WMSL-750 Legends Class
The NSC project has faced major challenges, including increased requirements based on the events of 9/11, damage to the yard caused by Hurricane Katrina in 2005, and the Northrop Grumman Ship Systems labor strike in 2007. These challenges affected the NSC project's cost and schedule. The Coast Guard and industry undertook a number of efforts to address challenges and strengthen the project. For example, NSC design changes are carefully reviewed by the technical authority, to verify compliance with established shipbuilding standards. Additionally, both the acquisition and technical staffs leverage the experience of the Naval Sea Systems Command (NAVSEA) in preparing recommendations. Other steps were taken to resolve most of the Coast Guard's contractual concerns. Early this past year, the Coast Guard realized that addressing all the numerous changes in contract terms and conditions could be combined under a single action.
The multi-year, multi-billion dollar Deepwater contract was awarded in June 2002 Integrated Coast Guard Systems [ICGS], an equal partnership between Lockheed Martin and Northrop Grumman. Headquartered in Rosslyn, Va., core leadership teams are co-located in Virginia, Louisiana, Mississippi, New Jersey and Washington, DC. ICGS subsequently issued subcontracts for Northrop Grumman Ship Systems to lead the WMSL production efforts in Pascagoula, Miss., while Lockheed assumed primary responsibility for integrating the ship into the system-wide command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) architecture. Northrop Grumman Corporation's Ship Systems sector was awarded a $129 million contract for the detail design and long lead material procurement as the first step in the development and delivery of this new class of cutters to replace the Coast Guard's aging fleet of surface vessels.
To ensure that the assets delivered by the Deepwater program allowed the Coast Guard to meet its new mission performance requirements, the Coast Guard began to adjust Deepwater shortly after the contract was awarded in June 2002 by modifying the capabilities required of the first major new asset, the National Security Cutter (NSC). These changes are included in the revised Deepwater implementation plan and will allow the first NSC to conduct maritime homeland security missions beginning in 2007.
On 01 July 2004 the US Coast Guard awarded a contract totaling $140 million to Integrated Coast Guard Systems for the production and delivery of the Maritime Security Cutter, Large (WMSL, formerly known as the National Security Cutter), part of the Integrated Deepwater System (IDS) Program. Fabrication of the first WMSL began in Sept. 2004, with the ship delivery scheduled in 2007.
On January 4, 2005 The US Coast Guard awarded a contract totaling $144 million to Integrated Coast Guard Systems (ICGS), LLC, for production and deployment of the Coast Guard's second Maritime Security Cutter Large. The anticipated delivery schedule for the second WMSL is late 2008. The initial NSC, i.e., NSC 1, was constructed under a Cost- Plus-Incentive-Fee agreement while NSCs 2 through 8 are being produced under Firm-Fixed-Price provisions.
Since the Deepwater contract was signed in June 2002, the combined cost of NSCs 1 and 2 had increased from $517 million to approximately $775 million by early 2007, resulting primarily from design changes necessary to meet post 9/11 mission requirements and other government costs not included in the original contract price. The $775 million estimate did not include costs to correct or mitigate the NSC's structural design deficiencies, additional labor and materials costs resulting from the effects of Hurricane Katrina, and the final cost of a $302 million Request for Equitable Adjustment (REA) that the Coast Guard negotiated with ICGS.
The cost of the National Security Cutter (NSC) (the largest of the Coast Guard cutters being built under the Deepwater program) has grown significantly since the contract was signed in 2002. In June of 2002, the contracted cost for the first 2 NSCs was $516.8 million. As of early 2007 the projected cost for these 2 cutters was $960 million. The Coast Guard states that the cost increases are as follows:
- $261 million in increased costs due to post-9-11 changes and other government requirements not in the June 2002 contract price (such as a new Aircraft handling system, flight deck changes, intelligence collection systems, increased spare parts, and combat management systems).
- $49.2 million for inflation from 2002 to 2006.
- $123 million for increased costs due to Hurricane Katrina (the ships are being built at Northrop Grumman Shipyards in Pascagoula, MS).
The negotiation process came to be known as the Consolidated Contracting Action, or CCA. At its heart, the CCA resulted in a new agreement on the NSC project's costs, as well as resolution of contract and design issues associated with the first two ships, NSC 1 and 2. The negotiations also resolved industry's $300 million Request for Equitable Adjustment (REA), which reflected the contractor's assessment of additional costs of post-9/11 mission requirements. The new NSC contract that emerged from the CCA in August 2007 was the culmination of a rigorous negotiation process that consumed approximately nine months and more than 50,000 labor hours, according to project officials. The new contract clarifies the desired technical characteristics of the NSCs; it defines the project's contractual requirements; and it allows the government better oversight of cost performance. The new contract includes an incentive clause that links fee earned directly to actual costs performance. The final cost of constructing the ship determines how much fee the contractor earns. The contract also includes a "notification of changes" clause. The clause requires that ICGS -as soon as possible, but no later than 30 days- notify the Coast Guard of any behavior that could lead to a change in the contract, which might entitle the contractor to an equitable adjustment. Every six months, the government receives from the contractor a release from potential changes or REAs that may have emerged during that period of time.
NSC 1, USCG Bertholf, was christened on November 11, 2006, with final delivery to the Coast Guard scheduled for August 2007. At that time NSC 2 was under construction, with final delivery scheduled for October 2008. According to the Revised Deepwater Implementation Plan of August 2005, delivery of NSCs 3 through 8 was scheduled to occur between 2009 and 2017.
On August 9, 2007 the U.S. Coast Guard announced that they had awarded a contract to begin production and delivery work on the third ship of the Legends class of National Security Cutters (WMSL 752), a new and highly capable high-endurance cutter. This contract awarded to Integrated Coast Guard Systems, valued at $337 million, initiates the effort to build the third ship of the most advanced cutter class in the Coast Guard's fleet. The stories on Aug. 8, 2007, read: "Coast Guard and industry agree to $592 million contract for the National Security Cutter (NSC) project." The news reflected that the NSC would proceed under a fresh agreement on cost, and the resolution of contractual and technical issues. In a consolidated contractual action, the Coast Guard awarded Integrated Coast Guard Systems $337 million for construction of the third national security cutter, along with $255 million for continuation of construction for the first two national security cutters. The combined award is the result of a successful negotiation between the government and industry, enabling these crucial new cutter projects to move forward. The third national security cutter incorporates cost-saving efficiencies and improvements in processes derived during the ongoing construction of the first two national security cutters. Additionally, the cutter will include design enhancements to ensure it meets a 30-year fatigue life and all operational requirements.
The first National Security Cutter (NSC), Bertholf (WMSL 750), returned to Northrop Grumman Ship System's Pascagoula facility after completing Machinery Trials. "The Bertholf Machinery Trial was an excellent opportunity for the industry and Coast Guard Team to groom the various systems in preparation for the Builder's Trial," said Richard Schenk, Northrop Grumman vice president and general manager, U.S. Coast Guard Programs. "The five days at sea validated our belief that Bertholf will clearly exceed expectations." The Machinery Trials, which began on 04 December 2007, were an initial test of many of the ship's capabilities at sea. Among the tests completed, Bertholf successfully met its contractually-required speed of 28 knots this past weekend.
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