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BUILDING THE FLEET: ASSESSING THE DEPARTMENT OF HOMELAND SECURITY’S ROLE IN 

THE UNITED STATES COAST GUARD’S ACQUISITIONS PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

TRANSPORTATION AND MARITIME 

SECURITY 

OF THE

COMMITTEE ON HOMELAND SECURITY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTEENTH CONGRESS 

SECOND SESSION 

MAY 7, 2024 

Serial No. 118–61 

Printed for the use of the Committee on Homeland Security 

Available via the World Wide Web: http://www.govinfo.gov 
(II) 

COMMITTEE ON HOMELAND SECURITY 

MARK E. GREEN, MD, Tennessee, Chairman 

MICHAEL T. MCCAUL, Texas 

CLAY HIGGINS, Louisiana 

MICHAEL GUEST, Mississippi 

DAN BISHOP, North Carolina 

CARLOS A. GIMENEZ, Florida 

AUGUST PFLUGER, Texas 

ANDREW R. GARBARINO, New York 

MARJORIE TAYLOR GREENE, Georgia 

TONY GONZALES, Texas 

NICK LALOTA, New York 

MIKE EZELL, Mississippi 

ANTHONY D’ESPOSITO, New York 

LAUREL M. LEE, Florida 

MORGAN LUTTRELL, Texas 

DALE W. STRONG, Alabama 

JOSH BRECHEEN, Oklahoma 

ELIJAH CRANE, Arizona 

BENNIE G. THOMPSON, Mississippi, Ranking 

Member 

SHEILA JACKSON LEE, Texas 

ERIC SWALWELL, California 

J. LUIS CORREA, California 

TROY A. CARTER, Louisiana 

SHRI THANEDAR, Michigan 

SETH MAGAZINER, Rhode Island 

GLENN IVEY, Maryland 

DANIEL S. GOLDMAN, New York 

ROBERT GARCIA, California 

DELIA C. RAMIREZ, Illinois 

ROBERT MENENDEZ, New Jersey 

THOMAS R. SUOZZI, New York 

TIMOTHY M. KENNEDY, New York 

YVETTE D. CLARKE, New York 

STEPHEN SIAO, Staff Director 

HOPE GOINS, Minority Staff Director 

SEAN CORCORAN, Chief Clerk 

SUBCOMMITTEE ON TRANSPORTATION AND MARITIME SECURITY 

CARLOS A. GIMENEZ, Florida, Chairman 

CLAY HIGGINS, Louisiana 

NICK LALOTA, New York 

LAUREL M. LEE, Florida 

MARK E. GREEN, MD, Tennessee (ex officio) 

SHRI THANEDAR, Michigan, Ranking Member 

ROBERT GARCIA, California 

TIMOTHY M. KENNEDY, New York 

BENNIE G. THOMPSON, Mississippi (ex officio) 

VACANCY, Subcommittee Staff Director 

ALEX MARSTON, Minority Subcommittee Staff Director 
(III) 

C O N T E N T S 

Page 

STATEMENTS 

The Honorable Carlos A. Gimenez, a Representative in Congress From the 

State of Florida, and Chairman, Subcommittee on Transportation and Maritime Security: 

Oral Statement ..................................................................................................... 1 

Prepared Statement ............................................................................................. 4 

The Honorable Shri Thanedar, a Representative in Congress From the State 

of Michigan, and Ranking Member, Subcommittee on Transportation and 

Maritime Security: 

Oral Statement ..................................................................................................... 2 

Prepared Statement ............................................................................................. 7 

The Honorable Bennie G. Thompson, a Representative in Congress From 

the State of Mississippi, and Ranking Member, Committee on Homeland 

Security: 

Prepared Statement ............................................................................................. 7 

WITNESSES 

PANEL I 

Ms. Shelby Oakley, Director, Contracting and National Security Acquisitions, 

U.S. Government Accountability Office: 

Oral Statement ..................................................................................................... 8 

Prepared Statement ............................................................................................. 11 

Mr. Ronald O’Rourke, Specialist in Naval Affairs, Congressional Research 

Service: 

Oral Statement ..................................................................................................... 40 

Prepared Statement ............................................................................................. 42 

Mr. Eric J. Labs, Senior Analyst, Naval Weapons and Forces, U.S. Congressional Budget Office: 

Oral Statement ..................................................................................................... 49 

Prepared Statement ............................................................................................. 51 

PANEL II 

Vice Admiral Paul F. Thomas, Deputy Commandant for Mission Support, 

United States Coast Guard: 

Oral Statement ..................................................................................................... 66 

Prepared Statement ............................................................................................. 67 

Mr. Randolph D. ‘‘Tex’’ Alles, Deputy Under Secretary, Management, U.S. 

Department of Homeland Security: 

Oral Statement ..................................................................................................... 70 

Prepared Statement ............................................................................................. 71 

APPENDIX 

Questions From Honorable Michael Waltz for Vice Admiral Paul Thomas ....... 85 

Question From Honorable Michael Waltz for Randolph D. ‘‘Tex’’ Alles .............. 86 

(1) 

BUILDING THE FLEET: ASSESSING THE DEPARTMENT OF HOMELAND SECURITY’S 

ROLE IN THE UNITED STATES COAST 

GUARD’S ACQUISITIONS PROCESS 

Tuesday, May 7, 2024 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON HOMELAND SECURITY, 

SUBCOMMITTEE ON TRANSPORTATION AND

MARITIME SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:03 a.m., at 

Room 310, Cannon House Office Building, Hon. Carlos Gimenez 

[Chairman of the subcommittee] presiding. 

Present: Representatives Gimenez, Higgins, and Thanedar. 

Also present: Representatives Moylan, and Radewagen. 

Chairman GIMENEZ. The Committee on Homeland Security Subcommittee on Transportation and Maritime Security will come to 

order. Without objection, the Chair may declare the subcommittee 

in recess at any point. I seek your indulgence in in my being late. 

I was held up on another matter. 

Today’s hearing will examine the Department of Homeland Security’s role in the United States Coast Guard’s acquisitions process. 

Without objection, the gentleman from Florida, Mr. Walsh; the gentleman from Guam, Mr. Moylan; and the gentlewoman from American Samoa, Mrs. Radewagen; and the gentlewoman from Alaska, 

Ms. Peltola, are permitted to sit with the subcommittee and ask 

questions of the witnesses. So ordered. 

Today’s hearings we will examine the Department of Homeland 

Security’s role in the United States Coast Guard’s acquisitions 

process. Without objection, the gentleman from Florida, Mr. Walsh, 

the gentleman from Guam—I think I have said that before. OK. 

As we begin today’s hearing, it is with a heavy heart that I take 

a moment to remember our late colleague Congressman Donald 

Payne, Jr. A proud son of New Jersey, Congressman Payne was a 

steadfast advocate for his constituents during his time in Congress. 

On the Homeland Security Committee, Congressman Payne 

worked to bolster the Department of Homeland Security’s ability to 

protect Americans, respond to emergencies, and safeguard our communities. He collaborated with his colleagues across the aisle to 

make necessary reforms to the Department’s operations, including 

the Department of Homeland Security Interoperable Communications Act which helped the Department facilitate more reliable 
2 

communications between personnel of different Department components during daily operations, planned events, and emergencies. 

Additionally, his leadership of the Homeland Security for Children Act, now, which was signed into law in 2022, ensured the Department is accounting for the unique vulnerabilities to children 

during natural disasters and acts of terrorism. Furthermore, he 

distinguished this subcommittee not only with his persistent advocacy, but also with his signature bowtie that elevated the sartorial 

character of the hearing room. 

We were saddened to hear of his tragic passing, and I think I 

speak for all the subcommittee Members by stating that we will 

miss his persistent advocacy and genteel presence on the dais. Our 

thoughts and prayers are with his families and friends, especially 

his wife Beatrice and their triplets Donald III, Jack, and Yvonne. 

I now recognize the Ranking Member, the gentleman from Michigan, Mr. Thanedar, for his remarks. 

Mr. THANEDAR. Thank you, Chairman Gimenez for yielding, and 

thank you for your kind words about our late colleague. I would 

like to echo everything you said. 

Congressman Payne was a true public servant in the best sense. 

He was humble, hardworking, and kind. His work on emergency 

preparedness, infrastructure investments, health care, and the security of our Nation’s children will have a lasting impact for many 

years to come. 

Congressman Payne sat on this subcommittee for most of his 

time in Congress. When it came to issues facing the TSA and the 

Coast Guard he always placed front-line workers front and center. 

He never missed an opportunity to thank Transportation Security 

officers, Federal air marshals, Coast Guard service members and 

other front-line workers and their service, and he backed up his 

words with action. 

His support was instrumental to securing pay raises and improved labor rights for TSA employees. He also sponsored the Securing Public Areas of Transportation Facilities Act of 2018, which 

was passed into law as part of the TSA Modernization Act later 

that year. 

His bill was helped guide the efforts of TSA and its security partners to protect public areas of airports, train stations, bus depots, 

and other transportation facilities. I was honored to work alongside 

Congressman Payne and get to know him. He will be sorely missed 

by his family, friends, colleagues, constituents, and staff. 

Mr. Chair, I yield back. 

Chairman GIMENEZ. Thank you, Mr. Ranking Member. 

To honor Congressman Payne, I ask all subcommittee Members, 

staff, witnesses, and the guests to rise and join me in a moment 

of silence. 

Thank you. Please be seated. 

I now recognize myself for an opening statement. Today our subcommittee is discussing the Department of Homeland Security’s 

role in the Coast Guard’s acquisition process. To carry out its 11 

statutory missions, the Coast Guard depends on a variety of assets 

from small boats and unmanned aerial vehicles to 400-foot-long 

vessels and complex fixed- and rotary-wing aircraft. These assets 

must be able to operate in the most austere and challenging envi-
3 

ronments and carry out dangerous maneuvers to save lives, protect 

our coastline, and our waters, pursue and arrest criminal actors, 

and enforce U.S. laws. 

It is, therefore, critical that the Coast Guard be able to acquire 

the assets necessary to perform their duties and replace older assets with new, more capable assets as the surface and air fleet age. 

The Coast Guard is currently in the process of replacing several 

mission-critical assets and new cutters. When completed, the new 

national security cutters, offshore patrol cutters, the fast response 

cutters will replace 90 existing cutters and assume responsibility 

for 7 of the Coast Guard’s 11 statutory missions. 

Additionally, the polar security cutter will bolster the aging 

Coast Guard icebreaker fleet and 3 heavy icebreakers will replace 

the Coast Guard’s sole heavy icebreaker, which is approaching almost 50 years in age. 

The Coast Guard works hand-in-hand with the domestic industrial base to meet the needs of the service. Among these critical acquisition programs there are certainly some success stories. The 

Coast Guard has so far commissioned 54 out of the 71 planned fast 

response cutters and expanded the areas of operations for these 

new cutters to the Persian Gulf and the Indo-Pacific. Shipbuilders 

are delivering the new FRCs on schedule and at a rate of 2 per 

year. 

Additionally, the Coast Guard will soon commission its 10th out 

of 11 planned national security cutters and the 11th NSC is currently under construction. The NSCs are already fulfilling critical 

missions requirements in the Indo-Pacific and elsewhere around 

the world. 

However, Coast Guard has experienced major setbacks with both 

the polar security cutter and the offshore patrol cutter programs. 

The first polar security cutter was originally supposed to be operational this year, but the Coast Guard has not yet begun construction on the first cutter. 

Among the factors contributing to the significant delay has been 

the lack of experience the Coast Guard and the domestic industrial 

base have in building icebreaking ships. While several allied countries such as Canada, Finland, and South Korea have extensive experience building icebreakers and ice-capable vessels, no heavy icebreaker has been constructed in the United States in almost 50 

years. The Coast Guard has not commissioned an icebreaker of any 

kind since 2006. 

This lack of experience is demonstrated in the development of 

ship design for the PSC, which to date is still not at the level necessary to begin construction. 

The Coast Guard has experienced significant issues with the offshore patrol cutter program as well. Between 2017 and 2019, estimates for the ships weight increased by more than 20 percent. Additionally, a 2023 Government Accountability Office report found 

that the OPC program, as well as the PSC program, did not follow 

standard practices in developing the ship’s design and technology. 

These issues have caused delays to the construction schedule for 

the OPCs and have raised the overall cost of the program as well 

as the maintenance cost required to keep the cutters the OPC will 

replace on-line for longer. 
4 

I am growing increasingly concerned that the Coast Guard cannot accurately estimate the cost of its shipbuilding programs. We 

have seen massive cost increases to the PSC program from the initial estimate the Coast Guard had provided Congress when standing up the program. 

That is why last fall Chairman Green and I requested to the 

Congressional Budget Office to conduct a cost estimate of the PSC 

program. According to the preliminary findings presented by Dr. 

Eric Labs, the PSC program cost will be almost 60 percent higher 

than the Coast Guard’s current estimate. 

Furthermore, as I mentioned earlier, existing challenges indicate 

that the OPC program costs will increase substantially from initial 

estimates. 

I understand that the Coast Guard is operating on a significantly 

smaller budget than its Navy counterparts, despite being tasked by 

Congress to develop, deploy, and maintain cutters that are equivalent in size and complexity to all but the largest of Navy ships. 

The Coast Guard’s entire budget request for fiscal year 2025 was $13.8 billion with $1.5 billion dedicated for procurement, construction, and improvements. In comparison, the Navy’s budget request 

for fiscal year 2025 includes $77 billion for procurement alone, 

roughly 51 times greater than the Coast Guard’s procurement 

budget. 

That said, as the Coast Guard prioritizes the PSC and OPC programs which will require the service to administer larger procurement budgets than they are used to, it is imperative that Coast 

Guard manages these programs effectively and efficiently. During 

my time as Chairman of this subcommittee the message we receive 

from stakeholders is clear. The demand for Coast Guard services 

is increasing and will continue to increase in the future. 

Bringing these cutters on-line on time and on budget will determine whether Coast Guard will be able to meet the growing demands for their assets, manpower, and expertise. 

Therefore, if we want to stem the flow of narcotics into our country, stop illegal fishing by the Chinese distance water fishing fleet, 

or maintain a consistent, credible presence in the Arctic to deter 

our geopolitical adversaries, the Coast Guard acquisitions program 

must deliver what Congress has tasked the services to do. 

I thank our two panels of witnesses for appearing before our subcommittee today to discuss this critical topic, and I look forward to 

your testimony. 

[The statement of Chairman Gimenez follows:] 

STATEMENT OF CHAIRMAN CARLOS A. GIMENEZ

Today, our subcommittee is discussing the Department of Homeland Security’s 

role in the Coast Guard’s acquisitions process. 

To carry out its 11 statutory missions, the Coast Guard depends on a variety of 

assets, from small boats and unmanned aerial vehicles to 400-feet-long vessels and 

complex fixed- and rotary-wing aircraft. 

These assets must be able to operate in the most austere and challenging environments and carry out dangerous maneuvers to save lives, protect our coastline and 

our waters, pursue and arrest criminal actors, and enforce U.S. laws. 

It is therefore critical that the Coast Guard be able to acquire the assets necessary to perform their duties and replace older assets with new, more capable assets as the surface and air fleet age. 

The Coast Guard is currently in the process of replacing several mission-critical 

assets with new cutters. 
5 

When completed, the new National Security Cutters, Offshore Patrol Cutters, and 

Fast Response Cutters will replace 90 existing cutters and assume responsibility for 

7 of the Coast Guard’s 11 statutory missions. 

Additionally, the Polar Security Cutters will bolster the aging Coast Guard icebreaker fleet, and 3 heavy icebreakers will replace the Coast Guard’s sole heavy icebreaker, which is approaching 50 years of service. 

The Coast Guard works hand-in-hand with the domestic industrial base to meet 

the needs of the service. 

Among these critical acquisition programs, there are certainly some success stories. 

The Coast Guard has so far commissioned 54 out of the 71 planned Fast Response 

Cutters and expanded the areas of operation for these new cutters to the Persian 

Gulf and the Indo-Pacific. 

The shipbuilder is delivering the new FRCs on schedule at a rate of 2 per year. 

Additionally, the Coast Guard will soon commission its 10th out of 11 planned National Security Cutters, and the 11th NSC is currently under construction. 

The NSCs are already fulfilling critical mission requirements in the Indo-Pacific 

and elsewhere around the world. 

However, the Coast Guard has experienced major setbacks with both the Polar 

Security Cutter and Offshore Patrol Cutter programs. 

The first Polar Security Cutter was originally supposed to be operational this 

year, but the Coast Guard has not yet begun construction on the first cutter. 

Among the factors contributing to this significant delay has been the lack of experience the Coast Guard and the domestic industrial base have in building 

icebreaking ships. 

While several allied countries such as Canada, Finland, and South Korea have extensive experience building icebreakers and ice-capable vessels, no heavy icebreaker 

has been constructed in the United States in almost 50 years, and the Coast Guard 

has not commissioned an icebreaker of any kind since 2006. 

This lack of experience is demonstrated in the development of ship design for the 

PSC, which to date is still not at the level necessary to begin construction. 

The Coast Guard has experienced significant issues with the Offshore Patrol Cutter program as well. 

Between 2017 and 2019, estimates for the ship’s weight increased by more than 

20 percent. 

Additionally, a 2023 Government Accountability Office report found that the OPC 

program—as well as the PSC program—did not follow standard practices in developing the ship’s design and technology. 

These issues have caused delays to the construction schedule for the OPCs and 

raised the overall cost of the program, as well as maintenance costs required to keep 

the cutters the OPCs will replace on-line for longer. 

I am growing increasingly concerned that the Coast Guard cannot accurately estimate the cost of its shipbuilding programs. 

We have seen massive cost increases to the PSC program from the initial estimate 

Coast Guard provided Congress when standing up the program. 

This is why, last fall, Chairman Green and I requested the Congressional Budget 

Office to conduct a cost estimate of the PSC program. 

According to the preliminary findings presented by Dr. Eric Labs, the PSC program’s cost will be almost 60 percent higher than the Coast Guard’s current estimate. 

Furthermore, as I mentioned earlier, existing challenges indicate that the OPC 

program’s cost will increase substantially from initial estimates. 

I understand that the Coast Guard is operating on a significantly smaller budget 

than its Navy counterparts, despite being tasked by Congress to develop, deploy, 

and maintain cutters that are equivalent in size and complexity to all but the largest Navy ships. 

The Coast Guard’s entire budget request for fiscal year 2025 was $13.8 billion, 

with $1.5 billion dedicated for procurement, construction, and improvements. 

In comparison, the Navy’s budget request for fiscal year 2025 includes $77 billion 

for procurement alone, roughly 51 times greater than the Coast Guard’s procurement budget. 

That said, as the Coast Guard prioritizes the PSC and OPC programs, which will 

require the service to administer larger procurement budgets than they are used to, 

it is imperative that Coast Guard manages these programs effectively and efficiently. 

During my time as Chairman of this subcommittee, the message we have received 

from stakeholders is clear: the demand for Coast Guard services is increasing and 

will continue to increase in the future. 
6 

Bringing these cutters on-line on time and on budget will determine whether 

Coast Guard will be able to meet the growing demand for their assets, manpower, 

and expertise. 

Therefore, if we want to stem the flow of narcotics into our country, stop illegal 

fishing by the Chinese distance water fishing fleet, or maintain a consistent, credible presence in the Arctic to deter our geopolitical adversaries, the Coast Guard acquisitions programs must deliver what Congress tasks the service to do. 

I thank our two panels of witnesses for appearing before our subcommittee today 

to discuss this critical topic, and I look forward to your testimonies. 

Chairman GIMENEZ. At this time I will yield to the Ranking 

Member for his opening statement. 

Mr. THANEDAR. Thank you, Chairman Gimenez. 

Thank you to our witnesses on both panels for joining us today 

and sharing your expertise on this important topic. 

The Coast Guard’s shipbuilding efforts and other acquisition programs play a critical role in protecting U.S. national security. The 

Coast Guard has an aging fleet of surface and aviation vessels. 

In the Arctic, the Coast Guard is challenged to maintain an adequate presence due to a lack of modern icebreakers. The Coast 

Guard’s two existing icebreakers, the Polar Star and the Healy, are 

operating well past their service lives and are not sufficient on 

their own to meet the Coast Guard’s needs. 

In the Indo-Pacific, the Red Sea, and elsewhere around the globe, 

the Coast Guard’s aging assets are similarly stretched thin by increased demands. 

The Coast Guard is undergoing a historic recapitalization of its 

fleet, working to acquire modern vessels that will enhance capabilities and mission readiness. This large-scale, complex effort will 

take long-term investment and commitment from those of us in 

Congress, as well as the consistent support and oversight of the 

Department of Homeland Security. 

Already the Coast Guard has successfully acquired and deployed 

a large number of new cutters through the national security cutter 

and fast response cutter program. However, the service has faced 

significant challenges in developing, designing, and building new 

icebreakers through the polar security cutter program, as well as 

new multi-mission cutters through the offshore patrol cutter program. 

These programs have faced a host of challenges, including a global pandemic, supply chain disruptions, natural disasters, contractor 

inexperience, and a strong labor market which is driving increased 

labor cost. As a result, both programs have seen significant delays 

and cost increases. Some of these challenges could not have been 

predicted while others likely should have been better accounted for 

within calculated risk assumptions. 

