[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENT OF HOMELAND SECURITY APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                         THURSDAY, MAY 1, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10 a.m., in room SD-106, Dirksen 
Senate Office Building, Hon. Thad Cochran (chairman) presiding.
    Present: Senators Cochran, Stevens, Byrd, and Murray.

                    DEPARTMENT OF HOMELAND SECURITY

                          U.S. Secret Service

STATEMENT OF W. RALPH BASHAM, DIRECTOR

                            U.S. Coast Guard

STATEMENT OF ADMIRAL THOMAS H. COLLINS, COMMANDANT

                OPENING REMARKS OF SENATOR THAD COCHRAN

    Senator Cochran. The Subcommittee will please come to 
order.
    Today the Subcommittee on Homeland Security of the Senate 
Appropriations Committee continues its hearings on the 
President's budget request for fiscal year 2004 for funding the 
Department of Homeland Security activities.
    This morning we will hear from two agencies that have been 
transferred to the new Department, the United States Secret 
Service and the United States Coast Guard.
    We are pleased to have as our witnesses this morning the 
Director of the U.S. Secret Service, W. Ralph Basham, and the 
Commandant of the United States Coast Guard, Admiral Thomas H. 
Collins.
    We will begin with the Secret Service. The Secret Service 
was established, as we know, in 1865 with very few officers and 
the responsibility for preventing the circulation of 
counterfeit currency.
    Today the Secret Service continues to curtail 
counterfeiting while protecting our Nation's leaders and 
securing America's financial infrastructure from cyber crime.
    We have a copy of your written testimony, Director Basham, 
which we appreciate very much. It will be made a part of the 
record in full, and we would encourage you to summarize it or 
discuss the high points and make any additional comments that 
you think would be helpful to the Committee's understanding of 
the budget request for the Secret Service.
    I thought we would go ahead with an opening statement and 
then recess the hearing because we have a vote that is 
scheduled on the Senate floor at 10:15. One way we could do 
this is to have the Commandant of the Coast Guard make an 
opening statement as well, if that is all right with the 
Admiral.
    So let us proceed now with the Secret Service. You may 
proceed, Mr. Director.

                  OPENING STATEMENT OF W. RALPH BASHAM

    Mr. Basham. Thank you, Mr. Chairman.
    It is a privilege for me to be here today to represent the 
men and women of the United States Secret Service and our 
fiscal year 2004 budget request.
    Our agency looks forward to forming a strong and lasting 
relationship with this new Subcommittee, and I deeply 
appreciate your willingness to allow us to be here to testify 
today.
    We have entered a truly momentous period for the Secret 
Service. On March 1, 2003, as you stated, our agency was 
transferred from the Department of the Treasury to the 
Department of Homeland Security. I would like to share with 
this Subcommittee our vision for the future of the Secret 
Service and in particular the role that this agency will seek 
to carry out in the new Department.

                     MISSIONS OF THE SECRET SERVICE

    The bedrock principle of the Secret Service's dual 
protective and investigative missions is our focus on 
prevention. This core philosophy is ingrained in our culture 
and is truly what makes the Secret Service unique among all law 
enforcement agencies.
    Our focus on prevention began with our original mandate to 
suppress counterfeiting when the Secret Service adopted the 
goal of preventing the production of counterfeit currency 
before it was circulated. Today our agents are trained to 
detect incidents before they occur, through meticulous advance 
work and counter-surveillance tactics.
    Threat assessments developed by our Intelligence Division 
identify existing dangers to officials that we protect. Our 
Electronic Crime Task Forces provide training to hundreds of 
our local law enforcement and private sector partners, aiding 
them in efforts to shield critical systems and networks from 
cyber criminals and terrorists.
    We believe that our prevention-based philosophy mirrors 
that of the new Department. Our common goal is to anticipate 
and prepare, to take the necessary precautions to minimize 
opportunities for our adversaries, and to prevent any loss of 
life or the disruption of the institutions upon which we 
depend.
    The Secret Service has already identified resources, 
assets, and personnel within our agency that could enhance the 
efforts of the new Department to achieve its homeland security 
objectives.
    Foremost is our century-old protective mission and mandate 
to protect the President, the Vice President, visiting world 
leaders, and other key Government officials, and to coordinate 
security operations for events of national significance.
    An equally important component of homeland security is 
economic security, including the protection of our currency and 
financial payment systems, particularly as fraudulent credit 
and debit cards and counterfeit checks have become prevalent in 
the marketplace.
    We must also address the vulnerabilities in other critical 
infrastructures. A serious compromise of these assets ranging 
from telecommunication networks to energy plants to water 
treatment facilities could wreak havoc on our economy, law 
enforcement, health care providers, transportation systems, and 
emergency services.
    The need to secure our critical infrastructure typifies an 
area where our agency's unique competencies and experience can 
contribute to the efforts of the new Department. Today, the 
Secret Service is already discussing with Departmental 
officials how our expertise can be applied to safeguarding and 
ensuring the continuity and reliability of physical and 
technology-based assets throughout our economy and our 
communities.

                ELECTRONIC CRIMES SPECIAL AGENT PROGRAM

    Let me introduce one of our special agents who is on the 
front lines of that effort. Special Agent Cornelius Tate is a 
graduate of the University of Mississippi with a degree in 
computer science. He is a 17-year veteran of the Secret 
Service. He has served in numerous protective and investigative 
assignments including the Presidential Protective Division. 
Today, Special Agent Tate is one of 180 members of our unique 
Electronic Crimes Special Agent Program. Our ECSAP program 
provides specialized training in the forensic preservation and 
examination of computer evidence. These ECSAP agents are truly 
unique, both because of their ability to provide timely, 
mobile, and onsite examinations, and because they can combine 
their technical expertise with their investigative skills and 
experience.
    Until recently, Special Agent Tate served as a Secret 
Service liaison to the Computer Emergency Response Team at 
Carnegie Mellon University. Today he is providing critical 
support to the DHS initiatives to coordinate Federal and State 
efforts to safeguard key assets throughout the Nation such as 
nuclear facilities and water treatment plants from both 
physical and electronic terrorist attacks.

                        SECRET SERVICE PERSONNEL

    Mr. Chairman, it has been more than three decades since I 
began my own Secret Service training, and as you can imagine, a 
lot has changed over that time. The technology revolution has 
forever transformed our economy, our culture, and the 
challenges we face in law enforcement. Our protective 
methodologies have become vastly more sophisticated, 
incorporating elements such as electronic surveillance, 
biometrics, and air space surveillance systems. And of course, 
we have the ominous and immediate threat posed by global 
terrorists.
    But if there has been a common thread throughout the 138 
years of the Secret Service's history, it is truly the unique 
caliber of individuals who are drawn to our agency. We have 
always managed to attract individuals with special backgrounds 
and extraordinary credentials. They join the Secret Service and 
they remain with our agency because the position offers 
something that the private sector cannot--an opportunity to 
serve their country.
    I would like to introduce to you one of our employees who 
truly embodies that spirit. Sergeant Joseph Wright is an 8-year 
veteran of the Secret Service Uniformed Division. He is a 
native of Fort Knox, Kentucky and completed his high school and 
college in West Virginia. He joined the United States Army as a 
reservist in 1987 and the Secret Service as a uniformed officer 
in 1995. Last year, Sergeant Wright temporarily left our agency 
to serve a year-long deployment with the U.S. Army Special 
Operations forces in Afghanistan. He was awarded the Bronze 
Star for his service, of which I know his three children are 
enormously proud.
    Special Agent Tate and Sergeant Wright are members of the 
United States Secret Service family. Every special agent, 
uniformed officer, technical specialist, forensic examiner, and 
administrative staff member contributes to our protective and 
investigative missions. Our employees represent a diversity of 
backgrounds, experiences, and expertise, yet they share many of 
the same ideas and aspirations.
    The character and spirit of our people is the undeniable 
strength of the Secret Service and defines both the history and 
the future of our agency.
    Mr. Chairman, the men and women of the United States Secret 
Service stand ready to continue to protect our leaders, our 
infrastructure, and the American people. Our people have the 
skills, the experience, the training and, most important, the 
character to rise to any occasion. They have dedicated their 
careers and their lives to making America safer.

                           PREPARED STATEMENT

    Thank you again for the opportunity to appear before you 
and this Subcommittee, Mr. Chairman. That concludes my 
statement, and I am prepared to answer any questions.
    Senator Cochran. Thank you very much, Mr. Director.
    [The statement follows:]

                 Prepared Statement of W. Ralph Basham

    Chairman Cochran, Senator Byrd, and distinguished members of this 
subcommittee, it is a privilege to be here today to testify on the 
fiscal year 2004 budget. Our agency looks forward to forming a strong 
and lasting relationship with this new subcommittee, and I deeply 
appreciate the opportunity to represent the 6,100 dedicated men and 
women of the Secret Service.
    Let me begin by expressing my gratitude to the Members and staff of 
the former Subcommittee on Treasury and General Government. For years, 
this subcommittee was responsible for the oversight of the Secret 
Service, and we were tremendously fortunate to have a long line of 
exceptional chairmen, Senators and staff--many of whom are here today--
that provided unwavering support to our agency, our mission and our 
personnel. The contribution of these individuals to the strength and 
versatility of the Secret Service today cannot be overstated, and we 
are grateful for their efforts and leadership.
    With me today, Mr. Chairman, are C. Danny Spriggs, Deputy Director; 
Barbara Riggs, Chief of Staff; Paul D. Irving, Assistant Director for 
Homeland Security; Stephen T. Colo, Assistant Director for 
Administration; Keith L. Prewitt, Assistant Director for Government and 
Public Affairs; Patrick C. Miller, Assistant Director for Human 
Resources and Training; Brian K. Nagel, Assistant Director for 
Inspection; George D. Rogers, Assistant Director for Investigations; 
Donald A. Flynn, Assistant Director for Protective Operations; Carl J. 
Truscott, Assistant Director for Protective Research; and John J. 
Kelleher, Chief Counsel.
    We come before you today during what is truly a momentous period 
for the Secret Service. For the first time in the 138 years of our 
existence, the Secret Service is no longer a part of the Department of 
the Treasury. On March 1, 2003, pursuant to the Homeland Security Act 
of 2002, our agency, and all of its functions and assets, were 
transferred to the new Department of Homeland Security. I would like to 
share with the subcommittee our vision for the future of the Secret 
Service, and in particular, the role our agency will seek to carry out 
in the new department, under the leadership of Secretary Ridge. This is 
a time of great transition and change for the Secret Service. But we 
recognize the magnitude of the challenge before us, and the men and 
women of the Secret Service stand ready to continue their extraordinary 
service to our country.
    The bedrock principle of the Secret Service's dual protective and 
investigative missions is our focus on prevention. This core philosophy 
is prevalent throughout our agency's history. The theme of prevention 
is ingrained in our culture and pierces every facet of the Secret 
Service. It is the undercurrent of our daily investigative and 
protective work, and is truly what makes the Secret Service unique 
among all law enforcement entities.
    Our focus on prevention began with our original mandate to suppress 
counterfeiting, when the Secret Service adopted the goal of preventing 
the production of counterfeit currency before it was circulated. One 
hundred thirty-eight years later, our field personnel continue to work 
closely with paper and ink manufacturers and suppliers to determine if 
there is any inordinate demand for the materials used to produce 
quality counterfeit currency.
    Prevention has also become an integral part of our efforts today to 
work with local law enforcement, other Federal agencies, and the 
private sector to protect our country's critical infrastructure and 
financial payment systems from intrusion and compromise.
    Our agents are trained to detect incidents before they occur 
through meticulous advance work and countersurveillance tactics. Threat 
assessments developed by our Intelligence Division identify existing 
dangers to the officials we are protecting. Our Technical Security 
Division analyzes and addresses any vulnerabilities in a physical 
security plan. Our Electronic Crime Task Forces provide training to 
hundreds of our local law enforcement and private sector partners, 
aiding them in efforts to shield critical systems and networks from 
cyber criminals and terrorists.
    We believe that our prevention-based core philosophy mirrors that 
of the new department. Like our agency, the DHS must be prepared to 
respond to incidents and infiltration. Our common goal is to anticipate 
and prepare, to take the necessary steps and precautions to minimize 
opportunities for our adversaries, and to prevent any loss of life or 
the destruction or disruption of the institutions we depend on.
    Following enactment of this historic reorganization legislation, 
the Secret Service began the process of identifying resources, assets 
and personnel that could enhance the efforts of the new department to 
achieve its homeland security objectives.
    Foremost is our century-old protective mission and mandate to 
protect the President, the Vice President, their families, former 
Presidents and other key government officials, including visiting world 
leaders and heads of state. The Secret Service is also responsible for 
coordinating security at National Special Security Events, such as the 
2002 Winter Olympics and the national political conventions. An equally 
important component of homeland security is economic security, 
including the protection of our currency, critical assets and financial 
payment systems. Since our inception 138 years ago, the goal of the 
Secret Service's investigative efforts has been to safeguard our 
financial infrastructure. Financial crimes have increasingly targeted 
both American industry and American consumers, as fraudulent credit and 
debit cards and counterfeit checks have become more prevalent in the 
marketplace. Even more troubling, stolen identities, false 
identification documents, and fraudulent credit cards have become the 
tools of the 21st century terrorist.
    Our currency and financial payment systems are primary targets for 
terrorists and other criminal enterprises, yet our critical 
infrastructure is equally vulnerable. A serious compromise of these 
assets, ranging from telecommunications networks to energy plants to 
water treatment facilities, could wreak havoc on our economy, law 
enforcement, military, health care providers, transportation systems, 
and emergency services. Accordingly, Secretary Ridge has made critical 
infrastructure protection one of the highest priorities of the 
Department of Homeland Security.
    The need to secure our critical infrastructure typifies an area 
where our agency's unique competencies and experience can enhance the 
efforts of the new department. Today, the Secret Service is already 
discussing with DHS officials how our expertise can be applied to 
safeguarding and ensuring the continuity and reliability of physical 
and technology-based assets throughout our economy and our communities.
    Reflective of the evolving nature of our mission, critical 
infrastructure protection has become a vital component of our 
protective methodology in recent years. Advances in technology and the 
world's reliance on interdependent network systems have demonstrated 
that we can no longer rely solely on human resources and physical 
barriers in designing a security plan; we must also address the role 
and inherent vulnerabilities of critical infrastructures upon which 
security plans are built. That is why the Secret Service has 
specialists, stationed in our field offices across the country, who 
have the experience and expertise to secure critical infrastructures 
that encompass information technology, telecommunications, emergency 
services, and other essential networks.
    Over time, these skilled personnel in our field offices have built 
partnerships with the municipalities, private companies, and local law 
enforcement agencies in the cities and regions we serve. On subjects 
ranging from physical security to threat assessment to forensic 
analysis, the Secret Service endeavors to share with our local law 
enforcement and private industry partners the prevention-based 
expertise we have developed during the course of our protective and 
investigative missions. This is clearly evident in the area of critical 
infrastructure protection and our efforts to aid local governments and 
private companies in assessing the vulnerabilities of their networks to 
prevent disruption and compromise. It is also reflected in our 
affiliation with Carnegie Mellon's Computer Emergency Response Team 
Coordination Center which focuses on insiders who attack critical 
information systems.
    Within the Department of Homeland Security, the Secret Service is 
currently assisting the Directorate of Information Analysis and 
Infrastructure Protection with its mandate to complete vulnerability 
assessments of identified assets and to develop a comprehensive plan 
for securing key resources and critical infrastructure, including power 
production and distribution systems, electronic and financial 
transmission systems, emergency communications systems, and physical 
and technical networks that support such systems. We continue to work 
closely with the Department and are discussing options for further 
expanding the role of the Secret Service in safeguarding these critical 
assets.
    Mr. Chairman, it has been more than three decades since I began my 
own Secret Service training. As you can imagine, much has changed for 
the Secret Service during that time. The technology revolution has 
forever transformed our economy, our culture, and the challenges we 
face in law enforcement. Our protective methodologies have become 
vastly more sophisticated, incorporating elements such as electronic 
surveillance, biometrics, airspace surveillance systems, and chemical/
biological/hazardous material detectors. And, of course, we have the 
ominous and immediate threat posed by global terrorists, who have 
demonstrated their zeal to destroy our most cherished symbols and 
institutions and to harm an infinite number of Americans.
    During my initial weeks as Director, I have spent considerable time 
introducing myself to our employees, both here in Washington and in our 
field offices. And as I have had the opportunity to reacquaint myself 
with the men and women of this agency and learn more about their 
backgrounds, their training, and their experience, I am reminded of the 
adage that the more things change, the more they stay the same.
    If there has been a common thread throughout the 138 years of the 
Secret Service's history, it is the truly unique caliber of individuals 
who are drawn to our agency. We have always managed to attract 
individuals with special backgrounds and extraordinary credentials.
    They join the Secret Service, and remain with our agency, because 
their position offers something that the private sector cannot--an 
opportunity to serve their country. An opportunity to protect their 
nation's highest elected leaders. An opportunity to protect their 
families, their friends, and their communities.
    For these men and women, it is more than an opportunity. It is a 
calling.
    The Secret Service is a family. Every special agent, uniformed 
officer, technical specialist, forensic examiner and administrative 
staff member contributes to our protective and investigative missions. 
Our employees represent a diversity of backgrounds, experiences and 
expertise, yet they share many ideals and aspirations. The character 
and spirit of our people is the undeniable strength of the Secret 
Service, and defines both the history and the future of our agency.
                 fiscal year 2004 appropriation request
    The Service's fiscal year 2004 funding request totals 
$1,123,951,000 and 6,066 full-time equivalents (FTE), and includes 
funding for two accounts: the Operating Expenses account, and the 
Capital Acquisitions account.

                           OPERATING EXPENSES

    The Secret Service's Operating Expenses appropriation request for 
fiscal year 2004 totals $1,120,372,000 and 6,066 FTE, a decrease of 45 
FTE from this fiscal year's staffing level. The funding increases 
proposed in this budget include: $54,056,000 needed to maintain current 
program performance levels, and cover base pay and benefits 
annualization costs; an additional $31,881,000 for the protective 
effort surrounding the 2004 presidential campaign, and $33,000,000 for 
processing of mail going to the White House. These increases are offset 
by a $9,000,000 reduction in the base budget reflective of our 
reorganization into the Department of Homeland Security, and 
anticipated consolidation savings from integration with Department-wide 
processes and operations.

                          CAPITAL ACQUISITIONS

    The Secret Service's fiscal year 2004 request for its Capital 
Acquisitions account totals $3,579,000, an increase of $83,000 over the 
level appropriated for this fiscal year. This increase is needed to 
maintain current program performance levels. There are no programmatic 
changes or initiatives proposed for this account.

                         INVESTIGATIVE PROGRAM

    Since 1865, the Secret Service has been safeguarding our currency 
and financial infrastructure, pre-dating our mission to protect the 
President by nearly four decades. Securing our financial and critical 
infrastructures and ensuring the strength and stability of our economy, 
are central tenets of homeland security. Our investigative mission is 
accomplished through our vast network of field offices, including 134 
throughout the United States and 20 additional offices overseas. Our 
field offices have developed strong, information-sharing partnerships 
with the multitude of local police organizations and private companies 
they work with on a daily basis. These field offices are leading 
criminal investigations and task force initiatives, but they are also 
resources for the communities they are serving.

                             COMPUTER CRIME

    For the last twenty years, the Secret Service has been a leader of 
Federal law enforcement efforts to investigate electronic crimes--an 
authority that was reaffirmed by Congress in the USA Patriot Act of 
2001. As with our protective mission, we continue to focus on 
preventative measures to shield the American people and our essential 
networks from terrorists, cyber criminals, and other attackers. We have 
committed ourselves as an agency to developing new tools to combat the 
growth of cyber terrorism, financial crime and computer fraud.
    The Secret Service's highly-regarded Electronic Crimes Special 
Agent Program (ECSAP) provides specialized training to select agents in 
all areas of electronic crimes, and qualifies these personnel as 
experts in the forensic examination and preservation of electronic 
evidence and in the protection of critical infrastructure. ECSAP agents 
are also trained to examine the variety of devices used in many 
criminal enterprises, including credit card generators, electronic 
organizers, scanners, computer hard drives, and devices manufactured or 
reconfigured to intercept or duplicate telecommunications services.
    The ECSAP program consists of 180 agents stationed today throughout 
the country. They have become invaluable specialists, both for our own 
investigations as well as for our local and Federal law enforcement 
partners. From June 1, 2001 through June 1, 2002, ECSAP agents 
completed over 1,400 forensic examinations on computer and 
telecommunications equipment. The nationwide demand among our local law 
enforcement and private sector partners for investigative or 
prevention-based assistance from our ECSAP agents is overwhelming, and 
we are striving to expand this program and training within our agency's 
existing resource levels.
    Another important component of our strategy to secure our financial 
and critical infrastructure is the development of the Secret Service's 
electronic crime task forces. Several years ago, the Secret Service 
recognized the need for law enforcement, private industry and academia 
to pool their resources and expertise as part of a collaborative effort 
to investigate and prevent electronic crimes and protect our nation's 
critical infrastructure. In New York alone, our task force is comprised 
of over 300 individual members, including 50 different Federal, state, 
and local law enforcement agencies, 250 private companies and 18 
universities. This task force has made 961 state and locally-prosecuted 
arrests and investigated an estimated $960 million in actual and 
potential losses due to fraud.
    The USA Patriot Act of 2001 authorized our agency to extend these 
task forces to cities and regions across the country. Last year, we 
launched the initial phase of this expansion, developing task forces in 
locations with significant or specialized interests in the financial, 
banking or critical information sectors, including Los Angeles, San 
Francisco, Las Vegas, Chicago, Charlotte, Miami, Boston, and 
Washington, D.C. We have received strong and enthusiastic support for 
this program from the scores of local law enforcement agencies we work 
with, as well as our private sector partners, who are all excited about 
the potential of this exciting new endeavor. These task forces 
represent a potential means of extending the preventative mission so 
imperative to homeland security to communities across the country.
    Based on our experience, the first line of defense in combating 
cyber crime is often an agent or officer who is trained in methods of 
preserving and securing evidence at electronic crime scenes. In 
recognition of the time sensitivities associated with computer crime, 
the importance of properly seizing computer-related evidence, and the 
increasing complexity of cyber-related crime, we continue to see the 
value in promoting partnerships and training. In the course of 
investigating electronic crime and developing strategies in search of 
the best formula, we have found prevention, collaboration, information 
sharing and timely response to be essential factors in the equation.
    Consequently, the Secret Service, in cooperation with the 
International Association of Chiefs of Police (IACP), recently 
introduced the Forward Edge training package. Forward Edge utilizes 
state-of-the-art computer training designed for all law enforcement and 
provides instruction with regard to securing electronic crime scenes 
and safely seizing computer-related evidence. Forward Edge includes an 
8-hour CD-ROM, utilizing a three-dimensional, interactive training 
format, to provide the officer or agent with different scenarios 
involving identity theft, financial crimes, network intrusion, credit 
card fraud, counterfeiting, data theft and other computer-related 
crimes. The CD-ROM also provides a field guide that contains practical 
information, such as an inventory of local computer crime statutes for 
every state jurisdiction, along with sample search warrants pertaining 
to the seizure and safe handling of computer-related evidence, drugs 
and weapons. Each scenario guides the trainee through crime scenes and 
enables him/her to interact with objects, individuals and situations 
they may encounter in real life. In fiscal year 2002, the Secret 
Service completed distribution of 20,000 copies of Forward Edge to 
local, state and Federal law enforcement agencies.

                             COUNTERFEITING

    Despite the inclusion of enhanced security features in the most 
recent designs of our currency, counterfeiters continue to take 
advantage of the latest digital technology to produce reasonably 
deceptive counterfeit notes. Desktop printers, color copiers, scanners 
and graphics software provide relatively unskilled counterfeiters with 
the basic tools to quickly and easily produce counterfeit United States 
and foreign currency, securities, bonds, checks and other obligations.
    Counterfeit currency produced using digital technology, such as 
computer printers and copiers, accounted for an estimated 39 percent of 
counterfeit notes passed on the American public in fiscal year 2002. 
The balance of notes passed in the United States were manufactured 
using traditional offset printing methods. Despite the fact that 
digitally-produced counterfeit currency accounted for just over one-
third of domestic passing activity, this type of counterfeiting 
resulted in 86 percent of domestic counterfeit arrests and 95 percent 
of domestic counterfeit printing operations suppressed by the Secret 
Service.
    Digital counterfeiting presents a continuing challenge to law 
enforcement due to the widespread availability, ease of operation, and 
mobility of personal computers. The privacy and convenience of personal 
computer systems encourages experimentation, and permits the printing 
of counterfeit currency with considerably less risk and expense than 
traditional printing methods.
    The Secret Service has long believed that the best tool in the 
fight against the proliferation of counterfeit currency is an educated 
public. Just as we practice prevention in our protective mission, our 
proactive approach to investigations is hinged upon the education and 
training seminars provided to business owners, retail groups, the 
financial industry, and state and local law enforcement. These 
counterfeit currency detection seminars provide key sectors of our 
public with the information they need to effectively protect themselves 
and their businesses from becoming victims of counterfeiters. In 
addition to providing training and education, the Secret Service 
publishes and distributes public education brochures describing the 
security features used to authenticate genuine currency.
    From an international perspective, the Secret Service continues to 
send instructors to the International Law Enforcement Academies (ILEA), 
where we provide training to foreign police representatives in the 
detection of counterfeit U.S. currency and offer information on 
strategies useful in investigations of counterfeiting. Last year, the 
Secret Service offered currency identification training to law 
enforcement and banking officials from 47 countries.
    Our continued presence overseas and the training provided through 
the ILEAs is paramount in our ongoing efforts to suppress and seize the 
increasing amount of foreign-produced counterfeit U.S. currency being 
sold, shipped and trafficked throughout the world. The Secret Service 
estimates that nearly 50 percent of all counterfeit U.S. currency 
passed domestically originates overseas. As the continued suppression 
of counterfeit printing operations and seizures of counterfeit currency 
in Colombia indicate, that country remains the leading producer of 
counterfeit U.S. currency in the world. The Secret Service maintains a 
permanent presence in Colombia through our office in Bogota. While 
lacking law enforcement authority overseas, we work closely in an 
investigative liaison capacity with law enforcement, prosecutors and 
government officials throughout the region. These efforts include 
providing training and investigative support aimed at suppression, 
seizure, deterrence, education, and intelligence-gathering regarding 
the organized criminal networks involved in transnational 
counterfeiting. The culmination of these efforts is apparent in the 
achievements of ``Plan Colombia.''
    Since its inception in May of 2001, Plan Colombia has enjoyed 
tremendous success. As of last December, the combined efforts of our 
agents working in cooperation with the Colombian government have 
resulted in 109 arrests, 26 plant suppressions and over $92 million in 
counterfeit U.S. dollars seized in Colombia prior to distribution. 
Accordingly, in fiscal year 2002, there was a 22 percent decrease in 
Colombian-manufactured counterfeit U.S. dollars passed on the American 
public from the previous year.
    Increasingly, Colombian counterfeiters have targeted ``dollarized'' 
economies. In December of 2001, the Secret Service and Colombian 
authorities intercepted a package of over $40 million in counterfeit 
U.S. dollars intended for distribution in Ecuador, which had previously 
adopted the U.S. dollar as its own currency. In July of 2002, the 
Colombian authorities, in cooperation with our own personnel, seized 
the first counterfeit $1 coin (Sacagawea or ``Golden Dollar'') 
production operation in Bogota. As of January, 2003, three additional 
counterfeit $1 coin plants had been suppressed in Colombia. In each 
case, the seized coins were intended for shipment and distribution in 
Ecuador where, according to the Federal Reserve, there are 
approximately $10 million in genuine $1 coins in circulation.
    Counterfeiters are keenly aware that the public, banks, and law 
enforcement in these dollarized countries are less familiar with 
counterfeit U.S. currency, and the punishment for smuggling, 
possessing, and passing counterfeit U.S. currency is generally far less 
than in the United States. Each of these factors decrease risk, lower 
costs, and thereby increases profits for the counterfeiter. Therefore, 
a continued Secret Service presence in this region is vital to 
maintaining both economic stability in these countries and confidence 
in the U.S. dollar.
    In August of 2002, the Secret Service and the Colombian National 
Police jointly hosted the ``International Conference on Counterfeit 
U.S. Dollars--Production, Distribution, and Criminal Prosecution'' in 
Bogota. The conference was attended by senior law enforcement officials 
and prosecutors from sixteen North, Central and South American 
countries, as well as representatives from Spain, Turkey, EUROPOL, and 
the Southern European Cooperative Initiative. This historic conference 
served to improve coordination, build new relationships, and enhance 
existing efforts within the international law enforcement community. 
The conference was yet another example of our emphasis on building and 
maintaining partnerships with foreign law enforcement officials; in 
this case with a focus on the production, distribution and trafficking 
of counterfeit U.S. currency.

                             IDENTITY THEFT

    It remains an investigative priority of the Secret Service to 
promote a public education program and work with law enforcement at all 
levels in preventing identity theft. Public awareness constitutes our 
best defense against identity theft and provides guidance to consumers 
on how they can effectively safeguard their private information. A 
stolen identity can provide a criminal with the tools and information 
necessary to establish good credit and obtain things of value through 
illicit means. Personal information can be used to establish bank 
accounts, obtain credit or debit cards, or gain unauthorized access to 
financial accounts or other sources of capital. Not surprisingly, most 
financial crimes, including bank fraud and credit card fraud, involve 
identity theft.
    The Secret Service hosts identity theft forums involving 
businesses, civic groups, community organizations and local police 
departments, and shares our ``best practices'' for preventing such 
crime and protecting consumers. We participate in and organize such 
events in communities across the country.
    In cooperation with the Federal Trade Commission (FTC) and the 
IACP, the Secret Service is developing an identity crime video and CD-
ROM. This project is designed to provide information to local and state 
law enforcement personnel that will assist them in investigating 
identity crimes at the local level. The video and CD-ROM will serve as 
an information and resource guide, providing downloadable materials 
such as State and Federal identity theft statutes, the FTC's Victim 
Assistance Guide and Sample Affidavit, a ``Best Practices Guide to 
Identity Crime,'' the local contact numbers for the Secret Service, 
Postal Inspection Service, FBI and other agencies, and credit card 
fraud and related information from our partners in the financial 
services industry. This valuable training tool should be available in 
the coming weeks, and the Secret Service will be distributing a copy to 
every police department in the United States.

