    [House Hearing, 109 Congress]
    [From the U.S. Government Publishing Office]

                            DEEPWATER IMPLEMENTATION

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

                                    (109-24)

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                    COAST GUARD AND MARITIME TRANSPORTATION

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED NINTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 21, 2005

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

                                     _____

                         U.S. GOVERNMENT PRINTING OFFICE
                                 WASHINGTON: 2006

    22-503 PDF

    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800
    Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                          DON YOUNG, Alaska, Chairman

    THOMAS E. PETRI, Wisconsin, Vice-    JAMES L. OBERSTAR, Minnesota
    Chair                                NICK J. RAHALL, II, West Virginia
    SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
    HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
    JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of
    WAYNE T. GILCHREST, Maryland         Columbia
    JOHN L. MICA, Florida                JERROLD NADLER, New York
    PETER HOEKSTRA, Michigan             ROBERT MENENDEZ, New Jersey
    VERNON J. EHLERS, Michigan           CORRINE BROWN, Florida
    SPENCER BACHUS, Alabama              BOB FILNER, California
    STEVEN C. LaTOURETTE, Ohio           EDDIE BERNICE JOHNSON, Texas
    SUE W. KELLY, New York               GENE TAYLOR, Mississippi
    RICHARD H. BAKER, Louisiana          JUANITA MILLENDER-McDONALD,
    ROBERT W. NEY, Ohio                  California
    FRANK A. LoBIONDO, New Jersey        ELIJAH E. CUMMINGS, Maryland
    JERRY MORAN, Kansas                  EARL BLUMENAUER, Oregon
    GARY G. MILLER, California           ELLEN O. TAUSCHER, California
    ROBIN HAYES, North Carolina          BILL PASCRELL, Jr., New Jersey
    ROB SIMMONS, Connecticut             LEONARD L. BOSWELL, Iowa
    HENRY E. BROWN, Jr., South Carolina  TIM HOLDEN, Pennsylvania
    TIMOTHY V. JOHNSON, Illinois         BRIAN BAIRD, Washington
    TODD RUSSELL PLATTS, Pennsylvania    SHELLEY BERKLEY, Nevada
    SAM GRAVES, Missouri                 JIM MATHESON, Utah
    MARK R. KENNEDY, Minnesota           MICHAEL M. HONDA, California
    BILL SHUSTER, Pennsylvania           RICK LARSEN, Washington
    JOHN BOOZMAN, Arkansas               MICHAEL E. CAPUANO, Massachusetts
    JIM GERLACH, Pennsylvania            ANTHONY D. WEINER, New York
    MARIO DIAZ-BALART, Florida           JULIA CARSON, Indiana
    JON C. PORTER, Nevada                TIMOTHY H. BISHOP, New York
    TOM OSBORNE, Nebraska                MICHAEL H. MICHAUD, Maine
    KENNY MARCHANT, Texas                LINCOLN DAVIS, Tennessee
    MICHAEL E. SODREL, Indiana           BEN CHANDLER, Kentucky
    CHARLES W. DENT, Pennsylvania        BRIAN HIGGINS, New York
    TED POE, Texas                       RUSS CARNAHAN, Missouri
    DAVID G. REICHERT, Washington        ALLYSON Y. SCHWARTZ, Pennsylvania
    CONNIE MACK, Florida                 JOHN T. SALAZAR, Colorado
    JOHN R. `RANDY' KUHL, Jr., New York
    LUIS G. FORTUNO, Puerto Rico
    LYNN A. WESTMORELAND, Georgia
    CHARLES W. BOUSTANY, Jr., Louisiana
    VACANCY

                                      (ii)

            SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

                    FRANK A. LOBIONDO, New Jersey, Chairman

    HOWARD COBLE, North Carolina         BOB FILNER, California, Ranking
    WAYNE T. GILCHREST, Maryland         Democrat
    PETER HOEKSTRA, Michigan             CORRINE BROWN, Florida
    ROB SIMMONS, Connecticut             GENE TAYLOR, Mississippi
    MARIO DIAZ-BALART, Florida           JUANITA MILLENDER-McDONALD,
    DAVID G. REICHERT, Washington,Vice-  California
    Chair                                MICHAEL M. HONDA, California
    CONNIE MACK, Florida                 ANTHONY D. WEINER, New York
    LUIS G. FORTUNO, Puerto Rico         BRIAN HIGGINS, New York
    CHARLES W. BOUSTANY, Jr., Louisiana  BRIAN BAIRD, Washington
    DON YOUNG, Alaska                    JAMES L. OBERSTAR, Minnesota
      (Ex Officio)                         (Ex Officio)

