Category Archives: Budget

Document Alert: Cutter Procurement–Another Report to Congress

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Once again, the Congressional Research Service’s Ronald O’Rourke has revised his “Coast Guard Cutter Procurement: Background and Issues for Congress” with the new edition issued April 15. This has got to be a hot topic because previous revisions were issued March 22, January 27, and December 14, 2015. That is four revisions in four months, on average every six weeks, but the latest is only 24 days after the previous edition. I have begun to sense, we may have turned a corner. The tone of the reports has changed over these four months, from, how long will it take us to reach the “Program of Record” (POR), to consideration of, if we should perhaps go beyond the POR.

The NSC, OPC, and FRC programs pose several issues for Congress, including the following:

“whether to fund the acquisition of a 10th NSC in FY2017;

“whether to fund the acquisition of four FRCs in FY2017, as requested, or some other number, such as six, which was the number projected for FY2017 under the Coast Guard’s FY2016 budget submission;

“whether to use annual or multiyear contracting for procuring FRCs;

“whether to use annual or multiyear contracting for procuring OPCs;

“planned procurement quantities for NSCs, OPCS, and FRCs;

“the cost, design, and acquisition strategy for the OPC;

“initial testing of the NSC; and

“rotational crewing of the NSC.”

The latest revision includes three substantial Appendices:

  • Appendix A. Planned NSC, OPC, and FRC Procurement Quantities (pp 17-22)
  • Appendix B. Funding Levels in AC&I Account (pp 23-26)
  • Appendix C. Additional Information on Status and Execution of NSC, OPC, and FRC Programs from March 2016 GAO Report (pp 27-34)

Appendix C is entirely new and appears to have been the reason for the revision.

Appendix A (p. 17-22) is a fairly detailed discussion of the results of the Fleet Mix Study and asks why we so seldom hear that the program of record is not enough to assure the Coast Guard to successfully accomplish its assigned missions.

The Fleet Mix Study was made public in 2012 long after its completion in 2009. It is due for a reexamination and the Commandant has said another will be done. When that happens, we seriously need to look at more than just more of the same assets. We need to look at additional technology, equipment, and weapons that might allow us to accomplish these missions without a major increase in personnel.

Looking at “Table A-3. Force Mixes and Mission Performance Gaps” (document page 18) I would note that if we get to Fleet Mix Analysis Phase 1 (FMA-1, an increase over the POR including 9 Bertholf class NSCs, 32 OPCs and 63 Webber Class FRCs, for a total of 104 vessels), we will have addressed all the “Very High Risk Gaps” found in the Fleet Mix Study that included SAR capability, “Defense Readiness Capacity,” and “Counter Drug capacity.” What will remain are “High” or lower risks in Ports, Waterways, and Coastal Security (PWCS) and Living Marine Resources (LMR), and a low to very low risk to the Alien Migrant Interdiction Operations (AMIO) mission. This total of more than 40 NSCs and OPCs certainly should not be out of the question, after all the Coast Guard has included over 40 ships larger than a thousand tons for the last several decades.

Still, I would note that, no matter how many ships we have, the Ports, Waterways, and Coastal Security (PWCS) mission will always be at risk, unless weapons are available to quickly and reliably stop terrorists’ exploitation of a larger merchant vessel to make an attack. Guns alone are simply not up to the task. I have identified two weapons that might address this threat, (1) equipping our WPCs and possibly WPBs with light weight torpedoes that target a ships propellers or (2) equipping our larger ships with the Long Range Anti-Ship Missile (LRASM) which might allow our larger cutter to effectively support our smaller cutters and respond to an attack, even if the large cutter 200 miles from the targeted port. Either would also make our ships much more capable of making a meaningful contribution to Defense Readiness.

