October 11, 2018

Weeks after a similar hearing on the House side, the Senate Subcommittee on Oceans, Atmosphere, Fisheries & the Coast Guard held a hearing Thursday examining the Coast Guard’s recapitalization efforts.

The hearing was also meant to consider the National Oceanic and Atmospheric Administration’s (NOAA) recapitalization program, but witness Rear Admiral Michael Silah, Director of the Office of Marine and Aviation Operations at NOAA, could not appear as he was deployed to Florida for Hurricane Michael recovery efforts.

Coast Guard

As Chairman Dan Sullivan (R-AK) pointed out, the Coast Guard is 10 years into its current recapitalization effort, which includes replacing a variety of different cutters – ships over 65 feet in length with accommodations for crews to live aboard. Rear Admiral Michael Haycock, Assistant Commandant for Acquisition for the Coast Guard, outlined the agency’s recent acquisition developments:

Offshore patrol cutters (OPC). The Coast Guard exercised a contract option last month to begin production of the lead offshore patrol cutter, which Rear Admiral Haycock called “one of the most critical assets,” and ordered long lead time materials for the second OPC. They expect delivery on the first OPC in 2021. Until then, the Coast Guard is focused on keeping its aging medium endurance cutter fleet—the cutters these new OPCs will replace—in good enough shape to avoid any capability gaps between their retirement and the OPCs’ delivery.

National security cutters (NSC). The Coast Guard recently received its seventh NSC and issued a contract for long lead time materials for its eleventh. Sen. Roger Wicker (R-MS) pointed out that the Senate appropriated $750 million in FY19 funds for a twelfth NSC but the House did not; Haycock said if the Coast Guard fails to get those appropriations, it could affect their delivery schedule and could signal to the ship-building industry that Congress and the Coast Guard are not serious about recapitalization.

Polar security cutters (PSC). The Coast Guard has not ordered a heavy polar ice breaker in 40 years. Rear Admiral Haycock reported that the Coast Guard has received technical proposals from the shipbuilding industry and will receive cost proposals later this fall. To speed up the acquisition process, the Coast Guard has formed an integrated program office with the Navy to utilize the Navy’s expertise and support.

The expected cost and timeframe of the PSCs have already come down; whereas the Guard previously estimated each cutter would cost $1 billion and take 10 years to build, they now estimate they could be acquired for as little as $700 million per ship and in less time. Part of what’s making them cheaper and quicker to build is the use of a parent design acquisition strategy that allows the Guard to use preexisting ship designs to design this new cutter, thereby shortening the five-year design window. Ronald O’Rourke, specialist in naval affairs for the Congressional Research Service (CRS), said the cost could come down further if the Guard utilizes block contracts, and the timeline could shorten further if they are willing to have the different cutters built at different shipyards.

Fast response cutters (FSC). The Coast Guard was recently delivered its 30^thfast response cutter and has exercised contract options for six more; the Guard now has 50 FSCs under contract.

Waterways commerce cutters (WCC). The Coast Guard is replacing a fleet of 35 small river tenders, barges, and construction tenders, many of which are nearing the end of their service lives. Congress has appropriated tens of billions of dollars for this inland fleet recapitalization. Admiral Karl L. Schultz, 26^th Commandant of the Coast Guard, told a House subcommittee last month that the Guard is working with the Army Corps of Engineers and other agencies to “pull forward” any technologies possible to speed up the design process.

There was disagreement between Chairman Sullivan and Rear Admiral Haycock over whether the current recapitalization effort will go far enough in enabling the Coast Guard to meet its many missions. Chairman Sullivan pointed out that the fleet is smaller now than it was 50 years ago (to the tune of 14,000 fewer available operational hours), while demand for Coast Guard missions is increasing.

Rear Admiral Haycock pointed out that the new ships are “more capable than what they’re replacing,” able to deploy for longer periods of time and travel longer ranges at faster speeds.

“It’s one thing to say we have a more capable platform,” Chairman Sullivan responded, “but you also do lose something with fewer platforms.”

Ranking Member Tammy Baldwin (D-WI) quizzed Rear Admiral Haycock on Buy America and the Coast Guard’s use of foreign components. While the Rear Admiral agreed that using foreign-made components, like Italian engines for some of its inland fleet, has led to challenges in getting replacement parts, he said the Guard wants to maximize competition to keep costs low and does not want to create an “artificial demand signal that’s not sustainable” in the domestic industry by going above and beyond current Buy America requirements.

NOAA

While Rear Admiral Silah did not appear to testify in person, his written testimony is available to read on the Senate Commerce Committee website. NOAA is replacing half its fleet of 16 research and survey ships, which are aging and costing the agency in maintenance dollars and lost operational days at sea. Those ships are due to retire in 2028.

NOAA’s Fleet Plan, which focuses on leveraging existing design features to speed the acquisition process, was approved in October 2016 and calls for the acquisition of the following new ships:

• Class A vessels: NOAA is proceeding with the design and construction of two general purpose Class A vessels, whose primary functions will be oceanographic monitoring, research, and modeling activities. Similar to the Coast Guard’s PSCs, NOAA is teaming up with the Navy on an interagency agreement for assisted acquisition.
• Class B vessels: NOAA is proceeding with concept designs for at least two Class B vessels, whose primary functions will be charting and surveying activities.
• Class C vessels: NOAA is assessing requirements for at least two multipurpose, low-endurance, shallow-draft, trawl-capable stock assessment Class C vessels. These vessels will meet specific assessment and management of living marine resource requirements in coastal waters and the Gulf of Mexico.
• Class D vessels: NOAA is proceeding with initial requirements analysis and concept designs for trawl-capable Class D vessels, whose primary function will be assessment and management of living marine resources.

Improving acquisitions

Also at the hearing were Marie Mak, director of contracting and national security acquisitions for the Government Accountability Office (GAO), and Mr. O’Rourke of CRS to talk about how the Coast Guard and NOAA can improve their acquisitions processes.

Ms. Mak outlined the need to develop a strong business case for the agencies’ ship programs that strike a balance between requirements and resources. She said the ship-building programs continually exceed cost and time targets and do not meet performance goals. She also discussed the importance of having a long-term strategic plan that lays out acquisition needs and trade-offs to inform better decision-making. GAO released a report this summer which found the Coast Guard’s short-term acquisitions focus has allowed the Guard to “los[e] sight of the balance and cost of its overall asset portfolio.”

Ms. Mak pointed to the Navy’s 30-year construction plan, which identifies the quantity and categories of needed assets and the Navy’s budgetary needs to execute the plan, as a model to follow.

“This type of long-term plan is particularly important to help ensure the agency has the assets it needs to deliver services where and when needed,” she said.

Mr. O’Rourke focused on the Coast Guard’s contracting process. He reminded the subcommittee that a contract with options, as the Guard has used to procure its OPCs, is not the same as multi-year contracting, and thus cannot achieve the savings possible under multi-year contracting. He said if the Coast Guard moved to multi-year contracting for its OPCs, it could save $1 billion—enough to build an additional ice-breaker to replace the entire waterway cutter fleet.

While a recording of the hearing has not been posted, read the witnesses’ testimony here.