                         GLOBAL FINANCIAL CRIME

    The professional and effective relationship we have developed with 
the Colombian government, and the similar success stories we have 
enjoyed among our other 19 foreign field offices, can be attributed to 
our long-term commitment to work with the host nation in a cooperative 
environment. This environment fosters relationships built on trust and 
mutual respect, and results in the sharing of information and 
expertise. Where permanent stations are not available, the Secret 
Service relies on temporary assignments to satisfy the requests for 
participation in overseas financial crimes and counterfeit task forces. 
Within the last 2 years alone, the impact of our work through temporary 
assignments in Lagos, Nigeria, Bucharest, Romania, and Frankfurt, 
Germany has resulted in the opening of permanent offices.
    In addition to the protection of our currency, the Secret Service's 
efforts abroad are directed at protecting the integrity of our 
financial infrastructure through responsiveness and timely assistance 
at the point of attack. Within our agency's existing resource levels, 
the Secret Service will seek to establish additional foreign offices in 
areas where there is a demand for our expertise, continued requests for 
partnerships, and in regions that make sense strategically and offer a 
high probability of a favorable return on the investment.

                     SECURITY OF IDENTITY DOCUMENTS

    The heightened threat of terrorism within the United States 
reinforces the need to secure, authenticate, and trace identification 
documents. There are no current uniform standards for identification 
documents in the United States, and many identity documents today, 
particularly state drivers' licenses, were not designed with security 
in mind. They often include features that are either available on the 
Internet or can be easily simulated by amateur counterfeiters using 
widely accessible technologies. With over 300 different, yet 
legitimate, formats for state driver licenses in use today, it has 
become nearly impossible for law enforcement to authenticate a 
questioned document.
    The counterfeiting of documents continues even after a change in 
design or security features. For this reason, the Secret Service's 
Forensic Services Division sponsors the Document Security Alliance 
(DSA), comprised of business leaders from the credentialing and 
identity document industry. The DSA's goal is to focus the efforts of 
this multi-disciplinary group on improving the security and procedures 
associated with identity documents. This organization has discussed and 
explored various processes, methods, techniques and technologies that 
could be used to improve the forensic tracing of fraudulent documents.
    Our agency has investigated cases where individuals were in 
possession of multiple genuine driver licenses, each bearing that 
individual's photographs with different biographical information. 
Subsequent information revealed that state motor vehicle 
administrators, upon receipt of counterfeit ``breeder'' documents, 
issued the licenses. The notion that criminals can generate counterfeit 
breeder documents, such as birth certificates and Social Security 
cards, and obtain with little difficulty more secure documents such as 
passports, throws a spotlight on one of our most troubling 
vulnerabilities.
    The Secret Service maintains a database consisting of over 90,000 
counterfeit identity and monetary documents. These counterfeit 
documents include credit cards, travelers checks, bank checks, Social 
Security cards, immigration documents, birth records, work identities 
and drivers licenses. The database was created to allow for link 
analysis or data mining of records that would not normally be discerned 
through traditional investigative or forensic approaches. The current 
system has produced numerous investigative leads and is considered the 
largest database of its kind in the world. The ability to collect, 
analyze and catalogue documents relating to terrorist investigations, 
and to provide a forensic link analysis in tracking criminals and 
terrorists throughout the world, is critical. The Secret Service has 
developed and implemented a Web-based application that provides law 
enforcement agencies across the country with access to all genuine 
identification documents used in the United States. Within seconds, law 
enforcement personnel can request an image file of a specific document 
along with critical information necessary to examine the document 
effectively.
    The images can be enlarged, printed or used for comparison with the 
document in question. The application can assist the officer with step-
by-step instructions to aide searches without the requirement for 
specific knowledge in the area of counterfeit documents. The program 
also provides additional instruction in detecting common defects in 
counterfeit documents as well as security features in genuine 
documents. A scanning feature will also be incorporated to allow a 
document to be submitted to our forensic lab. The anticipated 
turnaround time for a decision on the authenticity of the suspected 
document will be less than 60 minutes.

           NATIONAL CENTER FOR MISSING AND EXPLOITED CHILDREN

    The Secret Service derives enormous professional and personal 
fulfillment from our relationship with the National Center for Missing 
and Exploited Children (NCMEC), and continues to provide the valuable 
analytical, forensic and laboratory support, and other assistance that 
the Center has benefited from in recent years.
    Since the passage of the Violent Crime Control and Law Enforcement 
Act of 1994, the Secret Service has provided forensic and technical 
support to the NCMEC, including the use of the Automated Fingerprint 
Identification System; the Forensic Information System for Handwriting; 
ink analysis and comparison; traditional handwriting and fingerprint 
comparison; polygraph examinations and consultation; visual information 
services such as image enhancement, suspect drawings and video and 
audio enhancement; graphic and photographic support; and age 
regression/progression drawings. In fiscal year 2002, the Secret 
Service conducted 29 polygraph examinations in direct support of the 
NCMEC's mission. The examinations for these cases involved missing, 
abused and murdered children.
    We also actively support the Center's Operation Safe Kids 
initiative--a national, community-based awareness effort. We utilize a 
computer-enhanced application known as the Children's Identification 
System (KIDS), to acquire a photograph, fingerprints and biographical 
data of a child that are then printed and provided to his or her 
parents. This program has been offered at public events throughout the 
country, and to date, we have fingerprinted more than 35,000 children 
under the KIDS program.
    The Secret Service is also developing a Forensic Investigative 
Response and Support Team (FIRST). FIRST will be comprised of forensic 
experts able to respond on short notice to requests for assistance from 
state, local, or other Federal law enforcement agencies, providing 
time-sensitive forensic support to requesting agencies in cases 
involving missing or exploited children. In essence, when the NCMEC is 
notified by a local law enforcement department of an abduction, the 
Secret Service will be capable of launching a FIRST team to respond 
within the first 8 hours of abduction, providing computer, forensic and 
``real-time'' investigative support to a local police department that 
may lack the resources to respond in an effective manner during that 
critical period.

                           PROTECTIVE PROGRAM

    Since 1901, the Secret Service has been responsible for protecting 
our nation's highest elected officials, visiting world leaders and 
other designated individuals. In addition, our current mission includes 
reducing threats posed by global terrorists and other adversaries, and 
providing the safest environment to those participating in events of 
national significance. We perform this mission by providing continuous 
protective operations that offer comprehensive security for our 
protectees and the facilities where they work and live, and, by 
coordinating, planning and implementing security plans at important 
events and functions designated by the President as National Special 
Security Events (NSSEs).
    In recent decades, our protective mission has expanded beyond the 
protection of the President, the Vice President and their immediate 
families. Today, we are also mandated to provide personal protection to 
the President-elect, the Vice President-elect and their immediate 
families; major Presidential and Vice Presidential candidates and their 
spouses; visiting foreign heads of state or governments; former 
Presidents, their spouses and children under the age of 16; and other 
government officials as designated by the President. We also provide 
security for the White House Complex, the Vice President's residence, 
and 519 foreign missions within the Washington, D.C., area.
    Mr. Chairman, we have witnessed a decade of well-planned and well-
executed attacks, both at home and abroad, against Americans and 
American symbolic targets. Oklahoma City; Khobar, Saudi Arabia; the 
U.S. embassies in Kenya and Tanzania; the U.S.S. Cole, and of course, 
the World Trade Center and the Pentagon in 2001. These tragic events 
remind us of our vulnerabilities and the changing threats our nation 
faces each and every day.
    The Secret Service continues, as a matter of practice, to assess 
these threats and evaluate the application of our protective 
methodologies. We have assumed new responsibilities in the form of 
additional protective details, and we continue to adjust the depth of 
coverage to enhance the Presidential, Vice-Presidential, and Former 
Presidential protective details. Today, the Secret Service provides 
full-time protective details for 27 individuals, a number that 
increased sharply following the September 11th attacks.
    Our protective mission was further expanded in 2000, when Congress 
authorized the Secret Service to plan, coordinate and implement 
security operations at designated events of national significance. This 
authority was a natural evolution for the Secret Service, as we have 
led security operations at large events involving the President dating 
back to our first protective mandate in 1901 and have developed an 
expertise at planning these events and coordinating security with our 
local, State and Federal law enforcement partners. Since 1999, the 
Secret Service has led security operations at 12 NSSEs, including the 
2000 Republican and Democratic National Conventions, the 2001 United 
Nations General Assembly, and, most recently, the 2002 Winter Olympics 
and Super Bowl XXXVI.
    The actual planning and coordination of these events requires an 
intensive, sustained effort, and the volume of both financial and human 
resources required to develop and execute a sound physical security 
plan for a NSSE can be immense. The 2002 Winter Olympics in Salt Lake 
City, for example, involved an unprecedented interagency collaboration 
between Federal, State, and local law enforcement, as well as the 
military, working with the Salt Lake Organizing Committee, the 
International Olympic Committee, the State of Utah, and other entities. 
Security for the competition and ceremonies was provided for a 4-week 
period, 24 hours a day, for an estimated 65,000 daily spectators, 
including 2,500 athletes in 15 protected venues. These venues stretched 
over an area covering 900 square miles, slightly smaller than the state 
of Rhode Island. It was the largest and most comprehensive coordinated 
security event in the history of American law enforcement.
    In addition, the annual meeting of the United Nations General 
Assembly (UNGA) is held each year in New York City. On average, 50 to 
80 heads of state/government attend this event. It is important to note 
that each year, the UNGA is a manpower and resource intensive effort 
for the Secret Service.
    We consider the protective mission as an evolutionary process, 
essential to the security of our homeland. We apply that thought 
process when planning and executing security, and we analyze the actual 
and potential threats during increasingly complex protective 
operations. Adapting to changing situations in a changing environment, 
sound planning on all planes, and employing technology or other 
applications to our advantage is fundamental to our strategy.
    There is also a vibrant interrelationship between our protective 
and investigative responsibilities. Since 1865, the Secret Service has 
developed a unique capacity to build strong and trusted partnerships 
with local, county and state law enforcement in furtherance of our 
investigative mission. It is important to note that these are 
partnerships in their truest form. They are built over time, and 
involve information sharing, open communication, and, perhaps most 
critical, mutual trust.
    Building an atmosphere of trust and cooperation with local police 
is not only central to our criminal investigations and prevention-
oriented partnerships, it is also the keystone to fulfilling our 
protective mission. For travel outside of Washington, D.C., the Secret 
Service executes our security plan with the cooperation and resources 
of the local police in the area, as coordinated by our field office.
    The cooperative atmosphere that has already been established 
between our field office and local law enforcement with regard to our 
investigative duties breeds successful interagency collaboration during 
Presidential and other protectee visits. Simply put, there is already a 
precedence of trust between the parties that need to cooperate and 
coordinate their efforts, and the Secret Service builds upon that 
relationship to prepare for and provide a seamless and secure 
environment for our protectee.
    Not only is there a connection between our investigative 
responsibilities and the protection of the President, but the strength 
of our protective capabilities is dependent on our investigative 
mission. Every agent currently assigned to a protective detail began 
their career in the Secret Service as a criminal investigator in a 
field office, where they spent considerable time developing their 
skills and expertise by investigating counterfeit cases, financial 
crimes, protective intelligence cases or protecting critical 
infrastructure.
    A Secret Service agent is among the most skilled law enforcement 
operatives in the world, largely due to their investigative training 
and experience. This extended field training provides an opportunity to 
apply analytical skills and various investigative techniques while 
testing their maturity and judgment. These are the building blocks 
necessary for the transition of our agents into the next phase of their 
careers--protecting our nation's highest elected leaders. Because of 
this investigative experience, our protective agents are multi-
dimensional, relying on an array of skills and instincts to protect our 
nation's leaders. We draw upon those individuals who have years of 
experience in the field, who not only have acquired the requisite 
skills, but have been tried and tested under difficult circumstances, 
and have proven decision-making and other abilities that are crucial to 
protective missions. This investigative experience prepares our agents 
for the mental and physical challenges faced while planning and 
coordinating security, while always being ready to recognize and react 
instantaneously to a threat.
    As you can see, Mr. Chairman, our protective and investigative 
responsibilities are thoroughly intertwined and interdependent. They 
are the heart and soul of the Secret Service, and complement each other 
in a manner that is truly unique among law enforcement today.

                     OFFICE OF PROTECTIVE RESEARCH
                         INTELLIGENCE DIVISION

    The protective research and intelligence programs continue to serve 
a critical role in support of the dual missions of the Secret Service. 
Our Intelligence Division coordinates all Secret Service investigations 
related to direct threats against our protectees and develops threat 
assessments related to protected individuals, facilities and venues. 
This process involves the identification, assessment, and management of 
all information and incidents directed toward our protective efforts, 
both at home and abroad. The division evaluates risk potential 
associated with specific and generalized threats; prepares analyses of 
protectee-specific threats; maintains liaison with other law 
enforcement and intelligence agencies; plans and reviews the case 
management for high risk subjects; and, through our National Threat 
Assessment Center, collaborates in the design and implementation of 
program evaluation studies and other risk assessment research designed 
to improve our understanding of violence directed toward public 
officials.
    During fiscal year 2002 and fiscal year 2003, the Intelligence 
Division supported the development and implementation of the Department 
of Homeland Security, including the Information Analysis and 
Infrastructure Protection Directorate and related Working Groups, Sub-
Working Groups, and Planning Committees. As the Secret Service 
continues its transition to the DHS, the Intelligence Division will 
take on increased responsibilities, including the staffing of the DHS's 
multi-agency Homeland Security Center (HSC). The HSC provides a 24-hour 
``watch center'' and serves as the Department's single point of 
integration for information related to homeland security. The HSC is 
responsible for maintaining domestic situational awareness; detecting, 
preventing, and deterring incidents; and managing the response to all 
critical incidents, natural disasters and threats.
    In addition, the Intelligence Division will be uniquely involved 
with the Administration's new intelligence analysis initiative, the 
Terrorist Threat Integration Center (TTIC). The TTIC will merge and 
analyze terrorist-related information collected domestically and abroad 
in order to form the most comprehensive threat picture possible.
    The Secret Service's active role in these new and enhanced 
intelligence initiatives will play an important role in the overall 
mission of the DHS. The Secret Service is committed to full and active 
participation in the protection of our homeland; and further, it is 
imperative that our agency always has access to information that is 
vital to our own protective and investigative missions.
    The Secret Service will provide full-time staff for the 24/7 
operation of the HSC and the TTIC from within our Intelligence 
Division. Our personnel assigned to the HSC and the TTIC will be 
responsible for receiving and disseminating incoming intelligence 
information, as well as providing DHS with a point-of-contact for 
Secret Service response capabilities.
    The Intelligence Division coordinates Secret Service participation 
in the Department of Justice-led Joint Terrorism Task Forces (JTTFs). 
Currently, 58 Secret Service agents participate in JTTF programs in 51 
offices. In addition to collaborating in a combined and coordinated 
effort, the Secret Service provides and derives the benefits of sharing 
information on investigative matters that may be related to our 
protective mission.
    In addition to directing and performing such operational 
activities, the Intelligence Division continues to provide leadership 
for the Protective Detail Intelligence Network (PDIN), a consortium of 
Washington, D.C., area law enforcement, security, and public safety 
agencies with protective and security-related functions. Initiated in 
1999 by the Secret Service, the PDIN has emerged as an important forum 
for sharing intelligence information that affects security planning 
issues across agencies in the metropolitan area. PDIN meetings include 
briefings and training concerning significant and designated major 
security events coordinated by the Secret Service, and they facilitate 
cooperative partnerships among agencies who share protective and 
security responsibilities. Through the PDIN, the Secret Service has 
offered assistance in the preparation of security assessments for 
incoming Cabinet members and senior Administration officials.

                   NATIONAL THREAT ASSESSMENT CENTER

    As part of the Secret Service's protective intelligence mission, 
our National Threat Assessment Center (NTAC) continues to gain national 
attention through its training, outreach, consultation, and research 
efforts in the specialized field of targeted violence. Its principal 
goal encompasses the spectrum of threat assessment and targeted 
violence as it relates to our protective mission. As a natural 
extension of our protective intelligence methodology, we continue to 
share our knowledge and depth of experiences with the DHS, 
demonstrating the utility of Secret Service ``Best Practices'' for 
identifying, assessing, and reducing threats to homeland security.
    NTAC also continues to support the development of the new 
Department. NTAC has assisted the Information Analysis & Infrastructure 
Protection Directorate (IA&IP) in the development of a Competitive 
Analysis & Evaluation Office (CAEO), providing detailed personnel to 
ensure that the DHS has an operationally-sound quality assurance 
function. The purpose of the CAEO is to reduce the risk and 
consequences of domestic terrorist attacks by ensuring that the IA&IP 
Directorate's initiatives are tested and are of the highest quality and 
value. NTAC is also participating in ``Red Teaming'' exercises with the 
Department. Red Teaming is a risk assessment technique that tests an 
organization's methodologies and analyzes the vulnerabilities from the 
perspective of the threat.
    Following the attack at Columbine High School in 1999, NTAC entered 
into a partnership with the Department of Education and the National 
Institute of Justice to apply the methodology used in our traditional 
analysis of targeted violence, in the form of a study designed to 
examine if similar behavior was involved in school shootings. This 
study, known as the Safe School Initiative, reviewed 37 school 
shootings occurring in the United States in the preceding 25 years. The 
Safe School Initiative was completed in 2000, focusing on 
operationally-relevant information--information that law enforcement 
professionals, school personnel, and others could use to try to prevent 
future school shootings. The Initiative examined the pre-attack 
behavior and communications of school shooters, to identify information 
that might be discernible in advance of an attack, and could allow for 
intervention.
    NTAC staff has been able to communicate what we have learned in 
assessing threats on public officials and our findings in the Safe 
School Initiative with those with an interest in preventing school and 
workplace violence. In 2002, NTAC, in collaboration with the Department 
of Education, completed and published the final product of the Safe 
School Initiative: the study's Final Report, and a Guide to Threat 
Assessments in Schools. These materials suggest methods for school 
administrators, educators, law enforcement personnel, and mental health 
professionals to conduct threat assessments in their schools.
    The Secret Service and Department of Education have thus far 
conducted 46 Safe School Initiative presentations and 12 day-long 
training seminars around the country, providing thousands of school 
officials, law enforcement professionals and others information on how 
to respond to and manage threatening situations in our schools. NTAC 
was also involved in other seminars and forums in fiscal year 2002, 
including 28 Exceptional Case Study Project/Threat Assessment Training 
Presentations, five Field Protective Intelligence Briefings, and four 
Threat Assessment Seminars.
    Also noteworthy is the Insider Threat Study, a collaboration 
between the Secret Service and Carnegie Mellon University's Computer 
Emergency Response Team Coordination Center (CERT/CC) focusing on 
insiders who attack critical information systems. This partnership 
seeks to strengthen critical infrastructure protection efforts and 
provide private industry and law enforcement with information to help 
prevent insider attacks. The Insider Threat Study uses operational 
methodology of previous NTAC studies to examine network compromise 
incidents committed by insiders, such as current or former employees, 
and seeks to identify discernible behaviors and communications that 
could assist in the prevention of future compromises.
    NTAC has also proposed the creation of an information-sharing 
system for agencies with protective responsibilities. This system, 
dubbed the Targeted Violence Information-Sharing System (TAVISS), would 
contain a repository of names of subjects with a known or suspected 
adverse direction of interest towards local, state, and Federal public 
officials. TAVISS would be directly accessed from remote sites by 
multiple law enforcement agencies with protective responsibilities for 
such public officials.

                      TECHNICAL SECURITY DIVISION

    The Technical Security Division (TSD) is responsible for creating a 
safe and secure environment for Secret Service protectees and the 
facilities we protect. This includes the responsibility of managing all 
chemical/biological/hazardous materials countermeasures programs of the 
Secret Service that safeguard our protectees and facilities, and the 
mitigation of any threats of terrorism.
    As part of its ongoing support mission, TSD identifies and 
implements ways to improve its detection capabilities in and around the 
White House Complex, Naval Observatory and other protected locations. 
Outside of Washington, D.C., chemical/biological/hazardous material 
support is integral to any protective security plan during motorcade 
movements or at fixed locations, including all designated National 
Special Security Events.
    TSD has two significant programs of interest that demonstrate the 
Secret Service's ability to mitigate specific threats: the Radar 
Airborne Intrusion Detection System (RAIDS), and the Hazardous Agent 
Mitigation Medical Emergency Response Team (HAMMER).
    The RAIDS is a classified network of air intrusion detection 
equipment that allows the Secret Service to continuously monitor the 
airspace in the Washington, D.C. area. Segments of the system have 
recently been upgraded, and, at the recommendation of classified 
studies, additional subsystems will be incorporated to address existing 
and emerging threats.
    The HAMMER team was developed to provide rapid intervention to 
Secret Service protective details in the event of a chemical, 
biological or radiological incident. The HAMMER team consists of TSD 
personnel trained in hazardous materials identification, mitigation, 
decontamination, and basic life support. In the event that a hazardous 
environment incapacitates the protectee's primary medical support, the 
team can provide basic life support and decontamination prior to 
patient transport. The team will provide field tests and take samples 
for transport to remote laboratories for testing and identification. 
TSD has agreements in place for laboratory analysis of suspect 
materials. The HAMMER team will automatically deploy when a chemical, 
biological or hazardous materials release occurs and Secret Service 
protectees, or one of the facilities that we protect, are affected.

               INFORMATION RESOURCES MANAGEMENT DIVISION

    The Information Resources Management Division (IRMD) continues to 
provide an information and communications infrastructure in support of 
the protective and investigative missions of the Secret Service. The 
Secret Service's move to the Department of Homeland Security has 
significantly increased IRMD's role and responsibilities. Management 
and staff from this division are engaged in many of the DHS Working 
Groups and Sub-Working Groups, including the CIO Investment Review 
Group, Technical Reference Model Working Group, Security Sub-Group, 
Network Sub-Group, Web Management Sub-Group, Directory Services E-Mail 
Sub-Group, Collaboration Sub-Group, Data Management Sub-Group, Records 
Management Sub-Group, Geospatial Sub-Group, Wireless Sub-Group, E-
Learning Sub-Group, First Responders and Emergency Preparedness, CFO 
Council, and a Classified IT Technical Team.
    In fiscal year 2002, IRMD continued to upgrade and improve system-
wide efficiencies in radio, telephone and wireless communications. The 
priority initiatives include the conversion of Legacy mainframe 
applications to a Web-based system and upgrading headquarters and field 
office voice/data capacity. IRMD also completed its test of the 
Treasury Smart Card Proof of Concept and is in the process of 
integrating this new technology into the workplace. There are two 
significant benefits driving the move to smart card use and acceptance: 
the ability to securely store Public Key Infrastructure certificates 
(part of an elaborate process to authenticate ones' identity over 
electronic interfaces such as the Internet), and the ability to use 
digital signatures to authorize government activities. This program has 
also been presented to the DHS Chief Information Officer for potential 
use at the new Department.

                  EMERGENCY PREPAREDNESS PROGRAM (EPP)

    The EPP is responsible for coordinating the emergency preparedness 
programs of the Secret Service and concentrates its efforts on 
operations security, the continuity of government and critical 
infrastructure protection. The EPP staff coordinates with the White 
House Military Office, the Emergency Preparedness and Response 
directorate and other agencies regarding matters involving the 
continuity of government and emergency preparedness. Internally, EPP 
staff coordinates emergency preparedness exercises and provides 
frequent educational material and training to staff in all areas of 
emergency preparedness.
    In fiscal year 2002, EPP assisted the DHS with the development of 
the Emergency Preparedness and Response Directorate, and participated 
in efforts to create an emergency preparedness database to be shared 
among all agencies in the DHS. EPP has also been involved in the 
Homeland Council on Domestic Threat Response and Incident Management, 
and the Weapons of Mass Destruction Management Policy Coordination 
Working Group.
    EPP actively participates in the National Capitol Region Planning 
Committee Working Group that coordinates emergency preparedness 
efforts, particularly Federal Emergency Decision and Notification 
Protocol in the District of Columbia region.

                      HUMAN RESOURCES AND TRAINING
           WORKFORCE RETENTION/WORKLOAD BALANCING INITIATIVE

    The House and Senate Appropriations Committees should be commended 
for recognizing and supporting the priority of the Secret Service to 
confront the declining quality of life of our workforce caused by 
excessive overtime, out-of-district travel and other such factors. In 
fiscal year 2000, the Secret Service began our Workforce Retention/
Workload Balancing Initiative with the goal of hiring 682 additional 
agents during a 3-year period. I am pleased to report that the Secret 
Service exceeded this goal by more than 60 percent, hiring a cumulative 
total of 1,098 special agents. In addition, the Secret Service enhanced 
the quality of life of all of our employees by hiring 545 Uniformed 
Division officers and 453 support personnel during the same period, far 
exceeding the original target under the Workforce Retention/Workload 
Balancing Initiative.
    Despite our impressive hiring achievement, we have experienced a 
higher than normal level of attrition, attributable largely to ongoing 
retirements and transfers. This attrition requires us to continue our 
aggressive hiring plan and to reinforce our ranks, whose unique skill 
set is in high demand both in the government and private sectors. The 
safety, morale and job satisfaction of our entire workforce are of 
paramount importance.
    For fiscal year 2003, in order to meet our strategic goals of 
protection, investigation, and providing a responsive support 
infrastructure, the Secret Service plans to hire 893 special agents, 
Uniformed Division officers, and support personnel.

                               DIVERSITY

    It is the policy of the Secret Service to attract, develop, retain 
and maximize the potential of a diverse workforce in a changing and 
competitive environment. We are committed to this policy. As a means of 
fully achieving and emphasizing an organizational culture that 
recognizes the value added by a diverse workforce, the Secret Service 
has organized its Diversity Management Program under the direction of a 
Deputy Assistant Director for Recruitment, Employment and Diversity 
Programs (REDP). Through a coordinated process, the REDP develops and 
implements recruitment policies with our agency's Recruitment and 
Hiring Coordination Center, the Diversity Management Program, and the 
Chief of the Personnel Division.
    In support of the Secret Service's initiative to recruit, develop, 
and retain a diverse workforce, the Diversity Management Program hosts 
quarterly, interactive training conferences designed to address 
diversity issues throughout the agency. In fiscal year 2000, the Secret 
Service contracted with the Ivy Planning Group, a premier management 
consulting firm, whose skilled trainers have augmented our diversity 
conferences over the past two years. The Ivy Planning Group assists 
major organizations within the Federal Government and private sector in 
becoming more customer-driven by focusing on strategic and tactical 
planning, marketing and cultural diversity.
    Approximately 150 of our employees participated in these training 
sessions last year. The Diversity Management Program also offered a 
``Conference on Supervisory Diversity Issues''. In support of President 
Bush's Management Agenda regarding the Strategic Management of Human 
Capital, this class was attended by ``middle'' management and focused 
on issues within the Secret Service.
    The Secret Service supports and encourages employee participation 
in conferences dedicated to minority interests. In addition to our 
internal diversity training, the Diversity Management Program sponsors 
employees who participate in the following national training 
conferences:
  --Women in Federal Law Enforcement
  --National Organization of Black Law Enforcement Executives
  --National Native American Law Enforcement Association
  --Hispanic American Police Command Officers Association
  --National Asian Peace Officers Association
  --Blacks in Government Training Conference
    In fiscal year 2002, approximately 120 employees attended the 
following conferences: the Women in Federal Law Enforcement Conference; 
the Hispanic American Police Command Officers Association Training 
Conference; the National Organization of Black Law Enforcement 
Executives Training Conference; the Blacks in Government Training 
Conference; and the National Native American Law Enforcement 
Association Training Conference.
    Last year, the Secret Service sponsored 14 recruiting seminars 
attended by 4,446 potential applicants for Uniformed Division and 
Special Agent positions. The Recruiting and Hiring Coordinating Center 
(RHCC) continued its liaison efforts with the Historically Black 
Colleges and Universities, the Hispanic Servicing Institutions and 
Women's Colleges by attending career fairs at many of these 
institutions. Additionally, the RHCC mailed out Special Agent and 
Uniformed Division officer brochures to each of these institutions 
highlighting career opportunities with the Secret Service.
    The RHCC also ran recruiting ``banner'' ads on Internet websites 
targeted towards specific ethnic minority groups, including Hispanic 
Online, BlackVoice.com, GoldSea.com, and WIFLE, and sponsored 
recruiting advertisements in several magazines targeted towards various 
minority groups.
    In the past year, the Service has developed a core training course 
curriculum for our Equal Opportunity Program to lay a foundation for 
highly-skilled personnel to work in special emphasis programs and 
provide EEO counseling services. Additionally, we have established 
collateral duty special emphasis program manager positions for 
Hispanic, African-American, Asian-Pacific Islander, Native American, 
Persons with Disabilities/Disabled Veterans and Federal Women's Program 
constituency groups.