Canadian Coast Guard (also) Undermanned and Underfunded

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980914-N-8492C-005 PEGGYÕS COVE, Nova Scotia (Sept. 14, 1998) Ð- Canadian Coast Guard Cutter CCGV Hudson (front) conducts Laser Line Scanning (LLS) operations with the lasted in US Navy developed high-tech equipment at the crash site of SwissAir Flight 111. US Navy photo by PhotographerÕs Mate 1st Class Todd P. Cichonowicz. (RELEASED)

980914-N-8492C-005
PEGGYÕS COVE, Nova Scotia (Sept. 14, 1998) Ð- Canadian Coast Guard Cutter CCGV Hudson (front) now the oldest major vessel in the Canadian Coast Guard, conducts Laser Line Scanning (LLS) operations with the latest in US Navy developed high-tech equipment at the crash site of SwissAir Flight 111. US Navy photo by PhotographerÕs Mate 1st Class Todd P. Cichonowicz. (RELEASED)

Professional Mariner has reported that a Transport Canada report found the Canadian Coast Guard ” …fleet is undermanned and desperately in need of new ships” and “that unplanned maintenance on aging Coast Guard vessels skyrocketed in 2014.”

My first reaction was of course that they have the same problems we do, but looking at the history of Canadian Coast Guard ship building it is apparent that while none of their ships are over 53 years old, with those built in the 80s the largest group, so maybe they are slightly better off. On the other hand, there was almost no large ship construction in the 1990s or later so they are facing block obsolescence.

I took a look at the documents. I have to admit, I did not read them all. They cover all modes and aspects of transportation. Volume One (pdf) is the basic report and it is 286 pages, and Volume Two (pdf) is the Appendices and it is 230 pages. However, I did use the search function to find every mention of Coast Guard and there were some interesting aspects.

For one thing, the Canadian Coast Guard is partially funded by user fees. The report then goes on to both complain that the user fees have not been raised since established and consequently have not kept up with rising demand and costs, and then also points out that user fees tend to make Canada less competitive. There is not a clear recommendation on this point.

“The government introduced user fees to recover part of the costs for navigation services, which have not changed since 1998. Approximately 15 to 30 percent of the Canadian Coast Guard’s operating costs ($27 million out of $190 million) are recovered from industry (see Figures 9 and 10); icebreaking fees are separate.”

They have a strong justification for the Coast Guard in claiming its inadequacies hurt Canada’s economic competitivenes.

“The underfunding of the Coast Guard seriously hampers its ability to discharge its mandate, which adversely affects Canada’s international competitiveness and trade. (p.13)”

The report finds that the Canadian Coast Guard’s lack of law enforcement authority (and implicitly weapons to back up that authority) results in inefficiencies.

“The Canadian Coast Guard As noted above, the Canadian Coast Guard is responsible for the safe and efficient movement of ships in Canadian coastal and inland waters. Canada is unusual in having a civilian coast guard. In other northern jurisdictions, such as Denmark, Greenland, Norway, Iceland, Finland, and Russia, and in the United States, the coast guard is a military or security organization. As a civilian body, the Canadian Coast Guard does not have the authority to enforce international and national laws and regulations pertaining to the sea, the environment, and sovereignty without RCMP officers present, even though Canadian Coast Guard vessels and staff may be the best placed to respond to critical events and detect illegal activity. This has resulted in an inefficient enforcement regime. Canada has also been slow to use maritime transport to promote development and strengthen sovereignty. Canada must ensure that it meets the challenges of increased maritime traffic in the Arctic, the St. Lawrence, the Great Lakes, the Seaway, the Pacific and the Atlantic. Because of existing governance arrangements and inadequate funding, the Canadian Coast Guard is not currently well equipped to do so.” (p.220)

The report found that current ship building plans including the requirement to buy Canadian would not addressing the problem of an aging fleet.