                                     (iii)

                                    CONTENTS

                                   TESTIMONY

                                                                       Page
     Allen, Vice Admiral Thad W., Chief of Staff, United States Coast
      Guard, accompanied by Gregory L. Giddens, Deputy Program
      Executive Officer for the Integrated Deepwater System, United
      States Coast Guard.............................................     3

              PREPARED STATEMENT SUBMITTED BY A MEMBER OF CONGRESS

    Filner, Hon. Bob, of California..................................    35

                  PREPARED STATEMENT SUBMITTED BY THE WITNESS

     Allen, Vice Admiral Thad W......................................    21

                            DEEPWATER IMPLEMENTATION

                                  ----------

                             Tuesday, June 21, 2005

            House of Representatives, Committee on
                Transportation and Infrastructure, Subcommittee
                on Coast Guard and Maritime Transportation,
                Washington, D.C.
        The subcommittee met, pursuant to call, at 10:00 a.m., in
    Room 2167, Rayburn House Office Building, Hon. Frank A.
    LoBiondo [chairman of the committee] presiding.
        Mr. LoBiondo. Good morning. The Subcommittee on Coast Guard
    and Maritime Transportation will come to order. The
    Subcommittee is meeting today to hear testimony on the
    Deepwater Implementation. We will proceed directly, as we
    normally do, with my statement and Mr. Filner's statement.
        The Subcommittee is meeting this morning to continue its
    oversight of the Deepwater program and to review the revised
    implementation schedule that was submitted to Congress earlier
    this month.
        The Subcommittee has repeatedly requested the Coast Guard
    provide detailed information on the changes that the re-
    baselining will make to the number and nature of assets that
    will be acquired under Deepwater, the total cost of the
    program, and the program's delivery schedule. And while I am
    pleased that the Coast Guard has finally provided Congress will
    an out-year projection for the Deepwater program, I do have
    several concerns and questions concerning the information
    submitted.
        The most recent ``plan'' is actually four plans. Two
    different proposed funding streams are presented, each with two
    different mixtures of vessels and aircraft and estimates of
    total project costs. While this certainly presents a wealth of
    information on several possible courses of action, it does not
    include any recommendation or prioritization among the four
    presented options for acquiring new assets under the Deepwater
    program, and I think that this is a problem.
        When we required the Coast Guard to develop and submit a
    re-baseline plan to Congress, we envisioned it as a blueprint
    to guide the program to the future. Instead, I am now concerned
    that the four plans we received, with their broad ranges and
    number of assets that will be acquired and the total costs of
    the program combined with the uncertainty of several funding
    proposals, leaves us without any real direction once again.
        I am interested in hearing more about the CIP Plus funding
    stream that was outlined in the most recent plan. CIP Plan
    calls for the reallocation of funding from other sources within
    the Department of Homeland Security to support the legacy asset
    maintenance and upgrades. This Subcommittee has been and
    continues to be extremely concerned by the rapid deterioration
    of the Coast Guard's legacy assets, and I am happy to hear that
    the Coast Guard is considering steps to address this pressing
    problem while maintaining designated funding for new asset
    acquisition.
        However, I would be happier to hear that the Coast Guard
    and the Administration have committed to this funding approach.
    I think that is a key word, committed to the approach. I hope
    that is something that we will hear today.
        Now is the time to make the tough decisions that will guide
    the completion of this essential program. While I appreciate
    the Coast Guard's long and hard labor to get this information
    approved by the Department and Office of Management and Budget,
    which has not always been as cooperative as we would have
    liked, I still have concerns about the long-term adequacy.
        I hope that the witness testimony today will address these
    important issues, and I thank the Admiral for appearing before
    this Subcommittee.
        Mr. Filner.
        Mr. Filner. Thank you, Mr. Chairman, and thank you for
    raising those issues. I agree with you, and I have some
    additional questions or concerns of my own.
        I think that Deepwater may be in deep trouble. This project
    is very ambitious. The theory was, as I understood it, that the
    Government would lay out the mission and program requirements,
    and the contractor would build a system of systems that would
    provide the best value. The best value. Not the lowest cost,
    but the best value.
        The Coast Guard and their system integrator, Lockheed
    Martin, spent $49 million to convert eight 110-foot patrol
    boats to 123-foot patrol boats, only, as we have learned, to
    find out that the ships had major structural problems, and they
    should build new patrol boats instead. That is $49 million that
    is now not available to buy new equipment.
        And it doesn't look like the program has learned from that
    lesson. The revised Deepwater plan to include system
    requirements to meet post-9/11 challenges proposes, for
    example, to rebuild the HH-65 helicopters and C-130 aircraft,
    instead of buying new aircraft.
        As I said earlier, Deepwater was supposed to be about
    buying cutters and aircraft that are the best value for the
    Government. Cost of a particular asset, as I understand, was
    only to be about 15 percent of the weighted factors when making
    that decision. Now decisions are being made entirely on the
    lowest cost, so that the Government would end up manufacturing
    old aircraft instead of buying new, more capable assets. When
    the Deepwater modernization project is completed, the Coast
    Guard will have eight HH-65 helicopters and C-130 aircraft that
    are over 40 years old. I am told that is the oldest of any
    Coast Guard in the world.
        What appears to be happening is, as the Coast Guard adds,
    for example, new ship system requirements to cutters, OMB says
    that the total program cost can't increase, so the Coast Guard
    must cut costs from aircraft modernization and the total number
    of cutters purchased. So we are changing, apparently, Deepwater
    from a program to modernize the Coast Guard with new equipment
    to a program that buys too few new ships and keeps the old
    aircraft.
        Mr. Chairman, I think Deepwater is in deep trouble, and the
    Administration isn't giving the Coast Guard the support that we
    would like and that they need. The Administration is not
    committed to giving the men and women of the Coast Guard, who
    risk their lives everyday to save others, the best equipment
    that is available. Instead, they are forcing the Coast Guard to
    fulfill all of their future missions based on the budget
    restraints of today.
        We learned just at last week's hearing that the current
    fleet of Coast Guard cutters and aircraft are just not up to
    the job; they are having mechanical problems, interdicting only
    15 percent of the cocaine, for example, that enters the United
    States. If we had that percentage for WMDs in the future, we
    are not going to last too long. Given the direction of
    Deepwater, I doubt that the Coast Guard, in fact, will be any
    more effective once the modernization project is completed.
        Mr. Chairman, like you, I remain committed to the Deepwater
    program. However, given the direction of this program in our
    post-9/11 world, I am not exactly convinced yet that the Coast
    Guard of the future will be able to meet the challenges that we
    face in our future.
        Thank you, Mr. Chairman.
        Mr. LoBiondo. Thank you, Mr. Filner.
        We are very pleased that the Chair of the Intelligence
    Committee and distinguished Congressman, Peter Hoekstra, is
    with us.
        Peter, do you care to make any opening statements?
        Mr. Hoekstra. No. I am all set. Thank you.
        Mr. LoBiondo. Thank you.
        Mr. Coble, I know you are just walking in. We are going
    through some opening statements concerning Deepwater. Would you
    like to share any words of wisdom with us early on?
        Mr. Coble. Good to be here, Mr. Chairman. Thank you.
        Mr. LoBiondo. Okay. Thank you.
        We are very pleased today to have our witnesses, Vice
    Admiral Thad Allen, the Chief of Staff of the United States
    Coast Guard, and accompanying him is Mr. Gregory Giddens, the
    Deputy Program Executive Officer for Integrated Deepwater
    System for the United States Coast.
        Admiral Allen, thank you for being here. Please proceed.
    You need to kick on your microphone.

