Icebreaker Acquisition and the Need for a National Maritime Strategy

Statement of

Ronald O'Rourke

Specialist in Naval Affairs

Before

Committee on Transportation and Infrastructure

Subcommittee on Coast Guard and Maritime Transportation

U.S. House of Representatives

Hearing on

“Icebreaker Acquisition and the Need for a

National Maritime Strategy”

November 29, 2018

Congressional Research Service

https://crsreports.congress.gov

TE10030

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Chairman Mast, Ranking Member Garamendi, distinguished members of the subcommittee, thank you for

the opportunity to appear before you today to testify on icebreaker acquisition and the need for a national

maritime strategy. In my work as a CRS analyst on naval and maritime military issues for the past 34

years, I have covered Coast Guard ship acquisition for Congress for 20 years,1 the polar icebreaker

program specifically for 10 years,2 and issues relating to military sealift ships periodically for 28 years.3

My biography is shown in Appendix A.

Appendix B to this statement presents a general summary of some lessons learned in government

shipbuilding. Appendix C presents some considerations relating to the use of warranties in government

shipbuilding. Appendix D presents some considerations relating to avoiding procurement cost growth vs.

minimizing procurement costs in government shipbuilding. Appendix E presents discussion of the Coast

Guard’s National Security Cutter (NSC) program, Offshore Patrol Cutter (OPC) program, Fast Response

Cutter (FRC) program, and Waterways Commerce Cutter (WCC) program, which help form the context

for Coast Guard icebreaker procurement in a situation of finite Coast Guard procurement funding.

Icebreaker Acquisition

Funding and Acquisition Context

PC&I Account Funding Levels

There has been some discussion recently of how certain Coast Guard procurement priorities, including

icebreakers, would not be affordable if the Coast Guard’s Procurement, Construction, and Improvements

(PC&I) account in coming years were limited to an average of about $1.1 billion per year.4 An average

1 See, for example:



CRS Report 98-830 F, Coast Guard Integrated Deepwater System: Background and Issues for Congress, by Ronald

O’Rourke, first version October 5, 1998, final (i.e., archived) version June 1, 2001;



CRS Report RS21019, Coast Guard Deepwater Program: Background and Issues for Congress, by Ronald O’Rourke,

first version September 25, 2001, final (i.e., archived) version December 8, 2006;



CRS Report RL33753, Coast Guard Deepwater Acquisition Programs: Background, Oversight Issues, and Options for

Congress, by Ronald O'Rourke, first version December 18, 2006, final (i.e., archived) version January 20, 2012; and



CRS Report R42567, Coast Guard Cutter Procurement: Background and Issues for Congress, by Ronald O'Rourke,

first version June 13, 2012, current version October 26, 2018.

2 See CRS Report RL34391, Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for

Congress, by Ronald O'Rourke, first version February 26, 2008, current version October 26, 2018.

3 See, for example:



CRS Report 90-446 F, Sealift and Operation Desert Shield, by Ronald O’Rourke, September 17, 1990;



CRS Report 91-421 F, Persian Gulf War: Defense-Policy Implications for Congress, coordinated by Ronald O’Rourke,

May 15, 1991 (section on sealift);



CRS Report RL31946, Iraq War: Defense Program Implications for Congress, coordinated by Ronald O’Rourke, June

4, 2003 (section on sealift); and



CRS Report RL32513, Navy-Marine Corps Amphibious and Maritime Prepositioning Ship Programs: Background and

Oversight Issues for Congress, by Ronald O’Rourke, first version August 5, 2004, final (archived) version July 26,

2006.

4 See Government Accountability Office, Coast Guard Acquisitions[:] Actions Needed to Address Longstanding Portfolio

Management Challenges, GAO-18-454, July 2018, Figure 4 on page 22, and GAO’s spoken testimony during the question-andanswer portion of a July 24, 2018, hearing on Coast Guard acquisition programs and mission balance and effectiveness before the

Coast Guard and Maritime Transportation subcommittee of the House Transportation Committee, during which Figure 4, which

depicts a funding funnel, was shown on the hearing room’s display screens. (The funnel, which compares an annual PC&I

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PC&I funding level of about $1.1 billion per year would have that effect. In 2013, then-Coast Guard

Commandant Robert Papp testified that an annual PC&I funding level of about $1 billion per year

“almost creates a death spiral for the Coast Guard.”5 The notion that the PC&I funding level will be

limited to an average of about $1.1 billion per year, however, is no longer strongly supported by recent

data on Coast Guard annual funding requests,6 annual enacted funding levels,7 or projected future annual

funding requests as shown in Coast Guard five-year Capital Investment Plans (CIPs).8

In assessing future funding levels for executive branch agencies, a common practice is to assume or

predict that the figure in coming years will likely be close to where it has been in previous years. While

this method can be of analytical and planning value, for an agency like the Coast Guard, which goes

through periods with less acquisition of major platforms and periods with more acquisition of major

platforms, this approach might not always be the best approach, at least for the PC&I account.

More important, in relation to maintaining Congress’s status as a co-equal branch of government,

including the preservation and use of congressional powers and prerogatives, an analysis that assumes or

predicts that future funding levels will resemble past funding levels can encourage an artificially narrow

view of congressional options regarding future funding levels, which could deprive Congress of agency in

the exercise of its constitutional power to set funding levels and determine the composition of federal

spending.

As one example of how past funding levels were not the best guide to future funding levels, and of how

Congress has exercised its constitutional power to set funding levels and determine the composition of

federal spending, during the period FY2008-FY2015, when the Navy’s shipbuilding account averaged

about $14.7 billion per year in then-year dollars, there was recurring discussion about the challenge of

increasing the account to the substantially higher annual funding levels that would soon be needed to

begin implementing the Navy’s 30-year shipbuilding plan. Projections were prepared by CBO showing

the decline in the size of the Navy that would occur over time if funding levels in the shipbuilding

account did not increase substantially from the average level of about $14.7 billion per year. Congress,

after assessing the situation, increased the shipbuilding account to $18.7 billion in FY2016, $21.2 billion

in FY2017, $23.8 billion in FY2018, and $24.2 billion in FY2019. These increasing funding levels

occurred even though the Budget Control Act, as amended, remained in operation during those years. At

account funding figure of $1.1 billion to a higher figure of $2 billion consistent with the Coast Guard’s preferred PC&I account

annual funding level, is not drawn to scale: Although $1.1 billion is 55% of $2 billion, the narrower $1.1-billion bottom of the

funnel has an opening with a diameter than is no more than 22% as wide as that of the larger, $2-billion top of the funnel.) In

report GAO-18-454, see also Figure 3 on page 15, which indicates an average requested funding level of about $1.1 billion per

year for the period FY2014-FY2018, as well as the discussion on pages 13-14.

5 Admiral Papp’s spoken testimony during a May 14, 2013, hearing on the Coast Guard’s proposed FY2014 budget before the

Homeland Security subcommittee of the Senate Appropriations Committee, as reflected in the transcript for the hearing.

6 While the Coast Guard’s annual budget submissions for the five-year period FY2014 through FY2018 requested an average of

about $1,065 million per year for the PC&I account, the Coast Guard’s most recent request for the account—the request in its

proposed FY2019 budget—is for $1,886.8 million (a figure that reflects a late addition of $720 million to the request for the polar

icebreaker program), and the Coast Guard’s annual budget submissions for the five-year period FY2009-FY2013 requested an

average of about $1,322 million for the account.

7 Over the last 10 fiscal years (FY2009-FY2018), enacted funding levels for the PC&I account (including rescissions of

unobligated balances) have averaged about $1,560 million per year. Only once during this period, in FY2015, was the enacted

figure less than $1,200 million (it was $1,166.6 million that year). In the other nine years, it was more than $1,200 million, and

sometimes substantially more. The figures for the three most recent fiscal years—FY2016, FY2017, and FY2018—were $1,928.4

million, $1,370.0 million, and $2,282.4 million, respectively.

8 Although the projected funding requests in the FY2014, FY2015, and FY2016 CIPs (showing figures for FY2014-FY2018,

FY2015-FY2019, and FY2016-FY2020, respectively), averaged about $1,114.8 million per year, the projected funding requests

in the FY2017 CIP (for the period FY2017-FY2021) averaged about $1,427.5 million, and those in the FY2018 CIP (for the

period FY2018-FY2022) averaged about $1,533.1 million.

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the most recent figure of $24.2 billion, the Navy’s shipbuilding account is now 74% greater in then-year

dollars than it was as recently as FY2010.

Coast Guard’s Non-Use of Multiyear Contracting

In connection with my work on ship acquisition, I maintain the CRS report on multiyear procurement

(MYP) and block buy contracting.9 In both that report and in testimony I have given to other committees

in recent years on Coast Guard ship acquisition,10 I have noted the stark contrast between the Navy—

which uses multiyear contracting (in the form of MYP or block buy contracting) extensively to reduce its

ship- and aircraft-procurement costs by billions of dollars—and the Coast Guard, which to date has never

used multiyear contracting in its ship or aircraft acquisition programs.

The Navy in recent years, with congressional approval, has used multiyear contracting for, among other

things, all three of its year-to-year shipbuilding programs—the Virginia-class attack submarine program,

the DDG-51 destroyer program, and the Littoral Combat Ship (LCS) program.11 The Navy has been using

multiyear contracting for the Virginia-class and DDG-51 programs more or less continuously since the

late 1990s. Savings from the use of MYP recently have, among other things, helped Congress and the

Navy to convert a nine-ship buy of DDG-51 class destroyers in FY2013-FY2017 into a 10-ship buy, and a

nine-ship buy of Virginia-class attack submarines in FY2014-FY2018 into a 10-ship buy. The Navy is

also now using block buy contracting for the six initial ships in the John Lewis (TAO-205) class oiler

program, and is considering or anticipating using them for procuring LPD-17 Flight II amphibious ships,

FFG(X) frigates, and Columbia-class ballistic missile submarines. The Navy’s use or prospective use of

multiyear contracting for its year-to-year shipbuilding programs is arguably now almost more of a rule

than an exception in Navy shipbuilding. For Congress, granting approval for using multiyear contracting

involves certain tradeoffs, particularly in connection with retaining year-to-year control of funding.12 In

the case of Navy shipbuilding, Congress has repeatedly accepted these tradeoffs.

