Acquisition and Operation of Polar Icebreakers: Fulfilling the Nation’s Needs (2017) / Chapter Skim
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37 Appendix D Icebreaker Acquisition Strategy, Design and Cost Projections, and Operating Costs Contents ACQUISITION STRATEGY .................................................................................................... 39 Fixed Price Incentives Contract ............................................................................................
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38 Basic Work Scope of Medium Icebreaker Compared with Heavy Icebreaker ............ 87 Engineering, Detail Design, and Planning .......................................................................
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39 ACQUISITION STRATEGY Acquisition strategy will have a significant impact on overall program cost and performance. The objective is to achieve affordable construction and life-cycle costs for the new polar icebreaker fleet.
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40 Fixed Price Incentives Contract Several contracting methods are typically applied to government shipbuilding projects. The most common are "cost plus fixed fee" and "fixed price incentive fee." Cost plus fixed fee is appropriate for projects involving significant research and development of new technologies.
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41 Block Purchase A block buy authority for this program will need to contain specific language for economic order quantity purchases for materials, advanced design, and construction activities. A block buy contracting program26 with economic order quantity purchases enables series construction, motivates competitive bidding, and allows for volume purchase and for the timely acquisition of material with long lead times.
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42 Commonality of Design Commonality of design with existing vessels and between vessels intended for similar service is another factor leading to cost-effective construction. Commonality of design is one of the main reasons large-scale Asian shipyards are able to achieve higher productivity and lower material costs than U.S.
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43 independent variable27 could be applied to ensure reasonable trade-offs between performance and cost. For example, sewage discharge in ice-covered waters is prohibited by the Polar Code, and a ship must shift to an ice-free location to discharge treated sewage.
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44 Reduce Risks of Cost Overruns and Delay Many steps can be taken to reduce the risk of cost overruns and delays. They are well established in the commercial shipbuilding industry and should be applied to government construction projects.
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45 practice (which many say was followed in the United States during the high point in ship construction here from the 1940s to the 1960s) has been reapplied by U.S.
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46 second ship. Follow-on ships can be more closely spaced, since improvements in the design and construction processes will have been determined.
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47 USCG has informed the committee that the new heavy polar icebreaker is expected to be classed in accordance with steel vessel rules of the American Bureau of Shipping (ABS) , the U.S.-based classification society.
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48 FIGURE D-1 Notional timeline for first icebreaker acquisition (Ship 1)
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49 Keel laying can commence after assembly of an inventory of blocks and grand blocks sufficient for sustaining the planned rate of erection. In general, this milestone is 5 to 6 months after SOC.
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50 test and trials. A period of 6 months is suggested for trials and trial card31 resolution for the first ship of the class.
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51 workforce between Ship 1 and Ship 2. Although learning occurs among people and not facilities, it must be documented carefully to attain its full value.
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52 FIGURE D-2 Notional total timeline, all ships of class, polar icebreaker acquisition 4 × 1 strategy. (BOM = bill of materials; P = production.)
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53 ICEBREAKER DESIGN AND COST PROJECTIONS One task of the committee was to evaluate cost estimates for the new polar icebreakers. To carry out that task, a notional design that can form the basis for the cost estimate had to be developed.
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54 accommodation of more persons in a vessel this size is feasible since its length is well in excess of the 128- to 132-meter required stack-up length estimated by the committee. Existing overseas icebreakers are good sources for size data.
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55 Icebreaker Size The size of heavy polar icebreakers is a strong determinant of the cost of ship acquisition and operation. Foreign heavy icebreakers often have much smaller crews than do USCG cutters.
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56 Accommodations block 32.3 Foredeck 36.0 Length overall 132.0 NOTE: SRP = stern reference point. SOURCE: Generated by the committee.
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57 FIGURE D-3 Correlation between lightship weight and cubic number. (Source: Generated by the committee.)
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58 Installed Propulsion Power Icebreaking capability is in part determined by power provided to the propellers. The Oden's design was groundbreaking.
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59 estimate of U.S. shipyards bidding on this project, given their current practices and facilities.
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60 MIL-SPEC procurement of approximately 20 percent of materials and equipment is assumed in accordance with USCG's stated intention for the polar icebreakers. A premium is added for both material and shipyard labor to account for the added cost of purchasing and installing MIL-SPEC equipment.
