Category Archives: Budget

House Appropriations Committee FY2024 Budget Hearings

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Note the video above does not actually start until about minute 17.

Above is a video of the Commandant’s testimony before the House Committee on Appropriations that occurred about two weeks ago. It may be worth noting that those present were not the full committee. The full committee includes 71 members, currently 34 Republican and 27 Democrat.

The Coast Guard enjoys bi-partisan support in Congress, and it was evident in this committee hearing.

Concerns identified included:

  • IUU fishing
  • Border security/drugs/immigrants
  • Recruiting problems
  • Chinese investments/influence in Mexico’s transportation systems
  • The effects of offshore wind farms

There was discussion about the Unfunded Priority list, including:

  • Funding of four additional Fast Response Cutters,
  • Improvements at the Coast Guard Yard that would allow a larger floating dry dock capable of servicing the Offshore Patrol Cutters (1:21:00),
  • and various infrastructure improvements. Charleston, Seattle, and Alaska in particular were mentioned.

There was a lot of concern about the influx of non-prescription fentanyl. This is a problem the Coast Guard has not had much of a role in countering, but there was hope that the Coast Guard might be able to work with the Mexican Navy on ways to track the distribution of precursor chemicals which are imported into Mexico legally.

There was discussion of the lack of progress on the Polar Security Cutters and questions about the waterways commerce cutters.

The Commandant was consistent with her previous statements that the Work Force is her highest priority. Increased recruiting capacity, additional recruiters and recruiting offices, has been funded.

Some comments that surprised me:

  • Indo-Pacific support cutter, Harriet Lane, to arrive in Honolulu before the end of the year, will operate out of there for a couple of years before going on to her final homeport. (49:00)
  • Maritime illegal immigration attempts peaked earlier in the year and are now decreasing.
  • A Maritime Domain Awareness data fusion center has been started. The CG is getting Saildrone USVs to assist in data collection. Scan Eagle was mentioned but there was no specific discussion about land based UAS.
  • Purchase of a commercially available icebreaker was included in the FY2023 budget but was delayed until FY2024. The CG is apparently now ready to proceed with that.

The Commandant also confirmed that the Coast Guard was ready to proceed with procurement of a Great Lakes icebreaker with capabilities similar to Mackinaw (1:10:00).

There is a report on the hearings by “Workboat” here. Thanks to Paul for making me aware of this article, that then led me to find the video above. 

USCG Posture Statement, 2024 Budget Overview

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US Capital West Side, by Martin Falbisoner

The Coast Guard has published their FY2024 Budget Overview. It is a 40 page document but easily readable. It is much more than a tabular budget request. In fact you don’t get to the actual budget summary until page 26. It is, after all, an attempt to justify the budget. There is a lot of why the Coast Guard is needed, what we have done for you lately, and what we are going to do in the future. It is pretty impressive.

Bottom line. The budget request is for about $13.45B of which $12.05B is discretionary funding, of which $1.55 is Procurement, Construction, and Improvement (PC&I).

The PC&I budget request is actually down a bit.

Procurement, Construction, and Improvements (in thousands)

  • 2021 enacted        2,264,041
  • 2022 requested     1,639,100
  • 2022 enacted        2,030,100
  • 2023 requested     1,654,858
  • 2023 enacted      $2,080,100

You can see how Congress has tended to add to the amount requested, which is why I believe several of the items on the Unfunded Priorities List will ultimately be funded.

There is a more complete comparison with the enacted FY 2022 and 2023 budgets on page six of this document.

Coast Guard’s FY2024 Unfunded Priority List

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The crew USCGC Oliver Henry (WPC 1140) visit Ulithi Atoll on Oct. 31, 2022, the first time a fast response cutter visited the atoll and delivered 20 boxes of supplies, 50 personal floatation devices, and sporting equipment donated by the cutter crew, the extended U.S. Coast Guard Guam family, Ulithi Falalop Community Action Program, Guam Island Girl Power Foundation, and Ayuda Foundation. Ulithi was a central U.S. staging area during World War II, and home to a U.S. Coast Guard Loran-C communications station from 1944 to 1965 before operations relocated to Yap and ultimately shuttered in 1987. (U.S. Coast Guard photo by Petty Officer 3rd Class Zena Suzuki)

The Coast Guard has published its FY2024 Unfunded Priority List. The ten page document includes 26 line items totaling $1.6B. Much of it is infrastructure improvement, but there are also items to expand capabilities.