In contrast with Navy practice, the Coast Guard often uses contracts with options in its ship-procurement

programs. Contracts with options can be referred to as multiple-year contracts, but they are not multiyear

contracts. Instead, contracts with options operate more like annual contracts, and they cannot achieve the

kinds of savings that are possible with multiyear contracts.13 Like the other military services, the Coast

9 CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and

Issues for Congress, by Ronald O'Rourke and Moshe Schwartz.

10 See, for example, CRS Testimony TE10020, Building a 21st Century Infrastructure for America: Coast Guard Sea, Air, and

Land Capabilities: Part II, by Ronald O'Rourke, and CRS Testimony TE10004, The Status of Coast Guard Cutter Acquisition

Programs, by Ronald O'Rourke.

11 The term year-to-year shipbuilding program is used here to mean a shipbuilding program in which at least one ship of that kind

is procured each year. The Coast Guard plans to execute the OPC program as a year-to-year shipbuilding program.

12 From a congressional perspective, tradeoffs in making greater use of multiyear contracting include the following: reduced

congressional control over year-to-year spending and tying the hands of future Congresses; reduced flexibility for making

changes in 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 multiyear contracts); a potential need to

shift funding from later fiscal years to earlier fiscal years to fund economic order quantity (EOQ) purchases (i.e., up-front batch

orders of selected components for some or all of the end items that are to be procured under a multiyear contract); 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. Congress has considered these tradeoffs in deciding

whether to grant the Navy authority for using multiyear contracting in the service’s shipbuilding and other acquisition programs.

13 For additional discussion, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense

Acquisition: Background and Issues for Congress, by Ronald O'Rourke and Moshe Schwartz, particularly the section entitled

“MYP and BBC vs. Contracts with Options.”

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Guard has statutory authority to use MYP contracting and can be granted authority by Congress to use

block buy contracting.

Polar Security Cutter (PSC) (aka Polar Icebreaker)

The CRS report on the polar icebreaker program, which the Coast Guard now refers to as the Polar

Security Cutter (PSC) program, provides substantial discussion of various aspects of the program. 14

Below, as requested, are some focused observations on the program.

Reduction in Estimated Procurement Cost and Business Case

One of the most notable changes in the PSC program over the last year or two has been the reduction in

the estimated unit procurement cost of the ships. The procurement cost of a new heavy polar icebreaker

had earlier been estimated informally at roughly $1 billion, but the Coast Guard and Navy informed CRS

and CBO in March 2018 that they now believe that three polar icebreakers could be acquired for a total

cost of about $2.1 billion, or an average of about $700 million per ship.15 (The first ship will cost more

than the other two because it will incorporate design costs for the class and be at the start of the

production learning curve for the class.) The March 2, 2018, Request for Proposals (RFP) for the PSC

program states that “For informational purposes only, the government has established an estimate for the

HPIB [heavy polar icebreaker] shipbuilder costs in the amount of $746M [million] for the lead ship…

with an average ship price of $615M across three HPIBs….”16 Other information reported by GAO

identifies a smaller reduction in procurement cost, to something more than $900 million per ship.17 Other

things held equal, reductions in the estimated unit procurement cost of the polar icebreaker strengthen the

business case for the program. A reduction in estimated unit procurement cost to an average of $700

million per ship would strengthen it substantially.

Option for Block Buy Contract

The baseline plan for the PSC program calls for acquiring the ships using a contract with options, but

Coast Guard and Navy officials are open to the idea of instead using a block buy contract to acquire at

least some of the ships, and requested information on this possibility as part of the RFP for the PSC

14 CRS Report RL34391, Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress,

by Ronald O'Rourke.

15 Source: March 16, 2018, Coast Guard-Navy briefing to CRS and CBO on the polar icebreaker program. For further discussion,

see the section entitled “Estimated Acquisition Cost Has Declined Substantially” in CRS Report RL34391, Coast Guard Polar

Icebreaker Program: Background and Issues for Congress, by Ronald O'Rourke.

16 Naval Sea Systems Command (HQ), Solicitation N0002418R2210, March 2, 2018, page 257 of 294. See also Government

Accountability Office, Coast Guard Acquisitions[:] Polar Icebreaker Program Needs to Address Risks before Committing

Resources, GAO-18-600, September 2018, pp. 42-43. The GAO report also states that DHS and the Coast Guard estimate the

total lifecycle cost of a three-ship PSC program at $8,545 million (objective) and $9,827 million (threshold) (page 13), and that

the ships’ detail design and construction costs account for about 25% of these figures, with the remaining 75% or so accounted

for by remaining acquisition costs, 30 years of annual operating and support (O&S) costs, and end-of-life ship-disposal costs

(page 31). Twenty-five percent of $8,545 million and $9,827 million would equate to design and construction costs of $2,136.3

million (an average of about $712 million per ship) and $2,456.8 million (an average of about $819 million per ship).

17 A May 2018 GAO report stated that the acquisition program baseline (APB) approved for the polar icebreaker program in

January 2018 estimated the program’s acquisition cost at $3,207 million, and that the “current estimate” of the program’s

acquisition as of January 2018 was $2,789 million, or an average of about $930 million per ship. (Government Accountability

Office, Homeland Security Acquisitions[:] Leveraging Programs’ Results Could Further DHS’s Progress to Improve Portfolio

Management, GAO-18-339SP, May 2018, p. 85.) See also Government Accountability Office, Coast Guard Acquisitions[:]

Actions Needed to Address Longstanding Portfolio Management Challenges, GAO-18-454, July 2018, which states on page 18

that “The polar icebreaker program has an estimated total acquisition cost of more than $3 billion….”

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program that was released on March 2, 2018. Using the above-mentioned $2.1 billion estimated cost for a

three-ship procurement of PSCs, and based on savings estimates provided by the Navy in the past for

Navy shipbuilding programs that were being proposed for multiyear contracting, using a block buy

contract that included authority for making economic order quantity (EOQ) purchases18 rather than a

contract with options might reduce the combined acquisition cost of three PSCs by upwards of 7%, which

could equate to a savings of upwards of $150 million.

A congressionally mandated July 2017 National Academies of Sciences, Engineering, and Medicine

(NASEM) report on acquisition and operation of polar icebreakers states (emphasis as in original):

3. Recommendation: USCG should follow an acquisition strategy that includes block buy

contracting with a fixed price incentive fee contract and take other measures to ensure best

value for investment of public funds.

Icebreaker design and construction costs can be clearly defined, and a fixed price incentive fee

construction contract is the most reliable mechanism for controlling costs for a program of this

complexity. This technique is widely used by the U.S. Navy. To help ensure best long-term value,

the criteria for evaluating shipyard proposals should incorporate explicitly defined lifecycle cost

metrics....

A block buy authority for this program will need to contain specific language for economic order

quantity purchases for materials, advanced design, and construction activities. A block buy

contracting program with economic order quantity purchases enables series construction, motivates

competitive bidding, and allows for volume purchase and for the timely acquisition of material with

long lead times. It would enable continuous production, give the program the maximum benefit

from the learning curve, and thus reduce labor hours on subsequent vessels....

If advantage is taken of learning and quantity discounts available through the recommended block

buy contracting acquisition strategy, the average cost per heavy icebreaker is approximately $791

million, on the basis of the acquisition of four ships.19

Although Coast Guard officials have expressed interest in using a block buy contract for procuring PSCs,

they are considering the option of procuring the first PSC under a single-ship contract and then using a

block buy contract to procure subsequent PSCs. In support of that option, Coast Guard officials have

noted the risks involved in building a lead ship and the fact that the United States has not built a heavy

polar icebreaker in more than 40 years. Opponents of including the first PSC in a block buy contract

might argue, for example, that problems with the design of PSC components might be transmitted from

the first PSC to later PSCs by up-front EOQ purchases of those components made under a block buy

contract. They might additionally argue that excluding the first PSC from a block buy contract preserves

more government flexibility on whether and when to procure a second PSC, which could be advantageous

for responding to potential changes in operational needs or budgetary circumstances.

Supporters of including the first PSC in a block buy contract could argue that block buy contracting was

invented to a large degree expressly to permit a lead ship to be included in the contract, that the Navy has

included lead ships in block buy contracts in the Virginia-class attack submarine program and the TAO205 class oiler program, and that the Navy is considering using a block buy contract that includes the lead

ship for procuring the initial ships in the Columbia-class ballistic missile submarine program. The

comparison with the Navy’s plans for the Columbia class, they could argue, is of particular note, because

the United States has not procured the lead ship of a new class of ballistic missile submarines in more

than 40 years, the Columbia-class design is more complex in certain regards than the PSC design, and the

18 EOQ purchases are up-front batch orders of selected components for some or all of the end items (ships in this case) that are to

be procured under a multiyear contract.

19 National Academies of Sciences, Engineering, and Medicine, Division on Earth and Life Studies and Transportation Research

Board, Acquisition and Operation of Polar Icebreakers: Fulfilling the Nation’s Needs, Letter Report, with cover letter dated July

11, 2017, pp. 14, 15.

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Columbia-class design will incorporate a new-design electric-drive propulsion plant—something that the

United States has never before done on a series-production nuclear-powered submarine.

The lead ship in the PSC program will carry a risk of requiring design changes to fix problems in the

design that are only discovered as a result of building the design. That risk, however, will exist regardless

of whether the lead ship is built under a single-ship contract of a block buy contract, and it is not clear

how much more chance there would be under a block buy contract of transmitting any such design

problems to the second PSC, because the Coast Guard’s notional schedule for the PSC program calls for

procuring the second ship about 18 months after the first (i.e., while construction of the first PSC is still in

progress). To the extent that there would be a greater chance of transmitting design problems to the

second PSC under a block buy contract, the question would then become one of weighing the potential

cost of fixing those design problems against the added economies of including the first PSC in a block

buy contract. Supporters of including the lead ship in a block buy contract could argue that the risks of

encountering a design problem in the first ship have been mitigated by the industry’s shift since the last

polar icebreakers were built from paper designs to computer-aided design, by the Navy’s involvement in

the PSC program, and by the PSC program’s strategy of using a parent design (i.e., an existing polarcapable icebreaker design) as the basis for the PSC design. As shown in Appendix B, a key lessonlearned in government shipbuilding is to bring the design of the ship in question to a high level of

completion before beginning construction of the ship, precisely so as to minimize the risk of design

problems. Supporters of including the lead ship in a block buy contract could argue that if there is a

significant risk of substantial design problems in the lead ship, that is not an argument against including

the lead ship in a block buy contract—it is an argument against beginning construction of the ship under

any form of contract.