                    JAMES J. ROWLEY TRAINING CENTER

    The James J. Rowley Training Center (RTC) continues to evolve into 
a world-class education center with experienced staff, enhanced 
curriculum, and the development of facilities. Emphasis on overall 
quality and efficient operations has resulted in the enhanced 
integration of course content and streamlined scheduling of basic, in-
service, and external training. With the transition of the Secret 
Service into the Department of Homeland Security, the RTC envisions an 
opportunity for circular growth as a ``law enforcement university,'' 
offering training in physical security, site security, event security, 
counter terrorism studies, emergency preparedness, threat assessment, 
and protection of critical financial infrastructure.
    The Secret Service recognizes that the mission of our agency is 
extremely specific in nature and our advanced training cannot be 
provided anywhere else in the Federal law enforcement community. 
Physical security, site security, threat assessment and other 
components of our training are culturally unique to the Secret Service, 
and the curriculum and facilities we have developed at the RTC have 
significantly enhanced our ability to fulfill our protective and 
investigative missions.
    During fiscal year 2002, the RTC trained 350 special agents (15 
classes), 216 Uniformed Division officers (9 classes), and 26 special 
officers (2 classes). RTC also completed 23,874 in-service instances 
and re-qualification visits for the workforce. Review of course content 
remains a priority. The RTC has completed an evaluation and revision of 
the Uniformed Division's basic training curriculum review, eliminating 
duplication of effort at both the RTC and the Federal Law Enforcement 
Training Center (FLETC).
    The ``Beltsville Field Office'' at the RTC offers the special agent 
trainee a ``virtual'' performance-based program, exposing agents to the 
integration of elements relative to the missions of the Secret Service. 
This has included team-oriented, practical exercises in financial 
investigations, arrest procedures, protective intelligence, and site 
security.
    Strides in proactive protection methodology have produced and 
introduced new curriculum to address advanced counter surveillance 
measures and suicide bomber prevention. The canine program continues to 
explore the potential utilization of dogs beyond bomb detection to 
performing patrols and detecting personal explosive devices on humans.
    To more effectively meet the needs of the workforce, RTC continues 
to adopt technology-based training. The Center now houses two video-
conferencing studios that have been utilized to broadcast legal 
training, CPR and first aid kit review, computer applications, and 
program and methodology training to Secret Service students at FLETC 
and field offices across the country.
    Other distance learning techniques are being researched, procured, 
and implemented, such as custom courseware via the Intranet and Web-
based forums, electronic classrooms, and CD-ROMs. Such tools offer 
training opportunities to all employees anytime and anywhere, without 
the cost of time and travel.
    In the pursuit of academic excellence, the RTC established and 
continued an invaluable partnership with the Johns Hopkins University 
as part of an ongoing effort to assure that we develop and maintain the 
highest quality in our management ranks.

                               CONCLUSION

    Mr. Chairman, the Secret Service is entering a new era. We are 
proud to be part of the Department of Homeland Security, and are eager 
to contribute in any way we can to the mission of protecting our 
citizens, our economy and our institutions. While still in its infancy, 
it is clear that the new Department will be built on the twin pillars 
of prevention and protection. These are the very words found throughout 
our own strategic plan. They have defined the mission and culture of 
the United States Secret Service for 138 years. It is the hope of each 
and every employee of the Secret Service that our agency can strengthen 
the new Department.
    On behalf of the men and women of the Secret Service, we stand 
ready to continue protecting our leaders, our infrastructure and the 
American people. We know how daunting a mission this is, but I assure 
this subcommittee that the Secret Service can and will meet this 
challenge. Our people have the skills, the experience, the training, 
and most importantly, the character, to rise to any occasion. They have 
dedicated their careers and their lives to making a safer America.
    Mr. Chairman, thank you again for the opportunity to appear before 
the subcommittee. This concludes my prepared statement. I will be 
pleased to answer any questions you or the other members of the 
subcommittee may have.

    Senator Cochran. Before proceeding to hear from the 
Commandant, I welcome the distinguished Senator from 
Washington, Senator Murray. If you have an opening statement at 
this point, we would be happy to hear from you.
    Senator Murray. Mr. Chairman, I appreciate that, and I know 
I speak for many of my colleagues when I say that we never 
cease to be impressed by the accomplishments of our men and 
women in the Coast Guard, and I am really proud of the role 
that the Coast Guard played in Operation Iraqi Freedom and 
really want to highlight the work of the Port Security Unit 
from Tacoma, Washington which was instrumental in restoring 
order when the coalition forces captured the fort of Umm Qasr.
    While the Coast Guard may be viewed by some as the fifth 
military service, the Coast Guard is actually the first 
military service when it comes to defending our homeland. Over 
and above its mission to keep our ports and waterways secure, 
the Coast Guard is charged with missions that no other military 
service or Federal agency could even begin to contemplate. 
Their missions include stopping illegal immigrants, protecting 
the marine environment, ensuring the safety of boaters and 
shipping operations, and stopping the flow of illegal drugs.
    As Admiral Collins knows, I and many of my colleagues in 
the House and Senate were concerned about the President's plan 
to merge the Coast Guard into the new Department of Homeland 
Security. Our biggest concern was that the Coast Guard's non-
homeland security missions would continue to be deemphasized. 
We feared that the potential of catastrophic oil spills and 
illegal foreign fishing boats regularly encroaching on our U.S. 
fishing grounds would increase, and when the Department was 
established, the administration told us not to worry, that our 
concerns were ill-founded.
    Even so, just to be sure, Congress included language in the 
Homeland Security Act that states explicitly that the 
capabilities of the Coast Guard to perform its missions shall 
be maintained intact and without significant reduction once the 
Coast Guard is transferred to the new Department.
    The language also prohibited the Secretary of Homeland 
Security from substantially or significantly reducing the 
missions of the Coast Guard.
    A great deal of credit goes to our Committee Chairman, 
Senator Stevens, for insisting on the inclusion of that 
language.
    The Senate Appropriations Committee report that accompanied 
the 2003 Appropriations Act directed the Commandant of the 
Coast Guard to ensure that with the historic funding increase 
it received in that bill, the Coast Guard returns its level of 
effort in its non-homeland security missions to the level that 
existed prior to September 11, 2001.
    Today, when we look at the actual record as to where the 
Coast Guard has been focusing its attention, it is clear that 
we were right to worry about a continuing decline in drug 
interdiction, fisheries enforcement, marine safety, and marine 
environmental protection.
    Two weeks ago, the subcommittee received the first of the 
quarterly reports that I mandated as part of that 2003 Act. 
That reports required the Coast Guard to display its mission 
hours for each of the quarters since September 11, 2001 as well 
as the eight quarters that preceded September 11.
    Mr. Chairman, I carefully reviewed the figures that were 
transmitted in that report, and the findings are very 
disturbing. In the area of drug interdiction, the Coast Guard's 
efforts over the last year stand 42 percent below the number of 
hours committed to drug interdiction prior to September 11, 
2002. In my own 13th District in the Pacific Northwest, drug 
interdiction efforts were reduced by 25 percent over that 
period.
    In the area of marine environmental protection, the Coast 
Guard's mission hours have declined 64 percent below the pre-
September 11th levels, and in the Pacific Northwest, that 
reduction has equaled 82 percent.
    In the area of marine safety, the Coast Guard's level of 
effort over the last year stands 43 percent below the time 
prior to September 11.
    Of particular concern is the Coast Guard's greatly 
diminished efforts in the area of fisheries enforcement. 
Nationwide, the Coast Guard's level of effort has decreased a 
third.
    Let us remember that if Coast Guard vessels are enforcing 
fishing laws in the Bering Sea, they are also able to conduct 
quicker responses in search and rescue cases.
    When looking at this data, it is important to remember that 
the actual number of hours that the Coast Guard spends 
operating its cutters, boats, and aircraft has actually 
increased 20 percent since September 11. So all of these 
dramatic reductions have taken place at the same time that 
overall Coast Guard mission hours have increased.
    For example, prior to September 11, the Coast Guard spent 
12\1/2\ of every 100 hours on fisheries enforcement. That 
number is now down to less than 7 hours. That is a reduction of 
45 percent.
    In the area of drug interdiction, prior to September 11, 
the Coast Guard spent 15\1/2\ of every 100 hours keeping drugs 
off our Nation's streets. That number is down now to less than 
7.4 hours. That is a reduction of 52 percent.
    Many of these same observations were made recently by the 
GAO in testimony to the House of Representatives, but the GAO 
used less recent data than I just used. The lesson from all of 
this data for my colleagues is that when it comes to the Coast 
Guard, there is no free lunch. Despite a work ethic that is 
second to none both in the military and the entire Federal 
Government, and despite the tireless commitment of the 
thousands of hard-working men and women in the Coast Guard, 
they simply cannot be everywhere at all times.
    With that fact as our backdrop, I hope the Subcommittee 
will use this morning's hearing to really get to the truth as 
to what the President's budget for 2004 will or will not pay 
for when it comes to the Coast Guard and all of its critically 
important missions.
    In the formal testimony that the commandant will present to 
us this morning, he will tell us that one of the three primary 
objectives of his 2004 budget is ``to sustain non-homeland 
security missions near pre-September 11 levels.''
    The GAO, conversely, reviewed the President's 2004 budget 
and testified that the Coast Guard's 2004 budget request, and I 
quote, ``does not contain initiatives or proposals that would 
substantially alter the current distribution of levels of 
effort among mission areas.''
    Mr. Chairman, last year, this Subcommittee was successful 
in providing the Coast Guard with an historic funding increase, 
and that increase was well-deserved and long overdue. This 
year, the President is proposing yet another historic funding 
increase for the Coast Guard, and I commend him for that. But I 
think it is critical that this Subcommittee insist that if this 
agency's budget continues to grow by 20 percent in just 2 
years, we have a right to expect that this agency will return 
to its work of interdicting drugs, protecting our fishing 
grounds and our fishermen, and protecting our environment.
    Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator.
    Admiral Collins, I am pleased to welcome you to this 
hearing. We appreciate very much your distinguished service as 
Commandant of the United States Coast Guard.
    The President's request for fiscal year 2004 proposes $6.77 
billion for the Coast Guard, approximately $700 million more 
than was enacted in fiscal year 2003, excluding the recently 
enacted supplemental.
    The Coast Guard has significant homeland security and non-
homeland security responsibilities including the Integrated 
Deepwater System, maritime domain awareness, fisheries 
enforcement, and search and rescue.
    We have your written statement, and it will be made a part 
of the record. We encourage you to proceed to summarize it if 
you will and make any additional comments you think would be 
helpful to the Committee as we review this budget request.
    Mr. Commandant, you may proceed.

                 STATEMENT OF ADMIRAL THOMAS H. COLLINS

    Admiral Collins. Good morning, Mr. Chairman, Senator 
Murray. It is really an honor and a pleasure to be with you in 
our first session with this subcommittee.
    The Senate has been tremendously supportive of the Coast 
Guard over the years--``enduring support'' I think is the way 
to describe it. It has clearly enabled us to meet many of the 
challenges that we have faced over the years to provide for the 
maritime safety and security of the citizens of this country.
    That need has never been so evident over the past year-and-
a-half, and the scope and scale of the changes of those 18 
months have been absolutely significant and dramatic.
    Here at home, the Coast Guard units have been patrolling 
vigilantly, working side-by-side with our partners in the 
Department of Homeland Security and other Federal, State, and 
local agencies to ensure the security of our Nation and the 
safety of our citizens.
    Coast Guard forces have also been valiantly engaged in 
support of component commanders abroad, in the Arabian Gulf and 
in the Mediterranean. We employed two high-endurance cutters, 
eight patrol boats, one buoy-tender, four port security units, 
and two maintenance support units, many of which, the good news 
is, will be returning home soon now that the hostilities are 
drawing to a close.
    In the midst of the increased operational tempo that we 
have experienced in the recent months, I am very pleased to 
report that we are making excellent progress in becoming an 
integral member of the new Department of Homeland Security 
effective March 1. I think the new Department is the right 
place, at the right time, for the Coast Guard to serve America.

                     PRIORITIES OF THE COAST GUARD

    Throughout the process of this transition, we have remained 
focused on three main priorities. Our first priority is to 
aggressively build our homeland security capabilities. Our 
maritime operations must reflect the changes brought by the 
increase of global terrorism by increasing the level of effort 
against it. Over 44 percent of our operating expense budget in 
this current budget under consideration is devoted to the 
homeland security mission.
    We have designed a full range of concentric maritime 
security measures, starting overseas and extending to the 
shores of the United States. We cannot accomplish this without 
the strength of relationships that we are continuing to build 
with our partners in government and industry, both at home and 
abroad.
    The second priority--as we improve our capabilities in 
homeland security, we must also sustain our full range of 
missions. The law that created the new Department, as Senator 
Murray noted, mandates the Coast Guard must remain intact and 
must be attentive to its full range of missions. We have an 
obligation to the American public to provide critical services 
to them without interruption. The fiscal year 2004 operation 
and expense budget request of $4.7 billion provides an increase 
in every one of our missions relative to the fiscal year 2003 
levels and continues a multi-year investment plan to 
significantly enhance our search and rescue program.
    Third, we must increase our capacity, especially by 
recapitalizing and modernizing our aging fleet of cutters and 
aircraft and communication networks that connect them. The 
ability to sustain our full range of missions and to build our 
homeland security capabilities also requires an increase in 
capacity.
    In short, we must improve capability, capacity, and 
partnerships in the coming years. And due in large measure to 
the support in the Senate, in 2003 and 2004, we are making real 
progress and real advances along these lines. The President's 
fiscal year 2004 budget request reflects steady progress on our 
objective to balance our full range of missions. Every homeland 
security dollar directed in our budget will help to distribute 
a careful balance between security and safety, both of which 
are important to the prosperity and safety and security of our 
Nation.
    If the budget is enacted, by the end of 2004 we will have 
grown by 4,100 personnel and increased our overall budget by 
$1.6 billion, over a 30 percent increase over 2002. That should 
come as welcome news to anyone with interest in our capacity 
and capability to conduct our many missions.
    The proposed budget will continue funding for the 
Integrated Deepwater System, which is an integral part of our 
strategy for homeland security, as well as the capacity to 
carry out the entire portfolio of our missions. The Deepwater 
project will recapitalize the Coast Guard's aging cutters, 
aircraft, and offshore command and control network to help push 
U.S. borders out and increase our maritime domain awareness. It 
is a flexible program, able to meet emerging requirements for 
all of our missions.
    Together with the proposed budget, the fiscal year 2003 
supplemental budget request will help to answer concerns about 
our capacity, and we are very grateful for the Senate support 
in appropriating those funds.
    The fiscal year 2003 supplemental provides $580 million for 
our participation in Operation Iraqi Freedom and Operation 
Liberty Shield. It also provides an additional $10 million for 
increasing the security of our merchant mariner documentation, 
as well as $38 million for port security assessments. Both of 
those provisions are integral to our strategy for improving the 
maritime security of our Nation.
    The Maritime Transportation Security Act of 2002, which 
calls for us to implement a comprehensive security regime for 
ports, facilities, and vessels in close alignment with 
international standards, is the central component of our ports' 
strategy. It is an extremely important law, both for the 
security of the global maritime transportation system and for 
the future of the Coast Guard. We are working aggressively to 
implement its key components.
    Our rulemaking is proceeding on a very fast-paced schedule. 
We anticipate issuing an interim final rule this mid-summer and 
a final rule next November. Within our reach is the opportunity 
to create a robust security regime for our ports and coastal 
waters.
    In the past year, much more than our rulemaking has been 
fast-paced. The demands of the American public for the missions 
that the Coast Guard performs every day have continued to grow, 
and as we strive to meet them, what will remain foremost in my 
mind as Commandant is the operational excellence of our service 
to America. That is our ultimate goal. In the end, it is the 
performance outcome. And I think we have some good news here.

                           PREPARED STATEMENT

    But operational excellence depends not only on careful 
partnership and teamwork within the Department of Homeland 
Security. My key message here, Mr. Chairman, is that our 
operational excellence depends upon having the right capacity 
and the right capability for the mission at hand. And I look 
forward to working with you to that end.
    Thank you very much.
    [The statement follows:]

            Prepared Statement of Admiral Thomas H. Collins

Introduction
    Good morning, Mr. Chairman and distinguished members of the 
Subcommittee. It is a pleasure to appear before you today to discuss 
the Coast Guard's fiscal year 2004 budget request and its impact on the 
essential daily services we provide the American public.
    The President has clearly indicated that protecting the homeland is 
the government's number one priority and the Coast Guard has a critical 
role in that effort. The President's National Strategy for Homeland 
Security (dated 16 July 2002) stated:

    ``The Budget for fiscal year 2004 will continue to support the 
recapitalization of the U.S. Coast Guard's aging fleet, as well as 
targeted improvements in the areas of maritime domain awareness and 
command and control systems. . .''

    To that end, the Coast Guard's fiscal year 2004 budget proposes 
budget authority of $6.77 billion and continues our effort to establish 
a new level of maritime safety and security operations. The Coast 
Guard's goal is to create sufficient capacity and capability to 
implement the maritime component of the President's National Strategy 
for Homeland Security while sustaining the traditional missions the 
American public expects.
    I appreciate your support in the fiscal year 2003 Emergency 
Supplemental Funding Bill. Coast Guard forces have been fully engaged 
in support to the component commanders overseas in the Persian Gulf. We 
have deployed the largest contingent of Coast Guard forces since the 
Vietnam War, including 2 high endurance cutters, 8 patrol boats, 1 buoy 
tender, 4 port security units and 2 maintenance support units. We 
firmly believe that success overseas will bring greater security at 
home. These deployed assets constitute only three percent of our entire 
force so we will still be able to strike an appropriate balance between 
our domestic homeland security and non-homeland security missions 
through an effective use of risk based strategies to target resources 
to the greatest threats, increased op-tempo of domestic assets and the 
use of 11 PC-170 Navy patrol boats.

The Need to Sustain Growth in Fiscal Year 2004
    To implement the President's strategy, the Coast Guard must 
maintain our high standards of operational excellence. A convergence of 
several significant internal and external factors has emphasized the 
need for a continuing increase in capacity and capability for the U.S. 
Coast Guard to meet America's future maritime needs:
  --The move of the Coast Guard to the Department of Homeland Security;
  --The need to increase Maritime Homeland Security capability and 
        capacity;
  --The need to sustain our performance across all Coast Guard 
        missions; and
  --The requirement to quickly implement the comprehensive requirements 
        of the Maritime Transportation Security Act of 2002.

Building Capacity and Capability
    Immediately after the terrorist attacks on our nation, the Coast 
Guard established new port security zones, placed Sea Marshals on 
inbound merchant ships, conducted additional patrols off the coasts, 
established Maritime Safety and Security Teams to protect major ports 
and implemented new procedures to monitor vessel and crew movements 
within ports and coastal approaches. These increased responsibilities 
stretched already thin resources nearly to the breaking point and made 
it extremely difficult to continue serving other missions. To fill in 
the gaps, we activated nearly a third of our entire Selected Reserve 
force, and have quickly and effectively deployed the resources 
requested by the Administration and provided by Congress.
    The fiscal year 2004 budget provides for increased capacity that is 
necessary for the Coast Guard to provide the strength and security our 
nation requires. To fulfill its responsibility to the American public, 
the Coast Guard is attempting to use that increased strength to 
accomplish three primary objectives in fiscal year 2004:
  --Recapitalize legacy assets and infrastructure;
  --Increase Maritime Homeland Security Capabilities; and
  --Sustain non-Homeland Security missions near pre-9/11/01 levels.

Re-capitalizing the Coast Guard
    President Bush has asserted that our aging assets and 
infrastructure must be re-capitalized. In addition to Rescue 21, which 
is on schedule for completion in fiscal year 2006, the Coast Guard's 
Integrated Deepwater System will meet America's future maritime needs. 
Based on the organization's current capacity levels and the required 
capabilities immediately needed for Homeland Security and the other 
missions the American public expects, the continued funding of 
Deepwater is imperative and makes both programmatic and business sense. 
The Coast Guard is requesting $500 million for the Integrated Deepwater 
System.
    Several programmatic considerations reveal why the Integrated 
Deepwater System is so essential for the safety and security of the 
American public:
  --Homeland Security necessitates pushing America's maritime borders 
        outward, away from ports and waterways so layered, maritime 
        security operations can be implemented.
  --Maritime Domain Awareness--knowledge of all activities and elements 
        in the maritime domain--is critical to maritime security. 
        Integrated Deepwater System will improve current Maritime 
        Domain Awareness by providing more capable sensors to collect 
        vital information.
  --A network-centric system of Command, Control, Communications, 
        Computers, Intelligence, Surveillance and Reconnaissance is 
        required for effective accomplishment of all Coast Guard 
        missions.
  --Interdiction of illegal drugs and migrants and protection of living 
        marine resources are important elements of Homeland Security 
        and require capable Deepwater assets.
    The Deepwater Program will ensure the Coast Guard can continue to 
fulfill its mission of safeguarding the sovereignty, security, and 
safety of our homeland waters. New assets include five 110 patrol 
boats converted to more capable 123 patrol craft, seven Short Range 
Prosecutor small boats, the first National Security Cutter (to be 
delivered in fiscal year 2006), the an increased organization-wide 
Command, Control, Communications, Computers, Intelligence, Surveillance 
and Reconnaissance network including a Common Operating Picture, 
Command and Control System at four shore-based command centers and the 
establishment of an integrated logistics system.
    From a business perspective, the flexible Integrated Deepwater 
System framework was designed to adapt to changing conditions. The 
Integrated Deepwater System acquisition will replace or modernize 
obsolete and maintenance intensive assets that are not capable of 
meeting the current mission demand. The Integrated Deepwater System 
will provide the required capabilities the Coast Guard needs to perform 
an enhanced level of maritime security operations, sustain growing 
traditional missions and respond to any future crises, man-made or 
otherwise, that threaten America.
    The Rescue 21 project will dramatically improve the Coast Guard's 
command and control communications network in the inland and coastal 
zone areas for SAR and all other Coast Guard missions. The improved 
Rescue 21 system will meet safety requirements for growing maritime 
traffic, as well as International Convention for the Safety of Life at 
Sea treaty requirements. It will be also be a critical component of our 
homeland security operations as it facilitates more effective 
monitoring and control of coastal assets.

The Challenge of Homeland Security
    The Coast Guard is the lead Federal agency for Maritime Homeland 
Security. As such, the Coast Guard's mission, in conjunction with joint 
and interagency forces, is to protect the U.S. Maritime Domain and the 
U.S. Marine Transportation System and deny their use and exploitation 
by terrorists as a means for attacks on U.S. territory, population and 
critical infrastructure. The Coast Guard will prepare for, and in the 
event of an attack, conduct emergency response operations. When 
directed, the Coast Guard, as the supported or supporting commander, 
will conduct military homeland defense operations in our traditional 
role as one of the five Armed Services.
    This budget submission is aligned with the Strategic Goals and 
Critical Mission Areas in the President's National Strategy for 
Homeland Security. The Coast Guard has developed a Maritime Homeland 
Security Strategy that implements the maritime component of the 
President's plan and the fiscal year 2004 budget continues to support 
those goals. It addresses both event-driven and prevention-based 
operations through the following Strategic Objectives:
  --Prevent terrorist attacks within and terrorist exploitation of the 
        U.S. Maritime Domain.
  --Reduce America's vulnerability to terrorism within the U.S. 
        Maritime Domain.
  --Protect U.S. population centers, critical infrastructure, maritime 
        borders, ports, coastal approaches and boundaries and ``seams'' 
        among them.
  --Protect the U.S. Marine Transportation System while preserving the 
        freedom of maritime domain for legitimate pursuits.
  --Minimize the damage and recover from attacks that may occur within 
        the U.S. Maritime Domain as either the Lead Federal Agency or a 
        supporting agency.
    The threats to the security of the United States extend beyond 
overt terrorism. Countering illegal drug and contraband smuggling, 
preventing illegal immigration via maritime routes, preserving living 
marine resources from foreign encroachment, preventing environmental 
damage and responding to spills of oil and hazardous substances are all 
critical elements of national and economic security. Every dollar 
directed to the Coast Guard will contribute to a careful balance 
between our safety and security missions, both of which must be 
properly resourced for effective mission accomplishment.
    Maritime Domain Awareness is the catalyst for effective Maritime 
Homeland Security and the fiscal year 2004 budget provides the 
resources to enhance the Coast Guard's ability to receive, fuse, 
disseminate and transmit intelligence data and leverage our recent 
inclusion in the National Intelligence Community. It includes new 
personnel, hardware and software to support the underlying information 
architecture for Maritime Domain Awareness, funds leased satellite 
channels and other connectivity solutions for our entire cutter fleet 
and establishes a prototype Joint Harbor Operations Center (JHOC) in 
Hampton Roads, VA, to provide surveillance as well as command and 
control capability for the critical infrastructure in this area.
    The fiscal year 2004 request also provides the capability and 
capacity to conduct layered maritime security operations. Six new, 
deployable Maritime Safety and Security Teams, for a total of 12 teams, 
and over 50 Sea Marshals will be added throughout the country to 
protect our most critical ports. To increase our organic presence in 
our ports and waterways, we are requesting 43 fully crewed and 
outfitted Port Security Response Boats, nine 87-foot Coastal Patrol 
Boats, and the commencement of the Response Boat Medium acquisition, 
which will replace our aging fleet of 41-foot utility boats. We are 
standing up Stations Boston and Washington D.C. to increase security 
and safety in these critical ports where more resources were needed. We 
will also establish two new Port Security Units, for a total of eight 
teams, used to support domestic and overseas operations.

Balancing Our Missions
    The fiscal year 2004 budget restores the Coast Guard's multi-
mission focus to near pre-September 11, 2001 levels. We will utilize 
performance and risk-based analysis to strike a careful balance between 
our safety and security. This delicate balance is critical to 
protecting America's economic and national security by preventing 
illegal activity on our maritime borders. It will also enable the Coast 
Guard to maintain its surge capability, which was evident before and 
after September 11, 2001. One of the Coast Guard's greatest attributes 
is the innate flexibility to immediately shift mission focus to meet 
America's greatest threat while maintaining other missions for the 
American public.
    While its primary focus is Search and Rescue, the Rescue 21 project 
will transform the Coast Guard's command and control capabilities for 
all mission areas. Coupling this major acquisition with a staffing 
increase of nearly 400 new personnel at our multi-mission, small boat 
stations and Command Centers will ensure Coast Guard shore-side command 
and control networks and response units are properly equipped and 
staffed for multi-mission effectiveness. We are also requesting funds 
for the Great Lakes Icebreaker to ensure delivery in fiscal year 2006. 
The Great Lakes Icebreaker will perform aids to navigation functions as 
well as break ice to keep this critical commerce route open year-round.
    This budget also requests funding to fully train, support, and 
sustain the Coast Guard's Selected Reserve Force. The Coast Guard 
increased the number of reservists from 8,000 to 9,000 in fiscal year 
2003 and now to 10,000 in fiscal year 2004. The Reserve is 
significantly more than an augmentation force. It is an integral part 
of Team Coast Guard and provides daily support of all Coast Guard 
missions. Today's Coast Guard depends on Reserve personnel for day-to-
day activities in addition to a qualified military surge capacity. The 
Coast Guard Reserve fills critical national security and national 
defense roles in both Homeland Security and direct support of 
Department of Defense Combatant Commanders. The Coast Guard Reserve 
provides the nation's only deployable port security capability and a 
cost-effective surge capacity for Coast Guard operations, including 
quick response to natural or man-made disasters, such as floods, 
hurricane relief, major pollution cleanup efforts, and rapid response 
to major catastrophes. The Reserve is critical to the Coast Guards 
efforts to rebalance our mission execution.

The Goal of Operational Excellence
    We are facing many challenges in the coming years, not the least of 
which are the obsolescence of our aging asset fleet; the complexity of 
recruiting, retaining, and training the talented workforce necessary to 
execute our missions; and integrating fully into the new Department of 
Homeland Security.
    The President's fiscal year 2004 budget provides immediate 
capability for our Homeland Security responsibilities and continues to 
build upon past efforts to restore service readiness and shape the 
Coast Guard's future. It also demonstrates strong support for both the 
Deepwater project and Rescue 21. This budget will enable the Coast 
Guard to maintain operational excellence across all mission areas to 
meet the America's future maritime safety and security needs.
    I close with a quote from the National Strategy for Homeland 
Security which crystallizes the need for a transformed, multi-mission 
capable Coast Guard: ``The United States asks much of its U.S. Coast 
Guard and we will ensure the service has the resources needed to 
accomplish its multiple missions.''
    The demands continue to grow for the missions that the Coast Guard 
performs every day. As we strive to meet them, what will continue to 
remain foremost in my mind as Commandant--even as I sit here before 
this subcommittee--is the operational excellence of our service to 
America. That is our ultimate goal.
    Operational excellence depends not only on careful partnership and 
teamwork within the Department of Homeland Security, but it depends 
also on having the right capacity and the right capability for the 
missions at hand.
    I look forward to working with you to that end.
    Thank you for the opportunity to testify before you today. I will 
be happy to answer any questions you may have.

    Senator Cochran. Thank you very much, Admiral Collins, for 
your testimony.
    I notice by the clock on the wall that the vote has begun 
now. We can recess and make that vote in the Senate, and then 
we will resume our hearing with questions of our panel after 
that.
    The subcommittee will stand in recess.
    Senator Cochran. The subcommittee will please come to 
order.

                             PLAN COLOMBIA

    Director Basham, I appreciate very much your overview in 
your statement about the activities of the Secret Service and 
the challenges that you face. In reading your statement, I was 
attracted to the challenge that you have in Plan Colombia, the 
work that you are doing in Colombia that is discussed in your 
opening statement. It goes back to one of your earliest 
missions as a Service dealing with the integrity of currency, 
but it is broader than that.
    Could you tell us a little bit about the status of that and 
what your challenges are and how much money we are 
appropriating or being asked to appropriate in this budget for 
that activity.
    Mr. Basham. Mr. Chairman, I cannot give you a specific 
number at this point with respect to the funding that we are 
requesting for that activity, but I can tell you that just 
recently, we were able to recover prior to circulation about 
$41 million in U.S. currency due to our efforts there in 
Colombia.
    Colombia continues to represent----
    Senator Cochran. Was this counterfeit money?
    Mr. Basham. That is counterfeit currency that is produced 
there in Colombia which, as you are well aware, supports the 
drug activity. So that locale continues to represent one of the 
biggest challenges we have with respect to our international 
counterfeiting problems.
    We have, as you may well know, personnel who are assigned 
there, stationed there, who work very closely with the 
Colombian officials to assist them in suppressing the 
manufacture of counterfeiting.
    As you said before, our original mandate was to stop and 
prevent and protect the financial systems from attacks, and 
that is the same methodology that we apply there, and that is 
working with the local officials to identify plants and to 
suppress those plants prior to the currency getting into 
circulation.
    So we continue to work there. We are putting a lot of 
emphasis in some of the former Soviet Union countries where we 
are seeing some activity in the area of counterfeiting, but 
Colombia still represents one of the greatest challenges. I 
will get back to you, sir, with the information on what kind of 
funding we are requesting for that activity.