Four Additional Fast Response Cutters:

The single largest item is four additional Webber class WPCs. I think this will be approved and that this includes funding of facilities for a new base in American Samoa.

$400M “Funds the acquisition of four FRCs to further the Indo-Pacific Strategy of the United States through expanded presence and engagement to promote a free an open Indo-Pacific. Additional FRCs will begin to transform the Coast Guard from an organization which currently provides episodic presence, to be persistent and visible, strengthening coordination with Allied and partner nations to bolster regional security.”

Historically FRCs have been funded at about $65M each, and even that included support costs in addition to construction costs. There has been inflation, but the list gives us some information about that effect in a separate line item.

$34M “Fast Response Cutter (FRC) Economic Price Adjustment (EPA). Funding aids in reducing unfunded EPA growth resultant from the unprecedented rise in material and labor indices associated with contractual costs for production of hulls 1145 -1164 and procurement of spares. This amount provides the $34 million necessary for the projected EPA liability in FY 2024.

That is $34M spread over 20 ships or an increase of less than $2M per ship, so there is probably at least $120M for support costs over and above construction costs.

Aviation Improvements (note the third item indicates C-27Js will be assigned to CGAS Clearwater, FL, presumably replacing the C-130Hs there now): 

  • $138.5M One Missionized HC-130J Aircraft. rovides funding to purchase one missionized HC-130J aircraft in the Block Upgrade 8.1 configuration, manufactured by Lockheed Martin, and currently missionized by L3 Technologies. This funding supports acquisition costs for one of the unfunded three missionized C-130Js required to achieve the Coast Guard’s current program of record of 22 airframes and initial sparing.
  • $113M Four MH-60T Aircraft. Provides funding to outfit and assemble 4 MH-60T aircraft that would facilitate a future Air Station transition from MH-65s to MH-60s in FY 2026. These aircraft would be assembled at the Coast Guard’s Aviation Logistics Center in Elizabeth City, NC.
  • $25M Sparing for Fixed-Wing Aircraft Transitions. Provides initial sparing to establish on-site inventory for HC-130J and HC-27J aircraft planned for delivery to Barbers Point, HI, ($10 million) and Clearwater, FL ($15 million). This funding includes spare parts for aircraft, sensor suites, depot maintenance material, and ground support equipment necessary for aircraft operations as well as LLTM required to accelerate the missionization of HC-27J aircraft. (Scalable)

Infrastructure improvements are requested for:

  • Polar Security Cutter (PSC) Homeport Seattle (Phase 1-2), $130M
  • FRC Homeport Astoria (Phase 2), $30M
  • Waterways Commerce Cutter (WCC) Homeports – Sault Ste Marie, MI and Memphis, TN, $48M
  • NSC and Ocean-Going Buoy Tender (WLB) Homeport – Honolulu, HI (Phase 2), $15M
  • Offshore Patrol Cutter (OPC) Homeport – NAVSTA Newport, RI (Phase 2), $100M
  • Training Center Cape May -Multipurpose Recruit Training Facility, $130M
  • Alaska Housing (Kodiak), $26M
  • Sector Facilities – Sector Sault Ste Marie, MI, $35M
  • Consolidated Base Facilities – Base Charleston, SC, $22.6
  • Coast Guard Yard Upgrade: Ship Handling Facility – Baltimore, MD (Phase 1), $60M
  • Sector Facilities – Sector Lower Mississippi River – Memphis, TN, $37M
  • Station Waterfront – Station Rockland, ME, $40.7M
  • Mission Support Facility (MSF) – Joint Base Andrews, MD (Phase 3), $20M

Miscellaneous:

  • Great Lakes Icebreaker – Long Lead Time Material (LLTM), $20M
  • Special Purpose Craft (MLB)– Heavy Weather Recapitalization, $24M
  • Mariner Credentialing Program, (Navita) Acquisition, $11M
  • National Security Cutter (NSC) –Follow-On Acquisition Funding, $50M
  • National Security Cutters Operational Support Initiatives, $9.7M
  • Operations and Defense Industrial Base, $42M
  • Recruiting & Retention, $9m
  • Modernized Learning Management System, $3M

What does it all mean:

None of these items are in the current budget request, but Congress has historically added to the Coast Guard request. The Coast Guard has been shy about providing an unfunded priority request in the past. Several years there was no unfunded priority list. This is the first time I have seen mention of the Coast Guard’s list in industry news publications (here and here). The new CG administration is making public a good case for increased funding.