Risk of Delayed Delivery of Lead Ship

GAO has identified a risk of the first PSC being delivered later than its currently scheduled delivery

date.20 CRS agrees with that assessment. The Navy’s experience in building lead ships suggests that there

is a substantial risk of the first PSC being delivered late—perhaps as much as a year or more later than

currently scheduled. A late delivery could equate to an increase in the cost of building the ship, because it

could reflect having to use more labor hours to build the ship than had been estimated, and because the

ship will absorb more of the shipyard’s overhead costs by remaining in the shipyard for a longer period of

time. The government can insulate itself against the risk of such cost growth by using a fixed-price

contract to build the ship (which the Coast Guard and Navy plan to do).

The possibility of a late delivery is something the Coast Guard and Congress may consider preparing for

in terms of investments for maintaining Polar Star as an operational ship and/or seeking a short-term

bridging charter of a foreign polar icebreaker. To the extent that a delay in delivering the lead ship would

extend a gap in time between the retirement of Polar Star and the entry into service of the first PSC, that

could become an argument for starting construction of the lead PSC as soon as its design is brought to a

high level of completion and the ship is otherwise ready to begin construction.

Option for Using a Common Design for Heavy and Medium PSCs

The Coast Guard envisages procuring up to three new medium icebreakers after it procures three new

heavy polar icebreakers—a plan known as 3+3. The July 2017 NASEM report concluded that notional

operational requirements for new medium polar icebreakers would result in ships that would not be too

different in size from new heavy polar icebreakers. (That is not particularly surprising—the Coast

Guard’s current medium polar icebreaker, Healy, is actually somewhat larger than the Coast Guard’s

20 See Government Accountability Office, Coast Guard Acquisitions[:] Polar Icebreaker Program Needs to Address Risks before

Committing Resources, GAO-18-600, September 2018, pp. 33-40.

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heavy polar icebreaker, Polar Star. Healy has less icebreaking capability than Polar Star, but more

capacity for supporting onboard science operations.) Given this probable similarity in size, the NASEM

report recommended building a single medium polar icebreaker to the same common design as the three

new heavy polar icebreakers (i.e., 4+0), and operating these four new ships in conjunction with Healy to

produce a five-ship polar icebreaker fleet. The 4+0 production strategy, the report concluded, would

reduce the cost of the medium icebreaker by avoiding the cost of developing a second icebreaker design

and making the medium polar icebreaker the fourth ship on an existing production learning curve rather

than the first ship on a new production learning curve. An abstract from the NASEM report on this

proposal is shown in Appendix F to this statement.

If policymakers decide to procure a second or third new medium polar icebreaker, the same general

approach recommended by the NASEM report could be followed, leading to a 5+0 or 6+0 acquisition.

The potential percentage savings under a five- or six-ship block buy contract with EOQ authority could be

greater than the figure of upwards of 7% mentioned earlier for a three-ship block buy—they could be

closer to 10%. Building a single common icebreaker design rather than two designs to meet needs for

heavy and medium polar icebreakers might also reduce life-cycle operation and support costs.

An April 12, 2018, press report states:

As the Coast Guard prepares to review industry bids for a new heavy polar icebreaker, the service

is keeping its options open for the right number and mix of polar icebreakers it will need in the

future, Adm. Paul Zukunft, the [then-]commandant of the Coast Guard, said on Wednesday [April

11].

The Coast Guard’s program of record is for three heavy and three medium polar icebreakers but

Zukunft said the “jury is still out” whether that will remain so. Right now, the service is aiming

toward building three new heavy icebreakers, but it might make sense just to keep building these

ships, he told reporters at a Defense Writers Group breakfast in Washington, D.C.

Zukunft said that “when you start looking at the business case after you build three, and then you

need to look at what is the economy of scale when you start building heavy icebreakers, and would

it be less expensive to continue to build heavies and not mediums.” He added that the heavy

icebreakers provide more capability, and if the price is “affordable” and in “the same range” as

building medium icebreakers, then “maybe you end up with one class of heavy icebreakers.”

Building only one class of ships has a number of advantages in terms of maintenance, crew

familiarity, configuration management, and more, he said. A decision on what the future icebreaker

fleet will consist of is “still probably several years out …. but that’s one option that we want to keep

open going forward,” Zukunft said.21

Great Lakes Icebreakers

The Coast Guard’s current Great Lakes icebreaker fleet consists of nine cutters:







one heavy icebreaker—Mackinaw (WLBB-30), a 240-foot ship displacing 3,500 tons;

six 140-foot Bay-class icebreaking tugs displacing 662 tons each; and

two 225-foot Juniper-class seagoing buoy tenders displacing about 2,000 tons each that

have a light icebreaking capability.22

21 Calvin Biesecker, “Coast Guard Leaving Options Open For Future Polar Icebreaker Fleet Type,” Defense Daily, April 12,

2018. Ellipsis as in original.

22 Source: U.S.. Coast Guard, “Ninth Coast Guard District Units,” accessed November 19, 2018, at:

https://www.atlanticarea.uscg.mil/Atlantic-Area/Units/District-9/Ninth-District-Units/. A total of 10 cutters are assigned to the

Ninth District, which is responsible for the Great Lakes, the Saint Lawrence Seaway, and parts of the surrounding states. The

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Although Mackinaw is referred to as a heavy icebreaker, the word heavy in this instance is being used in

the context of Great Lakes icebreaking—Mackinaw is much larger and has more icebreaking capability

than the eight other ships listed above.23 Mackinaw would not, however, qualify as a heavy polar

icebreaker, as it is much smaller and has much less icebreaking capability than a heavy polar icebreaker.24

Coast Guard officials have stated that they do not view the procurement of additional Great Lakes

icebreakers as an urgent near-term acquisition need. In support of this assessment, they cite the

capabilities of the current Great Lakes icebreaking fleet, the relatively young age of Mackinaw (which

entered service in 2006), service life extension work being done on the ice-breaking tugs that is designed

to add 15 years to their service lives,25 and Canada’s own Great Lakes icebreaking capabilities. A 2016

Coast Guard report to Congress on the Great Lakes icebreaking mission stated:

The current mix of heavy and medium [Great Lakes] icebreakers is capable of managing priorities

and requests for icebreaking in Tier 1 and 2 waterways. When a severe ice season stresses Coast

Guard asset capabilities, the existing agreement and partnership with Canada fills the capability gap

and brings in extra heavy-icebreaking resources to manage the ice.… [T]he 2014 and 2015 ice

seasons were a 20-year anomaly, consuming almost twice as many cutter resource hours as in any

other year since 2005.

The Coast Guard cannot reliably predict the economic impact of maintaining a single heavy Great

Lakes icebreaker. Additionally, given the extreme conditions when ice coverage exceeds 90 percent,

it is not clear that shipping delays would be significantly mitigated by an increase in icebreaking

capability. Delays can be associated with several factors such as slow transit speeds, availability of

pilots, and simultaneous and competing demand signals for icebreaking services across the Great

Lakes.26

The Coast Guard’s position notwithstanding, some Members of Congress in recent years have expressed

interest in the possibility of bolstering the Coast Guard’s Great Lakes icebreaking fleet by procuring a

second icebreaker with capabilities generally similar to those of Mackinaw. Interest in this option was

reinforced by the winters of 2013-2014 and 2014-2015, which featured particularly high levels of ice

coverage on the Great Lakes.27 The committee report language requiring the above-quoted Coast Guard

report to Congress is one example of this interest.28 Another example is Section 215 of S. 1129, the Coast

tenth cutter assigned to the Ninth District is a 100-foot inland buoy tender whose primary missions do not include icebreaking.

23 At continuous speeds of 3 knots, Mackinaw can break ice up to 32 inches thick, the 140-foot icebreaking tugs can break ice up

to 22 inches thick, and the 225-foot seagoing buoy tenders can break ice up to 14 inches thick.

24 The Coast Guard’s two heavy polar icebreakers—the operational Polar Star and the non-operational Polar Sea, are 399 feet

long and displace about 13,200 tons each. Polar Star can break ice up to six feet (72 inches) thick at a continuous speed of 3

knots. The Coast Guard states that Mackinaw is equivalent to the Canadian Coast Guard ship Samuel Risley, a Great Lakeshomeported icebreaker and buoy tender that Canada classifies as a light icebreaker in a comparison conducted across its entire

icebreaking fleet, including its Arctic icebreakers. (U.S. Coast Guard, Great Lakes Icebreaking Mission Analysis, Fiscal Year

2016 Report to Congress, August 30, 2016, p. 5.)

25 For more on this service life extension work, see U.S. Coast Guard, “In-Service Vessel Sustainment Program,” accessed

November 19, 2018, at: https://www.dcms.uscg.mil/Our-Organization/Assistant-Commandant-for-Acquisitions-CG9/Programs/Surface-Programs/In-Service-Vessel-Sustainment-Program/.

26 U.S. Coast Guard, Great Lakes Icebreaking Mission Analysis, Fiscal Year 2016 Report to Congress, August 30, 2016, p. 11.

The report was required by S.Rept. 114-68 of June 18, 2015, the Senate Appropriations Committee’s report on S. 1619, the

Department of Homeland Security Appropriations Bill, 2016 (see page 75).

27 Although interest in procuring a second heavy Great Lakes icebreaker was reinforced by high levels of ice coverage in the

winters of 2013-2014 and 2014-2015, interest in Congress in procuring such a ship dates back further than 2013. See, for

example, H.R. 1747 of the 111th Congress, the Great Lakes Icebreaker Replacement Act, which was introduced on March 26,

2009, reported by the Committee on Transportation and Infrastructure on April 21, 2009 (H.Rept. 111-81), and agreed to by the

House by voice vote on April 27, 2009. A similar bill, S. 1024, was introduced in the Senate on May 12, 2009.

28 S.Rept. 114-68 stated:

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Guard Authorization Act of 2017 as reported in the Senate (S.Rept. 115-89 of June 15, 2017), which

states:

SEC. 215. Great Lakes icebreaker acquisition.

(a) Icebreaking on the Great Lakes.—For fiscal years 2018 and 2019, the Commandant of the Coast

Guard may use funds made available pursuant to section 2702(2) of title 14, United States Code, as

amended by section 101 of this Act, for the selection of a design for, and the construction of, an

icebreaker that is at least as capable as the Coast Guard Cutter Mackinaw to enhance icebreaking

capacity on the Great Lakes.