“As noted above and as depicted in Figures 1, 2 and 3, the Canadian Coast Guard fleet is aging, which has implications for maintenance as well as procurement. Given that 29 percent of the large vessels are more than 35 years old and close to 60 percent of small vessels are older than the design life of 20 years, it is not surprising that the number of major systems repairs required is increasing, vessel days are decreasing, and the number of ships out of service is increasing over time. The decrease in 2009 was as a result of money dedicated for repairs paid by the Economic Action Plan. Indeed, for such a critical piece of transportation infrastructure, the Canadian Coast Guard is not receiving the political attention, or the administrative and financial resources it requires. In 2014, the Commissioner of the Environment and Sustainable Development found that the Canadian Coast Guard’s icebreaking presence in the Arctic is decreasing, while vessel traffic is increasing.26 In response, the Canadian Coast Guard, Transport Canada, and the Canadian Hydrographic Service are currently advancing the Northern Marine Transportation Corridors Initiative to support responsible marine development, enhance marine navigation safety, and guide future Arctic investments.27 In addition, the 2015 Report of the Independent Review of the M/V Marathassa Fuel Oil Spill Environmental Response Operation found that the Canadian Coast Guard lacked adequate staff to respond in any part of its region at any time.28 Not only is it understaffed, but its fleet is one of the oldest in the world and urgently requires renewal (individual ships average nearly 34 years of age).29 Without such renewal it will have to pull ships from service, further reducing reliability. However, under the National Shipbuilding and Procurement Strategy, which requires the Canadian Coast Guard to purchase ships from Canadian shipyards, it can only replace one ship a year, at most. At that rate, the median age of the fleet will not decrease. Other strategies, such as outsourcing or leasing, are not part of the strategy and thus cannot be deployed to meet short-term requirements. (p.221)

There may be beaurocratic power grab here, in that Transport Canada seems to want the Canadian Coast Guard transferred under it purview rather than the Department of Fisheries and Oceans. In fact the Canadian Coast Guard had been an agency of the Department of Transportation until 1994 when it was moved to Fisheries and Oceans.

“We have been concerned for some time that the separate and distinctive roles of Transport Canada and the Canadian Coast Guard [make for] a less than efficient model for a coordinated and timely response to a maritime emergency. The situation is further compounded by CCG having been placed under the administration of the Department of Fisheries and Oceans whose role has little in common with that of CCG.” “p.231)

The Canadian Coast Guard is organizationally a mid-point between the single agency multiple tasked broad authority USCG model and the multiple specialized agencies UK model. In some respects it also incorporates elements that would correspond to duties performed in the US by NOAA and National Marine Fisheries. Apparently it, like the USCG has had a problem fitting in any one department because of its multiple missions. While it is under the Department of Fish and Oceans, since 2005 it has been designated a “special operating agency” with greater autonomy.

Notably the prevailing Canadian attitude seems to be that, if anything, the CCG needs to be given weapons and law enforcement authority, bringing it closer to the USCG model, so perhaps it is an endorsement of sorts, for the way the USCG is structured.

Perhaps the USCG needs to be a “special operating agency” or “independent agency” as it is called in the US, as well; after all, there are already 27 (or more) of them, but that is a topic for another day.

Thanks to Lee for bringing this to my attention.

A Billion Dollar, Once in a Lifetime Opportunity

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IMG_4128

I have been reading over Congressional Research Service’s Specialist in Naval Affairs Ronald O’Rourke’s prepared statement before the House Transportation and Infrastructure Committee’s Coast Guard and Maritime Transportation Subcommittee Hearing on The Status of Coast Guard Cutter Acquisition Programs, February 3, 2016. The implications are a bit startling.

By using Block Buy Contracting (BBC) and Multi-Year Procurement (MYP), the Coast Guard might save as much as $1.2B. This is an opportunity that may not come again for at least 30 years.  

This breaks down to about $100M on contracting for the remaining 26 Fast Response Cutters, $100M on a contract for two heavy icebreakers, and a whopping $1B over the life of the Offshore Patrol Cutter procurement.

We have never used these contracting methods before, but the Navy has with great success in their Burke class DDG, Virginia class submarine, and LCS programs.

The Congress has already granted authority to use Multi-Year Procurement (MYP) for the Offshore Patrol Cutter program, but because of the requirement of the law covering MYP a contract under these provisions probably could not be negotiated until at least FY2022 by which time the first five ships would have already been contracted for. Block Buy Contracting would require specific enabling legislation but could allow additional savings beginning in FY2018.

I would encourage reading the entire statement. There are only seven pages of testimony and ten pages of background appendices, but I’ll provide a “Reader’s Digest” version. Hopefully the author will forgive me for re-editing his work.

