“Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress” Updated 12 March, 2020, CRS

The Congressional Research Service has once again updated their report on the Polar Security Cutter. You can see the whole report here. I have reproduced the one page summary below. The entire report is a 63 page pdf. 

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 medium polar icebreakers. The PSC program has received a total of $1,169.6 million (i.e., about $1.2 billion) in procurement funding through FY2020, including $135 million in FY2020, which was $100 million more than the $35 million that the Coast Guard had requested for FY2020. With the funding it has received through FY2020, the first PSC is now fully funded and the second PSC has received initial funding.

The Coast Guard’s proposed FY2021 budget requests $555 million in procurement funding for the PSC program. It also proposes a rescission of $70 million in FY2020 funding that Congress had provided for the procurement of long lead time materials (LLTM) for a 12th National Security Cutter (NSC), with the intent of reprogramming that funding to the PSC program. The Coast Guard states that its proposed FY2021 budget, if approved by Congress, would fully fund the second PSC.

The Coast Guard estimates the total procurement costs of the three PSCs as $1,039 million (i.e., about $1.0 billion) for the first ship, $792 million for the second ship, and $788 million for the third ship, for a combined estimated cost of $2,619 million (i.e., about $2.6 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, or government program-management costs. When GFE and government programmanagement costs are included, the total estimated procurement cost of the first PSC is between $925 million and $940 million, and the total estimated procurement cost of the three-ship PSC program is about $2.95 billion.

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 Budget in “A Budget for America’s Future, Fiscal Year 2021” and a small, unpleasant surprise

White House, South Side. Photo by MattWade from Wikipedia

Looking for information on the 2021 budget I came across “A Budget for America’s Future, Fiscal Year 2021” issued from the White House by the GAO. It covers the entire Federal budget. It is a 138 pages. It mentions the Coast Guard only three times. (No, I did not read the entire document, used the “control F” function to find them.) I have reproduced those parts below. The third was a bit of a surprise.

  1. In addition, the Budget includes $1.6 billion to continue the important work of modernizing the U.S. Coast Guard vessels and aircraft that patrol the Nation’s coastal borders. (page 6 or 10 of 138 in the pdf)
  2.  In addition, the Budget includes $1.6 billion to continue to modernize U.S. Coast Guard vessels and aircraft that patrol and provide life-saving rescue missions across the Nation’s coastal borders.  The Budget includes funding for a second polar icebreaker to ensure America is at the forefront of safeguarding uninterrupted, year round commercial activity, trade, and supply routes and confirming America’s leadership role in the Arctic and Antarctic. (page 56 or 60 of 138 in the pdf)
  3. Focuses on Sound Budgeting.  The Budget proposes to shift $215 million in Overseas Contingency Operations (OCO) funding for the U.S. Coast Guard into the Department’s base budget.  This furthers the Administration’s goal of ensuring that the OCO request funds only temporary overseas warfighting operations and does not fund enduring operations “off budget.” (page 58 or 62 of 138 in the pdf)

The third entry caught my eye. I can only think of one significant “Overseas Contingency Operation,” PATFORSWA, which is funded by DOD. It sounds like DHS wants to terminate PATFORSWA. This might explain why the last two Webber class FRCs, which would have presumably gone to PATFORSWA, were not included in the FY2021 budget. 

Depending on your degree of cynicism, other possibilities are that DHS wants to increase the total budget that they control, or that they want make CG budget look bigger when it was really money we were getting already.

The on line edition of Seapower, the Navy League magazine’s, report on the budget included something that surprised me.

The 2021 budget also proposes $35.5 million to manage retirements of old assets, including the decommissioning of two Secretary-class high-endurance cutters, two Island-class patrol boats and eight Marine Protector-class patrol boats. (emphasis applied-Chuck)

Looks like we are starting to decommission the 87 foot WPBs without a replacement in sight. For at least the last five years, I have been saying we were going to need a replacement for these in the near future, here, here, here, but I was still surprised because I have seen nothing about a replacement.