(b) Initial survey and design work.—The Commandant of the Coast Guard shall commence initial

survey and design work associated with the acquisition of a new Coast Guard icebreaker that is at

least as capable as the Coast Guard Cutter Mackinaw to enhance icebreaking capacity on the Great

Lakes.

(c) Acquisition plan.—Not later than 45 days after the date of enactment of this Act, the

Commandant shall submit a plan to the Committee on Commerce, Science, and Transportation of

the Senate and the Committee on Transportation and Infrastructure of the House of Representatives

for acquiring an icebreaker described in subsections (a) and (b). Such plan shall include—

(1) the details and schedule of the acquisition activities to be completed; and

(2) a description of how the funding for Coast Guard acquisition, construction, and improvements

that was appropriated under the Consolidated Appropriations Act of 2017 (Public Law 115–31) will

be allocated to support the acquisition activities referred to in paragraph (1).29

GREAT LAKES ICEBREAKING CAPACITY

The Coast Guard is required by law to maintain a heavy icebreaking capability on the Great Lakes to assist in

keeping channels and harbors open to navigation in response to the reasonable demands of commerce to meet

the winter shipping needs of industry. The Committee is concerned that the Coast Guard does not possess

adequate capacity to meet its statutorily required icebreaking mission on the Great Lakes, with negative

consequences to the regional and national economy as well as to the safety of local communities. While the

Committee fully supports the Coast Guard’s Service Life Extension Project for its nine-vessel 140-foot

icebreaking tugs as part of the In-Service Vessel Sustainment Program, it notes that additional assets may be

necessary to successfully operate in the heavy ice conditions often experienced by the Great Lakes. The

Committee directs the Coast Guard to undertake an updated mission analysis study to determine the assets

necessary to effectively carry out its icebreaking requirements on the Great Lakes, including consideration of

a second heavy icebreaker for the Great Lakes, consistent with the capabilities of the Mackinaw. The updated

mission analysis should factor in recent historically high levels of ice coverage and the economic costs of

reduced Great Lakes shipping associated with maintaining only one heavy icebreaker. The updated mission

analysis shall be submitted to the Committee not later than 180 days after the date of enactment of this act.

(Page 75)

29 In addition, Section 314 of S. 1129 as reported in the Senate states (emphasis added):

SEC. 314. Inland waterway and river tender, and bay class icebreaker acquisition plan.

(a) Acquisition plan.—Not later than 545 days after the date of enactment of this Act, the Commandant of the

Coast Guard shall submit to the Committee on Commerce, Science, and Transportation of the Senate and the

Committee on Transportation and Infrastructure of the House of Representatives a plan to replace the aging

fleet of inland waterway and river tenders, and the bay class icebreakers.

(b) Contents.—The plan described in subsection (a) shall include—

(1) a schedule for the acquisition to begin;

(2) the date the first vessel will be delivered;

(3) the date the acquisition will be complete;

(4) a description of the order and location of replacements;

(5) an estimate of the cost per vessel and for total acquisition program of record; and

(6) an analysis of whether existing vessels can be used.

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An examination of procurement costs for Mackinaw, the National Science Foundation’s ice-capable

research ship Sikuliaq, new oceanographic research ships being procured for NOAA, and OPCs suggests

that a new Mackinaw-sized heavy Great Lakes icebreaker built in a U.S. shipyard might have a design

and construction cost between $175 million and $300 million, depending on its exact capabilities and the

acquisition strategy employed.30 The design portion of the ship’s cost might be reduced if Mackinaw’s

design or the design of some other existing icebreaker were to be used as the parent design. Depending on

the capabilities and other work load of the shipyard selected to build the ship, the construction time for a

new heavy Great Lakes icebreaker might be less than that of a new heavy polar icebreaker.

Need for a New National Maritime Strategy

Regarding the issue of the need for a national maritime strategy,31 four observations can be made.

Shift in Security Environment; New National Defense Strategy

The first observation relates to two legislative requirements from 2014 for the Department of

Transportation (DOT) to issue a national sealift strategy and a national maritime strategy. GAO notes that

these two requirements have not been met, and that this has deprived Congress of information for

supporting decisionmaking relating to the U.S.-flag merchant fleet.32

If DOT had issued such a strategy in the period 2014-2016 or even in 2017, they would have reflected the

Obama Administration’s defense strategy rather than the Trump Administration’s defense strategy, an

unclassified summary of which was not published until January 2018.33 More broadly, a national maritime

strategy issued in the period 2014-2017 might not have fully reflected the shift in the international

security environment from the post-Cold War era to the current era of renewed great power competition.34

30 Source: CRS analysis of cost per weight for Mackinaw (adjusted for inflation), Sikuliaq, new NOAA oceanographic research

ships now being procured, and OPCs.

Some press reports in 2015 and 2016 cited a cost of about $200 million for a new heavy Great Lakes icebreaker. (See, for

example, Todd Spangler, “A New Icebreaker for the Great Lakes? It’s Far from Certain,” Detroit Free Press, August 7, 2015;

“Frozen Commerce: Great Lakes Businesses Need a New Icebreaker,” Pittsburgh Post-Gazette, August 17, 2015; Todd Spangler,

“Call for Arctic Icebreakers Could Hurt Great Lakes,” Detroit Free Press, September 1, 2015; Bob Gross, “Congress Authorizes

New Icebreaker for Great Lakes,” Times Herald (Port Huron, MI), February 3, 2016; “Task Force Calls Anew for More Great

Lakes Icebreakers, Second Poe-Sized Lock,” Professional Mariner, February 17, 2016 [the article states that it presents the text

of a news release from the Great Lakes Maritime Task Force].) An opinion column in 2016 cited a figure of $240 million. (John

Hageman, “Is Winter Great Lakes Shipping Necessary?” Sandusky Register, February 18, 2016.)

The Great Lakes Maritime Task Force, an organization that states that it “was founded in 1992 in Toledo, Ohio, to promote

waterborne commerce and related industries on the Great Lakes” (see Great Lakes Maritime Task Force, “About Us,” accessed

November 26, 2018, at: http://www.glmtf.org/about), states in its annual report for 2017 that a second heavy Great Lakes

icebreaker “is projected to cost $240 million.” (2017 Annual Report of Great Lakes Maritime Task Force, PDF page 3 of 6,

accessed November 26, 2018, at: http://www.glmtf.org/wp-content/uploads/2018/05/2017-Annual-Report.pdf.) The same figure

is cited in the organization’s annual report for 2016. The organization’s annual report for 2015 cited a figure of approximately

$200 million.

31 As used here, the term national maritime strategy means a strategy for ensuring that the U.S. merchant marine fleet and the

U.S. civilian mariner workforce are adequate for, among other things, meeting DOD needs for military sealift capacity in time of

crisis or conflict. In other contexts, the term maritime strategy can have other meanings. Navy officials, for example, have often

used the term to refer to a strategy for how to employ naval forces in a major conflict.

32 Government Accountability Office, Maritime Security[:] DOT Needs to Expeditiously Finalize the Required National

Maritime Strategy for Sustaining U.S.-Flag Fleet, GAO-18-478, August 2018, summary page and pp. 34-35.

33 Department of Defense, Summary of the 2018 National Defense Strategy of the United States of America, Sharpening the

American Military’s Competitive Edge, undated, released January 19, 2018, 11 pp.

34 For more on this shift, see CRS Report R43838, A Shift in the International Security Environment: Potential Implications for

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This shift was not placed explicitly at the forefront of declared U.S. national security strategy until the

Trump Administration released its national security strategy in December 2017.35

In light of this, it might be argued that if a national maritime strategy had been issued in 2014-2017, it

would today be in need of update, revision, or replacement. That does not negate the impact to

policymakers of having been deprived of such a strategy in 2014-2017, but it suggests that even if such a

strategy had been issued during that period, policymakers might nevertheless be in a situation today of

wanting a new version to be prepared. A similar observation can be made about the Navy’s current forcelevel goal for achieving and maintaining a fleet of 355 ships. As discussed in the CRS report on Navy

force-structure and shipbuilding plans, this force-level goal was based on a force structure analysis

conducted in 2016, and thus reflects the Obama Administration’s defense strategy rather than the Trump

Administration’s defense strategy.36 As noted in the CRS report, the Navy has acknowledged this issue

and has stated that it is preparing an update or revision to its 355-ship force-level goal that will be based

on the Trump Administration’s defense strategy.

Mobility Capabilities and Requirements Study 2018 (MCRS-18)

A second observation relates to Section 144(b) of the National Defense Authorization Act for Fiscal Year

2018 (H.R. 2810/P.L. 115-91 of December 12, 2017), which requires DOD to conduct a new mobility

capability and requirements study, and to brief the congressional defense committees on the results of the

study not later than September 30, 2018. DOD states that it started the study, which it refers to as the

Mobility Capabilities and Requirements Study 2018 (MCRS-18), on March 8, 2018, and that it is

scheduled for completion in the fall of 2018.37 In connection with the point made in the previous section,

the Commander of U.S. Transportation Command (USTRANSCOM), Air Force General Darren W.

McDew, testified earlier this year that MCRS-18 “will reflect requirements articulated in the new

National Defense Strategy….”38

A September 25, 2017, press report about MCRS-18 states that “Since the early 1990s, Pentagon mobility

studies have consistently identified a requirement for about 20 million square feet of roll-on/roll-off

capacity to quickly transport material in support of a contingency.”39 Mobility studies conducted from the

1990s until recently, however, were all done in the post-Cold War era, when U.S. military force planning

focused to a large degree on potential crises and conflicts against regional military powers such as Iran

and North Korea. Given the recent shift from the post-Cold War era to the new era of renewed great

power competition and the resulting formal shift in U.S. military force planning toward a primary

emphasis on potential challenges posed by China and Russia, it is not clear that MCRS-18 will leave the

figure of 20 million square feet of roll-on/roll-off capacity unchanged. A change in this figure could have

implications for the content of a new national maritime strategy.

Defense—Issues for Congress, by Ronald O'Rourke.

35 White House, National Security Strategy of the United States of America, December 2017, 55 pp. For further discussion of this

shift and its acknowledgement in the U.S. national security strategy, see CRS Report R43838, A Shift in the International

Security Environment: Potential Implications for Defense—Issues for Congress, by Ronald O'Rourke.

36 CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald

O'Rourke.