“The Coast Guard has used contracts with options in cutter acquisition programs. A contract with options may look like a form of multiyear contracting, but operates more like a series of annual contracts. Contracts with options do not achieve the reductions in acquisition costs that are possible with MYP and BBC.

“MYP can reduce the unit procurement costs of ships by roughly 10%, compared to unit procurement costs under the standard or default approach of annual contracting. BBC can reduce the unit procurement costs of ships by amounts comparable to those of MYP, if the authority granted for using BBC explicitly includes authority for making economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of components. If the authority granted for using BBC does not explicitly include authority for making EOQ purchases, then the savings from BBC will be less—in the range of roughly 5%. EOQ authority comes automatically with MYP authority, but must be explicitly included in legislation granting BBC authority.

BBC, unlike MYP, can be used at the outset of a shipbuilding program, starting with the lead ship in the class. (emphasis applied–Chuck) MYP, in contrast, cannot be used until the lead ship has completed construction. Thus, for a class of ships that is procured at a rate of one ship per year and in which each ship takes five years to build, BBC can be a contracting option starting with the first ship in the class, and MYP can become a contracting option starting with the fifth or sixth ship in the class. This difference is due to the requirement under the statute governing MYP (10 U.S.C. 2306b) that a program must demonstrate design stability to qualify for MYP. In a shipbuilding program, design stability is typically demonstrated by completing the construction of the lead ship in the class.

“The Coast Guard wants to procure a total of 25 OPCs, and currently plans to use a contract with options for acquiring the first 9 to 11 ships in the program. The OPC program can be viewed as a candidate for instead using BBC for the initial ships in the program, and either BBC or MYP for later ships in the program. If using BBC and MYP were to reduce the acquisition costs of OPCs by about 10% (compared to costs under a contract with options), the savings would amount to roughly $1 billion. An alternate way to characterize such savings would be to say that using BBC or MYP would enable the Coast Guard to get about two and a half of the 25 OPCs for “free,” or to pay for the acquisition of a polar icebreaker.

“The Coast Guard plans to soon award a contract with options for acquiring the final 26 ships in the 58- ship FRC program. The final 26 ships in the program can be viewed as a candidate for instead using either MYP or BBC. If using MYP or BBC were to reduce the acquisition costs of OPCs by about 10% (compared to costs under a contract with options), the savings would amount to more than $100 million. An alternate way to characterize such savings would be to say that using MYP or BBC could enable the Coast Guard to get about two and a half of the 26 FRCs for “free.”

“The Offshore Patrol Cutter (OPC) program and the polar icebreaker (PIB) program can be viewed as candidates for using BBC, and the Fast Response Cutter (FRC) program can be viewed as a candidate for using either MYP or BBC. Using MYP and BBC for all three of these programs might produce savings totaling about $1.2 billion, an amount roughly equivalent to the average annual funding level in the Coast Guard’s Acquisition, Construction, and Improvements (AC&I) account. In considering whether to grant authority for using MYP or BBC for these programs, Congress may weigh the potential savings of these contracting mechanisms against the tradeoffs…From a congressional perspective, tradeoffs in making greater use of MYP and BBC include the following:  reduced congressional control over year-to-year spending, and tying the hands of future Congresses;  reduced flexibility for making changes in Coast Guard acquisition programs in response to unforeseen changes in strategic or budgetary circumstances (which can cause any needed funding reductions to fall more heavily on acquisition programs not covered by MYP or BBC contracts);  a potential need to shift funding from later fiscal years to earlier fiscal years to fund EOQ purchases of components;  the risk of having to make penalty payments to shipbuilders if multiyear contracts need to be terminated due to unavailability of funds needed for the continuation of the contracts; and  the risk that materials and components purchased for ships to be procured in future years might go to waste if those ships are not eventually procured.”

There seems little doubt we will need all the ships currently planned. The commitment is only a minuscule percentage of the Federal Budget, and therefore constitutes an extremely small risk. Use of Block Buy and Multi-Year Procurement could bring stability to the Coast Guard’s AC&I funding and result savings equal to an entire year’s worth of AC&I funding.

