USCG's Polar Icebreaker Program: If You Want It Bad, You Get It Bad.
The good, the bad, and the ugly from Tuesday's House Subcommittee on Transportation and Maritime Security Hearing.
In Monday’s post I commented on recent reports by the Congressional Research Service (CRS) and the Congressional Budget Office (CBO), released in advance of a scheduled hearing before the House Subcommittee on Transportation and Maritime Security. These reports suggested that the Polar Security Cutter (PSC) Program was further behind schedule, with the lead ship now expected in 2029, and, based on historical shipbuilding program costs, would realistically cost 60% more than the U.S. Coast Guard’s (USCG) most recent estimates.
I watched Tuesday’s hearing (Title: Building the Fleet: Assessing the Department of Homeland Security’s Role in the United States Coast Guard’s Acquisitions Process) several times and carefully read the written testimony. While the hearing provided few new facts about the current status of the design and construction of the PSCs, it did highlight the problems that the PSC program faced. The testimony highlighted missed opportunities to mitigate the obvious risks inherent in building the ‘first heavy polar icebreaker constructed in the United States in nearly 50 years.’
However, it seems that the USCG is more interested in discussing problems with the initial prime contractor, VT Halter1, and the current status of the U.S. industrial base, than it is in looking at what risk mitigation strategies it could have put in place to avoid the current situation. Without asking tough questions and suggesting changes to the acquisition process and/or law, not only will the USCG fail to learn the appropriate lessons, but they will also have failed to properly identify the problem.
So now let’s plunge into The Good, the Bad, and the Ugly of Tuesday’s hearing (full video link below, for the brave):
Polar Security Cutter: The Good
Although there wasn’t really any good news in the hearing, it was good that the three assembled experts did not hesitate to criticize the USCG’s procurement program, specifically highlighting the known risks involved with the PSC. (Note: the hearing covered all USCG acquisition programs but spent the most time on the PSC. This is also my focus, so will not discuss the Offshore Patrol Cutter or other programs covered in the hearing.)
Ms. Shelby Oakley, Mr. Ron O’Rourke, and Dr. Eric Labs did not pull punches in their assessment of the USCG’s acquisition process. If you are new to the PSC program, the contract for the lead ship was awarded in 2019 with delivery scheduled for March of 2024. As of Tuesday, according to the GAO, the vessel’s functional design is 67% complete. Many of the committee members seemed rightly baffled by this. In written testimony, GAO offered the following explanation (emphasis mine):
In July 2023, we found that the PSC’s design phase was already more than 2 years longer than originally planned and was not yet close to being complete. The PSC program originally planned to fully mature its design by March 2021. However, as of April 2024, Coast Guard officials said the program was targeting the end of 2024.
We found that four primary factors contributed to the shipbuilder’s almost 4-year delay in maturing the PSC’s design, according to program officials:
• U.S.-based designers and shipbuilders generally lacked experience designing and building heavy polar icebreakers.
• The ship design is complex, including that it used a specialized steel alloy that required technical study and development of new welding procedures before use.
• The shipbuilder overestimated the extent to which it could leverage the original design and had to make significant design changes to meet government specifications, according to program officials. The shipbuilder also made some design errors, such as selecting the wrong height for the lowest deck of the ship, which required significant, late redesign to correct.
• COVID-19 restrictions limited the extent to which the shipbuilder could collaborate and consult with its domestic and international partners.
The first factor-that U.S. based designers and shipbuilders lacked experience with icebreakers- was known by everyone involved. I heard the phrase “first heavy icebreaker built in the United States in nearly fifty years” countless times, from people at all levels of the U.S. Government. Ship designers and ship builders with icebreaker experience also used it- but normally followed up by saying that any U.S. shipyard contracted to design and build one “is going to need some help.”
The second and third points relate to the design that the USCG selected. Ron O’Rourke had the following to say about this in his written testimony:
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 FY2029.
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). 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. Limited numbers of available naval architects and design engineers within the United States also appear to have contributed to delays in maturing the PSC design.