Going forward, DHS and the Coast Guard must work together 

with partners in the U.S. Navy and the shipbuilding industry to 

build up an industrial base capable of regularly producing worldclass cutters and other vessels according to predictable schedules 

and budgets. 

These efforts will be critical to not just the success of the polar 

security cutter and offshore patrol cutter programs but to building 

Great Lakes icebreakers, waterway commerce cutters, arctic security cutters, and other cutters not yet envisioned. 
7 

I look forward to hearing from our witnesses today and about 

how we can learn lessons from the past few years to improve Coast 

Guard acquisition programs and ensure effective DHS oversight. 

I thank our witnesses, and I yield back, Mr. Chair. 

[The statement of Ranking Member Thanedar follows:] 

STATEMENT OF RANKING MEMBER SHRI THANEDAR

MAY 7, 2024 

The Coast Guard’s shipbuilding efforts and other acquisition programs play a critical role in protecting U.S. national security. The Coast Guard has an aging fleet 

of surface and aviation vessels. In the Arctic, the Coast Guard is challenged to 

maintain an adequate presence due to a lack of modern icebreakers. 

The Coast Guard’s two existing icebreakers, the Polar Star and the Healy, are operating well past their service lives and are not sufficient on their own to meet the 

Coast Guard’s needs. In the Indo-Pacific, the Red Sea, and elsewhere around the 

globe, the Coast Guard’s aging assets are similarly stretched thin by increased demands. 

The Coast Guard is undergoing a historic recapitalization of its fleet, working to 

acquire modern vessels that will enhance capabilities and mission readiness. This 

large-scale, complex effort will take long-term investment and commitment from 

those of us in Congress, as well as the consistent support and oversight of the Department of Homeland Security. 

Already, the Coast Guard has successfully acquired and deployed a large number 

of new cutters through the National Security Cutter and Fast Response Cutter programs. However, the service has faced significant challenges in developing, designing, and building new icebreakers through the Polar Security Cutter program, as 

well as new multi-mission cutters through the Offshore Patrol Cutter program. 

These programs have faced a host of challenges, including a global pandemic, supply chain disruptions, natural disasters, contractor inexperience, and a strong labor 

market which is driving increased labor costs. As a result, both programs have seen 

significant delays and cost increases. Some of these challenges could not have been 

predicted, while others likely should have been better accounted for within calculated risk assumptions. 

Going forward, DHS and the Coast Guard must work together with partners in 

the U.S. Navy and the shipbuilding industry to build up an industrial base capable 

of regularly producing world-class cutters and other vessels according to predictable 

schedules and budgets. These efforts will be critical to not just the success of the 

Polar Security Cutter and Offshore Patrol Cutter programs, but to building Great 

Lakes icebreakers, Waterways Commerce Cutters, Arctic Security Cutters, and 

other cutters not yet envisioned. 

I look forward to hearing from our witnesses today about how we can learn lessons from the past few years to improve Coast Guard acquisition programs and ensure effective DHS oversight. 

Chairman GIMENEZ. Thank you, Ranking Member Thanedar. 

Other Members of the committee are reminded that opening 

statements may be submitted for the record. 

[The statement of Ranking Member Thompson follows:] 

STATEMENT OF RANKING MEMBER BENNIE G. THOMPSON

MAY 7, 2024 

The Department of Homeland Security plays an important role in overseeing component acquisition activities and driving program effectiveness and accountability. 

The Coast Guard’s acquisition portfolio is particularly immense and complex, as the 

service seeks to recapitalize an aging fleet of surface and aviation assets. The Coast 

Guard has struggled to meet shipbuilding budgets and deadlines, as some of its 

largest acquisition programs have far exceeded initial cost estimates and delivery 

schedules. 

The Polar Security Cutter program, for example, is currently in breach status, as 

the program has fallen out of compliance with the schedule and cost basis set forth 

in its acquisition program baseline. In addition, the Offshore Patrol Cutter program—the Coast Guard’s largest acquisition program and highest investment priority—is likewise off-schedule and over budget. 
8 

In recent years, the Coast Guard has faced a variety of challenges. The COVID– 

19 pandemic interrupted business processes and global supply chains, increasing the 

costs of materials. Natural disasters have impacted shipyards, including when Hurricane Michael tore through the southeastern United States in 2018 and damaged 

the Offshore Patrol Cutter shipbuilder’s facilities. 

The Coast Guard has grappled with an inexperienced U.S. industrial base, which 

has not produced a heavy icebreaker in nearly 50 years, leading to delays in producing complex ship designs. Most recently, a strong economy has increased wages 

for workers, leading to a rise in labor costs associated with shipbuilding. Though 

these challenges have been unpredictable to some degree, we can be certain that 

more challenges lie ahead. 

DHS and the Coast Guard must develop robust acquisition and shipbuilding practices that accurately account for the likelihood of unforeseen circumstances and setbacks. Accurate cost estimates and delivery schedules are critical to the Coast 

Guard’s mission readiness, as ballooning costs and repeated delays have cascading 

impacts across the service. With top-line budget levels set in place, investing unplanned additional funds into acquisition programs means removing funds from 

other priorities. 

The Coast Guard has a wide variety of funding needs, from shore infrastructure 

to housing to recruiting and retention incentives. Developing acquisition programs 

that reliably stick to baseline schedules and cost estimates will allow DHS and the 

Coast Guard to prioritize and invest systematically, ultimately improving the safety 

and security of our Nation’s maritime environment. 

Again, I am pleased to have a distinguished panel of witnesses 

before us today on this critical topic. I ask that our witnesses 

please rise and raise their right hands. 

[Witnesses sworn.] 

Chairman GIMENEZ. Let the record reflect that the witnesses 

have answered in the affirmative. Thank you and please be seated. 

I would now like to formally introduce our witnesses. Ms. Shelby 

Oakley serves as the director of contracting and national security 

acquisitions with the Government Accountability Office, Mr. Ronald O’Rourke serves as the specialist in naval affairs for the Congressional Research Service, and Mr. Eric Labs serves as a senior 

analyst for naval forces and weapons for the Congressional Budget 

Office. I thank each of our distinguished witnesses for being here 

today. 

I now recognize Ms. Oakley for 5 minutes to summarize her 

opening statements. 

STATEMENT OF SHELBY OAKLEY, DIRECTOR, CONTRACTING 

AND NATIONAL SECURITY ACQUISITIONS, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. OAKLEY. Good morning, Chairman Gimenez, Ranking Member Thanedar, and Members of the subcommittee. Thank you for 

the opportunity to talk about Coast Guard shipbuilding programs 

and their challenges. I am a relative newcomer to DHS and Coast 

Guard acquisitions. I have spent the majority of my GAO career assessing acquisitions at NASA and DOD, in particular Navy shipbuilding. 

Given my unique experience, I can say that some of the fundamental challenges and disappointing outcomes I see with Coast 

Guard acquisitions are not unique. However, I will also say that 

the Coast Guard and DHS are not doing themselves any favors or 

the taxpayers any favors when they point to factors outside of their 

control as the primary cause for these outcomes. 

Coast Guard should do more to address what it can control. For 

example, GAO’s extensive body of work on DHS and Coast Guard 
9 

has resulted in 40 recommendations aimed at improving how it 

manages its acquisitions. As of today, about half of these recommendations remain unaddressed or we have already closed them 

because the Coast Guard didn’t take action in time for them to 

make a difference. 

Given that Coast Guard ships cost billions to acquire and they 

play a vital role in securing our homeland, my statement will focus 

on what the Coast Guard needs to do to improve outcomes for its 

existing and future shipbuilding programs. 

First, I will cover the main challenges that have plagued the 

Coast Guard’s highest-priority programs, OPC and PSC, and 

missed opportunities for improvement. 

Second, I will discuss leading practices that GAO has recently 

identified to help provide DHS and Coast Guard with a new path 

forward for achieving better outcomes in its ship programs. 

Both the OPC and PSC have struggled with achieving a stable 

design to support construction. This is a key leading practice to 

achieve predictable outcomes. 

For OPC we found that DHS and Coast Guard allowed the program to repeatedly proceed through design points intended to prevent programs from moving forward when they are not ready. This 

happened despite significant risks and our recommendations to the 

contrary. 

For example, OPC was authorized to start construction on the 

first 4 ships without fully developing a critical technology or completing key portions of the design. For PSC, we found that the program continues to struggle with design even after 5 years. Several 

factors that should have been red flags from the start have contributed to this, including a lack of heavy polar icebreaker expertise in 

the industrial base and the complexity of the design. 

Additionally, the shipbuilder and Coast Guard underestimated 

how many design changes they would need to make to meet Coast 

Guard specifications and made costly design errors, such as designing the lowest deck of the ship at the wrong height. Both programs 

are not meeting their original cost and schedule goals and are now 

reevaluating the feasibility of their current estimates. 

Specifically, the OPC lead ship delivery is delayed almost 4 years 

and costs have increased by $11 billion and the PSC lead ship is 

delayed by about 5 years and costs have increased by at least $2 

billion and potentially more as my CBO colleague will testify. 

In the mean time, the current fleet is aging and crews are having 

to work harder to keep existing ships operational while they wait 

for the new ships. 

Our work on leading practices for acquisitions, which has 

spanned decades, presents opportunities for the Coast Guard to improve. For this work we gathered and vetted practices from successful commercial companies to identify how they deliver innovative products that meet cost and schedule expectations. 

The bottom line, when thoughtfully applied, the practices leading 

companies follow for designing and constructing ships improve outcomes, even when cultural and structural differences yield a different sets of incentives, priorities, or requirements. 

At a very high level, companies establish realistic, executable 

business cases. They use their processes, tools, and expertise to 
10 

continually reevaluate their business cases to ensure that programs 

are on track and will take quick action when the business case deteriorates. 

These practices and the many open recommendations I discussed 

earlier provide a good starting point for the Coast Guard to consider new approaches to acquiring its capabilities to meet its important missions. It is safe to say no one is happy with the results 

the Coast Guard is seeing and change is needed. 

Chairman Gimenez, Ranking Member Thanedar, and Members 

of the subcommittee this completes my oral statement. I would be 

pleased to respond to any questions. I also want to take a moment 

to express my condolences about Mr. Payne. 

[The prepared statement of Ms. Oakley follows:] 
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Chairman GIMENEZ. Thank you, Ms. Oakley. 

I now recognize Mr. O’Rourke for 5 minutes to summarize his 

opening statements. 

STATEMENT OF RONALD O’ROURKE, SPECIALIST IN NAVAL 

AFFAIRS, CONGRESSIONAL RESEARCH SERVICE 

Mr. O’ROURKE. Thank you and my condolences also regarding 

Mr. Payne. 

Chairman Gimenez, Ranking Member Thanedar, distinguished 

Members of the subcommittee, thank you for the opportunity to appear before you today. With your permission I would like to submit 

my testimony for the record and summarize it here briefly. 
41 

As requested, my testimony focuses on the polar security cutter 

or PSC program. Estimated PSC procurement costs have increased 

about 39 percent since the contract award 5 years ago, but still appear to be significantly underestimated. 

Three potential sources of cost growth, if fully realized, could increase PSC costs another 30 to 40 percent and 2 other sources of 

cost growth could increase them further toward the figures in 

CBO’s testimony. 

The Coast Guard could respond to this potential cost growth by 

granting contract relief to the PSC shipbuilder through a request 

for equitable adjustment or using Pub. L. 85–804, as was done for 

the builder of the first 4 offshore patrol cutters. 

Mr. Chairman, as you mentioned, the Coast Guard originally 

aimed to have the first PSC delivered in 2024, but the ship’s estimated delivery date has been delayed repeatedly and is now expected to occur no earlier than fiscal year 2029. A parent design 

strategy used for the PSC program was intended to reduce the 

PSC’s design time, but 5 years after contract award the expected 

reduction in design time does not appear to have been realized, 

suggesting that the parent design might now more closely resemble 

what I refer to as a PDINO, meaning a parent design in name 

only. 

Limited numbers of available naval architects and design engineers also appear to have contributed to delays in maturing the 

PSC design. 

At this stage one option for substantially accelerating the construction of polar icebreakers would be to complete the maturation 

of the PSC design and begin building PSCs at the program’s current shipbuilder Bollinger, and at some later point introduce a second shipbuilder to build additional PSCs in parallel to those being 

built by Bollinger. Given the Coast Guard’s requirement for a total 

of 8 to 9 polar-capable icebreakers, including 4 to 5 PSCs and 4 to 

5 medium polar icebreakers, one possible approach might be to introduce a second shipbuilder to build the fourth and fifth PSCs 

while Bollinger completes the first 3. 

Another possible approach would be to have Bollinger build all 

4 or 5 PSCs while accelerating the start date of the time line for 

designing and building the medium polar icebreakers. These are 

not the only possible options. 

A 2017 National Academies’ report recommended using a common basic design for both the PSCs and the medium polar icebreaker. Coast Guard, however, has testified that it wants the new 

medium polar icebreakers to have a shallower draft than the PSC. 

This could make it difficult to employ a common basic design for 

both types of icebreakers. 

Building PSCs in parallel at two shipyards or accelerating the 

start of the time line for designing and building the medium polar 

icebreakers or increasing annual OPC procurement quantities so as 

to replace the medium endurance cutters more quickly could require substantially increasing annual funding levels in the Coast 

Guard’s procurement account. 

Substantially increasing that account might also make the use of 

block by contracting, which can reduce ship procurement costs, appear budgetarily less risky to Coast Guard officials. 
42 

1See CRS Report 98–830 F, Coast Guard Integrated Deepwater System: Background and 

Issues for Congress, by Ronald O’Rourke (first version October 5, 1998). 2 CRS Report RL34391, Coast Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress, by Ronald O’Rourke. 3 CRS Report R42567, Coast Guard Cutter Procurement: Background and Issues for Congress, 

by Ronald O’Rourke. 4 CRS In Focus IF11672, Coast Guard Waterways Commerce Cutter (WCC) Program: Background and Issues for Congress, by Ronald O’Rourke. 5 CRS Testimony TE10084, Strategic Competition in the Arctic, by Ronald O’Rourke. 6 CRS Report R41153, Changes in the Arctic: Background and Issues for Congress, coordinated 

by Ronald O’Rourke. 

Since fiscal year 2010, funding for the Coast Guard’s procurement account has remained relatively flat in nominal terms, while 

the Navy shipbuilding budget has more than doubled. The amount 

requested for the Coast Guard’s procurement account for fiscal year 

2025 equates to about $1.1 billion in constant fiscal year 2010 dollars. The Coast Guard testified in 2013 that an annual procurement funding level of about $1 billion would almost create a death 

spiral for the Coast Guard. 

The budget displays for the procurement account in the Coast 

Guard’s annual budget book lack certain basic information about 

the Coast Guard’s shipbuilding programs, including estimated per 

hull total procurement costs and scheduled delivery dates. These 

omissions can impede the ability of Members and their staff to 

identify and track year-to-year changes in per-hull procurement 

costs and delivery dates, which in turn can make it more difficult 

to conduct effective oversight of these programs. 

Congress may consider whether to direct the Coast Guard to include in its annual budget justification book budget displays for its 

shipbuilding and aircraft procurement accounts that are modeled 

after those in the Navy’s annual budget justification books, which 

include this kind of information. 

Chairman Gimenez, Ranking Member Thanedar, thank you 

again for the opportunity to appear before you today, and I will be 

pleased to respond to any questions the subcommittee may have. 

[The prepared statement of Mr. O’Rourke follows:] 

PREPARED STATEMENT OF RONALD O’ROURKE

MAY 7, 2024 

INTRODUCTION

Chairman Gimenez, Ranking Member Thanedar, thank you for the opportunity to 

appear before you today to testify on ‘‘Building the Fleet: Assessing the Department 

of Homeland Security’s Role in the United States Coast Guard’s Acquisitions Process.’’ As part of my work for Congress as the CRS specialist for naval issues, a position I have held since 1984, I have been tracking Coast Guard shipbuilding programs since 1998 (i.e., for the last 26 years).1 I currently maintain CRS reports on 

the Polar Security Cutter (PSC) program;2 the National Security Cutter (NSC), Offshore Patrol Cutter (OPC), and Fast Response Cutter (FRC) programs;3 as well as 

the Waterways Commerce Cutter (WCC) program.4 My biography is in the Appendix 

at the end of this statement. 

As requested, my testimony focuses primarily on the PSC program. I initiated the 

CRS report on what is now referred to as the PSC program in 2008, and have since 

updated it periodically (usually multiple times each year). I last testified before this 

subcommittee on July 18, 2023, at a hearing on strategic competition in the Arctic.5

My work on the PSC program supports my efforts as the head of the CRS Arctic 

team and the coordinator of the CRS overview report on the Arctic, which CRS initiated in 2010.6 Parts of this testimony are adapted from the CRS report on the PSC 

program and the CRS report on the NSC, OPC, and FRC programs. 
43 

7Source: CQ transcript of the hearing. 

8Source: U.S. Coast Guard email to CRS, March 26, 2024, which stated that costs shown are 

from the PSC 2021 LCCE v3 (Life Cycle Cost Estimate, version 3). The Coast Guard stated in 

the email that the 2021 LCCE v3 is the Coast Guard’s current model for estimated PSC procurement costs. 9See CBO, An Analysis of the Navy’s Fiscal Year 2024 Shipbuilding Plan, October 2023, p. 

34 (Figure 10). 10See Government Accountability Office, Navy Shipbuilding[:] Past Performance Provides Valuable Lessons for Future Investments, GAO–18–238SP, June 2018, p. 8. 11See CBO, An Analysis of the Navy’s Fiscal Year 2024 Shipbuilding Plan, October 2023, p. 

34 (Figure 10). 12Department of the Navy, Highlights of the Department of the Navy Fiscal Year Budget, 

2024, page 1–12. 

POLAR SECURITY CUTTER (PSC) PROGRAM

Two key issues for the Polar Security Cutter (PSC) program are cost growth and 

schedule delay. 

Cost Growth 

Coast Guard and Navy estimates of PSC procurement costs have increased about 

39 percent since the April 2019 PSC program contract award: 

• At a March 28, 2019, hearing on the Coast Guard’s proposed fiscal year 2020 

budget, then-Coast Guard Commandant Admiral Karl Schultz testified that as 

of that date, the cost of the first PSC was estimated at $925 million to $940 

million, and that the cost of the second and third PSCs would be in the range 

of $700 million each,7 producing an estimated three-ship total of about $2,325 

million to $2,340 million (i.e., about $2.3 billion). 

• As shown in the CRS report on the PSC program, the most recent estimate provided by the Coast Guard to CRS is for the first PSC to cost $1,297 million (i.e., 

about $1.3 billion), the second PSC to cost $921 million, and the third PSC to 

cost $1,017 million (i.e., about $1.0 billion), producing an estimated three-ship 

total $3,235 million (i.e., about $3.2 billion),8 a total that is about 39 percent 

higher than the total from the March 28, 2019, testimony. 

Even with this 39 percent increase, PSC procurement costs still appear to still be 

significantly underestimated. At least 5 potential factors could increase estimated 

PSC procurement costs from the March 2019 figures to figures that are significantly 

above the current estimate: 

• The actual PSC design is larger than the Government’s indicative design.—The 

design chosen for the PSC is about 35 percent larger in terms of light-ship displacement than the indicative design (i.e., the Government’s in-house notional 

design) that informed earlier Navy and Coast Guard cost estimating for the program. Adjusting for this larger design might incur an approximate 35 percent 

increase in estimated PSC procurement costs over the costs estimated at the 

time of the April 2019 PSC contract award. 

• The Navy has frequently underestimated lead ship costs.—As detailed by the 

Congressional Budget Office (CBO)9 and the Government Accountability Office 

(GAO),10 the costs of lead ships in Navy shipbuilding programs have exceeded 

the Navy’s estimates. Cost growth on Navy lead ships, CBO analysis shows, has 

ranged from a few percent to about 150 percent, with the weighted average figure for the 19 ship classes examined by CBO being 25 percent, and the 

unweighted average being 40 percent.11 Many of these 19 cases involve lead 

ships whose light-ship displacements were not underestimated, meaning that 

the cost growth resulted from factors other than the one described in the previous bullet point. 

• Recent inflation in shipbuilding.—Shipbuilding, like other sectors of defense 

procurement and the U.S. economy in general, has experienced significant inflation since the start of the COVID–19 pandemic due to supply chain disruptions 

and other impacts. The Navy states ‘‘the residual effects of inflationary pressures of the past few years, workforce challenges, plus increased labor and supply costs across the defense enterprise, all drove costs associated with our shipbuilding account up roughly 20 percent over the last couple of years.’’12 This inflation has increased the estimated procurement costs of multiple Navy shipbuilding programs. Within Coast Guard shipbuilding, the estimated unit procurement cost of an FRC has increased from $60 million in the Coast Guard’s 

enacted fiscal year 2021 appropriation to $100 million in the Coast Guard’s fiscal year 2024 unfunded requirements list and fiscal year 2025 budget submission, although not all of the increase is necessarily due to the recent inflation 

in shipbuilding. 
44 

13See, for example, Paul McLeary and Lee Hudson, ‘‘Navy Shipyards Compete with Fast 

Food, and Are Losing,’’ Politico Pro, April 9, 2024. 14 Ibid. 15 A January 22, 2024, press report states: 

Rear Adm. Chad Jacoby, the assistant commandant of the Coast Guard for acquisition, said 

this month workforce challenges—specifically, needing more highly trained welders and design 

engineers—are contributing to delays on the Polar Security Cutter program at Bollinger Mississippi, formerly VT Halter Marine. 

