[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD SEA,
LAND, AND AIR CAPABILITIES, PART 2
=======================================================================
(115-23)
HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
JULY 25, 2017
__________
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York
SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
JEFF DENHAM, California ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky JOHN GARAMENDI, California
MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT PERRY, Pennsylvania Georgia
RODNEY DAVIS, Illinois ANDRE CARSON, Indiana
MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia DINA TITUS, Nevada
TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut,
BRIAN BABIN, Texas Vice Ranking Member
GARRET GRAVES, Louisiana LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina JARED HUFFMAN, California
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
------
Subcommittee on Coast Guard and Maritime Transportation
DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska JOHN GARAMENDI, California
FRANK A. LoBIONDO, New Jersey ELIJAH E. CUMMINGS, Maryland
GARRET GRAVES, Louisiana RICK LARSEN, Washington
DAVID ROUZER, North Carolina JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida ELEANOR HOLMES NORTON, District of
JASON LEWIS, Minnesota, Vice Chair Columbia
BILL SHUSTER, Pennsylvania (Ex PETER A. DeFAZIO, Oregon (Ex
Officio) Officio)
CONTENTS
Page
Summary of Subject Matter and ``Acquisition, Construction, and
Improvements: FY2018 Unfunded Priorities List,'' U.S. Coast
Guard, July 20, 2017........................................... iv
TESTIMONY
Panel 1
Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard............ 4
Panel 2
Rear Admiral Richard D. West, U.S. Navy, Retired, Chair,
Committee on Polar Icebreaker Cost Assessment, National
Academies of Sciences, Engineering, and Medicine............... 25
Rear Admiral Michael J. Haycock, Assistant Commandant for
Acquisition and Chief Acquisition Officer, U.S. Coast Guard.... 25
Marie A. Mak, Director of Acquisition and Sourcing Management,
U.S. Government Accountability Office.......................... 25
Ronald O'Rourke, Specialist in Naval Affairs, Congressional
Research Service............................................... 25
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Hon. Don Young of Alaska......................................... 48
Hon. John Garamendi of California................................ 50
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Admiral Paul F. Zukunft.......................................... 53
Rear Admiral Richard D. West..................................... 57
Rear Admiral Michael J. Haycock.................................. 70
Marie A. Mak..................................................... 73
Ronald O'Rourke.................................................. 91
SUBMISSIONS FOR THE RECORD
Admiral Paul F. Zukunft and Rear Admiral Michael J. Haycock, U.S.
Coast Guard, submission of the following:
Responses to requests for information from the following
Representatives:
Hon. John Garamendi of California
Hon. Duncan Hunter of California and Hon. Peter A.
DeFazio of Oregon...................................... 40
Chart, ``FY2018-FY2022 Five-Year Capital Investment Plan:
Acquisition, Construction, and Improvements''.............. 102
Fiscal Year 2014 Report to Congress, ``Defense-Related
Activities,'' May 22, 2014, published by the U.S. Coast
Guard...................................................... 103
Rear Admiral Richard D. West, U.S. Navy, Retired, Chair,
Committee on Polar Icebreaker Cost Assessment, National
Academies of Sciences, Engineering, and Medicine, submission of
the following:
Responses to questions for the record from Hon. John
Garamendi, a Representative in Congress from the State of
California................................................. 61
Letter Report, ``Acquisition and Operation of Polar
Icebreakers: Fulfilling the Nation's Needs,'' published by
the Division on Earth and Life Studies and Transportation
Research Board of the National Academies of Sciences,
Engineering, and Medicine.................................. 110
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD SEA,
LAND, AND AIR CAPABILITIES, PART 2
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TUESDAY, JULY 25, 2017
House of Representatives,
Subcommittee on Coast Guard and Maritime
Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:08 a.m. in
room 2167 Rayburn House Office Building, Hon. Duncan Hunter
(Chairman of the subcommittee) presiding.
Mr. Hunter. The subcommittee will come to order. Thanks for
being here today, Commandant. It is just you right now, this is
good.
The subcommittee is meeting today to pick up from where we
left off from our June 7th hearing on Coast Guard
infrastructure. An important aspect of the previous hearing was
the Coast Guard stating it would submit its unfunded priorities
list with a 5-year Capital Investment Plan and a long-term
major acquisition plan to the committee.
Unfortunately, as of today's hearing, we only have received
the unfunded priorities list and a chart from the 5-year
Capital Investment Plan. But at least it is something.
Members of this subcommittee are some of the strongest
supporters of the Coast Guard with a number of us also serving
on the Armed Services Committee, which allows us to push for
Coast Guard priorities in parity with the other Armed Forces.
It can be frustrating and difficult to advocate for Service
priorities and funding needs when we lack specific Coast Guard
documents that can best inform congressional decisions on Coast
Guard acquisition programs.
With its aging fleet of cutters and aircraft, the Coast
Guard has implemented extensive maintenance and life-extension
projects for its assets in order to do more with less capable
assets. In addition, new assets such as the National Security
Cutters and the Fast Response Cutters have experienced ongoing
issues which reduce their capabilities and further exacerbate
the Service's ability to conduct its missions.
It is very likely that the Coast Guard assets will reach
the end of their service life before replacements are in place.
The threat of mission gaps is a very real possibility. The
Service will continue to tell us otherwise, and present charts
that show less substantial gaps, but I still believe the
Service charts are based on wishful thinking, not fiscal
reality. And we will represent that with a slide here once the
hearing really begins.
While it hasn't been the fault of the U.S. Coast Guard that
severe budgets have curtailed or delayed acquisition programs,
the Service can be faulted for a lack of detail on the impacts
of a stagnant budget on acquisition programs, and subsequently
on its ability to carry out its missions. The fact that the
mission needs statement, a 5-year Capital Investment Plan, and
the fleet mix analysis do not fully tell the story of the Coast
Guard's short-term and long-term gaps or its plan to address
them has been an ongoing concern.
GAO [U.S. Government Accountability Office] has pointed out
in a number of reports that the Coast Guard should develop a
long-term plan to influence its short-term planning documents.
In 2016, Congress required the development of the 20-year major
acquisition plan since it was clear the Service was not going
to do one on its own. However, it has been a year and a half
since the requirement was enacted into law and we still have
not received a long-term plan from the Coast Guard.
How important is long-term planning to the Coast Guard? I
really can't say. We on the committee believe long-term
planning documents can assist the Coast Guard in getting its
acquisition programs funded. It is disappointing that we only
have the unfunded priorities list to discuss today without the
5-year and 20-year planning documents that should fill in the
blanks and provide a roadmap for the future. It is hard to
understand any of these documents by themselves because they
are not in context; there is no perspective without a 20-year
plan.
Regardless, we will continue to have these important
discussions with the Service. I look forward to hearing from
our witness today on how we can best address the Coast Guard's
infrastructure needs.
I will now yield to Ranking Member Garamendi. You are
recognized.
Mr. Garamendi. You were going to go to DeFazio first.
Mr. Hunter. For an opening statement. To you and then----
Mr. Garamendi. Thank you, Mr. Chairman. Good morning,
Admiral, welcome. We are delighted that you are with us. We do
have some questions.
I felt that our priority hearing on this topic in early
June laid out the groundwork for future substantive
discussions, and it was my expectation that that would happen
today. I am not at all sure, however.
It is manifestly frustrating, again, to not have the Coast
Guard provide the committee with the capital planning and
budget information the Coast Guard is required by statute to
provide to this committee. And make no mistake about it, this
committee is deprived of critical information when both the 5-
year and 20-year Capital Investment Plans are not forthcoming.
I do notice that something at 5:47 was delivered to us
yesterday. The absence of these documents makes it difficult,
if not impossible, to understand and appreciate the budget
tradeoffs among the acquisition programs. Moreover, this gap in
information compromises our ability to flag programs that have
gone off-budget or to ensure that taxpayer dollars are invested
as wisely as possible to maintain Coast Guard mission readiness
and capability.
As I mentioned in my remarks at the June 7th hearing, the
Coast Guard has an enduring role in protecting our shores and
in facilitating our maritime commerce. When we talk about
ensuring the future prosperity and security of our Nation, few
things are as important as providing the Coast Guard with the
equipment it needs.
When this subcommittee is not provided essential
information to fully understand the complexities of these
expensive and important procurements, however, it makes it that
much more difficult for the members of the subcommittee to
advocate and build greater support in Congress for the Coast
Guard's budget.
Trying to understand a document that was delivered late
yesterday that I saw for the first time this morning when I
arrived here, for example, the polar icebreaker. Hmm, $19
million and $18 million--or is it $5 million--$50 million--$150
million, $430 million and then $300 million, that is maybe one
icebreaker. What about the other three or the other two or
other five?
We cannot do our work without good information, Admiral,
and we don't have it. And so, I guess I am resigned to having
to lower my expectations for the future of the Coast Guard. I
don't want to do that, but you don't leave me much option.
It is a missed opportunity. We have to make decisions very
soon about the Federal budget for 2018. The appropriations are
on the floor maybe today for the Homeland Security Department.
And this is the information we have available to us. To the
extent, Admiral, that you and Admiral Haycock can fill in the
blanks today, would you please do so?
As to our other witnesses, welcome. I look forward to your
testimony on these important matters, and let's hope that we
are not further disappointed. I yield back.
Mr. Hunter. I thank the gentleman. I'm going to go out of
order here and recognize the ranking member of the full
committee, because we are blessed to have him here in this
hearing. Mr. DeFazio is recognized.
Mr. DeFazio. Thanks, Mr. Chairman. I would certainly
endorse remarks of my colleague, the ranking member, Mr.
Garamendi. I think it was 4 or 5 years ago when we were doing a
Coast Guard budget hearing I asked your predecessor, ``This is
it?''
I mean at that point you didn't even list the icebreakers
on there. And having been on the icebreaker and having known,
you know, the fact that one was mothballed and the other one
is, you know, basically limping along, I was surprised and I
said, ``I hope that next year you will bring in a more complete
list of your needs.''
I know there is a lot of pressure from the trolls at OMB
[Office of Management and Budget] or others in the
administration, but if you don't advocate for the Service, we
can't advocate for the Service. And at some point we have got
to break this logjam, you know, and I don't know where--I don't
think it's within the Service that there is this reluctance. I
don't know exactly where the problem lies. But we need the
information.
And as Mr. Garamendi pointed out, I mean, it is very
puzzling that we finally got the polar icebreaker on the list,
but it looks like maybe, as he said, perhaps one and, you know,
obviously you have many, many, many other needs that are not
reflected on this 1-page summary. So we really need--and later,
when we are in questions I will be asking, if others don't,
when we are going to get the 5-year, when we are going to get
the 20-year.
I also intend to follow up on the questions that I raised
regarding the closure of the Potomac River. This is a fairly
unique situation. We have individual disbursed recreation, some
of it commercial, some of it--much of it commercial, rented,
but some of it guided. You have a camp for--a youth camp,
right, that would be affected because they use that section of
river?
And this is not your normal maritime situation, where
people have marine radios and that. I do note in your letter
that you say that individuals can apply to the captain of the
port and get individual authorization. That would be people in
inner tubes, I guess, and I am not sure how that would work. I
guess they--you know, maybe they can call in on their cell
phone, or something like that.
But, you know, I just don't see--I know the Secret Service
is always difficult to deal with, but I think you could assure
security without a total intermittent and unpredictable closure
because you are going to strand people. I mean if someone is--
if, as I pointed out, the President could play on his other 18-
hole course where he didn't--where it wasn't next to the river,
where he didn't cut down all the trees, and that could satisfy
his need to play golf on his own properties to promote his own
interests, as opposed to going somewhere else that is more
secure.
But, you know, to totally close this river, you are going
to have people floating along in inner tubes, drinking beer,
coming up against security, and then they have to get miles
down the river to their pickup point, and I guess they are
going to be sitting there drinking beer while someone plays 18
holes of golf, the President or other undesignated important
individuals.
So this is something that is going to require some
pushback, I think, with the Secret Service, where the Coast
Guard says this is not practical for this sort of recreational
activity. You could post a Zodiac there with a machine gun, and
if you see a threatening paddleboarder, take him out. So, you
know, that would--that might solve the problem. So I will be
asking questions about that also. Thank you, Mr. Chairman.
Mr. Hunter. I thank the gentleman.
Admiral, again, thank you for being here, and for your long
service. And you are now recognized.
TESTIMONY OF ADMIRAL PAUL F. ZUKUNFT, COMMANDANT, U.S. COAST
GUARD
Admiral Zukunft. Chairman, thank you, and Ranking Member
Garamendi, Ranking Member DeFazio, and members of this
committee, staff, thank you for giving me this opportunity to
testify today.
I do ask that my written statement be entered into the
record.
Mr. Hunter. Without objection.
Admiral Zukunft. OK. As this committee well knows, the
Coast Guard is a longstanding member of the armed services. We
have served in every military campaign dating back to 1790.
Today, there are over 20 Coast Guard cutters committed to
supporting DoD's global operations, chopped to DoD.
And on any given day there are 5 aircraft, 2 specialized
boarding teams, and an all-Reserve 130-member Port Security
Unit under the operational command of our DoD combatant
commanders. I mention this to bring to your attention the Coast
Guard's national security and defense missions are paramount.
These are Coast Guard platforms and forces performing defense
missions that are largely trained, equipped, maintained, and
salaried as part of the Coast Guard's budget, not part of
Department of Defense.
Yet, as a military service, only 4 percent of my budget is
funded through defense appropriation discretionary
appropriations. The other 96 I must compete with every other
Federal discretionary account to fully fund a broad array of
missions that span the globe and have not diminished over time.
For the past 5 years our annualized appropriations for
operations and maintenance has been below the Budget Control
Act floor. As the other armed services lament the prospect of
being funded at the BCA water level, the Coast Guard finds
itself under water in that regard.
Our 11 statutory missions, they best align with those of
the Department of Homeland Security. And two of our highest
priority regions, reining in transnational criminal
organizations like never before across the Western Hemisphere,
Central and South America, before they reach the United States,
and exerting sovereignty while protecting safety of life at sea
in the Arctic, do not rank high in the regionalized national
military strategy.
So yes, we are moored in the proper home port in the
Department of Homeland Security, and simply require the right
funding mechanism befitting a military service.
So, going forward, the Coast Guard requires 5 percent
annualized growth in its operations and maintenance account and
a $2 billion floor in our acquisition account. This would allow
me to dig out of the Budget Control Act basement, sustain
current operations, and grow our workforce while concurrently
building out our fleet of National Security Cutters, Offshore
Patrol Cutters, Fast Response Cutters, icebreakers, inland
construction tenders, reduce our shore infrastructure backlog
of $1.6 billion, missionize our C-27J aircraft and advanced
land-based unmanned aerial systems, and make that a program of
record.
Now I regret the less-than-timely--and all you have seen is
a chart of our 5-year Capital Investment Plan. We continue to
be in negotiation on late receipt of a budget as we move
forward, and a Service that has lived through 16 continuing
resolutions over the last 7 years, and 2 funding lapses, and 40
percent swings in what our annualized capitalization investment
is going to be year to year.
Our unfunded priorities list, that reflects reality. And
what it shows is a 40-percent gap in our 5-year Capital
Investment Plan and what we need to be a Coast Guard of the
21st century.