                            FOREIGN OFFICES

    Senator Cochran. I notice also that as you talk about 
global activities that may threaten the integrity of our 
national financial institutions and system, you have 
established offices or representation in some 19 different 
countries, I think your statement indicated.
    To what extent do you see these as permanent facilities or 
permanent assignments, or are they temporary in nature? What is 
your expectation with regard to that?
    Mr. Basham. We are constantly reviewing those foreign 
offices and the effectiveness of those foreign offices to make 
sure that we are getting the most out of those resources. On 
occasion, we will be changing the locations of those offices 
based upon what we are seeing in criminal activity coming from 
those countries.
    The great majority of those offices are permanent, and not 
only do they support the investigative mission of the Secret 
Service; they also support the protective mission of the Secret 
Service, which gives us sort of a first insight as to what 
activities may be going on in these relative to our protective 
role here.
    Senator Cochran. Is this role to protect high-ranking 
Federal officials who may be in those countries?
    Mr. Basham. Actually, it is not in just the foreign 
countries but also domestically, working with officials in 
those countries who may be able to give us some warning signs 
if there is activity being planned for an assault or an attack 
on people whom we protect here in the United States as well as 
having liaison with those countries when our visiting officials 
go there to get cooperation from those countries to work with 
us to provide protection for them overseas.

                   COUNTERFEITING OPERATIONS IN IRAQ

    Senator Cochran. We recently saw in the press the report of 
the finding of a lot of money in Iraq, a lot of U.S. currency. 
There was one press report that I noticed that indicated it 
could be counterfeit, or it might be valid currency. Are you 
working with the Department of the Treasury or others in trying 
to determine something about that currency and whether it is an 
indication of a counterfeiting operation in Iraq?
    Mr. Basham. We were involved in the very early stages when 
that currency was discovered in Iraq. We did dispatch personnel 
there to look at that currency. It was determined early on that 
the currency was genuine U.S. currency, and therefore, we have 
sort of backed out of that issue now that it has been 
determined.
    I believe they are in the process now of just trying to 
figure out a way of counting the currency in country versus 
bringing that currency out of the country, but yes, that was 
early on that we were involved and determined it was not 
counterfeit.

             AL QAEDA INVOLVEMENT IN COUNTERFEIT ACTIVITIES

    Senator Cochran. Have you come across evidence that 
indicates that the al Qaeda terrorist network is involved in 
counterfeiting U.S. currency?
    Mr. Basham. I do not know that I can say, Mr. Chairman, 
that there has been any direct connection to the al Qaeda 
network with counterfeiting. We do know that the al Qaeda 
network has made attempts to get into other types of financial 
systems through electronics, through trying to tap into those 
financial institutions. But in terms of a direct connectivity 
between al Qaeda and counterfeiting, I do not believe we have 
made that connection.
    Senator Cochran. You can furnish that for the record if you 
have information about it that you think we need to know about.
    Mr. Basham. I will furnish it.
    Senator Cochran. We would appreciate that.
    [The information follows:]

    Due to the sensitive nature of the information requested by Senator 
Cochran, the Secret Service provided this information to the Senator 
under separate cover.

    Senator Cochran. I am going to yield now to my colleagues 
for any questions that they may have.
    Senator Murray, you may proceed to question the witnesses, 
either Commandant Collins or the Director of the Secret 
Service, as you please.
    Senator Murray. Thank you, Mr. Chairman.
    I note that Senator Byrd is here, and I am happy to defer 
if he wants to go ahead of me.
    Senator Byrd. Walt Whitman said that the greatest thing 
upon the earth is woman. You were here before I was, so please 
go ahead.
    Let me say while I am talking that I am sorry to be tardy. 
We had a vote over on the floor, and rather than attempt to 
make two runs over here, which you might do at age 35, I 
thought I would just wait and make one.
    Thank you.
    Senator Murray. Well, thank you very much.

                     NON-HOMELAND SECURITY MISSIONS

    Admiral Collins, earlier, I recited the figures from your 
own quarterly mission hour report that indicate for the year 
that ended just 4 weeks ago, your efforts in the area of drug 
interdiction are 42 percent below the September 11 levels, and 
your efforts at fisheries enforcement are 33 percent below 
September 11 levels.
    In your formal testimony, you state that the President's 
2004 budget for the Coast Guard is built around the goal of 
returning your level of effort to these and other non-homeland 
security missions to pre-9/11 levels, but the GAO has reviewed 
the President's budget and does not agree that the enactment of 
the President's budget will enable you to get back to pre-9/11 
levels.
    We need to set the record straight, so I want to ask you if 
we enact the President's budget in full and provide you with 
the second year of historic increases for the Coast Guard, will 
your quarterly mission reports show us that drug interdiction 
and fisheries enforcement have returned to the levels that 
existed prior to September 11, 2001?
    Admiral Collins. Let me equivocate a little if you would 
allow me. I think it is relative to risk. Part of this 
accounting that we have had over the last 18 months relative to 
activity levels--and that is one way to measure mission 
balance; there is budget allocation, there are activity levels, 
and there is performance, and I think you have to look at all 
three--but if you look at activity, clearly, the snapshot was 
taken in a year, as I mentioned in my opening statement, of 
momentous change, of dramatic impact, of significant threat, 
and we were at many periods during the course of that time at 
orange threat conditions, obviously, and in the immediate 
aftermath of 9/11, the whole country was ramped up across the 
board. I would submit that if you looked at the activity level 
of every police department and every law enforcement 
organization in this country, you would find a similar spike 
given the scenario. And then, there were a couple of oranges 
and then Operation Liberty Shield, which was invoked in 
conjunction with Operation Iraqi Freedom.
    With all of those, it is a very unusual time to be doing 
this kind of accounting, so to have a spike in the homeland 
security mission I think is reasonable, appropriate, and I 
think a natural thing to do during that timeframe.
    Where did they come from? Most of that accounting is from 
redistributed major cutters from the fisheries mission and from 
the drug mission and from the migrant mission, and that is 
where they were taken from. We are maintaining our SAR posture.
    With the fiscal year 2002 supplemental, the fiscal year 
2003 budget, and the fiscal year 2004 budget, it is a 30 
percent increase, and by any standard, I think that is an 
unprecedented support by the administration and Secretary in 
terms of moving us up a glide slope that provides us the 
capability and the capacity to do our job.
    I am very happy with the level of support that they 
provided last year, this year and through the supplemental. I 
think we are going to close those gaps that we had, and we are 
going to get near pre-9/11 levels. I think there will still 
probably be some discontinuities in terms of exact level 
relative to particularly some of the law enforcement, 
fisheries, and drug mission in terms of the amount of activity 
we will be able to allocate, but we will be closing the gaps 
significantly. These are substantial increases that will allow 
us to return to normal.
    I would also stress that it assumes what we call Maritime 
Security Condition 1. We have three levels of security built 
into the International Code of Security for Ports and Vessels, 
and they are going to be built into our rulemaking that 
supports the Maritime Transportation Security Act. That is 
assuming a Maritime Security Level 1. If you go to 2 or 3, or 
if there is a sustained level of higher state of risk, then we 
are going to reallocate again. And I think that is what the 
American people want us to do is allocate our resources to 
risk.
    So I think we are going to be not exactly to levels. We 
will be approaching those levels at the MARSEC 1.
    Senator Murray. I agree that we need to allocate our 
resources to risk, but I also very strongly before homeland 
security passed, working with Senator Stevens and others, 
wanted to make it very clear that we cannot reduce our levels 
of effort in our other missions in order to accomplish this. We 
need to know what it is going to cost us to make sure that you 
can do all of your missions.
    So let me ask you, because in the past, the Coast Guard and 
other agencies in the administration have carefully estimated 
the amount of drugs entering our country and the number of 
illegal encroachments of foreign fishing vessels into U.S. 
waters. You have done that to measure the effectiveness of your 
efforts. So what have you observed regarding the likelihood of 
drugs entering our country and illegal encroachments on U.S. 
fishing grounds as a result of your greatly diminished efforts 
that we have seen in these two missions over the last year and 
a half?
    Admiral Collins. To answer that question, Senator, I think 
you would go to that third dimension of how you look at mission 
balance. And I mentioned budget, activity level, and 
performance. Our activity level over the last 18 months, 
because of the impact of homeland security, certainly our 
activity levels have been down for counter-drugs, and fish.
    The performance has been pretty consistent, however. If you 
look at our performance in terms of seizure rate, recovery 
rate--I am talking about drugs now--or, excuse me, removal 
rate, and that is both deterrents, those that were thrown over 
the side, or those we actually seized, we had last year the 
third highest cocaine seizures in U.S. Coast Guard history--
72.2 metric tons--and our removal rate has been fairly 
consistent between 20 and 25 percent.
    So in terms of performance, I think we had a very, very 
credible performance even in the face of some of our cutters 
being pulled off that mission. Now, the question is how did you 
do that, and I think there are a couple of answers to that.
    One is tremendous partnering--I mentioned capacity, 
capability and partnering are key to balancing our mission--
tremendous partnering with the United States Navy and with 
allies. If you look today, we have nine ships in the deep 
Caribbean and the Eastern Pacific right now, today, doing 
counter-drugs. And incidentally, we have 18 cutters underway 
today around the country. Fifteen of those 18 cutters are doing 
non-homeland security missions--15 of the 18. So as we speak 
today is an indication of how we are returning back to our 
normal posture.
    But let me get back to drugs, the reasons. We have a 
partnership with the United States Navy. We have Coast Guard 
law enforcement detachments on those Navy assets. We have Coast 
Guard law enforcement detachments on the allied ships, three, 
and our three vessels. That is a tremendous team, and those law 
enforcement detachments do not show up in the activity stats, 
but there is a tremendous outcome from that partnership.
    We had a British oiler down in the EASTPAC, allowing us to 
have a gas station far from anything, so we can get our ships 
refueled and staying in the game.
    So I think with better intel, great partnerships with the 
countries around the Caribbean Rim, we are getting better at 
this mission. We are putting metal on target, if you will, and 
getting great performance outcome.
    Having said that, if you had more capacity, could you get 
even more outcome? The answer is yes. But I think our 
performance is very, very, very credible, and we have tried to 
manage the dimensions of our mission so we can ensure the 
appropriate outcomes.
    If you switch to the migrants, if you look at the number of 
migrants seized over the last 3 years, it is consistent with 
previous patterns. We have interdicted 2,800 migrants to date 
in 2003. That will put us in a course above previous levels. We 
have been interdicting about 4,000.
    So we are not abandoning those missions, and the 
performance is still there.

                         FISHERIES ENFORCEMENT

    Senator Murray. What about fisheries enforcement, though?
    Admiral Collins. Fisheries enforcement is down, clearly. 
That is one of those areas that we have pulled cutters off of. 
We maintain minimums in certain areas. For example, the Bering 
Sea and the enforcement of the Maritime Boundary Line--we have 
a one-ship continuous presence in the Bering, and we have 
maintained that. That has not gone down. We have a half-ship 
presence, as we call it, in the rest of the Alaskan waters, and 
we have maintained that.
    So there are critical areas that we have maintained and 
other areas we have backed off. Is it where we want to be 
steady-state? No. We want to return to there, and as I have 
noted today, again, 15 of the 18 ships are back doing normal 
business, and nine of them are doing fisheries missions today.
    Senator Murray. My time is running out, but the GAO did 
quote Coast Guard office officials stating that the decline in 
both drug enforcement and fisheries enforcement can be 
attributable not only to your heightened homeland security 
requirements but also to the deployment of resources for 
military operations. I assume some of those ships are going to 
be coming home, but can you tell me when we expect to see the 
high-endurance cutters return?
    Admiral Collins. The exact dates are still up in the air 
and being decided, but it will be in the near term, not in the 
intermediate or far term. As to exact dates, there are 
logistics issues and other issues that we are working out, but 
they will be on their way home very, very shortly, and they 
will be turned back into non-homeland security missions.
    Senator Murray. Thank you very much, Admiral.

                       U.S. COAST GUARDS WORKLOAD

    Mr. Chairman, this is extremely important. We are asking 
the Coast Guard to do a tremendous amount of work. Obviously, 
they have been involved in the Iraqi efforts, and they are 
involved around the world. We are asking them to do fisheries 
enforcement, drug enforcement, search and rescue. We have given 
them more money, but I am deeply concerned that the numbers we 
are seeing coming back are saying that some of the critical 
missions that we are asking them to do are not taking place, 
and I think this Committee needs to look carefully at that and 
make sure that we budget the amount of money for the Coast 
Guard to do the homeland security jobs as well as all the other 
missions that we are asking them to do.
    Senator Cochran. Thank you, Senator Murray.
    Senator Byrd.
    Senator Byrd. Thank you.

                                 WOMEN

    Senator Murray, I mentioned Walt Whitman a little earlier. 
Walt Whitman said, ``Man is a great thing upon the earth and 
throughout eternity, but every jot and tittle of the greatness 
of man has unfolded out of woman.''
    Woodrow Wilson, who was the President of this country, a 
great President, when I was born, said he wouldn't give the 
snap of his finger for any young man who was not surrounded by 
a bevy of admiring females.
    Not many of the gentlemen in the audience laughed at that, 
did they? What is the matter with that crowd out there?
    Mr. Chairman, are you taking questions for both witnesses?
    Senator Cochran. Yes, sir.
    Senator Byrd. All right. Very well.
    I guess the Secret Service is first, is it not, today?
    Senator Cochran. Yes, sir. They testified first.

                          U.S. SECRET SERVICE

    Senator Byrd. All right. I welcome Director Basham. You are 
going to be in for a tough time.
    The Secret Service has long been an agency focused on 
homeland security. Since its creation in 1865, the Secret 
Service has protected our financial infrastructure and later 
took on the protective mission to safeguard our Nation's 
leaders and leaders from other countries.
    As the Secret Service is new to the Homeland Security 
Department, its functions are new to many of the members on 
this Committee. And I have to say that with the inclusion of 
myself, although I have been on the Committee--this is my 45th 
year; I am the grand-daddy of them all when it comes to length 
of service on this Committee--and my mom used to say, ``A self-
braggart is a half-scoundrel.''
    I was trying to think of that great athlete who said, ``It 
is all right to brag if you have done it.''
    Senator Cochran. Dizzy Dean.
    Senator Byrd. Dizzy Dean, right.
    So over the past 5 years, the Secret Service has grown 
substantially. Between fiscal year 1998 and fiscal year 2003, 
the Secret Service has grown in size from 4,800 to 6,100 
employees, and its budget has grown from $564 million to just 
over $1 billion.
    The Secret Service has over 3,000 special agents and nearly 
1,200 uniformed officers all across the country, working on 
protective detail, on financial investigations, and protecting 
the White House complex and the Vice President's residence.
    September 11 resulted in a significant increase in your 
mission requirements. Protective detail assignments have 
increased. The number of National Special Security Events has 
increased. The passage of the USA PATRIOT Act set additional 
requirements to protect and prevent terrorist attacks aimed at 
our financial systems.
    And today you are presenting a budget of $1,123,000,000--
that happens to be $1.12 for every minute since Jesus Christ 
was born. Can you compute that fast? It is pretty easy--
reflecting many of those changes, and the Committee looks 
forward to discussing this request with you now and on a 
continuing basis as long as it is necessary, as well as your 
many homeland security activities.
    Now, as to the Coast Guard, I welcome the Coast Guard 
Commandant. The Coast Guard has a long tradition as protectors 
of our ports and waterways. At no time in its history has the 
Coast Guard relied on its assets more than it does today. With 
the expanded mission of homeland security, the Coast Guard has 
increased patrols, enhanced its port and waterway presence, 
increased vessel boardings, and pushed legacy assets to their 
limits.
    All of this happened at the same time that the Coast Guard 
started to modernize and replace an aging fleet. The Coast 
Guard is also supporting our efforts in the Middle East by 
providing eight patrol boats, two high-endurance cutters, and a 
buoy-tender.
    Admiral Collins, even with the substantial budget increases 
provided to the Coast Guard since September 11, many concerns 
remain about your operational capabilities. Maintaining your 
non-homeland security missions at pre-September 11 levels has 
been a struggle. The Coast Guard's first quarterly report on 
mission hour emphasis revealed that efforts have decreased 
significantly in areas such as drug interdiction, marine 
safety, fisheries enforcement, and marine environmental 
protection.
    The Deepwater Program is approximately $200 million behind 
and at current levels could slip to a 30-year program. If the 
Deepwater Program continues at current levels, the success of 
the program could be in jeopardy.
    In addition, to make room for the high cost of the 
Deepwater Program, funding for shore facilities and aged 
navigation projects has been eliminated.
    With regard to strengthening port security, the Coast Guard 
has estimated that it will cost $1.4 billion in the first year 
and $6 billion over 10 years. Although funding for this purpose 
is not a direct responsibility of the Coast Guard, it is a 
homeland security priority.
    One of the entities folded into the new Department of 
Homeland Security is entitled the ``Transportation Security 
Administration,'' not the Aviation Security Administration. 
Yet, within the $4.8 billion TSA budget, only $86 million is 
requested for maritime and land security activities, while over 
$4.3 billion is required for aviation security.
    So, Admiral Collins, as the leader in maritime security, 
the Subcommittee challenges you to work to ensure that port 
security is given greater emphasis in future funding requests.
    For port security assessments which are mandated by the 
Maritime Transportation Security Act, it took Congressional 
action and $38 million in the recent fiscal year 2003 Emergency 
Supplemental to ensure that these assessments will be completed 
in a timely manner. Under the President's budget, port security 
assessments would not be completed until 2009.
    Finally, Coast Guard employees do a tremendous job with the 
resources given to them, but I fear that they are stretched too 
thin. Secretary Ridge has said that another attack is 
inevitable. If the Coast Guard were to operate under a Code 
Orange scenario for an extended period of time, non-homeland 
security missions could be left unattended.
    Admiral Collins, I realize that you are doing everything 
you can with the resources at hand, but you and this 
Subcommittee needed to confront these issues head-on. Of 
course, Coast Guard employees do extraordinary work. They are 
the lifeblood of our ports and waterways, and millions of 
Americans depend upon them every day. But the Coast Guard needs 
the assets and a secure infrastructure to do their job as 
effectively and efficiently as possible.
    Mr. Chairman, do we proceed with questions?
    Senator Cochran. Senator, I suggest you proceed with 
questions, and you are recognized for that purpose. I have 
asked a few of the Secret Service. I have not asked any 
questions of the Commandant. We have heard opening statements 
from both of them, and Senator Murray has made a statement and 
asked some questions.
    You may proceed.
    Senator Byrd. Very well. Thank you.

                  NATIONAL VESSEL DOCUMENTATION CENTER

    Let us begin with Admiral Collins. Last year, the Coast 
Guard submitted a so-called competitive sourcing plan to the 
Office of Management and Budget that listed 99 full-time 
equivalent at the National Vessel Documentation Center, NVDC, 
in Falling Waters, West Virginia. Have you ever been there?
    Admiral Collins. Yes, sir.
    Senator Byrd. Well, I was there when we dedicated that 
function, and there came a heavy rain, a downpour, a huge 
storm. They had a huge tend there that would have seated 
several hundred persons. And this huge storm came up, and the 
winds blew--do you remember how the Bible describes, ``and the 
winds blew''--and several ladies were very kind to my wife, and 
they ushered her into a side door in the building that was 
there, so she was taken to safety. I watched carefully because 
I was concerned--after all, she will have been my best friend 
and my wife 66 years come 1 month from yesterday.
    So there was the wind and falling waters. So the place was 
appropriately named, you see, Falling Waters, West Virginia. 
The waters fell that day.
    One day, I was over in West Virginia, and there was a 
drought over in the central part of the State. There had been a 
drought, and I made a big speech--I do not make many big ones, 
but this was a great speech--and I came to a point, Mr. 
Chairman, where I said, ``and then the rains came.'' And don't 
you know that the Creator was cooperating with me that day, and 
the rain started falling at that moment, and the rain came.
    So Falling Waters is the place, Falling Waters, West 
Virginia.

                      COMPETITIVE SOURCING AT NVDC

    You proposed to convert the NVDC into a Government 
corporation, which was viewed by many Federal workers as a 
first step toward contracting out the work of the NVDC. I have 
serious concerns about the administration's efforts to contract 
out what are inherently governmental functions, and I stated 
those concerns yesterday when Secretary Ridge was before this 
subcommittee.
    The NVDC effectively bestows citizenship on vessels at sea 
which affects international trade, diplomacy, national 
security, and a host of issues that fall under the purview of 
the Federal Government. This is not a function that should be 
exercised by contractors or Government corporations which 
operate outside congressional oversight.
    I wrote to you last October about this issue, and you 
replied that the Coast Guard, after discussions with the OMB, 
was reconsidering the conversion of the NVDC.
    Now, in light of the fact that Secretary Ridge in testimony 
before the subcommittee yesterday said that he was unaware of 
any underlined--any current plan within the new Department to 
contract out security services, what are the Coast Guard's 
privatization plans with regard to the NVDC, and to what extent 
are these plans a result of the OMB competitive sourcing 
initiative?
    Admiral Collins. Senator, of course, all of our competitive 
sourcing programs are in support of the OMB and the President's 
Management Agenda. That plan has been in various forms and 
various things on that, as you correctly note, and initially, 
NVDC was on that.
    The current 2003 plan--and basically, the competitive 
sourcing plan-is a plan to conduct studies scheduled for 
completion here in late 2003 and early 2004 contained to three 
particular areas within the Coast Guard, none of which involves 
NVDC. There is one in a public works function out of the Coast 
Guard Academy. There is another study of a public works 
function at our support center in Elizabeth City, North 
Carolina, and there is another looking at our retired services, 
pay services, at our pay center in Topeka, Kansas. And it is 
basically not huge numbers of people being looked at--42 in the 
Academy--these are civilian positions--41 at the support center 
in Elizabeth City, and 36 in Topeka.
    So these studies will run their course, and they will 
determine what the recommendation is after doing the studies. 
The 2004 competitive sourcing plan is yet to be configured, and 
it depends on the planning guidance that we get from the Office 
of Management and Budget on direction from them on putting that 
together. That will be put together later this summer.
    So the news is three studies for those facilities that I 
have noted and NVDC not a part of that.
    Senator Byrd. And what does that mean?
    Admiral Collins. That means we will wait until the outcome 
of the studies to see what they say in terms of a 
recommendation on outsourcing or not. We cannot prejudge what 
the studies are going to say, but it is for those functions in 
those commands that I have noted.
    Senator Byrd. Are you saying that the jury is still out on 
the facility at Falling Waters?
    Admiral Collins. I do not know what the 2004 list is going 
to look like, and that will depend upon guidance from the 
Office of Management and Budget and how we configure our list.
    Clearly, they have given us some direction on some of the 
things to extract from the previous inventory of potential 
studies, and we have done that, and I would suspect they will 
be consistent with that going forward. But it is yet to be 
determined at this point.
    Senator Byrd. Would you say that the Office of Management 
and Budget is Mount Olympus in this Administration?
    Admiral Collins. I do not know if I----
    Senator Byrd. Does it strike you that the Office of 
Management and Budget is all that important in this 
Administration and that your guidance will down from on high 
from the ethereal atmosphere of Mount Olympus?
    Admiral Collins. Certainly I respect the guidance and the 
direction of OMB regardless of what Administration is at the 
time. They are involved with management issues, management 
initiatives, and coordinating that effort through the Federal 
Government, and we try to adhere as best we can to the 
guidelines that they give us.
    Senator Byrd. Do you feel that the testimony that you are 
giving in response to this question is parallel with the 
testimony of Secretary Ridge yesterday on this point, or do you 
think there is any point of difference?
    Admiral Collins. Because I was not here at the hearing 
yesterday, Senator, I----
    Senator Byrd. I stated a moment ago what he said.
    Admiral Collins. Yes, that he was not aware. I do not know 
what his level of knowledge was. I will take that statement as 
accurate, sir.
    Senator Byrd. So once again, how shall employees at NVDC 
understand what you have said here before the committee today?
    Admiral Collins. I think they have to take it at face 
value. They are not on the study list, they are not on the 
inventory list, they are not planned for an assessment, and 
that is the current state.
    Senator Byrd. The OMB scores agencies on how well they 
comply with the President's management agenda. Agencies are 
encouraged to submit management plans to the OMB and to meet 
the competitive sourcing targets outlined in the President's 
budget. The OMB has informed me that these plans, while 
submitted to the OMB for approval, can be released to the 
public at the discretion of the agency heads.
    This subcommittee is asked to appropriate $6.8 billion to 
the Coast Guard to employ 43,450 full-time equivalents. Before 
we do that, I expect that you would provide this subcommittee 
with a copy of any management plan or competitive sourcing plan 
that the Coast Guard submits to the OMB.
    Admiral Collins. Sure.
    Senator Byrd. When do you--when you say ``Sure,'' what does 
that mean?
    Admiral Collins. Yes, sir, we would be glad to submit that 
to you.
    Senator Byrd. Very well. When do you expect to submit your 
next management plan to the OMB, and how soon can you make that 
plan available to the Appropriations Committee?
    Admiral Collins. It is my understanding--and I will have to 
confirm the exact timing of this--I believe, Senator, it is in 
the late July/August timeframe.
    Senator Byrd. Tuesday's New York Times points out that 
there seems to be a revolving door at the new Department of 
Homeland Security, with former top Federal officials walking 
out the door 1 day only to walk in the door another day as a 
top corporate lobbyist.
    With growing concerns about the reach of special corporate 
interests in this Department and others, I urge you and others 
in the Department leadership, the top leadership, to find a way 
to board up that door as you possibly can.
    The motto of the Coast Guard is ``Semper Paratus''--
``Always Prepared.'' That is kind of like the Boy Scouts' 
motto, isn't it--``Be prepared.''
    Admiral Collins. Close, Senator.
    Senator Byrd. That motto is not ``Always Privatized.'' It 
is ``Always Prepared,'' not ``Always Privatized.''
    Admiral Collins, the Coast Guard is a key part of the 
Nation's homeland security network. You and the men and the 
women under your command have the task of guarding our seaports 
and coastlines. And this is not a mission that should be driven 
by a private company's profit margin.
    What I am saying is really an admonition to people out here 
in this room today, probably. This is not a mission that should 
be driven by a private company's profit margin. This is a 
mission that should be first, last, and always driven by the 
security needs of the Nation. While it may be important to 
receive high marks from the OMB--and I suppose you might gather 
that I do not have a great deal of love for the current top 
management of OMB--and to comply with its directives to 
contract our Government services, it is far more important that 
the Coast Guard receive high marks from the American people in 
the protection of this country. And you have received high 
marks. The Coast Guard stands at the apex of agencies and 
departments and functions within the Government that people on 
the Appropriations Committee have great admiration for and 
confidence in.
    I think I will just submit my questions on the Secret 
Service, Mr. Chairman.
    Senator Cochran. Thank you, Senator Byrd.
    Senator Stevens, welcome.
    Senator Stevens. Thank you very much.
    I am pleased to be here with you, Director Basham and 
Admiral Collins. I have some provincial questions, really, 
which should not be unanticipated.

                      INCURSIONS IN NORTH PACIFIC

    There has been a significant number of incursions in the 
North Pacific in the fishing grounds, as a matter of fact, an 
increasing number of foreign vessels coming across the maritime 
boundary line. There were in particular incursions of several 
Russian pollack factory trawlers that I am sure you recall had 
to be cut off in really hot pursuit concepts with the Coast 
Guard cutter Rush. I congratulate you for those activities.

                        UNMANNED AERIAL VEHICLES

    However, I am concerned about that, and I wonder if it is 
not time to look at some high-tech concepts to increase the 
surveillance and decrease the potential for incursions. For 
instance, I have suggested the use of Predators to patrol the 
boundary line and to have on board warning capability to warn 
foreign vessels that they were now entering U.S. waters, and if 
they continued, that they would be pursued and arrested.
    Those are very inexpensive--they are even less expensive 
than the Global Hawk; the Global Hawk flies too high in my 
opinion to have really good aero-surveillance.
    Have you looked into that concept? Are we going to go into 
any new technology to make up for the decrease in effort we 
have from the Coast Guard in the North Pacific?
    Admiral Collins. Senator, we have maintained and intend to 
maintain the one-ship presence up on the boundary line that we 
have committed to. We have not moved away from that, and we 
continue to do that, and it is in our plans going forward.
    But clearly, you are absolutely right. I could not agree 
with you more that we can be increasingly effective with the 
increasing threat on the boundary line with technology. There 
is absolutely no question about it. And UAVs, I think we have 
seen around the planet how effective the UAVs are in other 
applications, and I think it is a wonderful application there.
    As you know, Senator, UAVs are an integral part of our 
Integrated Deepwater System Project. The national security 
cutter that we are building has embedded in those two vertical 
take-off UAVs as part of the design. Now, they are a few years 
out in terms of production and marriage with that new asset, 
but clearly, that is recognition in that project of how 
important UAVs will be for the Coast Guard now and into the 
future, and we really want to get that capability. It is a 
terribly important capability, and there is application in 
fisheries, there is application in migrant interdiction, there 
is application in counter drugs.
    So it is terribly important technology to go after. The 
current plan, of course, in getting that is our Integrated 
Deepwater Systems contract. The Predator I understand is a hot 
commodity, a high-demand commodity, and you have to wait in 
line in terms of production capacity to get one of these. I 
know the program manager for those is, of course, in the United 
States Air Force. But they are a high-demand asset, and 
currently we do not have funds in the budget to procure 
Predator other than our Deepwater Initiative, and there is this 
demand capacity issue associated with it.
    But I could not agree with you more, Senator. My opening 
statement was that we need capacity, capability, and solid 
partnership to have good mission balance, and part of the 
capability piece is using technology well, increasing our 
surveillance capability, and increasing surveillance capability 
is the heart and soul of our Deepwater project.
    Senator Stevens. Well, respectfully, Admiral, that is half 
the coastline of the United States, with more than 50 percent 
of the naturally-produced fish that Americans consume coming 
from that area, and we have one ship on half the coastline of 
the United States. We have the highest level of lives lost in 
any occupation in the country, and we have the greatest impact 
from foreign sources on the future of our product, of the 
species that we harvest ourselves.
    We have environmental groups now suggesting that we 
decrease our efforts because we have no way to control the 
foreign efforts. Now, somehow or other, a plan has to come 
forward. I am going to ask the committee to request that you 
present a plan to us for the modernization of the surveillance 
of these waters, and I think it would be cost-effective.
    I do believe that with what we are seeing now in Iraq and 
other places in the world, the military demand for Predators is 
going to go down. I assume that we are going to replace the 
ones that were lost, but I do not anticipate any expanded need 
for the Air Force or any of the military operations in the near 
future--and the line is up right now. I think you get a better 
price for Predators in the next 2 years than you will in the 
following 10 years, because they have their line expanded for 
increased production.
    I do hope that the committee will support that concept and 
that it will push you toward having the greatest use in new 
technology in surveillance of the maritime boundary.