More on the Navy’s New Design for Maintaining Maritime Superiority

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Waesche Carat 2012

This is a post I wrote for CIMSEC. under the title “A Design for Maintaining Maritime Superiority”–A Coastie’s View.” It is an expanded version of an earlier post that appeared here. The rewrite really begins about half way down under the header, “What I Want to See.”

Recently the new Chief of Naval Operations issued a document “Design for Maintaining Maritime Superiority” that outlines how, hopefully, the US Navy can maintain a maritime superiority our foes will recognize and avoid confronting.

If you look for anything specifically regarding the Coast Guard here, you will not find it (other than the cutter in the formation on the cover). The Coast Guard is not mentioned even once, but it does talk about some things that are Coast Guard related. Perhaps the Coast Guard should not feel bad about this. It only mentions the Marine Corps once.

Three Forces that are Changing the Environment

  • The first global force is the traffic on the oceans, seas, and waterways, including the sea floor – the classic maritime system.
  • A second increasingly influential force is the rise of the global information system – the information that rides on the servers, undersea cables, satellites, and wireless networks that increasingly envelop and connect the globe.
  • The third interrelated force is the increasing rate of technological creation and adoption.

Obviously the Coast Guard facilitates and regulates marine traffic, and is tapped into the global information system. In wartime, these contacts will become essential since they will form the basis for naval control of shipping. He also talks about new trade routes opening in the Arctic. These will only be reliable if we have new icebreakers. He also talks about illegal trafficking.

“This maritime traffic also includes mass and uncontrolled migration and illicit shipment of material and people.”

A Document That Explicitly Recognizes the Competition

“For the first time in 25 years, the United States is facing a return to great power competition. Russia and China both have advanced their military capabilities to act as global powers. Their goals are backed by a growing arsenal of high-end warfighting capabilities, many of which are focused specifically on our vulnerabilities and are increasingly designed from the ground up to leverage the maritime, technological and information systems. They continue to develop and field information-enabled weapons, both kinetic and non-kinetic, with increasing range, precision and destructive capacity. Both China and Russia are also engaging in coercion and competition below the traditional thresholds of high-end conflict, but nonetheless exploit the weakness of accepted norms in space, cyber and the electromagnetic spectrum. The Russian Navy is operating with a frequency and in areas not seen for almost two decades, and the Chinese PLA(N) is extending its reach around the world.

“…Coupled with a continued dedication to furthering its nuclear weapons and missile programs, North Korea’s provocative actions continue to threaten security in North Asia and beyond.

“…while the recent international agreement with Iran is intended to curb its nuclear ambitions, Tehran’s advanced missiles, proxy forces and other conventional capabilities continue to pose threats to which the Navy must remain prepared to respond.

“…international terrorist groups have proven their resilience and adaptability and now pose a long-term threat to stability and security around the world.”

Recognizing Budgetary Limitations

“There is also a fourth ‘force’ that shapes our security environment. Barring an unforeseen change, even as we face new challenges and an increasing pace, the Defense and Navy budgets likely will continue to be under pressure. We will not be able to “buy” our way out of the challenges that we face. The budget environment will force tough choices but must also inspire new thinking.”

Throughout there is an emphasis on understanding history and the strategic concepts of the past. There is also a recognition of the need to work with partners.

“EXPAND AND STRENGTHEN OUR NETWORK OF PARTNERS: Deepen operational relationships with other services, agencies, industry, allies and partners – who operate with the Navy to support our shared interests.”

Other than the Marine Corps, the US Navy has no closer partner than the US Coast Guard. And while only about one eighth the size of the US Navy, in terms of personnel, the US Coast Guard is larger than Britain’s Royal Navy or the French Navy. The partnership has been a long and successful one, but I would like to see the Navy be a better partner to the Coast Guard. This is how the Navy can help the Coast Guard help the Navy.

What I Want to See

If we have a “run out of money, now we have to think” situation, one thing we can do is to try to get the maximum return from the relatively small investment needed to make the Coast Guard an effective naval reserve force.