Now, rest assured, I will continue to work with our
Department, with this administration and with Members of
Congress to close these gaps going into the future. And what
you need, and I fully understand, is our 20-year CIP [Capital
Investment Plan].
As a military service, we are the only military service
that can say we have a clean financial audit opinion. We have
done that now for 4 consecutive years. We are delivering ships
on time, on budget, with zero growth, and with zero
deficiencies, and these ships pay for themselves in value of
contraband removed on their maiden deployment. And these ships
will be in service for more than three decades to come. It is a
great investment.
And I appreciate the investment that this committee has
made to our United States Coast Guard. That makes us the
world's best Coast Guard, bar none.
And looking out for the welfare of our people and our
blended retirement system to ensure that we do not sacrifice
our retirements, our benefits, and to make sure that we have a
permanent solution to this legislative mandate that addresses
blended retirement.
So on behalf of all 88,000 men and women who serve our
Coast Guard, thank you for serving us. I look forward to your
questions.
Mr. Hunter. Thank you, Commandant. Just because we are so
happy to have people here I am going to yield to Mr. Lewis for
5 minutes.
Mr. Lewis. Thank you, Mr. Chairman, and thank you, Admiral,
for appearing here today and for your service. We obviously
honor that and appreciate it.
I just have one quick question, and I brought it up at the
last--one of the last hearings, anyway, and that was about the
need to keep open our shipping lanes in the Great Lakes in the
harsh winters. I come from the great State of Minnesota, and it
is vital in Duluth and throughout the country.
So I am wondering. There is a lot of attention on the polar
icebreakers, but I am wondering, trying to cover the cost of
delays and millions of dollars of commercial revenue when we
have got severe ice coverage on the Great Lakes, what the Coast
Guard--or where we are in the procurement of a couple of much-
needed Great Lakes icebreakers right now.
Admiral Zukunft. I thank you for that question. So, current
state, we are extending the service life of our 140-foot
icebreaking tugs, who have performed yeoman duty up in the
Great Lakes. We have had an advantage of a very light ice
season, so we are not putting wear and tear on any of these
assets.
And we have also entered into an agreement with our
Canadian counterparts several years ago to assure that we have
some agreement between the two if we have severe ice seasons
like you saw in 2014 and in 2015, that we can apply those
scarce resources to the best advantage.
As you have seen, there is a line item in our 2017 budget
that addresses design and construction of a Great Lakes
icebreaker. If I were to rank that on all my priorities right
now, my biggest priority in my icebreaking fleet is going to be
our heavy icebreaker, which is consuming not just bandwidth,
but also a significant portion of our budget, as well.
Mr. Lewis. No, and I understand that. I understand that
national security implications of the polar icebreakers and
getting all of that done. But I am, obviously, concerned. I
think there is, what, one--the Mackinaw, one icebreaker in the
Great Lakes, is that correct?
Admiral Zukunft. That is correct, Congressman.
Mr. Lewis. And so we are extending the service life of the
140-foot icebreakers. Do you have any idea how long that
extension is, or what the life expectancy is?
Admiral Zukunft. Yes, we plan to get 10 more years out of
those vessels.
Mr. Lewis. Ten more years. I am just wondering at what
point--I mean you mentioned--and I certainly share in your
concerns how the Guard has been shortchanged in a number of
areas with regard to the BCA levels, or just getting 4 percent
of DoD appropriations, and things like that. But I do think
this is a very important part of your mission, obviously, with
regard to commerce in the Great Lakes, and I would just call
your attention to that.
And I yield back, thank you.
Mr. Hunter. I thank the gentleman. The ranking member of
the full committee is recognized.
Mr. DeFazio?
Mr. DeFazio. I thank you, Mr. Chairman.
Admiral, you did state in your testimony about the need for
$2 billion to begin to catch up. And, you know, I understand
the pressures you are--the Service has been under, and I am--
always endeavor to support additional funding.
But even in this 5-year outline you provided us, you don't
any one of those years hit the $2 billion. I mean it looks like
it roughly--$800, $600, $400, $200, $300 million short. So that
totals up to, you know, well over, like, $1.4 billion,
something like that. So how does this reflect being able to
catch up on the $2 billion a year?
Admiral Zukunft. Congressman, I am glad you brought that
up, because what that does reflects is fiscal guidance. And we
are a Service that has lived within fiscal guidance, and fiscal
guidance is not getting the mission done for us.
So the 5-year--those numbers that you see that don't
approach $2 billion, those are the constraints of living within
fiscal guidance.
Mr. DeFazio. OK----
Admiral Zukunft. The priorities----
Mr. DeFazio. Meaning you are being dictated to, in terms of
what you can ask for?
Admiral Zukunft. Yes, sir.
Mr. DeFazio. OK. And whoever is dictating is dictating that
you come up with numbers that are not adequate. I would just
like the record to reflect that.
A quick question about the icebreakers. There was one
report recently that, you know, if we bought a group, a
standardized design, four or five, we could get the price down
after the first one. And then there was a question about
militarization.
And I guess my question would be--and I don't know if you
are the appropriate person, but it seems to me that, you know,
I could envision a point at which--I mean the Navy is not going
to be able to get assets up into what is basically going to
become a seasonal shipping lane and an area of potential
conflict between ourselves and the Russians, given the
extraordinary claims they are making in the Arctic.
And, you know, maybe the Navy should be paying for these
icebreakers, and you guys operate them. What do you think?
Admiral Zukunft. Well, we already have an integrated
program office, stood up with the Navy, and $150 million in the
Navy shipbuilding account. That builds 20 percent of an
icebreaker. I would like to see 100 percent of the first
icebreaker, then look at block buy. And at that point I am
agnostic, in terms of source of funding.
Does it support homeland security? Does it support defense?
Does it support the United States of America? And, most
importantly, it answers that question. We have unique,
sovereign interests that other nations are encroaching upon. As
you mentioned, Russia is claiming all the way up to the North
Pole.
Mr. DeFazio. Right.
Admiral Zukunft. We are just sitting there, watching that
happen. We need a means to exercise our sovereignty in these
high latitudes, and we are severely lacking in that.
We will need that legislative approval to do block buys.
But beyond this first icebreaker, we need to look at a block
buy of icebreakers and accelerate the buildout of this program.
Mr. DeFazio. OK, excellent. Thank you.
On the issue of the security on the Potomac, have there
been or could there be discussions with the Secret Service
regarding something less than a bank-to-bank, you know, total
closure over a couple-of-mile section of the river?
Admiral Zukunft. I happened to fly over that very same
stretch of river late yesterday afternoon, over the golf
course. As you mentioned, there is no foliage. So it is clearly
exposed from the riverfront up to the clubhouse.
We are working with the three canoe groups, the kayak
groups, to allow them passage on the Maryland side of the
Potomac River. And then, once you get beyond that, you enter
class 1 rapids, which you will not take an inner tube down. So
we are looking at striking a balance between the two.
So, as you have brought up--and Ranking Member Garamendi,
as well, have elevated this issue. We listened, and we are
making that accommodation to the public.
Mr. DeFazio. OK. For just the organized groups, or would
that include individual canoeists? I mean----
Admiral Zukunft. So we have met with the American Canoe
Association----
Mr. DeFazio. Right.
Admiral Zukunft [continuing]. With the groups that haul out
there. And as long as they stay to the Maryland side of the
Potomac River, they can pass clearly when the security zone is
in effect.
Mr. DeFazio. OK. I hadn't seen that notice, or that change
in the notice. So that is welcome news.
And would that accommodate the kids in the camp, too?
Admiral Zukunft. It would.
Mr. DeFazio. OK. That is very good news, then. OK. Thank
you. I will look forward to seeing--now, is that a final
disposition? Because you had a pending rule. Is it----
Admiral Zukunft. Well, I read your letters.
Mr. DeFazio. Yes.
Admiral Zukunft. And, rather than read it, I have to see
it.
Mr. DeFazio. OK.
Admiral Zukunft. And I am meeting with our staff, the
sector commander. You know, we can make an accommodation here.
Mr. DeFazio. OK, excellent. OK. Well, thank you.
Thank you, Mr. Chairman.
Mr. Hunter. I thank the ranking member of the full
committee. I now recognize myself.
We will just start rolling here, Commandant. The UPL
[unfunded priorities list] that went to OMB and then finally
got to us didn't include six FRCs [Fast Response Cutters] for
CENTCOM [U.S. Central Command]. How big of a priority was that
for the Coast Guard?
Admiral Zukunft. When the Executive order came out on
restoring readiness for our military, as soon as that was
released, I sent a memo to the Department of Defense, to the
chairman, to the Secretary of Defense, and said we are going to
need to recapitalize these six patrol boats that are serving in
the Northern Arabian Gulf.
I have also met with the CENTCOM commander, as well. There
is an enduring requirement to do so. But to use DoD funding to
be able to build those out. So the reason that does not appear
in our unfunded priorities list, that could be funded by the
overseas contingency operations or some other mechanism,
because that will have an exclusive and sole purpose, DoD
mission, to----
Mr. Hunter. Do you think DoD is going to spring for that,
then?
Admiral Zukunft. I am hopeful that they will.
Mr. Hunter. You have a timeline?
Admiral Zukunft. I do not. So they are looking at how long
can these 110-foot cutters remain in service. We have only got
about maybe 5 years. The good news is we have a hot product
line for these Fast Response Cutters, and we are turning these
out. As I mentioned, the last five came out with no
discrepancies. So we can turn out service-ready platforms----
Mr. Hunter. So, theoretically, you would just add--tack on
these six to the hotline at some point, and get them over
there?
Admiral Zukunft. Correct.
Mr. Hunter. Got it, thank you. I guess we can go to the
timing. And this kind of falls into the overarching question of
the relation between the shortfall of the acquisition,
construction, and improvements, and the planning for that, and
your mission capability, because that is what we are looking
at, right? That is a--we are saying, in dollars, about $200
million short, at the best. And then, lower than that, much
more--the gap is bigger, going through.
[Slide]
Mr. Hunter. Here is a nice slide. The red line is what we
have authorized, the blue line is what has been appropriated,
and the green line is what the Coast Guard's budget request has
been.
Just above the red line, say an inch, is where your program
of record--all your programs of record, let's call them a
program of record--that is where those hit, is just above the
red line. So your requests never come close. That big spike is,
I think, National Security Cutter, right? And then after that,
even the appropriated dollars go down until you get another
NSC. But those never meet. And that is expressed in dollars.
But what I would like you to do right now is talk about it
in terms of capability.
Admiral Zukunft. So, what you are looking at is, you know,
life below the floor of the Budget Control Act. When we deal
with our fiscal planning guidance, it typically comes in at or
below the floor already. And then, with each iteration--over
the last several years we have been asked to then identify a 5-
percent excursion, in addition to a funding level that is
already funded below the BCA floor, which is why I am looking
at a 5-percent annualized growth in this account to dig out of
what is literally a basement, and we have been handed a shovel.
So, where does that pain get filled? Well, we start
deferring maintenance. You defer maintenance, you go down a
slippery slope. We have 72-year-old inland construction tenders
in service today that enable $4.6 trillion of commerce to take
place. And we never stepped out and said, ``Well, what are we
going to do about investing these?''
So, part of it I bear the responsibility of. We have been a
Service that will only build one thing at a time: the National
Security Cutter. When we finish that, we will move on to the
next. Well, there's five classes of ships that we need to
recapitalize today.
And not just the ships, but also the outgoing maintenance
to maintain these ships, as well, because too often we just
look at the initial acquisition cost and not the outyear
expenses for training, for people, for maintenance, and that is
where you start running into a train wreck, is when you start
deferring maintenance or you start cutting force structure. And
that green line has taken us to a place where we cannot
continue to navigate into the future.
Mr. Hunter. OK, but your 20-year plan, which we don't have,
I would guess that that would lay those things out.
Admiral Zukunft. It will.
Mr. Hunter. Right? That would--I mean that is where you
would get that information from. So have you submitted the 20-
year plan?
Admiral Zukunft. We have not, and I owe that to you.
Mr. Hunter. So it has not even been submitted to the
Department at all?
Admiral Zukunft. It has not.
Mr. Hunter. OK. I guess, following up with that--and I
think we have asked you this every time you have been in front
of this subcommittee--why do you think that discrepancy is
there? Do you think it is a--the--because DoD doesn't have this
problem. DoD is able to be--they are strong enough, they can
tell OMB to go pound sand.
You say you are a defense service, a military service, yet
your 11 statutory missions fall in line with homeland security.
But the Department of Homeland Security is not funding you
appropriately. So is it a question of Coast Guard willpower,
like the will to get this done? Brain power? What is the
problem, do you think?
Admiral Zukunft. Part of it is just the categorization of
our appropriation: non-defense discretionary. And so, 96
percent of that--we compete with all other Federal non-
discretionary funding. And there are lots of non-discretionary
funding needs, and I don't take that away from anybody. But as
a military service, you know, I am competing for every other
aspect, and yet only 4 percent of our funding comes from a
defense appropriation.
A recategorization of that would allow me to compete
better. But when I get fiscal planning guidance, which is
focused on that 96 percent, and then how do we divvy up
nondefense discretionary, that is how you end up with green
lines. That is how you end up with, well, you need to take a 5-
percent excursion below the BCA floor because we need even more
non-defense discretionary.
The Coast Guard will never bail out our Nation's debt,
which is going to approach $830 billion in the year 2026. My
budget is under $11 billion. The Coast Guard is not going to
pay us out. But we are a great investment. And what we have not
done adequately enough is play offense. And this defensive
back-and-forth of how do we build out a budget in the outyears,
we need to state our need----
Mr. Hunter. Let me interject. If your--but when you are in
the Department of Homeland Security, and you are, let's say,
tightly held to that planning--to that financial guidance, how
do you expect to break out of this?
Admiral Zukunft. I am seeing very positive signs. We saw
that during a passback that went public, the Coast Guard would
have seen a 13-percent reduction to its budget. Our Secretary,
Secretary Kelly, went to the highest places to ensure that the
Coast Guard was fully funded for 2017. And we are.
But we have tremendous support, and we did from Secretary
Johnson, as well. But the access that this Secretary has to key
leadership within this Government who understands the United
States Coast Guard, who understands the military--we have very
good alignment with senior leadership today.
Mr. Hunter. Do you think that your financial guidance is
going to change?
Admiral Zukunft. I do.
Mr. Hunter. Towards that red line?
Admiral Zukunft. I do, Chairman. And I will work to make
sure that happens.
Mr. Hunter. When do you think that--that we will see that
reflected?
Admiral Zukunft. I want to see that happen in 2018, 2019,
and, again, I want to see--you know, I am serious about this 5
percent annualized growth, $2 billion. And people say, ``Well,
you are asking for too much.'' You know, the fact that we can
account for our dollars, the fact that we have almost no growth
at all in our acquisition budget--and again, when the Coast
Guard cutter Stratton or the Hamilton returns from its maiden
voyage with $1 billion of cocaine on it----
Mr. Hunter. If we could sell that cocaine, we could----
[Laughter]
Admiral Zukunft. Well, we are not there yet. But we are
transnational----
Mr. Hunter. California is going to legalize coke----
[Laughter]
Admiral Zukunft. Where they are most vulnerable, really, is
when they are on the water. And their biggest dread is when
they see a National Security Cutter. Launching a ship-based
unmanned aerial system--they don't even know they are out
there, until we find them. And then that armed helicopter
arrives overhead. And if they try to run away, we stop them:
585 smugglers brought to the United States for prosecution, 100
percent of them prosecuted here, in the United States. I think
that is a successful mission.
Mr. Hunter. Last thing, then I am going to pass it on to
Ranking Member Garamendi.
We had a debate--not quite a debate, we just did the
National Defense Authorization Act, and we talked about
icebreakers, and we talked about the fund. I think we lost that
amendment, right?
Chairman Thornberry voted against the amendment to allow
icebreaker money to go into their account in the Navy. And what
I got from that is that the political leadership here, and the
Department of Defense, and the Navy, none of them see
icebreakers as a national security asset. That is what I took
away from it.
Why is that? Do you think that is correct? Do you think it
is more of a savings lives, when you start drilling for oil and
going after natural resources in the Arctic? Or do you think
there is a national security mission, not a search-and-rescue,
break-boats-out-of-ice mission.
Admiral Zukunft. Let me answer it this way, Chairman. We
have an area the size of the State of Texas that is part of our
extended Continental Shelf. And nearly half of the oil and gas
reserves are below that sea floor, in our 200-mile limit and
our extended Continental Shelf.
China has an icebreaker on its way right now, and they will
do scientific research in this extended Continental Shelf. And
maybe someday we ratify the Law of the Sea Convention, and we
claim was is rightfully ours. China will contest that. And so
we have sovereign interests that are up there.
Russia will take delivery of two icebreaking corvettes with
cruise missiles on them. They are militarizing search-and-
rescue stations. And doesn't this look like a movie we have
seen in the East and South China Sea? It is known as area
access denial, and we have no means to exert sovereignty.
So, what do you need an icebreaker to do, not just today,
but 30 years from now? Reserve space, weight, and power,
because you might have to weaponize this icebreaker. It is
great we have submarines, but I think it is very difficult to
exert sovereignty with a submarine. You have one course of
action, and that is to sink an adversary.
Mr. Hunter. Well, tell me, what is the disconnect, then?
Admiral Zukunft. So the disconnect----
Mr. Hunter. Because what you are saying makes sense to us,
but no one else is buying it. And that was made clear last
week.
Admiral Zukunft. Well, I think you answered the question:
buying it. Buying it.
Mr. Hunter. Money.
Admiral Zukunft. This is an issue of national security.
Mr. Hunter. This is one of those things that everybody says
we need, but nobody wants to put the money in.
Admiral Zukunft. Yes, sir.
Mr. Hunter. All right. Thank you very much.
Ranking Member Garamendi, you are recognized.
Mr. Garamendi. In your opening statement you said that the
Coast Guard provides Department of Defense services. You
mentioned 20 cutters, you mentioned aircraft. What is the total
cost of the services that you are currently providing for
national defense purposes? Worldwide.
Admiral Zukunft. Congressman, I will break that out and
provide you what that breaks out to. And that includes
salaries, maintenance, it is a pretty significant number, when
you add it all up. It is not just the cost of burning fuel,
doing a mission.
[The information from Admiral Zukunft of the U.S. Coast Guard
follows. This information is an update to the Coast Guard's fiscal year
2014 report to Congress: ``Defense-Related Activities,'' which is on
pages 103-109.]
Introduction
In response to the Coast Guard and Maritime Transportation
Subcommittee's July 26, 2017, request to provide ``an itemized
accounting for Coast Guard support to COCOMs (assets,
personnel, operations, etc.),'' the Coast Guard submits the
below update to its fiscal year 2014 report to Congress, which
was titled, ``Defense Related Activities.''
Since 2001, the Coast Guard has derived $340,000,000 (excluding
overseas contingency operations) of its annual Operating
Expenses appropriation for defense-related activities. The
update below applies the same methodologies used in the 2014
report to provide new estimates using fiscal year 2016 data.
Additionally, the Coast Guard conducted further analysis to
include pay and allowance costs for Coast Guard members when
they conduct defense-related activities.
Operating Expenses
For fiscal year 2016, the Coast Guard's estimated allocation
and expenditure of the aforementioned $340,000,000 is estimated
to be:
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2016 Fiscal Year 2016
Defense-Related Activity Allocation (BA in Expenditures (BA in
millions) millions)
----------------------------------------------------------------------------------------------------------------
Defense Readiness...................................... $17.172 $16.553
Domestic Support....................................... $193.885 $195.448
Memorandum of Agreement Annexes........................ $27.757 $24.095
Support to Combatant Commanders........................ $22.902 $10.245
--------------------------------------------------------
Subtotal............................................. $261.715 $246.340
--------------------------------------------------------
Drug Interdiction...................................... $78.285 $93.660
--------------------------------------------------------
Total.............................................. $340.000 $340.000
----------------------------------------------------------------------------------------------------------------
The Coast Guard's Mission Cost Model estimates of Operating
Expenses funding allocations and expenditures for total
defense-related activities in fiscal year 2016 are provided
below:
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2016 Fiscal Year 2016
Defense-Related Activity Allocation (BA in Expenditures (BA in
millions) millions)
----------------------------------------------------------------------------------------------------------------
Defense Readiness...................................... $79.066 $74.067
Domestic Support....................................... $222.468 $195.448
Memorandum of Agreement Annexes........................ $115.094 $107.818
Support to Combatant Commanders........................ $48.937 $45.843
--------------------------------------------------------
Subtotal............................................. $465.565 $423.176
--------------------------------------------------------
Drug Interdiction...................................... $447.380 $419.096
--------------------------------------------------------
Total.............................................. $912.945 $842.272
----------------------------------------------------------------------------------------------------------------
Other Discretionary Appropriations
Programs funded by Acquisition, Construction, and Improvement
(AC&I); Reserve Training (RT); and Research, Development, Test,
and Evaluation (RDT&E) ensure that the Coast Guard has the
necessary assets, and properly trained and equipped force to
conduct defense-related activities. The estimates for each of
those appropriations in fiscal year 2016 are provided below:
------------------------------------------------------------------------
Fiscal Year 2016
Defense-Related Activity Allocation (BA in
millions)
------------------------------------------------------------------------
AC&I Defense Readiness...................... $144.177
AC&I Drug Interdiction...................... $676.154
RT Defense Readiness........................ $7.561
RT Drug Interdiction........................ $14.393
RDT&E Defense Readiness..................... $0.605
RDT&E Drug Interdiction..................... $1.716
---------------------------
Total (Other Discretionary)............... $844.606
------------------------------------------------------------------------
Total of Discretionary Defense-Related Activities: $1,757.551
(in millions)
The Coast Guard's Mission Cost Model estimates of Operating
Expenses funding allocations and expenditures for total
defense-related activities in fiscal year 2016 to include pay
and allowances are provided below:
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2016
Defense-Related Activity Allocation (BA in Fiscal Year 2016
millions) Expenditures (in millions)
----------------------------------------------------------------------------------------------------------------
Defense Readiness...................................... $162.205 $157.206
Domestic Support....................................... $482.401 $455.381
Memorandum of Agreement Annexes........................ $236.117 $228.841
Support to Combatant Commanders........................ $100.396 $97.302
--------------------------------------------------------
Subtotal............................................. $981.118 $938.729
--------------------------------------------------------
Drug Interdiction...................................... $917.807 $889.524
--------------------------------------------------------
Total.............................................. $1,898.926 $1,828.253
----------------------------------------------------------------------------------------------------------------
Total of All Discretionary Appropriations' Defense-Related
Activities (including OE pay): $2,743.532 (in millions)
Mr. Garamendi. Yes, I would appreciate that information.
When we took this issue up on the floor with an amendment
that I proposed last week, the chairman--I think it was the
chairman of the Appropriations Committee spoke on the floor and
said that the Coast Guard does not provide any national defense
services.
In answer to the question that the chairman just posed to
you, the problem is ignorance amongst us. And so we have to
deal with that. And if you can provide us with the information
about the actual cost of the services and all of the equipment,
airplanes, cutters, et cetera, it would be helpful in providing
a little level of knowledge to keep people here, within this
Department.
Also, we might send that information to the Office of
Management and Budget, where I think I heard you say--no, you
didn't accuse them of the problem, but you did say you were
given instructions. And so this sheet of information that you
gave us is really a result of the Office of Management and
Budget telling you what you must tell us.
Don't respond. I don't want you to get in trouble.
However, I do note that the Office of Management and Budget
is willing to spend $1.6 billion on a 40- to 70-mile extension
of existing walls, or repair of existing walls on the Mexican
border. What could you do with $1.6 billion to really protect
the United States from immigrants, drug smugglers, and the like
on the southern border?
Admiral Zukunft. If you will allow me, firsthand--where
have I been in the last month? Meeting with Presidents in
Colombia, in--the Vice President of Ecuador, the President of
Panama, and heads of state in Mexico City.
When I was in Ecuador, they have violent crime and they
have drug usage because of the rampant growth of cocaine coming
out of the country of Colombia. Colombia is besieged with the
amount of coke under development.
Mexico is seeing it at their front at the far end of this,
but everyone is saying, ``We need more United States Coast
Guard off our coast.'' And as successful as we are, it really
comes down to sheer numbers.
We don't have enough planes in the air, to include unmanned
aerial systems, enough ships on the ocean to leverage all of
the information. We have an awareness of over 80 percent of the
drug flow that is ultimately destined for our Nation. It
doesn't land, you know, just--well, it lands 1,500 miles south
of the border. It lands in bulk in 80-pound bails of cocaine.
And when it lands, law enforcement will turn their head the
other way because, if they don't, they will be killed.
The rule of law goes out the window. That is why we are
seeing violent crime. With that violent crime--which is why you
are seeing families putting their children in the hands of
human smugglers to get them to the United States. The irony is
the United States demand is driving this train. And yet they
want to get their children here, in the United States.
But to stop this, where this threat is most vulnerable, is
actually at sea, where this law enforcement agency will not
turn its back. We will seize you and we will prosecute you.
That, to me, is a key instrument of regional stability right
here in our backyard, where we see some of the worst violent
crime in the world--is right here, just to the south, and well
south of our border with our trade partner, Mexico.
Mr. Garamendi. You gave a very good description of what you
are doing. What could you to with $1.6 billion in--these are
our choices. We, the representatives of the American people,
are making a choice to spend $1.6 billion on a wall, on some
40--maybe 70 miles of wall, instead of spending that money on
the U.S. Coast Guard, or on any other thing.
And my question is, if you had $1.6 billion--it is going to
be spent in the next year, it is going to be spent in 2018, a
budget year, $1.6 billion. Now, we could make the choice to
give $1.6 billion of additional money to the Coast Guard. You
could build three icebreakers over the next 3 years, 4 years,
with $1.6 billion. Is that correct?
Admiral Zukunft. Once----
Mr. Garamendi. About 700--well, 2\1/2\.
Admiral Zukunft. Yes. But once we award a contract, do a
block buy, and then it is a delivery schedule. You know, we
build out not four, but six Fast Response Cutters each year. We
accelerate the buildout of the Offshore Patrol Cutter. Because
these are the assets, especially our Fast Response Cutters,
Offshore Patrol Cutters, that we can bring and swing into this
part of the world.
Mr. Garamendi. And for icebreakers, if you had a block buy,
they are $700 to $800 million apiece? I think that is the
current estimate.
Admiral Zukunft. That is a ballpark figure.
Mr. Garamendi. So, 2\1/2\, not three. These are choices.
These are choices that we are making.
I listened last night to the--sitting there, listening for
hours to the Rules Committee debating whether to--what to do
with this $1.6 billion for a wall. I just bring this to the
attention of all of us here.
Currently, the plan is three heavies and three lights to
deal with the issues--icebreakers, going forward. They are not
in your budget, they are not in your 5-year capital investment
acquisition, construction, and improvement budget, nor are any
of the onshore facilities that are in the document that you
gave us of unfunded priorities.
Incidentally, I don't see in this document, either, the two
additional heavies or the two--or the three lights. Is that an
unfunded priority that is not listed here?
Admiral Zukunft. What you are seeing is just our near-term
unfunded priorities list.
Mr. Garamendi. OK.
Admiral Zukunft. That doesn't take us out into our 20-year
CIP.
Mr. Garamendi. I noticed that you are operating--your total
budget is somewhere around $10 billion a year--maybe $11
billion, if we----
Admiral Zukunft. A 10.7----
Mr. Garamendi [continuing]. Add in the----
Admiral Zukunft [continuing]. Salaries, retirement, that is
everything.
Mr. Garamendi. I am going to just speak to the chairman
here for a moment. There are two of us on this committee that
are also on the Armed Services Committee. And over the last
week, I know you and I have been trying to leverage into the
Department of Defense's $700 billion budget another $1 billion
or so for the Coast Guard for the--particularly for the
icebreakers. We have been unsuccessful in doing that. And I
think we ought to continue to try to do that.
I do not have an explanation for the question you raised,
Mr. Chairman, about why the U.S. Navy wants to build 350--or
have 355 ships, and not be able to use any of those ships,
except for submarines, in the Arctic Ocean. It makes no sense
to me at all. They want to build more LCSs [littoral combat
ships], which are, by their own estimate, useless in a
conflicted environment, but yet they want three more of those,
which--those three could fund two of the icebreakers.
I don't understand. I don't understand what the U.S. Navy
is thinking here. Nor do I understand what my colleagues on the
House Armed Services Committee are thinking about continuing to
build ships that are useless in the Arctic, and we know the
Arctic is a contested environment today, and will be more so in
the future.
So I guess I am just speaking, I don't know, maybe to
myself here. But I want the public to know that there is a
serious error being made by the House Armed Services Committee,
and specifically by the subcommittee dealing with seapower, in
that they are building ships that are not capable in a
contested environment, LCSs, that do not perform even the
services in an uncontested environment for which they were
designed.
At the same time, unwilling to provide the U.S. Coast
Guard, which is a defense organization, as well as a civilian
organization, with the money it needs not only for icebreakers,
but to provide the men equipment necessary for the existing
Department of Defense services that they are doing.
So maybe I am preaching to the choir here, but I want it on
the record that we are making some serious errors, and we have
got to correct these errors.
With that I yield back.
Mr. Hunter. I thank the ranking member. I think the Coast
Guard actually built the best LCS. It is called the NSC. That
is what the Navy needs to get on board with.
The former chairman of the committee, whose portrait sits
behind you, Commandant, is now recognized.
Mr. Young?
Mr. Young. I thank you, Mr. Chairman.
Mr. Hunter. And let me introduce his wife; Anne is back
there, too. Welcome, Anne.
Mr. Young. I thank you, Mr. Chairman, for having this
hearing. And, you know, someone once told me you always pay for
the sins that you have sown. And I look at my portrait every
day and I think I am paying for my sins right now.
But Admiral, welcome. We appreciate it. How old are you?
Admiral Zukunft. Sixty-two.
Mr. Young. OK. Let's see, 62. You were 14 years old,
approximately, when I got elected. So congratulations on your
climb to success.
Admiral Zukunft. That makes you a ranking member.