“Coast Guard Cutter Procurement: Background and Issues for Congress Updated January 28, 2020” –CRS

The Congressional Research Service has again updated its look at cutter procurement. (Note, this link will take you to the latest version of the report and is subject to change with each update.) While I cannot be sure there are no other changes, I believe the significant changes are a reflection of the result of the House and Senate Conference Committee. From page 25.

Conference In final action, the FY2020 DHS Appropriations Act became Division D of H.R. 1158, the Consolidated Appropriations Act, 2020. The explanatory statement for Division D of H.R. 1158/P.L. 116-93 of December 20, 2019, provides the funding levels shown in the appropriation conference column of Table 2. The explanatory statement for Division D of H.R. 1158 states: The agreement [for the Coast Guard’s Procurement, Construction, and Improvements account] provides an increase of $537,850,000 above the request, including … $260,000,000 for a total of four FRCs…. The bill makes available $100,500,000 for long lead time material for a twelfth National Security Cutter, consistent with the direction in the House Report….

I have reproduced Table 2 from page 21 of the report below. The following explanatory note is quoted from the CRS report:

“Source: Table prepared by CRS based on Coast Guard’s FY2020 budget submission, HAC committee report, and SAC chairman’s mark and explanatory statement on FY2020 DHS Appropriations Act. HAC is House Appropriations Committee; SAC is Senate Appropriations Committee.”

Summary of Appropriations Action on FY2020 Acquisition Funding Request

Table 2 summarizes appropriations action on the Coast Guard’s request for FY2020 acquisition funding for the NSC, OPC, and FRC programs.

Table 2. Summary of Appropriations Action on FY2020 Acquisition Funding Request Figures in millions of dollars, rounded to nearest tenth

  • Request______Request______HAC_______SAC_____Final
  • NSC program ____60 _______160.5 _______60 _____160.5
  • OPC program ___457 _______457 _______457 ______312
  • FRC program ___140 _______290 _______240 ______260
  • TOTAL _________657 ______907.5 ______757 ______732.5

So again Congress is providing funding above that requested by the administration.

The increase from two to four Webber class is consistent with previous Congressional action, and should actually result in a savings over the life of the program, in that it is in line with the current contract options and will not require a renegotiation that might have raised the cost of individual cutters by up to $10M. That means a total of 62 Webber class will have been funded. Only two additional in FY2021 are planned, for a total of 64, 58 in the program of record plus six for PATFORSWA to support CENTCOM, but I would not be surprised to see four in the final FY2021 budget.

The addition of $100.5M for Long Lead Time items for a twelfth National Security Cutter looks like a strong commitment to fund another Bertholf class National Security Cutter.

Relative to the OPC program, from page 26:

OPC Program.- The contract awarded to construct the OPC was recently amended to address increased cost estimates after the Acting Secretary determined that relief permitted under Public Law 85-804 was appropriate and necessary to the national defense. An associated delay in delivery of the first two hulls reduced the fiscal year 2020 requirement for the OPC by $145,000,000. Funds included in the agreement continue necessary program requirements. The agreement maintains the commitment to ensuring the Coast Guard can continue the program of record for these critical vessels. As a condition of the granted relief, the vendor will be subject to increased oversight, including additional scrutiny of the costs borne by the Coast Guard. The Coast Guard shall brief the Committees quarterly on the metrics used to evaluate adherence to production timelines and costs, including those attributed to reestablishing the production line and maintaining the skilled workforce required to ensure contract performance.

So Congress is going to let the decision to allow extraordinary relief to Eastern Shipbuilding go ahead. The reduction of OPC funding that had been requested is only due to delays in the program and presumably the deletion of long lead time materials for OPC #5 from the payments that had been planned for Eastern.

