Coast Guard Cutter Procurement: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Coast Guard’s program of record (POR) calls for procuring eight National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs) as replacements for 90 aging Coast Guard cutters and patrol craft. The NSC, OPC, and FRC programs have a combined estimated acquisition cost of about $21.1 billion, and the Coast Guard’s proposed FY2013 budget requests a total of $852 million in acquisition funding for the three programs.

NSCs are the Coast Guard’s largest and most capable general-purpose cutters. They have an estimated average procurement cost of about $684 million per ship. The first three are now in service, and the fourth and fifth are under construction. The Coast Guard’s proposed FY2013 budget requests $683 million for the NSC program, including $658 million to complete the funding for the sixth NSC.

OPCs are to be smaller, less expensive, and in some respects less capable than NSCs. They have an estimated average procurement cost of about $484 million per ship. The first OPC is to be procured in FY2017. The Coast Guard’s proposed FY2013 budget requests $30 million for the OPC program.

FRCs are considerably smaller and less expensive than OPCs. They have an estimated average procurement cost of about $73 million per boat. A total of 18 have been funded through FY2012. The first entered service on April 14, 2012; the second was delivered to the Coast Guard on May 26, 2012; and the third is scheduled to be delivered by the end of FY2012. The Coast Guard’s proposed FY2013 budget requests $139 million for the FRC program.

Potential oversight issues for Congress regarding the NSC, OPC, and FRC programs include the following:

• the absence of funding in the Coast Guard’s FY2013 five-year (FY2013-FY2017) capital investment plan for the seventh and eighth NSCs; 
• hull corrosion and leaks in the third NSC; 
• the Coast Guard’s proposal to restructure the use of FY2012 FRC acquisition funding so as to procure four FRCs in FY2012 rather than six, and to defer the procurement of the other two FY2012-funded FRCs to FY2013; 
• delays, cost growth, and testing issues in the FRC program; 
• the Coast Guard’s acquisition strategy for the OPC; 
• the potential for using multiyear procurement (MYP) in acquiring new cutters; 
• the adequacy of the Coast Guard’s planned NSC, OPC, and FRC procurement quantities; 
• whether eight NSCs, 25 OPCs, and 58 FRCs is the best mix of cutters that could be procured for roughly the same total amount of acquisition funding; and 
• the adequacy of information available to Congress to support review and oversight of Coast Guard procurement programs, including cutter procurement programs.

Date of Report: October 31, 2012
Number of Pages: 62
Order Number: R42567
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Coast Guard Polar Icebreaker Modernization: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Coast Guard’s proposed FY2013 budget includes $8 million in acquisition funding to initiate survey and design activities for a new polar icebreaker. The Coast Guard’s Five Year Capital Investment Plan includes an additional $852 million in FY2014-FY2017 for acquiring the ship. The Coast Guard anticipates awarding a construction contract for the ship “within the next five years” and taking delivery on the ship “within a decade.” The project to design and build a polar icebreaker is a new acquisition project initiated in the FY2013 budget.

Coast Guard polar icebreakers perform a variety of missions supporting U.S. interests in polar regions. The Coast Guard’s two existing heavy polar icebreakers—Polar Star and Polar Sea— have exceeded their intended 30-year service lives, and neither is currently operational. Polar Star was placed in caretaker status on July 1, 2006. Congress in FY2009 and FY2010 provided funding to repair it and return it to service for 7 to 10 years; the Coast Guard expects the reactivation project to be completed in December 2012. On June 25, 2010, the Coast Guard announced that Polar Sea had suffered an unexpected engine casualty; the ship was unavailable for operation after that. The Coast Guard placed Polar Sea in commissioned, inactive status on October 14, 2011.

The Coast Guard’s third polar icebreaker—Healy—entered service in 2000. Compared to Polar Star and Polar Sea, Healy has less icebreaking capability (it is considered a medium polar icebreaker), but more capability for supporting scientific research. The ship is used primarily for supporting scientific research in the Arctic.

The reactivation of Polar Star will result in an operational U.S. polar icebreaking fleet consisting for the next 7 to 10 years of one heavy polar icebreaker (Polar Star) and one medium polar icebreaker (Healy). The new polar icebreaker for which initial acquisition funding is requested in the FY2013 budget would replace Polar Star at about the time Polar Star’s 7- to 10-year reactivation period ends.