Let’s unpack this. In order to mitigate risk, the USCG required that all bids be based on a parent design. VT Halter’s parent design was that of the Polarstern II- a German polar research icebreaker. The PSC is supposed to be a highly capable escort icebreaker. This difference- between research vessel and escort icebreaker- does not speak to the icebreaking capability of the vessel per se but does reflect the types of tasks for which the design is optimized2. Using a research vessel as the parent would seem to invite design changes. Additionally- and most notably- the Polarstern II HAS NOT YET BEEN BUILT! Yes, you read that right. VT Halter’s winning bid was based on the parent design of a vessel whose construction was cancelled in 2020 for being too expensive! The German government is once again taking steps to build a new research vessel, but it is isn’t clear if this is the same design that was shelved in 2020.3 That means that the Polarstern II has not even been through a detailed design process (in which the function design is translated into specific instructions for the shipbuilder). Not only that, but this design also requires the use of EQ-47 steel- an alloy that is challenging to weld. A different design, or cooperation with a knowledgeable designer, could have resulted in a less complex building process. (Note: I’m planning on covering the use of EQ-47 as its own topic.)
It didn’t have to be this way. I’ve spent considerable time in conversation with people involved in icebreaker design and construction. Most of them don’t understand this parent design idea, as icebreakers are almost always designed and built for a specific mission in a specific location. Designers often incorporate proven technology from other vessels and designs into a new vessel in order to meet the specific needs of the customer.
For an example of this, look at the USCG’s ‘Medium’ Icebreaker Healy. Healy’s design incorporated proven technology from the Finnish Icebreaker Otso, specifically Otso’s hull form and propulsion line engineering. But Avondale Industries, who built the Healy, did not simply attempt to modify the Otso’s design. It wouldn’t have worked; Healy was built mainly for polar research, whereas Otso is an escort icebreaker optimized for use in the Baltic Sea and Gulf of Bothnia.
Again, it didn’t have to be this way. Three of the four factors that the GAO cited as contributing to the Polar Security Cutter design delay were in the control of the U.S. Coast Guard. What did the USCG’s Deputy Commandant for Mission Support, VADM Paul Thomas have to say about these factors?
The Bad
Nothing. Although his written testimony used the phrase “the first heavy polar icebreaker to be constructed in the United States in nearly 50 years,” VADM Thomas and Mr. Alles did not discuss risk mitigation efforts, but rather focused their testimony on blaming VT Halter and the American industrial base for the delays and cost overruns.
From VADM Thomas’ opening statement (note that I transcribed the oral testimony myself, any errors are mine):
The defense industrial base underwent significant consolidation over the last two decades in an attempt to reduce costs and operate 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 and 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 workforce. The increased demand for highly trained welders, pipefitters, and other trades along with design engineers and technical experts is just one example of how workforce challenges are contributing to delays and cost increases across the Coast Guard shipbuilding portfolio.
In his defense, VADM Thomas inherited this problem and is dealing with the program’s current status and working to get it on a (revised) track. Still, someone needs to address the overall failure to mitigate foreseeable risk. Maybe the Department of Homeland Security’s Under Secretary for Management?
From Mr. Alles opening statement:
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 eight 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 eight 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 FY 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.
So that’s a no. It was all the fault of the prime contractor.
And there was this exchange between Chairman Gimenez and VADM Thomas:
Chairman Gimenez: VADM, where does the buck stop? We’ve got a.. icebreaker that we put out a contract for five 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?
VADM: Congressman, I appreciate your frustration because I share it and… in the case of the Polar icebreaker, we had a conversation earlier in the last panel about how it really works, 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 etc. Now that we have a new prime contractor, we’re making very good progress on that detailed 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 detailed design and construction because our nation needs the ship and our nation needs the shipyard, and that’d our focus.
So again, it’s the fault of the initial prime contractor, who bit off more than they could chew. Is there any way someone could have seen this coming?
Charmain Giminez then pushed him to give a time for construction start.
Probably in December (2024) …. We will not be at the level of design maturity that the GAO would like to see when we do that.
VADM Thomas retires in July. His relief will be called back to testify later this year for a progress check.
The Ugly
Chairman Gimenez: This is not like gee, we are building a spaceship to go to Saturn, nobody’s ever built one before, ok? So.. We’re building an icebreaker. Which a bunch of countries, even friendly to us, build icebreakers, right? And they know the welding techniques and they know all the steel that’s necessary. Are we trying to reinvent a wheel here? That’s already been invented all around the world?
Ms. Oakley (AO): It’s 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.
No, we did not. It seems that we failed to apply any risk mitigation measures beyond the poorly executed ‘parent design’ requirement. And as we will see below, the USCG selected the one bid- out of the three made- that did not include a designer with icebreaker experience.
There was also a very confusing moment in which VADM Thomas seemed to say that the USCG wanted a ship based on a Finnish design, but instead ended up with one based on the German Polar Stern II (mentioned above). If takes place around the 2:00:20 mark of the video if you want to see for yourself:
Congressman: Worldwide, where can we go get this expertise if we need some?