What Frustrates Me? –an Apparent Lack of Transparent Long Term Planning

A reader recently asked me, “What frustrates you, Chuck? … what is the one or two key areas that you think the USCG needs?  A new ship design, up-arming, or missiles?”
My answer, actually it is the apparent failure to plan.

Rant to Follow

Maybe there is a plan, but if there is, it has not been shared with the Congress or the public. Consequently there has been no opportunity to build support for the plan.

Despite direction from Congress to provide a 25 year shipbuilding plan, none has been provided. Is the hold up in the Coast Guard or the Department? Who knows.

Our shipbuilding “Program of Record” (POR) was last baselined in 2005, as part of the defuncted “Deepwater” program. It was based not on need, but on expected funding.

An examination of need was made, in the form of an “Offshore and Aviation Fleet Mix Study.” A report was completed in 2009. It was reevaluated in 2011, resulting in lower requirements that still indicated that we needed assets far in excess of the program of record. Results were not made public until 2012.
There has been no reexamination of our needs since then, in spite of the fact that the Fleet Mix Study was based on an assumption of the use of the “Crew Rotation Concept” on the National Security Cutter and Offshore Patrol Cutter. It also anticipated deployment of shore based Unmanned Air Systems (UAS), large vertical take off ship based UAS, and networking that would provide a common tactical picture. So far, no land based UAS, only a much smaller less capable ship based UAS, and no real common tactical picture. The only pleasant surprise has been the utility of the Webber class cutters.
I have a half assed Operations Research background. It pains me to see that we are apparently not using the planning tools that are available.
When we present a well considered and fact based plan, the Congress has been responsive. They have supported the program of record, and are funding icebreakers in response to the High Latitude Study.
  • We sorely need an updated Offshore and Aviation Fleet Mix Plan.
  • From this and consideration of other needs we need to develop a 30 year Shipbuilding and Aviation Procurement Plan.
  • We need to update these planning tools on a regular basis. We can expect that they will get better with each iteration.
Normally the leadership changes every four years. It is reasonable that we have a planning cycle that follows this pattern. We can give the new Commandant and his staff a year to work with his predecessor’s planning products before initiating a new cycle. A year in he should initiate a new Fleet Mix Plan. Using it and other inputs, a new 30 year Shipbuilding and Aviation Procurement Plan should be completed well before the new Commandant is selected. 
Only tangentially related, but a budget document we seldom see, is the Coast Guard’s unfunded priority list. Almost three years ago, I did one of my own. Not much has changed.
Thanks to Peter for kicking off this line of thought. 

“Coast Guard releases draft statement of work for Offshore Patrol Cutter Program Industry Studies” –CG-9

OPC “Placemat”

The Acquisitions Directorate, CG-9, has issued a draft statement of work for Offshore Patrol Cutter Program Industry Studies.

The deadline for comments is short.

A draft statement of work (SOW) was released by the Coast Guard Nov. 22 in support of the Offshore Patrol Cutter (OPC) Program. The service is seeking industry feedback; responses to the draft SOW will be used to inform a future solicitation for industry studies to support OPC follow-on production.

The draft SOW can be found here.

The deadline to submit responses to this request is Dec. 6 at noon EST.

For more information: Offshore Patrol Cutter program page

Looking at the draft statement of work, one of the first things I noticed is that it describes the OPC as “360ft LOA and 4500LT.” I think that displacement should be full load. Even at that, it is significantly larger than previously stated. I had previously noted that dimensions and displacement did not seem to correspond, that the dimension for the OPC was larger than the Holland class OPV which are 3750 tons full load, but previous statements indicated that the ships would be 3730 tons full load. This was repeated in the Congressional Research Service Reports. If their full load displacement is actually 4500 tons, that means they are almost exactly the same size as the National Security Cutters which have been variously reported as 4500 or 4600 tons full load.

The draft SOW indicates, “The re-competed contract scope will be to complete the OPC Detail Design and to construct an initial OPC using that Detail Design, with options for constructing up to 10 additional OPCs.”