Mr. Young. Yes, thank you. I--you know, we hear a lot
about--and I listen to my--the minority leader, vice chairman
of the committee, and I appreciate what he is saying. We are
actually concentrating on an icebreaker or breakers in the
Arctic. And I know we need those, but that is not a defensive
weapon.
And I look at the border of Alaska, and especially in the
Arctic, with the activity of Russia and China, it is--some--
China is building icebreakers, which I don't understand. And
so, of course, Russia has got a whole lot more being built.
Have you looked at--Admiral, I know this has been an
ongoing battle with me and the Coast Guard over the years--the
other possibility of getting an icebreaker into the arena
quicker than having one constructed? Like leasing from another
outfit? You know I have been talking about this a long time.
Have you analyzed this again?
I know the last time we had a study it was 1980. That is a
long time ago. So is there a way we can put metal on the water,
especially for the new shipping through--and the cruise ships.
Because that Healy is old. And is--have you looked at that at
all?
Admiral Zukunft. We have, in fact. One potential vendor we
have had multiple interactions. They have a platform that has
yet to complete ice trials. We would not want to lease
something that can't demonstrate its ability to actually
operate in the ice that Healy sees. Healy was actually--sat in
ice for 36 hours last year. So it is not ice-free up there, and
that is a medium icebreaker. This particular platform doesn't
have the capability of Healy.
But we would at least want to make sure that ice trials
were completed, that we could actually be a good steward of
taxpayer dollars to lease a platform that would meet our
requirements. So we have had multiple interactions. Last one
was probably in May. And the issue of ice trials is still on
the table right now.
Mr. Young. The vessel itself that you are talking about--
and I happen to agree with you, if it doesn't do the job, you
don't want to lease it. But, you know, we could probably lease
a vessel for a whole lot more for a short period of time than
we--because I don't have confidence we are going to get the
money to build the icebreaker you need.
For some reason, the Arctic is still not on the forefront
of everybody's mind right now. This health bill and tax bill
and transportation bill--where is Mr. Shuster? You know, all
those things. But they are not thinking about what you need.
And we keep adding on to you, and as the chairman has said,
we are not properly funding you. And that concerns me. And I
just want you to know that.
I have--I think the last icebreakers were built by Lockheed
and they are no longer in operation. Is there a--is there
capability with the ship industry to build a good icebreaker?
Admiral Zukunft. I am very confident there is, Congressman.
There are five shipyards that we have awarded industry studies
to. They have done mockups of ice trials, and they are actually
ahead of the power curve, so to say, in terms of their ability
to submit a request for proposal, where we could honor and
start cutting steel.
What I have in front of me, this is a--about the weight of
a gold brick. That is a piece of steel out of the Coast Guard
cutter Polar Star. We have not build ships like this since
Lockheed Martin built the Polar Sea and Polar Star. They are
very confident we can build these here in the United States,
built in the U.S., with U.S. workers.
Mr. Young. Well, they will be built in the United States.
That I will guarantee you.
Admiral Zukunft. Yes, sir.
Mr. Young. I am not going to--any foreign ship. Now, back
to parochial activity. As you know, I like your fast cutters,
or Fast Response Cutters. I happen to be privileged to be on
one when it first made its maiden voyage. Great ship.
But I am a little concerned, parochially, about one-on-one
docking, porting, because it looks like now you are going to
have two in Ketchikan, one in Sitka. Petersburg has been left
out, but they had a tender there.
As we build the next one--I think you are building six
more?
Admiral Zukunft. Yes, six will be home-ported in Alaska.
Sitka, as you mentioned. Seward, Kodiak are other ports of
consideration, in addition to where we have two in Ketchikan
right----
Mr. Young. But again, I am interested because, if you look
at Alaska--come to my office and look at that map--that is a
hell of a coast. And we do have problems, you know. I will
listen to your testimony on the drug problem, you know, I did--
you apprehend, you know, get everything done, and then you say
they are prosecuted. But how is the prosecution going? How
many--are we doing anything about it after you catch them?
Admiral Zukunft. We are doing phenomenally well here, in
the United States, 100 percent prosecution. If they are
prosecuted downrange, maybe 5 percent. So extradition,
prosecution in the United States. And these aren't wrist-slaps.
These are 10-, 12-, 15-year sentences. They might be able to
bargain down if they are providing us valuable information
about where this activity is leaving. So when we talk about
organized crime, it becomes disorganized once they face
prosecution.
Mr. Young. Well, I know I shouldn't say this, Mr. Chairman,
but I had a bill I have written up that is pretty good. It is
called D&D bill. You deal and you are dead. The demand is huge
in the United States, I don't understand that, but dealers just
absolutely are committing murder. And the prosecution is great,
10 years, 5 years, that doesn't mean anything. If you knew that
you were going to be hanging from the yard line, you might
think a little differently. Thank you, Mr. Chairman.
Admiral, congratulations again. Good job.
Admiral Zukunft. Thank you, sir. Thank you for your many
years of service.
Mr. Young. Yes.
Mr. Hunter. Thank you, Mr. Young. Mr. Lowenthal is
recognized.
By the way, we almost had an all-California up here. Don
messed it up.
Dr. Lowenthal. Honorary Californian.
Mr. Young. I am from California.
Dr. Lowenthal. Good morning, Admiral. Cybersecurity, I am
going to focus a little bit on cybersecurity. And first, thank
the Coast Guard for really helping our PORTS Caucus when we--in
our latest discussions about cybersecurity, and I will ask
about that. It is both a critical part and component of our
homeland security, and also security for our transportation
network.
We all know that an attack upon our critical or crucial
infrastructure such as the ports can have a tremendous impact
on goods and movement. And in turn, the entire U.S. economy.
We--this is a--so the first question is what is the Coast Guard
doing to keep our ports safe from cyber attack, and to also
safeguard our critical maritime infrastructure?
And then the second question is--and I want to again thank
you for your help--what did the Coast Guard learn? What lessons
have we learned from the recent attack against Maersk, which,
as we saw, closed down a number of their terminals, the APM
Terminals, throughout the Nation?
So, kind of what are you doing, and what have we learned
now, using this as a learning experience?
Admiral Zukunft. Great question, Congressman. So, for more
than 14 years now we have had Area Maritime Security Committees
in 37 of our major ports where we have a captain of the port.
Let me take L.A./Long Beach as an example. They also have cyber
subcommittees on these Area Maritime Security Committees.
Now, when the committees were first stood up, there were
security measures that were put into place: fencing, cameras,
lighting, transportation worker identification credentials, and
the like. Industry wasn't so pleased with some of these
requirements, but it was written into law.
Now we are dealing with a whole new threat called cyber. We
were working with the National Institute of Standards and
Technology, who actually put out voluntary guidelines to all of
industry.
But I use L.A./Long Beach as a great case study. I was out
at Long Beach container terminals last year, and they have
nearly fully automated that container terminal. Drayage trucks
that are moved autonomously, they use batteries, they don't
burn fossil fuel----
Dr. Lowenthal. We are talking about Long Beach container
terminal?
Admiral Zukunft. Yes, sir.
Dr. Lowenthal. Right now the----
Admiral Zukunft. So now we have an event with Maersk
terminals. In fact, I will be in L.A. on Friday of this week,
and I am going to meet with Maersk to say what did they learn
from this. What they immediately did was they shut down most of
their operations. This particular piece of malware erases all
of your data. So they took mostly precautionary measures by
doing a shutdown before their data would have been erased, and
then to make sure that they could bring those systems back
online.
What it does indicate is the lack of resiliency in our
entire maritime transportation system if you look at all of
maritime shipping, and if there is a cyber event that brings
that down.
As you well know, off the coast of California, this is
just-in-time inventory. And a billion-dollar-plus of commerce
goes through the ports of L.A./Long Beach each and every day.
And it doesn't stop there, it goes on a rail system, it goes
through the Rust Belt, and it goes to New York, and it goes on
to Antwerp, from there. So any disruption along that supply
chain has a global consequence. And what that did elevate is we
can't take our eye off the maritime domain.
Maersk is doing a great job. Sometimes you are beholding to
a subcontractor, someone else that has access to your data,
they provide a back door into your systems. And so that is the
vulnerability that we need to look at closing, as we start
looking at what is cybersecurity.
And the other challenge is how do we hold those accountable
who would actually try to disrupt our supply chains, because
this is really an attack on our national security, at the end
of the day.
Dr. Lowenthal. Did you learn anything that you might change
some of our procedures or our interactions with other agencies?
Out of this, what did we learn? What did the Coast Guard learn,
in terms of how effective they were in responding to this, and
having responses, coordinated responses, from all the potential
agencies that are impacted by a cyber attack?
Admiral Zukunft. Yes. Well, the first thing we learned,
Congressman, is we don't have the cyber cavalry, if you will, a
cyber protection team that can go out and immediately apply
patches to allow an industry to recovery from a cyber attack.
What we also learned, though, is Maersk reported. And
sometimes there are disincentives to reporting that your
systems may have been compromised, because obviously, you
know----
Dr. Lowenthal. Right.
Admiral Zukunft [continuing]. In the private sector that
could have secondary consequences. But the fact they were
forthcoming, so we could look across the entire cyber domain
within the maritime transportation system, and ascertain that
this was the only one that had been singled out across all the
maritime stakeholders, but it allowed us to do a full sweep. Is
this part of a concerted attack against multiple domains
besides Maersk?
Dr. Lowenthal. Well, I am going to yield back. I want to
thank you.
I mean I see this as the critical issue, moving forward, is
how we implement more cybersecurity, and that we understand
just what we are up to, and that the--you know, this is a
cooperative venture between the Coast Guard, private industry,
our ports. And this could have a devastating impact upon the
U.S. economy.
And so, I am just really pleased that you are on it, and
that you are working on these issues. Thank you.
Mr. Hunter. I thank the gentleman. We are going to wrap up
here. Mr. Garamendi and I have a couple of last, quick
questions, and we will go to the second panel.
Admiral, back to the icebreakers really quick. And the next
panel, you are going to have the Assistant Commandant for
Acquisition on that one.
Admiral Haycock, you will probably answer some of these,
but--Ron O'Rourke can probably a couple of these, too.
But just--what is your take on why you don't want to block
buy the first-in-class heavy? Why not start--if you have the
design done--and I am sure, with the oversight and the
attention that the icebreakers are going to get, everybody is
going to make sure that the design is totally done, that lead
materials are purchased, that it goes along in that fashion,
right, so it is not haphazard. Why not block----
Admiral Zukunft. Well, what we have seen, just in our first
ship buys, is that there is a learning curve. And obviously,
with a heavy icebreaker, a very steep learning curve. We
haven't built a ship of this design in four decades.
So, there is inherent risk doing a block buy, where
industry may want to, you know, shed some of that risk. And if
we do a block buy of maybe $950 million per copy, well, maybe
that second ship we can negotiate down into a more affordable
range, and then, recognizing second, third, fourth, and so on,
those ships, you know, you can then get into a more affordable
range than we might with a lead ship if we are really trying to
get all of our requirements met, but do so at an affordable
range.
Mr. Hunter. So if you--if things go perfectly, when do you
think we would start building the first icebreaker, the first
heavy?
Admiral Zukunft. We want to award not later than 2019, and
have it in the water by 2023, have ice trials done, and, if it
meets all those requirements, that is the time to lock in a
block buy.
Mr. Hunter. So how does that match up, then, with the three
heavies and three mediums?
Admiral Zukunft. Well, you have probably seen the National
Academies of Sciences that said, you know, four heavies.
Mr. Hunter. Also on the next panel. Their stuff said you
could build a fourth heavy for cheaper--for less money than you
could build your first-in-class medium.
Admiral Zukunft. I agree with that, the science that comes
behind that. Lead ships are typically more expensive. Second
ships, you know, you realize some economies of scale. But
certainly a fourth heavy would probably come in less expensive
than a first medium icebreaker. And it can operate around the
globe.
Mr. Hunter. But right now it is pie in the sky, really,
talking about two, three, four----
Admiral Zukunft. It informs another study. So we have the
high latitude that said three heavy, three medium. And why six?
Well, have you see, whether you are a carrier strike group--but
it usually takes three ships to have full-time presence in any
given region: one that is there, one that is coming back and
will go through a refit, and the other one that is working up
and getting ready to go. So that is how you end up with a
number of six.
Now, that number four that the National Academies of
Sciences released, those are all four heavy icebreakers, but it
also includes the Healy. So it leaves you with five. So we are
still looking at what is the right number. The right number
right now is one, and get that first one built, do the block
buy, and start building out this program of record.
Mr. Hunter. Going back to Mr. Young's question, too, about
leasing, you said you are waiting for, I am guessing, money for
ice trials. That is what you said?
Admiral Zukunft. No real dollars have been negotiated in
any of this, so----
Mr. Hunter. But in real terms, though, you are only paying
for gas. I mean what does it cost to do ice trials? It is gas,
right? You are not going to hire more coastguardsmen to come in
and do it. I mean so that is a--your overhead is fixed. So what
does it cost to go do ice trials with the Aiviq?
Admiral Zukunft. That would really be for the----
Mr. Hunter. The--once again, the only existing U.S.-made
icebreaker in America.
Admiral Zukunft. So this is a ship that is built with
direct drive diesel. Icebreakers are typically diesel-electric,
which means the generators push the shaft. And they absorb that
shock load every time you collide with ice.
A reduction gear, fixed gear, is going through that--that
gear box is going to absorb all that shock. So if you are going
to do ice trials, there is a likelihood you might have to
replace a reduction gear. There might be real hidden costs in
doing ice trials.
So, if I am a vendor, I might want to protect myself from
some of that risk. Now, I am not the vendor, but those may be
some of my thoughts of, OK, if you are really serious about
this, and I do ice trials, and now I have just caused X number
of dollars that I am now going to have to fit--and, oh, by the
way, you are not going to lease it because it didn't meet your
requirements, I think those are some of the issues that we
still have to negotiate.
Mr. Hunter. And lastly for me, the continuation pay to put
you with the other services--and again, this goes back to the
Department of Homeland Security versus the Department of
Defense versus you as a military service versus you under the
Department of Homeland Security with your 11 missions. We got
creative, and we were able to do a short-term fix. If you
could, just talk a minute about the importance of that, and how
you plan on getting in line with the other services when it
comes to retirement.
Admiral Zukunft. Yes. Well, Chairman----
Mr. Hunter. And just about everything else.
Admiral Zukunft. You, you know, Ranking Member Garamendi,
your staff behind you, you guys did a lot of heavy lifting to
get us through this first wicket. But we can't keep going
through these wickets year in and year out. Maybe you don't
clear a wicket one year, because this is real money, this
continuity pay.
You know, blended retirement was legislatively mandated.
And yet this would immediately impact our retirement counts, my
operation capability. It is a legislative change, but I just
need the mechanisms, so we don't have to go back year in and
year out, but a permanent solution.
But I want to thank you for getting us through this first
wicket, but there are many more in front of us.
Mr. Hunter. It is kind of interesting. The blended
retirement is probably more important, I would guess, to the
other services. They probably have lower retention than the
Coast Guard does. You have guys that get in for 10 years, do
eight tours, special forces, then you get out and you get
nothing. That is why we fix it on the Armed Services Committee.
Probably different for the Coast Guard, in terms of your
retention and the burden on your servicemembers, too. I mean--
--
Admiral Zukunft. That is correct, sir. We enjoy the highest
retention of any armed service today. I don't know what
tomorrow holds in store for us, but certainly today 40 percent
of our recruits who leave basic training are on active duty 20
years later. Sixty percent of our officers.
Mr. Hunter. That is huge.
Admiral Zukunft. Which is a great return on investment.
Mr. Hunter. Admiral, thank you very much for being here.
And I am going to recognize Mr. Garamendi for closing remarks
here.
Mr. Garamendi. Admiral, a couple of things. We have talked
about icebreakers here. We will go into icebreakers a little
more with the second panel.
I am concerned about where the National Academies of
Sciences is going with regard to four icebreakers--four
heavies, and basically putting aside the issue of the mediums.
We will deal with that in more detail, but just note my concern
about that.
Also, you and I have had this conversation--I want to get
it on the record--with regard to Buy America. The President
talks about Made in America; I want to talk about Making it in
America, which means that these icebreakers, as--my goal is
everything on that icebreaker is American-made. That may or may
not be possible. I want to have a very, very tight window here
for purchase of those parts of the icebreaker that are not
American-made.
I would like to know your attitude on this, and find out
where you think this is going to go.
Admiral Zukunft. Now, that is a great point. And, you know,
the frustration I have right now with some of our foreign-made
parts, they go out of business. Or you find yourself waiting in
line. That is holding up our ability to provide spare parts for
the C-27J. Now, granted, we acquired these 14 aircraft, 13 are
out there on the tarmac right now. But we are dependent upon a
foreign supply chain to be able to outfit these to carry out
national security missions.
And so, we need to look at the world around us, which is
not exactly breaking out in tranquility. And do we want to be
attendant upon a foreign source provider to equip our national
assets?
And so I am in lock step with you, Congressman, that, yes,
these have got to be built in America so we don't find
ourselves--we can't get the parts to keep these platforms
running.
Mr. Garamendi. Good. The support necessary to build these
icebreakers and any other thing really will come from the
American economy or American manufacturers spread out across
this Nation participating in the construction of these
icebreakers or any other pieces of equipment that you need.
Just a couple of final comments, then. I appreciate your
testimony. In my opening I was concerned about the information
that we receive. I understand that you are told what to tell
us. We do need to know what you need without being censored by
the Office of Management and Budget. So my specific ask is that
we get full information about what is required by the Coast
Guard.
I also ask for some information with regard to those
portions of the Coast Guard operations that are clearly for
national defense, the Department of Defense.
So, if you will get that to us as quick as possible, it
would be helpful. We will go forward.
Admiral, thank you for your testimony.
Admiral Zukunft. OK, thank you.
Mr. Garamendi. I yield back.
Mr. Hunter. Admiral, thank you very much for being here,
thanks for your service.
Admiral Zukunft. Thank you.
Mr. Hunter. It is good seeing you, and we will get ready
for the next panel.
Admiral Zukunft. OK. Thank you, Chairman.
[Pause.]
Mr. Hunter. Good morning. On panel--we have saved the best
for last, by the way, that's how it works. On panel 2, we will
hear testimony from Rear Admiral Richard D. West, U.S. Navy,
Retired, chair of the National Academies of Sciences' Committee
on Polar Icebreaker Cost Assessment; Rear Admiral Michael J.
Haycock, Assistant Commandant for Acquisition and Chief
Acquisition Officer of the United States Coast Guard; Ms. Marie
Mak, Director of Acquisition and Sourcing Management with the
GAO; and Mr. Ronald O'Rourke, specialist in naval affairs with
the Congressional Research Service.
With that, Admiral West, you are recognized to give your
statement.
TESTIMONY OF REAR ADMIRAL RICHARD D. WEST, U.S. NAVY, RETIRED,
CHAIR, COMMITTEE ON POLAR ICEBREAKER COST ASSESSMENT, NATIONAL
ACADEMIES OF SCIENCES, ENGINEERING, AND MEDICINE; REAR ADMIRAL
MICHAEL J. HAYCOCK, ASSISTANT COMMANDANT FOR ACQUISITION AND
CHIEF ACQUISITION OFFICER, U.S. COAST GUARD; MARIE A. MAK,
DIRECTOR OF ACQUISITION AND SOURCING MANAGEMENT, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE; AND RONALD O'ROURKE,
SPECIALIST IN NAVAL AFFAIRS, CONGRESSIONAL RESEARCH SERVICE
Admiral West. Chairman Hunter, Ranking Member Garamendi,
and distinguished members of the subcommittee, thank you for
the opportunity to discuss the recently released report,
``Acquisition and Operation of Polar Icebreakers: Fulfilling
the Nation's Needs.'' I would like this report and my testimony
entered into the record.
My name is Dick West. I am a retired U.S. Navy rear admiral
and I chaired the study committee that authored the report for
the National Academies. Our report was requested by this
committee and focuses on strategies to minimize the capital
acquisition and operating costs for polar icebreakers capable
of meeting the Coast Guard's mission, including breakout of the
McMurdo Station.
For more than 30 years, studies have shown the need for
polar icebreakers to fulfill the Coast Guard's statutory
missions and to meet our national goals. These studies have
indicated an ever-widening gap in the Nation's ability to meet
these statutory obligations, protect our interest and maintain
leadership in the high latitudes of our Earth.
We recommend building four heavy polar icebreakers owned
and operated by the Coast Guard and propose an acquisition
strategy that could address these anticipated gaps. We examined
leasing options and found them to be more expensive for the
Federal Government over the life of the assets.
The first three heavy icebreakers could meet the Coast
Guard's requirements to provide a continuous presence in the
Arctic, while the fourth heavy icebreaker could perform the
annual McMurdo breakout. One of the three icebreakers assigned
to the Arctic could also be emergency backup for the McMurdo
operation, if it is required.
The recommended acquisition strategy employs block-buy
contracting with a fixed-price incentive fee for the four ships
and a design for a single class of polar icebreakers. By using
a single design, we estimate that the fourth heavy icebreaker
would cost less than the first of a medium-class icebreaker.
With our recommended strategy, icebreaker design and
construction costs can be clearly defined. A fixed-price,
incentive-fee construction contract is the most reliable
mechanism for controlling costs for this program. Block-buy
authority for this program will need to contain specific
authorizing language for economic order quantity purchases for
materials, advanced design and construction activities.
Such a contracting program, the economic order quantity
purchases enables series construction, motivates competitive
shipyard bidding, enables shipyard infrastructure investment,
and reduces material acquisition costs, allowing for volume
purchase and for timely acquisition of material long-lead
items. It would enable continuous production, give the program
the maximum benefit from the learning curve, and thus reduce
labor hours and costs on subsequent vessels.
Technology transfer from icebreaker designers and builders
with recent experience is critical for reducing design and
construction costs. In addition, the design should maximize the
use of commercial off-the-shelf equipment, apply the polar
code, and commercial standards and reduce military
specifications to the minimum necessary. Reduction of MIL-SPEC
[military specifications] requirements could significantly
lower the acquisition costs of each ship with no loss of
mission capability.
Importantly, the program's schedule must allow for
completion of the design and planning before the start of
construction. Our recommended acquisition, design, and
construction strategies will control possible cost overruns and
provide significant savings in the overall life cycles of the
polar icebreaking program.
We recommend that the single design for the heavy
icebreakers be made science ready and include sufficient space
and margins to accommodate future installation of scientific
equipment. The additional design cost is minimal, especially
when compared to a subsequent retrofit for that vessel.
Recognizing the Healy is halfway through its expected
service life, the fourth proposed vessel could be made science
capable or fully outfitted for science. The Polar Star is well
beyond her expected service life. We propose an enhanced
maintenance program with the intent of keeping the vessel
operational through the delivery of at least the first new
icebreaker.
Although extending the life of the Polar Star will be
challenging, the committee recommends against compressing the
design and construction schedule of the new icebreakers, as
such an approach may lead to cost overruns.
Mr. Chairman, this concludes my statement. Thank you again
for the opportunity to reply and I stand by to answer any of
your questions.
Mr. Hunter. Thank you, Admiral.
Admiral Haycock, you're recognized.
Admiral Haycock. Thank you. I have written testimony I
would like to submit for the record and a short oral statement
to read.
Mr. Hunter. Without objection.
Admiral Haycock. Chairman Hunter, Ranking Member Garamendi,
members of the subcommittee, good morning. Thank you for the
opportunity to speak about the Coast Guard's ongoing activities
to recapitalize our surface, aviation, and command and control
capabilities. Echoing the sentiments of the Commandant earlier
this morning, I thank you for your oversight and your continued
support of our Service.
I am honored to represent 800 military and civilian
personnel dedicated to delivering the assets and the
capabilities to our operational community. Ten years ago this
month, the Coast Guard stood up the Acquisition Directorate. In
that time, the Service has strengthened its acquisition
management and its support functions, and it has invested in
recruiting, training and retaining a highly qualified
acquisition workforce. Today, we are seeing strong returns on
that investment, and I am proud to share with you an update on
our efforts.
First, I would like to discuss the Offshore Patrol Cutter,
the Coast Guard's highest acquisition priority. This past year,
we awarded a contract for detailed design and construction,
which will enable us to build up to nine Offshore Patrol
Cutters. We are on track to move forward with an order for long
lead-time materials for the first cutter before the end of the
fiscal year.
Regarding the heavy polar icebreaker, we are working
closely with the Navy through an integrated program office to
begin acquiring the Nation's first heavy polar icebreakers in
more than 40 years. We have adopted some of the Navy's best
practices, including the use of industry studies. In fact, we
awarded five industry study contracts in February to identify
approaches that can further reduce acquisition costs and
production timelines. We've also released a draft system
specification for industry review and we are developing a
contract solicitation for design and construction on the lead
heavy icebreaker.
We are also continuing full-rate production on the National
Security Cutter and our Fast Response Cutter classes, moving
forward with missionization and upgrades to our fixed-wing
aviation fleet, and we are deploying enhanced command and
control communications systems nationwide.
The men and the women of the Coast Guard Acquisition
Directorate have a lot to be proud of and I am committed to
continuing the success that we have achieved since our standup
10 years ago. This means employing each and every tool and
resource at my disposal to continue to deliver the best
products to our operational commanders at the best price to the
taxpayer.
To that end, we are looking at contract authorities that
are available or may be available, including multiyear
procurement, that can help us take advantage of cost and
schedule efficiencies and achieve greater affordability. The
Coast Guard also recently received findings in the National
Academies of Sciences' Transportation Research Board's Polar
Icebreaker Acquisition Operations Study, and I plan to use its
findings to inform our acquisition approach going forward.
We greatly appreciate the valuable oversight function
performed by this subcommittee and the robust independent
assessments provided by Ms. Mak's team at the Government
Accountability Office, and Mr. O'Rourke and his team at the
Congressional Research Service. Your role in Coast Guard
acquisitions success, both in the past and going forward, is a
critical one and we thank you for your support.
The Commandant continues to make fleet recapitalization one
of the Service's highest priorities and we are proud of the
efforts to ensure our Service stays true to its motto, semper
paratus, always ready.
Thank you for your support of the Coast Guard's effort to
provide our men and women in uniform with the mission
capability they need in the 21st century. I appreciate the
opportunity to testify and I look forward to your questions.
Thank you.
Mr. Hunter. Thank you, Admiral.
Ms. Mak, you're recognized.
Ms. Mak. Good morning, Chairman Hunter, Ranking Member
Garamendi, and members of the subcommittee. Thank you for
inviting me here today to continue our discussion on GAO's body
of work on the Coast Guard's recapitalization effort. We value
the excellent working relations we have with the Coast Guard,
and it is important for me to note that the Coast Guard, for
the last few years, has been making progress in addressing
GAO's concerns regarding its acquisition portfolio.
However, as the Coast Guard moves forward in managing its
multibillion-dollar acquisition portfolio to modernize its
aging and maintenance-intensive assets, the Coast Guard is
facing several key acquisition planning challenges.
The two areas that I would like to highlight today are,
first, the importance of well-formulated planning tools for the
Coast Guard to manage its overall affordability of its
acquisition portfolio. And, second, the acquisition risks
related to the heavy polar icebreaker.
With regard to planning tools, for the past several years,
the Coast Guard has submitted to Congress its 5-year Capital
Investment Plan, or CIP, intended to provide insight into the
proposed budget for that particular fiscal year and the
following 4 years. We found that the 5-year CIPs report the
assets' total cost and schedule per the acquisition program
baseline, however does not account for tradeoffs made in
previous annual budget cycles. Furthermore, we have found that
the projected funding levels far exceed the amount that the
Coast Guard traditionally requests in its annual budget.
In 2014, we recommended that the Coast Guard develop a 20-
year fleet modernization plan, which is intended to identify
all acquisitions necessary for maintaining at least its current
level of service and the fiscal resources to build these
assets. The Coast Guard reports that efforts are underway to
develop this long-term plan, which the Coast Guard is calling a
20-year CIP. But to date, it is unclear when this plan will be
completed and what level of detail it will contain.
However, in line with the Office of Management and Budget's
capital planning guidance, we would expect this 20-year CIP to
include, among other things, a review of the portfolio of
assets already owned by the Coast Guard and those that are in
procurement, the capabilities necessary to bridge the old and
new assets, and the justification for new acquisitions proposed
for funding. The most recent unfunded priorities list that you
referred to earlier is a good start at identifying more of the
Coast Guard's needs that have been delayed, and we hope to see
those and more in the 20-year plan.
A long-term plan that also includes acquisition
implications, such as sustainment costs, support infrastructure
and personnel needs would further enable tradeoffs to be
identified and addressed prior to making irreversible
commitments, and ensures the maintainability of these assets.
Second, while the Coast Guard has made progress in
advancing the acquisition for three heavy polar icebreakers,
the accelerated schedule it is pursuing poses risk. To meet
this schedule, the Coast Guard is partnering with the Navy to
leverage its expertise and reduce costs. This acquisition,
according to Coast Guard officials, is considered one of its
high-priority programs. However, such an acquisition would be
difficult to afford while it builds the Offshore Patrol Cutter,
which would take anywhere from one-half to two-thirds of the
Coast Guard's acquisition budget starting in 2018. If funds
come primarily from Navy appropriations, as was being
considered, additional risk and concerns associated with the
actual contracting process exist, with the Navy using the
Department of Homeland Security's acquisition process. But as
this committee mentioned earlier, if this is off the table, the
Coast Guard's affordability concerns just multiplied
significantly, if funding stays where it historically has been
the last several years.
The Coast Guard faces some difficult and complex decisions
with potentially significant cost and mission implications.
Without completing this 20-year plan, the Coast Guard will
continue, as it has in recent years, to plan its future
acquisitions through the annual budgeting process, a process
that has led to delayed capabilities. A comprehensive, long-
term strategic plan would provide timely information to
decision makers on how best to allocate resources in a
constrained budget environment to build and maintain a modern,
capable Coast Guard fleet.
Chairman Hunter, Ranking Member Garamendi, members of the
subcommittee, this completes my prepared statement. I would be
pleased to respond to any questions you may have.
Mr. Hunter. Thank you, Ms. Mak.
Mr. O'Rourke, good to see you. You're recognized.