‘‘If you look across all of our construction programs, every shipyard says they’re going to hire 

1,000 or 2,000 more people prior to executing the contracts that we have in place. They all happen to be on the Gulf Coast, so if you add up all those numbers, it’s probably physically impossible for every one of those individual shipyards to hire 2,000 more people’’ to support on-time 

ship deliveries, Jacoby said on a Jan. 11 panel at the Surface Navy Association annual conference. 

He told Defense News after the panel he is specifically concerned about Bollinger Mississippi 

in Pascagoula and its Polar Security Cutter; Eastern Shipbuilding Group in Panama City, Florida, which is building the first four Offshore Patrol Cutters; Austal USA in Mobile, Alabama, 

which will build the next 11 OPCs; and Birdon America, a Denver-based company that will build 

the Waterways Commerce Cutters with a number of Louisiana-and Alabama-based companies. 

‘‘It is one workforce across many States,’’ the admiral said of the Gulf Coast region. ‘‘As each 

shipyard says they’re going to hire people, they’re definitely competing against each other.’’ 

(Megan Eckstein, ‘‘Coast Guard Ship Programs Facing Delays amid National Worker Shortage,’’ Defense News, January 22, 2024.) 

• Potential need for additional increases in worker wages and benefits.—Shipyards 

and associated supplier firms face challenges in recruiting and retaining new 

workers, in part because wages and benefits in service and retail jobs have 

grown more in recent years than have wages and benefits at shipbuilders and 

supplier firms.13 As a result, workers are now more likely to choose service and 

retail jobs, where the work, while paying less than shipbuilding work, is more 

likely to be done in air-conditioned indoor settings, involve less heavy lifting or 

risk of serious injury, and take place in locations offering easier daily commutes.14 Reestablishing a larger differential in wages and benefits between 

shipbuilding jobs and service and retail jobs could require substantially increasing total wages and benefits for shipbuilding workers. Such a change could, in 

turn, substantially increase procurement costs for ships such as the PSC, since 

shipyard labor can account for roughly 40 percent of a military ship’s total procurement cost. Increases in worker wages and benefits could also result from 

shipyards along the Gulf Coast competing against one another for available 

shipbuilding workers.15

• Labor hours and absorption of fixed overhead costs.—Construction delays due 

to lower-than-anticipated shipyard worker productivity, supply chain issues, or 

other causes could increase the cost of the PSC because of the ship requiring 

a larger-than-anticipated number of labor hours to build (if worker productivity 

is an issue), and because the ship would absorb a portion of the shipyard’s 

monthly fixed overhead costs for an increased number of months (an effect 

somewhat like the meter in a taxi continuing to run even when the taxi is stuck 

in traffic). 

A simple (not compounded) sum of the potential percentage cost increases described in the first 3 bullet points above (using the 25 percent and 40 percent figures from the second bullet) comes to a potential percentage cost increase, if all 3 

factors were to come fully into play, of 80 percent to 95 percent above the March 

2019 figures. 

Increasing the March 2019 figures by 80 percent would result in an estimated cost 

of $1,665 million to $1,692 million (i.e., about $1.7 billion) for the lead ship and 

$1,260 million (i.e., about $1.3 billion) each for the second and third ships, producing an estimated three-ship total of $4,185 million to $4,212 million (i.e., about 

$4.2 billion). This total is about 30 percent higher than the currently estimated total 

of $3,235 million. 

Increasing the March 2019 figures by 95 percent would result in an estimated cost 

of $1,804 million to $1,833 million (i.e., about $1.8 billion) for the lead ship and 

$1,365 million (i.e., about $1.4 billion) each for the second and third ships, producing an estimated three-ship total of $4,534 million to $4,563 million (i.e., about 

$4.5 billion to $4.6 billion). This total is about 40 percent higher than the currently 

estimated total of $3,235 million. 

The cost figures in the 2 previous paragraphs do not include any increases cost 

resulting from the factors outlined in the fourth and fifth bullet points above. 

Percentage increases in estimated ship procurement costs comparable to the potential 80 percent–95 percent increase discussed above have recently occurred in 

certain Navy shipbuilding programs. The estimated procurement cost of the lead 
45 

16For more on the TAGOS–25 program, see CRS In Focus IF11838, Navy TAGOS–25 Ocean 

Surveillance Shipbuilding Program: Background and Issues for Congress, by Ronald O’Rourke. 17For more on the LSM program, see CRS Report R46374, Navy Medium Landing Ship (LSM) 

(Previously Light Amphibious Warship [LAW]) Program: Background and Issues for Congress, 

by Ronald O’Rourke. 18 Congressional Budget Office, Acquisition Costs of the Navy’s Medium Landing Ship, April 

2024, p. 1. For further discussion, see CRS Report R46374, Navy Medium Landing Ship (LSM) 

(Previously Light Amphibious Warship [LAW]) Program: Background and Issues for Congress, 

by Ronald O’Rourke. 19 Another consideration in comparing cost estimates for the first PSC and the LPD–17 Flight 

II design is that the first PSC is at the top of the learning curve for building the PSC design, 

while the cost of the LPD–17 Flight II design reflects learning curve benefits from producing 

earlier LPD–17 Flight I class ships. For more on the LPD–17 Flight II class program, see CRS 

Report R43543, Navy LPD–17 Flight II and LHA Amphibious Ship Programs: Background and 

Issues for Congress, by Ronald O’Rourke. 20For more on Pub. L. 85–804 and the contract relief granted in the OPC program to Eastern 

Shipbuilding Group under that law, see CRS Report R42567, Coast Guard Cutter Procurement: 

Background and Issues for Congress, by Ronald O’Rourke. 21The phrase parent design in name only (with the resulting acronym PDINO) is only one 

possible shorthand way of referring to the situation. One possible way to pronounce the acronym 

PDINO would be pa-DEE-no. 22For more on the FFG–62 program, see CRS Report R44972, Navy Constellation (FFG–62) 

Class Frigate Program: Background and Issues for Congress, by Ronald O’Rourke. On the issue 

of the FFG–62’s parent design strategy, the report states: 

An April 2, 2024, press report states: ‘‘At one point the Constellation design shared about 85 

percent commonality with the original [Italian-French] FREMM [Fregata Europea MultiMissione parent] design, but the alterations [incorporated into the FFG–62 design] have brought 

that commonality down to under 15 percent, a person familiar with the changes told USNI 

News.’’ If the FFG–62 design shares less than 15 percent commonality with the FREMM design, 

then some observers might characterize the FFG–62 program as having moved over time toward 

what might be termed a parent design in name only (PDINO) design approach. 

ship in the Navy’s TAGOS–25 ocean surveillance ship program increased about 82 

percent between the Navy’s fiscal year 2023 and fiscal year 2024 budget submissions;16 the estimated procurement cost of the lead ship in the Navy’s medium landing ship (LSM) program increased 43 percent between the Navy’s fiscal year 2024 

and fiscal year 2025 budget submissions;17 and the estimated procurement cost of 

the lead ship in the Navy’s light replenishment oiler (TAOL) program increased 202 

percent between the Navy’s fiscal year 2024 and fiscal year 2025 budget submissions. An April 2024 CBO report on the procurement costs of LSMs estimates that 

LSMs will cost roughly 127 percent to 187 percent more than the Navy estimates.18

A procurement cost for the first PSC that is closer to $2 billion than to $1 billion 

would be comparable to the procurement cost of a Navy LPD–17 Flight II class amphibious ship, which is about $2.0 billion. The LPD–17 Flight II design a little larger than the PSC design and has more expensive combat system equipment than the 

PSC.19

The Coast Guard could respond to potential PSC program cost growth by granting 

contract relief to the PSC shipbuilder, Bollinger Mississippi Shipbuilding, through 

a request for equitable adjustment (REA) or pursuant to Pub. L. 85–804 (as done 

for the builder of the first four OPCs, Eastern Shipbuilding Group).20

Schedule Delay 

The PSC program has fallen far behind its original schedule. The Coast Guard 

originally aimed to have the first PSC delivered in 2024, but the ship’s estimated 

delivery date has been delayed repeatedly and is now expected to occur no earlier 

than fiscal year 2029. 

A principal cause of the delay has been the time needed to achieve design maturity (i.e., to complete the detail design of the ship). The parent design strategy used 

for the PSC program (i.e., the strategy of creating the PSC design by modifying the 

design of an existing polar-capable ship) was intended by the Coast Guard and Navy 

to reduce the PSC’s design time. Five years after contract award, the expected reduction in design time does not appear have been realized. The time needed to mature the PSC design suggests that the parent design used for the PSC program— 

the design for the new German polar icebreaker Polar Stern II—might now more 

closely resemble a parent design in name only (PDINO).21 In this regard, the PSC 

program appears somewhat similar to the Navy’s Constellation (FFG–62) class frigate program, which the Navy initiated as a program that would use a parent design, 

but which observers might now characterize as having moved over time toward a 

PDINO situation.22 Limited numbers of available naval architects and design engi-
46 

23The January 22, 2024, press report quoted in footnote 15 mentions states (emphasis added): 

‘‘Rear Adm. Chad Jacoby, the assistant commandant of the Coast Guard for acquisition, said 

this month workforce challenges—specifically, needing more highly trained welders and design 

engineers—are contributing to delays on the Polar Security Cutter program at Bollinger Mississippi, formerly VT Halter Marine.’’ 24For further discussion of the CAPI program and Aiviq, see CRS Report RL34391, Coast 

Guard Polar Security Cutter (Polar Icebreaker) Program: Background and Issues for Congress, 

by Ronald O’Rourke. 25 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. 

See also Calvin Biesecker, ‘‘Coast Guard Leaving Options Open for Future Polar Icebreaker 

Fleet Type,’’ Defense Daily, April 12, 2018. 26Source: CQ transcript of hearing. 

neers within the United States also appear to have contributed to delays in maturing the PSC design.23

With PSC design maturation now approaching 80 percent—the minimum typically 

targeted by the Navy before beginning construction of a lead ship—a principal option for substantially accelerating the construction of polar icebreakers for the Coast 

Guard would be to complete the maturation of the PSC design, begin building PSCs 

at the program’s current shipbuilder, Bollinger Mississippi Shipbuilding, and at 

some later point introduce a second shipbuilder to build additional PSCs in parallel 

to those being built by Bollinger. The Coast Guard has testified that its most recent 

fleet mix analysis calls for a total of 8 to 9 polar-capable icebreakers, including 4 

to 5 heavy polar icebreakers (i.e., PSCs), and 4 to 5 medium polar icebreakers. 

Given these figures and Bollinger’s current contract to build up to 3 PSCs, one possible approach might be to introduce a second shipbuilder to build the fourth and 

fifth PSCs while Bollinger completes the first 3. Another possible approach would 

be to have Bollinger build all 4 or 5 PSCs while accelerating the start date of the 

time line for designing and building the medium polar icebreakers. This second approach could accelerate the date for completing the larger total of 8 to 9 heavy and 

medium polar icebreakers. These 2 alternatives are not the only possible approaches. 

ARCTIC SECURITY CUTTER (ASC) PROGRAM

Of the 4 to 5 medium polar icebreakers called for in the Coast Guard’s fleet mix 

analysis, one is to be the Commercially Available Polar Icebreaker (CAPI)—an existing, privately-owned ship that the Coast Guard plans to purchase and modify into 

a Coast Guard medium polar icebreaker, using funding appropriated for that purpose in the Coast Guard’s fiscal year 2024 budget. The ship to be purchased and 

modified is Aiviq, a U.S.-registered ship that was originally built to serve as an Arctic oil-exploration support ship, and which has an icebreaking capability sufficient 

to serve as a Coast Guard medium polar icebreaker.24 The other 3 to 4 medium 

polar icebreakers are to be new-construction ships referred to as Arctic Security 

Cutters (ASCs). 

As discussed in the CRS report on the PSC program, one possible acquisition 

strategy for polar icebreakers would be to build PSCs and ASCs to a common basic 

design (i.e., the PSC design). A Congressionally-mandated July 2017 report from the 

National Academies of Sciences, Engineering, and Medicine (NASEM) on the acquisition and operation of polar icebreakers concluded that notional operational requirements for new medium polar icebreakers would result in ships similar in size 

to new heavy polar icebreakers. (The Coast Guard’s current medium polar icebreaker, Healy, is somewhat larger than Polar Star.) Given this probable similarity 

in size, the NASEM report recommended building a single medium polar icebreaker 

to the same basic design as 3 new heavy polar icebreakers. This approach, the report concluded, would reduce the cost of the medium icebreaker by avoiding the cost 

of developing a new design and by 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.25 The same general approach could be applied to procuring 4 to 5 PSCs and 3 to 4 ASCs. 

At a November 29, 2023, hearing before the House Homeland Security Committee, Vice Admiral Peter Gautier, Coast Guard Deputy Commandant for Operations, stated that the Coast Guard in coming years will need to have ‘‘a mix of 

heavy icebreakers like the Polar Star and the Polar Security Cutters that we’re 

building now, and medium icebreakers like the Healy that have shallower drafts 

and can get into tighter spaces and shallower areas.’’26 Procuring ASCs as ships 

with shallower drafts could make it difficult or impossible for PSCs and ASCs to 

be built to a common basic design: A ship’s draft is a basic design characteristic; 
47 

27Government Accountability Office, Coast Guard Recapitalization[:] Actions Needed to Better 

Manage Acquisition Programs and Address Affordability Concerns, statement of Marie A. Mak, 

Director, Contracting and National Security Acquisitions, Testimony Before the Subcommittee 

on Coast Guard and Maritime Transportation, Committee on Transportation and Infrastructure, 

House of Representatives, July 27, 2023, GAO 23–106948, p. 9. 28Government Accountability Office, Coast Guard Recapitalization[:] Actions Needed to Better 

Manage Acquisition Programs and Address Affordability Concerns, statement of Marie A. Mak, 

Director, Contracting and National Security Acquisitions, Testimony Before the Subcommittee 

on Coast Guard and Maritime Transportation, Committee on Transportation and Infrastructure, 

House of Representatives, July 27, 2023, GAO 23–106948, Figure 4 on p. 14. 29Operating two OPC classes could be viewed as similar to how the Coast Guard currently 

operates two primary classes of medium-endurance cutters. 

reducing the PSC design’s draft enough to meet the Coast Guard’s requirements 

might necessitate design changes that would effectively make it a different design. 

OFFSHORE PATROL CUTTER (OPC) PROGRAM

Cost Growth 

GAO testified in July 2023 that Offshore Patrol Cutter (OPC) program’s ‘‘acquisition cost estimate increase increased from $12.5 billion to $17.6 billion between the 

program’s 2012 and 2022 life-cycle cost estimates. The Coast Guard attributes the 

increase [of about 40 percent] to many factors, including restructuring the stage 1 

contract—for OPCs 1 through 4—and recompeting the requirement for stage 2— 

OPCs 5 through 25—in response to a disruption caused by Hurricane Michael, and 

increased infrastructure costs for homeports and facilities, among other things.’’27

Of the five factors discussed earlier in connection with a potential increase in PSC 

procurement costs, two of them in in particular—recent inflation in shipbuilding and 

the potential need for additional increases in worker wages and benefits—could further increase estimated OPC procurement costs. 

Annual Procurement Quantities 

As discussed in the CRS report on the National Security Cutter (NSC), OPC, and 

Fast Response Cutter (FRC) programs, the current OPC procurement profile, which 

reaches a maximum projected annual rate of 2 ships per year, would deliver OPCs 

many years after the end of the originally planned service lives of the Coast Guard’s 

existing medium-endurance cutters. GAO testified in July 2023 that under the OPC 

program’s current procurement schedule, the Coast Guard’s 14 Reliance-class 210- 

foot medium-endurance cutters would be replaced when they would be (if still in 

service) about 60 to 65 years old, and the Coast Guard’s 13 Famous-class 270-foot 

medium-endurance cutters would be replaced when they would be (if still in service) 

about 34 to 52 years old.28 These ages, particularly for the Reliance-class cutters, 

would be high, raising questions concerning the ships’ future operational availability 

and ability to perform missions cost-effectively. 

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. Operating 

aged medium-endurance cutters will incur maintenance and repair costs, particularly during the ships’ final years of intended service. Even with investments in 

their capabilities, the ships may remain less capable in certain regards than OPCs. 

One possible option for addressing this situation would be to increase the maximum annual OPC procurement rate from the currently planned 2 ships per year 

to 3 or 4 ships per year. Such an increase could result in the final (i.e., 25th) OPC 

being delivered a few to several years sooner than under the currently-planned maximum rate. Increasing the maximum procurement rate for the OPC program could, 

depending on the exact approach taken, reduce OPC unit acquisition costs due to 

improved production economies of scale. Such an increase might also expand opportunities for using competition in the program. Notional alternative approaches for 

increasing the OPC procurement rate to 3 or 4 ships per year include: 

• increasing the production rate to 3 or 4 ships per year at a single shipyard— 

an option that would depend on that shipyard’s production capacity; 

• using 2 shipyards for building OPCs to a single OPC design; 

• using 2 shipyards for building OPCs to 2 designs, with each shipyard building 

OPCs to its own design—an option that would result in two OPC classes;29 and 

• building additional NSCs in the place of some of the planned OPCs—an option 

that might include de-scoping equipment on those NSCs where possible to reduce their acquisition cost and make their capabilities more similar to those of 

the OPC. 

The fourth alternative above could be pursued in combination with 1 of the first 

3 alternatives. 
48 

30For more on block buy contracting, see CRS Report R41909, Multiyear Procurement (MYP) 

and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress, by Ronald O’Rourke. 31Funding from the Navy’s shipbuilding account funded about 89 percent of the procurement 

cost of Healy, as well as the procurement 33 of the Coast Guard’s 49 Island-class 110-foot patrol 

boats (the cutters being replaced by FRCs). Prior-year funding for the PSC program includes 

$300 million in funding from the Navy’s shipbuilding account ($150 million each in fiscal year 

2017 and fiscal year 2018). 32Fiscal year 2025 dollars were converted into fiscal year 2010 dollars using the DOD deflator 

for procurement excluding pay, fuel, and medical in Department of Defense, National Defense 

Budget Estimates for Fiscal Year 2025, April 2024, p. 61 (Table 5–5). 

BLOCK BUY CONTRACTING

Using block buy contracting—a form of multi-year contracting used in a few Navy 

shipbuilding programs—could reduce procurement costs for PSCs, ASCs, or OPCs 

by perhaps 5 percent to 10 percent.30 The Coast Guard typically uses contracts with 

options for its shipbuilding programs. Although a contract with options may resemble multi-year contracting, it operates more like a series of annual contracts. Contracts with options do not achieve the kinds of reductions in acquisition costs that 

are possible with multi-year contracting. 

Section 311 of the Frank LoBiondo Coast Guard Authorization Act of 2018 (S. 

140/Pub. L. 115–282 of December 4, 2018) provides permanent authority for the 

Coast Guard to use block buy contracting with economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of components in its major acquisition programs. The authority is codified at 14 U.S.C. 1137. 

Using multi-year contracting involves accepting certain tradeoffs, including the 

following: 

• reduced Congressional control over year-to-year spending; 

• reduced flexibility changing Coast Guard 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 multi-year 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 purchases) of components; 

• the risk of incurring penalty payments to shipbuilders if multi-year contracts 

are 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. 

The Navy since the 1990’s has made extensive use of multi-year contracting in 

its ship and aircraft procurement programs. The Coast Guard, in contrast, has to 

date not used multi-year contracting in a major ship or aircraft procurement program. Given the relatively small size of the Coast Guard’s Procurement, Construction, and Improvements (PC&I) account (see next section), the second trade-off listed above may be of particular concern to the Coast Guard in deciding whether to 

use multi-year contracting. 

COAST GUARD PROCUREMENT, CONSTRUCTION, AND IMPROVEMENTS (PC&I) ACCOUNT

Three of the options presented in this testimony—building PSCs in parallel at 2 

shipyards, accelerating the start of the time line for designing and building ASCs, 

and increasing annual OPC procurement quantities—would require substantially increasing annual funding levels in the Coast Guard’s Procurement, Construction, and 

Improvements (PC&I) account (or providing additional funding for Coast Guard ship 

procurement through the Navy’s shipbuilding account, which has been done in the 

past).31 Increasing the PC&I funding level might also make the use of block buy 

contracting appear budgetarily less risky to Coast Guard officials. 