We shouldn’t expect everything on the list to be approved, but I think we will definitely see the additional C-130 and at least three additional FRCs. Some of the other items will probably be approved as well. Those items not funded in FY2024 will likely be included in the FY2025 budget.

Congressional Research Service Issues Revised Polar Security Cutter (heavy icebreaker) and Cutter Procurement Reports

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US Capital West Side, by Martin Falbisoner

The Congressional Research Service issued updates to both their Polar Security Cutter (heavy icebreaker) program and Cutter Procurement reports on 22 December. (These links will always take you to the latest version of the reports.)

I haven’t really gotten into these revisions yet, but I would expect that any changes would likely be in the “Legislative Activity for FY2023” sections particularly the House-Senate (HAC-SAC) portion. Even a quick scan of the Cutter Procurement report shows how little guidance in the FY2023 National Defense Authorization Act (NDAA) meant to the actual budget negotiations.

The Polar Security Cutter report, of course, notes the sale of VT Halter to Bollinger.

Hopefully, I will have more commentary, but wanted to get the word out ASAP.

Some Posts of Interest

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Bell’s V-280 prototype

There have been some posts that may be of interest published recently that I will point to below, with only brief comments.

“The New Coast Guard Funding Bill Is Really Good For The USCG” –Forbes There is a lot here, but you should recognize that this is the National Defense Authorization Act (NDAA), not an actual budget. It is not uncommon to have items in the authorization that are not included in the corresponding budget, so we have to wait a little longer to see what is actually funded.

The Coast Guard is directed to complete a number of studies. I hope they will be completed and delivered to Congress, but they may not be and if they are, we may never know. I have been told, a lot of reports get delivered late, because there is little penalty, and the committees don’t need to inform anyone else of whether they have received a report they requested.

“Some Fun Coast Guard Reads In Forbes” –Next Navy: This talks about the post above and a second post that suggests that the Coast Guard replace the C-27 with the Army’s recently selected V-280. I think the production version of the V-280 has a good chance of finding a place in the Coast Guard. Ultimately it might even replace all our land-based helicopters and all the fixed wing aircraft except the C-130, but that is many years in the future. It’s premature to consider replacing the C-27. (Thanks to Walter for bringing this to my attention.)

“Expand Seattle Coast Guard base without impacting working waterfront”: The local longshoremen’s union takes issue with the three proposals for expansion of Base Seattle. (Thanks to Mike for bringing this to my attention.)

“MOAA Interview: Coast Guard Commandant Charts the Path Forward” Admiral Zukunft emphasized the Cutter recapitalization. Admiral Schultz spent a lot of time talking about shoreside infrastructure. Admiral Fagan’s emphasis is on personnel issues, e.g., recruiting, incentives for afloat billets, afloat billets for women, and women the Coast Guard in general. There is also a nod to the Arctic.

“White House steps in as Navy, Pentagon feud over amphibious ship study” –Defense News/Analysis Paralysis

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US Capital West Side, by Martin Falbisoner

Defense News reports, on the convoluted process that has blocked Congress from getting a report from the Marine Corps regarding how much amphibious lift they think they need.

Apparently, the Congress has taken steps to ensure that they don’t get stonewalled and that they get an answer directly from the source.

This does not look Coast Guard related except that it seems the same thing is happening to Congressionally mandated reports from the Coast Guard.

There have been other mandated reports that seem to have been ignored, but there is one I think particularly important. The original Fleet Mix Study was completed in 2009 but was not made public until 2012 after a revision in 2011. For years the Congress has been asking for an update. Like in the case of the Marines need for amphibious lift, this is a force structure question, and the silence has been deafening.

We have not had a new evaluation of Coast Guard force structure for over eleven years. Considering how Coast Guard operations have changed in the last decade, the emergence of new threats (like unmanned systems), new opportunities (like unmanned systems), and the experience we have gained with the National Security Cutters and the Fast Response Cutter operation, is that wise?

Congress needs to be equally assertive about hearing what the Coast Guard needs to do its missions and insist that the result not be filtered by the Department.

Once the desired level is established, certainly, questions will be raised. Limitations will emerge. Study assumptions will be questioned. Affordability will have to be addressed, but we need to start with an attempt at an honest and comprehensive assessment of requirements. We saw the GAO critique the Coast Guard’s shipbuilding program as unachievable because the required budget was larger than it had been historically. That is certainly a factor, but it needs to be considered in the light of objectives and a history of neglect.

