutters, medium-endurance cutters, and patrol craft. The total of 64 FRCs includes 58 for domestic use and 6 for use by the Coast Guard in the Persian Gulf.

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. Congress has fully funded the procurement of 11 NSCs—three more than the 8 in the Coast Guard’s POR—including the 10th and 11th in FY2018, which (like the 9th NSC) were not requested by the Coast Guard. 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 FY2023 budget requests $60.0 million in procurement funding for the NSC program. This request does not include further funding for a 12th NSC; it does include funding for closing out NSC procurement activities and transitioning to sustainment of in-service NSCs. Nine NSCs have entered service; the ninth was commissioned into service on March 19, 2021. The 10th is scheduled for delivery in 2023.

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 program and the Polar Security Cutter (PSC) program as the service’s highest acquisition priorities. (The PSC program is covered in another CRS report.) The Coast Guard’s FY2020 budget submission estimated the total acquisition cost of the 25 ships at $10.270 billion, or an average of about $411 million per ship. The first OPC was funded in FY2018. The first four OPCs are being built by Eastern Shipbuilding Group (ESG) of Panama City, FL. The Coast Guard held a full and open competition for a new contract to build the next 11 OPCs (numbers 5 through 15). On June 30, 2022, the Coast Guard announced that it had awarded a fixed-price incentive (firm target) contract to Austal USA of Mobile, AL, to produce up to 11 offshore patrol cutters (OPCs). The initial award is valued at $208.3 million and supports detail design and procurement of LLTM for the fifth OPC, with options for production of up to 11 OPCs in total. The contract has a potential value of up to $3.33 billion if all options are exercised. The Coast Guard’s proposed FY2023 budget requests $650.0 million in procurement funding for the 5th OPC, LLTM for the 6th, and other program costs.

FRCs are considerably smaller and less expensive than OPCs; they are intended to replace the Coast Guard’s 49 aging Island-class patrol boats. The Coast Guard’s FY2020 budget submission estimated the total acquisition cost of the 58 cutters intended for domestic use at $3.748.1 billion, or an average of about $65 million per cutter. A total of 64 FRCs were funded through FY2021. The Coast Guard’s proposed FY2022 budget did not request funding for the procurement of additional FRCs. In acting on the Coast Guard’s proposed FY2022 budget, Congress added $130 million in FRC procurement funding for the construction of up to two additional FRCs and associated class-wide activities. If built, the two additional FRCs would be the 65th and 66th FRCs. As of July 12, 2022, 48 FRCs have been commissioned into service. The Coast Guard’s proposed FY2023 budget requests $16.0 million in procurement funding for the FRC program; this request does not include funding for any additional FRCs.

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