37 Source: U.S. Transportation Command, “Mobility Capabilities and Requirements Study Gets Underway,” March 29, 2018.

38 Statement of General Darren W. McDew, United States Air Force, Commander, United States Transportation Command,

Before the Senate Armed Services Committee On the State of the Command, April 10, 2018, p,. 12.

39 Jason Sherman, “DOD Eyes 2018 to Set Assumptions, Scenarios for Mobility Capability Study,” Inside the Navy, September

25, 2017.

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Recapitalization of DOD Sealift Fleet

A third observation relates to DOD’s aging fleet of surge sealift ships. Since 2016, the condition of this

fleet and DOD’s strategy for recapitalizing it in coming years have become matters of concern for

policymakers. In February 2017, the Army reportedly sent an information paper to Congress warning of

an “unacceptable risk in force projection” within the next five years if the Navy does not act quickly to

address the situation.40 In May 2016, the House Armed Services Committee directed GAO to report on

the readiness of Military Sealift Command Ships (MSC) and employment plans.41 GAO’s report, issued

in August 2017, focused in part on declining readiness rates for DOD’s surge sealift ships.42

In March 2018, the Navy reportedly submitted to Congress a report on a proposed strategy for

recapitalizing the surge sealift fleet, as well as requested legislative authorities for implementing the

strategy.43 Section 1021 of the National Defense Authorization Act for Fiscal Year 2018 (H.R. 2810/P.L.

115-91 of December 12, 2017) and Sections 1012 and 1013 of the John S. McCain National Defense

Authorization Act for Fiscal Year 2019 (H.R. 5515/P.L. 115-232 of August 13, 2018) amended 10 U.S.C.

2218—the statute governing the National Defense Sealift Fund (NDSF)—to, among other things, provide

DOD with authority, subject to certain conditions, to purchase used vessels, including a limited number of

foreign-built vessels, as part of its effort to recapitalize the surge sealift fleet. Section 1019 of P.L. 115232 requires the Navy, in consultation with the Maritime Administration (MARAD) and

USTRANSCOM, submit to the congressional defense committees a report setting forth a business case

analysis of recapitalization options for the Ready Reserve Force (RRF).44 How, and how quickly, the

surge sealift fleet is recapitalized could have implications for the content of a new national maritime

strategy.

Potential Shortfall of Navy Escorts and Possible Impacts on Mariners

A fourth observation relates to the availability of U.S.-citizen mariners to crew DOD sealift ships in

wartime. GAO notes MARAD’s September 2017 estimate of a potential shortage of U.S.-citizen mariners

available to crew U.S.-owned reserve sealift ships during a crisis or conflict.45 The challenge of finding

40 David B. Larter, “US Army Warns of Crippling Sealift Shortfalls During Wartime,” Defense News, November 11, 2018. See

also John Grady, “Official: U.S. Military Sealift Capacity is ‘On the Ragged Edge,” USNI News, April 11, 2018; David B. Larter,

“The US Army Is Preparing to Fight in Europe, But Can It Even Get There?” Defense News, October 8, 2018.

David B. Larter, “The US Navy Will Have to Pony Up and Race the Clock to Avoid a Sealift Capacity Collapse,” Defense News,

October 20 2018.

41 H.Rept. 114-537 of May 4, 2016, on H.R. 4909, the National Defense Authorization Act for FY2017, pp. 126-127.

42 Government Accountability Office, Navy Readiness[:] Actions Needed to Maintain Viable Surge Sealift and Combat Logistics

Fleets, GAO-17-503, August 2017, 33 pp.

43 See, for example, Justin Katz, “Navy Sends Congress $242 Million Plan to Recap Surge Sealift,” Inside Defense (Daily News),

March 29, 2018. See also Justin Katz, “DOD Requests Authorities for Sealift Surge Force Procurement in FY-19 Defense Policy

Bill,” Inside Defense (The Insider), April 3, 2018.

44 Section 1019 states that the business case analysis is to include each sealift capability area and associated capacity for which

RRF ships are required to be recapitalized through FY2048, and that the categories of ships to be considered are to include U.S.

purpose-built vessels such as Common Hull Auxiliary Multi-mission Platform (CHAMP) ships; U.S. non-purpose built vessels

such as vessels formerly engaged in Jones Act trade; foreign-built ships that participated in the Maritime Security Program

(MSP); foreign-built vessels that did not participate in the MSP; and foreign-designed, U.S.-built ships.

45 Government Accountability Office, Maritime Security[:] DOT Needs to Expeditiously Finalize the Required National

Maritime Strategy for Sustaining U.S.-Flag Fleet, GAO-18-478, August 2018, summary page and pp. 29-33. MARAD’s estimate

is presented in U.S. Department of Transportation, Maritime Administration, Maritime Workforce Working Group Report,

undated, transmission letter dated September 29, 2017, 137 pp.

See also John Grady, “MARAD: U.S. Short Almost 2,000 Mariners to Supply American Force in War,” USNI News, March 8,

2018.

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adequate numbers of appropriately trained mariners to crew DOD sealift ships in time of crisis or conflict

is a longstanding issue, dating back at least to 1990, when mariners in their 50s, 60s, and 70s (and one

aged 81), some brought out of retirement, were reportedly needed to help fill out the crews of DOD sealift

ships that were activated for Operation Desert Shield (the initial phase of the U.S. reaction to Iraq’s 1990

invasion of Kuwait).46 Problems in filling out ship crews reportedly contributed to delays in activating

some RRF sealift ships to participate in the operation.47 A potential shortage of U.S.-citizen mariners for

manning DOD sealift ships in wartime has been a recurring matter of concern since then.

This longstanding issue, however, may now be affected by a new factor that relates to the defense of DOD

sealift ships in wartime. From 1990 until recently (i.e., during the post-Cold War era), the defense of

DOD sealift ships was not a pressing concern. In the new era of renewed major power competition, it has

become a concern, given current and potential future Chinese and Russian capabilities for interdicting

ships. Section 1072 of the National Defense Authorization Act for Fiscal Year 2018 (H.R. 2810/P.L. 11591 of December 12, 2017) requires the Navy to submit a report on its plans for defending combat logistics

and strategic mobility forces—meaning Navy underway replenishment ships, RRF sealift ships, and MSC

surge sealift ships—against potential wartime threats. The report is to include, among other things, a

“description of the combat logistics and strategic mobility forces capacity, including additional combat

logistics and strategic mobility forces, that may be required due to losses from attacks,” an “assessment of

the ability and availability of United States naval forces to defend combat logistics and strategic mobility

forces from the threats,” and a “description of specific capability gaps or risk areas in the ability or

availability of United States naval forces to defend combat logistics and strategic mobility forces from the

threats….”

The question of how DOD sealift ships will be defended in wartime, including the possibility of

capability gaps for defending them, could have implications for the potential shortage of U.S.-citizen

mariners for crewing DOD sealift ships in wartime. An October 10, 2018, press report stated:

In the event of a major war with China or Russia, the U.S. Navy, almost half the size it was during

the height of the Cold War, is going to be busy with combat operations. It may be too busy, in fact,

to always escort the massive sealift effort it would take to transport what the Navy estimates will be

roughly 90 percent of the Marine Corps and Army gear the force would need to sustain a major

conflict.

That’s the message Mark Buzby, the retired rear admiral who now leads the Department of

Transportation’s Maritime Administration, has gotten from the Navy, and it’s one that has instilled

a sense of urgency around a major cultural shift inside the force of civilian mariners that would be

needed to support a large war effort.

“The Navy has been candid enough with Military Sealift Command and me that they will probably

not have enough ships to escort us. It’s: ‘You’re on your own; go fast, stay quiet,’” Buzby told

Defense News in an interview earlier this year.

Along with Rear Adm. Dee Mewbourne at Military Sealift Command, who would get operational

control of the whole surge force in a crisis, Buzby has been working to educate mariners on things

that might seem basic to experienced Navy personnel but are new to many civilian mariners….

… significant losses among the available pool of mariners would likely dissuade some from

volunteering (bad) and would mean the loss of mariners with critical skills needed to operate the

46 See, for example, Lourdes Rodriguez-Florido, “Worth Their Salt; Scarcity of Trained Mariners During Gul War Prompts Call-

Up of Some Old Men of the Sea,” Sun-Sentinel, February 6, 1992; Robert Little, “Merchant Marine’s Demise Endangers War

Readiness,” Baltimore Sun, August 5, 2001.

47 See, for example, CRS Report 90-446 F, Sealift and Operation Desert Shield, by Ronald O’Rourke, September 17, 1990, p. 21.

For an example of an analysis expressing concern about this issue even before 1990, see Stephen D. Boyce, Strategic Mobility

and the Decline of the United States Merchant Marine, Air War College Research Report, 1989, 78 pp.

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fleet for months or even years in a major contingency (worse). And even without losses, MARAD

estimates the country is about 1,800 mariners short if any kind of rotational presence is needed….

To try and offset these daunting challenges, MSC and the Maritime Administration are getting their

mariners to think more like sailors when it comes to digital emissions….

“Adm. Mewbourn at Military Sealift Command and I have talked a lot about this and we have been

trying to get the word out to people that we are going to have to do things differently,” Buzby said.

“Turn your navigation lights off, turn your [Automatic Identification System] off, turn your radars

off, tell your crews not to use their cell phones — all those [Emissions Condition] things that we in

the Navy are familiar with that are completely foreign to a merchant mariner and are seen as an

imposition….

Military Sealift Command is focusing more on operating inside contested waters, said Tom Van

Leunen, the command’s spokesman.

“We are operationalizing the force, that’s been Adm. Mewborne’s focus since he got here. We’re

focused on preparing mariners for the more complex operational environment,” Van Leunen said.

As part of those efforts, the command has developed a basic and advanced operations course for its

mariners and has been participating in more fleet exercises, he said.

Mewborne’s efforts on “mariner resiliency” have been setting the right tone, Buzby said. The effort

focuses on containing electronic emissions, becoming physically fit to be able to combat damage

over long periods and a sobering reminder at the end, he added.

“The last bullet point on one of the slides is ‘Learn how to swim,’” he said. “It’s to that point.

There’s not going to be a bunch of destroyers around us as we take those ships over there. We’re

going to be hitting the sea buoy, cranking it up and going hell-bent for leather, hoping to stay

undetected.”

… while the [NATO] alliance continues to scrape the rust off its large-scale logistics trains, the

question of whether the mariners will show up to man the lift vessels is an open one, and one that

Buzby thinks about from his office at the MARAD.