Since fiscal year 2010, in nominal terms (not adjusted for inflation), funding for 

the Coast Guard’s PC&I account has remained relatively flat while the Navy’s shipbuilding account has more than doubled. The Navy’s shipbuilding account increased 

from $13.844 billion in fiscal year 2010 (enacted) to $32.378 billion in fiscal year 

2025 (requested), a nominal increase of about 134 percent. The Coast Guard’s PC&I 

account, by comparison, was $1.536 billion in fiscal year 2010 (enacted) and is 

$1.564 billion in fiscal year 2025 (requested). After accounting for inflation, the requested fiscal year 2025 figure for the PC&I account amounts to about $1,095 million (i.e., about $1.1 billion) in fiscal year 2010 dollars, which is 29 percent less in 

real (inflation-adjusted) terms than the fiscal year 2010 enacted figure.32
49 

As noted in the CRS report on the NSC, OPC, and FRC programs, at a May 14, 

2013, hearing on the Coast Guard’s proposed fiscal year 2014 budget before the 

Homeland Security Subcommittee of the Senate Appropriations Committee, thenCoast Guard Commandant Admiral 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 because we are forced to sustain older assets—older ships and older 

aircraft—which ultimately cost us more money, so it eats into our operating funds, 

as well, as we try to sustain these older things.’’ 

BUDGET DISPLAYS

The budget displays for the PC&I account in the Coast Guard’s annual budgetjustification book lack certain basic information about the Coast Guard’s shipbuilding programs, including estimated per-hull total procurement costs and scheduled delivery dates. These omissions can impede the ability of Members and their 

staff to identify and track year-to-year changes in per-hull procurement costs and 

delivery dates, which in turn can make it more difficult to conduct effective oversight of these programs. Congress may consider whether to direct the Coast Guard 

to include, in its annual budget justification book, budget displays for its shipbuilding (and aircraft) procurement programs that are modeled after those in the 

Navy’s annual budget-justification books, which include this kind of information. 

CONCLUSION

Chairman Gimenez, Ranking Member Thanedar, thank you again for the opportunity to appear before you today, and I will be pleased to respond to any questions 

the subcommittee may have. 

APPENDIX.—BIOGRAPHY

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 the Congressional 

Research Service of the Library of Congress. He has written many reports for Congress on various issues relating to the Navy, Coast Guard shipbuilding, China’s 

naval forces, U.S.-China strategic competition in the South and East China seas, 

U.S. defense strategy, defense acquisition policy, the international security environment, and the Arctic. 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. 

Chairman GIMENEZ. Thank you, Mr. O’Rourke. 

I now recognize Mr. Labs for 5 minutes to summarize his opening statement. 

STATEMENT OF ERIC J. LABS, SENIOR ANALYST, NAVAL WEAPONS AND FORCES, U.S. CONGRESSIONAL BUDGET OFFICE 

Mr. LABS. Thank you, Mr. Chairman. I, too, would express my 

condolences at the passing of Congressman Payne. 

Chairman Gimenez, Ranking Member Thanedar, and Members 

of the subcommittee, thank you for inviting me to testify about the 

procurement costs of the Coast Guard’s heavy polar icebreaker program known as the polar security cutter. 
50 

In consultation with committee staff, I have focused this short 

statement on providing a summary of the Congressional Budget Office’s report on the polar security cutter, which Chairman Green 

and Chairman Gimenez requested. That report is currently being 

drafted, and we expect to publish it this summer. 

In February 2024, the Coast Guard notified the Congress that 

the first polar security cutter would experience cost growth of more 

than 20 percent and that the ship’s production will be delayed by 

another year. As both the Congressional Research Service and the 

Government Accountability Office have noted, in the 5 years since 

the contract for the first ship was awarded, development and design of the polar security cutter has progressed slowly and little 

work on building the first ship has been completed. 

In that time, the Coast Guard’s design estimate of the ship’s 

lightship displacement, a key indicator of cost, grew by 40 percent 

while its cost estimate for a three-ship program increased by just 

16 percent. Regardless of the contract structure, that was going to 

be an untenable situation. 

While the lead ship’s design is still incomplete, the service is 

hoping that the shipyard will be able to begin substantial construction on the lead ship early next year with an estimated delivery 

date in 2029. The Coast Guard expects to release a revised estimate of the cost of the three-ship polar security program later this 

year. 

At the committee’s request, CBO conducted an independent cost 

assessment of the polar security cutter. The results of our analysis 

indicate that the procurement costs of the first polar security cutter 

would be about $1.9 billion. Subsequent ships would average about 

$1.6 billion each in constant 2024 dollars. 

Thus, the procurement costs of the current program of record for 3 polar security cutters would be about $5.1 billion. That amount 

is 60 percent greater than the Coast Guard’s most recent publiclyreleased estimate, which was provided to CBO by the Coast Guard 

in March. Of course, a program greater than 3 ships would cost additional money. 

Let me briefly provide some background on how CBO conducted 

its estimate. When it comes to assessing the costs of new naval 

shipbuilding programs, including those of the Coast Guard, CBO 

estimates are derived from a model that largely uses a ship’s 

weight to calculate its cost. Essentially, CBO estimated the costs 

of the new polar security cutters in the same way it estimates the 

costs of new naval ships. 

CBO identified ships acquired in the past that were similar to 

the polar security cutter and calculated the cost-to-weight ratio of 

the most analogous ship. The agency then used that ratio as a critical input into estimating the cost of the new ship. 

CBO found that the best historical analog for the polar security 

cutter was the Coast Guard’s existing medium icebreaker, the 

Healy. Built in the 1990’s, the Healy, though medium icebreaker, 

displaces about 16,000 tons of water when fully loaded. It is larger 

than the Polar Star, a heavy icebreaker built in the early 1970’s, 

that displaces 13,200 tons when fully loaded. 

Even though the Polar Star has more installed shaft horsepower, 

which among other things makes it a heavy icebreaker, the polar 
51 

security cutter would be significantly larger than them both with 

a full load displacement of about 23,000 tons and would have improved capabilities compared to its predecessors. 

In conducting its analysis, CBO started with the estimated cost 

per 1,000 tons of lightship displacement of the polar security cutter 

using data on the ship provided by the Coast Guard. Lightship displacement is the weight of the water a ship displaces without its 

crew, stores, ammunition, or fuel or other liquids. 

CBO then adjusted it to account for current industry conditions 

and the inexperience of U.S. shipyards in building icebreakers, as 

well as the efficiencies that shipyards gain as they produce additional ships of a given type. CBO applied those adjustments to the 

estimated cost of the first ship of the class to estimate the cost of 

all subsequent polar security cutters. 

Finally, CBO adjusted its estimates to reflect its expectation that 

the cost of labor and materials would continue to grow at a rate 

that is 1 percentage point faster in the naval shipbuilding industry 

than in the economy as a whole, as they generally have for that 

past several decades. 

The CBO estimate does not represent an upper bound, but rather 

represents our best analysis of what the PSC should realistically 

cost. There are reasons to believe that the final price of the ship 

could be lower than what CBO estimates, but there are also reasons to believe why the final price could be higher than what CBO 

estimates. 

I hope you find this information helpful, and I am happy to answer any questions you may have. 

[The prepared statement of Mr. Labs follows:] 

PREPARED STATEMENT OF ERIC J. LABS

APRIL 30, 2024 

Chairman Gimenez, Ranking Member Thanedar, and Members of the subcommittee, thank you for inviting me to testify about the procurement costs of the 

Coast Guard’s heavy polar icebreaker program, known as the Polar Security Cutter 

(PSC) program. In consultation with committee staff, I have focused this short statement on providing a summary of the Congressional Budget Office’s report on the 

PSC program, which Chairman Green and Chairman Gimenez requested. That report is currently being drafted, and we expect to publish it this summer. 

CBO’s findings are as follows: 

• The procurement cost of the first PSC would be about $1.9 billion. Subsequent 

ships would average about $1.6 billion each. (All costs in this statement are expressed in 2024 dollars.) 

• Given those costs, the procurement cost of 3 PSCs would be about $5.1 billion. 

That amount is 60 percent greater than the Coast Guard’s most recent publiclyreleased estimate for the procurement cost of 3 heavy icebreakers, which was 

provided to CBO by the Coast Guard in March 2024. 

CBO’s estimates are largely derived from a model that uses a ship’s weight to calculate its costs. 

BACKGROUND

The Coast Guard currently has two operational polar icebreakers: the Polar Star, 

a heavy polar icebreaker, and the Healy, a medium polar icebreaker. The descriptors 

‘‘heavy’’ and ‘‘medium’’ refer to the thickness of the ice that the ships can break on 

a continuous basis at 3 knots, not the size or weight of the ships themselves. 

The Polar Star is 48 years old; the Coast Guard keeps it operating in part by 

scavenging parts from its nonoperational sister ship, the Polar Sea. The Healy is 

24 years old. No U.S. shipyard has built a heavy or medium icebreaker since those 

ships entered service. 
52 

1Detail design in shipbuilding occurs after a preliminary or a contract design that aims to 

meet the requirements of the authority purchasing a ship (in this case, the Coast Guard) is established. Detail design involves the development of all the drawings, documents, and calculations that will determine the final internal layout and configuration of the ship. 2For an explanation of how CBO models the cost of new ships, as well as a detailed example 

of that process applied to a particular ship, see Congressional Budget Office, How CBO Estimates the Costs of New Ships (April 2018), www.cbo.gov/publication/53785. 

In 2013, the Coast Guard proposed a plan to replace its two operational icebreakers with 6 new polar ice-breakers: 3 heavy polar icebreakers and 3 medium 

polar icebreakers. The Coast Guard’s most recent analysis of its goals for the mix 

of ships in its fleet calls for increasing the number of new polar icebreakers to a 

total of 8 or 9: 4 or 5 heavy polar icebreakers and 4 or 5 medium polar icebreakers. 

The PSC is the Coast Guard’s proposed new heavy polar icebreaker; after delays 

in the design of the ship, the service expects that it will soon approve the start of 

general construction. The new medium icebreaker that the service plans to build at 

some point in the future has been designated as the Arctic Security Cutter. The medium icebreaker will have a shallower draft (the length from the waterline to the 

bottom of the ship) and will therefore be able to conduct patrols and visit ports in 

areas that are inaccessible to the deeper-drafted heavy icebreaker. 

The increase in the number of polar icebreakers desired by the Coast Guard is 

driven by increased commercial activity and economic and geopolitical competition 

in the Arctic. Given those developments, the service believes that the year-round 

continuous presence of one polar icebreaker in the East Arctic and another in the 

West Arctic, as well as a half-time presence of another polar icebreaker in the Antarctic, is necessary. The Coast Guard has stated that maintaining a presence of 2.5 

heavy and medium icebreakers in the polar regions will require a total of 8 to 9 

ships when accounting for maintenance and rotating ship patrols. 

In April 2019, the Coast Guard awarded a fixed-price incentive contract for the 

detail design and construction of the first PSC (the lead ship) to VT Halter Marine, 

Inc., now Bollinger Mississippi Shipyard.1 The Coast Guard is working with the 

Navy to manage the program and acquire the ships. 

In February 2024, the Coast Guard notified the Congress that the PSC lead ship 

would experience cost growth of more than 20 percent and the ship’s production 

would be delayed by more than a year. In the 5 years since the contract was awarded, development and design of the PSC has progressed, but little work on building 

the first ship has been completed. In that time, the Coast Guard’s estimate of the 

ship’s lightship displacement—a key indicator of costs, described below—grew by 40 

percent, while its cost estimate for a three-ship program increased by just 16 percent. The service hopes that the shipyard will begin substantial construction on the 

lead ship early next year, with an estimated delivery date in 2029. The Coast Guard 

also expects to release a revised estimate of the cost of the three-ship PSC program 

later this year. 

CBO’S ANALYSIS

CBO estimated the costs of the new PSCs in the same way it estimates the costs 

of new naval ships.2 Specifically, CBO identified ships acquired in the past that 

were similar to the PSC and calculated the cost-to-weight ratio of the most analogous ship; the agency then used that ratio to estimate the cost of the PSC. 

CBO found that the best analogue for the PSC was the Healy. Built in the 1990’s, 

the Healy, though a medium icebreaker, displaces about 16,000 tons of water when 

fully loaded (that is, when carrying crew, stores, ammunition, and fuel and other 

liquids); it is larger than the Polar Star, a heavy icebreaker built in the early 1970’s 

that displaces 13,200 tons when fully loaded. The PSC would be significantly larger 

than them both, with a full-load displacement of about 23,000 tons, and would have 

improved capabilities compared with its predecessors. 

CBO first estimated the cost per thousand tons of lightship (rather than full-load) 

displacement of the PSC, using data on the ship provided by the Coast Guard. 

(Lightship displacement is the weight of the water a ship displaces without its crew, 

stores, ammunition, or fuel or other liquids.) CBO then accounted for the reduction 

in average overhead costs that occurs as a shipyard builds multiple ships of the 

same type simultaneously and the efficiencies that shipyards gain as they produce 

additional ships of a given type. CBO applied those adjustments to the estimated 

cost of the first ship of the class to estimate the costs for all subsequent PSCs. Finally, CBO adjusted its estimates to reflect its expectation that the costs of labor 

and materials would continue to grow at a rate that is 1 percentage point faster 
53 

3 Congressional Budget Office, The Shipbuilding Composite Index and Its Rates of Change 

Compared With Economy-wide Inflation Rates (April 2024), www.cbo.gov/publication/59026. 

in the naval shipbuilding industry than in the economy as a whole, as they generally have for several decades.3

I hope you find this information helpful, and I am happy to answer any questions 

you may have. 

Eric J. Labs prepared this testimony, with guidance from David Mosher and Edward 

G. Keating. In keeping with CBO’s mandate to provide objective, impartial analysis, 

this testimony makes no recommendations. Jeffrey Kling and Robert Sunshine reviewed the testimony, Christine Browne edited it, and R.L. Rebach prepared it for 

publication. The testimony is available at www.cbo.gov/publication/60168. 

Chairman GIMENEZ. Thank you, Mr. Labs. 

Members will be recognized by order of seniority for their 5 minutes of questioning, and I recognize myself for 5 minutes of questioning. 

I don’t know if it was you, Mr. Labs, but somebody said that the 

Coast Guard is hoping—hoping—to begin construction later this 

year, but didn’t they hope to have the first icebreaker in operation 

this year? 

Mr. LABS. Yes, Mr. Chairman, I did use the word ‘‘hoping’’. It 

was the best term I think I could come up with under the circumstances of the troubled history of this program. So delays in 

the past are no guarantee that those delays are not going to continue in the future. 

Chairman GIMENEZ. Where are they, if anybody—anybody can 

answer this, where are they on the design? How close are they to 

beginning construction on the icebreaker? 

Ms. OAKLEY. The most recent information that we have on that 

is they are about 67 percent complete with their functional design. 

GAO’s best practices would say that you should have 100 percent 

of your basic and functional design complete by the time you begin 

construction, including systems that run throughout the ship called 

distributive systems. 

So the Coast Guard I know is hoping to make the case to start 

construction by the end of the year and so 67 percent to 100 is 

quite a lot of work to happen over the remainder of the year to hit 

that marker. Even at their own marker of 95 percent, which is different than ours, it is a significant amount of work remaining. 

Chairman GIMENEZ. You are saying that they are at 67 percent 

design completion—— 

Ms. OAKLEY. Mm-hm, yes. 

Chairman GIMENEZ [continuing]. After 5 years? 

Ms. OAKLEY. Yes. 

Chairman GIMENEZ. That is completely—do you have any estimate on the private sector? I come from Miami. Royal Caribbean, 

Carnival, Norwegian, they are based out of Miami. They design 

their ships in Miami and they do a really good job designing ships 

on time, on budget. It is money, OK? For them it is money. All 

right. 

So do you have any estimate how long it takes for, say, Norwegian or Royal to design one of their new ships? Just design and 

I am not talking about construction, but do you have any was on 

the private sector side of this? 

Ms. OAKLEY. I don’t have exact numbers but it is certainly not 

5 years, and it is certainly not the case that they overpromise how 
54 

quickly they are going to be able to do it because it is money, right? 

These companies need to be able to start booking trips on these 

ships. 

Chairman GIMENEZ. Right. 

Ms. OAKLEY. So our work looking at leading commercial shipbuilders and buyers across the world has found that they are able 

to predictably design and pump out ships by following some of the 

best practices that we talk about like completing their design, relying on existing designs, and limiting their modifications of those 

designs to, you know, certain areas of the ship that are most important for meeting their business case. 

There are a number of other practices that our work has identified, but it is a completely different mindset and completely different set of outcomes. 

Chairman GIMENEZ. They also have, you know, really impressive 

technology, computer-aided design. Do we have such capability or 

are we still doing stuff, you know, with on a board and you are 

drawing, you know, with pencil and eraser and a ruler? How are 

we designing ships? Are we also using computer design and do we 

use the latest in that technology in trying to help us design our 

ships? 

Ms. OAKLEY. I think we are a little further behind in the U.S. 

shipbuilding industrial base companies themselves in the types of 

tools and practices that they use for digitally designing the ships, 

although they have made some progress. The things that we have 

seen from companies is that those digital tools and those digital designs allow them to understand the impact of their changes and it 

allows them to understand their progress and it allows multiple 

people, including decision makers, to understand the progress of 

the ship in real time. 

It is a big distinction, but it is a distinction that enables them 

to have efficiency and effectiveness in their design efforts. 

Chairman GIMENEZ. Well, I am a landlubber so I know about 

this stuff, OK? Do you think there is intellectual curiosity on the 

part of not only the Coast Guard but our armed services in looking 

at what the private sector is doing, how they design their ships, 

how they procure their ships, and trying to learn from them? Or 

do you think it is, no, we know better because, you know, we are 

the Coast Guard, we are the Navy? We know how to do this, and 

we don’t really need the private folks to tell us what to do or show 

us what to do. 

Ms. OAKLEY. Yes, in my experience I can’t comment as much on 

the Coast Guard aside from recent statements by the commandant, 

but the Secretary of the Navy is very focused on taking what he 

can from these leading companies and applying it to commercial 

shipbuilding. 

I think there is, unfortunately, an attitude within the Government that we have too many roadblocks to be able to do what commercial companies do. We are the Government. We have all these 

policies and regulations and they can’t be overcome without really 

critically assessing how we could apply these practices and what 

we could take to be more efficient. 

The other thing I will say really quickly is that some of these 

practices require investment, right? Being able to set up digital 
55 

tools and infrastructures to be able to support this will require enterprise-wide investment, both on the part of the Navy, the Coast 

Guard, and the shipbuilders that we have yet to really see supported and incentivized. 

Chairman GIMENEZ. Well, my time is up and I am actually over 

on my time, but I will be coming back for a second round because 

I do have some follow-up questions for you. Thank you. 

Now I recognize the Ranking Member, Mr. Thanedar. 

Mr. THANEDAR. Thank you, Chairman Gimenez. 

Well, the DHS and Coast Guard has confronted a host of challenges in its polar security cutter and offshore patrol cutter programs. Some of these challenges were truly unforeseen, such as the 

global pandemic causing unprecedented supply chain disruptions. 

Others were unfortunate but perhaps within the realm of what 

can be reasonably expected to occur over the course of a long-term 

acquisition program such as hurricane-causing disruptions to the 

shipyard and challenges in finding a sufficient work force. 

Now, I ran small businesses for many, many years and, you 

know, one of proper planning, cost control are things that is just 

second nature for a small business because there is not resources, 

funding available to do things so everything needs to be planned. 

Everything needs to be, you know, down to the last dollar everything needs to be planned. 

Now, you know, Congress wants to, and committed to, you know, 

providing the technology modernization the agencies need is essential for our national security, but we also need to have some assurance that that funding is utilized properly in an efficient manner, 

you know. 

The old saying, whatever happened to measure twice and cut 

once, right? Whatever happened to that? Why is these delays happening? Why are we redoing work? Why aren’t we planning everything right the first time so that we don’t end up redoing work and 

costing the taxpayer all this expenses? Any one of you want to comment on that? 

Ms. OAKLEY. So I think some people don’t want the answer of 

what a realistic business case could look like, right? When you 

think about the risks that were present on both of these programs 

from the very beginning, inexperienced shipbuilders’ lack of experience with designing polar icebreakers in the case of that, bad business systems to be able to track progress and understand outcomes. 

These were all huge risks that were apparent at the beginning of 

the program that should have been factored into what the Coast 

Guard thought it was going to take in terms of time and funding 

to be able to execute them. 

But there is obviously a pressure to fit within a budget, right, 

and I think, unfortunately, that then leads to optimism in those 

business cases. Pushing forward with an optimistic business case 

has never in my experience worked out to get you something any 

quicker or any cheaper. It usually ends up costing probably what 

you thought it was going to cost and taking probably what you 

thought and how long you probably thought it was going to take. 

It is just that it wasn’t planned from the beginning to be that. 

So in that old adage of if you want it bad you get it bad, I think 

that that is what we are seeing in a lot of these programs. It is 
56 

not unique to the Coast Guard. Major acquisitions across the Federal Government all fall victim to this, and I think as decision 

makers within the agencies and within Congress we need to press 

these agencies to come with more realistic business cases so that 

we understand what we are getting into once the money starts 

flowing and it is hard to turn it off. 

Mr. THANEDAR. Thank you. Thank you. 

Anybody else? How do we assure Congress, the taxpayer, the 

American people that we have the capability to change from these 

practices to something moving from hope and optimism to proper 

planning and, you know, competency? How can you assure that? 

