1. OCS Survey Cost Analysis U. S. HYDROGRAPHIC CONFERENCE HSRP Meeting San Diego March 31 – April 1, 2005 1

2. OCS Survey Cost Analysis Introduction In the late 1990’s, NOAA’s total survey workload had been prioritized to define “Critical Areas” and “Navigationally Significant Areas” NOAA’s survey assets had been steadily decreasing through the 1990’s due to inactive or decommissioned vessels Congress augmented NOAA’s survey resources to allow partnering with the private sector in order to more quickly reduce the Critical Area Survey Backlog NOAA received encouragement from the private sector to use leased vessels as another method of hydrographic data acquisition A cost analysis was completed in 2001 as a management tool to evaluate the cost effectiveness of three approaches to hydrographic data acquisition 2

3. OCS Survey Cost Analysis Background NOAA’s survey responsibilities: > 3 million snm in EEZ > 500,000 snm* in Navigationally Significant Areas ** > 40,000 snm in Critical Survey Backlog --------------------------------------------------------------- * Square Nautical Miles ** (80% in Alaska and Gulf of Mexico) 3

4. OCS Survey Cost Analysis Inactive/Decommissioned NOAA Hydro Ships During The Last 15 Years West Coast/Alaska Inactive/Decommissioned Remaining 2004 Op Costs Avg SNM Per Year DAVIDSON (1989) RAINIER $6.85M600-1,000 FAIRWEATHER (1989) 400-800 (Reactivated 2004) SURVEYOR (1995) McARTHUR (2003) DISCOVERER (1996) East Coast/Gulf of Mexico Inactive/Decommissioned Remaining 2004 Op CostsAvg SNM Per Year HECK (1996) MT MITCHELL (1996) THOMAS JEFFERSON $4.99M 400-600 PEIRCE (1992) RUDE$1.07M 80-100 4

5. OCS Survey Cost Analysis 5 NOS established contracting policy for mapping and charting services in 1996 that NOAA Navigation Services has essentially followed since that time. Policy states that contracts for surveying and mapping services will be awarded to qualified commercial sources in accordance with Title IX of the Federal Property and Administrative Services Act of 1949 (40 USC § 541 et seq.), commonly known as the “Brooks Act.” Reiterated by the 1998 Hydro Services Improvement Act, which authorized contracting to the greatest extent practicable and cost- effective, and the use of Brooks Act service contracts for hydrographic surveys. 1996 National Ocean Service Contracting Policy

6. OCS Survey Cost Analysis A Historical Perspective On NOAA Contracting Since 1998 6 YEARSNM $$ AWARDED 1998421$8,937,193 1999870$20,343,667 2000476$15,578,487 20011,346$18,153,065 2002657$16,589,815 20031,173$22,711,331 20041,073$22,363,732

7. OCS Survey Cost Analysis Impact Of The Hydrographic Services Improvement Act (HSIA) Purpose was to rapidly decrease Critical Survey Backlog Increased opportunity to partner with private sector on mapping requirements Brooks Act A&E contracting procedures required Promulgation of standards for hydrographic surveying Development and implementation of Quality Assurance Program Maintenance of hydrographic expertise in NOAA 7

8. OCS Survey Cost Analysis Impact Of The Hydrographic Services Improvement Act (HSIA) 8 1998 HSIA Section 303 (b) provides that : …to fulfill the data gathering and dissemination duties of the Administration under the Act of 1947, and subject to the availability of appropriations, the Administrator - may procure, lease, evaluate, test, develop, and operate vessels, equipment, and technologies necessary to ensure safe navigation and maintain operational expertise (i.e., core capability) in hydrographic data acquisition and hydrographic services;

9. OCS Survey Cost Analysis 2000 NOAA Hearing for Navigation Services BEFORE THE SUBCOMMITTEE ON FISHERIES CONSERVATION, WILDLIFE AND OCEANS - COMMITTEE ON RESOURCES U.S. HOUSE OF REPRESENTATIVES NOAA reported on its navigation services for promoting safe navigation and the huge backlog of areas never surveyed or not adequately surveyed due to historical resource and technology limitations The Management Association For Private Photogrammetric Surveyors (MAPPS) testified that the capability to conduct hydrographic surveying existed in the private sector and that NOAA should be given more funds to execute The Brooks Act A&E contracts for hydrographic services Private sector ship building and leasing industry advocated NOAA acquire survey data with leased vessels rather than capitalizing for new NOAA ships 9

10. OCS Survey Cost Analysis Another Data Acquisition Approach NOAA historically conducted hydrographic data acquisition primarily using NOAA platforms. And though the number of platforms had been reduced, NOAA had a huge data acquisition requirement and also needed to maintain in-house operations to maintain hydrographic expertise and core competency NOAA had been conducting turnkey contract surveys since 1998, effectively increasing it’s capacity to acquire data NOAA wanted to explore the use of leased vessels as a potentially cost effective, additional method of partnering with the private sector for increasing its capacity for data acquisition 10

11. OCS Survey Cost Analysis NOAA Initiative For Cost Analysis NOAA initiated cost analysis to determine data acquisition costs for 3 approaches: In House Contract Leased Vessel 11

12. OCS Survey Cost Analysis Preliminary NOAA Internal Cost Analysis Cost analysis of data acquisition by NOAA-conducted surveys and by contractor-conducted surveys was performed by HSD personnel Upon completion and review, it was decided to follow up with external analysis:  To assure standard accounting practices were used  To assure that all cost factors were included  To assure compliance with relevant GAO/OMB guidelines Contract to perform analysis was won by KPMG consulting, with final report completed in September 2001 and Addendum completed October 2001 12