                FOCUS ON NON-HOMELAND SECURITY MISSIONS

    Second, I asked the GAO to look into the question of the 
decline in mission hours for drug interdiction, fisheries 
enforcement, marine environmental protection and marine safety. 
I am sure you have seen that report. It is my understanding 
that we all thought that that was the result of 9/11. The GAO 
report shows that beginning in 1998, the hours dedicated to 
resource protection started to decline, and they have been on a 
slippery slope downward ever since.
    So this is somewhat related to the marine boundary but not 
totally. This is a national problem on all of our shores for 
drug interdiction, fisheries enforcement, marine environmental 
protection, and marine safety.
    I would like to ask is there any way we can balance the 
demand for these non-defense missions so that there is not a 
continued decline now? With your new responsibilities in 
homeland security, it appears that the decline is becoming 
steeper, and I would like to reverse that or at least level it 
off.
    Can you give us any understanding of what is going to 
happen to the resources dedicated to these kinds of activities?
    Admiral Collins. Yes, Senator. Clearly in the 1998-1999 
timeframe, or pre-9/11, those resource hour drops were a direct 
reflection of a decreasing budget. In other words, we had 
budget cuts as we were laying up ships, if you recall, in those 
budgets. So there was the pressure of the budgets, and we were 
getting operational cutbacks, and we were laying up assets. 
That was part of the pre-9/11 problem.
    Post-9/11 clearly is the security demands of the Nation, 
and all law enforcement agencies across the country, armed 
services, pulsed into that issue in the immediate 9/11, and so 
did we--we surged into that area. And we have had a number of 
Orange alerts, clearly, since then, and they require a ramping 
up of diversion of our boat hours and ship hours and aircraft 
hours into that area, so we have done that. We had Liberty 
Shield, an operational order that was put into effect 
consistent with and concurrent with our war in Iraq.
    So this post-9/11 period, this 18 months, is a fairly 
unusual period, a snapshot. It is a period of very, very high 
threat in the homeland security arena, and the Coast Guard 
surging into that area over time to provide the protection that 
America needs.
    We did in fact have to take those cutters from other 
missions. They are now back--a good portion of those cutters 
are back--doing the non-homeland security mission.
    I noted earlier, Senator, before you came in, that today, 
if you took a snapshot, we had 18 cutters deployed this morning 
around the country, in the Caribbean and Eastern Pacific and 
through Alaska, and 15 of those 18 are doing non-homeland 
security missions, and 9 of them are doing fisheries missions.
    So the message here is that we have now backed out from 
Liberty Shield, we are now off of Code Orange, and we are 
allocating cutters back into the non-homeland security missions 
as we should. So it is a dynamic process. We are allocating our 
resources to the risk.
    The other good part of the story is that we have through 
the fiscal year 2002 supplemental, the fiscal year 2003 budget, 
and the fiscal year 2004 budget, additional capacity that the 
Senate has provided and the House has provided, so we are 
building up our capacity to do both. The trend is a good one. 
We will not be exactly there at the end of 2004 to be exactly 
at the pre-9/11 allocation levels, but we will be pretty close. 
So the full intent is to balance our mission, build up our 
capability and capacity--capacity meaning more people, more 
assets, capability meaning things like technology and new types 
of units--to have the kind of mission balance we need in our 
waters.
    So our full intent is to balance, balance, balance, and we 
appreciate the Administration's support and Congress' support 
in helping us build up our capacity so we can do that.

                  RELATIONSHIP WITH THE NEW DEPARTMENT

    Senator Stevens. One of the things we fought for--not only 
here in this committee but in the Governmental Affairs 
Committee when I participated in the homeland security bill--
was to assure that we would maintain the independence of the 
Coast Guard. Tell us about the development of the relationship 
of your service to the new Department.
    Admiral Collins. I just think it is terrific, Senator. I 
could not be more pleased with the support of both the 
Secretary and the Deputy Secretary, the incredible 
collaboration across all of our agencies in the new Department.
    I just think it is again the right place for us to be and 
the right time for the Coast Guard to serve America. I remain a 
direct report to the Secretary. I am on a par with the other 
Undersecretaries in the Department. The Secretary is very 
cognizant of our full range of missions. I think every time he 
has come up to testify, he has said, ``We need to support the 
full range of Coast Guard missions,'' and I commit to that.
    So I think terribly supportive of the United States Coast 
Guard. I think our credibility is very, very high within the 
organization. We are committed team players, committed to the 
team's success.
    I am very, very pleased with where we are, Senator.
    Senator Stevens. I have just two more questions, Mr. 
Chairman.

                IMPORTATION OF GAS FROM FOREIGN ENTITIES

    One item that has just come to my attention is the 
projection for the increased demand for natural gas from 
offshore. One of the think tanks up in Alaska has just given me 
a projection that we will soon see the increase occur on a 
steady basis and that places like Qatar will be the source of 
liquefied natural gas that will come more and more to our East 
Coast.
    I know you have the whole concept of your offshore ports 
and the concepts of deepwater, but are you planning ahead for 
what is going to be the problem of our country as we see--we 
are already importing about 56 percent of our oil; if this 
projection is correct, by 2015, we will be importing 40 percent 
of our natural gas, and it will be liquefied and coming into 
the same ports that the oil is coming into. You talk about 
homeland security and the terrorist problem, my God, as a 
matter of fact, there are two novels that have already been 
written on that, as I am sure you know.
    In your plans, are you looking ahead at not only the 
problems of security but also the problems of handling that 
much imported gas?
    Admiral Collins. Yes, sir. Of course, the Maritime 
Transportation Security Act that was just passed last fall and 
signed by the President in late November provides an extension 
of the deepwater ports regime to natural gas. It was heretofore 
crude. So we presently have two applications for Deepwater LNG, 
and we are processing that under the terms of the Act. In 
addition, there are additional ports throughout the country 
that are moving to that--of course, LNG has been delivered into 
Boston for some time; Cove Point in the Chesapeake Bay is 
another area to deliver to and has been recently on a track to 
be approved; Savannah receives gas, and there are ports in the 
Gulf. So there are additional ports, and in each case, we have 
looked through the safety and security dimension. Cove Point is 
an example. I know that Senator Mikulski was very intimately 
involved in overseeing the assessment both from a security and 
a safety perspective of LNG coming into Cove Point.
    We did an exhaustive assessment. We partnered like crazy 
with every stakeholder we could imagine in the area. We looked 
at it upside down, sideways, and every which way you can, in 
providing the necessary safety and security provisions, and I 
think we have that one right, and I think it has been agreed to 
across the board by almost everyone who looked at it that we 
have got that right, and that from a safety and security 
perspective, it is reasonable.
    Part of our rulemaking to support the Maritime 
Transportation Security Act--rulemaking that I mentioned 
earlier in my statement, the final rule by November--that 
rulemaking will address offshore dimensions, so we will have as 
part of that rulemaking from a security perspective how we 
provide for and what are the regulations associated with 
security in the offshore.
    It is an evolving thing, a dynamic thing, Senator, and you 
very correctly point out that it is tending to be a growth 
area, and we are following the terms of the Maritime 
Transportation Security Act.
    Senator Stevens. Thank you very much.
    Thank you for your patience, Mr. Chairman.
    That statistic he used that nine of the vessels are 
dedicated to fisheries enforcement, and one of them is in an 
area that is half the coastline of the United States, comes 
back to my original problem. I did go to the Predator factory, 
I talked to the Predator people, I asked them what the capacity 
of Predator was. They told me that we could have slings under 
the Predator that would carry life-saving devices. They told me 
they could carry buoys that could be dropped to a ship that is 
obviously sinking so that the follow-on rescue would not have 
to spend hours trying to find the location. They told me we 
could have loudspeakers that could be operated from the shore, 
as I said, to give a warning as people came in. They told me we 
could have photographic capability on board to take a 
photograph of them with a GPS marker so that we would have to 
have no more proof of the violation after you go back across 
the line in hot pursuit.
    In my judgment, the use of high-technology in the Predator 
will make up for that imbalance in terms of the assignment of 
your vessels. So I urge you to get us a plan, but moving 
forward in that area and using that kind of technology. It will 
not increase your manpower. It will not increase your costs 
except in terms of acquisition costs of new technology. And the 
people who operate those, as you know, could be sitting in San 
Diego and work on the Predators that are over the waters of 
Alaska.
    It is an entirely new concept of life-saving and protection 
of our resources that I think we have got to move into as 
rapidly as possible.
    Thank you very much, Mr. Chairman.
    Admiral Collins. Thank you, Senator. We will take that for 
action. We are almost as enthused as you are, Senator, about 
that technology, and I would rather have it sooner than later. 
I think it is a tremendous force multiplier for us, and we will 
get busy with our pencils and develop a concept for you.
    Senator Stevens. Thank you.
    Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator Stevens. We appreciate 
your contribution to the hearing.

                COAST GUARD DEPLOYMENT OF ASSETS IN IRAQ

    In the supplemental, Admiral Collins, you received $400 
million for work in connection with the Iraqi war, and the 
Coast Guard deployed vessels to the theater. I assume you are 
in the process now of reclaiming some of those for their 
traditional functions closer to the United States.
    To what extent are you in transition, and do you intend to 
have other assets deployed to that region in the near future as 
part of the reconstitution of a government and making available 
whatever assistance our national interests indicate are 
appropriate?
    Admiral Collins. The existing resources that we sent over 
there, the two high-endurance carriers, the eight patrol boats, 
the buoy-tender and so forth, will all come back, and there are 
plans being discussed now with the joint staff on just how and 
when and what are the logistics associated with those. So we 
anticipate in the near term, they are coming back.
    I think it is likely--and I have talked in a conceptual way 
with the joint staff on this--that they will ask for us to 
support some of the maritime security initiative in a post-war 
setting. In other words, one of the things we have done around 
the world is to assist other nations in establishing coast 
guards. We have been doing that since World War II. The 
Japanese Coast Guard was set up by the United States Coast 
Guard as part of MacArthur's occupation.
    We have been doing that ever since in selected places. We 
are in Yemen, where we have an advisor establishing a Yemenese 
Coast Guard. So I think that, yes, in the long-term, the 
initial assets will be coming back that we sent over, and there 
is likely to be some assistance that we can provide in 
establishing maritime security there.
    We will probably rotate on a recurring basis in and out. We 
have, as you may know, Senator, in the last 10 years or so, had 
Coast Guard presence in the Arabian Gulf to enforce the UN 
resolution against Iraq in enforcing that embargo. So we have 
been there for a long time. What the future has in store is 
under development.

                       PORT SECURITY ASSESSMENTS

    Senator Cochran. The supplemental bill also provided 
funding, $38 million, for the completion of the port security 
assessments here in the continental United States. To what 
extent is that funding available to you to fulfill your 
responsibilities? Do you have enough money to complete those 
assessments, and if so, when do you anticipate the completion 
will occur?
    Admiral Collins. Senator, we expect the completion no later 
than the end of calendar year 2004. We are very, very thankful 
for the support of the House and the Senate for that 
supplemental increase. That allows us to get those port 
security assessments on track and done in an expeditious way. 
It was the right call. We thank you for the support. We are, as 
we speak, aggressively making the contractual modifications to 
ensure that the contractor that we have--it is a partnership 
with Northrop Grumman; they are doing assessments--they can 
roll those out to ensure we get them done. But the game plan is 
to get that money on contract, and get them done by the end of 
calendar year 2004.
    Senator Cochran. Is there an order of priority? For 
example, I think about the naval station at Pascagoula on the 
Mississippi Gulf Coast, and Charleston, South Carolina--I know 
Senator Hollings has expressed concerns about that--and I have 
read reports about the challenges in Miami, Florida, with the 
large numbers of cruise ships that come in there as well as the 
containers. Are these areas of high priority, and do you 
foresee that there will be some kind of ranking or assessment 
of priorities as you proceed to do your work?
    Admiral Collins. Right, and we will be glad to provide to 
the committee, Senator, the full list of the 55 ports, in what 
order we are doing it and what the criteria were for that 
order. We will be glad to provide that for you.
    [The information follows:]

    The list of 55 ports has been classified as either For Official Use 
Only or Secret based on how the list is organized. The Coast Guard will 
provide the information separately in an appropriate forum.

    Admiral Collins. We are doing 55 what we call Tier 1 ports 
in terms of volume, critical infrastructure, and a whole host 
of other variables, and those are the ones that we will do 
within calendar year 2004. In addition, we have 47 captains of 
the port around the country, and they are designated by the 
Maritime Transportation Security Act as the Federal maritime 
security coordinators for those areas. Every one of those 
Captains of the Ports already has used what we call the port 
security risk assessment tool that was developed in conjunction 
with our Research and Development Center in Groton, Connecticut 
and American Bureau of Shipping. It is really a neat tool. 
Every captain of the port has used it in advance of these 
studies. So we did not want any dust to settle. We did not want 
to sit on our hands. We really wanted to have some kind of 
baseline assessment, as immediate after 9/11 as we could. So 
the captains of the ports have been busy partnering with all 
the stakeholders in the port, using this tool, identifying 
risk, determining intervention strategy even in advance of the 
rulemaking. I think it is really a positive thing, and what we 
are trying to do is do these things in parallel, not in series, 
and have things fold out so we have a robust position in our 
ports.

                      INTEGRATED DEEPWATER SYSTEM

    Senator Cochran. I know that as a part of your 
modernization effort the Coast Guard has projected the 
Integrated Deepwater System to be a 20-year program to replace 
or modernize aging and technologically obsolete assets of the 
Coast Guard. That is a very sizeable undertaking and plan.
    I notice that some are saying that the funding is not at a 
level where it should be. Some have suggested $79 million in 
additional funding could have been used in this fiscal year to 
get the program moving.
    Do you think that in the 2004 budget request, you have 
sufficient funding requested for this program?
    Admiral Collins. We have funding that keeps very, very 
strong momentum going on this program. Five hundred million in 
a relative sense, looking over the past number of years for our 
capital account is a pretty sizeable chunk of money for one, 
single Coast Guard project.
    So I am very pleased that we have the support to move ahead 
aggressively on it, and of course, the more money you put on 
it, the faster you get the project done. The project was 
designed, Senator, under sort of boundary conditions so that 
all three teams that were competing, three consortia, could 
have the same planning factors. We said design a system that 
guarantees the operational output of the system at a certain 
level, baseline level--98 was the baseline--do it at the lowest 
total cost of ownership, and do it for a capital cost of $500 
million a year and $1 billion total operating cost for the 
system.
    Those were the design parameters. All three of them 
designed to those design parameters and presented those, and we 
awarded the contract. To keep with that notional design, you 
would have to get $500 million a year in fiscal year 1998 
dollars, plus project management costs. So if we are below that 
notional planning, the design of the system has to be morphed, 
and it is morphed by being stretched.
    So that is where we are. We did not get exactly that 
notional planning level, so the project is stretched a bit. 
Now, in the Homeland Security Act of last fall, that Act 
required that we submit a plan, the feasibility of accelerating 
Deepwater and moving it from a 20-year to a 10-year project. 
That report has been submitted--it was the first report 
submitted under the new Department--and that details the 
feasibility of acceleration and the pros and cons.

                       MARITIME DOMAIN AWARENESS

    Senator Cochran. You also have a program called Maritime 
Domain Awareness, and the request in the budget proposes $34 
million for funding of this program. Tell us a little bit about 
that program and whether you think that is a sufficient amount.
    Admiral Collins. I think it is a good start. It is, of 
course, a recurring effort. Maritime domain awareness is a 
concept. It is saying that for us to be truly effective as a 
law enforcement agency and a homeland security agency or a 
fisheries enforcement agency, you have to have transparency of 
your operating environment; you have to have domain awareness, 
and you have to have systems that allow you to get that so the 
scarce ships and planes you do have, you can put them on 
target, and you can push your borders out and have visibility 
of what is coming at you from a security perspective. That is 
sort of the general philosophy of that and I think the central 
feature of our maritime homeland security strategy that we 
published last December, and it is the central capability that 
is embedded in the Integrated Deepwater System.
    The $34 million helps us along the way with that by 
building communications, connectivity and the like, and 
building some prototype harbor operations surveillance systems 
around the country in partnership with the Navy.
    So I think it is a good step, and I think the priorities 
are right there, Senator.

                               RESCUE 21

    Senator Cochran. Another program that I found interesting 
in my briefing papers here is ``Rescue 21''--that is also a 
modernization project--and in the budget request $134 million 
is proposed to be spent in fiscal year 2004 developing more 
cost-efficient towers and receivers for communication purposes.
    Tell us what your reaction to this budget proposal is? Is 
that enough for that program? What do you intend to accomplish 
in the next fiscal year with that money?
    Admiral Collins. That project is right on schedule with the 
funding profile. It is a project that has received a great deal 
of attention both in the Senate and the House. We are mandated 
by Congress to finish the project by 2006, so we have direction 
to not sit on our laurels on this one but to move out in a fast 
way.
    It is on schedule. That money will keep it on schedule. It 
is a tremendously important project. I see that project itself, 
Senator, as a subsystem of this MDA concept, because it gives 
you transparency, it has direction-finding capability in it 
that we do not have now, so when we get a search and rescue 
case, we can direction-find on the transmission; it is digital, 
not analog; multiple channels can be monitored simultaneously; 
it closes geographic coverage gaps around the country. It is a 
tremendously important project, and we are very appreciative of 
the support we have received on the Hill for this project--but 
we are on track with that one.

                       SEARCH AND RESCUE EFFORTS

    Senator Cochran. You mentioned search and rescue. I think 
$26 million is in the budget request for search and rescue. Is 
that sufficient for your purposes?
    Admiral Collins. Yes, Senator. That is part of a multiyear 
effort that we began several years ago to continue to reinvest 
in that. I think when most people think of the United States 
Coast Guard, they think of search and rescue first. We like 
that image, quite frankly, and I think we do it really well. 
But I think there is a time to reinvest, take our pulse in 
terms of our readiness posture there, and I think Congress has 
agreed. And we built this and have continued to invest in our 
search and rescue function over the last 2 or 3 years. In fact, 
from 2002 to 2004, if Congress approves the fiscal year 2004 
request, we will have added 1,000 billets to the search and 
rescue mission in the form of additional people at stations, 
additional people in our command and control nodes, and 
additional training infrastructure to increase and enhance the 
professionalism.
    So yes, I think we are on target, and it is consistent with 
where we have been going in the last couple years.
    Senator Cochran. Thank you very much.
    Director Basham, I want you to understand that we have not 
forgotten you. I know we have had a lot of questions directed 
to the Commandant of the Coast Guard, but there are some 
important questions that I have too about the sufficiency of 
the budget request for the Secret Service and the capacity that 
you have to fulfill your responsibilities.

                 FISCAL YEAR 2004 PRESIDENTIAL CAMPAIGN

    We have an election campaign coming up. Some candidates are 
already out campaigning. Isn't that part of your responsibility 
in the Secret Service, to protect the security of Presidential 
candidates, and if so, do you have sufficient funding requested 
in this budget to do that?
    Mr. Basham. Mr. Chairman, in answer to that, I would say 
yes, I feel very comfortable that we do have sufficient funding 
identified in the fiscal year 2004 budget and some actually in 
the fiscal year 2003 budget to provide that security.
    One of the great benefits of our move into the Department 
of Homeland Security is that we are now going to be able to 
utilize some of those assets that are in that Department to 
assist us with that mission. As a matter of fact, we are 
starting as early as this summer to begin the training of some 
2,000 Federal special agents in other departments within the 
Department of Homeland Security to help us with that mission.
    But as you indicated, we are tasked with that 
responsibility, and there are processes in place which will 
identify those candidates who would receive Secret Service 
protection and then determine the time lines for when that 
would begin and, quite frankly, when it actually ends.
    Senator Cochran. I notice there is a $1.7 million request 
for new equipment to be used in connection with Presidential 
campaign candidate protection. What kind of new equipment are 
you planning to buy, and for what purpose will that equipment 
be used?
    Mr. Basham. I would like to submit that to you off the 
record if I could, Senator, but I can tell you that the 
majority of that would be additional equipment necessary to 
provide it to the other Federal special agents who will be 
assisting us, but primarily in the area of technology. I would 
like to provide that to you later.
    Senator Cochran. That will be fine.
    I notice that you have some reprogramming or reallocation 
of full-time equivalents--250 positions from the Service's 
investigative activity--to staff the Presidential campaigns. 
What happens to the functions that those people normally carry 
out? Who does that work? Is there a breakdown caused by that 
transfer of personnel?
    Mr. Basham. Well, there is somewhat of a temporary pause in 
the activities in our investigative responsibilities in order 
to move those assets to our protective mission.
    Quite frankly, I think the very thing that makes the Secret 
Service strong and gives it its strength is our dual mission of 
protection and investigation, but at times, it also represents 
our Achilles heel in that we do have to move assets from one of 
those missions to the other, and a campaign is an example of 
that.
    But over the years, we have had great success in partnering 
with the other Federal agencies to assist us in that activity.

                         RELATIONSHIP WITH DHS

    Senator Cochran. Do you think the Service has been 
strengthened by the inclusion of the Service in the new 
Department of Homeland Security? Are you better able to obtain 
information that is helpful to you in carrying out your 
mission, or has it become a problem for you?
    Mr. Basham. I would like to echo the comments of Admiral 
Collins on that point. The Secret Service feels that it was an 
excellent move for us to go to the Department of Homeland 
Security. We, as well as the Coast Guard, were moved over 
intact, with our resources and responsibilities, to report 
directly to the Secretary.
    What I think is pointed out here is that the very mission 
of the Secret Service, as I said in my statement, I believe 
mirrors the mission of the new Department of Homeland Security, 
and that is suppression and prevention and protection, and that 
has been for 138 years the methodology and the philosophy of 
the Secret Service, and I think it fits extremely well within 
the new Department.
    I would also like to say that there has been an early 
indication that the cooperation now within this Department as a 
result of this merger is becoming more and more evident as we 
move along.

                          CAPITAL ACQUISITIONS

    Senator Cochran. There is a request for capital 
acquisitions to be funded at an amount of $3.579 million. What 
is the purpose for this appropriation? What are you going to do 
with this money?
    Mr. Basham. I am not completely familiar with the $3.5 
million. If I could, I would like to get back to you with that.
    Senator Cochran. It would be good to know how you plan to 
spend that money.
    Mr. Basham. I will.
    [The information follows:]

    The request for $33 million in the fiscal year 2004 budget was 
developed based on limited understanding of the costs associated with 
the mail screening needs. The Service is currently in the process of 
studying the mail screening needs of certain high risk Federal 
Government agencies, such as, Congressional offices, FBI, CIA, and 
Homeland Security. With this study we will learn the best methods to be 
utilized to implement a central processing facility in lieu of the 
current individual mail processing centers for each agency. A full 
evaluation of methods, operations, technology and other issues related 
to establishing a fully operational mail facility for the White House 
Complex will be established with this study, and a full spend plan will 
be developed at that time.

                        REALIGNMENT OF PERSONNEL

    Senator Cochran. The budget justification indicates that 
the Service is developing a new hiring plan that will consider 
such things as the Service's realignment within the Department 
of Homeland Security. Is there any particular cost estimate 
that you have developed that is attributable to realignment? 
What do you mean by ``realignment''?
    Mr. Basham. As we move into the Department of Homeland 
Security, we are seeing that, particularly in the area of 
critical infrastructure or key asset protection of critical 
infrastructure, it is going to require that the Service 
redesign, and to some extent, it is our training of our special 
agents and Uniformed Division officers as well as our 
professional and technical personnel. Because we have been 
asked to participate in this key asset protection and critical 
infrastructure protection, it is going to require us to go 
about our business somewhat differently.
    I do not know that we identified a specific number or 
amount of money that is going to be necessary, but in our 
Electronic Crimes Special Agent Program which will be dealing 
in cyberspace, if you will, it is going to require that we do 
additional training which is quite expensive, but as of this 
point, we have been using moneys that we currently have to do 
that sort of training.

           NATIONAL CENTER FOR MISSING AND EXPLOITED CHILDREN

    Senator Cochran. I found it interesting to note that there 
is an involvement by the Secret Service in the National Center 
for Missing and Exploited Children. I was not aware of this. 
Tell us a little bit about that and what the responsibilities 
of the Secret Service are that you have assumed using your 
protective expertise to help ensure the safety of America's 
children as well as our schools.
    Mr. Basham. Mr. Chairman, we have been involved with the 
National Center for quite some time to provide them with 
forensic and investigative expertise and to help and assist in 
identifying missing and exploited children.
    As a matter of fact, we just received within the last few 
weeks legislation which now actually gives us authority to work 
with the National Center to further develop this partnership.
    But quite frankly, we feel--and we are very proud of that 
relationship with the National Center and have applied 
resources toward assisting State and local communities in 
identifying and in some cases actually finding missing 
children--but we also found that there is an application of the 
Secret Service's expertise in protection in identifying and 
assessing threats, and we have worked with the Department of 
Education to come up with a training program where we have gone 
out to various school districts around the country, and we have 
tried to help them identify possible threats by, whether it is 
schoolchildren or others, directed toward those schools and 
have had success in actually thwarting what would have been 
some very, very disastrous events out there.
    Senator Cochran. Thank you very much for that information. 
I have some other questions that I am going to submit in 
writing for your consideration. We hope you will be able to 
respond in a reasonable time. And, Admiral Collins, we have 
other questions that we will probably submit to you as well, 
and we hope you will cooperate by submitting answers in writing 
in a reasonable time.
    Senator Byrd.

                          PORT SECURITY GRANTS

    Senator Byrd. Thank you, Mr. Chairman.
    You mentioned earlier the signature by the President of the 
Maritime Transportation Security Act on November 25 of last 
year. On that day, the President said this, and I quote: ``We 
will strengthen security at our Nation's 361 seaports, adding 
port security agents, requiring ships to provide more 
information about the cargo, crew, and passengers they carry.''
    The Coast Guard has since estimated the cost of 
implementing the Act at $1.4 billion in the first year and $6 
billion in the next 10 years. Congress has worked diligently to 
establish a mechanism for direct Federal grants to assist the 
ports. Altogether, Congress has provided $348 million to help 
ports establish new security measures. Unfortunately, none of 
these funds--nothing was requested along this line by the 
Administration. In the most recent competition, ports sent in 
over $1 billion in applications for $105 million of funding.
    Just 2 months after signing the Act, the President sent to 
Congress a budget that did not include any funding for Social 
Security grants. Yet in his State of the Union, the President 
said that we have intensified security at ports of entry.
    Do you have any comment as to how one might reconcile these 
statements with the President's request?
    Admiral Collins. I think clearly, the approach to our 
rulemaking, which we are approaching aggressively, is that the 
investment is a shared burden approach. In terms of our budget, 
you can look at the Coast Guard's budget and see elements 
within that that represent a Federal investment in the 
increased security of our ports--the fact that by the end of 
2004, we will have 12 maritime safety and security teams around 
the country, we will have additional patrol boats, additional 
small boats. Those represent the Federal investment in the 
security of the ports.
    So that just in our budget alone, I think there are 
significant elements that will enhance the security of the 
Nation in our ports. The $1.4 billion and the $6 billion are 
estimates of the impact of the rulemaking on the private sector 
relative to the security enhancements which may be required as 
a result of the rulemaking, and it is our estimate in terms 
of--most of that, Senator, is on the vessel aspects of the 
rulemaking, and then there is the facility aspect of the 
rulemaking, and most of that estimate, close to $1 billion of 
the $1.4 billion, is on the facility end, the facility impact.
    It is a shared approach, and if you look through our 
budgets, particularly the Coast Guard budget, there is 
considerable investment in enhancing port security reflected in 
the additional assets that we are going to bring to bear to the 
issue.
    Senator Byrd. Let me try again. Congress provided $348 
million--that is an easy figure to remember. Do you remember 
what Andy Gump's license number was? Three-forty-eight. Perhaps 
you are not familiar with Andy Gump. That is an old comic strip 
that I saw a good many years ago when I was a boy.
    We provided $348 million to help ports establish new 
security measures. I am asking why you might construe the 
President's request--he sent a budget that did not include any 
funding for port security grants. Yet in the State of the 
Union, the President said we have intensified security at ports 
of entry. So there is a discrepancy here, it seems to me.
    What role have you taken in budget discussions to support 
additional funding for port security based on the new law?
    Admiral Collins. Part of the discussions, and they are 
still underway in terms of what it will take to implement the 
new law from our perspective and under the administrative 
oversight of the rulemaking, and the rulemaking is going to 
require plans, facility plans, security plans, which have to be 
reviewed and approved, and you have got to have capacity to do 
that. That dialogue is underway, and it is not reflected in the 
fiscal year 2004 budget. That is sort of an unfunded mandate, 
if you will, at this juncture in terms of actually 
administering the rule when it finally comes out--under 
discussion.
    Senator Byrd. Let me try it this way. We provided $348 
million to help ports establish new security measures. None of 
these funds were requested by the administration. In the most 
recent competition, ports sent in over $1 billion of 
applications for $105 million in funding.
    Were requests made to OMB for additional funding for port 
security based on the new law? Would you answer that?
    Admiral Collins. No, because of course, number one, the 
$1.4 billion is the estimate of the private sector costs 
associated with this. Of course, the rule is not even in effect 
yet and is not even published yet--it does not come out until 
this summer. The fiscal year 2004 budget was done about that 
same time, so a lot of these things did not find their way into 
the fiscal year 2004 budget because of timing for instance, the 
port security assessments gap that was addressed by the 
supplemental, so the supplemental addressed that.
    So it was a timing issue amongst other things, Senator.

