Shore Infrastructure Needs Loom Large In Coast Guard Unfunded Priorities List, Zukunft Says

With a strong acquisition budget in place for fiscal year 2018 and a solid request in to Congress for its operating platforms in fiscal year 2019, the Coast Guard is developing an unfunded priorities list that will emphasize its shore infrastructure needs, the service’s outgoing chief said in an interview this week.

The Coast Guard for the past seven years has prioritized its operations and maintenance funding for its ships and aircraft, leaving the service with more than $1 billion in repairs and other needs on the shore side.

The forthcoming unfunded priorities list will include a C-130J aircraft and a new command and control aircraft used for VIP transport, to include the Secretary of Homeland Security, and shore infrastructure, Adm. Paul Zukunft, the Coast Guard Commandant, said in a May 15 interview in his office.

Coast Guard Commandant Adm. Paul F. Zukunft. Photo: U.S. Coast Guard

Coast Guard Commandant Adm. Paul F. Zukunft. Photo: U.S. Coast Guard

The Coast Guard’s FY ’19 funding request includes $750 million for the first in a new class of heavy polar icebreakers, which topped the unfunded priorities list a year ago, and is expected to be delivered in 2023. The Coast Guard is also expecting to award this year the first construction contract to Eastern Shipbuilding for a new class of medium endurance cutters called the Offshore Patrol Cutter (OPC).

The Coast Guard is negotiating with the Navy to build out infrastructure in San Diego to homeport some of the new OPCs and the icebreakers, Zukunft said. Current plans call for 25 OPCs and the Coast Guard also wants to expand its facilities in Pensacola, Fla., to make that a major homeport for OPCs as well. The Coast Guard also needs to refurbish a pier in Kodiak, Alaska, where it also will expand its people presence, which means new housing, he said.

“As you bring these new resources to bear, there are ancillary costs that need to be addressed as well so these score pretty high on our unfunded priorities list,” Zukunft said.

Zukunft’s four-year term at the helm of the Coast Guard ends on May 31 and the service will hold a change of command ceremony on June 1 to welcome Adm. Karl Schultz as the new commandant. Zukunft said there’s no gap between his priorities and Schultz’s.

“The game plan does not change going forward,” Zukunft said. “In years past, there’s been a tendency to shred the game plan and start afresh. And so it really isn’t about the individual, it’s about the service.”

Indeed, during his Senate confirmation hearing last month, Schultz highlighted the need for the Coast Guard to have at least $2 billion annually for its acquisition account and receive 5 percent annual increases for operations and support to sustain readiness and claw back its $1.6 billion maintenance backlog. The $2 billion acquisition floor and steady gains in the operations and support account have been constant themes with Zukunft.

Congress appropriated $2.7 billion in acquisition funding for the Coast Guard in FY ’18, well above the original $1.2 billion request, in large part due to the addition of two new National Security Cutters (NSC), which added nearly $1.2 billion to the total. The Coast Guard’s request in FY ’19 is $1.9 billion, which includes the icebreaker funding, and if Congress adds funding for another NSC, which is a strong possibility, that would give the service two consecutive years of robust acquisition spending.

In March, at a hearing on the Coast Guard’s budget request, Rep. Duncan Hunter (R-Calif.), chairman of the House Transportation and Infrastructure subcommittee that oversees the service, said the out-year spending profile for acquisition falls substantially. He cited figures the Coast Guard provided from its forthcoming Capital Investment Plan showing $1.4 billion planned for the FY ’20 acquisition request, a figure more in line with what the Coast Guard typically receives.

Zukunft warned of a coming “train wreck” in government fiscal demands by the mid-2020s when debt service needs for non-discretionary spending combined with the demands of an aging population will compete more intensely with discretionary budgets. He said the Coast Guard’s five-year long stretch of clean financial audits will help the service compete for its share of discretionary spending and its focus on delivering assets on schedule and within budget while meeting requirements will serve the service well when it seeks appropriations from Congress.

On top of strong financials and program execution, Zukunft said the Coast Guard’s operations that help enable $4.6 trillion annually in commerce on the nation’s inland waterways and drug seizures on the high seas exceed the costs of its operating budget, further demonstrating the service’s value to Congress and taxpayers.

Whether the Coast Guard’s financial rigor and operational prowess translate into continued strong budgets in the upcoming years remains to be seen. For the next few years, the Coast Guard plans to seek funding annually for one OPC, but in FY ’21, it will up that request to two per year. The production cost for the OPCs isn’t clear yet. Congress appropriated $500 million in FY ’18 for construction of the first ship, long-lead materials for the second ship, and related government furnished equipment and program-related activities.

The Coast Guard also plans to buy three new heavy polar icebreakers and three new medium icebreakers, although the fleet mix could change. Congress has committed the Navy to helping with funding for one of the heavy icebreakers.

The upcoming budget demands created by the rampup in production of OPCs and icebreakers will be partially offset by the end of acquisition funding for the NSC program, and in a year or two, for the Fast Response Cutter. The two programs combined cost roughly $900 million to $1 billion in the acquisition account.

The Coast Guard has been performing well on its major acquisition programs, although Rep. Duncan Hunter (R-Calif.), in a hearing last week, took the service to task for taking too long to acquire technologies that have already been proven in the maritime environment that the Coast Guard also wants. He cited Predator long-endurance unmanned aircraft systems, long-range acoustic devices currently used by the Navy, and hand-launched UAS that are used by Special Forces,  as examples of the kind of technology the Coast Guard doesn’t need to spend a lot of time testing.

The Coast Guard at one time “always had one foot on the gas pedal but the other foot was weighing just as heavily on the brakes,” because it didn’t  “fully articulate” all its funding needs to meet its mission needs, Zukunft said. Now, the Coast Guard has taken its foot off the brake in terms of advocating for its needs, he added.

The Coast Guard, within a week, is expected to award a contract for small UAS systems that will operate from its NSCs. Zukunft noted that this technology has been around a while and that the service should have taken advantage of it sooner.

However, he said the Coast Guard’s overseers need to be willing to accept more risk when the service researches, develops, tests and acquires systems, saying ‘It’s almost a zero defect acquisition environment that we find ourselves in.”

“There’s an expectation that whatever you venture out on you’re going to buy it and it’s going to work right out of the starting block,” he said. “And when it doesn’t, you have the same folks that are then shaking their finger at us saying, ‘I can’t believe you just wasted this much money on that system.’”





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