Potential issues for Congress regarding Coast Guard polar icebreaker modernization include the potential impact on U.S. polar missions of the United States currently having no operational heavy polar icebreakers; the numbers and capabilities of polar icebreakers the Coast Guard will need in the future; the disposition of Polar Sea; whether the new polar icebreaker initiated in the FY2013 budget should be funded with incremental funding (as proposed in the Coast Guard’s Five Year Capital Investment Plan) or full funding in a single year, as normally required under the executive branch’s full funding policy; whether new polar icebreakers should be funded entirely in the Coast Guard budget, or partly or entirely in some other part of the federal budget, such as the Department of Defense (DOD) budget, the National Science Foundation (NSF) budget, or both; whether to provide future icebreaking capability through construction of new ships or service life extensions of existing polar icebreakers; and whether future polar icebreakers should be acquired through a traditional acquisition or a leasing arrangement.


Date of Report: October 26, 2012
Number of Pages: 63
Order Number: RL34391
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Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Aegis ballistic missile defense (BMD) program, which is carried out by the Missile Defense Agency (MDA) and the Navy, gives Navy Aegis cruisers and destroyers a capability for conducting BMD operations. Under MDA and Navy plans, the number of BMD-capable Navy Aegis ships is scheduled to grow from 24 at the end of FY2011 to 36 at the end of FY2018.

Under the Administration’s European Phased Adaptive Approach (EPAA) for European BMD operations, BMD-capable Aegis ships have begun operating in European waters to defend Europe from potential ballistic missile attacks from countries such as Iran. On October 5, 2011, the United States, Spain, and NATO jointly announced that, as part of the EPAA, four BMD-capable Aegis ships are to be forward-homeported (i.e., based) at Rota, Spain, in FY2014 and FY2015. BMD-capable Aegis ships also operate in the Western Pacific and the Persian Gulf to provide regional defense against potential ballistic missile attacks from countries such as North Korea and Iran.

The Aegis BMD program is funded mostly through MDA’s budget. The Navy’s budget provides additional funding for BMD-related efforts. MDA’s proposed FY2013 budget requests a total of $2,303.0 million in procurement and research and development funding for Aegis BMD efforts, including funding for Aegis Ashore sites that are to be part of the EPAA.

Issues for Congress for FY2013 include:

• the reduction under the proposed FY2013 budget in the ramp-up rate for numbers of BMD-capable Aegis ships over the next few years; 
• the cost effectiveness and U.S. economic impact of shifting four Aegis ships to Rota, Spain; 
• U.S. vs. European naval contributions to European BMD; 
• the lack of a target for simulating the endo-atmospheric (i.e., final) phase of flight of China’s DF-21 anti-ship ballistic missile; 
• the capability of the SM-3 Block IIB Aegis BMD interceptor; and 
• concurrency and technical risk in the Aegis BMD program.

Date of Report: October 25, 2012
Number of Pages: 84
Order Number: RL33745
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Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Littoral Combat Ship (LCS) is a relatively inexpensive Navy surface combatant equipped with modular “plug-and-fight” mission packages. The Navy wants to field a force of 55 LCSs. Twelve LCSs have been funded through FY2012, and the FY2013-FY2017 Future Years Defense Plan (FYDP) calls for procuring 16 more, in annual quantities of 4-4-4-2-2.

The Navy’s proposed FY2013 budget requests $1,785.0 million in procurement funding for the four LCSs requested for FY2013. The Navy’s proposed budget also requests $102.6 million in procurement funding for LCS mission modules.

There are two very different LCS designs—one developed by an industry team led by Lockheed, and another developed by an industry team that was led by General Dynamics. The Lockheed design is built at the Marinette Marine shipyard at Marinette, WI; the General Dynamics design is built at the Austal USA shipyard at Mobile, AL. LCSs 1, 3, 5, and so on are Marinette Marinebuilt ships; LCSs 2, 4, 6, and so on are Austal-built ships.

The 20 LCSs procured or scheduled for procurement in FY2010-FY2015—LCSs 5 through 24— are being acquired under a pair of 10-ship block buy contracts. Congress granted the Navy the authority for the block buy contracts in Section 150 of H.R. 3082/P.L. 111-322 of December 22, 2010, and the Navy awarded the block buy contracts to Lockheed and Austal USA on December 29, 2010. The contracts are both fixed-price incentive (FPI) block-buy contracts.

