A funding rule put in place by the White House Office of Management and Budget (OMB) requiring full funding for a program in a given fiscal year is causing a 6 to 8 percent increase in the total acquisition costs for the three remaining National Security Cutters (NSC) to be purchased by the Coast Guard, according to a House budget report.
The application of OMB Circular A-11 funding policy to the NSC program for vessels five through eight also means that the acquisition baseline will be “extended by several years” and that the acquisition costs will increase by an estimated $45 million to $60 million per cutter for vessels six through eight, the House Appropriations Committee says in their report accompanying their markup of FY ’12 budget for the Department of Homeland Security.
The appropriators slammed the OMB policy for increasing costs not just for the NSC but also because the additional program delays mean higher costs to maintain legacy cutters that the NSCs are replacing.
“The committee believes that the application of a policy that results in higher costs and in the undue delay of critical operational capabilities to be illogical and counterproductive to our nation’s security needs as well as current budgetary realities,” the report says. Furthermore, delays in the acquisition of the NSC will exacerbate the already escalating operating and maintenance costs of the Coast Guard’s aging High Endurance Cutter fleet.
The Coast Guard didn’t request any funding in its FY ’12 budget request for NSC 6 because of the funding rule (Defense Daily, March 2). The service did ask for $77 million in its request to complete acquisition for NSC 5, but Congress ended up shifting those funds into the program’s FY ’11 budget.
Huntington Ingalls Industries [HII] is the shipbuilder for the Coast Guard’s planned fleet of eight NSCs.
In their markup of the DHS bill, the appropriators cut the request for six 154-foot Fast Response Cutters (FRC) by two vessels, lopping $118 million from the $358 million requested. The request was pared for the FRC because of concerns over structural deficiencies found in the first vessel.
The Coast Guard told Defense Daily yesterday through its program oversight and third party validation it determined that it was necessary to modify the design safety margins in localized areas on the main and 01 decks. The solution has already been incorporated into the lead FRC, the Bernard C. Webber, and is being applied to other hulls under construction, the Coast Guard said.
The design safety change will be built into future FRCs that are yet to be built, the service adds.
The FRCs are being built by Bollinger Shipyards. The Webber was launched in April and is on track for delivery in the fall.
The committee also said that before accelerating the production rate of FRCs from four to six per year the results of the forthcoming operational test and evaluation must be examined.