What would it take to go to a level of competency where taxpayers, 

Congress will feel assured that the funds will be used properly? 

Mr. LABS. Actually, I don’t know how to change the incentives 

but I do know that the incentives in the bureaucracy in the Navy, 

in the Coast Guard, and other departments do need to change so 

that there is not this preference or prevalence toward the optimism 

that Ms. Oakley talked about. 

I share her perspective on that. I think there is a culture of optimism that creeps into new shipbuilding programs and new procurement programs in general for a variety of reasons that may be perfectly innocent along the way. Lots of little decisions get taken 

along the way that they don’t compare to sort-of what historical reality has been and as a result what comes out the other end is way 

too optimistic. 

Somehow we have to change the incentives so that we don’t necessarily go with the lowest bidder because the lowest bidder might 

not be submitting a realistic cost estimate and they are trying to 

get the program locked in. Once it is locked in, then you have got 

a future where you are going to have to deal with that one way or 

another. 

But focusing on those incentives is one of the strategies that I 

think that Congress should look at. 

Mr. THANEDAR. Thank you. 

I yield back. 

Chairman GIMENEZ. The gentleman yields back. 

I now recognize the gentleman from Louisiana, Mr. Higgins. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Ms. Oakley, Mr. O’Rourke, Mr. Labs, we are going to be focused 

on the polar security cutter with my questioning here because 

Bollinger Shipyards is a constituent in the State of Louisiana. They 

have taken on the responsibility of completing this vessel. 

Shall we say it was quite a mess that they have inherited and 

they are shouldering that burden, so we are going to dig into the 

cost of this thing and how it was so outrageously underestimated 

and what the design concerns have been throughout the inception 

of this incredibly expensive program that we are in the process of 

dealing with Congressionally. 

What will the cost be?—and we need realistic estimates. 

So we have the Government Accountability Office here, the Congressional Research Service here, and the Congressional Budget 

Office here for some, and I am very glad you are here and I appreciate you being here. We should be able to get answers here and 

specifically with regards to are we doing everything we can to help 
57 

Bollinger Shipyards complete this program? It’s an important program for the for the security of the United States, the polar security cutter. 

On the last page of the CBO report Mr. Labs has stated that 

generally speaking for decades naval cost for labor and materials 

runs higher than the commercial industry shipbuilder. Is that correct? 

Mr. LABS. The cost of labor and materials in naval shipbuilding 

runs higher than inflation in the economy as a whole, not commercial shipbuilding, but the economy as a whole. 

Mr. HIGGINS. So without getting into the weeds of the culture of 

the Pentagon regarding spending over there, we just accept that for 

some reason the world’s biggest shipbuilder has greater impact 

from inflation, including in shipbuilding, than the rest of the Nation’s shipbuilding industry? 

Mr. LABS. I am not sure I quite understand your question, Congressman. 

Mr. HIGGINS. OK. It is an assessment of your report—— 

Mr. LABS. Yes. 

Mr. HIGGINS [continuing]. Saying that it is more expensive for 

the Navy to build a ship because of labor and materials—— 

Mr. LABS. Correct. Yes, sir. 

Mr. HIGGINS [continuing]. OK, than the commercial industry, but 

they are the world’s largest shipbuilders so one would—you know, 

a regular American would think that the world’s largest shipbuilder might have more efficient programs and systems. Again, 

not to get into the weeds of Pentagon shipbuilding. 

Ms. Oakley, on page 21 of the GAO report, stepping into what 

was Halter Marine’s project, it was their contract to build the PSC, 

the polar security cutter, said that Halter likely overestimated the 

extent to which you could leverage the original design and underestimated the magnitude of design changes. 

You go on to speak of the complexity of the design work, late design revisions, and when Bollinger took over the program they had 

to, obviously, embed their own design experts into the existing 

teams to try and work through these things. Is that correct? 

Ms. OAKLEY. Correct. 

Mr. HIGGINS. So we had design changes since inception and challenges that threaten this very important program. 

Ms. OAKLEY. Yes. 

Mr. HIGGINS. Somehow we just allowed that to move forward and 

then Bollinger purchased Halter Marine. Now Bollinger has that to 

fix, and we are going to help him. 

So, Mr. O’Rourke, in the CRS report you state 5 primary reasons 

for massive increases in the PSC program estimated expense from 

the original estimates. 

No. 1, the actual PSC design is larger than the Government’s 

original design of what they anticipated, about 35 percent. Obviously, if they are going to have a 35 percent larger vessel, larger 

displacement is going to cost a lot more. 

No. 2, the Navy has frequently underestimated lead ship lost. 

The CBO average is 25 to 40 percent in a broad study across 19 

programs an average of 25 to 40 percent underestimated cost at inception for Navy shipbuilding. Our shipbuilders have to deal with 
58 

this down the line. They are being told by the Navy, well, you are 

over cost. You are over cost when in reality historically the model 

seems to be that the United States Navy underestimates costs. 

No. 3, recent inflation in shipbuilding, you say, ‘‘The residual effects of inflationary pressures over the past few years and work 

force challenges plus increased labor and supply costs across the 

defense enterprise all drove costs associated with our shipbuilding 

up roughly an additional 20 percent.’’ 

No. 4, potential need for increases in workers’ wages and benefits. Shipyards and associated supplier firms face challenges in recruiting and retaining new workers. 

Finally, schedule delays which move to design. You state that a 

principal cause of delay has been the time needed to achieve design 

maturity, meaning to complete the detailed design of the ship. 

So we have issues in the way we are rolling out shipbuilding in 

America and the polar security cutter is no exception to those 

issues. But we are responsible to address the larger issues because 

we cannot continue to pretend that the original estimates for a 

shipbuilding project is going to fall within the parameters that are 

presented to Congress for funding. 

So we have questions we are going to submit in writing to Ms. 

Oakley, Mr. O’Rourke, and Mr. Labs, and we hope for a timely response on those written questions that we will submit to you. I 

thank you for being here. My time has expired and I yield back. 

Chairman GIMENEZ. The gentleman’s time has expired. 

I now recognize the gentlelady from American Samoa, Mrs. 

Radewagen. 

Mrs. RADEWAGEN. ‘‘Talofa lava,’’ good morning. I want to thank 

Chairman Gimenez and Ranking Member Thanedar for allowing 

me to join the subcommittee today. 

Thank you to the panel for appearing. My question is for Ms. 

Oakley. Your statement emphasizes the importance of maturing 

and finalizing a ship’s design before the contractor starts construction. This seems like common sense. 

In your opinion, why has completing the design before starting 

construction been so hard for the Coast Guard to do on its major 

shipbuilding programs? 

Ms. OAKLEY. I think it comes back to the incentives that are 

there to continue to push forward with the program to meet the 

unrealistic cost and schedule baselines that are set up. So when 

you kind-of have an unexecutable program from the very beginning 

you begin to make decisions that add risk. The decision to move 

forward with construction without the design being complete is certainly something that adds risk to a program. 

Again, this isn’t something that is unique to the Coast Guard but 

it is certainly something that we have seen across many shipbuilding programs, this kind of focus on, well, we have enough complete to move forward. Then design changes happen and they reverberate through things that have already been constructed, and 

that is where the real challenges lie. 

So by completing 100 percent of the basic and functional design 

in the systems that run throughout the ship, the design of the systems that run throughout the ship, it reduces that risk that there 
59 

is going to be change and therefore then you can reliably predict 

how quickly you are going to be able to construct the ship. 

Mrs. RADEWAGEN. Thank you. 

Mr. Chairman, I yield back the balance of my time. 

Chairman GIMENEZ. Thank you, Mrs. Radewagen. 

The Chair now recognizes the gentleman from Guam, Mr. 

Moylan. 

Mr. MOYLAN. Thank you, Mr. Chairman and Ranking Member. 

I, too, am saddened for the loss of our colleague, Rep. Payne, but 

I am also grateful for all the work he has done for this committee. 

Mr. Chairman, I will be speaking on issues of such importance 

for my district and the general safety and security of the Pacific region. The U.S. Coast Guard serves a critical role in the Indo-Pacific 

region, from preventing illegal, unreported, and unregulated fishing, IUU, to countering the Chinese Communist Party relying on 

influence in providing much-needed aid during humanitarian missions to the Pacific countries. The Coast Guard serves as our Pacific Swiss Army knife. 

The IUU fishing represents a critical threat to our national security and the health of fisheries. The Coast Guard leads law enforcement efforts to effectively counter these threats and stop the blatant incursions of our sovereign waters. 

The existing fast response cutters also serve to prevent illegal 

migration to Guam, particularly the Chinese nationals that could 

very easily penetrate the island’s defense and spy as a spy for their 

home nation. 

However, it is clear that the Coast Guard needs more cutters in 

Guam to properly accomplish their stated mission in the region. 

Captain Nicholas Simmons, the commander of the U.S. Coast 

Guard force’s Micronesian Sector Guam, has said that Guam maritime search-and-rescue region is two-thirds the size of the continental United States that they patrol with 3 ships and 300 people. 

While we are grateful to hear the following that this year the 

Coast Guard reauthorization of two more FRCs are on the way, the 

region can and must be served by more than just 5 small vessels. 

So my question No. 1, Mr. O’Rourke, is Guam has been called the 

tip of the spear for the United States in the Indo-Pacific region and 

for good reason. The people at the Republic of China’s maritime militia and distant water fishing operations pressure our allies and 

threaten regional security. So how does increasing the Coast 

Guard’s capability, capacity in the region directly respond to the 

threat that China poses? 

Mr. O’ROURKE. The Coast Guard has identified a need for increasing its operations and presence in the Indo-Pacific region to 

counter China and to serve other U.S. interests in the region. You 

mentioned one of those, which is EEZ, enforcement, fisheries enforcement both for U.S. EEZ waters and those of the Pacific Island 

countries. 

In connection with that, the Coast Guard has identified a need, 

for among other things, 6 additional fast response cutters to be assigned out into that region. Of those 6, 2 were funded in last year’s 

appropriation and another 2 are requested for procurement in this 

year’s appropriation. 
60 

The Coast Guard has also moved another older medium endurance cutter out into the region and engages in a wide range of not 

always well-reported or well-understood engagement activities with 

many of the countries in that region. 

All these things are directed at serving not just law enforcement 

missions but also broader U.S. interests in countering China and 

strengthening our relationships with the countries in that region. 

Mr. MOYLAN. Thank you, Mr. O’Rourke. 

In the little time here just a couple more questions for you, 

please, sir? The FRCs are required to undergo maintenance every 

4 years. This requires making a long journey back to Honolulu to 

dry dock and undergo repair. 

In your opinion, would the Coast Guard and the Navy benefit 

from a ship repair capacity on Guam and in the form of a dry dock? 

Mr. O’ROURKE. That is possible, yes. It would depend on the 

costs, but, yes, avoiding the longer transits back to the continental 

United States could increase time on station if the maintenance 

could be done locally rather than back in CONUS. 

Mr. MOYLAN. Quickly just for my last question, this goes to Ms. 

Oakley, what are the top 3 most important things DHS and Coast 

Guard can do to improve the outcomes for their shipbuilding programs and get the capabilities out to the operators? 

Ms. OAKLEY. First, I think DHS in its oversight role of the Coast 

Guard can demand the Coast Guard to present better business 

cases for its programs that are based on realistic assessments of 

risk. That would include not only what you can do from a requirements perspective, but also from a cost and schedule perspective as 

well. 

Second, I would say that the Coast Guard needs to begin to look 

toward these commercial companies that I mentioned before and 

identify how they could begin to incentivize their builders that they 

work with in the broader industrial base to operate more in that 

space, more how these commercial builders operate. 

I think there that the Congress also plays a role, too. There are 

demands and accountability that the Congress can ask for from the 

Coast Guard and from DHS about the basis for its programs and 

what the realistic assessment is of those programs before they are 

approved such that, you know, once that funding spigot is turned 

on it is not usually turned off pretty quickly. 

Mr. MOYLAN. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman GIMENEZ. Thank you. 

I am going to start a second round. I do have some follow-up 

questions, and I will start with myself and then I will yield to the 

Ranking Member. 

Ms. Oakley, it seems to me like when the Air Force is procuring 

a new fighter or a new plane they put out the requirements, the 

mission of that plane, what the performance they expect out of that 

plane, and then they put those requirements out and then companies will come back with their design that then accomplishes that 

mission, correct? 

It appears that the Navy and the Coast Guard don’t do it that 

way for ships anyway. Do they put out a, these are the requirements of the ship. This is the size that we want to ship to be, how 
61 

many people are going to be on it. This is the mission of the ship, 

how fast we want it to be. 

What capability do we want and then put it out to, you know, 

the shipbuilding industry and then they come back with a design 

that says this is accomplished and then they evaluate the designs 

and pick the winner. Do they do that or is it some something different here? 

Ms. OAKLEY. They do do that, yes. There is an effort there at the 

beginning to kind-of put, here is what we want, can anybody do it, 

out there, right? That is the—— 

Chairman GIMENEZ. You said beginning. 

Ms. OAKLEY. Yes, at the beginning. 

Chairman GIMENEZ. You said beginning to do that. 

Ms. OAKLEY. No, no, no, no. 

Chairman GIMENEZ. They are beginning to do that or they did 

that already? 

Ms. OAKLEY. They did do. They do do that, yes. 

Chairman GIMENEZ. OK. So tell me how it is that 5 years after 

they did that—— 

Ms. OAKLEY. Yes. 

Chairman GIMENEZ [continuing]. And supposedly come back with 

a design that fits all the capabilities and all that, they still haven’t 

started construction on this thing? Tell me how that is possible. 

Ms. OAKLEY. Yes. I think that the Coast Guard is the victim of 

the atrophied industrial base. I know that I mentioned, you know, 

things outside of their control. This is certainly one of the things 

outside their control. 

The number of shipyards in the United States that build ships 

in general has completely declined since the 1990’s and in particular, as you mentioned—— 

Chairman GIMENEZ. Could I stop you there for a second? 

Ms. OAKLEY. Mm-hm. 

Chairman GIMENEZ. All right. So I went back to you have a design, you have the capabilities, the specifications, how many people, OK. Did they put that out and did somebody come back with 

here is the design, here is the ship? 

Ms. OAKLEY. Here is what we can do. Yes. 

Chairman GIMENEZ. What we can do. 

Ms. OAKLEY. Yes. 

Chairman GIMENEZ. OK. That means that there was a shipbuilder that said this is what we can do. 

Ms. OAKLEY. Mm-hm. 

Chairman GIMENEZ. So where is this industrial base thing all 

about because you wouldn’t have had somebody come back to you 

and say, hey, we can build this ship but really can’t build a ship? 

Was it fantasy or what? 

Ms. OAKLEY. It happens all the time, unfortunately, in Government acquisitions where contractors come back and say they can 

meet these requirements because they know, again, as I have mentioned a few times, once the spigot turns on, once the contract is 

let, it is unlikely to be canceled, right? 

So when you think about, yes, we can do it, here is what we can 

do, this is where it is incumbent on the Coast Guard and on DHS 

to critically evaluate what it is that they are getting from the con-
62 

tractor and how realistic it is that a contractor that has never built 

a polar icebreaker before in an industrial base that hasn’t built a 

polar icebreaker in 50 years, how likely it is going to be that they 

are going to meet these costs and schedule goals and these targets 

for what the capability is going to provide? That is—— 

Chairman GIMENEZ. Ms. Oakley, Ms. Oakley, I don’t have a problem with that. I do have a problem that not one rivet has been put 

on anything on this. I don’t know if they still use rivets, I don’t 

know, OK, or nobody has welded anything together yet. 

I could see you starting the program. I could see you starting 

building a ship and then say, hey, wow, we are having difficulty 

with this, this, and this, but we haven’t even started building this 

ship 5 years after somebody was awarded a contract to deliver 

something they said they could deliver. 

Ms. OAKLEY. Yes. For the polar security cutter they are building 

prototype units so some things are being built right now on the 

ship prototype blocks that they are using to learn about the specialized welding techniques that they have to use for the steel that 

is required for a polar icebreaker. 

So there is some initial construction that is going on right now. 

My question about that for the Coast Guard that I would be interested in, if I were you, is how are they learning from that and how 

are they incorporating that into their construction plan going forward for how long and how much it is going to take? 

Chairman GIMENEZ. OK. This is not convincing me, OK, because 

this is not like, gee, we are building a spaceship to go to Saturn. 

Nobody has ever built one before, OK? 

So we are building an icebreaker—— 

Ms. OAKLEY. Yes. 

Chairman GIMENEZ [continuing]. Which a bunch of countries, 

even friendly to us, build icebreakers, right? 

Ms. OAKLEY. Yes. 

Chairman GIMENEZ. They know the welding techniques and they 

know all the steel that is necessary. Are we trying to reinvent a 

wheel here that has already been invented all around the world? 

Ms. OAKLEY. It is true that, you know, many of our allies around 

the world are building icebreakers and have built icebreakers and 

are pretty effective at it. We did not take that approach. 

We are obviously, you know, needing to use a U.S. shipyard to 

build these ships, and I think that that capability, since we haven’t 

done it in a long time, is needing to be built back up. That is what 

I was getting at with the industrial base. 

Chairman GIMENEZ. OK. My time has expired. 

I now yield to the Ranking Member, Mr. Thanedar. 

Mr. THANEDAR. Thank you, Chairman Gimenez. 

Just a quick question, I just want to understand the procurement 

process. How were these contractors chosen? What is the process? 

Is the procurement do the applications come from all over the 

world or is this only domestic producers? What is the whole process 

like? 

Mr. O’ROURKE. So, in general and for the PSC program there 

was an operational requirement that the Coast Guard spent many 

years defining. They put that out for bidding. It was an open competition. 
63 

They received bids from at least three shipbuilders. All the bidders were required to show what parent design they were proposing to use as the basis for the new cutter, and the Coast Guard 

evaluated the bids that it received, the three at least that were reported publicly and chose the one that it thought best. 

That was Halter’s design. Halter said their parent design would 

be the German icebreaker Polarstern II, which was a new polar research ship for Germany. Halter said that they went through 6 or 

7 design spirals to take the German design and turn it into what 

they were presenting to the Coast Guard in the bidding process. 

The Coast Guard evaluated that proposal along with the others 

that it received and chose Halter. So there was a requirement that 

the Coast Guard actually spent many years to define and make 

very specific. This was done at a time when the polar security cutter wasn’t getting a lot of funding so there wasn’t much else the 

Coast Guard could do except study the requirements to a very fine 

degree. 

Then they received the bids. They went with the one that they 

thought was the best. It was the Halter design and what turned 

out, apparently, is that the Halter design, even having gone 

through the design spirals and after receiving the design from Germany, turned out to need a lot more change than they thought. 

The volume of design work to then get to a mature design turned 

out to be much greater than was anticipated and then that was exacerbated by limits on the numbers of naval architects and naval 

engineers that could be applied to working that design task down. 

That is why things have proceeded so slowly and gradually since 

then. 

Mr. THANEDAR. Thank you. Thank you so much. 

Chair, I yield back. 

Chairman GIMENEZ. Thank you. 

Mrs. Radewagen or Mr. Moylan, do you want a follow-up? OK. 

The Chair recognizes the gentlewoman from American Samoa, Mrs. 

Radewagen. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. 

So, Dr. Labs, your estimate that you present to us today pins the 

total cost of the PSC program almost 60 percent higher than the 

Coast Guard’s current estimate. 

You have a long record of assessing the Navy’s shipbuilding programs. Is it common that your estimates are that much higher 

than the Navy’s original estimate? 

Mr. LABS. You are right, Congresswoman, I have been doing this 

for a long time. Sometimes my estimates are that higher, that 

much higher than the Navy’s, sometimes even higher. 

I recently put out an estimate on the Navy’s medium landing 

ship that has essentially doubled what the Navy’s current estimate 

is. Back in the 2000’s they estimated a new destroyer program at 

50 percent higher than what the Navy was estimating. It took 15 

years, but the Navy has estimated the final cost of that ship ultimately reached very close to what my initial estimate was back in 

the mid-2000’s. 

So yes, there has been a range of numbers. It will vary from ship 

program to ship program, but 60 percent is not common, but it is 

not unheard-of. 
64 

Mrs. RADEWAGEN. So, Dr. Labs, on average how does CBO estimates usually compare with the Navy’s original estimate for a 

given program? It looks like you have partially answered that. Is 

there a pattern? 

Mr. LABS. Well, I think the pattern that I have observed over the 

years is that CBO consistently has estimates that are higher than 

the Navy’s. The vehicle in which this is most often done is through 

the annual shipbuilding analysis that CBO is required to do by 

statute of the Navy’s 30-year shipbuilding plan. 

I go through those programs one by one, ship program by ship 

program. What you see from one year to the next is that I will put 

out an estimate and one year’s analysis and then a couple years 

down the road the Navy will be changing their estimates along the 

way so that those gaps get closer. I, generally speaking, have not 

substantially overpriced a ship yet that I am aware of, certainly 

not a lead ship program. 

All too often what happens is that even though I have an estimate that is a good deal higher than the Navy’s, it is just as frequently possible that I am still underestimating the cost of that 

ship program. The PSC is one of those examples today where even 

using the Navy’s or the Coast Guard’s own information. 