VADM Thomas: Well, I mean in the case of the Polar Security Cutter I think the Chairman mentioned earlier that there is real expertise in icebreakers in places like Finland, that’s 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’s the requirements, here’s one that is pretty close, they came back and said we want to use this design over here, and by the way the ship that they chose for the parent design has actually never been constructed, and that’s why detailed design is taking so long.
I put this in the ugly category because it’s confusing. It seems to suggest that the USCG saw a design that it liked- maybe one that resulted from the 2017 design study contract- but in the end “they” chose a different design (VT Halter’s), and then the Coast Guard had to live with it- again, suggesting the blame lies somewhere else, with the mysterious “they” who selected the winning bid. Yes, VADM Thomas inherited this program, but the USCG cannot afford to be so complacent in the future. It needs to look closely at this decision in order to really learn anything from the current mess.
Here are two slightly random things that I put into the ugly category.
Dr. Labs, in his testimony, equated shaft horsepower with icebreaking capability.
Can we please kill the idea that shaft horsepower is what distinguishes icebreaking capability? There is a big difference between the icebreaking capability of modern icebreakers with podded propulsion and legacy icebreakers. Vessels built today are far more capable in the ice- with significantly less shaft horsepower- then their conventional icebreaking predecessors. I wrote a bit about this technological advancement in my article on Finland’s icebreakers:
And finally, Congressman Higgins seemed to repeatedly refer to Bollinger as the world’s largest shipbuilder. According to Bollinger’s website, it is the United States’ largest private shipbuilder. Not the same thing.
General Defense Acquistion: An Incentive for Wishful Thinking
The hearing featured a good discussion on incentives. On several occasions committee members expressed disbelief when they learned that the contractor who “won” the contract could not perform as their bid required. Here are some comments on why the initial costs are always over optimistic, even fictional:
Mr. Ron O’Rourke (CRS):
As for why you have services underestimating costs, I would say that there are three reasons and Ms. Oakley mentioned one of them, and Eric also commented on it, which is that at the start of a program there is a range of uncertainty about what a ship might cost, there’s 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 process, the CAD/CAM tech that was mentioned early for example, or different manufacturing techniques and they can identify those and take credit for them and roll them into the cost estimates but 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’re allowed to fold in the stuff that can lower the cost, but are not really at liberty to then put a wedge in for stuff that will go wrong as a result, the estimate tends to be biased for the optimistic for that reason as well.
Ms. Shelby Oakley (GAO):
When you think about the risks that were present on both of these programs (PSC and Offshore Patrol Cutter) 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 programs that should have been factored in to 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 and pushing forward with an optimistic business case has never in my experience worked out to get you something any quicker or any cheaper…. If you want it bad, you get it bad- I think that’s what we’re seeing in a lot of these programs.
….
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 mentioned a few times once the spigot turns on, once the contract is let, its unlikely to be cancelled. And so when you think about yeah, we can do it, here’s what we can do, this is where it’s incumbent on the Coast Guard and on DHS to critically evaluate what it is that they’re getting from the contractor and how realistic it is that a contractor that’s never built a polar icebreaker before in an industrial base that hasn’t built a polar icebreaker in fifty years how likely it’s going to be that they are going to meet these cost and schedule goals and these targets for what the capability is going to provide.
Questions I would have liked to see asked:
Knowing that this was the first icebreaker of its type to be built in the United States in about fifty years, what measures did you take to mitigate risk?
Follow up: Why do you think these risk mitigation measures were unsuccessful? In the end, do you think the parent design requirement helped at all?
VT Halter (with TAI), Bollinger (with Knud E. Hansen4), and Fincantieri (with Vard5 and Aker Arctic6) all submitted bids for the Polar Security Program. Knowing the risks involved, why did we pick the only bid in which the bidder had zero experience in designing or building icebreakers?
You can see where my thoughts go on this matter. It is absolutely unbelievable that the USCG launched this program without seemingly doing anything substantial to mitigate the known risks. It appears that the USCG then chose the cheapest technically compliant bid, without considering the risk of this option against the other bidders. VADM Thomas suggested that the USCG didn’t want VT Halter’s design- so how did we really end up here?
Lightning Round
Some other interesting points from the hearing:
As I wrote on Monday, the CBO estimates that the PSCs will cost significantly more than the USCG’s latest estimate. A portion of the hearing focused on the historical accuracy of CBO’s cost estimates for ship construction, and the consensus was that the CBO has been historically far more accurate than the service’s cost estimates.
