By Calvin Biesecker
An Office of Management and Budget rule requiring full funding for a program in a given fiscal year is the reason the Coast Guard decided against requesting any money in FY ’12 to begin work on the sixth of eight planned National Security Cutters (NSC), Coast Guard Commandant Adm. Robert Papp said yesterday.
Papp said that the rule would require including funds for long-lead material purchases, ship construction and post-construction in the same fiscal year, which was too much to bear in FY ’12 because if its impact on other programs.
Instead, through an exemption granted by OMB for FY ’12, the Coast Guard is requesting $77 million to complete construction of NSC 5, Papp told the House Transportation and Infrastructure Subcommittee On Coast Guard and Maritime Transportation. With that request combined with what it would cost to “fit the entire cost of NSC 6 in the [FY] ’12 budget,” Papp said too many other programs would have been displaced that in turn would have eventually led to breaching their acquisition project baselines.
The NSC project has already been slipping behind schedule. In December, the Coast Guard awarded a $480 million contract to Northrop Grumman [NOC] for the fourth vessel, more than a year later than expected (Defense Daily, Dec. 1, 2010). Then, in January, the service awarded the company $89 million for long-lead materials for NSC 5 (Defense Daily, Jan. 20).
Subcommittee Chairman Frank LoBiondo (R-N.J.) said the lack of funding for NSC 6 in the FY ’12 request will only lead to further program delays and likely higher costs. Papp said that he would get back to the panel on the cost and schedule impacts.
Papp did say that all in all the proposed funding will provide “some savings” given that the Coast Guard is buying six Fast Response Cutters, which is two more than are funded in FY ’11, and 40 Response Boat-Mediums, which is “a little quicker” than planned. This way “we can make room in the out-years” of the budget, Papp said.
“As I said right from the start, there were some very tough choices in this budget and I think we have optimized our purchases within the amount of money that’s available,” Papp said.
Papp also offered that the price that Northrop Grumman proposed for NSC 4 was also higher than the Coast Guard originally budgeted for, which then required the service to dip into funds that had been set aside for long-lead procurement purchases relating to NSC 5. That, in turn, led to the Coast Guard having to make sure that it could utilize monies in FY ’11, which is currently under stringent obligation requirements due to the ongoing Continuing Resolution to fund the federal government, to award the long-lead contract for NSC 5, Papp said.
The Coast Guard’s budget request for acquisition activities in FY ’12 is $1.4 billion (Defense Daily, Feb. 15).