If you look, for example, at their first life-cycle cost estimate 

analysis where they had a 13,000-ton lightship displacement ship 

for, you know, about a little more than a billion dollars, if you 

looked at that metric and then applied that cost metric to the current design, you could come up with an estimate that is higher 

than the CBO estimate is today. 

So that is the way I would answer your question at this point. 

Mrs. RADEWAGEN. Mr. O’Rourke, you also have spent significant 

time in your career assessing Navy and Coast Guard shipbuilding 

programs. What causes the Coast Guard’s estimates to come in so 

much lower than the actual cost? 

Does the Coast Guard’s track record in shipbuilding mirror the 

Navy’s in terms of programs coming under or over budget, ships 

being delivered on time or late, and the overall programs being 

managed well or poorly? 

Mr. O’ROURKE. To build on what Eric said and to get to the question that you put to Eric, it has been my observation over the years 

in observing the differences between the CBO’s estimates, Eric’s estimates, and the Navy’s that eventually the answer is going to settle a lot more closer to Eric’s than it will to the Navy’s. It may take 

some time, but you asked if there was a pattern? In my observation 

that is the pattern. It is going to be closer to what Eric says. It 

may take some time to get there, but that has been the pattern. 

Now, as for why you have services underestimating costs, I 

would say that there are 3 reasons, and Ms. Oakley mentioned one 

of them and Eric also commented on it, which is that at the start 

of a program if there is a range of uncertainty about what a ship 

might cost there is an incentive to set the number at the lower end 

of the range so as to help get the program started and established. 

A second cause, I believe in looking at this over many years, is 

that when people in the program offices bring programs forward 

they are allowed to talk about how doing it differently this time 

will save money in one regard or another, a new shipbuilding proc-
65 

ess, the CAD/CAM technology that was mentioned earlier, for example, or different manufacturing techniques. 

They can identify those and take credit for them and roll them 

into the cost estimates. What they can’t identify ahead of time and 

roll into the cost estimate is what may go wrong because they don’t 

know what that is. 

So they are allowed to fold in the stuff that can lower the cost. 

They are not really at liberty to then put a wedge in for stuff that 

will go wrong and, as a result, the estimate tends to be biased toward the optimistic for that reason as well. 

Eric gets around—— 

Chairman GIMENEZ. The gentlewoman’s time has expired. 

The Chair now recognizes the gentleman from Guam, Mr. 

Moylan. 

Mr. MOYLAN. Thank you, Mr. Chair. 

Mr. O’Rourke, speaking about numbers, this year’s budget for 

the Coast Guard was $1.5 billion. What would be a more realistic 

number do you think that they need to adequately fulfill their mission and, I am sorry, their acquisition needs? 

Mr. O’ROURKE. Right, what funding level in the Coast Guard’s 

procurement account would more adequately take care of their 

needs? The Coast Guard itself testified to that several years ago, 

and the figure they provided at that time was $2 billion to $2.5 billion. If you were to adjust that into today’s dollars that would be 

more like $2.5 billion to $3 billion a year. 

A figure of $3 billion a year would be twice what the request is 

this year. 

Mr. MOYLAN. Thank you, sir. 

Thank you, Mr. Chair. 

Chairman GIMENEZ. The gentleman yields back. 

I thank the witnesses for their valuable testimony and the Members for their questions. The witnesses are dismissed and the committee will stand in brief recess while the clerks arranged for the 

second panel of witnesses. 

[Recess.] 

Chairman GIMENEZ. The committee will come to order. I am 

pleased to welcome our second panel of witnesses. 

I ask that the witnesses please rise and raise your right hand. 

[Witnesses sworn.] 

Chairman GIMENEZ. Let the record reflect that the witnesses 

have answered in the affirmative. Thank you and please be seated. 

I would now like to formally introduce our second panel of witnesses. Vice Admiral Paul Thomas serves as the U.S. Coast 

Guard’s deputy commandant for mission support. Mr. Randolph 

Tex Alles, did I pronounce that right, Alles? Alles, serves as the undersecretary for management for the Department of Homeland Security. I thank each of our distinguished witnesses for being here 

today. 

I now recognize Vice Admiral Thomas for 5 minutes to summarize his opening statements. 
66 

STATEMENT OF VICE ADMIRAL PAUL F. THOMAS, DEPUTY 

COMMANDANT FOR MISSION SUPPORT, UNITED STATES 

COAST GUARD 

Admiral THOMAS. Good afternoon, Chairman Gimenez, Ranking 

Member Thanedar, distinguished Members of the subcommittee, 

my written testimony has been provided and I request to have it 

entered into the official record. 

Chairman GIMENEZ. Without objection. 

Admiral THOMAS. On behalf of our commandant, I want to first 

offer my deepest condolences to the family, friends, and colleagues 

of Representative Payne. We are deeply appreciative of his steadfast support of our Coast Guard and our Coast Guard women and 

men. 

Thank you for the opportunity to speak about the Coast Guard’s 

on-going activities to recapitalize the service’s assets and capabilities and efforts to meet increasing mission demands across the Nation and around the world for our Coast Guard. 

Over the next 10 years to answer increased call for the service’s 

unique capabilities, the Coast Guard will field new assets, expand 

our enduring presence in critical areas like the Arctic and the IndoPacific, build new infrastructure, and grow our work force to operate these assets. 

To do so, the Coast Guard, under the guidance of the Department of Homeland Security, is investing in a multi-billion dollar 

portfolio of acquisition programs to meet the Nation’s needs of 

today and tomorrow. We are guided by a comprehensive framework 

of acquisition policies informed by statutory and regulatory requirements and leveraging the best practices identified by GAO and others as we oversee our acquisition programs. 

To meet the growing needs for Coast Guard presence and to protect the Nation’s strategic objectives in the polar regions, the Coast 

Guard and the U.S. Navy have established an integrated program 

office to design and deliver a fleet of 3 polar security cutters. This 

arrangement leverages each service’s experience and expertise in 

large, complex vessel acquisition programs. 

The integrated program office has awarded a contract for the detailed design and construction of the lead polar security cutter. Detailed design activities are under way and the prime contractor has 

begun limited activities to support early production through a prototype fabrication assessment program. 

Even with this innovative production process we know that we 

cannot build these national assets alone. The defense industrial 

base plays a critical role in supporting our national security and 

economic prosperity. 

We are not just investing in the polar security cutter here. We 

are investing in national capability to build and field large, complex vessels, the capability the Nation needs to meet demands 

around the world. 

However, we face large-scale economic and geopolitical challenges to do so. While Americans have long prided ourselves on our 

ability to do big and complex things, the world has changed and 

we have work to do. 

The defense industrial base underwent significant consolidation 

over the last 2 decades in an attempt to reduce costs and operate 
67 

more efficiently. An unintended consequence of this consolidation 

was the erosion of the defense industrial base expertise and capacity to produce military vessels, despite the demand signal for recapitalization and growth of our fleets. 

Additionally, much of the global expertise in ship design has 

moved overseas, placing an even greater burden on our domestic 

shipbuilders. Moreover, lagging investment in capital infrastructure at our shipyards has eroded our Nation’s ability to produce the 

largest, most complex ships, such as the polar security cutter. 

Today’s challenges go beyond the infrastructure investment 

though. Equally concerning, America’s defense industrial base is 

encountering some of the same challenges our services are with regard to recruiting and retaining a work force. 

The increased demand for highly-trained welders, pipefitters, and 

other trades, along with design engineers and technical experts is 

just one example of how work force challenges are contributing to 

delays and cost increases across the Coast Guard shipbuilding portfolio. 

With a concentration of shipyards supporting Coast Guard and 

Navy programs on the Gulf Coast of our Nation, competition between shipyards for labor amplifies the challenge. 

I appreciate the continued bipartisan support of this committee, 

and I look forward to continue to work with you on advancing our 

recapitalization efforts. Thank you for the opportunity to testify before you today and for all that you do for the women and men of 

the United States Coast Guard. I look forward to your questions. 

[The prepared statement of Vice Admiral Thomas follows:] 

PREPARED STATEMENT OF VICE ADMIRAL PAUL F. THOMAS

MAY 7, 2024 

INTRODUCTION

Good morning, Chairman Gimenez, Ranking Member Thanedar, and distinguished Members of the subcommittee. Thank you for your continued oversight and 

strong support of the U.S. Coast Guard. I am honored to appear before you today 

to update you on our on-going efforts to recapitalize the Nation’s legacy fleet of polar 

icebreakers. This work is a part of a larger, comprehensive effort to deliver mission 

capability across the Coast Guard’s surface and aviation fleets; Command, Control, 

Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance 

(C5ISR) systems; and shore infrastructure. 

Our Commandant speaks regularly about the need to adapt to the ever-increasing 

pace of change. To keep up with the changing world around us, we must provide 

our total workforce with modern assets, systems, and infrastructure to support mission execution. In line with this direction, the Service continues to invest in a multibillion-dollar portfolio of acquisition programs established to identify and deliver the 

right capabilities for the Service. At the same time, the Coast Guard continues to 

prioritize investments in shore infrastructure, where every mission begins and ends: 

the facilities, piers, runways, and buildings that are as necessary for operations as 

our ships, boats, aircraft, and C5ISR systems. 

Indeed, recapitalization remains a top priority for the Commandant and the Service, and today’s efforts to invest in tomorrow’s needs will shape the Coast Guard 

and impact national security for decades. This subcommittee’s continued support 

has helped us make tremendous progress, and it is critical that we continue to deliver assets to the field that improve mission execution and provide the capabilities 

the Nation needs. Simply put, we must act today to be prepared for tomorrow. 

Significant investment is needed to advance our Nation’s interests in the Arctic, 

and I embrace the trust Congress and the American people have placed in the Coast 

Guard. The Service will continue to prioritize actions that safeguard U.S. interests 

while promoting safe, secure, and environmentally responsible maritime activity in 

the Arctic. 
68 

ENDURING MISSION NEEDS IN THE POLAR REGIONS

As 1 of only 8 Arctic Nations, the United States has both sovereign rights and 

responsibilities to safeguard our interests in the Arctic. Similarly, the United States 

has strong interests in the Antarctic region. The Coast Guard has been the lead 

Federal agency in assuring surface access to the Polar Regions since 1965, meeting 

the Nation’s most critical mission needs in the high latitudes. 

In the Arctic, we are witnessing a dramatic transformation of the physical, operational, and geostrategic environment. Climate change is opening up new access to 

Arctic waters, and Arctic activity is increasing and evolving at a rapid pace, from 

a surge in oil and gas exploration a decade ago to growth in types and locations 

of vessel transits, including an expansion of environmental tourism. Dynamic and 

accelerated changes in the Arctic environment create new opportunities and challenges. 

In addition to the challenges posed by increased access, the Arctic is a region of 

increasing strategic competition with the potential to elevate geopolitical tensions. 

In the U.S. Arctic, the Coast Guard is engaging more often with a growing number 

of strategic partners and competitors. Among the competitors, the Service is observing an increased presence by the People’s Republic of China and the Russian Federation. Both nations have declared the Arctic a strategic priority; both have made 

significant investments in new or refurbished capabilities; and both are attempting 

to exert direct or indirect influence across the region using instruments of national 

power. 

Likewise, the Coast Guard is a critical mission enabler in the Antarctic region, 

supporting scientific and U.S. objectives in the region by conducting the annual Operation Deep Freeze, which involves breaking a navigable channel through miles of 

ice up to 21 feet thick to allow fuel and supply ships to reach McMurdo Station, 

the U.S. Antarctic Program’s logistics hub and largest station. 

DELIVERING ENHANCED CAPABILITY

Coast Guard polar icebreakers are the foundation of U.S. operational presence 

and influence in the Polar Regions. These multi-mission cutters provide assured, 

year-round access not only for Coast Guard missions, but also in support of critical 

activities that protect key U.S. interests in the high latitudes. 

With the strong support of this subcommittee, we are moving forward with the 

acquisition of the Nation’s first new heavy polar icebreakers in nearly 5 decades. 

The Polar Security Cutter (PSC) is one of the top acquisition priorities for the Coast 

Guard. When fully operational, PSCs will provide the global reach and icebreaking 

capability necessary to project U.S. presence and influence, conduct Coast Guard 

missions in the high latitudes, and advance our national interests in the Arctic and 

Antarctic regions. 

The Coast Guard has established an Integrated Program Office (IPO) with the 

Navy to leverage each service’s experience and expertise in large, complex vessel acquisition programs. The roles and responsibilities for each service are well-defined, 

and the acquisition is following established processes and procedures under the Department of Homeland Security’s (DHS) acquisition framework. 

The Coast Guard and Navy remain committed to attaining the necessary design 

maturity prior to beginning production activities. This approach ensures shipyard 

readiness and mitigates overall schedule risk. Detail design activities are on-going, 

and long lead-time material for the lead ship has been delivered to the shipyard. 

The IPO has adopted an innovative and incremental approach to support early production, Prototype Fabrication Assessment (PFA), which is based on Navy best practices. By prioritizing and starting construction on up to 8 low-risk modules, PFA allows the shipbuilder to progressively build workforce capability, test new processes 

and equipment, and reduce production risk. Four modules are currently under construction. These modules have achieved near-100 percent design maturity and 

present very low risk of re-work. These modules, unlike work done under special 

studies previously authorized, are part of the first PSC. 

As the first heavy polar icebreaker to be constructed in the United States in nearly 50 years, we recognize the challenges associated with this effort, especially given 

the Defense Industrial Base’s lack of recent experience and available infrastructure 

to design and build such a complex vessel. The Defense Industrial Base is a critical 

component of the United States’ economic prosperity and national security, and the 

Coast Guard recognizes the strategic need to preserve national shipbuilding capacity. Bollinger Mississippi Shipyard is one of few U.S. shipyards with the capacity 

and capability to build and launch large Government and commercial vessels, and 

we are committed to working together to produce the PSC. 
69 

Earlier this year, the Coast Guard notified Congress that the PSC program would 

exceed cost and schedule thresholds, in accordance with statutory and policy requirements. The program is in the process of reviewing cost and schedule projections provided by the PSC prime contractor to formally establish new cost and 

schedule parameters in the acquisition program baseline. This work is occurring in 

parallel with on-going program activities to support delivery of the PSC fleet as 

quickly as possible. 

PSCs will provide the global reach and icebreaking capability necessary to project 

U.S. influence, conduct Coast Guard missions in the high latitudes, and advance our 

national interests in the Arctic and Antarctic regions. Continued investment is key 

to meeting our Nation’s growing needs in these rapidly-evolving and dynamic areas 

of responsibility. 

ADDRESSING NEEDS IN THE NEAR-TERM

To maintain heavy polar icebreaking capability until the PSC class is delivered, 

the Coast Guard established an effort to complete a service life extension on Coast 

Guard Cutter Polar Star, the Nation’s only operational heavy polar icebreaker. The 

cutter recently began the fourth of 5 planned annual work periods to enable continued operation of the aging cutter and availability for the annual breakout of national facilities in Antarctica’s McMurdo Sound and other missions in the high latitudes. 

Likewise, the Service has initiated a service life extension program for Coast 

Guard Cutter Healy, the Service’s only operational medium polar icebreaker, which 

was commissioned in 1999. The 5-year phased production builds upon the lessons 

learned from Polar Star’s service life extension and is planned to be completed between 2026 and 2030. When complete, this effort will recapitalize a number of major 

systems while addressing significant operational degraders to maintain the Coast 

Guard’s required heavy icebreaking capability. 

In addition to the on-going maintenance and service life-extending work in the 

Service’s current fleet and with the subcommittee’s support, the Coast Guard received funding in the fiscal year 2024 Homeland Security appropriation to procure 

a commercially-available polar icebreaker. The purchase of a commercially-available 

polar icebreaker is an effective strategy to increase operational presence in the near 

term and add long-term national capacity in the Arctic. Under the authority granted 

by the Don Young Coast Guard Authorization Act of Fiscal Year 2022, the Coast 

Guard intends to acquire a domestically-produced commercially-available polar icebreaker through a streamlined acquisition process that aligns with DHS and Coast 

Guard policy requirements. Initial activities will be directed at achieving initial 

operational capability, followed by a series of phased modifications to achieve full 

operational capability between annual Arctic operations. 

CONCLUSION

The physical, operational, and geopolitical environment in the high latitudes continues to change rapidly, driving demand for Coast Guard presence, influence, and 

missions. The Coast Guard has served in these regions for more than 150 years and 

is central to a U.S. whole-of-Government approach to ensuring national interests in 

the Polar Regions are protected. The continued support of the administration and 

Congress for a modernized and capable polar fleet and increased Coast Guard capacity and capabilities in the high latitudes will fortify the Nation’s position at this critical juncture. 

Since 1790, the Coast Guard has safeguarded our Nation’s maritime interests and 

natural resources on our rivers, in our ports, on the high seas, and around the 

world. Each day, the Coast Guard carries out its missions to protect lives, protect 

the environment, secure our maritime borders, and facilitate commerce. Our mission 

support and acquisition enterprises are, likewise, working each day to plan and deliver the assets and capabilities needed to support these critical missions. 

The cutters, aircraft, boats, C5ISR systems, and shoreside infrastructure we acquire today will provide vital capability for decades to come. We are committed to 

maximizing the Nation’s return on these important investments. Thank you for the 

opportunity to testify before you today and for all you do for the women and men 

of the Coast Guard. I look forward to answering your questions. 

Chairman GIMENEZ. Thank you, Vice Admiral Thomas. 

Now I recognize Mr. Alles for 5 minutes to summarize his opening statements. 
70 

STATEMENT OF RANDOLPH D. ‘‘TEX’’ ALLES, DEPUTY UNDER 

SECRETARY, MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. ALLES. Chairman Gimenez, Ranking Member Thanedar, and 

distinguished Members of the subcommittee, it is a privilege to appear before you today to discuss how the management director of 

the Department supports recapitalization of the Coast Guard fleet. 

I would also like to express my condolences to the committee for 

the loss of Mr. Payne, a tragic, tragic situation. 

As noted, I serve as the deputy under secretary for management 

and I have since July 2019. In that capacity I oversee the Department-wide management and oversight of all mission support functions, such as information technology, budget, and financial management procurement, acquisition, human capital, security, and 

asset management. 

In my role as the deputy under secretary of management I am 

also the chief acquisition officer for the Department. The management director works collaboratively with the Coast Guard overseeing the acquisition of maritime and aviation fleets needed by 

our front-line personnel to protect the homeland. 

As chief acquisition officer of the Department, I recognize the 

critical role effective acquisition management plays in meeting mission needs. 

Being proactive in security efforts across the Department’s various mission sets requires the acquisition community to work hard 

to streamline efforts without sacrificing our ability to execute the 

Department’s missions. 

DHS acquisition programs vary in size, scope, and cost. Collectively, the Department’s acquisition program portfolio works together to provide security for our Nation’s borders both land and 

maritime. 

As the commandant of the Coast Guard has previously conveyed, 

we have never experienced a greater demand for Coast Guard services, and we anticipate this demand to grow in the future. At the 

Department we are focused on facilitating the delivery of capabilities to meet these demands and confront the dynamic and complex 

challenges faced by Coast Guard personnel. 

We need new and more cable cutters, aircraft, boats, and command-and-control and communication systems that are required to 

support mission execution domestically in some of the most challenging environments around the world, including the polar regions, the Indo-Pacific region, and the Persian Gulf. 

Recapitalization of the Coast Guard is an important priority of 

the Department, and we were focused on effective program oversight and governance to ensure the investment in our critical assets has the greatest opportunity to meet the mission needs at an 

affordable cost and in a timely manner to support our personnel. 

These acquisitions require executable strategies that consider the 

need to plan and scope acquisitions before work begins, to oversee 

the design and production processes, and prepare future crews and 

the maintenance community for the delivery of future operational 

capabilities. 

By teaming with component acquisition executives, program 

managers, and other acquisition professionals, the Department’s 
71 

goals to enhance these acquisition activities which provide the appropriate number of checks and balances to promote better outcomes and achieving program success. 

Among the active Coast Guard shipbuilding the average DHS is 

currently governing 6 of these programs as major acquisitions, either as Level 1 programs, meaning that they exceed $1 billion, or 

Level 2 programs with a life-cycle cost exceeding $300 million. 

These programs are also in various stages of the Department’s 

acquisition life-cycle framework from established programs at the 

tail end of production, such as our national security cutters and 

fast response cutters to more recent programs that are in the earlier phase of acquisition, such as the polar security cutter and the 

waterway commerce cutters. 

The Coast Guard’s new shipbuilding programs include on-going 

construction at 5 private shipyards across the United States with 

the preponderance of the activities for building the major cutters 

centered in the Gulf Coast region of Louisiana, Mississippi, Alabama, and Florida. 

We recognize that the shipbuilding industry as a whole is facing 

pressure from diminished industrial base capacity. The main issue 

is limiting private shipbuilders and the long-term lies in the lack 

of personnel, rising costs of materials, and fluctuating acquisition 

priorities. 