WPC Kathleen_Moore

We need explicit support from the Navy at every level, particularly within Congress and the Administration, for Coast Guard recapitalization. While the Navy’s fleet averages approximately 14 years old. The Coast Guard’s major cutters average over 40. The proposed new ships, are more capable than those they replace. They are better able to work cooperatively with the Navy. The nine unit 4,500 ton “National Security Cutter”program is nearing completion with funds for the ninth ship in the FY2016 budget. The 58 unit, 154 foot, 353 ton Webber Class  program is well underway with 32 completed, building, or funded. But the Coast Guard is about to start its largest acquisition in history, 25 LCS sized Offshore Patrol Cutters. Unfortunately, it appears that while the first ship will be funded in FY2018 the last will not be completed until at least 2035. This program really needs to be accelerated.

We need an explicit statement from the Navy that they expect the Coast Guard to defend ports against unconventional threats, so that they can keep more forces forward deployed. This is in fact the current reality. The Sea Frontiers are long gone. Navy vessels no longer patrol the US coast. The surface Navy is concentrated in only a handful of ports. No Navy surface combatants are homeported on the East Coast north of the Chesapeake Bay. If a vessel suspected of being under the control of terrorists approaches the US coast the nearest Navy surface vessel may be hundreds of miles away.

We need the Navy to supply the weapons the Coast Guard need to defend ports against unconventional attack using vessels of any size, with a probability approaching 100%. These should include small missile systems like Hellfire or Griffin to stop small, fast, highly maneuverable threats and we need a ship stopper, probably a light weight anti-ship torpedoes that target propellers to stop larger threats. We need these systems on not just the largest cutters, in fact they are needed more by the the smaller cutters that are far more likely to be in a position to make a difference. These include the Webber class and perhaps even the smaller WPBs.

We need to reactivate the Coast Guard’s ASW program and ensure that all the new large cutters (National Security Cutters and Offshore Patrol Cutters) have an ASW capability, if not installed on all of the cutters, at least planned, prototyped, tested, and practiced on a few ships (particularly in the Pacific). The National Security Cutters and the Offshore Patrol Cutters are (or will be) capable of supporting MH-60R ASW helicopters. Adding a towed array likeCAPTAS-4 (the basis for the LCS ASW module) or CAPTAS-2 would give them a useful ASW capability that could be used to escort ARGs, fleet train, or high value cargo shipments. Towed arrays might even help catch semi-submersible drug runners in peacetime.

IMG_4128

The Coast Guard is the low end of America’s Naval high-low mix. It is a source of numbers when numbers are needed. The Coast Guard has more assets for low end functions like blockade than the Navy. The Navy has about 105 cruisers, destroyers, LCS, PCs, and is not expected to have more than 125 similar assets for the forseeable future. The Coast Guard has about 165 patrol cutters  including 75 patrol boats 87 feet long, about 50 patrol craft 110 to 154 feet in length (58 Webber class WPCs are planned), and about 40 ships 210 foot or larger that can be called on, just as they were during the Vietnam War, when the Coast Guard operated as many as 33 vessels off the coast in support of Operation MarketTime, in spite of the fact that the Navy had almost three times as many surface warships as they do now. The current program of record will provide 34 new generation cutters including nine 4500 ton National Security Cutters and 25 Offshore Patrol Cutters that should be at least 2500 tons.

The Coast Guard provides peacetime maritime security, but is currently under-armed even for this mission. A small investment could make it far more useful in wartime.

(Note there is another post on this looking at the “design” from a Navy point of view.)

Thoughts on State of the CG, 2016

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You can read the Commandant’s State of the Coast Guard speech here (pdf). It is only eight pages.

The Commandant continues to hammer on themes he has addressed in the past–the Arctic Strategy in response to the opening of a new ocean and the Western Hemisphere Strategy in response to lawlessness in Central America and the resulting immigration crisis (plus the ships needed to employment the strategies–OPCs and Icebreakers in particular), and duty to our people (the Human Capital Strategy). While the topics are familiar, his tone is more optimistic.

The Coast Guard budget for FY2016 included the largest acquisitions, construction, and improvements (AC&I) budget in its history and the Commandant appears to believe this will not be a flute.

The Commandant has chosen his battles and is doing well in terms of conveying what he sees as the critical narrative. Now it sounds like he is about to expand his objectives.

The Commandant has promised an analysis of Coast Guard personnel requirements.