“We are going into a contested environment, so we are going to have attrition to deal with, in both

ships and the people who sail on them,” Buzby said. “Who knows, that might dissuade some people.

“The tradition of the Merchant Marine is we go to sea no matter what, damn the torpedoes. Most of

us believe that our people will not be dissuaded. But until they walk up the gangway, you never

know.”48

An Implication from the Above Observations

One implication of these four observations is that the situation concerning the future of military sealift is

currently complex and dynamic, with multiple issues and developments unfolding in parallel. This will

make the task of assessing sealift needs and capabilities and developing a supporting national maritime

strategy more challenging.

Chairman Mast, this concludes my statement. Thank you again for the opportunity to testify, and I will be

pleased to respond to any questions the subcommittee may have.

48 David B. Larter, “‘You’re On Your Own’: US Sealift Can’t Count on Navy Escorts in the Next Big War,” Defense News,

October 10, 2018.

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Appendix A. Biography—Ronald O’Rourke

Mr. O'Rourke is a Phi Beta Kappa graduate of the Johns Hopkins University, from which he received his

B.A. in international studies, and a valedictorian graduate of the University's Paul Nitze School of

Advanced International Studies, where he received his M.A. in the same field.

Since 1984, Mr. O'Rourke has worked as a naval analyst for CRS. He has written many reports for

Congress on various issues relating to the Navy, the Coast Guard, defense acquisition, China’s naval

forces and maritime territorial disputes, the Arctic, the international security environment, and the U.S.

role in the world. He regularly briefs Members of Congress and congressional staffers, and has testified

before congressional committees on many occasions.

In 1996, he received a Distinguished Service Award from the Library of Congress for his service to

Congress on naval issues.

In 2010, he was honored under the Great Federal Employees Initiative for his work on naval, strategic,

and budgetary issues.

In 2012, he received the CRS Director’s Award for his outstanding contributions in support of the

Congress and the mission of CRS.

In 2017, he received the Superior Public Service Award from the Navy for service in a variety of roles at

CRS while providing invaluable analysis of tremendous benefit to the Navy for a period spanning

decades.

Mr. O'Rourke is the author of several journal articles on naval issues, and is a past winner of the U.S.

Naval Institute's Arleigh Burke essay contest. He has given presentations on naval, Coast Guard, and

strategy issues to a variety of U.S. and international audiences in government, industry, and academia.

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Appendix B. A Summary of Some Acquisition Lessons

Learned for Government Shipbuilding

This appendix presents a general summary of lessons learned in government shipbuilding, reflecting

comments made repeatedly by various sources over the years.49 These lessons learned include the

following:

















At the outset, get the operational requirements for the program right. Properly

identify the program’s operational requirements at the outset. Manage risk by not trying

to do too much in terms of the program’s operational requirements, and perhaps seek a

so-called 70%-to-80% solution (i.e., a design that is intended to provide 70%-80% of

desired or ideal capabilities). Achieve a realistic balance up front between operational

requirements, risks, and estimated costs.

Impose cost discipline up front. Use realistic price estimates, and consider not only

development and procurement costs, but life-cycle operation and support (O&S) costs.

Employ competition where possible in the awarding of design and construction

contracts.

Use a contract type that is appropriate for the amount of risk involved, and structure

its terms to align incentives with desired outcomes.

Minimize design/construction concurrency by developing the design to a high level of

completion before starting construction and by resisting changes in requirements (and

consequent design changes) during construction.

Properly supervise construction work. Maintain an adequate number of properly

trained Supervisor of Shipbuilding (SUPSHIP) personnel.

Provide stability for industry, in part by using, where possible, multiyear procurement

(MYP) or block buy contracting.

Maintain a capable government acquisition workforce that understands what it is

buying, as well as the above points.

Identifying these lessons is arguably not the hard part—most if not all these points have been cited for

years. The hard part, arguably, is living up to them without letting circumstances lead program-execution

efforts away from these guidelines.

49 This appendix is adapted from Appendix J of CRS Report RL32665, Navy Force Structure and Shipbuilding Plans:

Background and Issues for Congress, by Ronald O'Rourke. See also Government Accountability Office, Navy Shipbuilding[:]

Past Performance Provides Valuable Lessons for Future Investments, GAO-18-238SP, June 2018, 36 pp.

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Appendix C. Some Considerations Relating to

Warranties in Government Shipbuilding and Other

Government Acquisition

This appendix presents some considerations relating to warranties in shipbuilding and other defense

acquisition.50

In discussions of government shipbuilding, one question that sometimes arises is whether including a

warranty in a shipbuilding contract is preferable to not including one. The question can arise, for

example, in connection with a GAO finding that “the Navy structures shipbuilding contracts so that it

pays shipbuilders to build ships as part of the construction process and then pays the same shipbuilders a

second time to repair the ship when construction defects are discovered.”51

Including a warranty in a shipbuilding contract (or a contract for building some other kind of end item),

while potentially valuable, might not always be preferable to not including one—it depends on the

circumstances of the acquisition, and it is not necessarily a valid criticism of an acquisition program to

state that it is using a contract that does not include a warranty (or a weaker form of a warranty rather than

a stronger one).

Including a warranty generally shifts to the contractor the risk of having to pay for fixing problems with

earlier work. Although that in itself could be deemed desirable from the government’s standpoint, a

contractor negotiating a contract that will have a warranty will incorporate that risk into its price, and

depending on how much the contractor might charge for doing that, it is possible that the government

could wind up paying more in total for acquiring the item (including fixing problems with earlier work on

that item) than it would have under a contract without a warranty.

When a warranty is not included in the contract and the government pays later on to fix problems with

earlier work, those payments can be very visible, which can invite critical comments from observers. But

that does not mean that including a warranty in the contract somehow frees the government from paying

to fix problems with earlier work. In a contract that includes a warranty, the government will indeed pay

something to fix problems with earlier work—but it will make the payment in the less-visible (but still

very real) form of the up-front charge for including the warranty, and that charge might be more than what

it would have cost the government, under a contract without a warranty, to pay later on for fixing those

problems.

From a cost standpoint, including a warranty in the contract might or might not be preferable, depending

on the risk that there will be problems with earlier work that need fixing, the potential cost of fixing such

problems, and the cost of including the warranty in the contract. The point is that the goal of avoiding

highly visible payments for fixing problems with earlier work and the goal of minimizing the cost to the

government of fixing problems with earlier work are separate and different goals, and that pursuing the

first goal can sometimes work against achieving the second goal.52

50 This appendix is adapted from Appendix K of CRS Report RL32665, Navy Force Structure and Shipbuilding Plans:

Background and Issues for Congress, by Ronald O'Rourke.

51 See Government Accountability Office, Navy Shipbuilding[:] Past Performance Provides Valuable Lessons for Future

Investments, GAO-18-238SP, June 2018, p. 21. A graphic on page 21 shows a GAO finding that the government was financially

responsible for shipbuilder deficiencies in 96% of the cases examined by GAO, and that the shipbuilder was financially

responsible for shipbuilder deficiencies in 4% of the cases.

52 It can also be noted that the country’s two largest builders of Navy ships—General Dynamics (GD) and Huntington Ingalls

Industries (HII)—derive about 60% and 96%, respectively, of their revenues from U.S. government work. (See General

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The Department of Defense’s guide on the use of warranties states the following:

Federal Acquisition Regulation (FAR) 46.7 states that “the use of warranties is not mandatory.”

However, if the benefits to be derived from the warranty are commensurate with the cost of the

warranty, the CO [contracting officer] should consider placing it in the contract. In determining

whether a warranty is appropriate for a specific acquisition, FAR Subpart 46.703 requires the CO

to consider the nature and use of the supplies and services, the cost, the administration and

enforcement, trade practices, and reduced requirements. The rationale for using a warranty should

be documented in the contract file....

In determining the value of a warranty, a CBA [cost-benefit analysis] is used to measure the life

cycle costs of the system with and without the warranty. A CBA is required to determine if the

warranty will be cost beneficial. CBA is an economic analysis, which basically compares the Life

Cycle Costs (LCC) of the system with and without the warranty to determine if warranty coverage

will improve the LCCs. In general, five key factors will drive the results of the CBA: cost of the

warranty + cost of warranty administration + compatibility with total program efforts + cost of

overlap with Contractor support + intangible savings. Effective warranties integrate reliability,

maintainability, supportability, availability, and life-cycle costs. Decision factors that must be

evaluated include the state of the weapon system technology, the size of the warranted population,

the likelihood that field performance requirements can be achieved, and the warranty period of

performance.53

Dynamics, 2016 Annual Report, page 9 of Form 10-K [PDF page 15 of 88]) and Huntington Ingalls Industries, 2016 Annual

Report, page 5 of Form 10-K [PDF page 19 of 134]). Thus, even if a warranty in a shipbuilding contract with one of these firms

were to somehow mean that the government did not have pay under the terms of that contract—either up front or later on—for

fixing problems with earlier work done under that contract, there would still be a question as to whether the government would

nevertheless wind up eventually paying much of that cost as part of the price of one or more future contracts the government may

have that firm.

53 Department of Defense, Department of Defense Warranty Guide, Version 1.0, September 2009, accessed July 13, 2017, at

https://www.acq.osd.mil/dpap/pdi/uid/docs/departmentofdefensewarrantyguide[1].doc.

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Appendix D. Some Considerations Relating to Avoiding

Procurement Cost Growth vs. Minimizing Procurement

Costs

This appendix presents some considerations relating to avoiding procurement cost growth vs. minimizing

procurement costs in shipbuilding and other government acquisition.54

The affordability challenge posed by government shipbuilding plans can reinforce the strong oversight

focus on preventing or minimizing procurement cost growth in government shipbuilding programs, which

is one expression of a strong oversight focus on preventing or minimizing cost growth in DOD

acquisition programs in general. This oversight focus may reflect in part an assumption that avoiding or

minimizing procurement cost growth is always synonymous with minimizing procurement cost. It is

important to note, however, that as paradoxical as it may seem, avoiding or minimizing procurement cost

growth is not always synonymous with minimizing procurement cost, and that a sustained, singular focus

on avoiding or minimizing procurement cost growth might sometimes lead to higher procurement costs

for the government.

How could this be? Consider the example of a design for the lead ship of a new class of ships. The

construction cost of this new design is uncertain, but is estimated to be likely somewhere between Point A

(a minimum possible figure) and Point D (a maximum possible figure). (Point D, in other words, would

represent a cost estimate with a 100% confidence factor, meaning there is a 100% chance that the cost

would come in at or below that level.) If the government wanted to avoid cost growth on this ship, it

could simply set the ship’s procurement cost at Point D. Industry would likely be happy with this

arrangement, and there likely would be no cost growth on the ship.