Along with the rest of the industry, our Coast Guard programs 

are also seeing challenges caused by these issues. As legacy cutters 

continue to age, maintaining the older ships will be more of a challenge due to cost and obsolescence. With that in mind, we continually strive to improve our acquisition process with a focus on 

meeting mission performance at an affordable cost within the required schedule. 

Thank you again for your attention to the important mission and 

for the opportunity to discuss the management directorate’s governance of critical Coast Guard shipbuilding efforts. I look forward 

to answering your questions. 

[The prepared statement of Mr. Alles follows:] 

PREPARED STATEMENT OF RANDOLPH D. ‘‘TEX’’ ALLES

MAY 7, 2024 

INTRODUCTION

Chairman Gimenez, Ranking Member Thanedar, and distinguished Members of 

the subcommittee: It is a privilege to appear before you today to represent the Department of Homeland Security (DHS or the Department) and its Management Directorate. 

My name is Randolph ‘‘Tex’’ Alles, and I have served as the Deputy Under Secretary for Management (DUSM) since July 2019. In my capacity as DUSM, I oversee Department-wide management and oversight for all mission support functions, 

such as Information Technology, budget and financial management, procurement, 

acquisition, human capital, security, and asset management. In addition to my role 

as DUSM, I serve as the chief acquisition officer for the Department. 

I am pleased to be joined today by my colleague from the United States Coast 

Guard (USCG), Vice Admiral Paul Thomas, deputy commandant for mission support. The Management Directorate works collaboratively with the USCG to oversee 

the acquisition of maritime and aviation fleets needed by our front-line employees 

to protect our homeland. 

As chief acquisition officer for the Department, I recognize the critical role effective acquisition management plays in meeting mission needs. Being proactive in security efforts across the Department’s various mission sets requires the acquisition 
72 

community to work hard to streamline efforts without sacrificing our ability to execute the Department’s missions. DHS’s acquisition programs vary in size, scope, and 

cost. Collectively, the Department’s acquisition program portfolio works together to 

provide security for our Nation’s borders, both land and maritime. 

As the Commandant of the USCG has previously conveyed, we have never experienced a greater demand for USCG services, and we anticipate this demand to grow 

in the future. At the Department, we are focused on facilitating the delivery of capabilities to meet these demands and confront the dynamic and complex challenges 

faced by USCG personnel. New and more capable cutters; aircraft; boats; and command, control, and communications systems are required to support mission execution domestically and in some of the most challenging environments around the 

world, including the Polar Regions, Indo-Pacific region, and Persian Gulf. 

Recapitalization of the USCG is an important priority of the Department, and we 

are focused on providing effective program oversight and governance to ensure that 

investment in our critical assets has the greatest opportunity to meet the mission 

needs, at an affordable cost, and in a timely manner to support our personnel. 

THE HOMELAND SECURITY ACQUISITION ENTERPRISE

As the chief acquisition officer of the Department, I am responsible for the management, administration, and oversight of the Department’s acquisition programs 

and acquisition management systems. I am proud to lead a talented team of professionals that facilitate the acquisition of necessary capital assets, infrastructure, and 

systems across all of the Department’s operational components. These acquisitions 

require executable strategies that consider the need to plan and scope acquisitions 

before work begins; to oversee the design and production processes; and to prepare 

future crews and the maintenance community for the delivery and future operation 

of new capabilities. By teaming with the component acquisition executives, program 

managers, and other acquisition professionals, the Department’s goal is to enhance 

these acquisition activities, while providing the appropriate number of checks and 

balances to promote better outcomes in achieving program success. 

U.S. COAST GUARD SHIPBUILDING

Among the active USCG shipbuilding efforts, DHS is currently governing 6 of 

these programs as major acquisitions, either as Level 1 programs with life-cycle 

costs exceeding $1 billion or Level 2 programs with life-cycle costs exceeding $300 

million. These programs are in various stages of the Department’s Acquisition 

Lifecycle Framework, from established programs at the tail end of production, such 

as our National Security Cutters (NSC) and Fast Response Cutters (FRC), to more 

recent programs in an earlier phase of the acquisition life cycle, such as the Polar 

Security Cutters (PSC) and Waterway Commerce Cutters (WCC). 

Of the USCG’s white-hull cutter fleet, the NSC is the largest and most technologically sophisticated. The USCG accepted delivery of the 10th NSC on October 13, 

2023, and construction of the 11th and final NSC is currently under way in 

Pascagoula, Mississippi. We also continue to deliver FRCs into the fleet. Just this 

March, USCG accepted delivery of the 56th of the planned 65 FRCs. The fiscal year 

2024 appropriations provided funding for another 2 FRCs which we plan to put 

under contract soon. 

The Offshore Patrol Cutter (OPC) remains a top acquisition priority for the Department and is vital to recapitalizing the capability provided by our legacy fleet 

of 210-foot and 270-foot Medium Endurance Cutters (MEC). The program is progressing, with production of OPCs 1–4 under way with the Stage 1 contractor. Additionally, we are continuing with design activities on the Stage 2 contract, which will 

lead to the future production of up to 11 additional OPCs. As a bridging strategy 

to maintain mission capabilities until the OPCs are delivered, USCG has undertaken a service life extension program that will address key systems and component 

obsolescence on board the legacy MECs, many of which already exceed 50 years in 

service. 

We are also investing in the acquisition of the Nation’s first new heavy polar icebreakers in over 4 decades. PSC design activities are on-going, and initial long leadtime material has been delivered to the shipyard. Recognizing the critical need for 

these assets, the USCG is working closely with the prime contractor to mitigate 

schedule risks and ensure production readiness. When fully operational, PSCs will 

provide the global reach and icebreaking capability necessary to project U.S. sovereignty and influence, conduct missions in the high latitudes, and advance our national interests in the Arctic and Antarctic regions. The USCG Cutter POLAR STAR 

is the Nation’s only remaining heavy polar icebreaker. She was commissioned in 

1976, along with her sister ship, POLAR SEA. The PSC will be considerably larger 
73 

at 22,900 tons displacement compared to the 13,200-ton displacement of the previous polar icebreakers, to meet modern habitability and environmental standards 

and provide additional multi-mission spaces. 

On October 5, 2022, the USCG awarded the WCC contract for the design and future production of the river buoy tender and inland construction tender variants. 

The contract includes options for production of up to 27 cutters, and a separate effort is planned to deliver 3 inland buoy tenders to achieve a total fleet of 30 WCCs. 

The prime contractor began design activities earlier last year. Investment in our inland fleet is critical to the continued operation of the Nation’s Marine Transportation System, which accounts for more than $4 trillion in annual economic activity. 

The legacy fleet is approaching obsolescence, and maintenance costs are rising. Continued progress toward delivering these new assets and replacing the legacy fleet, 

which has an average age of over 55 years, is critical to maintaining the USCG’s 

capability to execute this important mission. 

SHIPBUILDING CHALLENGES

The USCG’s new shipbuilding programs include on-going construction at 5 private 

shipyards across the United States, with a preponderance of the activities for building the major cutters centered in the Gulf Coast region of Louisiana, Mississippi, 

Alabama, and Florida. We recognize that the U.S. shipbuilding industry as a whole 

is facing pressure from a diminished industrial base capacity. The main issues limiting private shipbuilders in the long term lies in lack of personnel, rising costs of 

materials, and fluctuating acquisition priorities. Along with the rest of the industry, 

our USCG programs are also seeing challenges caused by these issues. Two of our 

highest-priority programs—the OPC and PSC—have faced, and are continuing to 

face, significant schedule delays and cost increases. 

While it is common to see cost growth on first-in-class ships across the industry, 

the OPC program experienced unprecedented events early in the design process. 

The catastrophic effects of Hurricane Michael in 2018 as well as COVID–19-era inflation have resulted in the acquisition cost estimate increasing significantly since 

the initial estimate in 2012. We have increased Department-level oversight of the 

OPC Program, and I am briefed by the program manager regularly to stay up-todate on the program status. The USCG is working closely with the OPC shipbuilders to establish an updated baseline and schedule to determine what it will realistically take to get the first and follow-on OPCs in operation. 

The PSC program is now years behind the original schedule, without having attained the level of maturity we require prior to authorizing the start of construction. 

In addition to the general lack of U.S. experience designing and building polar icebreakers, the prime contractor suffered from organizational instability and has undergone managerial restructuring following its acquisition by a competitor shipyard 

in 2022. With the new management in place, we are now expecting to complete the 

Critical Design Review later this year, allowing us to start construction soon thereafter. In addition to enhancing our oversight and analysis of design metrics, in May 

2022, I approved the USCG’s plan to begin construction on up to 8 prototype units 

of the cutter that will eventually be incorporated into the construction of the first 

icebreaker. These prototype units are intended to allow the yard to exercise their 

fabrication processes in a controlled environment and are expected to reduce future 

production and schedule risk. Four of the 8 prototype units are now under construction and are, as we hoped, yielding valuable lessons for the craft workers to incorporate into the future full production. Additionally, the USCG received $125 million 

in fiscal year 2024 appropriations for the acquisition of a commercially-available icebreaker to increase its near-term presence in the Arctic. We are streamlining the 

processes to acquire this capability with the goal of providing some degree of operational presence in the Arctic within the next 24 months. 

CONCLUSION

Chairman Gimenez, Ranking Member Thanedar, and distinguished Members of 

the subcommittee, thank you again for your attention to this important mission and 

for the opportunity to discuss the Management Directorate’s governance of critical 

USCG shipbuilding efforts. As the legacy cutters continue to age, maintaining the 

older ships will be more of a challenge due to cost and obsolescence. With that in 

mind, we continually strive to improve our acquisition process with a focus on meeting mission performance, at an affordable cost, and within the required schedule. 

I look forward to answering your questions. 

Chairman GIMENEZ. Thank you, Mr. Alles. 
74 

Members will be recognized by order of seniority for their 5 minutes of questioning, and I recognize myself for my 5 minutes of 

questioning. 

Vice Admiral, where does the buck stop? We have got a cutter, 

I mean, I am sorry. We have an icebreaker that we put out a contract for 5 years ago. We have not even started construction on it, 

so where does the buck stop? Whose fault is that and what have 

we done to resolve this issue? 

Admiral THOMAS. Congressman, I appreciate your frustration because I share it. You know, in the case of the polar icebreaker you 

had a conversation earlier in the last panel about how it really 

works. 

You know, the Coast Guard does not design the ship. We let a 

contract that includes the detailed design of that ship. Our first 

contractor early on, I believe, decided they were going to try to get 

out of this deal and they essentially stopped designing the ship. 

They made very, very little progress. They talked about their subcontractor not delivering, et cetera. 

Now that we have a new prime contractor we are making very 

good progress on that detail design. We have taken some action to 

restructure the contract to put additional resources after it, more 

engineers for example. 

There were a lot of roadblocks, but right now the buck stops with 

me, and I am focused on getting to a detail design and construction 

because our Nation needs the ship and our Nation needs the shipyard. That is our focus. 

Chairman GIMENEZ. Give me a time. When will you be done with 

design? When will construction stop? 

Admiral THOMAS. We—— 

Chairman GIMENEZ. I am going to hold you to it, so what is the 

time? 

Admiral THOMAS. We intend to begin construction late this year. 

Chairman GIMENEZ. What is late this year? 

Admiral THOMAS. Probably in December. We are currently building prototype modules that will become part of the ship. We will 

not be at the level of design maturity that the GAO would like to 

see when we do that. 

Chairman GIMENEZ. In December I will call you back, and I—— 

Admiral THOMAS. We are—— 

Chairman GIMENEZ [continuing]. And I will call you back in December, OK? We are going to see where we are with this icebreaker. 

The offshore patrol cutter, I suppose we are having trouble with 

that. How many of these are we procuring? 

Admiral THOMAS. Well, we currently have a program of record of 

25 ships. We have awarded the Stage 1 contract for hulls 1 through 

4 and those are being built at Eastern Shipbuilding, Ship Group. 

Then we have a contract for—— 

Chairman GIMENEZ. For hulls 1 through 4 are they started construction? 

Admiral THOMAS. Yes, sir. All 3 are under construction and hull 

1 is in the water. She will be delivered in May of next year. 

Chairman GIMENEZ. When was the original contract given? 

Admiral THOMAS. That ship will be—well, the—— 
75 

Chairman GIMENEZ. The original contract, when was the original 

contract? 

Admiral THOMAS. The original contract delivery date was in May 

2024. I don’t remember. I have got that here, but the ship—— 

Chairman GIMENEZ. Is that for the first ship, May 2024? 

Admiral THOMAS. The ship will be late, just like most of the 

ships—— 

Chairman GIMENEZ. Is the program late? 

Admiral THOMAS. Yes, sir. That program is behind schedule and 

over target budget, and we are working to adjust that. 

Chairman GIMENEZ. For both the Navy and the Coast Guard I 

am hearing the same the same thing, that the industrial base, that 

we have lack of skilled workers in the industrial base. Is that your 

assessment, welders, et cetera, the things that we actually need to 

build to a ship, the people that we actually need to build the ships? 

Are we short of those kind of skill sets here in the United States? 

Admiral THOMAS. Yes, we are, sir, and that is one of the reasons 

why the estimates vary so wildly because—— 

Chairman GIMENEZ. Oh, now hold on. That is just a yes or no 

answer to that. OK. So what is the Coast Guard, what is the Navy 

doing about that? 

Admiral THOMAS. The Navy has some authorities to actually do 

something about that, including spending money to train people in 

key trades that they need particularly for building submarines. The 

Coast Guard doesn’t have those authorities although we do work 

closely with the Navy so that they understand our needs as well. 

They target those monies to the trades that we need as well. 

Chairman GIMENEZ. Do you think you need that authority? 

Admiral THOMAS. As I said, right now we work very closely with 

the Navy and we leverage their authority so I think we are OK. 

If we were to have the authority then we would need the same appropriations that the Navy has in order to have the money to actually—— 

Chairman GIMENEZ. Do those skill sets exist around the world? 

Admiral THOMAS. There are labor challenges in shipbuilding 

around the world. 

Chairman GIMENEZ. Around the world. OK. 

Admiral THOMAS. At least in the Western world. 

Chairman GIMENEZ. Fair enough. OK. Vice Admiral, I will be 

bringing you back in December. I still will be here in December, 

OK? I am going to probably be here after that, too. 

Admiral THOMAS. OK. 

Chairman GIMENEZ. But in December for sure I will be here and 

so we will be having this conversation again about the cutter and 

then also these programs that are falling behind. 

I just feel it is completely inexcusable that a contract was let 5 

years ago and we haven’t even started construction on this, especially when supposedly the design was built, was already—it is 

here is the design, here is the ship. Here we go and then nothing. 

If somebody was giving you trouble and delaying you, we should 

have known about that. 

So with that, my time is expired. 

I now recognize the Ranking Member, Mr. Thanedar. 

Mr. THANEDAR. Thank you, Chairman Gimenez. 
76 

Several questions here. I wonder if we have enough of an expertise in-house, shipbuilding expertise, expertise to oversee the shipbuilder’s expertise to evaluate their submissions, expertise to monitor it. Do we have enough in-house expertise? If not, what can you 

do to build such an expertise so we can effectively monitor these 

acquisitions and oversight? 

Admiral THOMAS. Well, one of the reasons that we have an integrated project office with the Navy is so that we can leverage their 

expertise as well as the Coast Guard expertise, particularly given 

the complexity of the polar security cutter in this case. You know, 

our expertise is typically around smaller vessels. 

As a Nation we need to make sure we don’t lose this expertise. 

We need to support STEM programs because we are not building 

the engineers as a Nation that are near-peer competitors are building, and so that is a concern across shipbuilding across the maritime or the military industrial base. It is a real concern. I appreciate you noticing that. 

Mr. THANEDAR. Well, not only domestically United States but 

world-wide, where can we go get this expertise if we need to? 

Admiral THOMAS. Well, I mean, in the case of polar security cutter, you know, I think the Chairman mentioned earlier that, you 

know, there is real expertise in icebreakers in places like Finland. 

That is where we went when we first put out the proposal and we 

had to choose an indicative design. 

We said we want something like this. They came back and we 

didn’t provide them a design. We said here are the requirements. 

Here is one that it is pretty close. They came back and said we 

want to use this design over here and then, you know, by the way, 

the ship that they chose for the parent design has actually never 

been constructed and that is why the detail design has taken so 

long. 

Mr. THANEDAR. Thank you. Now, Admiral Thomas, I represent 

much of Detroit, Michigan. My constituents depend upon maritime 

commerce and tourism on the Great Lakes. In fact, 55 percent of 

the Great Lakes regional economy is dependent on key shipping 

channels according to Coast Guard. 

We have heard a lot about polar security cutter program, how 

the Coast Guard struggles to respond to mission needs in the Arctic, but is the same true on the Great Lakes where Coast Guard 

rely on a fleet of aging vessels? 

What mix of small, medium, and heavy icebreakers does the 

Coast Guard believe it will need in the Great Lakes? What can 

Congress do to support the Coast Guard’s Great Lakes icebreaking 

effort and acquisitions? 

Admiral THOMAS. Well, thank you for the question. The Coast 

Guard is committed to recapitalizing our system of icebreakers on 

the Great Lakes because it takes a system. It takes the small, medium, and the large in order to, you know, get those ships all the 

way to the pier. 

We believe that we need about 2 heavies, and in this case a 

heavy would be equivalent to the Mackinaw, which is currently 

there, and about 11 of what is currently a 140-foot, you know, tug 

and about 8 of the smaller ones that can work closer to the piers. 
77 

We have, you know, we have gotten some support from Congress 

and particularly to build another Great Lakes heavy icebreaker. 

We got enough money in the budget last year to begin the acquire 

phase of the acquisition program, analyze and acquire. 

We are going to need another $20 million to finish that phase, 

but we have started. 

Mr. THANEDAR. Thank you. Thank you so much, Admiral. 

I yield back. 

Chairman GIMENEZ. The Ranking Member yields back. 

I recognize the gentleman from Louisiana, Mr. Higgins. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Admiral Thomas, Mr. Alles, thank you for being here today. Admiral Thomas, you have got 39 years in the rearview mirror in 

your uniform, sir. Thank you for your service. My understanding 

is that you will be retiring soon, and we wish you the best. 

I am an old Army veteran NCO and a couple of my district staff 

members are prior Army combat veteran, another NCO and a lieutenant colonel, so we were predisposed to love Army in my office 

and but in my district in south Louisiana we have so much interaction with the Coast Guard. 

The last 8 years have been a real awakening. The old Army veterans in my office said just how squared away the Coast Guard is. 

So if you have been there for 39 years, my brother, then you are 

partly responsible for just how impressive the United States Coast 

Guard is, so thank you for that service. 

Regarding these vessels and getting them finished and built, figuring out what is wrong, we are going to do that. We are going to 

work together. 

Congress is going to work with the Coast Guard and the Navy. 

We are going to identify what the problems have been. We are 

going to iron them out. 

You have an excellent shipbuilder on the polar security cutter 

now in Bollinger Shipyards so we are going to fix these issues. I 

thank you for your service, sir. 

Admiral, clearly in the last panel we identified some challenges 

that we must overcome with two major vessel programs, including 

the polar security cutter. Can you please describe the relationship 

between the Navy, the Department of Defense, and the Coast 

Guard as it pertains to the polar security cutter? Like, who is in 

charge? Which Government entity has the ultimate decision-making authority when it comes to interacting with the shipbuilder? 

Can you clear that up for America? 

Admiral THOMAS. Well, first, Congressman, thank you. It has 

been a privilege to serve for 39 years, and I am retiring in July so 

I just signed my relief up to meet the Chairman in December. 

But, you know, the Coast Guard and the Navy work very, very 

closely on the polar security cutter. The Coast Guard really is driving the, you know, the requirements and the design review, and we 

have a joint office with the Navy down at the shipyard. 

The Navy helps us. It is a Navy contract, not a Coast Guard contract, so that is really where the Navy plays the biggest role is in 

contract modifications. But we tell them what we would like to see 

and they have been very helpful in that regard. 
78 

Mr. HIGGINS. So contract modification, you said that is the major 

role that the Navy plays? That the Coast Guard is driving what the 

needs are for the design but the Navy is responsible for actual contract modification with the shipbuilder. Is that accurate? 

Admiral THOMAS. We work together on that, so the Coast Guard 

is driving the train with regard to what it is going to take to get 

this ship and that includes regular meetings with the ownership of 

that yard—— 

Mr. HIGGINS. Yes, sir. 

Admiral THOMAS [continuing]. Understanding where they are 

and then understanding how the contract must be modified so that 

we get both the ship and a shipyard. Then we go and we work with 

the Navy to make those necessary modifications. 

Mr. HIGGINS. Mr. Alles, do you have anything to add to that 

question regarding the relationship between the Coast Guard and 

the Navy and the shipbuilder? 

Mr. ALLES. Just as the Admiral said, sir, the contract is Navy, 

but they respond to the requirements the Coast Guard gives them. 

The money at this point purchasing the cutter is DHS money 

through DHS appropriations. 

The initial money for the contract was shipbuilding construction 

Navy, which is why the contract went to them originally. Now it 

is DHS money. So they are very responsive, as the Admiral said. 

Mr. HIGGINS. OK. Well, we are going to work closely with the 

Coast Guard, the Navy, and the shipbuilder to help these projects 

move forward and get back on track. 