13. OCS Survey Cost Analysis KPMG Final Report Cost Study Executive Summary The results of this analysis are estimates of the cost per square nautical mile of conducting hydrographic surveys in Alaska and in the Gulf of Mexico, under three scenarios: Utilizing NOAA vessels and staff; Contracting for hydrographic survey services and related activities; and Chartering a survey vessel, including staff and equipment, with limited NOAA personnel on-board. 13

14. OCS Survey Cost Analysis KPMG Final Report Cost Study Executive Summary ~ Continued ~ The Alaska surveys are divided into shallow and deep water regions; deep water refers to depths of greater than 100 feet (30 meters). The results of the analysis are as follows: Cost per square nautical mile ($/SNM), thousands of dollars In-house Contractor Time Charter Alaska - Shallow $24.17 $58.38 $18.89 * Alaska - Deep $12.18 $35.62 Gulf of Mexico $17.40 $19.70 $21.59 ------------------------------------------------------------------------------------------- * Costs of the Time Charter for Alaska did not initially differentiate between deep and shallow water surveys 14

15. OCS Survey Cost Analysis KPMG Final Report Cost Study Executive Summary (Addendum) ~ Continued ~ The table below shows the results of the original analysis, along with the additional results for time charter surveys specifically in shallow water and deep water. The first three columns of results are identical to the original report. The last column displays the new findings. Cost per square nautical mile ($/SNM), thousands of dollars In-house Contractor Time Charter * Time Charter ** Alaska - Shallow $24.17 $58.38 $18.89 $33.02 Alaska - Deep $12.18 $35.62 $16.89 ----------------------------------------------------------------------------------------------- * This estimate does not differentiate between shallow and deep water surveys ** Based on a full year of shallow water surveying and a full year of deep water surveying, respectively 15

16. OCS Survey Cost Analysis Why Update The Survey Cost Analysis? Data is 4-5 years old Time Charter based on RFI rather than experience Time Charter implementation different from scenario in RFI FAIRWEATHER reactivated THOMAS JEFFERSON replaces WHITING OMB has inquired about what NOAA is doing to improve cost efficiency for all data acquisition methods Potential increase in FY 2006 budget 16

17. OCS Survey Cost Analysis Time Charter Implementation Differences Analysis: A 4-launch vessel in Alaska A 2-launch vessel in Gulf Of Mexico Actual: A single 2-launch vessel; 30-Day transit between Alaska and Gulf of Mexico Analysis: Time Charter provides vessel, including staff and equipment, with limited NOAA personnel on board Actual: Time Charter provides vessel, crew, some equipment. A&E contractor provides equipment and survey personnel. NOAA provides lead hydrographers and oversight/data quality personnel 17

18. OCS Survey Cost Analysis Funding Outlook ($ Million) 6.604 1.971 Vessel Time Charter 31.48018.727 Address Survey Backlog President’s FY06 Request President’s FY06 Request FY05 Budget with Rescissions Survey Activity 18 Misc. Surveys

19. OCS Survey Cost Analysis Collaboration With NMAO NOAA Office of Marine and Aviation Operations (NMAO) is initiating a cost analysis of alternatives for all NOAA Programs which use NOAA Fleet Services for data acquisition OCS can benefit from partnering with NMAO for obtaining an updated cost analysis of hydro surveys in Alaska and Gulf Of Mexico as a component of NMAO’s overall analysis 19

20. OCS Survey Cost Analysis Approach For the new analysis tasks, described below, OCS will select specific hydrographic surveys conducted over the period from FY 1996 through FY 2004, including only those using either multibeam sonar or side scan sonar or a combination of both. The selection process will be conducted in such a way that the analyses will be based on similar conditions (geographic area, average depth, bottom conditions, weather conditions). The survey areas planned for inclusion in the analysis are: Alaskan Waters (shallow) Alaskan Waters (deep) Gulf of Mexico 20

21. OCS Survey Cost Analysis Approach (Continued) The Following Tasks Are Envisioned For This Analysis: 1.Prepare a detailed cost estimate of NOAA hydrographic surveys in Alaska and the Gulf of Mexico based on the selected surveys 2.Determine the cost of NOAA contracts with the private sector for data acquisition in Alaska and the Gulf of Mexico based on the selected surveys 3.Prepare a cost estimate for conducting multibeam and side scan sonar hydrographic survey operations in Alaska and the Gulf of Mexico utilizing leased privately owned and operated vessels 4.Prepare a summary of NOAA survey support costs for each of the above methods 5.Should we be looking at other models for Time Charter (AK & GOM)? 21

22. OCS Survey Cost Analysis Summary Since that time:  Additional 4 years of surveys via in-house  Additional 4 years of surveys via contract  First Time Charter survey, but very different implementation  Increase in NOAA survey assets  Potential large increase in resources for ’06, with discretion on how to allocate among the strategies A good time for an updated cost analysis to support decisions on future resource allocation 22 Cost Analysis Completed in 2001 Provided First Look At Three Data Acquisition Strategies

23. OCS Survey Cost Analysis Hydrographic Services Improvement Act Amendments of 2002 Federal Advisory Committee Act (FACA) Request HSRP To Make Recommendations For: NOAA’s approach to cost analysis Appropriate model for the Time Charter Frequency of conducting a cost analysis 23