Force study evaluations should be an iterative process repeated at least every four years to inform the actions of succeeding administrations both within the service and within government.

“Stage 2 of the Coast Guard offshore patrol cutter moves forward” –CG HQ News Release

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Artists rendering from Eastern Shipbuilding Group

Below is a news release. Just minutes before I saw this, I recieved an email from Jessica Ditto, Eastern’s VP, Communications

As you might have seen, ESG is going to the Court of Federal Claims (COFC) to challenge the OPC stage II award decision. COFC is not an appeal, but a new proceeding that allows ESG to seek the disclosure materials that have been withheld by the government in the GAO protest. Here is our statement:

“The federal procurement process is designed to be fair and transparent. Ordinarily, the government discloses reasonable justification for its award decisions to the attorneys representing the parties in a protest. The government has declined to voluntarily disclose the information that might offer that justification. As a result, we are seeking the information and justification through a different legal pathway,” said Joey D’Isernia, President of Eastern Shipbuilding Group, Inc.

News Release

U.S. Coast Guard Headquarters
Contact: Headquarters Public Affairs

Stage 2 of the Coast Guard offshore patrol cutter moves forward

WASHINGTON — The Coast Guard today issued a notice to Austal USA, the offshore patrol cutter (OPC) Stage 2 contractor, to proceed on detail design work to support future production of OPCs. The Coast Guard issued the notice following the withdrawal of an award protest filed in July with the Government Accountability Office by an unsuccessful Stage 2 offeror.

The Coast Guard on June 30, 2022, awarded a fixed-price incentive (firm target) contract through a full and open competition to Austal USA to produce up to 11 offshore patrol cutters. The initial award is valued at $208.26 million and supports detail design and long lead-time material 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 requirements for OPC Stage 2 detail design and production were developed to maintain commonality with earlier OPCs in critical areas such as the hull and propulsion systems, but provide flexibility to propose and implement new design elements that benefit lifecycle cost, production and operational efficiency and performance.

The 25-ship OPC program of record complements the capabilities of the service’s national security cutters, fast response cutters and polar security cutters as an essential element of the Department of Homeland Security’s layered maritime security strategy. The OPC will meet the service’s long-term need for cutters capable of deploying independently or as part of task groups and is essential to stopping smugglers at sea, interdicting undocumented non-citizens, rescuing mariners, enforcing fisheries laws, responding to disasters and protecting ports.

For more information: Offshore Patrol Cutter Program page.

“Coast Guard could see more funding in new Senate legislation to help face Arctic challenges from Russia and China” –Stars and Stripes

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USCG Cutter Bear transits out of Torngat National Park, Canada, on Aug. 9, 2022. The Bear was partaking in the Tuugaalik phase of Operation Nanook, an annual exercise that allows the United States and multiple other partner nations to ensure security and enhance interoperability in Arctic waters. (Matthew Abban/U.S. Coast Guard)

This isn’t through the budgeting process, but it is more indication of the Congress’ bipartisan support for the Coast Guard. Seems likely much of this will be incorporated in the final budget.

Stars and Stripes reports on action by the Senate Committee on Commerce, Science and Transportation, that would provide money for the third Polar Security Cutter, establish an Arctic Security Cutter program, and provide “more options for child care, better access to affordable housing and expanded medical care and education opportunities…”

The bill would authorize $14.94 billion for the service for fiscal 2023, which begins Oct. 1. It would amount to a 21.5% budget increase from fiscal 2021.

The bill would support greater Arctic presence, combat IUU fishing, and improve polution response.

“Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress” –CRS, Updated August 30, 2022

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USCG Polar Security Cutter [Image courtesy Halter Marine / Technology Associates, Inc.]

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 Dec. 7, 2021 revision.

The one-page summary is reproduced below, but first I will point out what appears to have changed since the Dec. 7, 2021 edition.

On December 29, 2021, the Coast Guard exercised a $552.7 million fixed price incentive option to its contract with Halter Marine Inc. for the second PSC. (Summary and p.9)

—

On February 24, 2022, the Coast Guard announced that the first PSC will be named Polar Sentinel, and that the Coast Guard has candidate names in mind for the second and third…PSCs. (p.5)

The new icebreaker was supposed to have been based on a proven “parent” design. The nominal parent for the chosen design was the Polarstern II, but in fact it was a design that had never been tested. There is a footnote (p.8) that explains that this design, on which the Polar Security Cutter was supposedly based, may be built after all. This may mean that the Polar Security Cutter will become the parent design for its own parent design.

On February 14, 2020, the Alfred Wegener Institute (AWI), Helmholtz Centre for Polar and Marine Research, announced that “the [German] Federal Ministry of Education and Research (BMBF) today cancelled the Europe-wide call for tenders for the procurement of a new polar research vessel, Polarstern II, for legal reasons.” (Alfred Wegener Institute, Helmholtz Centre for Polar and Marine Research, “Call for Fender Procedure for the Construction of a Successor to the Icebreaker Polarstern Has Been Cancelled.,” February 14, 2020.) On June 3, 2022, however, AWI stated that “Now that the federal budget for 2022 was approved by the German Bundestag on 3 June 2022, the construction procurement procedure for Polarstern II can begin. The AWI plans to promptly launch the Europe-wide procurement procedure so that the competitive bidding can start promptly as the first step. The handover of the completed ship is slated for 2027.” (Alfred Wegener Institute, Helmholtz Centre for Polar and Marine Research, “Polarstern II: German Bundestag Greenlights the Construction of New Icebreaker,” June 3, 2022. See also Eurasia Review, “Polarstern II: German Bundestag Green-  Lights Construction Of New Icebreaker,” Eurasia Review, June 4, 2022.; Michael Wenger, “Germany’s ‘Pola[r]stern II’ Becomes Reality,” Polar Journal, June 6, 2022.)

It was noted that the PSC will recieve the 30mm Mk38 Mod4. (p.9)

Icebreaking Anchor Handling Vessel Aiviq

Purchase of an existing Icebreaker: 

“On May 3, 2022, the Coast Guard released a Request for Information (RFI) regarding commercially available polar icebreakers, with responses due by June 10, 2022.” (p.13)

“An April 28, 2022, press report states that the commercial ship that would be “the most likely” candidate to be purchased under the Coast Guard’s proposal is the Aiviq…” (p.14)

“At a May 12, 2022, hearing on the Coast Guard’s proposed FY2023 budget, Coast Guard Commandant Karl Schultz testified that We can get a commercially available breaker fairly quick, bridge that [polar icebreaking] gap from a capacity standpoint. We had—the conversation [about how to bridge the gap] started as a lease conversation [i.e., a conversation about leasing an existing ship]. I—we—we shaped it [i.e., the conversation] to say, well, if we’re going to lease something, we could actually do this much cheaper, onboard it [i.e., purchase the ship rather than lease it], turning it into a Coast Guard ship. So, 125 [million dollars] to procure the vessel, hopefully, that’s what we’re thinking, [and] 25 million [addition dollars] for—for crewing. There’s probably a bill—125, 250 million [additional million dollars] to really outfit it over some outyear budget cycles [i.e., further modify and/or equip the ship over a period of some additional years]. That would be [i.e., doing that would produce] a medium icebreaker [that would be] in the Coast Guard inventory. There’s one domestically available ship that’s only 10 years old with very little use on it. We could—we could use that ship to shape our thinking about what the Arctic security requirements could look like.” (p.14/15)

Delayed Delivery (Original Expected Delivery was March 2024):

Another potential issue for Congress concerns the delay in the delivery date of the first PSC. The Coast Guard had earlier said the ship would be delivered in the first half of 2024. As noted earlier, the Coast Guard now expects it to be delivered in the spring of 2025.

Status of FY2023 Budget: 

This is the current state of the FY2023 budget according to the CRS report:

  • Polar Security Cutter (PSC)            Request $167.2M; HAC 257.2; SAC 257.2
  • Commercially Available Icebreaker Request $125.0M; HAC 125.0; SAC 125.0
  • Great Lakes Icebreaker                  Request 0;              HAC 0;        SAC 0

HAC=House Appropriations Committee/SAC=Senate Appropriations Committee

The “increase of $90,000,000 above the request for the remaining cost of long lead
time materials and the start of construction of a third PSC.” (Support from both HAC and SAC)

(Note, there was $350M included in the FY2022 budget for a Great Lakes Icebreaker.)

Regarding the procurement of a commercially available icebreaker, the House Appropriations committee wants the Coast Guard to also consider icebreakers that were not made in the US. (Note this has not yet made it into law.)