Admiral, closing question here regarding unmanned systems, the 

strategic plan. Last year the Coast Guard released a report highlighting that the use of unmanned systems is critical for mission 

readiness. 

Has the Coast Guard thought about incorporating autonomous 

vessels into its fleet? What is the status of that? 

Admiral THOMAS. Thank you, Congressman. You mentioned we 

have a strategy for incorporation of unmanned systems. Right now 

our focus really is on aerial systems. We have experimented with 

unmannered autonomous surface vessels as well, but we are working to develop those CONOPS and definitely in the future we will 

need those systems. 

Mr. HIGGINS. We will talk more about that. My time has expired. 

Thank you. 

Chairman GIMENEZ. The gentlemen’s time has expired. 

Admiral, I also want to thank you for your service. Please let 

your successor know, he or she, that they will be back here in December to talk about the polar icebreaker. Thank you. 

The Chair now recognizes the gentlewoman from American 

Samoa, Mrs. Radewagen. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. 

I represent American Samoa in the South Pacific. Our largest industry is fishing, which is at threat from Chinese IUU fishing. 

Coast Guard presence in American Samoa is the best deterrence 

from Chinese incursions into our EEZ. Every single Pacific Island 

leader has asked for 2 things in the Pacific Coast Guard and the 

Peace Corps. Today we are discussing the fleet of the future, one 

that can operate in the South Pacific. 
79 

American Samoa recently just hosted the commandant of the 

Coast Guard, Admiral Fagan, in February and American Samoa 

stands ready to host a larger permanent presence of the Coast 

Guard. 

With the success of the Harriet Lane’s tour of the Indo-Pacific, 

I would like to focus on OPC. My first question is for Admiral 

Thomas. With regard to its aging fleet, what are the operational 

consequences the Coast Guard is currently and anticipates facing 

due to delays in the OPC and PSC programs? What operational 

and financial tradeoffs are the Coast Guard having to make as a 

result? 

Admiral THOMAS. Thank you for that question, Congresswoman. 

I know the commandant told me she really enjoyed her visit with 

you there. 

Yes. The delays in our offshore patrol cutter have caused us to 

undertake a service life extension program for our 270-foot Harriet 

Lane-type ships, and then we are doing that in order to maintain 

that capability and that capacity until we can get the offshore patrol cutter into full production, and that, you know, eventually that 

would be 2 ships per year. 

Mrs. RADEWAGEN. Thank you. For my next question, and both 

you and Mr. Alles can answer, what lessons learned from OPC 

stage 1 has the Coast Guard collected and will proactively apply to 

mitigate design and construction delays on stage 2? 

Mr. ALLES. I think I would just comment the stage 2 program is 

progressing quite well at this point. A design is coming along well. 

They have done their initial critical design review so we are very 

encouraged by what we are seeing from the offshore contractor 

there. 

Lessons learned from OPC 1 have clearly been incorporated into 

that effort and we are seeing good progress. 

Mrs. RADEWAGEN. Admiral Thomas. 

Admiral THOMAS. No, I agree with everything Mr. Alles said. The 

primary contractor for stage 2 is progressing very, very well on the 

design, and we expect to begin production on that ship this year 

as well. 

Mrs. RADEWAGEN. Thank you. As a follow-up, what are the biggest risks to OPC’s stage 2? What is the Coast Guard doing to mitigate them? What off ramps does the Coast Guard have in place to 

descope requirements if needed to get ships out faster and is this 

enough? 

Admiral THOMAS. I would say the biggest risk to stage 2 is the 

availability of labor. Again, because that shipyard is on the Gulf 

Coast with all the other ship routes that are doing a lot of work 

for both the Navy and the Coast Guard they have on a lot of Navy 

work in that very shipyard as well so their ability to get the number of laborers they need to deliver those ships on time is the biggest risk. 

Mr. ALLES. I think likewise. I agree with Admiral Thomas’ response. I think also there is the competition with the Navy itself, 

so we will make sure we stay in the fight there for our production. 

Mrs. RADEWAGEN. Thank you. 

Mr. Chairman, I yield back the balance of my time. 

Chairman GIMENEZ. The gentlewoman yields back. 
80 

The Chair now recognizes the gentleman from Guam, Mr. 

Moylan. 

Mr. MOYLAN. Thank you, Mr. Chairman. 

Vice Admiral, all 3 FRCs currently stationed in Guam are due 

for repair next year. What is the Coast Guard’s plan for the region 

during this time when the FRCs will be completely absent from 

Guam’s area of responsibility and how can we ensure that this gap 

in service and structure will never happen again? 

Admiral THOMAS. So all 3 of those vessels will go into dry dock 

but not at the same time. We will sequence them so there will always be 2 in Guam. Then very likely we will home port another 

FRC there in the coming 2 or 3 years. 

Mr. MOYLAN. Good to hear, thank you. Second question, Vice Admiral, I recently had a chance to host Chairman Sam Graves to see 

Guam’s Apra Harbor breakwater. I continue working with both the 

Department of the Navy and the House Armed Services Committee 

to find solutions on how the marine infrastructure can be repaired. 

The breakwater is just one typhoon away from completely washing out and rendering Apra Harbor useless. If this was to happen, 

what would be the impact on the Coast Guard operations and the 

capacity in Sector Guam? 

Admiral THOMAS. So I have been to Apra Harbor as well and I 

share your concern. Obviously, if we lose that breakwater and the 

ability to have sheltered moorings there we would not be able to 

operate out of Guam, at least not on a full-time basis. So it is a 

concern for us. 

Mr. MOYLAN. It is considered an emergency, and I appreciate 

your continued push to get this repaired as quickly as possible. 

For my final question, Vice Admiral, as the deputy commander 

commandant for mission support, we have received reports from 

senior Coast Guard leaders in Guam about the need for increased 

capability and personnel support for operations out of Guam. What, 

if anything, have your commanders said to you about what it takes 

to realize their needs in supporting Homeland’s mission in Guam 

and what steps have been taken to address the stated concerns? 

Admiral THOMAS. Coast Guard commanders around the world 

tell me they don’t have enough to do what they need to do and they 

are right. Two-thousand-eighteen we had a PC&I budget of $2.6 

billion. You just heard in 2025 that it is $1.6. We are going in the 

wrong direction. We need at least a $3 billion PC&I budget to do 

all the infrastructure work that we need to do around the Nation, 

and we simply are going in the wrong direction. 

So I hear that everywhere I go. It is one of the greatest frustrations of being the guy responsible to provide things that float and 

fly have runways and roofs, and I can’t do it. 

Mr. MOYLAN. I can imagine the pressure you are facing and I 

really appreciate your experience and support in fighting for the 

Coast Guard, for the Indo-PACOM area, for Guam, and free associated states and America Samoa as well, we rely on you heavily to 

protect our fisheries and most especially keeping out the CCP from 

our area. We just can’t do it without your support, so we are going 

to fight for you and appreciate that. Thank you for your service, 

sir. 
81 

Admiral THOMAS. Thank you. Our members love serving out 

there. 

Mr. MOYLAN. Mr. Chairman, I yield back. Thank you. 

Chairman GIMENEZ. The gentleman yields back. 

I am going to do a second short round of questioning for those 

that want to. Admiral Thomas, do you have a, in the Coast Guard, 

do you have a number of engineers, naval architects, et cetera, that 

work for the Coast Guard that help you? 

Admiral THOMAS. Congressman, thank you for the question. I 

am, in fact, an MIT-trained naval architect. We have a number of 

naval architects who both work on our ships and work on review 

of design for commercial vessels that we regulate. So that is an expertise that we do have in our force, both on our civilian side and 

on our military side. 

Chairman GIMENEZ. Does the Navy have the same kind of setup over on their side? 

Admiral THOMAS. Yes, Congressman, they do and, in fact, while 

I was in grad school for naval architect most of my classmates were 

Navy officers. 

Chairman GIMENEZ. Do you guys, does the Navy and the Coast 

Guard, are you collocated or do you talk to each other? I mean, do 

you operate separately? Do you operate quasi together or is it just 

separate Coast Guard here, Navy there? 

Admiral THOMAS. We are integrated to the point where we actually do exchanges of some of our employees so that we can get our 

Coast Guard members some experience working on Navy projects 

and vice versa. So we are talking to NAVSEA. Their ship design 

headquarters is just across the river from Coast Guard headquarters so we are there often. 

Chairman GIMENEZ. You are there often? OK, but you are not 

collocated technically. You are not together. They are across the 

river, right? 

Admiral THOMAS. Yes. Yes, sir, but as I said, we do have embeds 

and they have embeds with us. 

Chairman GIMENEZ. OK, fair enough. You said that you needed 

more money. Everybody in the Federal Government says they need 

more money and I tend to agree with you. You probably do. The 

submission that you gave to the administration, was that pared 

down by the administration? 

Admiral THOMAS. Just like every component or at an agency we 

are given a top line that we have to stay underneath and we have 

to make hard choices in order to get underneath that top line, 

which is why you see so much on the unfunded priorities list. 

In the case particularly of the polar security cutter, we will not 

be able to build that ship from money within our base and still do 

everything else the Nation needs us to do. We need top line relief 

in order to build a polar security cutter. We have not gotten that 

and that relief has to really be at the Department level so it doesn’t 

come from Department priorities as well. 

Chairman GIMENEZ. All right. So you don’t have the money to 

build the icebreaker that you need. Is that what you are telling 

me? You don’t have the money to do that? For our Nation’s security 

you don’t have the money to do that? 
82 

Admiral THOMAS. What I am telling you, sir, is that with the current top lines that we are given to build a budget to we cannot 

build a polar icebreaker and still produce 2 OPCs per year and 

transition our rotary-winged fleet to H–60’s and build C–130’s and 

build waterway commerce cars. We cannot do it. 

So if we are forced to do it within our base we are going to have 

to make some really tough choices, which includes probably curtailing the OPC program or perhaps flying less aircraft, which will 

really hurt our ability to provide the same level of service to the 

Nation. 

Chairman GIMENEZ. Will you provide that information to Congress as to what you can do with the money that Congress is allocating to you instead of saying, well, yes, we will do all these 

things, knowing full well you can’t do all these things? 

Admiral THOMAS. Absolutely happy to provide a brief. I mean, we 

do come up once a quarter and brief where we are in acquisitions, 

but we can definitely provide you a brief on what we will and will 

not be able to do if we stay at a $1.5 billion PC&I budget. 

Chairman GIMENEZ. Well, I think what we need to know is what 

is it you believe you need to maintain the national security of the 

United States, what equipment you need, how much it will cost, 

and then what you can actually do with the budget that is allocated to you. So I would like to see that. 

Admiral THOMAS. Absolutely. 

Mr. THANEDAR. With that, I yield the balance of my time. 

I now recognize the Ranking Member, Mr. Thanedar. 

Mr. THANEDAR. Thank you, Chairman Gimenez. 

Thank you to our panelists here. Mr. Alles, you know, and Admiral Thomas, I, you know, I appreciate the hard work of the men 

and women of U.S. Coast Guard. I appreciate your long service and 

I wish you, you know, a very happy retirement. 

As I look at all these cost overruns and the delays and how expensive these programs have become and, obviously, you have a 

limited budget, what are these additional expenses, additional 

costs, how is that impacting? What programs is that impacting? 

As you try to cut costs, what does that do to our national security? 

Mr. ALLES. I would just say that, obviously, as the Admiral mentioned, it means tradeoffs, tradeoffs in mission performance. It will 

possibly mean tradeoffs in the Department where we put money. 

It is going to have to come from somewhere to support the Coast 

Guard mission sets, but it is a national priority that the Secretary 

takes seriously and will have to be evaluated. 

I would mention that as we think about costs overall we have 

seen a very dramatic acceleration across all of our building areas, 

not just shipbuilding, just building construction, labor, materials, 

costs have accelerated much more rapidly than consumer price 

index, in some cases up to 80 percent. So that has a big impact. 

The pandemic has had a lasting effect overall and we are navigating that. 

Mr. THANEDAR. Thank you. That is all the questions I have. 

I yield back. 

Chairman GIMENEZ. The Ranking Member yields. 
83 

The Chair now recognizes the gentlelady from American Samoa, 

Mrs. Radewagen. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. 

Admiral Thomas, can you go into how the Francis Scott Key 

Bridge collapse is affecting the work at the Coast Guard yard, especially in regards to the 270 service life extensions? 

Admiral THOMAS. Thank you for that question. I love any opportunity to talk about the Coast Guard yard. Fortunately, we have 

not experienced any adverse impacts from the bridge collapse, so 

we have a deep enough channel open now to get our ships back and 

forth. 

But the Coast Guard yard is another place where the Nation 

needs to invest. We are not going to be able to service our own 

ships. The new ships are too big for the current facilities at the 

Coast Guard yard. We need to maintain that ability in-house so 

that we can keep the military industrial base competitive. 

When they know they are the only game in town it becomes really difficult, so we as a Nation need to invest in the Coast Guard 

yard and particularly in a dry dock that can lift the OPC and the 

NSC. 

Mrs. RADEWAGEN. So this question is for Mr. Alles and Admiral 

Thomas, too. Secretary Mayorkas recently testified to the Senate 

Homeland Security Appropriations Committee that the Coast 

Guard is underfunded. Do you agree with the Secretary? 

Does the Coast Guard have the necessary assets to fulfill all 11 

of the service’s statutory mission sets? What more is needed to fill 

in the operational gaps? 

Mr. ALLES. So I would agree with the statement that the Department has historically been underfunded overall at the level of 

many billion dollars. This rolls over on the Coast Guard programs. 

I won’t give an amount they need. That is something I would think 

we probably can provide back to the committee, but definitely the 

funding levels are not sufficient to do all the mission sets for the 

Coast Guard. 

I will defer to Admiral Thomas. 

Admiral THOMAS. Well, the Chairman said it earlier. The demand for the Coast Guard around the globe has never been higher. 

We are being asked to be in more places more often and for longer 

periods of time, and our budget has been flatlined, in particular our 

PC&I budget, as I had mentioned, is going in the wrong direction. 

So we are underfunded and we will have to make some tough 

choices if we continue to be underfunded. 

Mrs. RADEWAGEN. Thank you. 

Mr. Chairman, I yield back the balance of my time. 

Chairman GIMENEZ. The gentlewoman yields back. 

The Chair now recognizes the gentleman from Guam, Mr. 

Moylan. 

Mr. MOYLAN. No further questions, Mr. Chairman. I just want to 

thank the panel. Thank you very much. 

Chairman GIMENEZ. The gentleman yields back. 

I thank the witnesses for their valuable testimony and the Members for their questions. The Members of the subcommittee may 

have some additional questions for the witnesses, and we would 

ask the witnesses to respond to these in writing. 
84 

Pursuant to committee rule VII(D), the hearing record will be 

open for 10 days. Without objection, the subcommittee stands adjourned. 

[Whereupon, at 12:20 a.m., the subcommittee was adjourned.] 
(85) 

A P P E N D I X 

QUESTIONS FROM HONORABLE MICHAEL WALTZ FOR VICE ADMIRAL PAUL THOMAS

U.S. COAST GUARD VS CHINESE COAST GUARD IN INDO-PACIFIC

Question 1a. Per Rep. Waltz, ‘‘As the U.S. strives to protect a free and open IndoPacific by the following of international rules, norms, and laws, the U.S. Coast 

Guard (USCG) continues to comply with all international law and legal boardings. 

However, the Chinese Coast Guard (CCG) continues to violate international law as 

exemplified in protecting illegal Chinese fishing in the South China Sea, and in 

other South Asian economic exclusion zones (EEZ) like the Philippines and Vietnam.’’ 

How is the USCG competing with the CCG in the South China sea with our limited USCG assets (we only have a couple in USCG assets in Singapore)? Why are 

we not building out our USCG capacity in the region to prevent illegal CCG activity? 

Answer. The Service works closely with our Department of State and Defense colleagues to leverage their authorities and funding to develop partnerships with likeminded nations, and execute tailored training engagements. The opportunities for 

capacity building are only limited by funding and associated authorities provided by 

interagency colleagues for which the U.S. Coast Guard has the unique skill set to 

execute. 

• The Coast Guard operates National Security Cutters, Fast Response Cutters, 

Seagoing Buoy Tenders, and aircraft to patrol and combat illegal, unreported, 

and unregulated fishing in the U.S. economic exclusion zone (EEZ), the high 

seas, and the EEZs of Pacific Island nations through bilateral maritime law enforcement agreements with 12 Oceania countries. 

• The Coast Guard provides deployable specialized forces on-board U.S. and allied 

naval vessels to conduct maritime law enforcement, interdiction, and security 

operations across the North and West Pacific and in Oceania. 

• A trusted partner in the region, the Coast Guard is well-positioned to continue 

current operations and expand activities across the region. 

• The fiscal year 2024-enacted appropriation provided funding for 2 additional 

154-foot Fast Response Cutters to support the Indo-Pacific, which will add capacity to complete further-reaching deployments once cutters are delivered to 

the region. However, the Service is still limited by its force structure in the region and is not poised to keep pace with mounting demands from partners for 

support to assist in securing their waters from coercive behavior. 

• The fiscal year 2025 President’s budget requests $263 million to further accelerate expansion in the Indo-Pacific. 

• The Coast Guard’s fiscal year 2025 Unfunded Priority List features $232 million 

in investments that would further the expansion supported by the President’s 

budget, including an additional 270-foot Indo-Pacific Support Cutter to further 

the work currently being supported by USCGC Harriet Lane, shore infrastructure projects, and increased Marine Transportation System Assessment Team, 

Maritime Engagement Team, and regional engagement personnel. 

Question 1b. Why is there a lack of USCG assets in the Pacific when the USCG 

is best positioned to operate in the gray zone of the South China Sea (i.e. if there 

was a search-and-rescue mission in American Samoa we’d have to ask the NZ coast 

guard for help)? We have USCG assets in Guam, but why not in Japan? 

Answer. The Coast Guard’s role as part of the Indo-Pacific Strategy is largely centralized in Oceania, aside from National Security Cutters supporting the Department of Defense in the First Island Chain. The administration has called the Compacts of Free Association the bedrock of the U.S. role in the Pacific—including our 

regional search-and-rescue responsibilities and shared maritime boundaries. The 

Coast Guard has long undertaken presence, patrolling (including pursuant to ship- 
86 

rider agreements with partner nations), training, and advisory missions in this vital 

region. The investments in the fiscal year 2025 President’s budget and Unfunded 

Priorities List represent the next step to building Coast Guard capacity in the region. 

U.S. COAST GUARD HEAVY ICEBREAKER—ARCTIC OPERATIONS

Question 2. Per Rep. Waltz, ‘‘I am happy to see that we are looking to replace 

the 1979 U.S. Coast Guard Icebreaker POLAR STAR with 3 additional Heavy Ice 

Breakers by 2029, albeit 5 years behind schedule.’’ 

With Russia’s fleet of 40+ heavy icebreakers and a Russian goal of 50 nuclear ice 

breakers, how is the U.S. Coast Guard competing in the 2,500 nautical miles of strategic Arctic waterway that Russia and China both want to monopolize and militarize, with only 1 active USCG heavy ice breaker? 

Answer. The Coast Guard remains committed to safeguarding U.S. sovereignty 

and interests in the Arctic as outlined in the 2022 National Security Strategy, 2022 

National Strategy for the Arctic Region, and the USCG’s 2023 Arctic Strategic Outlook Implementation Plan. Expanding Arctic surface capabilities, based on the objectives expressed in the national strategies, is one of various initiatives that the Coast 

Guard is pursuing to meet national security objectives in the Arctic. 

QUESTION FROM HONORABLE MICHAEL WALTZ FOR RANDOLPH D. ‘‘TEX’’ ALLES

EASTERN VS. AUSTAL FOR USCG CUTTERS

Question. Austal Limited, the Australian-based corporation is the parent company 

of Austal USA, an Alabama shipbuilder selected in 2022 over Eastern Shipbuilding 

for a more than $3 billion U.S. Coast Guard contract to build ships 5 through 15 

in the Coast Guard’s Offshore Patrol Cutter Program (part of a $10.5 billion project 

with the Coast Guard to build up to 25 Heritage Class Offshore Patrol Cutters). 

Eastern Shipbuilding was commissioned to build the first 4 cutters in the program. The Panama City company also was given the rights for the first 11 ships 

in 2016, but that contract was reduced to 4 after Category 5 Hurricane Michael devastated Bay County and other parts on the Panhandle in October 2018. 

Eastern officials have said they think Austal USA’s bid for the latest Coast Guard 

contract was unrealistic. They also have noted Austal USA does not have experience 

building steel hull ships. The company instead is known for building aluminum 

ships for the Navy. 

Prior to receiving the Coast Guard contract last year, the foreign-owned Alabama 

shipbuilder was commissioned by the Navy to build Littoral Combat Ships that were 

reported to be ‘‘plagued by cracked hulls, broken equipment, and technologies that 

do not work.’’ 

Why did DHS/USCG switch from an American-based Eastern shipbuilders to a 

foreign Austal Limited? Especially with a disastrous recent track record for the LCS 

program. 

Answer. Response was not received at the time of publication. 

Æ