Section 2.2.2.2 does at least mention the possibility of a block buy.

 “The impact of block buys of OPCs as a cost reduction strategy shall be addressed in this section.”

The draft SOW states:

“References Available at Award.  The following references will be made available not later than award of the Industry Studies contract.

1. Updated draft OPC System Specification

2. List of Long Lead Time Materials (LLTM)

3. Selected Detail Design Deliverables for information only, including Functional Design artifacts, ABS design review information, Transitional (3D) Design artifacts, Production Design artifacts, Schedules, Test Procedures, and Test Reports.  The maturity of the Functional Design artifacts exceeds 95%.

4. Selected Construction Deliverables for information only, including: Equipment Configuration List, Test results, Engineering Change documents, and schedules

5. Selected Non-Proprietary Management Planning Deliverables for information only

6. USCG Notional OPC Detail Design and Construction (DD&C) Schedule

7. Placemat summarizing OPC Functional Design “

Frankly, I don’t see how you could bid on the contract without having this information first.

The notional schedule does not appear to have changed, meaning, if followed, the contract will not be awarded until the end of FY2022, and the first ship (OPC#5) will not be delivered until near the end of FY2026 and the last ship of the class will not be delivered until near the end of FY2037, three years after the previous plan. At that time the youngest 270 would be 56 years old. We will not have fourteen OPCs to replace the 210s until 2032, by which time the youngest 210 will be 63 years old. This is starting to look ridiculous, but it does looks like there may be some flexibility.

“Contractors will evaluate the referenced design artifacts and propose their most cost effective and schedule efficient plan to transition the Functional Design into a Production Design and to construct OPCs per the contract scope described above. “

This has to be very frustrating. We already went through a year of proposal evaluations, a year of competing preliminary designs, and a year of detail design, and now it looks like we are starting over almost from ground zero.

I anticipate these ships are going to cost considerably more than the original Eastern contract or the original benchmark cost. That, and the considerable delay, are a good argument for funding a 12th NSC in FY2020.

Hopefully the contractors would offer options that would depart from the notional timeline and allow earlier completion of the program as a cost reduction strategy.

On the other hand, if we are going to take this much time, maybe we could make the  ship a bit faster and better armed, since it appears we are firmly back in the great power competition mode.

“Maslow’s “Hierarchy of Needs” Rule and the Coast Guard During a Lapse in Appropriation” –USNI

U.S. Coast Guard photo by Petty Officer 1st Class Matthew S. Masaschi.

US Naval Institute has a short article discussing how delay of pay can undermine our efforts to inspire and retain good people, written by an active duty USCG commander.

This comes at a time when neither the DHS FY2020 budget nor legislation to guarantee continued pay for the Coast Guard in case of a government shutdown has been passed.

“Coast Guard Cutter Procurement: Background and Issues for Congress” –CRS, October 21, 2019, A New Version Reflects RFI

Congressional Research Service has again updated their review of the Coast Guard’s Cutter acquisition programs. (Again only five days after the previous update) The changes reflect the Request for Information (RFI) issued Oct. 18, 2019. You can see the new CRS report here.

The significant changes begin on page 11, and continues through page 14 with quotes from the RFI, and in the “Issues for Congress” section, beginning on page 18 under “Follow-On Competition,” continuing through page 20.

It still seems strange to me that Eastern’s team is not being required to complete the detail design and that the Coast Guard would take the time to develop a second detail design.

As I understand, it the design team is Vard. They should not have been significantly  effected by the hurricane that struck Eastern. Have they been unable to complete a detail design? Shouldn’t they be able to complete one before the re-compete contracts for design studies, evaluates design studies, awards another contract, and completes a second detail design? That the Coast Guard is considering this course make be suspicious that that something is terribly wrong within the Eastern team. I hope I am wrong.

It is gratifying to note that two posts from this blog are referenced in the report: