[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

CREATING AMERICAN JOBS AND ASSURING THE
SAFETY AND SECURITY OF AMERICA'S
WATERWAYS: A REVIEW OF THE COAST GUARD'S
5-YEAR CAPITAL IMPROVEMENT PLAN

=======================================================================

(112-86)

HEARING

BEFORE THE

SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

MAY 16, 2012

__________

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri HEATH SHULER, North Carolina
BOB GIBBS, Ohio STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania LAURA RICHARDSON, California
RICHARD L. HANNA, New York ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
------ 7

Subcommittee on Coast Guard and Maritime Transportation

FRANK A. LoBIONDO, New Jersey, Chairman
DON YOUNG, Alaska RICK LARSEN, Washington
HOWARD COBLE, North Carolina ELIJAH E. CUMMINGS, Maryland
ANDY HARRIS, Maryland CORRINE BROWN, Florida
FRANK C. GUINTA, New Hampshire TIMOTHY H. BISHOP, New York
CHIP CRAVAACK, Minnesota MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas MICHAEL H. MICHAUD, Maine
JEFFREY M. LANDRY, Louisiana, NICK J. RAHALL II, West Virginia
Vice Chair (Ex Officio)
JOHN L. MICA, Florida (Ex Officio)

CONTENTS

Page

Summary of Subject Matter........................................ iv

TESTIMONY

Vice Admiral John P. Currier, Deputy Commandant for Mission
Support, United States Coast Guard............................. 4

PREPARED STATEMENT SUBMITTED BY WITNESS

Vice Admiral John P. Currier..................................... 15

SUBMISSION FOR THE RECORD

Vice Admiral John P. Currier, Deputy Commandant for Mission
Support, United States Coast Guard, responses to questions from
Hon. Rick Larsen, a Representative in Congress from the State
of Washington.................................................. 23

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CREATING AMERICAN JOBS AND ASSURING
THE SAFETY AND SECURITY OF AMERICA'S
WATERWAYS: A REVIEW OF THE COAST
GUARD'S 5-YEAR CAPITAL
IMPROVEMENT PLAN