Mr. O'Rourke. Chairman Hunter, Ranking Member Garamendi,
distinguished members of the subcommittee, thank you for the
opportunity to appear before you today to discuss Coast Guard's
sea, air, and land capabilities. As requested, my testimony
focuses on Coast Guard ship acquisition.
Mr. Chairman, with your permission, I would like to submit
my statement for the record and summarize it here briefly.
Mr. Hunter. Without objection.
Mr. O'Rourke. Coast Guard officials have begun stating
regularly that executing their acquisition programs fully and
on a timely basis will require an AC&I [acquisition,
construction, and improvement] account of about $2 billion a
year. Past Coast Guard statements have sometimes put the figure
as high as $2\1/2\ billion. That would represent a big increase
over recently requested levels. It can be noted, however, that
the requested funding levels for the Navy's shipbuilding
account have increased by about $6.8 billion per year, or by
about 50 percent, during the period of the Budget Control Act.
A common practice is to assume or predict that an agency's
funding levels in coming years will likely be close to where
they have been in previous years. For the Coast Guard, which
goes through periods with less acquisition of major platforms
followed by periods with more acquisition of major platforms,
this might not always be the best approach, at least for the
AC&I account.
Moreover, in relation to maintaining Congress' status as a
coequal branch of Government, an analysis that assumes or
predicts that future funding levels will resemble past funding
levels can encourage an artificially narrow view of
congressional options regarding future funding levels,
depriving Congress of agency in the exercise of its
constitutional power to set funding levels and determine the
composition of Federal spending.
The Navy in recent years has used multiyear procurement and
block-buy contracting to procure more than two-thirds of all
the ships shown in the Navy's 5-year shipbuilding plans in
recent years, saving billions of dollars in the process. In
contrast, the Coast Guard has made zero use of multiyear
contracting for its shipbuilding programs.
Using multiyear contracting might reduce the OPC program's
cost by about $1 billion, which is roughly the cost of a polar
icebreaker or a 35-ship inland waterway tender program. This
potential savings of $1 billion represents a once-in-a-
generation opportunity for using multiyear contracting to
reduce the cost of an individual Coast Guard acquisition
program by such an amount.
The Coast Guard currently is using a contract with options
for acquiring the first nine ships in the OPC program. A
contract with options is not an example of multiyear
contracting. Contracts with options operate more like annual
contracting and they don't achieve the savings that can be
achieved through multiyear contracting. Acquiring the first
nine ships in the OPC program under the current contract with
options could forgo roughly $350 million of the $1 billion in
potential savings.
One option for the subcommittee would be to look into the
possibility of having the Coast Guard replace the current OPC
contract at an early juncture with a block-buy contract.
The planned OPC procurement rate of two ships per year
would deliver OPCs many years after the end of the originally
planned service lives of the existing Medium Endurance Cutters.
The Coast Guard has said it plans to extend the service lives
of the Medium Endurance Cutters to bridge the gap. A possible
alternative would be to increase the OPC procurement rate to 3
or 4 ships per year, which could reduce their cost and
accelerate the delivery of the 25th OPC by 4 to 6 years. There
are various potential options for increasing its procurement
rate to three or four per year.
Using a block-buy contract could reduce the cost of a
three-ship polar icebreaker procurement by upwards of $200
million. The savings on the four-ship acquisition recommended
in the National Academies' report would be greater. And the
savings on a five- or six-ship procurement would be greater
still and could exceed $400 million.
And Mr. Chairman, you brought up the issue of whether the
lead ship should be under that contract. I would be happy to
talk with you about that during the Q&A, if you would like.
The Coast Guard has testified that the new inland waterway
tenders might cost about $25 million each. Using that figure, a
35-unit replacement program might cost roughly $875 million.
That cost, too, might be reduced through multiyear contracting.
Numerous U.S. shipyards, including yards not capable of
building the Coast Guard's bigger and more complex cutters,
might be interested in bidding for this program.
Mr. Chairman, this concludes my remarks. Thank you again
for the opportunity to testify and I look forward to the
subcommittee's questions.
Mr. Hunter. Thank you, Mr. O'Rourke.
Let's start. We gave the Coast Guard block-buy authority
last year, I think. Right? Was it last year, Admiral Haycock?
Last year, I think?
Admiral Haycock. I believe that is accurate, yes.
Mr. Hunter. So would you speak to what Mr. O'Rourke just
said of why you didn't do a block buy for the OPCs?
Admiral Haycock. For the OPCs or the FRCs?
Mr. Hunter. OPCs.
Admiral Haycock. OPCs. The----
Mr. Hunter. That is what you referred to, right, Mr.
O'Rourke?
Mr. O'Rourke. That's right.
Admiral Haycock. The OPC contract we awarded last
September. That contract is well on its way in terms of all the
preparations and things. Making changes that late in the
contract would probably have been detrimental to getting it
awarded. So we didn't do it on the OPC.
There are opportunities in the future, as Mr. O'Rourke has
indicated, to actually block buy on the OPC and we are look
at----
Mr. Hunter. How much money would you save if you would have
done a block buy with those? The first nine, you say? You
bought nine, right?
Admiral Haycock. Yes, sir.
Mr. Hunter. Starting with nine, how much money would you
have saved if you had done a block buy?
Mr. O'Rourke. My estimate is that there is more than $300
million of savings over those nine ships that the Coast Guard
is currently on a track toward forgoing. You could recapture
much of that savings by putting most of those first nine ships
under a block-buy contract, rather than simply waiting for that
contract to be fully implemented over several years and then
starting with ship 10.
Mr. Hunter. Let's just stay on this. Why would you not do
that? I think this is kind of indicative of what happens with
the Coast Guard in general, and why we put these authorities in
there, for you to have the authority to purchase ships like the
Navy does. This is why we put it in there. And so your argument
was--not yours, but the Coast Guard's argument was 4 years ago
or 3 years ago, we don't have the authority, we don't have the
authority. So we have to spend money that we don't have,
basically, and not save.
So we gave Coast Guard the authority. So they are just like
the Navy now. And then once they had the authority, you chose
to not use it. I mean, $300 million is, for the Coast Guard, a
lot of money.
Admiral Haycock. Yes, sir. It is not that we are choosing
not to use it. The Coast Guard, we want to save money, Mr.
Chairman. And we consider ourselves to be good stewards of the
taxpayers' dollars. The issue is that it is a very attractive
opportunity, but it also underplays some of the risks involved.
So the Coast Guard is open to any techniques and tools out
there. Multiyear, block buy, we are considering all those
tools. And we haven't necessarily ruled any of them out. It is
not that we are intentionally not using them. We want to make
sure that we don't get ourselves in a situation where the risks
outweigh the benefits.
No one wants an acquisition to go south. It is a----
Mr. Hunter. Would you explain how the risks outweigh the
benefits?
Admiral Haycock. So some of the risks that we see is you
are essentially--you are all in, is what it comes down to. You
are basically saying, I want a block buy for, say, for OPC,
nine hulls, nine cutters. And then if things aren't going well,
you are kind of stuck, you are committed.
Mr. Hunter. What do you mean, if things aren't going well?
Admiral Haycock. As you know, every acquisition has
challenges. There are challenges in design, there are
challenges in production. There are things that you can kind of
foresee coming and there are things that you can't foresee
coming. And that is why you have acquisition professionals,
highly trained people executing the acquisitions.
So there are things that you just don't see, especially on
a first in class. And I know Mr. O'Rourke's position is it is a
good tool for first in class. We are not necessarily saying
that that is not the case. But our experience with first in
class is, the first in class oftentimes doesn't look like the
rest of the fleet.
Mr. Hunter. I would offer, too, that the Coast Guard's
shipbuilding hasn't been stellar. So what you see as first in
class not being right and what the Navy does are two different
things, we are trying to--what is different with the way you
build ships and the way that the Navy builds ships? Is there
special Coast Guard sauce or something? I mean, what is the
difference between the Navy building ships and the Coast Guard
building ships?
Admiral Haycock. Not an awful lot, sir.
Mr. Hunter. Then why not do what the Navy does?
Admiral Haycock. We are looking at that.
Mr. Hunter. OK, if you are looking at it, you are not doing
it. Right? I mean, 300 million bucks, again, is a lot of money.
That is going to lead into--do you know what the numbers are
for your backlog on shore improvements and maintenance, right,
and upkeep? What is that? It is a total of like $1.4 billion,
$1.6 billion? It is like $700 million and then another $800
million or something like that?
Admiral Haycock. It is big, yes, sir.
Mr. Hunter. OK. So let's switch really quick. I don't want
to monopolize just on the one ship, on the OPC. What do you
plan on doing with that? How do you plan on paying that?
Admiral Haycock. For?
Mr. Hunter. How do you plan on paying the backlog and doing
your shore facility upkeep, along with all the acquisitions?
And you can't see this chart, but it basically shows which
lines of ships are going to be completed when. And as you can
see, the dotted line there, the gray goes up above that. Again,
that is where you don't have the money to do what you say you
are going to do.
Admiral Haycock. As I think this subcommittee has
recognized, Mr. Chairman, is the budgets that we get for OE and
for acquisition are not what they need to be. As the Commandant
has previously testified, we need an annualized 5-percent
increase in our OE maintenance accounts, we need $2 billion in
acquisition accounts to do all the things we need to do.
We don't have the funding, so we have to prioritize. So
that is what we do. We go through and prioritize, look at the
things that impact missions most and try to get those
accomplished first. So that is the process we use and we will
continue to use.
Mr. Hunter. So lastly, before I go to Mr. Garamendi, and
Ms. Mak, I would like you to answer this, too. At what point do
you realize that you have to plan for real life, as opposed to
planning for non-real life? Because when you gave your fleet
mix analysis, I think, 2 or 3 years ago, it was great. That is
what we would like to see, is what you want, without it being
screened or changed by anybody. That is what we would like to
see, so we know at least what do you need to accomplish the
mission, if you got 100 percent of what you wanted, right? Then
you come back and say, we are not able to do that because this
gets scrubbed, and here is the reality of the budget and here
is what we are going to get.
At what point do these charts start matching? Meaning, at
what point do you start planning for what you actually get?
Right now, are you planning for what is unattainable, because
there is no money for it. But that is your plan. Your plan is
to do something that is not possible. So at what point does the
Coast Guard put its hands in the air and start planning to what
the actual monies you get? Does that make sense?
Admiral Haycock. It does. And, Mr. Hunter, that is what we
are doing now. Under our current Commandant, he has asked us to
be bold and look at what we really need to do the job and ask
for it. And that's what we're doing.
Mr. Hunter. But your 5-year plan is short. Meaning, you
don't have enough funds for your 5-year plan, let alone your
20-year plan. Is your 20-year plan going to fall within real
life budgets, or is it going to go way up while your money
stays straight?
Admiral Haycock. I am not certain, because the plan is not
complete. We are still working that.
Mr. Hunter. Is the 5-year plan indicative of what the 20-
year plan is going to look like? Because the 5-year plan is
unattainable, too.
Admiral Haycock. The 5-year plan is the--it is the 2018
budget, essentially. And it is, it is constrained. Those are
essentially the rules that we work under, sir.
Mr. Hunter. OK. Mr. Garamendi, you are recognized.
Mr. Garamendi. Mr. O'Rourke, you argued strongly for a
block buy. Ms. Mak, your opinion of block buy, working off Mr.
O'Rourke's testimony?
Ms. Mak. Thank you. We don't believe it is wise to use
block buy for the icebreaker, let me clarify. Block buy is an
effective contracting mechanism in certain circumstances. In
this particular case, we don't agree that this approach is
valid for the same reason using multiyear is not allowed for
lead ships.
When you use multiyear, the statutory criteria include
stable requirements, for example, design maturity and also
proof of substantial savings. None of those have been proven
especially with this first polar icebreaker being built in the
U.S., a ship that has not been built in over 30 years. There
are a lot of things at risk that has to be worked through with
the design and build of the first heavy icebreaker until the
design is stabilized.
Based on our shipbuilding work, it generally takes three to
four ships before the requirements in design get stabilized.
Given that the number of heavy icebreakers is only expected to
be three at this point, we are not advocates of using block buy
for this particular acquisition.
Mr. Garamendi. Is there another option, besides block buy,
as a way of moving towards three or four ships?
Ms. Mak. Annual contracts with options will work, and can
produce savings. We have just shown that in the FRCs as well,
and it also gives you more congressional oversight. Once a
contract is let, every year, if you have the options, if things
go wrong, you can always pull back. Whereas, with a block buy,
you can't pull it back once it is paid for. Ordering long-lead
materials ahead of time locks the Coast Guard in.
Mr. Garamendi. Mr. O'Rourke, counter?
Mr. O'Rourke. Yeah. There are arguments on both sides of
this. The admirals and now Ms. Mak have presented the arguments
for being cautious about using block buy, especially with a
lead ship. Let me present the arguments on the other side, so
that you can have a balanced presentation.
The first is that block buy was invented precisely so that
you could use it on the lead ship in a program and the earliest
ships in a program. The second argument is that the Navy, in
fact, has done this with its own shipbuilding programs. They
did it with the Virginia-class submarine, which is a ship that,
with all due respect to the Coast Guard, is a lot more complex
than an icebreaker, and the Navy is expected to even do this on
its Columbia-class ballistic missile submarine, which again is
a very complex ship and also a ship of a type that we have not
built in decades.
Thirdly, the shipyards in this country that are working
toward this program are also working with the Europeans to
import their design know-how, and that will mitigate the design
risk on this.
Fourth, as the GAO itself has testified in the past, it is
a best practice in shipbuilding to bring the design of the ship
to a high stage of completion before you start building it. In
fact, if you have not done that, you probably shouldn't be
building the ship under any contracting arrangement at all. So
if the ship has been brought to a high stage of design
completion, you have mitigated the risk associated with the
lead ship. In other words, the idea that lead ships present
this kind of design risk is a lesson learned from the past that
reflects earlier, not current, best shipbuilding practices.
Three more arguments. If you do a block-buy contract, it
can be, and the National Academies' report recommends, that it
be a fixed-price incentive contract. That is protecting the
Government against the risk of cost growth.
Secondly, if there is a need to make changes in the design
of the lead ship, you would then want to measure the cost of
making those changes, which should be relatively minor if you
have developed the design to a high stage of completion,
against the savings that you are forgoing by not having that
ship under a block-buy contract.
And then seventh and lastly, it is not correct that you
can't stop a block-buy contract. You can, and the cancellation
penalties that the Government would need to pay under that
contract are less than they are under a multiyear procurement
contract.
So again, there are two sides of this. And the admirals and
Ms. Mak have done a good job, I think, of presenting the
arguments on that side. So for the sake of balance, I've given
you seven arguments on the other side.
Mr. Garamendi. Well, I guess we are going to get to decide.
Admiral West, could you opine on this question?
Admiral West. Yes, sir. I have to add that we had five
members of our committee with extensive marine architecture and
marine shipbuilding experience, you know, generations of
expertise. And they are convinced the block buy is the way to
go with the icebreaker. We also heard from retired shipbuilders
and shipyard owners who also agreed with us.
Because we haven't built one in a long time, but the design
is fixed if you have the design. It is not a complicated
mission. They are doing it internationally now. The designs are
out there. We are not going to add anything later. There is no
R&D involved with the design, and we think it fits the block-
buy concept.
Mr. Garamendi. I appreciate that.
