Coast Guard Commandant Adm. Bob Papp yesterday told a House panel that he has directed that the top driving factor in planning for the service’s next medium endurance cutter is “affordability” and that requirements are being aligned as such.
Papp, who became commandant in May 2010, told the House Transportation and Infrastructure Subcommittee on the Coast Guard that when he took the top post at the Coast Guard he directed a review of requirements for the Offshore Patrol Cutter (OPC) with affordability as key.
“And we’ve in fact even reduced some of our threshold requirements, getting them where they are still acceptable for carrying out Coast Guard operations but keeping into account that ship is going to have to be affordable,” Papp said.
The hearing was held to examine rising costs in the Coast Guard’s asset modernization program, called Deepwater. For the most part the hearing covered Deepwater cost issues raised in a Government Accountability Office report issued last summer that pegs a revised program baseline at $29.3 billion for total acquisition costs versus a $24.2 billion estimate provided in 2007 (Defense Daily, Aug. 3).
The newer cost estimates don’t include revisions for several Deepwater assets, notably the OPC, which accounts for $8.1 billion of the 2007 estimate. The GAO said in its July report that it expects the $29.3 billion Deepwater cost estimate to go higher once costs are revised for the OPC.
Asked whether GAO’s expectations of higher OPC costs are in the “ballpark,” Papp said they are but added that there can be a host of things that could raise costs such as changes in the price of steel and what may happen in the country.
Papp noted that when requirements are stable, as they are with the high-endurance National Security Cutter (NSC), the Fast Response Cutter patrol boat, and the HC-144 Maritime Patrol Aircraft, costs remain stable. He noted that the recent contract with Huntington Ingalls Industries [HII] for the fifth NSC is similar in cost to the fourth vessel that recently began fabrication, demonstrating that despite higher material costs the learning curve has improved enough to contain those costs.
The Coast Guard’s annual acquisition budget has been around $1.4 billion in the past few years but Papp said for the Coast Guard to meet all of its acquisition and sustainment needs, including shore infrastructure, renovating small ice breakers and other ships and aircraft, it estimates it needs about $2.5 billion annually. He said that creating the FY ’12 budget request, which is also about $1.4 billion, “was very tough for us this year as we analyzed our budget and we tried to strike that balance between mission execution, in other words maintaining front line operations, and still continuing on our acquisition project baseline.”
To maintain those operations meant making “some very challenging choices in terms of distribution of resources within our acquisition accounts” such as ordering the minimum quantities of assets in some projects, he said.