----------

WEDNESDAY, MAY 16, 2012

House of Representatives,
Subcommittee on Coast Guard and
Maritime Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:00 a.m. in
Room 2167, Rayburn House Office Building, Hon. Frank LoBiondo
(Chairman of the subcommittee) presiding.
Mr. LoBiondo. Good morning. The subcommittee will come to
order. The subcommittee is meeting today to review the Coast
Guard's major acquisition programs and its 5-year capital
improvement plan. The Coast Guard's acquisition programs have
suffered through some very, very dark days. And this
subcommittee has been vigilant to ensure that the Service has
the capability, capacity, and motivation to reform its
acquisition process.
I want to applaud the improvements made by both Admiral
Papp and his predecessor, Admiral Allen. They both made
acquisition reform a priority and focused on the end result:
building new assets in a timely, cost-effective manner.
However, I fear--and sometimes it seems, like it does now--
that for every two steps forward, we may be taking one step
back. I can't tell you how concerned that I am--and I believe I
speak for the committee--about the recent discovery that the
Coast Guard Cutter Stratton, the third newest National Security
Cutter, is in need of an emergency drydock to fix a leaky hull
plating.
I know there is an investigation into what caused this
steel to fail. But again, I can't tell you how extremely
troubling it is to see the newest ship in the fleet, and the
most expensive cutter in Coast Guard history, needing emergency
repairs. I just sort of can't get my brain around this one.
I am also very upset to hear there is a shortage of spares
for the Maritime Patrol Aircraft. Due to what appears to be
very poor planning and budgetary short-sightedness, the brand
new fleet of MPAs will face flight hour restrictions for the
foreseeable future, further exasperating the MPA's patrol hour
gap. Again, I just hope we can get some answers to this,
because nothing is making sense.
The failure to adequately budget for critical spare parts
points to larger problems with the budget request and the
sustainability of the capital improvement plan. The
administration's decision to cut the Service's acquisition
budget by 19 percent over the current year has left it
scrambling to reprioritize limited funding, forcing the
termination of critical acquisition programs and the reduction
in vital capabilities for certain assets.
Trying to squeeze a $2.5 billion annual need into a $1.2
billion annual program is just not going to work. Trade-offs
will undermine the Service's missions effectiveness, and costs
will increase in the outyears. And all this on the heels of
what we thought were a number of years of finally making some
progress, and we are sliding back down that hill that we pushed
so hard to get up very rapidly.
I also continue to be very concerned with the findings by
the GAO and others with questions--the Service's assertions
that new assets are providing increased capability.
For instance, after 10 years, and nearly $4 billion
appropriated by Congress, the National Security Cutter and the
C4ISR program still have not met promised capabilities. How
much patience are we to have? What else can we do? The three
National Security Cutters operating today still lack enhanced
small boats, extended aerial surveillance capability, or a
crewing plan to increase patrol days. And the C4ISR program has
failed to deliver a common operating picture across all
aspects--something we were told absolutely would take place.
I look forward to hearing from the admiral on how these
acquisitions are a good investment for the taxpayer, and how we
are going to get the results that we were promised, and fix
some of these problems and keep them from happening again. It
seems like it is deja vu, we are getting promises of stuff,
that it is going to get fixed, and then we are back here again
with even worse news than we had in the prior occasion.
Finally, while it is important to focus on how the Coast
Guard intends to recapitalize its assets, we must not forget
that the Service faces a half-a-billion dollar backlog in
shoreside infrastructure. The administration's decision to
slash shoreside infrastructure funding by 86 percent and zero
out funds to rehabilitation servicemember housing--extremely
disappointing doesn't come close to covering it. It is a total
disregard for what priorities ought to be.
We ask a lot of the men and women in the United States
Coast Guard. And failing to provide them and their families
with adequate housing is just unacceptable. It is totally
wrong.
Admiral, I hope you will be able to tell us when we can
expect to receive the complete housing survey report, and what
the Coast Guard is doing to ensure our servicemembers have the
resources and support they need.
Admiral, I thank you for appearing today. I congratulate
you on your promotion to vice commandant. Please give our best
wishes to Vice Admiral Sally Brice-O'Hara on her retirement.
Please extend a thank-you from the committee for her 37 years
of outstanding service to our Nation.
And before I turn over to Mr. Larsen, Admiral, we have
tried to be your biggest cheerleaders. We have tried over the
years to push back on the critics, to explain why and how the
Coast Guard needs the programs that they need. You are making
it very difficult. Not you, personally, but you are in the seat
today. And we have got to get on a positive track here.
Mr. Larsen?