“The Committee notes that both 14 U.S.C. 1151 and 10 U.S.C. 8679 include waiver provisions for vessels not constructed in the United States. In order to conduct a full and open competition, the Coast Guard shall expand its source selection criteria to include commercially available polar icebreaking vessels that may require such a waiver. The Coast Guard is directed to brief the Committee not later than 30 days after the date of enactment of this Act on an updated procurement plan.

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 procurement of the first two PSCs is fully funded; the Coast Guard says the first PSC is to be delivered to the Coast Guard in the spring of 2025.

The Coast Guard’s proposed FY2023 budget requests $167.2 million in continued procurement funding for the PSC program, which would be used for, among other things, program management and production activities associated with the PSC program’s Detail Design and Construction (DD&C) contract, long leadtime materials (LLTM) for the third PSC, and government-furnished equipment (GFE), logistics, and cyber-security planning costs.

The Coast Guard’s proposed FY2023 budget also requests $125.0 million in procurement funding for the purchase of an existing commercially available polar icebreaker that would be used to augment the Coast Guard’s polar icebreaking capacity until the new PSCs enter service. Under the Coast Guard’s proposal, the Coast Guard would conduct a full and open competition for the purchase, the commercially available icebreaker that the Coast Guard selects for acquisition would be modified for Coast Guard operations following its acquisition, and the ship would enter service 18 to 24 months after being acquired.

The Navy and Coast Guard in 2020 estimated the total procurement costs of the three 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 Halter Marine Inc. (formerly VT  Halter Marine) of Pascagoula, MS, a shipyard owned by Singapore Technologies (ST)  Engineering. Halter Marine was the leader of one of three industry teams that competed for the DD&C contract. On December 29, 2021, the Coast Guard exercised a $552.7 million fixed price incentive option to its contract with Halter Marine Inc. for the second PSC.

The DD&C contract includes options for building the second and third PSCs. If both of 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 portion of the PSCs’ total procurement cost; they do not include the cost of government-furnished equipment (or GFE, meaning 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.

“Coast Guard Cutter Procurement: Background and Issues for Congress, Updated August 30, 2022” –CRS

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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 July 22, 2022 update. I have reproduced the one page summary in full below.

A decision on Eastern’s protest of the Stage 2 contract to Austal is still pending, with a decision due Oct. 24, 2022.

Since my last update, there have been two significant events. First, the Coast Guard has exercised an option for FRC#65, still leaving a considerable portion of the $130M voted for the FRC program in the FY2022 budget unobligated. Second, the Senate Appropriations Committee has reported.

Fast Response Cutter Program: 

On August 9, 2022, the Coast Guard exercised a contract option with Bollinger Shipyards for $55.5 million of the $130 million for production of one FRC plus associated deliverables; this FRC will be the 65th. (p.16)

FY2023 Budget Status: 

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

(HAC is House Appropriations Committee. SAC is Senate Appropriations Committee)

The Senate Appropriations Committee did have some notes for the Coast Guard, DHS, and the administration (from page 27):

Fleet Mix Analysis.—The Committee continues to be interested in the Fleet Mix Analysis required in the Joint Explanatory Statement accompanying Public Law 117–103, and appreciates the Coast Guard’s periodic status updates. The Committee reiterates its expectation, as stated in the requirement, that the analysis be truly comprehensive and include all classes of vessels, even those whose mission might not have a direct bearing on the workload of other vessel classes.

Full-Funding Policy.—The Committee again directs an exception to the 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 post-production 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….

Funded Projects.—The Committee expects that when it funds specific projects, those projects shall be executed expeditiously and responsibly. Given project cost increases across Coast Guard’s portfolio, the Committee is concerned about recent efforts by the Coast Guard to cancel funded projects in order to finance cost increases elsewhere. The Coast Guard shall be transparent with respect to cost increases, executability concerns, and any other issues that may increase the risk profile of a project, and shall provide the Committee sufficient time to consider the issue and respond in an appropriate manner….

Offshore Patrol Cutter [OPC].—The Committee provides the requested amount of $650,000,000 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. (Pages 75-76)

Bottom Line: 

As the FY2023 Budget currently stands, it includes only one additional OPC, #5 plus long lead time items for OPC#6, but no additonal Bertholf class NSCs or Webber class FRCs.

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. On August 9, 2022, the Coast Guard exercised a contract option with the FRC builder (Bollinger Shipyards of Lockport, LA) for $55.5 million of the $130 million for production of one FRC plus associated deliverables; this FRC will be the 65th . As of July 22, 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.