               WHITE HOUSE MAIL SCREENING AND PROCESSING

    Senator Byrd. I have a couple of questions which I will 
direct to Director Basham.
    You spoke of programmatic budget increases requested. The 
only programmatic budget increase requested for fiscal year 
2004 is $33 million for White House mail screening and 
processing. That function has historically been the 
responsibility of the White House Office of Administration.
    The Secret Service has been stretched in recent years to 
meet many new responsibilities. As a consequence, overtime 
rates have continued to be high, attrition rates have 
increased. Given these constraints in your traditional mission, 
what is the rationale for transferring the EOP mail processing 
function from the White House to the U.S. Secret Service?
    Mr. Basham. Senator, I believe the rationale was that the 
Administration felt that the processing of this mail, or the 
security surrounding the processing of this mail, would fall 
within the purview or the mission of the Secret Service. So 
what we are currently in the process of doing is a study to 
make a determination as to what is the best method for 
processing mail and identifying potential threats, whether 
there needs to be a Government-wide application of this 
processing to provide security to not just the White House but 
to any Government entity that may be threatened through the 
mail. The Service has agreed to work with the White House to 
come up with a plan as to how this should be applied.
    The Service at this point is providing technical expertise 
to this issue. We are not actually in the process of processing 
the mail, and the $33 million was a figure that was placed 
there as a placeholder, because we really do not know what the 
costs are going to be associated with the processing, whether 
it is going to require a facility, additional personnel, 
whether there should be contract personnel or Government 
personnel.
    So when we get the results of the study, we will have a 
better idea as to exactly what requirements there are going to 
be. But we agree that the Service should not be in the position 
of having to actually physically do that processing.
    Senator Byrd. If it was a placeholder, why was it not $30 
million or $35 million, rather than $33 million? What will $33 
million buy?
    Mr. Basham. We do not have any information as to why $33 
million was identified for that project. It is our 
understanding that it was merely an amount of money that was 
earmarked by OMB to do that, recognizing that there were going 
to be some costs associated with this. So I cannot tell you why 
it was not $30 million or $35 million but yet $33 million.
    Senator Byrd. Would you please provide for the record what 
the $33 million would buy?
    Mr. Basham. What it will buy--yes, sir.
    [The information follows:]

    The request for $33 million in the fiscal year 2004 budget was 
developed based on limited understanding of the costs associated with 
the mail screening needs. The Service is currently in the process of 
studying the mail screening needs of certain high risk Federal 
Government agencies, such as, Congressional offices, FBI, CIA, and 
Homeland Security. With this study we will learn the best methods to be 
utilized to implement a central processing facility in lieu of the 
current individual mail processing centers for each agency. A full 
evaluation of methods, operations, technology and other issues related 
to establishing a fully operational mail facility for the White House 
Complex will be established with this study, and a full spend plan will 
be developed at that time.

    Senator Byrd. In fiscal year 2003, $9 million was proposed 
to be transferred from the Office of Homeland Security to the 
Department of Homeland Security for the purpose of EOP mail 
processing. What is the status of the $9 million transfer, and 
will this funding to the Secret Service?
    Mr. Basham. The $9 million was, I believe, an amount that 
was assessed across the various agencies on a percentage basis. 
That happened to be the amount that the Service was requested 
to put forward from the 2004 budget request.
    So I will have to provide you with information as to how 
that is going to be applied and where it is coming from.
    Senator Byrd. All right.
    [The information follows:]

    This $9 million was transferred to the Service on March 17, 2003 
from the Office of Homeland Security pursuant to section 1516 of the 
Homeland Security Act of 2002, Public Law 107-296.
    This funding will be used to cover the cost of sustaining mail 
screening for the Executive Office of the President while designing an 
ideal mail processing facility. It will fund the utilization of an 
interim facility to handle and process all mail addressed to the White 
House Complex and screen it for selected chemical, biological, 
radiological, nuclear, and explosives (CBRNE) contaminants. This 
screening function is undertaken as a means of facilitating the overall 
R&D effort. This research is being carried out by the U.S. Army Soldier 
and Biological Command, Department of Defense.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Byrd. Mr. Chairman, I thank you. I have a few 
questions that I will submit also for the record.
    Senator Cochran. Thank you, Senator Byrd.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

        Questions Submitted to the United States Secret Service

              Questions Submitted by Senator Thad Cochran

    Question. The fiscal year 2004 budget request for capital 
acquisitions is $3.5 million. This budget activity covers operational 
costs at the James J. Rowley Training Center. The budget request for 
capital acquisitions proposes an increase of roughly $82,000 above the 
fiscal year 2003 appropriations level. Will capital acquisition funds 
also be used to perform facility upgrades to the recently acquired 
Webster school?
    Answer. The $3.5 million request for capital acquisitions in fiscal 
year 2004 would be dedicated to operational infrastructure repairs at 
the James J. Rowley Training Center. In fiscal year 2002, the Service 
did dedicate $442,000 to maintain the structural integrity of the 
Webster School, however, the Service obligated these funds from its 
base budget, not its capital acquisitions budget. None of the $3.5 
million requested for capital acquisitions in fiscal year 2004 will be 
used to perform facility upgrades to the Webster School.
    Question. The budget request identifies $1.7 million for security-
related equipment to support Presidential Campaign protection. Has the 
Secret Service worked with the Science and Technology directorate to 
determine what types of equipment to use to protect against chemical, 
biological, and other attacks?
    Answer. The Secret Service's Technical Security Division maintains 
technical liaison with other agencies and private industry concerning 
current and future developments in state-of-the-art technologies to 
assist in developing concepts, equipment, etc. supporting research and 
development in the areas of chemical, biological, radiological, and 
nuclear detection and countermeasures. The Secret Service continues to 
expand on partnerships with other Federal agencies, universities, and 
industry to coordinate research and development in the areas of 
infrastructure protection; investigative support; physical security; 
explosives detection; and the evaluation, modification and procurement 
of off-the-shelf equipment. Recently, the Technical Security Division 
met with the Director of the Science and Technology Directorate of DHS. 
This meeting fostered a direct interchange with DHS concerning 
chemical/biological technology requirements and development.
    Question. The protection of our nation's critical infrastructure is 
a fundamental priority of the Department of Homeland Security. What 
collaborative efforts will take place between the Information Analysis 
and Infrastructure Protection directorate and the Secret Service?
    Answer. The Secret Service Intelligence Division collaborates 
directly with the Information Analysis and Infrastructure Protection 
Directorate through the Homeland Security Center. This center is 
staffed with an Intelligence Division Special Agent on a 24-hour basis 
to serve as a conduit of information relating to threats against USSS 
protectees and National Special Security Events. The Secret Service 
provides immediate notification to DHS through the Center regarding 
incidents which may adversely affect our nation's critical 
infrastructure. This information can be compared with that from all 
agencies under IA&IP to indicate trends in threat behavior, and 
identify vulnerabilities.
                                 ______
                                 

             Questions Submitted by Senator Robert C. Byrd

                          BUDGET PRESENTATION

    Question. The fiscal year 2004 budget justification includes 
$1,003,435,000 as the budget estimate for fiscal year 2003. In the 
fiscal year 2003 budget justification, the fiscal year 2003 estimate 
was $1,010,435,000, a $7,000,000 difference. Was this funding 
transferred to the Department of Homeland Security? If so, under what 
authority was this transfer made? If the funding was not transferred, 
please explain the $7,000,000 reduction.
    Answer. This $7,000,000 difference was not transferred to the 
Department of Homeland Security. To maintain 3-year comparability in 
the President's Budget, these funds were shown in the Departmental 
Management Operating Expenses account to represent the consolidation of 
managerial activities at the headquarters level and the savings 
associated with centralizing these functions in the new Department. The 
reallocation was made for budget presentation purposes only, with no 
loss of funding actually occurring in fiscal year 2003.

                         CONSOLIDATION SAVINGS

    Question. Your prepared testimony states that ``These budget 
increases are offset by a $9,000,000 reduction in the base budget 
reflective of our reorganization into the Department of Homeland 
Security, and anticipated consolidation savings from integration with 
Department-wide processes and operations.'' The budget justification 
submitted to Congress doesn't appear to identify this reduction. Has 
the $9 million in savings been identified? If so, provide a detailed 
list of the anticipated savings. If the savings cannot be achieved, 
what is the impact on personnel and your future hiring plans?
    Answer. The $9 million identified above is made up of $7 million 
associated with consolidation of managerial activities at the 
Departmental level and $2 million in savings anticipated from 
integration with the Department-wide processes and operations. The 
Department of Homeland Security is currently reviewing operations 
across all entities to ascertain where efficiencies and cost savings 
can be achieved. One expense area believed to hold the most promise is 
consolidation of information technology expenses. For example, the 
buying of Enterprise licenses in bulk for the entire Department, rather 
than individually for each entity within the Department, is being 
carefully considered as one means to achieve cost savings.

               WHITE HOUSE MAIL SCREENING AND PROCESSING

    Question. The only programmatic budget increase requested for 
fiscal year 2004 is $33 million for White House Mail Screening and 
Processing. This function has historically been the responsibility of 
the White House Office of Administration. What is the rationale for 
transferring the EOP mail processing function from the White House to 
the United States Secret Service?
    Answer. The Service has a responsibility for ensuring that any 
potential threat to the safety and security of the White House is 
eliminated. This includes any threats that could arise from the 
delivery of mail addressed to the White House.
    Question. What responsibilities will the Secret Service have with 
regard to White House Mail Screening and Processing?
    Answer. The Secret Service is responsible for screening of all 
threats to those whom it has been directed to protect. The mail is just 
one aspect of this process. Secret Service employees check mail 
addressed to the White House for potential physical threats (such as 
munitions, and chemical, biological, and radiological material) and 
then allow the Office of Administration to sort and deliver the 
screened packages.
    Question. Provide a spend plan associated with the $33 million 
request.
    Answer. The $33 million request for mail screening activities in 
the fiscal year 2004 budget was developed based on limited 
understanding of the costs associated with the mail screening needs. 
The Service is currently in the process of studying the mail screening 
needs of certain high risk Federal Government agencies, such as 
Congressional offices, FBI, CIA, and DHS. With this study we will learn 
the best methods to be utilized to implement a central processing 
facility in lieu of the current individual mail processing centers for 
each agency. A full evaluation of methods, operations, technology and 
other issues related to establishing a fully operational mail facility 
for the White House Complex will be established with this study, and a 
full spend plan will be developed at that time.
    Question. In fiscal year 2003, $9 million was proposed to be 
transferred from the White House Office of Homeland Security to the 
Department of Homeland Security for the purpose of EOP mail processing. 
What is the status of the $9 million transfer and will this funding go 
to the Secret Service and for what purpose?
    Answer. The transfer of $9 million from the White House Office of 
Homeland Security to the Service has been completed. The Service has 
used this funding to contract with the U.S. Army Soldier and Biological 
Command, Department of Defense to handle and process all mail addressed 
to the White House Complex and screen it for selected chemical, 
biological, radiological, nuclear, and explosives (CBRNE) contaminants.
    Question. What is the status of the Secret Service's study on White 
House mail processing? When will the study be completed?
    Answer. We expect to award the contract for the study on White 
House mail processing on May 30, 2003, and have the study completed by 
November 30, 2003.

             USSS SPECIAL AGENT WORKFORCE & QUALITY OF LIFE

    Question. Over the past 3 fiscal years, Congress provided 
significant funding increases to the Secret Service to address 
workforce quality of life issues such as excessive overtime rates and 
excessive travel. According to your prepared testimony, the Service has 
hired 1,098 special agents over a 3 year period and 545 Uniformed 
Division officers and 453 support personnel during the same period. The 
intention of this initiative was to reduce overtime levels and achieve 
overall levels of overtime closer to fiscal year 1994 levels. According 
to information submitted by the Secret Service last year, average 
monthly overtime levels remained at levels close to the fiscal year 
2000 high of 80.06. What is the average monthly overtime level now and 
is the fiscal year 2004 budget request sufficient to achieve levels 
closer to fiscal year 1994 levels? If not, what funding level, above 
the President's request, would be necessary to achieve that goal?
    Answer. For the first 6 months of fiscal year 2003, overtime worked 
by field agents averaged 61.21 hours per month--this is below the 1994 
level of 62 hours per month. The Service recognizes the increased 
workload for the 2004 Presidential campaign and believes that it has 
sufficient funding budgeted for overtime.

                     USSS UNIFORMED DIVISION HIRING

    Question. Over the past few years, the Secret Service has 
experienced a higher than average non-retirement attrition rate for 
Uniformed Division personnel. In 2001, the non-retirement attrition 
rate was 6.42 percent compared to 1.14 percent in 1995. In 2002, the 
attrition rate was 15.18 percent through the first half of the year. 
Most of the separations were due to the Transportation Security 
Administration's air marshals hiring program. Is the Uniformed Division 
staffed at a level you are comfortable with and if not, why doesn't the 
fiscal year 2004 budget request address this need?
    Answer. The Service is currently working with the Department of 
Homeland Security and the Administration to review staffing levels 
within the Uniformed Division. As discussed above, the fiscal year 2004 
budget includes appropriate levels to support the current staffing 
levels for the entire Secret Service.
    Question. What additional requirements need to be met and what is 
the funding level needed to meet your hiring demands in fiscal year 
2003 and fiscal year 2004?
    Answer. As discussed above, the Service is currently working with 
the Department and the Administration to review the Uniformed 
Division's staffing needs. Once appropriate decisions have been made, 
funding levels will be reassessed to ensure that revisions to current 
staffing levels can be accommodated within requested funds.

                            USA PATRIOT ACT

    Question. The USA Patriot Act, Public Law 107-056, provided the 
Secret Service with additional authorities and mandates. Provide a list 
of requirements and expanded authorities given to the Secret Service as 
a result of that Act. Provide a list of activities, with associated 
funding levels, that have been undertaken as a result of that Act.
    Answer. The USA Patriot Act (``the Act'') included five sections 
specifically addressing Secret Service initiatives and investigative 
authorities.
  --Section 105 of the Act requires the Director to develop a national 
        network of electronic crime task forces based on the New York 
        Electronic Crimes Task Force model to prevent, detect and 
        investigate various forms of electronic crimes.
  --Section 374 extends the reach of the domestic counterfeiting 
        statutes (Chapter 25 of Title 18 U.S.C.) to include analog, 
        digital or electronic images, and provides enhanced penalties 
        for these offenses.
  --Section 375 extends the reach of the foreign counterfeiting 
        statutes (Chapter 25 of Title 18 U.S.C.) to include analog, 
        digital or electronic images, and provides enhanced penalties 
        for these offenses.
  --Section 377 provides extra-territorial jurisdiction for violations 
        of 18 U.S.C. Sec. 1029 committed abroad, to include fraud and 
        related activity in connection with access devices.
  --Section 506 provides concurrent jurisdiction for the Secret Service 
        to investigate computer-based crimes under 18 U.S.C. Sec. 1030, 
        along with the FBI. This section also provides for the re-
        authorization of Secret Service jurisdiction for financial 
        institution fraud under 18 U.S.C. Sec. 1344. This authority was 
        due to expire in 2004.
    Since 1984, and with the re-authorization contained in the USA 
Patriot Act, the Secret Service has been authorized to investigate 
crimes committed with the use of a computer.
    The Secret Service works closely with stakeholders in the financial 
services industry, electronics manufacturing sector, and information 
services, to provide feedback regarding the misapplication of advances 
in computer related products.
    The New York Electronic Crimes Task Force (NYECTF) task represents 
a strategic alliance of more than 661 regional members or groups 
including: prosecutors; local, state and Federal law enforcement; 
academia; and companies in private industry with interests in banking, 
financial services, brokerage, and telecommunications. The common 
denominator in the NYECTF is that each member, be it law enforcement or 
industry, is a stakeholder with a business or investigative interest in 
preventing electronic crime. Each member adds value through specialized 
knowledge or expertise in contributing to the common goal. As a 
testament to the resolve and adaptability of the agents and members, 
the NYECTF resumed operations within 48 hours of the loss of its base 
of operations in the New York Field Office. The NYECTF defines the 
Secret Service's priority on partnerships, and demonstrates the 
economies of scale inherent in the task force approach.
    Based on the mission and organization of the NYECTF, the Secret 
Service established eight additional electronic crimes task forces 
throughout the country, in locations with significant or specialized 
interests in the critical financial, banking or information 
infrastructures. These additional task forces are located in Boston, 
Washington, DC, Charlotte, Miami, Chicago, Las Vegas, Los Angeles, and 
San Francisco.
    For fiscal year 2003 and beyond, we intend to follow-through with 
the development and implementation of additional specialized training, 
and pursue recently enacted legislative authority by forming electronic 
crimes task forces based on the New York Electronic Crimes Task Force 
model.
    Currently, the Service spends approximately $3 million to $4 
million per fiscal year on the operation of these task forces and their 
efforts to thwart cyber-crime.

                    NATIONAL SPECIAL SECURITY EVENTS

    Question. The Secret Service is required to be the lead agency for 
security at National Special Security Events (NSSEs). Depending on the 
size of the event, the associated costs can vary dramatically. Except 
for the 2002 Winter Olympics, which was paid for in the fiscal year 
2002 Emergency Supplemental, the costs associated with these events 
have been paid for through the Department of Treasury's 
Counterterrorism Fund. Not once has the Secret Service budgeted for a 
NSSE through the normal budget process, even though some events are 
known well in advance such as the annual State of the Union Address and 
the national political conventions every 4 years. Now that the Secret 
Service is part of the Department of Homeland Security, will the 
Department of Homeland Security Counterterrorism Fund pay for these 
events or will you be pursuing another mechanism?
    Answer. The use of the Department of the Treasury's 
Counterterrorism Fund to cover the extraordinary and unbudgeted costs 
of National Special Security Events worked very well for the Secret 
Service. It worked well because of the ad hoc nature of these events 
and the ongoing availability of funding provided with the 
Counterterrorism Fund. With the dissolution of Treasury's Office of 
Enforcement, Treasury's Counterterrorism Fund was transferred to the 
Department of Homeland Security as part of the determination order 
process. Unless a fund is specifically established to cover the costs 
of NSSEs, the Service anticipates that the DHS Counterterrorism Fund 
will be the source of funding for these events, and that processes at 
DHS will mimic those that worked well at the Department of Treasury.

                   NATIONAL THREAT ASSESSMENT CENTER

    Question. Since fiscal year 2001, Congress has appropriated 
approximately $1.7 million and 4 FTE annually for the Secret Service's 
National Threat Assessment Center (NTAC). The purpose of NTAC is to 
share Secret Service expertise in identifying, assessing, and reducing 
threats to homeland security. Following the school shooting in 
Columbine in 1999, the Secret Service started the ``Safe School 
Initiative.'' The purpose of this program is to share expertise in 
identifying threatening behavior and preventing violence. Through a 
partnership with the Department of Education, this program has reached 
thousands of teachers and law enforcement officers across the country. 
According to your prepared testimony, the Secret Service has conducted 
46 Safe School Initiative presentations and 12 day-long training 
seminars around the country.
    Now that the Secret Service is part of the Department of Homeland 
Security, NTAC's focus is also on assisting the Information Analysis & 
Infrastructure Protection Directorate to help focus on the risk and 
consequences of a domestic terrorist attack.
    With an annual budget of $1.7 million and 4 FTE, how is NTAC 
balancing these two needs?
    Answer. The National Threat Assessment Center is able to meet the 
demands of current research and training obligations under current 
budget allocations. Any increased demands related NTAC support of the 
Department of Homeland Security will be met within the current budget 
through careful prioritization of the program's workload and, as 
necessary a reallocation of existing resources. Currently the Center 
supports all feasible requests for seminar training, declining only 
those requests that are too costly for participants or those which do 
not have enough participants to conduct training cost effectively. The 
Center balances requests for service with resource availability in the 
areas of research, presenting findings, and training. Through this 
balancing we will be able to continue to deliver timely and accurate 
information to the law enforcement community and the public.
    Question. According to information provided by your agency last 
year, the Secret Service was able to meet approximately 60 percent of 
the written requests to present information from the Safe School 
Initiative in fiscal year 2001. What percentage of the demand was met 
in fiscal year 2002? Can you provide the funding needed to meet the 
unmet demand in fiscal year 2003? What funding level is necessary to 
respond to 100 percent of the written requests in fiscal year 2004?
    Answer. The Service met 69.4 percent of the requests it received to 
provide information on the Safe School initiative in fiscal year 2002. 
We conducted 50 training sessions with approximately 8,500 attendees. 
Twenty-two requests were declined. The decision to decline such 
requests was typically based on the very small number of attendees 
expected, scheduling conflicts, or because the organizers were charging 
unusually high fees for attending the presentation. The Service is not 
declining requests for presentation because of a lack of funding.
                                 ______
                                 

          Questions Submitted to the United States Coast Guard

              Questions Submitted by Senator Thad Cochran

                           HOMELAND SECURITY

    Question. The Homeland Security Act requires the continuation of 
all non-homeland security missions of the organizations transferred to 
the Department of Homeland Security. It directs that Coast Guard non-
homeland security capabilities be maintained without significant 
reduction unless specified in subsequent law. What specific criteria 
would you apply if the Coast Guard was faced with a choice between 
carrying out a non-homeland security mission and a homeland security 
mission?
    Answer. As a military, maritime, multi-mission organization, the 
Coast Guard recognizes that its Maritime Homeland Security (MHS) and 
Non-Maritime Homeland Security (non-MHS) missions are not mutually 
exclusive. Resource obtainment and allocation efforts, at the strategic 
and tactical level, are made utilizing values, experience, training, 
judgment, and a keen eye toward balancing the risks involved in the 
situation at hand.
    Consider the tactical resource allocation example of a Coast Guard 
cutter and embarked helicopter patrolling the waters off the south 
coast of Florida. The multi-mission capabilities of these assets and 
the people who crew them result in a resource mix that on any given day 
might:
  --Respond to a call from a sinking sailboat (non-MHS mission--Search 
        & Rescue);
  --Conduct a boarding on a commercial fishing vessel (non-MHS 
        missions--Marine Safety, Living Marine Resources, and Marine 
        Environmental Protection);
  --Interdict a ``go-fast'' approaching U.S. shores (MHS missions--
        Ports, Waterways & Coastal Security; Drug Interdiction; Migrant 
        Interdiction);
  --Escort a Naval ship during a military out load operation (MHS 
        missions--Ports, Waterways & Coastal Security; Defense 
        Readiness).
    Should a situation unfold in which a MAYDAY call and ``go fast'' 
sighting occur simultaneously, the Coast Guard Operational Commander 
would utilize the assets available and the aforementioned decision-
making tools in crafting a response, keeping in the forefront of his or 
her mind the premise that human life takes precedence.
    A second example, this one in the realm of strategic resource 
obtainment, pertains to the President's fiscal year 2004 budget 
request. The funds requested in the fiscal year 2004 budget are 
critical to overall mission balancing efforts and to the sustainment of 
the Coast Guard's high standards of operational excellence across all 
missions. It is important to note that every MHS dollar directed to the 
Coast Guard will contribute to a careful balance between our safety and 
security missions, both of which must be properly resourced for 
effective mission accomplishment. The fiscal year 2004 budget reflects 
steady progress in a multi-year resource effort to meet America's 
future maritime safety and security needs. This new funding will 
positively impact performance in all assigned missions.
    In performance-based organizations, such as the Coast Guard, 
resource obtainment and allocation decisions are made with the 
overarching mission outcome in mind. Coast Guard decision-making 
criteria is focused on successful mission performance, and led by our 
values, training, experience, judgment, sense of balance, and risk 
management skills.

                       MERCHANT MARINER DOCUMENTS

    Question. After September 11, 2001, the need for tamper-resistant 
identification cards became a priority for all agencies of the 
government issuing these types of cards. The fiscal year 2003 
supplemental appropriations act provides $10 million to the Coast Guard 
for updating the Merchant Mariner Documents provided to certain 
qualified crew members. Please tell the subcommittee how you plan to 
use the supplemental appropriations provided.
    Answer. Fiscal year 2003 supplemental funding will be used to 
provide contractor support at the Regional Exam Centers (REC) in fiscal 
year 2003 and a portion of fiscal year 2004 to accommodate workload 
surges resulting from the enhanced security processes; to install 
technological improvements such as electronic fingerprinting 
capabilities to reduce processing time and upgrades to the database for 
mariner documentation tracking and record keeping; to provide more 
Investigating Officers in the field to adjudicate security issues 
discovered on mariner applicants; and, to centralize where possible 
those functions not requiring face-to-face contact with the applicant.

             SPEND PLAN FOR $10 MILLION SUPPLEMENTAL FUNDING
------------------------------------------------------------------------
                                                              Planned
            Item Description                   Cost          Execution
                                                           (fiscal year)
------------------------------------------------------------------------
Additional personnel and equipment at         $5,000,000       2003/2004
 the RECs...............................
Electronic Fingerprinting Equipment.....       1,000,000            2003
Additional Investigating Officers.......         700,000       2003/2004
Additional personnel for screening and         1,900,000       2003/2004
 evaluation support.....................
Mariner credentials database upgrades...       1,000,000       2003/2004
Additional program management and                400,000            2003
 project support........................
                                         -----------------
      Total.............................      10,000,000
------------------------------------------------------------------------

    The upgrades for issuing credentials to mariners operating in the 
Marine Transportation System are intended to ensure that credentials 
are never issued to those who pose a threat to national security or 
marine safety. This new system includes a more robust vetting process 
for mariners and more personal interaction between the mariner and the 
REC to verify the applicant's identity. In addition, a more tamper-
resistant card is being issued to minimize the chance of misuse. The 
Coast Guard will continue to work with other agencies, especially the 
Transportation Security Administration, to achieve a ``good 
government'' solution that is fast, accurate, and consistent.
    Question. Have you discussed with Secretary Ridge the possibility 
of working with other agencies of the Department of Homeland Security 
that are also in the process of developing more secure identification 
cards for employees, such as the Transportation Security 
Administration, Citizenship and Immigration Services, or the Bureau of 
Customs and Border Protection?
    Answer. Yes. The Transportation Security Administration (TSA) is 
responsible for developing the Transportation Workers Identification 
Credential (TWIC) for use as a transportation system common credential, 
used across all modes, for all transportation workers requiring 
unescorted access to secure areas of the transportation system. The 
Coast Guard has participated with the Department of Transportation and 
TSA in the development of the TWIC concept since its inception. The 
Coast Guard is working with the TSA Credentialing Office and monitoring 
their ongoing efforts to develop and implement the TWIC program. The 
Coast Guard will continue to work closely with TSA and DHS to ensure 
the Merchant Mariner credentialing process is aligned with the TWIC 
when finalized by TSA to provide the best government solution.

                              WAR ON IRAQ

    Question. You state in your prepared testimony that the Coast Guard 
deployed the greatest number of assets overseas during the War on Iraq 
since the Vietnam War, to include 2 high endurance cutters, 8 patrol 
boats, 1 buoy tender, 4 port security units and 2 maintenance support 
units. Does the Coast Guard plan to leave any assets overseas as part 
of the President's plan to assist the Iraqi people in rebuilding their 
country and developing a democracy? If so, which assets and what would 
be the responsibility of the Coast Guard regarding those assets and the 
cost incurred by the Coast Guard in support of those assets?
    Answer. The Coast Guard is awaiting information from the Combatant 
Commander on the exact needs for Coast Guard forces to assist in the 
rebuilding of Iraq. Over half of the Coast Guard forces deployed have 
already been released by the Combatant Commanders and are returning or 
have returned to the United States.
    Question. As the Coast Guard's deployed assets return home there 
are general maintenance and repair needed to restore equipment to its 
pre-war capacity. Does the Coast Guard have sufficient funding, either 
from the fiscal year 2003 Consolidated Appropriations Resolution or the 
fiscal year 2003 Emergency Wartime Supplemental Appropriations Act, to 
address those needs?
    Answer. The Department of Defense has been appropriated funds 
within the IRAQI FREEDOM Fund of the 2003 Emergency Wartime 
Supplemental Appropriations Act of which ``up to'' $400 million may be 
transferred to the Coast Guard to cover the costs for supporting 
Operation IRAQI FREEDOM. The Coast Guard is working with the Department 
of Defense to effect the transfer of those funds to the Coast Guard. 
The Coast Guard expects to receive sufficient funds to cover the 
reconstitution of its deployed forces.
    Question. If not, do you have estimates of additional funding 
needed to cover the costs of reconstituting the Coast Guard assets?
    Answer. The Department of Defense has been appropriated funds 
within the IRAQI FREEDOM Fund of the 2003 Emergency Wartime 
Supplemental Appropriations Act of which ``up to'' $400 million may be 
transferred to the Coast Guard to cover the costs for supporting 
Operation IRAQI FREEDOM. The Coast Guard is working with the Department 
of Defense to effect the transfer of those funds to the Coast Guard. 
The Coast Guard expects to receive sufficient funds to cover the 
reconstitution of its deployed forces.