Mr. Larsen. Thank you, Mr. Chairman, for convening this
morning's hearing to continue the subcommittee's oversight of
the U.S. Coast Guard's major acquisition programs and policies.
Your persistence in keeping the Coast Guard's feet to the fire
to ensure that their acquisition activities remain on track and
on schedule is admirable, and essential. It is imperative we
avoid any future delays and cost overruns if we hope to deliver
the Coast Guard with the type of 21st-century surface air and
communication assets that the agency needs.
It is no exaggeration to say that when the Coast Guard set
out in 1996 to recapitalize its aging fleets of cutters and
aircraft, the need for this initiative was unassailable.
Despite the past setbacks of the former deepwater program,
since discontinued, recent evidence demonstrates the Coast
Guard has moved smartly to fully internalize all major
acquisition activities, and assume the role as lead system
integrator. New and additional acquisition personnel have been
hired. Stringent new policies have been adopted to ensure
timely and effective oversight, both within the Coast Guard and
the Department of Homeland Security.
So, I want to commend Admiral Currier for the many positive
actions taken by the Coast Guard to assume all system
integrated responsibilities. We all recognize the magnitude of
the challenge before you, and realize that this effort remains
very much a work in progress.
Notwithstanding this progress, however, significant
impediments remain and must be overcome if we hope to maintain
the Coast Guard's operational capabilities at sea and in the
air. Regrettably, the only conclusion I can reach after an
assessment of the current circumstances is that the status of
the Coast Guard's major acquisition programs has now risen to
nothing short of critical.
Mr. Chairman, you will recall the Government Accountability
Office has reported that the absence of baseline estimates for
several major assets, especially the Offshore Patrol Cutter,
might drive up the overall cost for the major system
acquisitions to well over $29 billion. The GAO also asserts
that revised cost estimates and delivery schedules developed by
the Coast Guard may be unreliable, because the Coast Guard has
not adhered consistently with its own best management
practices.
The unreliability of the acquisition timetable was made
even more acute by significant omissions from the Coast Guard's
fiscal year 2013 budget request, most notably the failure to
request any funding for the final two National Security
Cutters, or to account for future outyear requests to build a
new Polar-class icebreaker.
Cumulatively, these omissions will add hundreds of millions
of dollars to future acquisition account requests. And nowhere
does the budget take into account future outyear operational
expenses that the Coast Guard will assume when it initiates
perpetual seasonal activities in the high North.
More troubling within the current context of zero sum or
declining Federal budgets, these unbudgeted priorities will
almost certainly push out further to the right the timetables
for other important acquisition or construction programs, and
simultaneously also wrap up maintenance and operating costs for
the Coast Guard's legacy assets.
Important initiatives such as the construction of Fast
Response Cutters and maritime patrol craft, completion of the
approved program of record for response boat, or the renovation
of Coast Guard housing and construction of new shore
infrastructure will be delayed, prematurely terminated, or left
to languish without these funds. Additionally, the GAO has
raised concerns about the viability of the Coast Guard ever
achieving a system of systems capability. It now appears that
the new generation of command and control and communication
technologies once promised will not be delivered.
And so, we have reached a critical threshold. Admiral Papp,
in his first State of the Coast Guard address, openly
acknowledged the Coast Guard does not have the resources to
perform 100 percent in every one of its statutory missions on
every given day. That is a somber warning, and something that--
which every Member of Congress needs to take seriously.
After all, our Nation is, first and foremost, a maritime
Nation. Ninety-five percent of our foreign trade arrives or is
shipped by sea. The maritime transportation system accounts for
nearly $700 billion of the U.S. gross domestic product, and
provides roughly 51 million jobs for U.S. workers. Our Nation's
economy and its security depend upon safe and reliable maritime
commerce, and our Coast Guard is the indispensable tool that
protects and facilitates that commerce.
Mr. Chairman, unless we are willing to see the gaps in this
capability expressed by Admiral Papp be--unless we are willing
to see these gaps become chronic, we need to break from the
current deficit-driven mindset. If the Coast Guard could find
the means--I am sorry, if Congress could find the means to
recapitalize the Coast Guard during the depths of the Great
Depression, we could find the resources today to provide the
Coast Guard with the type of modern, capable, multimission High
Endurance Cutters and aircraft that the Coast Guard deserves.
Few things are as important.
With that, I yield back.
Mr. LoBiondo. Thank you, Mr. Larsen.
Our witness today is Coast Guard Vice Admiral John Currier,
deputy commandant for mission support.
Admiral, you are recognized for a statement.