Most people have seen the great American cinema classic Jaws. In it, Police Chief Brody, when he first lays eyes on the 30-foot Great White shark attacking New England beachgoers, says to his colleague, “You’re going to need a bigger boat.” It is a great line that lives on as an expression to state the obvious.
We’ll let me nuance that a bit. Looking at the challenges we’re facing in the world today: ladies and gentlemen, you’re going to need a bigger Coast Guard….As required by our 2015 Authorization Act, I am directing a Coast Guard Manpower Requirements Plan to formally establish a force size informed by strategy, analysis and risk management.

Allow me to look even further down the road,

The world seems to becoming an increasingly dangerous place. The brief window when the US ruled a mono-polar world is closed. It may be time for the Coast Guard to reemphasize its military character. If you look at long term trends, the size of the Coast Guard, in terms of personnel has generally been stable or growing, while the still much larger, Navy has continued to shrink. When I was commissioned in 1969, the Navy was about 21 times larger than the Coast Guard and the Marine Corps was over eight times as large. Now the Navy is less than eight times the size of the Coast Guard, and the Marine Corps is less than five times as large. In terms of personnel the Coast Guard is already larger than the British or French Navy. This suggest that its potential as a significant naval force should not be ignored. 

The Coast Guard now seems poised to have a future fleet of nine frigate sized National Security Cutters and 25 corvette (or light frigate) sized Offshore Patrol Cutters. That is 34 surface combatants, not an insignificant number when you consider the Navy has and will have only about 120 cruisers, destroyers frigates and LCS. While the cutters quality as warships is far below that of DDG, they are not far removed from that of an LCS and in some respects, particularly endurance, they are superior. We really need to look at what we could do, for relatively small marginal costs, to make these ships effective contributions to the National Fleet. In a similar fashion we need to look at how other elements of the Coast Guard could strengthen national defense.

The Coast Guard may be the US’s secret naval edge, unrecognized by our enemies and by our own government, the Navy and many of our own people, but risking the stealthy nature of our contribution to national defense, a more formalized and recognized military tasking could justify continued expansion that could also improve performance in other mission areas, and give us the bigger Coast Guard the Commandant think we need.

 

Coast Guard Authorization Act for 2016/2017

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A two year authorization is now on the way to the President’s desk, and there is little reason to expect he will not sign it. You can find the bill here.

It looks, good, but it is not a budget. We will have to wait and see.

It does include provision to begin planning for new polar and Great Lakes icebreakers.

Perhaps most notably it includes a near $2B AC&I budget for 2017 as well as 2016. Hopefully that will hold up.

“For the acquisition, construction, renovation, and improvement of aids to navigation, shore facilities, vessels, and aircraft, including equipment related thereto, and for maintenance, rehabilitation, lease, and operation of facilities and equipment—

(A) $1,945,000,000 for fiscal year 2016; and

(B) $1,945,000,000 for fiscal year 2017.”

Document Alert: Coast Guard Cutter Procurement: Background and Issues for Congress

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Samsung

Photo: USCGC Steadfast, one of the newer 210 class, now about 48 years old. We don’t expect her replacement for at least another ten years.

The US Naval Institute has published the Congressional Research Services latest version of Coast Guard Cutter Procurement: Background and Issues for Congress, by their Naval Affairs Specialist, the ever prolific Ronald O’Rourke.

It is not quite up to date, because it does not reflect funding for a ninth National Security Cutter, but otherwise it nicely defines the issues the program has been faced with, most notably inadequate funding.

It also raises the question, should multi-year or block buy funding, with its potential for substantial savings, be pursued? We really should be doing this for the Webber class, which is a proven, mature design, approved for full rate production. In fact, we should have been doing this for a couple of years now.

The thing I found most disturbing was that the first Offshore Patrol Cutter (OPC) will not be funded until FY2018, although it looks like the detail design will be funded in FY2017. I am beginning to wonder if we will see the first OPC before 2022.