The alternative strategy open to the government is to set the ship’s target procurement cost at some figure

between Points A and D—call it Point B—and then use that more challenging target cost to place pressure

on industry to sharpen its pencils so as to find ways to produce the ship at that lower cost. (Government

officials sometimes refer to this as “pressurizing” industry.) In this example, it might turn out that industry

efforts to reduce production costs are not successful enough to build the ship at the Point B cost. As a

result, the ship experiences one or more rounds of procurement cost growth, and the ship’s procurement

cost rises over time from Point B to some higher figure—call it Point C.

Here is the rub: Point C, in spite of incorporating one or more rounds of cost growth, might nevertheless

turn out to be lower than Point D, because Point C reflected efforts by the shipbuilder to find ways to

reduce production costs that the shipbuilder might have put less energy into pursuing if the government

had simply set the ship’s procurement cost initially at Point D.

Setting the ship’s cost at Point D, in other words, may eliminate the risk of cost growth on the ship, but

does so at the expense of creating a risk of the government paying more for the ship than was actually

necessary. DOD could avoid cost growth on new procurement programs starting tomorrow by simply

setting costs for those programs at each program’s equivalent of Point D. But as a result of this strategy,

DOD could well wind up leaving money on the table in some instances—of not, in other words,

minimizing procurement costs.

DOD does not have to set a cost precisely at Point D to create a potential risk in this regard. A risk of

leaving money on the table, for example, is a possible downside of requiring the government to budget for

its acquisition programs at something like an 80% confidence factor—an approach that some observers

54 This appendix is adapted from Appendix L of CRS Report RL32665, Navy Force Structure and Shipbuilding Plans:

Background and Issues for Congress, by Ronald O'Rourke.

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have recommended—because a cost at the 80% confidence factor is a cost that is likely fairly close to

Point D.

Procurement cost growth is often embarrassing for the government and industry, and can damage their

credibility in connection with future procurement efforts. Procurement cost growth can also disrupt

congressional budgeting by requiring additional appropriations to pay for something Congress thought it

had fully funded in a prior year. For this reason, there is a legitimate public policy value to pursuing a

goal of having less rather than more procurement cost growth.

Procurement cost growth, however, can sometimes be in part the result of government efforts to use lower

initial cost targets as a means of pressuring industry to reduce production costs—efforts that,

notwithstanding the cost growth, might be partially successful. A sustained, singular focus on avoiding or

minimizing cost growth, and of punishing the government for all instances of cost growth, could

discourage the government from using lower initial cost targets as a means of pressurizing industry, which

could deprive the government of a tool for controlling procurement costs.

The point here is not to excuse away cost growth, because cost growth can occur in a program for reasons

other than the government’s attempt to pressurize industry. Nor is the point to abandon the goal of seeking

lower rather than higher procurement cost growth, because, as noted above, there is a legitimate public

policy value in pursuing this goal. The point, rather, is to recognize that this goal is not always

synonymous with minimizing procurement cost, and that a possibility of some amount of cost growth

might be expected as part of an optimal government strategy for minimizing procurement cost.

Recognizing that the goals of seeking lower rather than higher cost growth and of minimizing

procurement cost can sometimes be in tension with one another can lead to an approach that takes both

goals into consideration. In contrast, an approach that is instead characterized by a sustained, singular

focus on avoiding and minimizing cost growth may appear virtuous, but in the end may wind up costing

the government more.

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Appendix E. Coast Guard NSC, OPC, FRC, and WCC

Acquisition Programs

This appendix presents discussion of the Coast Guard’s National Security Cutter (NSC) program,

Offshore Patrol Cutter (OPC) program, Fast Response Cutter (FRC) program, and Waterways Commerce

Cutter (WCC) program, which help form the context for Coast Guard icebreaker procurement in a

situation of finite Coast Guard procurement funding. The CRS report on cutter procurement provides indepth discussions of the NSC, OPC, and FRC programs.55 Below are some focused comments on these

programs and the WCC program.

Adequacy of Planned Quantities of NSCs, OPCs, and FRCs

The Coast Guard’s 91-ship program of record (POR) for general-purpose cutters—which dates to 2004

and calls for a force of 8 NSCs, 25 OPCs, and 58 FRCs—will provide substantially more capability than

the force of older-generation cutters it will replace. At the same time, it can be useful to recall that Coast

Guard studies have concluded that the planned total of 91 NSCs, OPCs, and FRCs would provide only

61% of the NSCs, OPCs, and FRCs that would be needed to fully perform the service’s statutory missions

in coming years, in part because Coast Guard mission demands are expected to be greater in coming years

than they were in the past. As shown in Table E-1, the Coast Guard’s 2011 Fleet Mix Analysis (FMA)

Phase 2—the last general analysis of future Coast Guard ship force structure requirements to be publicly

released by the Coast Guard—concluded that fully performing the Coast Guard’s statutory missions in

coming years would require a total of 149 NSCs, OPCs, and FRCs.56 This point may be particularly

salient right now in connection with the NSC and FRC programs, procurement of which would end soon

under the POR figures.

Table E-1. Program of Record Compared to Fleet Mix Analysis Phase 2 (2011)

Ship Type

Program of

Record

Refined Objective Mix

from Fleet Mix Analysis,

Phase 2 (2011)

NSC

8

9

OPC

25

49

FRC

58

91

Total

91

149

Source: Coast Guard Fleet Mix Analysis, Phase 2, 2011, Table ES-2 on p. iv. For additional discussion, see Appendix A of

CRS Report R42567, Coast Guard Cutter Procurement: Background and Issues for Congress, by Ronald O'Rourke.

National Security Cutter (NSC) Program

The NSCs were procured at irregular rather than regular intervals, and they were procured with annual

rather than multiyear contracts. Both of these aspects of their acquisition made the ships more expensive.

If NSCs had instead been procured at regular intervals under multiyear contracts that included EOQ

authority, the reduction in their combined procurement cost could have been substantial—possibly

55 See CRS Report R42567, Coast Guard Cutter Procurement: Background and Issues for Congress, by Ronald O'Rourke.

56 For additional discussion, see Appendix A of CRS Report R42567, Coast Guard Cutter Procurement: Background and Issues

for Congress, by Ronald O'Rourke.

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enough (or even more than enough) to have paid for one of the 11 NSCs that have been fully funded

through FY2018.

As discussed below in the section on the OPC program, building additional NSCs is one option for

acquiring replacements for retiring medium-endurance cutters more quickly than currently planned, so as

to close more quickly any gap in time between retirements of the medium-endurance cutters and the entry

into service of their replacements. The NSCs are bigger and in some respects more capable than OPCs,

and they would individually be more expensive to procure and to operate and support than OPCs. The

difference in size, capability, and cost between the NSC and OPC design is not insignificant, but neither is

it a night-and-day difference. With an estimated full-load displacement of 3,500 to 3,730 tons,57 for

example, OPCs are to be roughly 80% as large as NSCs, which have a full load displacement of about

4,500 tons.58 In terms of size, capability, and cost, the OPC is a lot closer to the NSC than it is to the FRC,

which is a large patrol craft with a full load displacement of 353 tons.

Procurement of NSCs for replacing retiring Hamilton-class high-endurance cutters is approaching its end.

If additional NSCs were procured in the near term in parallel with OPC procurement as part of a strategy

for more quickly replacing retiring medium-endurance cutters, the additional NSCs could be built using

the currently open NSC production line, avoiding a break in that production line and thereby maximizing

production learning curve benefits. The procurement cost of any additional NSCs might be further

reduced by procuring them at regular intervals and using an MYP contract.

OPC Program

The Coast Guard is using a contract with options to procure the first nine OPCs. As stated earlier,

although a contract with options might look like a multiyear contract, it is not a form of multiyear

contracting. A contract with options operates more like annual contracting and cannot achieve the kinds of

savings that are possible with multiyear contracting.59

Using multiyear contracting in the 25-ship OPC program—specifically, block buy contracting with EOQ

authority for the initial ships in the program, followed by either block buy contracting with EOQ authority

or MYP contracting for later ships in the program—rather than annual contracting might reduce the total

acquisition cost of the program by about $1 billion. This potential savings of $1 billion—a figure equal to

or greater than the acquisition cost of either a polar icebreaker or a 35-ship Waterways Commerce Cutter

program—represents a rare opportunity for using multiyear contracting to reduce the cost of an individual

Coast Guard acquisition program by such an amount.

Acquiring the first nine ships in the OPC program under the current contract with options could forego

roughly $350 million of the $1 billion in potential savings. Much of this $350 million in potential savings

might be recaptured by renegotiating the current contract so as to convert it, with congressional approval,

into a block buy contract with EOQ authority. If acquisition regulations prohibit such a renegotiation, the

Coast Guard alternatively could choose to not exercise most of the options in the current contract and

hold a new competition for building the current NSC design under a block buy contract. The current OPC

builder—Eastern Shipbuilding of Panama City, FL—would be well positioned to win such a competition,

57 As of May 26, 2017, the OPC’s light ship displacement (i.e., its “empty” displacement, without fuel, water, ballast, stores, and

crew) was preliminarily estimated at about 2,640 to 2,800 tons, and its full load displacement was preliminarily estimated at

about 3,500 to 3,730 tons. (Source: Figures provided to CRS by Coast Guard liaison office, May 26, 2017.)

58 Source for figure of 4,500 tons: Coast Guard NSC fact sheet, accessed October 3, 2018, at:

https://www.dcms.uscg.mil/Portals/10/CG-9/Acquisition%20PDFs/Factsheets/NSC.pdf?ver=2017-04-24-142526-023.

59 For additional discussion, see CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense

Acquisition: Background and Issues for Congress, by Ronald O'Rourke and Moshe Schwartz, particularly the section entitled

“MYP and BBC vs. Contracts with Options.”

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since it would involve building Eastern’s own design and Eastern would already have moved down the

initial (i.e., the steepest) part of the learning curve for building the design.

The current planned procurement profile for the OPC, which reaches a maximum projected rate of two

ships per year, would deliver OPCs many years after the end of the originally planned service lives of the

medium-endurance cutters that they are to replace. Coast Guard officials have testified that the service

plans to extend the service lives of the medium-endurance cutters until they are replaced by OPCs. There

will be maintenance and repair expenses associated with extending the service lives of medium-endurance

cutters, and if the Coast Guard does not also make investments to increase the capabilities of these ships,

the ships may have less capability in certain regards than OPCs.