TESTIMONY OF JOHN CURRIER, DEPUTY COMMANDANT FOR MISSION
SUPPORT, UNITED STATES COAST GUARD

Admiral Currier. Thank you, Chairman LoBiondo, Ranking
Member Larsen. Good morning, and thank you for the opportunity
to provide an update on the Coast Guard's ongoing
recapitalization program. I have submitted a written statement
for the record, sir.
On behalf of the commandant and the men and women of the
Coast Guard, thank you for your strong support of our Service.
Your oversight and advocacy have been essential to the Coast
Guard's many successes.
We in the Coast Guard as well as you in the subcommittee
are well aware that the Nation is facing a challenging fiscal
environment. The Coast Guard understands the pressures faced by
our Nation. And I can assure you that we are committed to
maintaining a disciplined and effective acquisition process,
and to best allocate our resources to address our most urgent
operational risks. We are making responsible investments to
build capabilities that this Nation needs now and will for the
next half-century.
We are mindful of the subcommittee's concerns regarding
affordability. We have worked very hard to optimize the balance
between investment and recapitalization and current operations
within our top line. We have done this in a way that preserves
the Coast Guard's viability well into the future, while still
responding to today's essential mission demands. Our fiscal
year 2013 to 2017 capital investment plan shows that at our
projected outyear funding levels, we can achieve our
recapitalization goals. We may not be able to reach these as
fast as we all would like, particularly with respect to the
baselines developed in the expanding budget environments of the
past, however we can continue to make intelligent trade-offs to
address our most urgent risks.
We are in the process now of updating our plans to reflect
the constraints of the current fiscal environment, and we are
committed to working with this subcommittee to successfully
replace our aging assets. We know this is the right course,
because the operational need for our acquisition assets has
been validated several times over, notably by our fleet mix
analyses one and two, and by the DHS cutter study.
In the past, the Coast Guard briefed the subcommittee
regarding our acquisitions. In some cases, not always great
stories. Today, I am very proud of the achievement of the Coast
Guard acquisition directorate, and the mission support
infrastructure that is behind it. I appreciate how effective
your oversight in our collective efforts have paid dividends.
Today we are delivering capable assets that are serving the
Nation, prosecuting missions, and saving lives along our shores
this day and every day. Given this transformation, we are able
to migrate--or mitigate our highest operational risks while we
remain--which remain in our offshore regions.
Our major cutter fleet is obsolete and increasingly less
effective. For example, our 43-year-old High Endurance Cutters
are achieving 70 percent of their programmed days away from
home port, and sailing 50 percent of the time with mission-
degrading casualties. This places our crews in an unacceptable
position. It jeopardizes our ability to refuse threats, protect
mariners, secure our borders, and be ready to mount capable
response to any contingency. We need to replace these assets
now. We have the ability today to do just that.
We are delivering assets on schedule at a well-negotiated
price, introducing tremendous capability to our fleet. We are
reaping the benefits of efficient shipyard processes,
experienced shipbuilders, and stable production. Last year, the
production contract for the fifth NSC was awarded at a price
that was virtually the same as that of the fourth. Recently we
awarded the contract for long lead-time materials for the sixth
NSC, and that was awarded at a lower price than the long lead
material for number five.
The first Fast Response Cutter was delivered, commissioned,
and certified ready for sea. We look forward, sir, to showing
this cutter off to anyone who is interested, certainly the
subcommittee members, while it is here in DC, on the
waterfront.
These are the same processes that allowed us to react
quickly when a problem was discovered aboard Stratton that you
mentioned. We were able to rapidly identify the issue, and
verify that our other cutters, the first two, are not impacted.
I want to be crystal clear that this is not a classwide issue.
Most importantly, the close work amongst our acquisition
contractor, maintenance, and shipyard personnel ensured that
the problem will be permanently fixed, and she will put to sea
ready to perform all missions in short order.
These assets are serving the public in a manner that we
planned and expected. Even in the face of new threats that were
not anticipated during the conception of the deepwater program,
our current acquisitions are able to meet those threats.
A recent operational case highlights the effective mix of
our assets. Last March, a Medium Endurance Cutter, a 110-foot
patrol boat, and a new HC-144 aircraft spotted a self-
propelled, semi-submersible drug boat in the Caribbean Basin.
The aircraft used its onboard sensors to pinpoint the vessel,
while both cutters were able to effectively launch small boats
and arrive on scene, preventing tons of cocaine from crossing
the southwest border of the United States and reaching our
streets. This case involved a new asset with improved sensors,
a Medium Endurance Cutter that had undergone a successful MEP,
and a legacy asset soon to be replaced by a Fast Response
Cutter, but all still operating because of the highly effective
maintenance programs that we have in place.
This type of success story the Coast Guard hopes to keep
telling, but would not be possible while at the persistent
offshore presence in the areas where threats exist. And that is
supported by shoreside activities that have been modernized.
This is why we must continue to build new assets such as the
sixth National Security Cutter as quickly as possible.
Now is the time to deliver these assets cost effectively,
and to ensure the Coast Guard is capable of interdicting
offshore threats for the next half-century. The Service's
future depends on our ability to recapitalize an aging fleet.
We do not have the discretion to stop and wait for a more
favorable budget environment, if we are to remain semper
paratus.
Thank you again for the opportunity to testify today, sir.
Thank you for your steadfast support. I look forward to
answering your questions.
Mr. LoBiondo. Thank you, Admiral Currier. On the Stratton,
I think we have been your biggest cheerleaders for the newer
assets and demonstrating the need and the efficiencies to be
realized. But we still don't have an answer on the 123s. I know
it is a sore subject, but at some point in time there has to be
an answer for the taxpayers about how these things get screwed
up.
So, Stratton is going into drydock when, in June?
Admiral Currier. Late May, June, yes. Yes, sir.
Mr. LoBiondo. Late May, June?
Admiral Currier. Mm-hmm.
Mr. LoBiondo. And I guess right now it just means it is
tied up somewhere, right? It can't be doing anything, right?
Admiral Currier. Well, it has moved to its home port, and
it is able to get underway with operational restrictions. But
the repairs have been made.
If I could, sir, I would like to run through this, just to
put it into context.
Mr. LoBiondo. Go ahead.
Admiral Currier. About a month ago we started to see--we
got a report from the crew that there was a limited amount of
seawater in void spaces on Stratton, which really surprised
everyone. So we did an underwater hull survey, and we found in
the aft section of the ship areas of concentrated corrosion
that actually had penetrated the hull with small cracks and
some pitting. This was confounding to us. We did a
comprehensive underwater inspection of the hull. We found what
looked like corrosion.
We have started a comprehensive engineering analysis. And I
am not prepared to give answers on causal factors at this
point. But I can tell you what I know, and I really feel I need
to do that.
First of all, this is not a classwide issue. We inspected
in detail the other two National Security Cutters and found no
evidence of corrosion like this.
Second of all----
Mr. LoBiondo. Excuse me.
Admiral Currier. Yes, sir.
Mr. LoBiondo. Evidence of corrosion at all, or----
Admiral Currier. Yes, sir.
Mr. LoBiondo. OK.
Admiral Currier. Nothing that would not be expected of a
ship----
Mr. LoBiondo. OK, nothing that would not be considered
normal.
Admiral Currier. That is absolutely correct.
Mr. LoBiondo. OK, OK.
Admiral Currier. We are going back with this engineering
analysis on Stratton now because we are extremely interested in
causal factors on this. There is a spectrum of possibilities on
how this could be caused.
On the one end--and this is speculation on my part, but
somewhat informed speculation from years of maintenance and
engineering experience--on the one end, it could be a quality
of steel issue, but we don't have indications to that.
On the other end, there was some local repairs done on this
ship through a welding process after there was a bump of the
pier. So there was a localized repair done to Stratton before
it was commissioned by the First Lady. This damage is
consistent with what we have seen before in ships when the
welding procedure is not performed properly. If it is an
electric weld and the welding is not grounded properly, you can
see degradation in welds and cracks open in steel structure on
ships.
I am not suggesting at this point that is the cause. What I
am suggesting is this is--what I am saying, categorically, is
this is not a classwide issue. We don't have strong indications
that this was a quality issue in the build of the ship. But we
won't have a clear answer on the forensics for about another 6
weeks. In the meantime, the ship will go into drydock, will be
fully repaired, and put back into service as quickly as we can,
likely within 30 to 45 days. That is what we know today on
Stratton.
This is, in my opinion, sir, not reflective on either the
acquisition process or the quality of the shipyard in building
the ship.
Mr. LoBiondo. So, it is way too early to tell whether the
rust protection system, the cathodic protection system was--
there is something flawed there? I guess we just have to wait
to find out?
Admiral Currier. We looked at the cathodic protection
system on this ship. There was a quality issue in a wiring--in
one of the wiring bundles. But that was, in the opinion of our
engineers, not sufficient to contribute materially to this
problem. It was a quality issue that was corrected. We looked
at the cathodic protection systems on the first two National
Security Cutters and saw no discrepancies whatsoever.
Mr. LoBiondo. So I guess whether this is coming under the
ship's warranty is something that is just going to have to
wait?
Admiral Currier. Yes, sir. I am not prepared to discuss
warranty issues at this point, because we don't have a solid
causal factor.
Mr. LoBiondo. OK. Let's move on to the shortage of the
spare parts for the Maritime Patrol Aircraft. The Coast Guard
informed the subcommittee this month that, due to budget
constraints, there are not a sufficient number of spare parts
for the fleet to support full operational readiness when it
initiates operations in Cape Cod this fall.
We have any idea of what it is going to take to correct
this, how much money it is going to cost to acquire the needed
spare parts?
Admiral Currier. First of all, sir, I am not sure I agree
with that characterization that your staff was provided. I have
gone back through both the operations directorate and the
support directorates in the Coast Guard. We had a meeting to
discuss this. I am an aviator, so I take this very close to
heart.
First of all, this is a longstanding systems acquisition.
It is stretched out over years. It is certainly not the way we
would want to do it. But we are buying two--one, two, three,
sometimes--airframes a year. Along with that, we are buying, to
a model, sparing for these aircraft. We are also buying mission
pallets, as you are aware of. So there are three main pieces in
the acquisition.
As we progress these airframes, we are incrementally buying
spares. The characterization that we are going to limit flight
hours or stand up Cape Cod with inadequate spares is not today
true. That is not true. In fiscal year 2012 we plan to buy 2
airframes, 16 and 17. We plan to buy five mission pallets.
These will be the first mission pallets that are bought by the
Coast Guard, not under the aegis of ICGS. And spares in the
fiscal year 2012 funding profile.
When we definitize the cost of the mission pallets, we will
know how much money we have left for spares. That decision
needs to be made. But we will stand up Cape Cod late this year
and early the year after. They will be adequately spared to fly
1,200 flight hours. There are no current plans to reduce flight
hours or to slow down the deployment of these aircraft.
Mr. LoBiondo. Do you anticipate the shortage in funds that
we are experiencing in some of these issues to affect the
scheduled acquisitions for 2013?
Admiral Currier. 2013, our current plan--and it is a solid
plan--is to buy airframe number 18 with the funds that are
available. I would say that, in an ideal situation--we are in a
fiscal environment where tough choices are required, and we are
making those tough choices. What we will do is buy airframe 18,
and with fiscal year 2012 money ensure that we have spares
adequate to run those aircraft out to 1,200 flight hours. That
is the way it looks today, sir. And if this changes, I will get
back through my staff to your committee staff. But at the
current time we have no plans to reduce flight hours.
Mr. LoBiondo. Well, that is really good news, Admiral,
because somehow there was a miscommunication or
misunderstanding. After the hearing, we will make an attempt to
find out where the gap in information was. And I am absolutely
thrilled with your assessment that operational readiness is not
affected, and whatever is happening is relatively minor
compared to what we thought that it would be.
So, I am going to hold for now and go to Mr. Larsen.
Mr. Larsen. Admiral Currier, I noted a story this morning
that the--it is possible that the House Appropriations Defense
Subcommittee will ask the Air Force to continue the purchase of
C-27s. However, there has been some discussion about the Coast
Guard's interest in acquiring the C-27. Has the Coast Guard
completed its business case analysis for that proposal?
Mr. LoBiondo. Yes, sir, we have. We have instituted or
conducted a business case analysis, and I received a pre-brief
on it the other day. We are waiting to brief the commandant,
who, as you probably know, has recently had a health issue.
Mr. Larsen. Right.
Admiral Currier. So we are a little bit behind in catching
him up. But it is teed up for him to be briefed. I can tell you
that my interpretation of it is that if we were--if these
planes were made available to us--and I want to be clear they
have not as yet been made available----
Mr. Larsen. Right.
Admiral Currier [continuing]. But were they to be made
available, we feel there is significant capitalization cost
avoidance likely available to us, were we to get 21 of these
airframes from DOD at no cost.
Now, there will be--we will have to come back to Congress
and this subcommittee if that is made available to us and talk
about upfront funds that might be required to integrate those
aircraft. Because, rather than the C-144 program, which would
be stretched out over many years----
Mr. Larsen. Right.
Admiral Currier [continuing]. We conceivably could receive
21 airframes in very short order.
Mr. Larsen. Right.
Admiral Currier. So that would require an adjustment on our
OE money and potential AC&I money.
This plane, interestingly enough, was actually looked at as
a candidate for our MRS asset, the HC-144. But at that time the
144 was chosen. It was chosen by ICGS. We think if the planes
are made available, that there is a likely potential that we
would be able to achieve significant cost avoidance by bringing
them on board.
Mr. Larsen. Thank you. So the current baseline $24.2
billion for the former deepwater program was adopted in 2007.
And since assuming full control as the lead system integrator,
the Coast Guard has made progress in approving APBs for each
acquisition project on an asset-by-asset basis. Yet the GAO
reports that the overall baseline is now estimated to be $29
billion. What factors have contributed to this increased--16
percent estimated cost increase in just 5 years?
Admiral Currier. Sir, I think--I need to take you back just
a second and talk about deepwater. With ICGS, we had a system
of systems. They made some projections on total program cost
that were very immature and very early in the program. As this
program was stretched out, the fidelity of our cost estimates
have increased.
We disaggregated deepwater, as you know. We broke it down
into component acquisition buys. So to compare the original
cost figure and estimate to today's potential cost estimate for
the aggregate program is almost an apples-to-oranges
comparison.
The truth of the matter is, with an organization as asset-
intense as the Coast Guard, we are never going to get out of
the acquisition business. So to try to put a deadline on the
end of our major systems acquisition probably is unrealistic.
Our aircraft--our helicopters, in particular, which are a
major component of the Coast Guard--will come to service life
end in the 2025 to 2027 range. So we can't really say we are
going to stop systems acquisition there. This is an ongoing
process.