I think there is another factor involved in this, and that
is from the point of view of--I will speak for the Coast Guard
here--they have absolutely no idea what Congress is going to
give them year to year. And therefore, the block buy is a
concern.
Ms. Mak, you are nodding your head as if that might be
correct. Is that correct? Is that a factor here?
Ms. Mak. Absolutely. Because if you pay the money to
purchase other components earlier and the other ships are
already in construction, you are locked into using those
components unless, like Mr. O'Rourke mentioned, if the contract
gets canceled, you have to pay a cancellation fee at some
point.
Also, I would like to note that it is a bit early to
discuss what contracting type the Coast Guard is going to use,
when they haven't finished all the acquisition paperwork. I
think more is at risk in the detailed design, cost estimates,
all of those documents that are required to be done before a
contract is awarded. And some documentation is required to be
done by the end of this fiscal year, to be able to award the
contract in fiscal year 2019.
Mr. Garamendi. I suppose it is time for me to opine, also,
if I might. First of all, I like the idea of a block buy
because it does commit the Congress to the future. And if we
need three or four icebreakers, then we need to be committed.
And if we can do that. Now, the next question really has to do
with the nature of the contract itself, how you write into that
contract the possibility of design changes. I suspect that
there are designs and designs. There is the basic design, what
this thing is going to look like, the hull and the rest, and
then there are other things that will probably change over
time. For example, there may be engine issues or the like, and
those can be written into the contract. So my opinion, block
buy.
Now, the question is three or four?
I'm out of time----
Mr. Hunter. Keep going. There's no objection----
Mr. Garamendi. There being no objection, I will continue
on.
The National Academies recommended four rather than what we
were looking at before, three heavies and three mediums. Can
you get into this in a little more detail, Admiral West, and
what happens to the other two ships? Can we get by with four or
do we actually need six?
Admiral West. We came up with four for two reasons. One is
the acquisition strategy, making it more robust, and there are
all sorts of reasons why you will get shipyards more engaged if
they know they are going to build more than one.
The second was we looked at the mission, the High Latitude
Study and the operational requirement the Coast Guard had come
up with and we saw the presence, the one hull presence in the
Arctic and we saw the McMurdo breakout and we said, you need
four ships to do that. And that is the minimum we recommend.
You can go on from there. At some point, your learning
curve that each ship is cheaper will level off at some point,
four, five, six down the way. You may want to change at that
point. But clearly, we thought that the four large were the
best investment of public money for the mission right now.
Mr. Garamendi. So it kind of comes down to, if you're going
to build an icebreaker, build a heavy because it can do the job
of the medium as well?
Admiral West. Build an icebreaker to go break ice. Yes,
sir.
Mr. Garamendi. You also spoke to the operational costs,
that the operational costs of a new icebreaker are
significantly less than the existing icebreakers. But the
difference between the operational cost of a heavy icebreaker
and a medium icebreaker, did you take that into account.
Admiral West. We did. And I don't have the exact figures,
but there is not much difference. I mean, the Healy is a very
large ship. In fact, it is a little bit bigger than the Polar
Star. So it all depends on how much mission you put on that
ship and how many people you put on it and who you embark. But
the operating costs are not that much different.
Mr. Garamendi. And am I correct, you also recommended that
all of the ships be designed for scientific purposes, but that
not every ship be equipped for scientific purposes?
Admiral West. We decided that if a ship was going to go
where no other ship can go, and to regions where we don't know
a heck of a lot about the oceans, that it ought to have a
science capability. So in the original design, there should be
a science capability designed into it for weight and space
moment, and then--which turned out to be relatively cheap, we
were surprised, as we costed that out, if it is in the original
design. Rather than trying to retrofit something later on. And
then if you want to outfit it, then you add the equipment later
on.
Mr. Garamendi. It seems to me that the scientific--that if
we designed the ship for scientific purposes, that the
scientific equipment ought to be paid by the scientific
organizations.
Admiral West. Our option allows that. A science-ready ship
is roughly $10 to $20 million in the design itself. Putting the
equipment on board is an additional cost, obviously, and can be
charged to whoever.
Mr. Garamendi. Whoever wants to do that.
Admiral Haycock, what do you opine on the issues of block
buy and this scientific--four versus six?
Admiral Haycock. Thank you. First on the block buy, as Mr.
O'Rourke had indicated that Ms. Mak and I had mounted a
defense, my intention is not to mount a defense against block
buy. That is not my intent.
The subcommittee asked me why we seemed reticent. I just
want to throw out there, if we have some reticence, it is
because we want to make sure we have covered all the risks. It
is clear that Mr. O'Rourke and this subcommittee are trying to
avail the tools, such as block buy for the Coast Guard's use,
and we are excited and we appreciate that. And we are open to
that and we are looking at that.
So we owe you a report in December on block buy and we will
get that to you on time and that will help explain some of
those things. But we are open to using block buy multiyear and
we are excited about those opportunities.
Regarding science, one of the things that we have been
trying to do for the last 9 months, since we teamed up with the
Navy with our Integrated Program Office, is make the icebreaker
affordable. So we have taken a hard look at all the things that
the icebreaker is supposed to do and all the equipment and
structure and stuff that needs to be put in place to do that.
And so we have worked hard to reduce the cost of the
icebreaker.
I think the initial cost estimates were a little over $1
billion. And our efforts within the Coast Guard, with CG-4, our
tech authority for ship design and engineering and production,
we have been able to reduce the cost of the icebreaker by about
$200 million so far, and we are still working on that. And our
industry studies, as we work with industry and learn more, we
are optimistic we can bring that cost down further.
One of the things that we have done is we have looked at
things like science. And so the icebreaker, as currently
designed from the Government's indicative design perspective,
has space, weight and power reserved for changes that might
occur in the future for the Coast Guard's icebreaker mission.
That might be science, it might be a weapons system. Might be
whatever the Nation needs the icebreaker to adapt to, that is
the secret behind our getting ships to last 50 years is we
build them flexibly, or we build flexibility into the design.
Mr. Garamendi. And you expect this detail to be available
the last half of this year?
Admiral Haycock. I am not following you, sir.
Mr. Garamendi. The actual design of the icebreaker, power,
equipment, science equipment, all of that, or science space,
and you expect all of that to be designed and prepared for
review by the end of this year?
Admiral Haycock. We have an internal design we are working
that enables us to determine whether we can meet requirements
and to help us estimate costs and such. The intent is not to
release that to industry, because we want industry to come
forward with creative and innovative solutions in their
designs. I don't know if that answers your----
Mr. Garamendi. I am really getting to the point, when do we
get to see what you want to do and when can we review that?
Admiral Haycock. I am going to take that back and figure
that one out, sir. You know, the design continues to mature and
we are still----
Mr. Garamendi. I was looking at your schedules and it looks
to me like by the end of this year, you would expect to have
the design completed and ready to go to contracts early next
year?
Admiral Haycock. I understand. So what you are asking is,
at what point in time will we be ready to go on contract for
the detailed design and production? So the design the
Government is working, the indicative design is more of an
estimating tool and the ability to put reasonableness into our
requirements and verify the requirements are correct and that
sort of thing.
What we intend to do is get a request for proposals out
later next fiscal year, toward the middle of the fiscal year.
That will be a sign to industry that we need them to submit
proposals. With those proposals, we anticipate there would be
designs. And then we would award a contract and then industry--
the team that wins would actually go through and actually
formalize that design, make it final and make it ready for
production.
[The information from Rear Admiral Haycock of the U.S. Coast Guard
follows:]
In FY18, the Coast Guard will release the Request for Proposal
(RFP) which contains the requirements that will drive the
detail design for the Heavy Polar Icebreaker. The Coast Guard
will then review the design submissions submitted by industry
in response to the RFP. In FY19, through a full and open
competitive process, the Coast Guard will award the Detail
Design and Construction contract to the industry team that will
complete the design. The Heavy Polar Icebreaker design will be
shared with CG&MT, NAS, GAO, and CRS once the Detail Design and
Construction contract has been awarded.
Mr. Garamendi. Mr. Chairman, thank you so very much for the
additional time. Just a final comment.
A couple of decisions are going to have to be made by us,
as I look at this. That is, are we going to go to four heavy
icebreakers or three and three. Right now, I think, presently,
we are looking at three and three, so this will be a change, as
I understand where we are.
Secondly, there is the final--I am not sure of the word
``final,'' but the design of the icebreaker itself should be
available sometime in the next 6 months, correct? And if that
is the case, then I would think that Ms. Mak and Mr. O'Rourke
and Rear Admiral West would like to take a look at that and
give us their opinion as to whether this is the proper design,
and then we would authorize either a block buy or some other
mechanism for the ships.
So this is kind of, looking at our own work schedule out
ahead, the kind of things, the decisions that we are going to
have to make.
And then there is this issue, much larger issue that we are
going to have to deal with, and that is the overall budget for
the Coast Guard, both for its acquisitions as well as for
operations.
With that, Mr. Chairman, thank you so very much for the
additional time.
Mr. Hunter. Thank you, sir.
Mr. DeFazio is recognized.
Mr. DeFazio. Thank you, Mr. Chairman.
Admiral Haycock, you know, I just want to follow up on
something you said. You're saying the first in class, you know,
might meet specs but often what comes after that is not so
great. I mean, don't we write contracts well enough that if
they don't meet the specifications on the second ship that they
don't get paid? What kind of contracts does the Government
write here? I know the 110 contracts, boy, that was pretty
poorly written. I don't know why the Government can't protect
the taxpayers better.
So why would you say well, gee, we are concerned because
the first in class might meet specs and be great but after that
they are going to create some crap and we're going to have to
pay for it?
Admiral Haycock. I think my comments may have caused you to
misunderstand.
Mr. DeFazio. OK.
Admiral Haycock. It is not that the first in class is good
and everything that follows is not. It is actually, it is the
opposite. The first in class is a challenge, because it is the
first one you have built----
Mr. DeFazio. Right.
Admiral Haycock [continuing]. There is a lot of learning
that goes into it.
Mr. DeFazio. Yeah, but if it comes out well in the end?
Admiral Haycock. We almost always find ways to improve it
and to make it more effective and more efficient and usually
affordable. So the follow-on ships become better and better as
they go along. Usually the first in class----
Mr. DeFazio. But couldn't the contract allow for design
changes that are within certain parameters? I mean, you are not
totally redesigning the ship between 1 and 2.
Admiral Haycock. That is accurate, sir. Yes. The contracts
are written to provide that sort of flexibility. We don't
completely redesign or rewrite things.
Mr. DeFazio. Yeah. But, I mean, you could anticipate that?
Admiral Haycock. Absolutely.
Mr. DeFazio. Now, Admiral West, apparently Admiral Zukunft
did answer a question I had, which is are the Russians
militarizing some of their icebreakers. And the answer was yes.
And my question is, I saw that analysis where you could save a
lot of money, but it is an irrevocable decision. I mean, once
you have not militarized the icebreakers, then you are out of
luck unless you want to build a different ship or a pretty much
dramatically changed ship.
Don't you believe that at least some of these icebreakers
should be militarized? I mean, given the potential for conflict
in the Arctic?
Admiral West. I am not sure, sir, to be honest with you. I
know in the operational requirements that I saw, the Coast
Guard's 2015 ORD, there was some small armament there, the
ability to ward off ships and take on small ships. I think you
have a whole different design if you want to make it a warship
and not an icebreaker. So I am not sure----
Mr. DeFazio. I am not necessarily talking about a warship
that is designed for warfighting, but something that is robust
enough and has defensive capabilities. You know, in World War
II, we were dumping, you know, mines off the backs of, you
know, ships that weren't armed or were lightly armed, to try
and get the German U-boats. I mean, some sort of capability. I
mean, if we are having to lead a convoy or something through
the Arctic, you know, escort ships would have to be provided.
They are going to have to follow. And then if they get the
icebreaker which is, you know, whatever, lightly armed or
doesn't have defensive capabilities, then they are in a tough
spot.
Admiral West. I think the operational concept for an
icebreaker in a wartime environment is an interesting study
that should be done.
Mr. DeFazio. OK.
Admiral West. But right now, the ships that are being
designed do not have that capability.
Mr. DeFazio. OK, all right. Study that needs to be done.
All right, that is something to take under consideration. Thank
you. Appreciate it.
Mr. Hunter. I thank the gentleman.
Let's stay on this. Again, DoD has made it clear that there
is no national security, national defense requirement for an
icebreaker. So why would you militarize it? I understand what
the ranking member's point is. But the Department of Defense,
General Dunford, I have asked him this. And he said there is no
requirement in any operational plan anywhere in the world for
an icebreaker.
Go ahead. Please, comment, opine.
Admiral West. I can't add to that, sir.
Mr. Hunter. Admiral Haycock?
Admiral Haycock. Mr. Chairman, I don't know that I can
state it any better than the Commandant did in the first
testimony. I don't understand why people don't see it that way.
The Coast Guard has been doing defensive or national defense-
related missions since 1790, as the Commandant has indicated.
[The information from Rear Admiral Haycock of the U.S. Coast Guard
follows:]
The U.S. Coast Guard does not typically charge the Department
of Defense (DoD) for ``Defense Operations'' missions (i.e.,
RIMPAC deployment of WMSL is not reimbursed). Over the past 5
years, the Coast Guard Icebreaker Polar Star has supported the
DoD ``Joint Task Force-Support Forces Antarctica'' as part of
Operation DEEP FREEZE.
Upon crossing 60 degrees South Latitude, Polar Icebreakers
enter the Antarctic treaty zone. At that time, Polar
Icebreakers shift tactical control to PACOM, specifically Joint
Task Force (JTF)-Support Forces Antarctica. Below is a table of
total days each year (previous 5 years) the Polar Icebreakers
shifted tactical control (TACON) to PACOM.
------------------------------------------------------------------------
Year 2013 2014 2015 2016 2017 Avg Total
------------------------------------------------------------------------
Days.... 0....... 31..... 45..... 41..... 35..... 38..... 152
------------------------------------------------------------------------
In the Arctic, the Coast Guard Icebreaker Healy has conducted
missions to support Naval Research Labs and other defense
science and technology research. These deployments are
classified as ``Ice Operation'' missions, although they are in
support of DoD. In 2016, Healy conducted 33 days of these
operations, while in 2017 she conducted 50 days.
Mr. Hunter. And I am saying, according to the Department of
Defense and the Chairman of the Joint Chiefs of Staff and the
U.S. Navy, there is no military requirement right now for an
icebreaker. That is just for an icebreaker by itself, let alone
a militarized icebreaker.
Admiral Haycock. I don't know what else to tell you, sir.
The Commandant made his comments earlier. I don't know why the
Department of Defense doesn't see it that way.
Mr. Hunter. Admiral West, let's go back to what you said
about military design. Specifically, what things would you have
that is more militarized than what would be commercial? What
would you pull out of the MIL-SPEC requirements?
Admiral West. I think you have to first start--what is the
threat you expect up there? I mean, it is just like we do with
our warships. What do you want? Is it antisubmarine warfare, is
it AA warfare? What is the threat? And then you have to build
in that capability into the ship.
I think that is an interesting study. What is the threat up
there?
I know the Russians are building ice-hardened combatants. I
think the Canadians are building a Harry DeWolf-class ice-
hardened combatant of some type. So there are people who are
looking at combatants in the Arctic region, and we certainly
should look at that.