Mr. Ron O’Rourke compared the PSC parent design concept to that of the U.S. Navy’s Constellation class frigate program. Supposed to be based on a mature European design, the U.S. Navy’s changes have reduced commonality with the parent to less than 15%, resulting in an at least three-year delay. At least in the U.S. Navy’s case, we were building a frigate based on a mature frigate design- not building an escort icebreaker based on a yet-to-be-built research icebreaker.
Mr. O’Rourke also suggested ways for the U.S. Coast Guard to ‘catch up’ as the requirement for eight to nine polar icebreakers, four of five of which should be ‘heavies,’ has not gone away. I’ll have to address this topic another time.
Concluding Thoughts
As stated earlier, I learned two factual things from this hearing. First, that functional design is 67% done. Second, that Bollinger intends to start building the first PSC in December, before meeting the design maturity recommended by the GAO.
I found the hearing frustrating. Although the witnesses pointed out that the risks in the PSC program were well known, no one addressed what risk mitigation measures were taken (besides the poorly implemented parent design requirement). Indeed, it seems to me that we added risk in selecting the bid from THE ONLY design and construction team with zero icebreaker experience.
VADM Thomas vented about his frustration with the first contractor and designer (VT Halter) but seemed to offer no thoughts as to why the U.S. Coast Guard selected VT Halter despite their lack of experience and expertise. The use of the impersonal “they” seemed to indicate that he felt the process was beyond the control of the USCG. Perhaps politics, or pressure to take the lowest bidder drove the decision. Yet someone had to select the winning bid- and I have yet to hear any evidence that the anyone in the U.S. Government did their due diligence before selecting VT Halter. If John McCain were still with us, perhaps he would demand that the USCG look into this decision in detail.
I’ve heard a lot about the PSC program throughout the past eight years. My general impression is that the USCG was primarily interested in getting the program funded and the contract awarded- that these political milestones were more important than reducing the programmatic risk and getting a better product. At one point in 2020 I learned, for example, that the VT Halter’s initial “winning” PSC design lacked a bow thruster, which would making mooring at McMurdo Station, Antarctica, virtually impossible. At the time the Coast Guard planned to push and ahead and add it later, because it was seemingly more important to get the ships built than to get them built correctly. As Ms. Oakley said, “If you want it bad, you get it bad".”
While my analysis is mostly backwards looking- at how the USCG got itself into this spot- I think it is important that the USCG learn from this process in order to avoid making similar mistakes in the planned Arctic Security Cutter program.
I’ve now added at least three topics to my list of future installments today. You can look forward to learning about high-strength steel, reading my thoughts on Mr. O’Rourke’s suggested options to reduce the overall delays in acquiring icebreakers, and an analysis of what the revised PSC program schedule means for current USCG operations. Until then, thanks for reading, subscribing, and spreading the word.
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All the Best,
PGR
In November 2022, Bollinger Shipyards bought VT Halter Marine and took over the PSC program.
According to the International Maritime Organization, an escort icebreaker is capable of operations in ice including patrol and search and rescue missions. Escort icebreakers break channels for other ships, free vessels stuck in ice, and can tow other vessels. Research icebreakers mainly engage in independent operations in ice but can also break channels for other vessels. This distinction says nothing about the icebreaking capability of the vessel, rather how the vessel’s overall construction is optimized for its use. It seems to me that a using a polar research vessel would introduce additional required design changes.
New German icebreaker takes big hurdle | Polarjournal
Knud E. Hansen is a Danish ship design firm that has experience designing icebreakers.
Vard is a Norway-based shipbuilder that has extensive experience designing and building icebreakers.
Aker Arctic is a Finnish design firm that has designed the majority of icebreaking ships in the world.
The UK and Spain had to get help from Electric Boat on their subs as they no longer had the expertise to get the designs across the finish line. We may need the Finns to get us across the "Finnish Line" on this one. Might want to also just start over in a hurry. Of all items we may want to hand to a foreign yard, this might be the one.
The Navy ran the procurement under a joint office, and picked VT Halter, basically to give them work. The USCG is not totally innocent. Do a deep dive into OPC, which was awarded two years earlier and still doesn’t have the first ship. Also look at the Waterways Commerce Cutter, a Small Business set aside, was awarded to an Australian corporation that set up a sales office in Denver and got the award. Ugh!