I can provide to you specifics on cost estimates for the
disaggregated component pieces. But I really don't think there
is great utility, or can I produce a figure with great fidelity
for what used to be deepwater but now is the way we are buying
these systems.
Mr. Larsen. So last year the GAO emphasized that the Coast
Guard's 17 major acquisition programs, though, continued to
experience challenges and in program execution, schedule, and
resources. Further, the GAO said that the Coast Guard's own
estimates contained in its capital investment plan recommends
funding levels through the fiscal year 2016 that are
unrealistic--that is GAO's words--given the historical pattern
of appropriations for the AC&I.
Has the Coast Guard done anything to adjust cost estimates
contained in the CIP to reflect the present fiscal climate in
DC?
Admiral Currier. Yes, sir. We are mindful of resources
available and, as I said in the opening statement, the
pressures that the country and Congress are under. We take
every opportunity to control costs. I would cite the OPC, the
upcoming OPC, as an example. We have taken a year where Admiral
Salerno, the DC of--deputy commandant for operations and myself
have had our staffs in a room, scrubbing the requirements to
get to thresholds that are the least expensive that will do the
mission.
We have entered in, as we have released specifications to
industry--preliminarily, draft specifications--we have been in
a robust dialogue with industry specifically to find out how we
can accomplish our operational requirements at a reduced cost.
We are--cost is a true variable in the OPC. We have tried to
reflect that back through others.
For instance, NSC 4, National Security Cutter four, between
four and five there was virtually no price difference in the
construction contracts. That is a success story. We just
contracted long lead material for number five at less money
than we contracted long lead material for four. So this is kind
of emblematic of what we are able to do with these acquisition
processes if we receive stable funding. So hopefully that
answers your question, sir.
Mr. Larsen. Well, it doesn't, but introduces the OPC into
the discussion further. What is the lineup on the calendar of
the OPC's operational--initial operating capability, or as the
DOD term--whatever term Coast Guard uses----
Admiral Currier. Right.
Mr. Larsen [continuing]. What is that timeline versus the
completion of your MEPs and the potential additional MEPs on
the 210s and the 270s?
Admiral Currier. OK, sir. The 210s have completed the MEP
process. They are 40-year-old ships, but they have--and the
MEP, as you know, is not a SLEP, it is not a service life
extension. It is a--basically a treatment of the hull,
mechanical engineering at the highest readiness degraders. The
210s have been completed. fiscal year 2013 we have requested
funds to complete the last two 270s, 270-foot cutters. That
puts us in a fairly good position for them to have about 7 to
10--maybe more--years' service life.
Now, that doesn't mean that these are pushed out and
forgotten about. The modernized maintenance practices that we
are doing, the computerized maintenance, the preventative
maintenance, we are going to watch these ships carefully. But I
don't at this time, nor does the commandant, anticipate that we
are going to have a service life extension or an additional MEP
program in the MEC fleet. We deliver the first--notionally, we
deliver the first OPC in the 2020 timeframe, and then we will
deliver one per year, and it will hopefully pick up to a two-
per-year delivery construction.
We feel that we can get our MEP fleet into that timeframe,
as long as we don't have further delays in the OPC, and only
treat on a case-by-case basis the maintenance that the ships
need. So we don't anticipate another major mid-life program for
these ships. We think that we can get them to the point where
they will be replaced by the OPC. And as we are doing with the
HECs, there will be reduced spending on these ships near the
end of their service life, but we will keep them in service.
Mr. Larsen. So who in the Coast Guard, then, over the next
several years is responsible for tracking the success of the
MEP on the 210s and 270s, to ensure that they live that long?
Admiral Currier. The 270 MEP was funded and managed by our
acquisition directorate. But now the ships are in service they
come under our engineering directorate. They have modernized
practices. Quite frankly, many of them were based on our
successful aviation maintenance programs that now applied to
the ships. CG4 it is called, our engineering directorate, will
have direct authority and responsibility for overseeing the
material condition and operational availability on those ships.
Mr. Larsen. Of all of them?
Admiral Currier. Yes, sir.
Mr. Larsen. So it won't be ship by ship, it will--they are
responsible for all of them?
Admiral Currier. Well, they have--they are responsible for
all of them, but they view it on a ship-by-ship basis.
Mr. Larsen. Right, yes, I got it. I understand.
Admiral Currier. They have a product line that does that.
Mr. Larsen. Yes. Right, right. Thank you, Mr. Chairman. I
yield back.
Mr. LoBiondo. Admiral Currier, I appreciate your
explanations, I think we have some information gaps here, but I
have to tell you that I am still terribly troubled by how these
decisions are being made, and the priorities. And I can't help
but come back to some things that the Coast Guard is making
decisions on. And this may be a sore subject, but there is
going to be about $25 million that it is going to cost to move
to St. Elizabeths. The promise that the Coast Guard would not
be moving out there alone appears to be forgotten.
I don't know how we look Coast Guard men and women in the
eye with housing problems and some of these other things, and
we apparently have not done everything we can, or we don't have