I don't think we did look at it when we designed the
current icebreaker. But I think it is a good study to look at.
Mr. Hunter. Would you think, I mean, is that the Coast
Guard's role to look at that or the Navy's role to look at
that?
Admiral West. I think it has to be both. I mean, usually
the comms suite, the weapons suite that are provided to cutters
as warships come from DoD, so it is a common--an issue that
they should do together.
Mr. Hunter. But that study, that would be done by the Navy?
Admiral West. I think it ought to be done by both of them.
Mr. Hunter. Ms. Mak, I want to come back to you. Ms. Mak, I
asked you earlier at what point, and I forgot to get your
answer, at what point does the Coast Guard start planning for
real life to meet their actual budgets? As opposed to asking
for everything under the sun and then having graphs like this
where there is never enough money to meet their acquisition
timeline and schedule.
Ms. Mak. I believe a 20-year plan hopefully will start
addressing that, because that forces the Coast Guard to lay out
more than the assets that are needed and are shown in the 5-
year plan. For instance, the 5-year plan doesn't cover quite a
few other assets. And when you go further out with strategic
planning, it has to cover more assets and be able to lay out
those tradeoffs that have to occur if we don't have the funding
to procure certain assets. And that is why we have been
advocating for a 20-year plan. Because that forces the Coast
Guard to lay out all the assets that are needed, all the
resources that are needed, and then lay out tradeoffs.
I know the Commandant said earlier that DHS and OMB make
certain cuts. And agreed, they have to prioritize. But we have
spoken to DHS and OMB since the last hearing and they also
acknowledge as long as the Coast Guard lays out this 20-year
plan within the budget constraints, then the Coast Guard can
say, if we stay at $1.2 billion for acquisitions, this is what
doesn't get done. DHS and OMB agreed to that. They don't have a
problem with listing out all their needs. Whether they get
funded or not is a different issue, and that's the Department's
call and OMB's call.
Mr. Hunter. Let's go back, really quick, Mr. O'Rourke,
about block buy on the icebreaker. Let's go through it slowly.
Because we have arguments on each side of this.
The icebreaker is not a complicated ship. I think that is--
I do my little hand movements of what an icebreaker does. It
hits stuff, then it goes down, then it backs up, then it hits
stuff, then it goes down and it backs up and it hits stuff, so
on and so on, ad nauseam. That is what an icebreaker does.
To me, it is almost besides the technical aspects of
bending really thick steel and the way that the boat is
designed. Beyond that, it is a very untechnical ship. So could
you speak to that? If you were to do a block buy, starting with
the first ship, whether it is going to be partially militarized
or not, and that is decided upon beforehand, can you go through
the risks associated with it if you don't start, as we are all
saying, until you have 100 percent design and you have all of
the materials, at least for the first couple ships, and if this
can save you $1 billion by block buying the three, what are the
risks associated with that?
Mr. O'Rourke. Right, there is some complexity in the
icebreaker. It is more complex than something like a sealift, a
military sealift ship that would be similar to a commercial
cargo ship. But it is not a highly complex ship. We are not
talking about, you know, a submarine that goes down to a
pressure depth and has a nuclear reactor on board and also a
lot of weapons and complex electronics. So it is not a highly
complex ship.
Furthermore, there is a lot of design know-how available on
icebreakers. Even though they have not been built in this
country in some time, a lot of other people have been building
them all along and they have accumulated quite a lot of design
know-how. And the shipyards in this country that are interested
in this program have access to that and they can choose to
partner----
Mr. Hunter. They would partner with----
Mr. O'Rourke [continuing]. With these, and some of them
already have. You can import that design know-how into it to
mitigate the risk.
But lastly----
Mr. Hunter. Stop there, though. Your point there, I think,
needs to be made. It is really not a first-in-class ship. It
might be for us, but it's really not.
Mr. O'Rourke. Not for----
Mr. Hunter. If you bring over the Norwegians and they are
in your yard with you and they look at everything, it is really
not a first-in-class ship, it is number 27; it is just being
built in a U.S. yard, as opposed to a Norwegian yard.
Mr. O'Rourke. To the extent that you follow a foreign
design, yeah, that becomes more and more true. It depends on
exactly how much of the foreign design is incorporated into the
U.S. design.
But as a matter of philosophy, if you think there is risk
in the design of that ship, you shouldn't be building it
anyway. Best practices are to develop the design to a high
state of completion and confidence in that design before you
start bending metal. This is one of the major lessons of
shipbuilding, and it is not a new one; it goes back some number
of years.
So if you think there is risk in that design, then why are
you contemplating even starting the construction of that ship
under any circumstances?
But lastly, let's say you need to make some changes in the
design as you work your way through the construction process.
What is the cost of making those changes and how does that
compare to the savings of having put that ship under the block-
buy contract? That is what you need to weigh. There may be some
changes you want to put onto that first ship and that may cost
you some amount of money. But that cost could be a lot less
than the savings that you will give up by not putting that ship
under the block-buy contract in the first place. And I think
that needs to be weighed in the balance.
If you build the first ship outside the block-buy contract
and then wait until it is complete, you will not only--before
committing to a block buy for the follow ships, you will not
only forgo the savings on the first ship, you will then put an
interval between that first ship and the second ship that will
give you a loss of learning and a poorer production learning
curve, and you will lose savings moving from ship number 1 to
ship number 2, as well.
Mr. Hunter. What I am kind of seeing here, and this is just
me being a conspiracy theorist, but after watching the Coast
Guard for a couple of years, if you do a block buy or a
multiyear contract, basically you are--and it is approved, the
Coast Guard is getting a long-term commitment by the
Government, by OMB, by the Department of Homeland Security and
by the appropriators, by this Congress. That is what a block-
buy contract signals, number one. Not only is it just good
fiscally, but it signals a long-term funding commitment to you
guys.
I think that is why you didn't use it for the OPCs. I think
that's why. I don't think that OMB wants you to have a long-
term show of faith from the Government. Because if you do that,
then they are going to be 100 percent committed. Because that
is what a block buy is, right?
Would you like to speak to that, Admiral Haycock?
Admiral Haycock. Yes, sir. The thought of having a
commitment to building three or four or six or however many
icebreakers is exciting and, you know, we are looking forward
to that. I think the thing that we need to keep in mind is it
is not just the OMB or the Department that has signed up for
the commitment, it is also Congress, as well. And one of the
things that we learn early on is you want to be careful about
tying the hands of future Congresses. And so we are trying to
be respectful of the way business is done.
So we are excited about making this a priority in the
commitment upfront and in the commitment, it shows to industry
that this is real and that the Nation is going to build
multiple icebreakers. They can get their arms around that and
that makes them serious, that makes them competitive, and it
spurs innovation, so we are going to get unique designs that
are going to be able to meet our needs, and hopefully
affordable.
If I could just take a second, sir, to clear up a
misconception, however. I have heard a number of people, and I
have been dealing with this for about 9 months now. There is a
misconception, sir, that an icebreaker, it is really simple and
it is not complex. And I would agree, in general, it is not
rocket science. OK. We are not building a submarine, OK, by any
means.
But I think people need to understand that we don't need an
icebreaker. We need a Coast Guard cutter that can break ice so
it can get to the places it has missions. It doesn't make sense
to go up to the Arctic and just break ice. In fact, you know,
some people might not like that, environmentalists, that sort
of thing, OK?
We need the icebreaker because there is a mission to
perform somewhere in the high latitudes. Maybe it is responding
to a search and rescue case because of increased tourism. Maybe
it is responding to an environmental spill of some sort because
of oil exploration or mineral exploration on the seabed. You
know, maybe it is a national defense mission of some sort, OK?
Maybe it is mapping the seabed and preparing--making
sovereignty claims and that sort of thing.
The point is, there is a mission that we need to accomplish
and the ice is in the way, so we need to break the ice to get
to where we need to conduct our missions. Just breaking ice for
the sake of breaking ice may occur domestically, because we
need to clear ports and keep them free for commerce. But in the
high latitudes, it is generally because we have a mission we
have to accomplish someplace and we need the icebreaker to do
it.
And so that is why it is not just a simple icebreaker. It
is a Coast Guard cutter that has the ability to break ice. So
it won't be a complex cutter like a National Security Cutter,
likely it will be something less. But the Coast Guard missions
that we need to accomplish in terms of communications with
other authorities, State, local, Tribal, et cetera, all those
things need to be rolled into the icebreaker.
Mr. Hunter. We are not saying we are not going to have
comms on the icebreaker, or a skiff or something. That is not
what we are saying, right? We are talking about the complexity
that you choose to build for departments that are not the Coast
Guard. Whether it is science stuff or militarization. As you
know, the Coast Guard is a jack of all trades, master of some.
But if you want to make the icebreaker everything to everybody,
it will be master of none, and it will be massively expensive.
If you added all those things with the possible missions
that coincide with your 11 statutory missions and you try to
put those all in an icebreaker, your costs are going to go up
massively. I don't even know what those numbers would be, but I
am sure you guys have taken a look, that if you got everything
that you wanted on an icebreaker, what it would cost. It would
be over $1 billion, right?
Admiral Haycock. We concur, sir. That has been our effort
over the last 9 months, is bringing that cost down.
Mr. Hunter. So you are saying, here is all the stuff we
wanted. Now we are going to cut it down to what we can afford?
Admiral Haycock. We are trying to cut out the things that
do not have major mission impact. That is really what we are
going after.
Some of the cost savings that we have identified is also
from the maturation of the actual cost model itself. So as all
those things mature, we get more confident in the number and
the number goes down.
Mr. Hunter. And you told Mr. Garamendi you are going to
have the design by the end of the year or the next 6 months or
year, right? That was----
Admiral Haycock. I think that also is a misunderstanding.
So we will get the designs when the industry teams submit their
proposals for the detailed design and construction. I don't
know if that makes sense----
Mr. Hunter. Because what I would like to get before that
are your requirements. Because you said we got the--here is a
$1.5 billion ship, we have to whittle that down. When will you
have your requirements to give the subcommittee, what you have
whittled it down to?
Admiral Haycock. So we had an operational requirements
document that was signed, I think, a year--or this past
January, I believe. And so we are going to do a revision to
that document.
Some of the changes that have been made to our internal
indicative design, most of them are, you know, kind of buried
in the engineering requirements, as opposed to the top-level
operational requirements. So I think you are going to find that
the icebreaker will meet virtually all the needs we need to
meet. But the savings and stuff are some of the details.
Like Admiral West was talking about using commercial versus
military specifications. We have gone through and that has been
part of the calculus that has got us to our $200 million
savings so far, is looking at those requirements and saying,
which ones do we really have to have as a military
specification and which ones can we go commercial?
Mr. Hunter. But if you build block buy into your planning,
you could add some of those requirements back, because of the
money that you save. Or you could use the money to go onto the
next ship, too. Are you, in your planning for your design, are
you building the block buy? Are you assuming a block buy in
your calculations? Because that either saves you money or not,
right?
Admiral Haycock. Yes, sir, that is part of the calculus.
Through the foresight of this subcommittee, we had the Navy on
our team in our Integrated Program Office. The Navy, as Mr.
O'Rourke has indicated, has done this many times. And so we are
listening to their counsel and taking things into
consideration, some of the best practices they've put into
place.
I think one of the things we haven't talked about is, you
know, some of the acquisition processes that we've borrowed
from the Navy that we are folding into our process. So we are
learning from our engagement with the Navy. And block buy is
certainly one of those.
Mr. Hunter. That is all I have.
Mr. Garamendi, any closing thoughts?
Mr. Garamendi. I think I just heard you say closing
thoughts, which gives me some indication that we are about to
wrap up here.
Within the next 6 months, this committee and Congress are
going to have to make some final decisions about the
icebreakers. I think, Mr. Chairman, a closing thought is one
that came up in the discussion a few, well, maybe 20 minutes
ago. And that is, we should, since both of us are on the
Seapower and Projection Forces Subcommittee, we should ask that
subcommittee to ask the U.S. Navy, are there any military
requirements for the U.S. Navy in the Arctic. It will be
interesting to see what they have to say as to that. So I am
going to carry that forward.
I want to thank the National Academies of Sciences for a
very detailed study here that provides direction on most of the
questions that we've asked. So over the next several months,
probably the next 6 months, we are going to be moving toward
the finalization of an icebreaker strategy for the United
States. We are almost there. The question of three, three--
three heavies and three lights, or four heavies, remains to be
decided, and it is a critical question that we are going to
have to answer here. The arguments made by the National Science
Foundation are important and perhaps provide us with the final
answer.
Ms. Mak, we are going to have to take a look at the
question of block buy. I think the answer to that is going to
lie in the nature of the contract itself and the design going
into a block buy.
Also, I think, Mr. O'Rourke, you came up with this issue of
the first one hits the waves and gets into the water will be
tested and then the second, third or maybe fourth one will then
be modified based upon the testing. Sea trials, is that the
word?
Mr. O'Rourke. Acceptance trials, yes, testing.
Mr. Garamendi. Or ice trials, or whatever.
Mr. O'Rourke. There are lots of phases of that. They go by
different names.
I just wanted to add one small point to what I said
earlier. It was pointed out that under a block buy you might
make a commitment to get components upfront for all the ships
covered under the block buy, and that this could pose a risk if
you decide to change the design or not get the follow ships.
But that is only true if your block-buy contract is using EOQ
purchases and buying those things upfront.
You can still do the block buy without that. It doesn't
save as much as a block buy that does use EOQ purchases, but it
still saves. So if you are concerned about the risk of buying
components and materials that may not work out for follow
ships, you can get rid of that risk and still do the block-buy
contract and still save money.
Mr. Garamendi. Well, once again, it depends on what those
specific items are. Some are very, very well known and very low
risk. Others are unique and would have a high risk. And so
again, that goes to the contract itself and the sufficiency of
the contract.
My final point is to Admiral Haycock. You have been unable
to deliver to us a viable 5-year plan, noting what was given to
us late last night, which really does not meet what we are
already committed to build, for example, icebreakers.
I want to believe that the Coast Guard actually knows what
it needs to do over the next 5 and 20 years, but that you have
been prohibited from giving us that information by the Office
of Management and Budget. That is a problem that I cannot
accept, and it is one that I am going to, with hopefully--well,
I am sure with the support of the chairman, try to see if there
is some way for us to get information on what is a real 5-year
and 20-year program for the Coast Guard on the acquisition, as
well as for the operational.
Presumably, these new icebreakers will need personnel and
fuel and we will have to build that into the operating budgets
going forward.
So, Admiral Haycock, I for one will be pressing hard for a
20-year budget. It can be informal. It can be handed to us over
the transom late at night. Or any other mechanism that might be
used.
I will note that the U.S. Navy uses an informal mechanism
to deliver information to us in a variety of ways, as does the
Air Force.
I will let it go at that, Mr. Chairman. A very, very
helpful and useful meeting. Thank you very much for structuring
it. Thank you.
Mr. Hunter. I thank the ranking member. This has been a fun
2\1/2\ hours.
I would like to thank the few Members that came and
participated and you, the panel. Thank you very much.
Appreciate it.
And with that, we are adjourned.
[Whereupon, at 12:27 p.m., the subcommittee was adjourned.]
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