19 July 2023

US CRS notes benefits of possible USCG OPC block buy

by Michael Fabey

The US Coast Guard could potentially save hundreds of millions of dollars by procuring Offshore Patrol Cutters through block buys, the Congressional Research Service says. (US Coast Guard)

A block buy of Offshore Patrol Cutters (OPCs) could save the US Coast Guard (USCG) a significant amount of money, according to the US Congressional Research Service (CRS).

“CRS estimates that if the coast guard were to use block buy contracting with EOQ [economic order quantity] purchases of components for acquiring the first several OPCs beginning with OPC 5, and either block buy contracting with EOQ purchases or another form of multiyear contracting known as multiyear procurement (MYP) with EOQ purchases for acquiring the remaining ships in the program, the savings on the total acquisition cost of the 25 OPCs (compared to costs under contracts with options) could amount to hundreds of millions of dollars,” the CRS said in its report, Coast Guard Cutter Procurement: Background and Issues for Congress , released on 10 July.

“The coast guard typically uses contracts with options for its shipbuilding programs,” the CRS reported. “Although a contract with options may look like a form of multiyear 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 multiyear contracting. Using multiyear contracting involves accepting certain trade-offs.”

“Block buy contracting can be used at the start of a shipbuilding program, beginning with the first ship,” the CRS reported. “Indeed, this was a principal reason why block buy contracting was in effect invented in FY [fiscal year] 1998, as the contracting method for procuring the [US] Navy's first four Virginia-class attack submarines.”

A block buy of Offshore Patrol Cutters (OPCs) could save the US Coast Guard (USCG) a significant amo...

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