One possible option for addressing this situation would be to increase the maximum annual procurement

rate of the replacement ships from the currently planned two ships per year to a higher figure. Increasing

the rate to three or four ships per year, for example, could result in the 25th ship being delivered about

four years or six years sooner, respectively, than under the currently planned maximum rate. Increasing

the procurement rate would require a substantial increase to the Coast Guard’s PC&I account, which gets

back to the issue discussed earlier of future funding levels for that account and Congress’s agency in

setting funding levels and determining the composition of federal spending.

From a production point of view, there are at least three options for increasing the annual procurement

rate of replacement ships from the currently planned two ships per year to a higher rate, so as to close any

gap in time between the retirements of medium-endurance cutters and the entry into service of their

replacements. These options are as follows:







increasing the annual OPC production rate at Eastern Shipbuilding, if Eastern’s capacity

would permit this;

building additional OPCs at one or two additional shipyards, such as Bollinger Shipyards

of Lockport, LA and/or General Dynamics’ Bath Iron Works (GD/BIW) of Bath, ME—

the two other finalists in the OPC competition; and

building additional NSCs at Huntington Ingalls Industries/Ingalls Shipbuilding

(HII/Ingalls).

These three options are not mutually exclusive—they could be pursued in combination. Additional OPCs

built at Bollinger and/or GD/BIW could be built to the OPC designs that those two shipbuilders submitted

for the OPC competition. (Those designs are presumably optimized for the production facilities at

Bollinger and GD/BIW. The Coast Guard, moreover, currently does not have data rights for the complete

vessel design for Eastern’s OPC design.60) Building additional OPCs at Bollinger and/or GD/BIW to the

designs developed by those two shipbuilders would result in a fleet with two or three classes of OPCs, a

situation that would increase OPC life-cycle operation and support costs and complicate the training and

assignment of OPC crew members. These additional life-cycle costs and complications, however, might

be deemed acceptable in return for avoiding the costs and risks of extending the service lives of mediumendurance cutters and shortening any gap in time between the retirement of medium-endurance cutters

and the entry into service of their replacements. The Navy decided in 2010 to fill its requirement for LCSs

by building two different LCS designs at the same time, and did so knowing that this would result in some

additional life-cycle operation and support costs and crewing-related complications compared to the

option of building all LCSs to a single design.61 The option of building additional NSCs as replacements

for retiring medium-endurance cutters was discussed above in the section on the NSC program.

60 Source regarding data rights: Email from Coast Guard liaison office to CRS, September 6, 2017.

61 For additional discussion of the LCS program, see CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program:

Background and Issues for Congress, by Ronald O'Rourke. A total of 35 LCSs have been funded through FY2019. Of these 35

ships, 17 will be built to one of the LCS designs, and 18 will be built to the other.

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FRC Program

With 50 FRCs procured through FY2018 and four more requested for FY2019, the FRC is approaching

the 58-ship figure called for in the Coast Guard’s program of record. As shown earlier in Table E-1,

however, the Coast Guard’s 2011 Fleet Mix Analysis Phase II concluded that a total of 91 FRCs would be

needed as part of an overall force of 149 general-purpose cutters to fully perform the service’s statutory

missions in coming years.

Procuring additional FRCs beyond the 58th would require additional procurement funding, which gets

back to the issue discussed earlier of future funding levels for the PC&I account and Congress’s agency in

setting funding levels and determining the composition of federal spending. As with the option discussed

earlier of procuring additional NSCs, procuring additional FRCs immediately following the procurement

of the 58th FRC would permit them to be built using the currently open NSC production line, avoiding a

break in that production line and thereby maximizing production learning curve benefits. And as with the

NSC option discussed earlier, the cost of any such additional FRCs could be reduced by procuring them

under an MYP or block buy contract. The resulting increase in Coast Guard force structure from 58 FRCs

to some higher number would increase long-term Coast Guard operation and support costs above

currently planned levels.

WCC Program

The WCC program—the program to replace the Coast Guard’s current 35-ship inland waterways fleet—is

a smaller program than those discussed above. With a notional procurement cost of roughly $25 million

per cutter, a 35-ship replacement program might have a total acquisition cost of roughly $900 million.62

Although the scale of the program is more modest than that of the NSC, OPC, and FRC programs, the

WCC program is of importance in terms of its economic benefit to the nation (by supporting waterborne

commerce) and the bidding opportunity it will provide to U.S. shipyards that are not capable of building

larger Coast Guard cutters.

As the Coast Guard begins to develop the details of this program, potential oversight issues could include,

among other things, the planned number of replacement cutters (which has not yet been determined and

could turn out to be something other than 35), planned annual procurement quantities and the resulting

schedule for replacing the existing ships, whether to develop a new design or instead use a parent design,

the number of shipyards to be used to build the ships, and the contracting strategy, including whether to

use multiyear contracting.

62 Source for $25 million figure: Spoken testimony of Coast Guard Commandant Karl Schultz during the question-and-answer

portion of a September 16, 2018, hearing on Coast Guard modernization and recapitalization before the Coast Guard and

Maritime Transportation subcommittee of the House Transportation and Infrastructure Committee, as reflected in the transcript of

the hearing. The Commandant stated: “I'm loathed to put a number out, but I think you're talking a $25 million, plus or minus,

[cost per] ship.” The planned number of new replacement WCCs has not yet been determined and could turn out to be something

other than 35. GAO states that “according to Coast Guard officials, the preliminary rough order of magnitude estimate for total

acquisition cost is $1.1 billion.” Government Accountability Office, Coast Guard Acquisitions[:] Actions Needed to Address

Longstanding Portfolio Management Challenges, GAO-18-454, July 2018, p. 19.

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Appendix F. NASEM Report Recommendation for

Building Heavy and Medium Polar Icebreakers to a

Common Design

Regarding its proposal to build heavy and medium polar icebreakers to a common design, the July 2017

NASEM report stated (emphasis as in original):

2. Recommendation: The United States Congress should fund the construction of four polar

icebreakers of common design that would be owned and operated by the United States Coast

Guard (USCG).

The current Department of Homeland Security (DHS) Mission Need Statement... contemplates a

combination of medium and heavy icebreakers. The committee’s recommendation is for a single

class of polar icebreaker with heavy icebreaking capability. Proceeding with a single class means

that only one design will be needed, which will provide cost savings. The committee has found that

the fourth heavy icebreaker could be built for a lower cost than the lead ship of a medium icebreaker

class....

The DHS Mission Need Statement contemplated a total fleet of “potentially” up to six ships of two

classes—three heavy and three medium icebreakers. Details appear in the High Latitude Mission

Analysis Report. The Mission Need Statement indicated that to fulfill its statutory missions, USCG

required three heavy and three medium icebreakers; each vessel would have a single crew and would

homeport in Seattle. The committee’s analysis indicated that four heavy icebreakers will meet the

statutory mission needs gap identified by DHS for the lowest cost....

4. Finding: In developing its independent concept designs and cost estimates, the committee

determined that the costs estimated by USCG for the heavy icebreaker are reasonable.

However, the committee believes that the costs of medium icebreakers identified in the High

Latitude Mission Analysis Report are significantly underestimated....

Although USCG has not yet developed the operational requirements document for a medium polar

icebreaker, the committee was able to apply the known principal characteristics of the USCG Cutter

Healy to estimate the scope of work and cost of a similar medium icebreaker. The committee

estimates that a first-of-class medium icebreaker will cost approximately $786 million. The fourth

ship of the heavy icebreaker series is estimated to cost $692 million. Designing a medium-class

polar icebreaker in a second shipyard would incur the estimated engineering, design, and planning

costs of $126 million and would forgo learning from the first three ships; the learning curve would

be restarted with the first medium design. Costs of building the fourth heavy icebreaker would be

less than the costs of designing and building a first-of-class medium icebreaker....

6. Recommendation: USCG should ensure that the common polar icebreaker design is scienceready and that one of the ships has full science capability.

All four proposed ships would be designed as “science-ready,” which will be more cost-effective

when one of the four ships—most likely the fourth—is made fully science capable. Including

science readiness in the common polar icebreaker design is the most cost-effective way of fulfilling

both the USCG’s polar missions and the nation’s scientific research polar icebreaker needs.... The

incremental costs of a science-ready design for each of the four ships ($10 million to $20 million

per ship) and of full science capability for one of the ships at the initial build (an additional $20

million to $30 million) are less than the independent design and build cost of a dedicated research

medium icebreaker.... In briefings at its first meeting, the committee learned that the National

Science Foundation and other agencies do not have budgets to support full-time heavy icebreaker

access or the incremental cost of design, even though their science programs may require this

capability. Given the small incremental cost, the committee believes that the science capability cited

above should be included in the acquisition costs.

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Science-ready design includes critical elements that cannot be retrofitted cost-effectively into an

existing ship and that should be incorporated in the initial design and build. Among these elements

are structural supports, appropriate interior and exterior spaces, flexible accommodation spaces that

can embark up to 50 science personnel, a hull design that accommodates multiple transducers and

minimizes bubble sweep while optimizing icebreaking capability, machinery arrangements and

noise dampening to mitigate interference with sonar transducers, and weight and stability latitudes

to allow installation of scientific equipment. Such a design will enable any of the ships to be

retrofitted for full science capability in the future, if necessary....

Within the time frame of the recommended build sequence, the United States will require a sciencecapable polar icebreaker to replace the science capabilities of the Healy upon her retirement. To

fulfill this need, one of the heavy polar icebreakers would be procured at the initial build with full

science capability; the ability to fulfill other USCG missions would be retained. The ship would be

outfitted with oceanographic overboarding equipment and instrumentation and facilities comparable

with those of modern oceanographic research vessels. Some basic scientific capability, such as

hydrographic mapping sonar, should be acquired at the time of the build of each ship so that

environmental data that are essential in fulfilling USCG polar missions can be collected.63

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff

to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of

Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of

information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.

CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United

States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,

as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the

permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

63 National Academies of Sciences, Engineering, and Medicine, Division on Earth and Life Studies and Transportation Research

Board, Acquisition and Operation of Polar Icebreakers: Fulfilling the Nation’s Needs, Letter Report, with cover letter dated July

11, 2017, pp. 2, 4-6.

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