all the answers. The administration proposed budget cuts here
and what they mean to the Coast Guard overall, which is not
your fault, and I understand that you somehow have to carry the
water, toe the line, whatever we are going to see. But I just
want to let you know to pass to headquarters that I am so
concerned about this and that I intend on having a conversation
with Peter King.
Since the Department of Homeland Security does not appear
to be concerned with this subcommittee because of our lack of
jurisdiction over certain of their aspects, and they have sort
of made that clear to us, I am going to have a conversation
with Peter King and we will pass on to you, if I can convince
Peter to take up this gauntlet. Because I just have a serious
concern about what this means for our overall posture of the
Coast Guard in the future. So just sort of an idea of where my
head is on this, because I think we have got big problems here
that aren't being answered.
I have a couple more questions. When can we expect to
receive the Coast Guard report on the condition of Coast Guard
housing?
Admiral Currier. OK, sir. That--first of all, we
commissioned a national housing survey. We have three types of
housing. And if you--by your leave, sir, I would like to give
you a little bit of an explanation of where we are.
We have leased housing, we have public-private venture
housing that is handled in conjunction with DOD, we have Coast
Guard-owned housing. Quite frankly, we didn't have--we had a
regime where it was managed locally by the districts. Under
modernization we have pulled it under central control. But what
we found is we didn't have a good service-level view of either
what we had, what our footprint was, or what our true
requirements were. So we initiated this national housing survey
that you are referring to.
The national housing survey, I just received a brief on it,
the commandant will be receiving a brief very shortly. After he
sees it, I think we will--we should be able to make it
available to your staff. What this does is it surveys all of
our housing, all types we have. It cites the requirements,
looks at where we need more, where we need enhanced because of
material condition, where we need to divest, and it brings it
all home to our central adjudications, so we can take these
precious dollars that we have and best apply them to the
benefit of our people.
I guarantee you, sir, nobody is more impassioned with
getting housing right than I am, or the commandant of the Coast
Guard is. We are--we spent $20 million last year and it zeroed
out in 2013. We are bringing in the national housing survey,
and we plan on focusing on housing in the next several fiscal
years.
Mr. LoBiondo. OK. Admiral, I just want to come back to this
spare shortage that we are talking about that is--apparently
some kind of miscommunication. Conferring with staff, they are
quite certain of what they were told about this.
Admiral Currier. OK.
Mr. LoBiondo. So I will need from you in some rapid
response fashion whether you are disagreeing with what they
have apparently conveyed to our subcommittee staff. Because
this really goes right at the heart of operational readiness
and some other things that we are going to need to get settled
as soon as possible. If I could have your assurance that you
will work with us on that----
Admiral Currier. Absolutely, sir. The last thing I want is
misinformation here.
Mr. LoBiondo. OK.
Admiral Currier. And I will back through my staff to ensure
you get an accurate read on this thing.
Mr. LoBiondo. OK. Anything else, Rick?
Mr. Larsen. Yes.
Mr. LoBiondo. Mr. Larsen?
Mr. Larsen. Admiral, the fiscal year 2013 budget includes
$8 million to start a survey and design process for acquiring a
new Polar icebreaker. And I understand that that acquisition
program certainly extends beyond the 5-year capital investment
plan. First off, is that correct, that it extends past the 5-
year acquisition plan?
Admiral Currier. The--I'm sorry?
Mr. Larsen. The whole program, the acquisition program?
Admiral Currier. Oh, yes, sir.
Mr. Larsen. Is it?
Admiral Currier. Yes, sir.
Mr. Larsen. OK, good. Yes, right.
Admiral Currier. Yes.
Mr. Larsen. So, when does the Coast Guard intend to
complete the development of the mission requirements for this
particular new vessel?
Admiral Currier. Sir, we have $8 million for survey and
design. Basically, that will include the definition of
requirements. We feel that--this is a national asset. We have a
set of requirements. Obviously, NSF likely has a set of
requirements. And there are other interagency governmental
entities that have an interest in this, as--particularly as the
Arctic opens up.
So, we will start our definition of requirements. But I
think I need to be clear that this is a major acquisition. This
is not a minor ship acquisition. We really need to get this
right. And we talk all the time about our modernized
acquisition process. We need to take a disciplined approach to
this.
The $8 million is sufficient for us to come out of the
chocks and start defining requirements and looking at designs.
And we are talking with the Canadians, we are doing all the
proper things. But this ship is likely an 8- to 10-year
project. The first thing we need to do is establish a mission
need and establish requirements. Unless we do that, we fall
prey to all the bad things that happen in an acquisition
process downstream.
So, the long answer--I apologize--to a short question, but
that $8 million was sufficient for us to start with a mission
need, to survey the interagency for requirements, and then
start to put together a clear requirements document for this
ship.
Mr. Larsen. Thank you. Thank you, Mr. Chairman.
Mr. LoBiondo. OK. Admiral Currier, I would like to thank
you very much. We will obviously have some ongoing dialogue
about where we go with all this.
And the committee stands adjourned.
[Whereupon, at 10:45 a.m., the subcommittee was adjourned.]