The LCS program has encountered controversy from time to time over the years over various program-related issues. Some observers, citing these issues, potential future Navy operations, and potential future constraints on defense spending, have proposed truncating the number of LCSs to be procured. In response to criticisms of the LCS program, the Navy over the years has acknowledged certain problems and stated that it was taking action to correct them, disputed other arguments made against the program, and maintained its support for the program and for procuring a total of 55 LCSs.

Current issues for Congress concerning the LCS program include the LCS’s prospective mission performance and cost-effectiveness, the combat survivability of the LCS, hull cracking and engine problems on LCS-1, and corrosion on LCS-2.


Date of Report: October 22, 2012
Number of Pages: 99
Order Number: RL33741
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Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The planned size of the Navy, the rate of Navy ship procurement, and the prospective affordability of the Navy’s shipbuilding plans have been matters of concern for the congressional defense committees for the past several years.

In February 2006, the Navy presented to Congress a goal of achieving and maintaining a fleet of 313 ships, consisting of certain types and quantities of ships. On March 28, 2012, the Department of Defense (DOD) submitted to Congress an FY2013 30-year (FY2013-FY2042) shipbuilding plan that includes a new goal for a fleet of about 310-316 ships. The Navy is conducting a force structure assessment, to be completed later this year, that could lead to a refinement of this 310- 316-ship plan.

The Navy’s proposed FY2013 budget requests funding for the procurement of 10 new battle force ships (i.e., ships that count against the 310-316 ship goal). The 10 ships include one Gerald R. Ford (CVN-78) class aircraft carrier, two Virginia-class attack submarines, two DDG-51 class Aegis destroyers, four Littoral Combat Ships (LCSs), and one Joint High Speed Vessel (JHSV). These ships are all funded through the Shipbuilding and Conversion, Navy (SCN) account.

The FY2013-FY2017 five-year shipbuilding plan contains a total of 41 ships—14 ships, or about 25%, less than the 55 ships in the FY2012 five-year (FY2012-FY2016) shipbuilding plan, and 16 ships, or about 28%, less than the 57 ships that were planned for FY2013-FY2017 under the FY2012 budget. Of the 16 ships no longer planned for FY2013-FY2017, 9 were eliminated from the Navy’s shipbuilding plan and 7 were deferred to years beyond FY2017. The nine ships that were eliminated were eight Joint High Speed Vessels (JHSVs) and one TAGOS ocean surveillance ship. The seven ships deferred beyond FY2017 were one Virginia-class attack submarine, two LCSs, one LSD(X) amphibious ship, and three TAO(X) oilers. The Navy’s proposed FY2013 budget also proposes the early retirement of seven Aegis cruisers and the placement into Reduced Operating Status (ROS) of two LSD-type amphibious ships.

The Navy’s FY2013 30-year (FY2013-FY2042) shipbuilding plan, which was submitted to Congress on March 28, 2012 (more than a month after the submission of the FY2013 budget on February 13, 2012), does not include enough ships to fully support all elements of the Navy’s 310-316 ship goal over the long run. The Navy projects that the fleet would remain below 310 ships during the entire 30-year period, and experience shortfalls at various points in ballistic missile submarines, cruisers-destroyers, attack submarines, and amphibious ships. The projected cruiser-destroyer and attack submarine shortfalls are smaller than they were projected to be under the FY2012 30-year (FY2012-FY2041) shipbuilding plan, due in part to a reduction in the cruiser-destroyer force-level goal and the insertion of additional destroyers and attack submarines into the FY2013 30-year plan.

In its July 2012 report on the cost of the FY2013 30-year shipbuilding plan, the Congressional Budget Office (CBO) estimates that the plan would cost an average of $20.0 billion per year in constant FY2012 dollars to implement, or about 19% more than the Navy estimates. CBO’s estimate is about 11% higher than the Navy’s estimate for the first 10 years of the plan, about 13% higher than the Navy’s estimate for the second 10 years of the plan, and about 33% higher than the Navy’s estimate for the final 10 years of the plan. Some of the difference between CBO’s estimate and the Navy’s estimate, particularly in the latter years of the plan, is due to a difference between CBO and the Navy in how to treat inflation in Navy shipbuilding.


Date of Report: October 25, 2012
Number of Pages: 63
Order Number: RL32665
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