                    FISCAL YEAR 2004 BUDGET REQUEST

    Question. The President's fiscal year 2004 budget requests $6.77 
billion for the Coast Guard, which is approximately $700 million over 
the fiscal year 2003 level. Do you believe this is adequate funding to 
support the homeland security and non-homeland security activities of 
the Coast Guard?
    Answer. The fiscal year 2004 budget reflects steady progress in our 
multi-year resource effort to meet America's future maritime safety and 
security needs. This new funding will positively impact our performance 
in all assigned maritime homeland security (MHS) and non-MHS 
performance goals. The multi-mission resources requested in the fiscal 
year 2004 budget are critical to overall mission balancing efforts and 
to the sustainment of the Coast Guard's high standards of operational 
excellence across all mission areas. It is important to note that every 
Homeland Security dollar directed to the Coast Guard will contribute to 
a careful balance between our safety and security missions, both of 
which must be properly resourced for effective mission accomplishment.
    From the fiscal year 2002 enacted budget to 2004 request, the Coast 
Guard has received over 32 percent budgetary growth. This includes 
personnel Growth of 800 in fiscal year 2002, 1,400 in 2003 and nearly 
2,000 in the fiscal year 2004 request. The Coast Guard's $6.7 billion 
request in fiscal year 2004, a 10 percent increase over the previous 
year's enacted budget, provides resources to perform increased MHS 
operations and sustain non-MHS missions. It will specifically enable us 
to accomplish three primary goals:
    Recapitalize Legacy Assets and Infrastructure: The Integrated 
Deepwater System is requesting funding for conversion of five 110 
patrol boats to more capable 123 patrol craft, seven Short Range 
Prosecutor small boats, the first National Security Cutter (to be 
delivered in fiscal year 2006), the continued development of a Common 
Operating Picture (COP), command and control system at four shore-based 
command centers and the continuation of the Rescue 21 command and 
control communications project which will be 35 percent complete at end 
of fiscal year 2004 (100 percent complete by end of fiscal year 2006).
    Build-Out Homeland Security Operations.--Increase our Maritime 
Domain Awareness by leveraging our recent inclusion in the National 
Intelligence Community and investing in communications capability that 
will enable us to remain interoperable with DOD, DHS modes, and other 
Federal, local and State agencies. The fiscal year 2004 request will 
also fund six new deployable Maritime Safety and Security Teams (for a 
total of 12 teams), 58 Sea Marshals, 43 Response Boats (Small) & 8 
Response Boat (Mediums), the stand-up of Stations Boston and Washington 
(D.C.), two new Port Security Units (for a total of 12 teams) and nine 
87 Coastal Patrol Boats.
    Sustain Non-HLS Missions.--Funding for 390 new personnel towards 
achievement of a 68-hour workweek at our multi-mission stations and a 
12-hour watch standard at command centers. Resources area also included 
for training enhancements at the National Motor Lifeboat School and 
Boatswainmate ``A'' school.
    Support of the President's fiscal year 2004 budget will enable the 
Coast Guard to meet the maritime safety and security challenges that 
America will face in the 21st century.
    Question. How much of the proposed funding is for homeland security 
related activities and how much is for non-homeland security related 
activities?
    Answer. The Coast Guard's fiscal year 2004 Operating Expenses (OE) 
budget is shown in both tabular and graphical form. This OE funding 
does not include Reserve Training (RT) or Environmental Compliance and 
Restoration (EC&R). 





    Note.--Graph does not include Reserve Training and Environmental 
Compliance and Restoration (RT and EC&R).
    Question. The President's fiscal year 2004 budget proposes to 
consolidate several existing Coast Guard accounts: Operating Expenses, 
Environmental Compliance and Restoration, and Reserve Training into one 
Operating Expenses account; and Acquisition, Construction and 
Improvements and Research, Development, Test and Evaluation into one 
Capital Acquisitions account. Is this consolidation of accounts 
necessary? What is accomplished by combining these accounts?
    Answer. The Coast Guard fully endorses the Administration's plan to 
consolidate six of its major appropriations into two larger 
appropriations for more consistency, simplicity, and flexibility across 
all of the Department of Homeland Security components. This 
consolidation will improve clarity of the Coast Guard's budget requests 
to Congressional oversight committees and simplify financial 
accounting.
    Question. There is some concern that funding for the Reserve 
Training account may be used for other purposes if it is combined into 
the Operating Expenses account. This would be detrimental to Reserve 
readiness at a time when the Coast Guard is relying heavily on its 
Reserve units. Do you feel that funding for Reserve Training should 
stand alone to ensure that those funds are used for their intended 
purpose?
    Answer. The Coast Guard fully endorses the Administration's plan to 
consolidate the Reserve Training accounts into the Operating Expenses 
account. This consolidation will improve clarity of Coast Guard's 
budget requests to Congressional oversight committees and afford 
efficiency in financial accounting. Consolidation of accounts will 
improve the Coast Guard's capability to train the Reserve Forces.

                      INTEGRATED DEEPWATER SYSTEM

    Question. Some have suggested that Deepwater's 20-year duration 
should be cut in half. Such an action might increase costs by about $4 
billion in fiscal years 2005-2010, although it might save about $4 
billion in fiscal years 2010-2020. What would be the benefits of 
accelerating Deepwater and could the Coast Guard afford the increases 
associated with that acceleration?
    Answer. The Integrated Deepwater System (IDS) is an integral part 
of every element of the Coast Guard's maritime homeland security (MHS) 
strategy and in balancing our non-MHS missions. MHS necessitates 
pushing America's maritime borders outward, away from ports and 
waterways so layered, maritime operations can be implemented. IDS will 
provide a network-centric system of Command, Control, Communications, 
Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) that 
is critical for enhancing maritime domain awareness. Through common 
systems and technologies, common operational concepts, and a common 
logistics base, new and modernized IDS assets and equipment will 
provide increased capabilities, multi-mission readiness and 
availability, and interoperability with the Department of Defense and 
other Department of Homeland Security agencies.
    Per the Coast Guard's March 7, 2003 Report to Congress on the 
Feasibility of Acceleration IDS to 10 years, accelerating IDS is 
feasible and provides increased operational capability sooner. It would 
expedite the introduction of C4ISR on new and legacy assets, improve 
system readiness and asset availability, and provide approximately 
943,000 additional mission hours to support Maritime Homeland Security 
(MHS) and other Coast Guard non-MHS missions over a 20-year IDS 
implementation plan. The industrial base is more than sufficient for an 
accelerated build out of the IDS. Temporary workforce increases would 
be necessary to meet training and crew requirements associated with the 
accelerated plan but these are also manageable.
    As provided in the Coast Guard Report to Congress, the following 
are the estimated capital acquisition funding levels needed to fund the 
proposed IDS in 10 years. These figures reflect ``then-year dollars.''

                          [Millions of dollars]
------------------------------------------------------------------------
                       Fiscal year                            10-Year
------------------------------------------------------------------------
2002....................................................            $320
2003....................................................             478
2004....................................................             500
2005....................................................           1,892
2006....................................................           1,663
2007....................................................           1,506
2008....................................................           1,472
2009....................................................           1,428
2010....................................................           1,226
2011....................................................             988
------------------------------------------------------------------------

    Question. Some have suggested that the Deepwater program is already 
behind schedule in procurement because of insufficient funding and 
insist this program will be impossible to finish in 20 years. Do you 
think it's possible to complete Deepwater in 20 years at $500 million a 
year? If not, how do you think the plan should be revised?
    Answer. Although the Integrated Coast Guard Systems (IDS) 
contracting strategy was chosen based on its flexibility to adjust to 
budget variances, funding below notional funding levels will increase 
the time and cost necessary to fully implement the Deepwater solution 
and delay needed capability improvements that IDS provides.
    The March 7, 2003 Report to Congress on the Feasibility of 
Accelerating the Integrated Deepwater System provides a 20-year funding 
schedule that would complete the IDS initial build out approximately 2 
years after the last funds were received. This funding is reproduced 
below:

   CAPITAL ACQUISITION BUDGET EXPRESSED IN THEN YEAR (BUDGET) DOLLARS
------------------------------------------------------------------------
                                                            Millions of
                       Fiscal year                            dollars
------------------------------------------------------------------------
2002....................................................             320
2003....................................................             478
2004....................................................             500
2005....................................................             871
2006....................................................             888
2007....................................................             608
2008....................................................             762
2009....................................................             768
2010....................................................             779
2011....................................................             790
2012....................................................             787
2013....................................................             855
2014....................................................             845
2015....................................................             908
2016....................................................             897
2017....................................................             919
2018....................................................           1,001
2019....................................................           1,016
2020....................................................           1,029
2021....................................................           1,001
------------------------------------------------------------------------

    Question. The Integrated Deepwater System was developed in 1998 and 
is therefore based on pre-September 11, 2001, Coast Guard mission 
requirements. Have you made revisions to the Deepwater plan since 
September 11, 2001, to coincide with the evolving mission of the Coast 
Guard? Please provide the Subcommittee with a comparison of the 
original (pre-9/11) and current (post-9/11) performance requirements of 
all Coast Guard assets included in the Deepwater program.
    Answer. After September 11th, 2001 an assessment of Integrated 
Deepwater System (IDS) requirements was conducted by the Coast Guard's 
Assistant Commandant for Operations to determine whether the 
requirements needed to be revised in reponse to the Coast Guard's 
enhanced emphasis on Homeland Security. Based on those findings, a 
change to the Request for Proposal (RFP) was not necessary. The IDS 
System Performance Specification in the RFP was developed based on the 
global mission task sequence of Surveil, Detect, Classify, Identify and 
Prosecute (SDCIP). This task sequence is used in performing every IDS 
mission and is essential to effectiveness in Maritime Homeland Security 
(MHS) missions, as well as all non-MHS missions.
    Consistent with the IDS acquisition strategy, potential operational 
requirements, including Maritime Homeland Security (MHS) requirements, 
are reviewed, identified, and evaluated for integration into the System 
Performance Specifications (SPS). Potential changes to the SPS, since 
September 11, 2001, are presently being assessed for associated 
performance, costs and schedule impacts, and the Coast Guard will work 
with the Department of Homeland Security to address these changes. 
Continual review and validation of requirements and incorporation of 
changes will occur throughout the course of the IDS program. The Coast 
Guard conducts regular briefs with our Congressional oversight 
committees, and if changes are being contemplated for final approval, 
Congress will be informed.

                       MARITIME DOMAIN AWARENESS

    Question. Of the $34 million requested in the fiscal year 2004 
budget for Maritime Domain Awareness, how much funding will be directed 
toward satellite channels for large cutters and satellite handsets for 
smaller assets, the Automated Identification System, and the Joint 
Harbor Operations Center?
    Answer. Of the $34 million requested for Maritime Domain Awareness 
(MDA) in the fiscal year 2004 budget, $5.6 million will be provided for 
wireless communications for Coast Guard cutters, $4 million for 
Automatic Identification System (AIS) for cutters, and $1.1 million to 
provide permanent CG staffing for Joint Harbor Operations Center (JHOC) 
Hampton Roads. Additional information for each of these initiatives is 
provided below.
  --Wireless Communications--$5.6 million
  --This proposal requests $5.6 million in funding for wireless 
        communications for Coast Guard cutters 65 feet and larger. 
        Specifically, this initiative provides the following:
    --$3 million to install necessary satellite communications 
            equipment on board Coast Guard cutters 210 feet and larger 
            and lease dedicated satellite channels and terrestrial 
            landlines to link the satellite land earth stations to 
            Coast Guard data networks.
    --$2.6 million to design, install and support a wireless 
            communications solution for Coast Guard cutters ranging in 
            size from 65 to 180 feet in length. Commercial satellite 
            communications, along with other types of wireless 
            communications systems, will be evaluated as potential 
            solutions to provide wireless connectivity to smaller 
            cutters.
    --AIS for Cutters--$4 million. This proposal requests funding to 
            equip cutters 65 feet and larger with the capability to 
            transmit and receive AIS transmissions.
    --JHOC Hampton Roads--$1.1 million. This proposal requests funding 
            to permanently staff JHOC Hampton Roads with 25 active duty 
            military personnel and provide operation and maintenance 
            funding for installed sensor equipment.
    Question. If the Joint Harbor Operations Center is a project the 
Coast Guard is conducting in conjunction with the Department of Defense 
(DOD), how are the costs being shared between the Coast Guard and DOD? 
Do you have a specific breakdown, or proposed estimates?
    Answer. Shortly after September 11, 2001, the Coast Guard Captain 
of the Port of Norfolk and the Commanding Officer of Naval Base Norfolk 
collaborated on the creation of a vessel monitoring system in the Port 
of Hampton Roads. This system was pieced together by integrating some 
existing Coast Guard test sensors (radar & cameras), a radar operated 
by the local Pilots, and some new equipment. A Joint Harbor Operations 
Center (JHOC) was established in an old degaussing tower at Naval Base 
Norfolk and staffed with Navy and Coast Guard reserve personnel to 
monitor all shipping that presented a potential threat to Naval assets 
or other critical infrastructure in the port.
    This system benefits the port by providing improved situational 
awareness to those who are responsible for security in the port. The 
center reconciles all vessel arrivals with the required Advanced Notice 
of Arrival (ANOA) reports and coordinates Navy and Coast Guard 
escorting responsibilities for High Interest Vessels and High Value 
Assets arriving and departing Hampton Roads.
    The Navy and Coast Guard are working together in a prototyping 
effort that seeks to enhance the JHOC in Hampton Roads and establish an 
additional JHOC in San Diego. The goal of these prototypes is to assist 
in refining our concept of operations and further specify requirements 
for a shared port security system that can be duplicated in other large 
Navy ports. The Coast Guard also anticipates using the knowledge gained 
through these prototypes to assist with development of similar robust 
surveillance system in strategic ports that do not have a significant 
Navy presence.
    The costs to implement and operate the JHOCs will be shared equally 
between the Navy and Coast Guard. The initial estimate to implement 
this prototype effort is approximately $5 million ($2.5 million per 
port). The Coast Guard's portion of follow-on operation, maintenance, 
and staffing of JHOC Hampton Roads is included in the Coast Guard's 
fiscal year 2004 budget request.
    Question. I am told that you plan to combine Coast Guard resources 
from the Automated Identification System (AIS) and Rescue 21 for a more 
cost-efficient placement of towers and receivers on land. If this is 
true, how do you plan to accomplish this goal? Was this plan taken into 
account when developing the fiscal year 2004 budget request?
    Answer. As part of our effort to enhance Maritime Domain Awareness 
(MDA), the Coast Guard is evaluating a project to install a nationwide 
shore-based Universal Automatic Identification System (AIS) system 
capable of capturing essential MDA information (AIS provides 
identification, position, heading, ship length, beam type, draft, and 
hazardous cargo information from any AIS equipped vessel) throughout 
the coastal zone. The nationwide shore-based AIS concept envisions 
displaying AIS data at regional command centers for use by operational 
commanders, as well as transmitting the data to District and Area 
Fusion Centers for analysis and monitoring. Any effort to install a 
nationwide shore-based AIS system will consider the ongoing Rescue 21 
project in order to leverage existing infrastructure and support to the 
greatest extent possible. The Coast Guard is currently evaluating the 
best approach to capturing AIS information throughout the coastal zone, 
thus funding for this system is not included in the Coast Guard's 
fiscal year 2004 budget request.
                                 ______
                                 

             Questions Submitted by Senator Robert C. Byrd

                               DEEPWATER

    Question. The Coast Guard awarded the Deepwater Contract to 
recapitalize, modernize and integrate all of their offshore ships and 
aircraft less than 1 year ago. That contract assumes a steady funding 
stream of $500 million per year for 20 years. Based in the funding 
appropriated to date, the Deepwater program is $202 million behind 
based on a $500 million per year level in fiscal year 1998 dollars. 
What is the shortfall to date if program management and inflationary 
escalators are factored in?
    Answer. Industry teams used a notional annual planning funding 
stream of $300 million in fiscal year 2002 and $500 million from fiscal 
year 2003 in fiscal year 1998 dollars until project completion. In 
addition to the Request For Proposal (RFP) notional annual funding 
level, Deepwater estimated $30 million per year for government program 
management to administer the program. The difference between planned 
Deepwater funding for fiscal years 2002, 2003, and 2004 and 
appropriated funding results in a deficit of $202 million. This funding 
difference includes program management and inflationary escalators.
    Question. Is the Deepwater contract being reevaluated to take into 
account the Coast Guard's enhanced focus on homeland security? If so, 
when will the evaluation be completed?
    Answer. After September 11th, 2001 an assessment of Integrated 
Deepwater System (IDS) requirements was conducted by the Coast Guard's 
Assistant Commandant for Operations to determine whether the 
requirements needed to be revised in reponse to the Coast Guard's 
enhanced emphasis on Homeland Security. The system review indicated 
that the acquisition strategy and System Performance Specification 
(SPS) were still appropriate to address the spectrum of Deepwater 
missions. Based on those findings, a change to the Request for Proposal 
(RFP) was not required. However, it was also recognized that 
adjustments in system and individual asset capabilities and capacity 
would result as increased Maritime Homeland Security (MHS) and non-MHS 
mission demands emerged.
    Consistent with the IDS acquisition strategy, potential operational 
requirements, including MHS requirements, are reviewed, identified, and 
evaluated for integration into the SPS. Potential changes to the SPS, 
since September 11, 2001, are presently being assessed for associated 
performance, costs and schedule impacts, and the Coast Guard will work 
with the Department of Homeland Security to address these changes. 
Continual review and validation of requirements and incorporation of 
changes will occur throughout the course of the IDS program. The Coast 
Guard will keep our Congressional oversight committees informed if 
changes are being contemplated for final approval.
    Additionally, the Coast Guard is planning to evaluate the current 
implementation plan and work with the Department of Homeland Security 
to align as necessary capability and capacity with priorities and 
mission demand. An estimated time on when this evaluation will be 
complete has not been determined, however the Coast Guard will keep our 
Congressional oversight committees informed of its progress. This 
evaluation will take into account the enhanced focus on homeland 
security.

                           DOLPHIN HELICOPTER

    Question. Operational Air Station Commanders have identified the 
safety record and extensive maintenance requirements of the HH-65 Short 
Range Recovery ``Dolphin'' Helicopter as their number one safety issue. 
The Coast Guard currently operates 96 of these helicopters throughout 
the nation. What is the performance record of the Dolphin Aircraft and 
how does it compare to the Coast Guard's other aircraft? The 
President's Budget for fiscal year 2004 requests $67.7 million for 
Deepwater Aviation Contracts and Legacy Sustainment. How much of this 
amount will go toward the re-powering of the ``Dolphin'' Helicopter and 
how is the Coast Guard managing this legacy asset in light of its 
safety record?
    Answer. Since 1997, there have been 80 documented in-flight power 
losses/engine failures in the HH-65 fleet. The in-flight power loss 
trend for first half of fiscal year 2003 (6 months) is nearly twice the 
rate of the previous 6 years:




    The 7-year average engine mishap rate (average number of mishaps 
per 100,000 flight hours) of the HH-65 engine is 25.99. This year the 
mishap rate is 50.79. Comparatively, the 5-year average engine mishap 
rate for the HH-60 is 5.44 with no mishaps this year.
    There is no funding in the President's Budget for fiscal year 2004 
for re-powering the Dolphin Helicopters. In April, 2003, the Coast 
Guard and Honeywell executed a Letter of Instruction to jointly develop 
solutions to HH-65 engine safety, reliability and operational concerns 
to include detailed plans for engine improvement implementation, 
operational evaluation, and spend plans associated with funding already 
appropriated by Congress (approximately $10 million).
    The notional Deepwater Multi-mission Cutter Helicopter (MCH) 
solution is a converted HH-65 that includes new engines and extensive 
modifications to improve capability. We do not anticipate requesting 
funds for Deepwater's MCH until fiscal year 2005 with first delivery 
slated for fiscal year 2007. An engine decision for the MCH will also 
be made in fiscal year 2005.
    Question. Will it be necessary to re-power all 96 ``Dolphin'' 
helicopters in the Coast Guard inventory? Have these costs been 
properly factored into the original Deepwater Contract? Is the Coast 
Guard evaluating an accelerated schedule to re-power the Dolphin 
Helicopter? If so, when will that evaluation be completed?
    Answer. The notional Deepwater Multi-mission Cutter Helicopter 
(MCH) solution is a converted HH-65 that includes new more powerful 
engines and extensive modifications to improve capability. The new 
engine for the MCH will be obtained using the ICGS Open Business Model 
to ensure the best value for the Coast Guard, and the implementation 
plan includes upgrading 93 Dolphin Helicopters to the MCH 
configuration. We do not anticipate requesting funds for Deepwater's 
MCH until fiscal year 2005 with first delivery slated for fiscal year 
2007. These costs are included in the Deepwater plan.
    There is no on-going evaluation to accelerate the upgrade of the 
Dolphin Helicopter to the MCH. However, the Coast Guard has researched 
and prototyped other appropriate helicopter engines and in April 2003, 
the Coast Guard and Honeywell executed a Letter of Instruction to 
jointly develop solutions to existing HH-65 engine safety, reliability 
and operational concerns. These include detailed plans for engine 
improvement implementation, operational evaluation, and spend plans 
associated with funding already appropriated by Congress.

                   110 FOOT CUTTER HULL DETERIORATION

    Question. The Coast Guard operates 49-110 foot Island Class 
Cutters. Many of these cutters are now operating past their intended 15 
year life span. However, as part of the Deepwater Contract all of these 
Cutters will be fitted with 13 foot inserts to increase the size of the 
aft deck and to accommodate a stern mounted rescue boat. At the same 
time, many of these cutters are also experiencing excessive hull 
corrosion that has resulted in significant repair costs. What is the 
status of the hull corrosion issues associated with the 110 foot Cutter 
fleet? What cost has the Coast Guard incurred to date in order to 
repair these vessels? What is the total anticipated cost of the repair 
program, and are these costs incorporated into the Deepwater Contract? 
What is the anticipated life expectancy of these Cutters?
    Answer. The service life of the Island Class 110 foot Patrol Boats 
is 25 years as a result of an early 1990s ship alteration to address 
hull stresses. A 2001 survey of each vessel showed that 22 of 49 110 
foot WPBs were experiencing extensive hull corrosion.
    To date, five cutters exhibiting the worst corrosion per the 2001 
survey have received extensive hull renewal maintenance external to the 
123 foot conversion project at an Operating Expense (OE) cost of $8.5 
million. Two additional 110 foot WPBs are currently in commercial 
facilities for emergent hull repairs. Emergent hull repairs will 
continue to be accomplished on 110 foot WPBs as required. Since these 
emergent hull repairs are accomplished on a case-by-case basis, the 
total cost of repairs has not been estimated at this time.
    The Deepwater 123 foot conversion plan does include renewal of 
corroded shell plate. The 123 foot Patrol Boat is estimated to have a 
15 year service life.

       COAST GUARD ACTIVITIES NEW YORK OPERATION TEMPO MARSEC II

    Question. My staff was recently briefed on the level of resources 
needed to maintain a MARSEC II security level for Activities New York. 
How long has Activities New York been operating under a MARSEC II 
security level? Is Activities New York still operating under a MARSEC 
II security level? What impact does the recent decision by Secretary 
Ridge to lower the threat level from Orange to Yellow have on resource 
levels required for Activities New York? For Activities New York, 
provide the assets necessary, including personnel, to operate under 
MARSEC II level.
    Answer. Activities New York operated at MARSEC Level Two for 
operation LIBERTY SHIELD from March 18, 2003 until April 18, 2003. 
Since April 18, 2003 Activities New York has been at MARSEC Level One 
with additional Coast Guard Reservists still on hand assisting with 
security for military in-loads and out-loads in support of Operation 
IRAQI FREEDOM. The decrease from MARSEC Level Two to MARSEC Level One 
was executed in accordance with the conclusion of operation LIBERTY 
SHIELD and the shift from threat level Orange to threat level Yellow as 
directed by the Department of Homeland Security. Consequently, the 
shift from MARSEC Level Two to MARSEC Level One has reduced the number 
of operational resources required by Activities New York for security 
operations.
    Port-specific asset requirements for MARSEC Levels are classified. 
A classified briefing can be arranged if desired.

                     RADIATION DETECTION EQUIPMENT

    Question. The Coast Guard's Radiological Detection Working Group 
recently identified a suite of radiation detection equipment for use by 
Coast Guard forces. Provide, for the record, a list of recommendations 
by the working group. What is the Coast Guard doing to address these 
recommendations? Does the fiscal year 2004 budget include resources to 
purchase radiation detection equipment for Coast Guard employees? Is 
so, please describe the request.
    Answer. The Working Group has incorporated all of its 
recommendations into a draft Coast Guard Commandant Instruction 
(COMDTINST) for implementation Coast Guard wide. This COMDTINST is 
currently in the final review process and will be issued in the near-
future.
    To briefly summarize, the COMDTINST intends to implement a layered 
approach for detecting illegitimate radioactive sources to prevent and 
deter their entry into the United States. Most Coast Guard personnel 
that conduct safety and law enforcement missions on board vessels will 
be designated as Level I teams, outfitted with basic pager-style 
radiation detectors, and given proper training for their use. If they 
encounter radiation readings that are not associated with legitimate 
cargoes or machinery, they will contact Level II teams for assistance. 
These Level II teams will be located on major cutters, Maritime Safety 
and Security Teams, Law Enforcement Detachments, Port Security Units, 
and Strike Teams. They will have more advanced searching and isotope 
identification equipment to further determine if the source is 
legitimate. If the Level II team is unable to determine whether the 
source is safe, procedures have been established to rapidly access 
Department of Energy Radiological Assistance Program (RAP) teams for 
final disposition.
    The Coast Guard is in the final procurement stages for an initial 
purchase of equipment. The fiscal year 2003 budget contains over $17 
million in funds for Chemical, Biological, and Radiological protection 
and detection equipment. The Coast Guard will use these funds to 
procure initial outfits of the equipment recommended by the Working 
Group.

                          MISSION REQUIREMENTS

    Question. The General Accounting Office has reported on several 
occasions that it is skeptical about the Coast Guard's ability to meet 
its responsibilities for all of its missions due to the increase in 
post 9/11 homeland security requirements. The Homeland Security Act 
clearly states that the capabilities of the Coast Guard to perform its 
missions shall be maintained intact and without significant reduction. 
In light of that requirement, what would be the cost to return all law 
enforcement missions to 93 percent of pre-September 11th levels in 
fiscal year 2003? What funding level, above the President's Request for 
fiscal year 2004, would be necessary to return all law enforcement 
missions to 95 percent of pre-September 11th levels by the end of 2004? 
These estimates should assume that the Coast Guard will continue 
operate under various levels of maritime security.
    Answer. The Coast Guard is pursuing a multi-year resource effort to 
perform an enhanced level of Maritime Homeland Security (MHS) while 
sustaining our non-MHS missions near pre-9/11/01 levels. Although we do 
have capacity, capability and operational tempo challenges to 
sustaining mission balance, the Coast Guard will continue to emphasize 
all of our missions. At the end of the day, we are focused on 
performance-based results and not only resource hours. The perspective 
through the performance lens illustrates that our non-Homeland Security 
missions are not suffering. The fiscal year 2002 Performance Report/
fiscal year 2004 Budget in Brief (BIB) provides documentation of the 
Coast Guard's high performance levels across our full mission spectrum. 
For example, in fiscal year 2002 the Coast Guard:
  --Seized the third highest cocaine total in service history,
  --Interdicted or deterred illegal immigration by sea at a rate of 
        88.3 percent (which exceeded our target of 87 percent),
  --Reduced the volume of oil spilled per million gallons shipped to 
        0.6 gallons (which was well below our target of 2.5 gallons), 
        and
  --Further reduced the number of maritime worker fatalities to 4.3 per 
        10,000 workers (which is below our target of 8.7).
    A necessary first step is base-lining our maritime Homeland 
Security (MHS) requirements to help balance our other missions. To 
accomplish this, the Coast Guard has focused on a Strategic Deployment 
Plan (SDP) for implementing the maritime component of the President's 
National Strategy for Homeland Security. Various components of our 
Maritime Security Strategy Deployment Plan are under development, with 
the first component to be completed in May of 2003.
    These MHS requirements will roll into a comprehensive blueprint to 
achieve overall mission balance. This blueprint will consider budgetary 
inputs, resource activity levels, multi-year mission targets and 
mission performance outcomes. Our existing strategic planning process 
and performance plans will serve as the cornerstone of an integrated 
approach emphasizing three general areas of effort: preserving non-MHS 
missions, conducting MHS missions, and maintaining military readiness 
to conduct Defense Operations when tasked. The planning process 
provides the ability to detail the difference between pre and post-9/11 
levels of effort and performance in missions. We anticipate completion 
of the comprehensive blueprint for mission balancing by the end of 
fiscal year 2003.
    The multi-mission resources requested in the fiscal year 2004 
budget are critical to overall mission balancing efforts and to the 
sustainment of the Coast Guard's high standards of operational 
excellence across all mission areas. It is important to note that every 
Homeland Security dollar directed to the Coast Guard will contribute to 
a careful balance between our safety and security missions (including 
law enforcement), both of which must be properly resourced for 
effective mission accomplishment. The fiscal year 2004 budget reflects 
steady progress in a multi-year resource effort to meet America's 
future maritime safety and security needs. This new funding will 
positively impact our performance in all assigned MHS and non-MHS 
goals.

                       PORT SECURITY ASSESSMENTS

    Question. Part of the Coast Guard's Maritime Homeland Security 
Strategy is to reduce America's vulnerability to terrorism within the 
U.S. Maritime Domain. The Maritime Transportation Security Act mandates 
that the Secretary of the Department in which the Coast Guard is 
operating conduct initial facility and vessel vulnerability 
assessments. These assessments are to be the basis for a new 
requirement for facility and vessel security plans. The Coast Guard has 
established a plan to conduct security vulnerability assessments for 55 
ports but has only completed 15 assessments to date with 4 more 
scheduled for this year. Based on the President's budget, when will 
these assessments be completed? Now that Congress has added $38 million 
in the fiscal year 2003 emergency supplemental, when will these 
assessments be completed and is the $38 million sufficient to complete 
them?
    Answer. The Maritime Transportation Security Act of 2002 (MTSA) 
requires two distinct assessments. The first is an ``initial 
assessment'' to determine which facilities and vessels are at high risk 
of being involved in a transportation security incident (TSI). 
Depending on the outcome of that initial assessment, the MTSA requires 
a ``detailed assessment'' of those vessels and facilities that may be 
involved in a TSI. The Coast Guard accomplished the ``Initial 
Assessments'' required by MTSA by providing Captains of the Ports 
(COTPs) with a Port Security Risk Assessment Tool (PS-RAT), which 
ranked relative consequence and risk within a port. These initial PS-
RAT assessments were analyzed at the national level to assist in 
determining which vessels and facility types pose a higher security 
risk and will require a ``detailed assessment,'' and individual 
facility and vessel security plans.
    Port Security Assessments (PSAs) are conducted by a team of Coast 
Guard and contracted security experts and provide a level of detail 
that the port stakeholders cannot achieve on their own. PSAs will 
address various facets of the port not covered by individual facility 
and vessel assessments, and they will directly feed into the Area 
Maritime Security Plan required by the MTSA. Port Security Assessments 
(PSAs) have been completed at 13 of the 55 port complexes to date.
    The President's Budget included sufficient funding within the 
Information Analysis and Infrastructure Protection (IAIP) Directorate 
of DHS to complete all 55 assessments by the end of calendar year 2004. 
The $38 million provided in the Emergency Wartime Supplemental has 
allowed the Coast Guard to immediately initiate the contracting actions 
necessary to get assessment teams into the field. The $38 million will 
cover the contract costs for the remaining ports, but does not include 
funding for Coast Guard program support, personnel costs, or travel to 
support the PSAs. The Coast Guard will continue to work with IAIP to 
ensure the viability of the PSA program, and to provide a coordinated 
and consistent assessment effort across all critical infrastructures.
    Question. First, what conclusions can you share on the assessments 
that have been completed to date?
    Answer. The Assessments highlighted common deficiencies across all 
13 ports. Some general examples are:
  --Many commercial vessels, waterfront facilities and port areas do 
        not have adequate security plans.
  --Inadequate security training for commercial vessel and facility 
        operators.
  --Governmental Agencies do not conduct adequate security exercises to 
        ensure coordinated consequence management and crisis response.
  --High consequence facilities often have adequate shore-side 
        security, but lack adequate waterside protection against 
        terrorist intrusion/attack.
  --A lack of communication links between responsible stakeholders, and 
        a lack of real time Maritime Domain Awareness (MDA).
  --Local, state and Federal response/security/law enforcement 
        organizations need more resources to maintain high level of 
        security in ports.
  --Limited sharing of classified or Sensitive Security Information 
        (SSI) observations.
  --No worker and visitor credentialing system.
  --Bureau of Immigration and Customs Enforcement checks at first port 
        of call only.
  --Facilities do not account for crews.
    Specific PSA results are designated as Sensitive Security 
Information.
    Question. Secretary Ridge testified that the $700 million 
appropriated for critical infrastructure in the fiscal year 2003 
Supplemental and the $829 million request in fiscal year 2004 for 
Information Analysis and Infrastructure Protection will be available 
for the Coast Guard to conduce these assessments. Has any funding been 
provided to the Coast Guard from these accounts for the purpose of port 
security assessments? Do you know of any plans to utilize funding from 
these accounts for port security assessments?
    Answer. The Secretary of Homeland Security and Commandant of the 
Coast Guard have both stated the intent to have all 55 ports completed 
by the end of calendar year 2004 with funds contained in the 
Department's fiscal year 2004 budget request. The $38 million (from the 
fiscal year 2003 Emergency Wartime Supplemental) will cover the 
contract costs for the remaining ports, but does not include funding 
for CG program support, CG personnel costs, or CG travel to support the 
PSAs. The Coast Guard will continue to work with the Information 
Analysis and Infrastructure Protection (IAIP) to ensure the viability 
of the PSA program, and to provide a coordinated and consistent 
assessment effort across all critical infrastructures.

                        C-130S AND MPA AIRCRAFT

    Question. In fiscal year 2001, Congress appropriated $468 million 
for six C-130J long-range maritime patrol aircraft. The language that 
accompanied this funding in fiscal year 2001 required that these planes 
meet defense-related and other elements of the Coast Guard's multi-
mission requirements. What is the funding level is required to outfit 
these planes to fulfill the Coast Guard's Marine Patrol aircraft 
surveillance mission? What is the schedule to complete this requirement 
for the 6 planes?
    Answer. The Coast Guard needs $230 million to complete the C-130J 
missionization and make the aircraft fully mission capable, maritime 
patrol aircraft (MPA). This funding will be utilized to procure 
sensors, communications, computers and other systems necessary to 
missionize them for Coast Guard maritime patrol operations. The Coast 
Guard is working with DHS to determine the source and timing of this 
funding. Prior to becoming fully missionized, the aircraft will be 
flown for logistics purposes, testing, training and limited operational 
missions. Once the HC-130J's are fully mission capable, estimated in 
the summer of 2008, the Coast Guard plans to use them as replacements 
for existing HC-130H aircraft.

                     RESEARCH & DEVELOPMENT FUNDING

    Question. The budget request includes $22 million for the Coast 
Guard's Research and Development program to develop enhancements to 
homeland security functionality for U.S. ports. What systems are being 
developed to improve port, waterways and coastal security and to the 
extent you can, provide a schedule for deployment?
    Answer. The Coast Guard's fiscal year 2004 Research, Development, 
Testing and Evaluation (RDT&E) request provides funding to develop 
techniques, equipment, and systems to enhance the Coast Guard's 
capabilities to perform the full range of Coast Guard missions. 
Investments will focus on improvements to maritime homeland security in 
the port domain while continuing research in other Coast Guard mission 
areas, including search and rescue, marine safety, marine environmental 
protection, aids to navigation, and ice operations.
    Specific planned RDT&E initiatives primarily focused on the 
performance of maritime homeland security missions (Ports, Waterways 
and Coastal Security and Enforcement of Laws and Treaties) are listed 
below.

Improved Maritime Domain Awareness
    Develop a high frequency radar system that provides wide area 
surveillance of coastal zones. Anticipate completing preliminary 
operational evaluation during second quarter of fiscal year 2004.
    Demonstrate an operational Port Security System that combines 
surface search radar with visual and infrared cameras to detect and 
identify targets. Fiscal year 2003 efforts prompted a follow-on 
expanded demonstration that is planned for 3rd quarter of fiscal year 
2004.
    Evaluate portable thermal imaging technology to enhance all-
weather, day/night surveillance capability on Coast Guard patrol boats 
and Multi-Mission Station assets. Prototype testing is expected to 
begin during the 1st quarter of fiscal year 2004. Model candidate port 
sensor systems to evaluate relative performance and develop concept of 
operations for consideration during future sensor acquisitions. Sensor 
modeling will be a continuous effort with frequent reports throughout 
fiscal year 2004.
    Monitor capabilities of unmanned and autonomous vehicles (air, 
surface and subsurface) through Department of Defense research 
partnerships and relationships with industry. Perform continuous 
evaluation of applicability of vehicles to enhance performance of Coast 
Guard missions.
    Enhanced Chemical, Biological, Radiological and Nuclear Detection 
Capability: Develop and evaluate technology to provide standoff 
capability for detecting the presence of nuclear or radiation agents. 
Completion of initial testing is scheduled for the 4th quarter of 
fiscal year 2004.
    Develop a portable ``electronic nose'' device that will alert Coast 
Guard boarding personnel to harmful chemical warfare or toxic 
industrial agents at pre-debilitating levels. Anticipate initial 
prototype testing to be completed in the 3rd quarter of fiscal year 
2004.

Improved Interdiction Capabilities
    Develop a helicopter-deployable entangling device to stop non-
compliant high-speed craft. Anticipate completing testing during 2nd 
quarter of fiscal year 2004. Research and develop alternative methods 
and deployable devices to gain control/interdict non-compliant vessels. 
Anticipate reporting results during the 4th quarter of fiscal year 
2004.
    Question. Public Law 107-296, the Homeland Security Act of 2002, 
created the Homeland Security Advanced Research Projects Agency 
(HSARPA) to support basic and applied research to help promote homeland 
security. The Department's fiscal year 2004 budget request for HSARPA 
is $365 million. The Homeland Security Act requires that at least 10 
percent of the funding be used in joint agreement with the Coast Guard 
to carry out research and development of improved ports, waterways, and 
coastal security surveillance and protection capabilities. What is the 
status of this agreement?
    Answer. The Department of Homeland Security (DHS) has not yet 
issued policy or directives regarding the execution of Homeland 
Security Advanced Research Projects Agency (HSARPA) funding. The Coast 
Guard is currently working with DHS to develop processes and policy for 
compliance with Section 307 of the Homeland Security Act.

                    AUTOMATED IDENTIFICATION SYSTEM

    Question. The Maritime Transportation Security Act and the 
International Ship and Port Security Code require that an Automated 
Identification System (AIS) be installed on all vessels entering U.S. 
ports by December 31, 2004. How will the Automated Identification 
System enhance Homeland Security? In terms of implementation, can you 
explain the difference in requirements, those for the shipping 
companies and those for the Coast Guard?
    Answer. The Automatic Identification System (AIS) is an information 
collection, processing and decision support system that will be a key 
data stream for achieving Maritime Domain Awareness (MDA), a 
cornerstone of the Coast Guard's maritime homeland security strategy. 
MDA is essentially a heightened state of awareness of the maritime 
environment and is built upon knowledge and understanding of the 
presence, identification, track, intentions and contents of vessels 
operating in U.S. ports, waterways and littoral seas.
    AIS contributes to MDA by means of an onboard transmitter/receiver 
that can operate in conjunction with a shore-side receiving and 
distribution network to produce a composite traffic image of all AIS-
equipped vessels operating within its horizon (line-of-sight). The 
Coast Guard is currently working with the Department of Homeland 
Security and the Administration to promulgate regulations on specific 
AIS carriage requirements for vessels. The Coast Guard plans to outfit 
all Coast Guard cutters over 65 feet in length with AIS capability.
    Question. What ports are scheduled to receive this technology? What 
is the schedule, by fiscal year, to outfit these ports with the AIS and 
the associated cost?
    Answer. The acquisition and installation of Automatic 
Identification System (AIS) equipment in the ports of Sault Ste Marie 
and Berwick Bay is complete. AIS equipment installation has been 
contracted to begin in five additional Vessel Traffic Service (VTS) 
ports as indicated in the following table.

------------------------------------------------------------------------
                   Port                      Scheduled AIS Installation
------------------------------------------------------------------------
Lower Mississippi River, LA...............  May 2003
Prince William Sound, AK..................  July 2003
Houston/Galveston, TX.....................  July 2003
New York, NY..............................  October 2003
Port Arthur, TX...........................  January 2004
Puget Sound...............................  Not yet scheduled
San Francisco Bay.........................  Not yet scheduled
------------------------------------------------------------------------

    To date, $22.9 million has been funded in the fiscal year 2002 
Supplemental Appropriation and $5 million in fiscal year 2003 for 
installation and implementation at the above listed ports.
    Long-term goals for enhancing maritime domain awareness include 
developing and installing a National AIS coverage system based on the 
technology and processes used at the VTS ports. This network would 
first be introduced in congested waterways and in ports with critical 
military or commercial infrastructure. The exact sequence of 
implementation has not been determined. These sites would be connected 
to a network that allows access to the AIS information. Each site 
requires a tower, an AIS base station unit, and an interface for data 
connectivity to the network. Currently, Coast Guard Program Managers 
responsible for the Rescue 21 and AIS projects are working closely to 
identify common requirements and strategies to best support both 
initiatives. Liaison areas include shared tower locations, commercial 
leases, and microwave bandwidth requirements.
                                 ______
                                 

              Questions Submitted by Senator Patty Murray

HAS OPERATION IRAQI FREEDOM FURTHER DIMINISHED COAST GUARD ABILITIES IN 
                              U.S. WATERS?

    Question. Admiral Collins, you pointed out that, for the first time 
since the Vietnam War, the Coast Guard has deployed a considerable 
number of ships and people overseas--in this case, to participate in 
Operation Iraqi Freedom. You went on to say that this deployment did 
not hinder your operational capabilities in the United States because 
it represented only three percent of your entire force. However, your 
statement failed to mention that in addition to deploying these ships 
overseas, you are taking additional patrol boats out of service--about 
one a month--for major modifications as part of your Deepwater program. 
And two the ships you have sent overseas are High Endurance Cutters--
ships that are particularly well suited for high seas missions like 
fisheries patrols. The entire Coast Guard only has 12 of these ships. 
The General Accounting Office quoted a Coast Guard official as stating 
that the decline in both drug enforcement and fisheries enforcement can 
be attributable not only to your heightened homeland security 
requirements, but to the deployment of resources for military 
operations. Can you quantify what number of fisheries and drug 
interdiction patrols did not take place as a result of your deployment 
of floating assets to the Persian Gulf?
    Answer. The deployment of floating assets to the Persian Gulf has 
not in and of itself resulted in a decline in fisheries and drug 
enforcement patrols.
    Every year, two High or Medium Endurance Cutters (the Coast Guard 
has 42 high and medium endurance cutters in commission) participate in 
Department of Defense exercises and other out of hemisphere operations. 
This year those cutters were redirected to participate in Operation 
IRAQI FREEDOM, thus not directly impacting our counter-drug and fishery 
efforts.
    In addition to the High Endurance Cutter deployments, the Coast 
Guard deployed eight 110-foot patrol boats. To compensate for those 
patrol boats deployed overseas, undergoing a hull sustainment project, 
or undergoing modifications as part of the Deepwater program, the Coast 
Guard increased the operational tempo of remaining cutters to 125 
percent of their normal pace. Additionally, the Navy allowed our 
tactical control of 11 170 Patrols Coastals to augment stateside 
requirements.
    The net effect of the IRAQI FREEDOM operational decisions and 
corresponding risk mitigation measures is no reduction in fisheries or 
drug interdiction patrols. The Coast Guard has however, had slight 
reductions in these patrols due to the number of surge operations as a 
result of several ``orange'' Homeland Security Advisory System alerts. 
Although we do have capacity, capability and operational tempo 
challenges to sustaining mission balance, the Coast Guard will continue 
to emphasize all missions, and temporarily surge as timely intelligence 
dictates is appropriate. At the end of the day, we remain focused on 
performance-based results and not only resource hours. The perspective 
through the performance lens illustrates that our non-Homeland Security 
missions are not suffering. The fiscal year 2003 Report/fiscal year 
2004 Budget in Brief (BIB) provides documentation of the Coast Guard's 
high performance levels across our mission spectrum. For example, in 
fiscal year 2002 we seized the third highest cocaine total in our 
history, we interdicted or deterred illegal immigration by sea at a 
rate of 88.3 percent which exceeded our target of 87 percent, we 
reduced the volume of oil spilled per million gallons shipped to 0.6 
gallons which was well below our target of 2.5 gallons, and continued 
to reduce the number of maritime worker fatalities to 4.3 per 10,000 
workers which is below our target of 8.7.
    Question. Now that hostilities have largely ceased, what is your 
schedule for bringing back each unit that is deployed to assist in 
Operation Iraqi Freedom? When, for example should we expect the High 
Endurance Cutters to return? What about the Port Security Units?
    Answer. Deployed Coast Guard forces will be returned when the 
Combatant Commander determines their mission has been completed. Thus 
far, two high endurance cutters, four patrol boats, the buoy tender, 
and a variety of shore-side Coast Guard components have been released. 
BOUTWELL and DALLAS commenced their return trips on May 14th. DALLAS is 
escorting the four patrol boats that were deployed to the Mediterranean 
Sea. BOUTWELL is completing previously scheduled Theater Security 
Cooperation activities during her return transit. WALNUT also commenced 
her return trip on May 14th.
    The patrol boats BAINBRIDGE ISLAND, GRAND ISLE, KNIGHT ISLAND, and 
PEA ISLAND, all deployed to the Mediterranean, have been released and 
commenced a return trip to the United States in company with the 
DALLAS. Personnel from Port Security Unit 305, the Atlantic Strike Team 
Detachment, the Mediterranean Mobile Support Unit and Law Enforcement 
Detachments #204, 205 and 411 have already returned to the United 
States. Their equipment will follow by sealift.
    Coast Guard patrol boats, port security units, law enforcement 
detachments, and supporting structure remain in the Arabian Gulf 
fulfilling port and coastal security missions for the Combatant 
Commander.
    Question. Many of the patrol boats that were deployed to the Iraqi 
theater performed fisheries enforcement missions off of New England. 
When do you expect that all of those boats will be returned to their 
home ports?
    Answer. Four of the eight deployed patrol boats traditionally 
conducted fisheries enforcement missions off the New England coast. Two 
of those patrol boats, BAINBRIDGE ISLAND and GRAND ISLE, have started 
their return trip to the United States from the Mediterranean. Their 
estimated arrival at Norfolk VA is 11 June. After several weeks of 
necessary maintenance, they will return to their original homeports of 
Sandy Hook, NJ and Gloucester, MA.
    The other two patrol boats, ADAK and WRANGELL, are deployed to the 
Arabian Gulf and continue to perform duties for the combatant 
commander. No departure date has been established for these patrol 
boats.
    The Coast Guard temporarily relocated BLOCK ISLAND to Gloucester, 
MA upon the departure of the GRAND ISLE. The BLOCK ISLAND will return 
to its normal homeport of Atlantic Beach, NC upon the arrival of GRAND 
ISLE.
    Question. What has been the impact on your other Coast Guard units 
that have been required to ``pick up the slack'' for the units that 
have been deployed overseas? Is their higher operating tempo 
sustainable over the long term?
    Answer. To compensate for the patrol boats deployed overseas, the 
Coast Guard increased the operational tempo of remaining cutters by 25 
percent. This temporary surge capability is sustainable through the 
remainder of fiscal year 2003.

       WILL COAST GUARD BE ABLE TO HANDLE A MAJOR MIGRANT INFLUX?

    Question. Admiral Collins, in your testimony, you point out the 
remarkable flexibility that the Coast Guard exhibits at times of 
national crisis. It is something that I and all senators should be 
immensely proud of. One of the areas where the Coast Guard has shown 
extraordinary flexibility in the past is when we have experienced a 
massive influx of migrants attempting to reach U.S. shores from Cuba or 
Haiti. We have all read with concern the heightened numbers of arrests 
as well as executions in Cuba. You, of course, get additional 
intelligence briefings on the instability in that country. Whenever we 
have had these massive influxes of migrants in the past, the Coast 
Guard effectively threw almost every floating asset they had to attack 
the problem. Given your current deployment of so many vessels overseas, 
as well as other patrol boats being sent to the shipyard for major 
overhauls, are you at all concerned about your ability to handle a 
sudden influx of migrants at this time?
    Answer. The Coast Guard continues to monitor migrant departures, 
and maintains an effective presence in the transit and arrival zones. 
The summer months typically yield higher maritime migrant flow, and the 
Coast Guard allocates additional resources to facilitate interdiction 
and timely repatriation in order to prevent future departures. In the 
event that migration numbers approached mass migration levels that 
exceed our capacity, the Coast Guard would look to the Department of 
Defense for additional assistance.
    Question. During major migrant influxes in the past, you have had 
the benefit of some Navy ships being brought under your command to 
assist in rescuing migrants. Given the current deployment of so many 
Navy ships overseas, are you confident that you will have the level 
support from the Navy that is needed if there is a major influx of 
migrants?
    Answer. In the event of a mass migration, the Coast Guard would 
receive assistance from the Navy as outlined in ``Operation Distant 
Shore--Mass Migration Emergency Plan.'' The Coast Guard has no 
indication that the Navy would not be able to provide the required 
assets if needed.
    Question. Migrant interdiction is another mission where your hours 
have declined considerably from pre-September 11th levels. What can you 
tell me regarding the impact of this declining effort on our ability to 
protect against illegal migrants being smuggled to the West Coast of 
the United States from Asia? Have you been able to follow up on all 
intelligence leads indicating that there may be illegal migrants aboard 
ships bound for the West Coast?
    Answer. While the Coast Guard's Abstract of Operations data 
indicated a reduction in resource hours attributed to the Migrant 
Interdiction mission in the two fiscal quarters following the September 
11, 2001 attacks, the data for the past three quarters indicates a far 
different picture. The Coast Guard is currently expending more effort 
in the Migrant Interdiction mission than before September 11, 2001.
    The direct arrival of Asian migrants on the West Coast of the 
United States has significantly declined since 1999. However, Asian 
migrant smugglers continue to use low profile methods to move their 
human cargo. While intelligence regarding Asian migrant smuggling 
events is rare, the Coast Guard has been able to respond to reported 
events with considerable success.

HOW DID THE COAST GUARD RESPOND TO THE COMMITTEE DIRECTIVE TO REBALANCE 
                               MISSIONS?

    Question. Admiral Collins, as part of the 2003 Appropriations Bill, 
in which you were provided with a record increase in funds, the 
Committee directed you to seek to use this increased funding to 
rebalance your level of effort between missions and bring your non-
homeland security missions to the maximum amount possible back to pre-
September 11th levels. A review of the data that I discussed in my 
opening statement makes clear that that has not taken place. How 
precisely did the Coast Guard respond to the Committee's directive? 
Should we expect to see any progress over the remainder of 2003 in 
seeing drug interdiction, fisheries enforcement and marine safety 
returned to their pre-September 11th levels?
    Answer. Prior to the attacks of 9/11, the Coast Guard had committed 
less than 2 percent of its assets to active port security duty. 
Immediately after 9/11, the Coast Guard surged nearly 60 percent of its 
assets in immediate support of port security. Since then, we have 
rebalanced our assets to provide roughly 28 percent of our assets in 
coverage of port security. In so doing, we have used the additional 
funding provided by Congress to establish new security capabilities in 
critical ports, and we are in the process of adding those same 
capabilities to all critical ports, as funding allows. This added 
funding has permitted the Coast Guard to return its other assets to the 
non-Homeland Security mission portfolio.
    The results speak for themselves. In fiscal year 2002 we seized the 
third highest cocaine total in our history, we interdicted or deterred 
illegal immigration by sea at a rate of 88.3 percent which exceeded our 
target of 87 percent, we reduced the volume of oil spilled per million 
gallons shipped to 0.6 gallons which was well below our target of 2.5 
gallons, and continued to reduce the number of maritime worker 
fatalities to 4.3 per 10,000 workers which is below our target of 8.7. 
For a detailed record of actual resource hours across all missions for 
the first final quarters of fiscal year 2003, please see the report to 
Congress entitled Quarterly Abstract of Operations. In addition, our 
fiscal year 2003 Report/fiscal year 2004 Budget in Brief provides 
documentation of the Coast Guard's high performance levels across our 
mission spectrum.
    Our service remains fully committed to sustaining operational 
excellence across all our missions and to achieving the appropriate 
balance between non-homeland security and homeland security mission. 
The Coast Guard is pursuing a multi-year resource effort to perform an 
enhanced level of Maritime Homeland Security while sustaining our Non-
Maritime Homeland Security missions near pre-9/11 levels.
    Although we do have capacity, capability and operational tempo 
challenges to sustaining mission balance, the Coast Guard will continue 
to emphasize all of our missions. At the end of the day, we are focused 
on performance-based results and not only resource hours. The 
perspective through the performance lens illustrates that our non-
Homeland Security missions are not suffering.
  is deepwater patrol boat life extension program being reconsidered?
    Question. Admiral Collins, under your plans for the Deepwater 
Program, you intent to take your 110-foot patrol boats and extend their 
service life by adding an additional 13 feet to each boat and 
renovating the rest of the ship. I understand that early indications 
are that these patrol boats may be showing greater wear and tear and 
corrosion than was originally anticipated. This will add to the overall 
cost of extending the life of these ships and may call into question 
the wisdom of extending them for several more years. What can you 
report to us about these early indications that these patrol boats need 
a great deal more work than was originally anticipated? Is the Coast 
Guard currently reconsidering whether your entire fleet of 110-foot 
patrol boats should be restored in this manner? What alternatives are 
you contemplating?
    Answer. The 49 Island Class 110-foot patrol boats in the Coast 
Guard inventory have proven to be quite versatile, highly effective 
resources, which are employed for a wide range of Coast Guard missions. 
The demand for these workhorses has created an intense operational 
tempo that has resulted in a more rapid degradation of their material 
condition than was originally forecast in 1998 at Deepwater's 
inception.
    A 2001 survey of each vessel showed that 22 of 49 110-foot WPBs 
were experiencing extensive hull corrosion. To date, five cutters 
exhibiting the worst corrosion per the 2001 survey have received 
extensive hull renewal maintenance external to the 123-foot conversion 
project at an Operating Expense appropriation cost of $8.5 million. Two 
additional 110-foot WPBs are currently in commercial facilities for 
emergent hull repairs. Since these emergent hull repairs are 
accomplished on a case-by-case basis, the total cost of repairs has not 
been estimated at this time.
    The Coast Guard is currently evaluating the scope of the Deepwater 
123-foot conversion project. Emergent hull repairs will continue to be 
accomplished on 110-foot WPBs as required.
    Question. Admiral Collins, when it was originally conceived, the 
Deepwater program was anticipated to grow above the $500 million level 
by certain increments each year in order to achieve the total amount of 
recapitalization that the Coast Guard requires to execute its many 
missions. However, for the last two budget cycles, the President's 
budget has effectively frozen funding for the Deepwater program at $500 
million. What would be the long-term impact on the Deepwater program if 
funding remained frozen at $500 million for the next several years? 
Will the Coast Guard be able to recapitalize all its assets on its 
original schedule at this level of funding?
    Answer. The IDS contracting strategy was chosen based on its 
flexibility to adjustment to budget variances. Funding below notional 
funding levels will increase the time and cost necessary to fully 
implement the Deepwater solution and delay needed capability 
improvements that IDS provides. With a funding profile of $500 million 
annually in appropriated-year dollars, it would take at over 27 years 
to acquire the assets included in the IDS implementation plan.
    Question. One of the provisions included in the Homeland Security 
Act was a report on the feasibility of expediting the Deepwater Program 
in order to replace your aging assets more quickly. The report that was 
submitted to the Congress confirmed that it was feasible to expedite 
the Deepwater Program and that such an action would indeed save the 
taxpayer several billion dollars. To your knowledge, is any real 
consideration being given within the Administration to requesting funds 
to expedite the completion of the Deepwater program? We certainly don't 
see such an effort in the 2004 budget request.
    Answer. The Administration considers Integrated Deepwater System 
(IDS) funding in conjunction with all agency requests based upon 
national priorities. The President's fiscal year 2004 request of $500 
million for the IDS funds critical initiatives and is consistent with 
the fiscal year 2004 funding level reflected in the March 7, 2003 
Report to Congress on the Feasibility of Accelerating IDS to 10 years. 
The IDS contracting strategy provides the Coast Guard the flexibility 
to adjust the proposed implementation schedule depending on budget 
variances. The Coast Guard will continue to work with the 
administration on appropriate funding of Deepwater.

               DEFICIENCIES IN SEARCH AND RESCUE PROGRAM

    Question. Both in the 2002 and 2003 Appropriations Act, we 
statutorily required you to boost funding for your search and rescue 
program by $14.5 million and $15.7 million, respectively. The Committee 
took these action in response to reports from the DOT Inspector General 
that were extraordinarily critical of the overall readiness of your 
search and rescue boat stations; the condition of their equipment; and 
the inadequate training and experience levels that were found among 
your boat crews.
    The 2002 Appropriations Act required the DOT Inspector General to 
certify that you actually spent the money as the Committee intended. 
The 2003 Act requires the General Accounting Office do the same thing. 
Unfortunately, the Inspector General was not able to certify that you 
did spend the money specifically on Search and Rescue improvements. 
While there was a substantial increase in the number of people assigned 
to your small boat stations, the IG could not certify that these funds 
were specifically used to increase the readiness, training, or 
experience levels of the individuals serving at the boat stations. 
Needless to say, I was greatly disappointed by IG's report.
    Should we expect a similar report from the GAO regarding the Search 
and Rescue enhancement funds that we provided you for 2003? Will you be 
able to show the GAO as well as the Committee that you spent this $14.5 
million specifically to address your Search and Rescue shortfalls?
    Answer. In 2002, the Coast Guard spent in excess of $14.5 million 
to improve Search and Rescue and boat operation capabilities. The DOT 
IG audit agrees with that statement. The audit, however, was critical 
of our accounting practices rather than the actual amount of 
expenditure itself. The Coast Guard acknowledges we could have tracked 
specific expenditures better to allow greater transparency for the DOT 
IG Search and Rescue audit analysis, and we will work with GAO to 
account for direct expenditures against specifically appropriated 
budget initiatives.
    The Coast Guard's system provides reliable, repeatable correlations 
between mission activity and spending. The method, which was developed 
for the Coast Guard by KPMG Consulting (now BearingPoint, Inc.), is 
based on highly reliable cost data that is reconciled to our audited 
financial statements. It utilizes state of the market analytical tools 
and the latest activity-based costing protocols to apply organizational 
costs incurred by Coast Guard units against actual operational activity 
data to allocate costs across mission areas. For example, a Coast Guard 
Multi-Mission Station's mission allocation may result in 20 percent of 
operational activity tied to the performance of the Search and Rescue 
(SAR) mission over a set time period. Thus, based on standard activity 
based costing procedures, 20 percent of the organizational expenses 
associated with that Multi-Mission Station during that time frame are 
allocated as SAR expenses.

                          SUBCOMMITTEE RECESS

    Senator Cochran. Director Basham, Admiral Collins, we 
appreciate your cooperation with our committee. We also 
appreciate your service to our country.
    We will continue our hearings to review the fiscal year 
2004 budget request for the Department of Homeland Security on 
Tuesday, May 6, at 10 a.m., in room 124 of the Dirksen Senate 
Office Building. At that time, we will hear the testimony of 
the Under Secretary for Border and Transportation Security, the 
Honorable Asa Hutchinson.
    Until then, the subcommittee stands in recess.
    [Whereupon, at 12:17 p.m., Thursday, May 1, the 
subcommittee was recessed, to reconvene at 10 a.m., Tuesday, 
May 6.]
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