The FY2016 budget was a pleasant surprise with the addition of funds to build a ninth National Security Cutter. If this near $2B funding level is seen as a new norm (as I would hope) there will be room in the FY2017 budget for another major acquisition. It might be a tenth NSC. That would not be an altogether bad thing, but it would be outside the needs identified in the Fleet Mix Study. Unless another major project is injected into the FY2017 budget, we will loose the momentum for a larger AC&I budget.

If the FY2017 NSC, OPC, and FRC funding is as indicated in the document (see pdf page 14, marked at page 10), most of the shipbuilding funds will go for what looks like five or six more Webber class. There are smaller amounts for the OPC and NSC programs for a total of only $557M. There may, however, be the opportunity to fund a big part of the new polar icebreaker, as the Commandant has suggested, if the AC&I budget remains at least equal to the FY2016 level.

Inflation and the OPC

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CIMSEC has just republished a post which is specific to Canada’s shipbuilding program, but it addresses a problem that will effect the Offshore Patrol Cutter (OPC) as well, inflation.

Their point is one that is often missed.

Inflation in the shipbuilding industry is higher than inflation in general. 

The post states ” American warships have historically inflated at an annual rate of 9 to 11 percent based on a pay for view study by Rand Corporation, available here.” Figures I saw earlier suggest the shipbuilding inflation rate outpaces that for the economy in general by two to three percent annually

This difference in inflation rate means that even if well run, a shipbuilding program is almost always destined to go over budget and the longer it is stretched out, the worse it is going to get.

Inflation rates are recognized in the budgeting process, but only the overall rate, not the rate applicable to a particular industry.

Stretching the Offfshore Patrol Cutter program out over more than fourteen years will guarantee unfavorable comparisons between early estimates and actual performance.

This is the largest program in Coast Guard history and the largest in the Department of Homeland Security as well. Acquisition cost of the 25 ships are expected to be $10.523 billion, or an average of about $421 million per ship. The Coast Guard’s Request for Proposal (RFP) for the program, released on September 25, 2012, establishes an affordability requirement for the program of an average shipyard cost of $310M each for ships #4-9 in then year dollars. That does not include government furnished equipment (GFE).The longer the program stretches out, the less likely that becomes.

Coast Guard Polar Icebreaker Modernization: Background and Issues for Congress–Updated

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POLAR SEA and POLAR STAR side by side in McMurdo Sound, Antarctica

The US Naval Institute News Service has provided a copy of the Dec. 14, 2015 Congressional Research Service report, “Coast Guard Polar Icebreaker Modernization: Background and Issues for Congress,” by Naval Ronald O’Rourke.

This updates a series of earlier reports.

It is quite clear from the report that even if things go as planned, which I doubt it will, we will have a period of two to six years when we will have only one medium icebreaker and no heavy icebreakers.

If we do as currently planned, we will not see a new icebreaker until at least 2024.

We have looked at alternatives that might carry us through until the US can truly recapitalize its current fleet.

We can renovate Polar Sea. Clearly Congress is running out of patience waiting for a decision about what to do with this ship. We ought to ask for the funds to renovate it one way or the other.

We can lease one or two of these excess icebreakers. We could put one in the Great Lakes to satisfy those interests and it could in worst case exit the Great Lakes and go to the assistance of a polar icebreaker or break into resupply Thule airbase in Greenland.

Both of these are relatively low cost options. They deserve serious consideration.

President Calls for More Icebreakers

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USCGCHealeyCGphoto

The New York Times is reporting that, in a Speech today, the President will call for new icebreakers for the Coast Guard including accelerating the one currently planned and for additional icebreakers beyond that.

“The aging Coast Guard fleet is not keeping pace with the challenge, the administration acknowledged, noting that the service has the equivalent of just two “fully functional” heavy icebreakers at its disposal, down from seven during World War II. Russia, by contrast, has 41 of the vessels, with plans for 11 more. China unveiled a refurbished icebreaker in 2012 and is building another.

“Mr. Obama will propose speeding up the acquisition of a replacement icebreaker that had been planned for 2022, setting a new date of 2020, the White House said. He will also propose that planning begin on the construction of new ones, asking Congress to provide “sufficient resources” to fund them.”

Hopefully these WAGBs and the rumored additional National Security will move the perception of what is a normal AC&I budget closer to a realistic level.