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61 The government will incur costs for its own efforts in addition to the design and construction contract price. The committee accounts for these items to allow an "apples-toapples" comparison with USCG estimates but does not have the data needed to validate these figures.
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62 Total cost, GFM/GFE $102 million/ship Total cost, government PEO, representatives, and SUPSHIP $48 million/ship PDA $15 million/ship NOTE: SUPSHIP = Supervisor of Shipbuilding, Conversion, and Repair. SOURCE: Generated by the committee.
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63 Change orders 78 30 29 29 Other government expenses 62 63 65 65 Total, government program expenses 162 115 116 116 Grand total per vessel 983 759 729 692 Overall program costs Total program budget, four ships 3,163 Average price, each of two 871 Average price, each of three 824 Average price, each of four 791 NOTE: Costs are in millions of U.S. dollars, 2019.
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64 Cost of Science Making the new icebreakers science-ready means incorporating design elements that allow costeffective retrofitting of the ships for full science capability if necessary during the ships' service lives. Such design elements could include the following: 1.
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65 to be determined. In addition, certification for dynamic positioning requires a high level of redundancy and independence of system operation that can have a major impact on propulsion, auxiliary machinery, electric distribution, and controls design, with a significant increase in cost that is difficult to determine.
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66 Maximum beam (meters) 25 28 19 15.85 24 21 19 Displacement, full load (metric tons)
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67 Standardization vans can be loaded aboard to provide additional science and workstation capabilities. In April 2012, the Healy escorted a tanker carrying an emergency fuel delivery to Nome, Alaska.
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68 In striking contrast, the Polaris was commissioned last year at a reported cost of only 125 million euros, or an estimated $150 million (in 2016)
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69 (meters) Maximum speed (knots)
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70 ships to the same design) for the first medium icebreaker, but the advantage would apply to the alternative fourth heavy ship.
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71 exist. They cover interfaces, design, manufacturing, standard practices, and testing.
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72 Impact of MIL-SPEC on Costs Committee members have been involved in the design and construction of commercial vessels and U.S. government vessels where MIL-SPEC has been invoked and understand the trade-offs.
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73 Value of MIL-SPEC to Polar Icebreakers The committee believes that the application of MIL-SPEC and MIL-STD, as described above, may not be justified. In view of the unique nature of icebreaker service, the use of applicable international and commercial standards often can achieve better levels of safety and reliability than would be achieved by MIL-SPEC.
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74 and service. Extensive testing will not make a poorly designed or hard-to-service engine reliable.
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75 frequent and more just-in-time maintenance, which reduces annual cost. Modern machinery also is more reliable and allows greater time between overhauls.
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76 strategy reduces up-front acquisition cost, but it could also be more cost-effective for operating costs over the life of the vessel. The three primary drivers of annual operating cost are often the vessel's physical characteristics, the operating and voyage profile, and the maintenance schedule (such as when the vessel is dry-docked)
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77 • Basic work scope; • Engineering, detail design, and planning; • Material and equipment cost; • Production labor and productivity; • Risk margin applied by the shipyard; • Learning rate assumed by the shipyard; and • Profit margin assumed by the shipyard. Basic Work Scope of Medium Icebreaker Compared with Heavy Icebreaker Variance in the basic work scope will occur if the ship characteristics that the committee assumed differ from those set forth by USCG.
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78 conservative) cost.
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79 Risk Margin The committee's cost analysis models applied a risk margin of 7.5 percent to the basic estimate for engineering, detail design, planning, and production labor for Ships 1 and 2, decreasing to 3.75% each for Ship 3 and Ship 4. No risk margin was applied to the material estimate, and in fact, a 5 percent reduction in material costs was assumed for "tasking" the result of aggressive negotiation between the shipbuilder and key suppliers.
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80 contract is completed, which is often lower than expected. If a shipbuilder bids low on its profit margin, the contract may fail to perform to shareholders' expectations.
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81 NOTE: The assumed range of uncertainty is ±10 percent of the total shipyard contract for heavy icebreakers and ±15 percent of the total shipyard contract for medium icebreakers. Figures are in millions of U.S.
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82 If there are two contracts, one for three heavy icebreakers and another for one new medium design, and the first contract is won with a 98 percent bid learning rate while the second for the medium design is won with an 85 percent learning rate, the total cost of Ship 4 will be slightly higher (by $4 million, the difference between $788 million and $792 million) than if four ships to the same design are bought.
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83 O'Rourke, R
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