    TESTIMONY OF VICE ADMIRAL THAD W. ALLEN, CHIEF OF STAFF, UNITED
     STATES COAST GUARD, ACCOMPANIED BY GREGORY L. GIDDENS, DEPUTY
    PROGRAM EXECUTIVE OFFICER FOR THE INTEGRATED DEEPWATER SYSTEM,
                       UNITED STATES COAST GUARD

        Admiral Allen. Good morning, Mr. Chairman. It is a pleasure
    to be here and discuss what is arguably the most important
    acquisition project the Coast Guard has undertaken probably in
    its history. I would like to make a few brief remarks and then
    offer a formal statement for the record, if that is okay, sir.
        If I were to describe the overall budget goals for fiscal
    year 2006 for the Coast Guard, it would be three: to continue
    to recapitalize Coast Guard assets, and the Deepwater project
    is all about that; to implement our maritime security strategy
    for homeland security; and to generally improve mission
    performance with both AC&I and operating dollars.
        We have a revised Deepwater plan that has been based on a
    comprehensive program gap analysis that attempts to do three
    things: one is to modify original assets to improve post-9/11
    capabilities; to retain, upgrade, and convert aviation legacy
    assets as part of that final mix; and adjust the program
    delivery schedule to maximize operational effectiveness.
        The revised plan ensures cutters and aircraft will be
    equipped with the right systems and right capabilities. Those
    capabilities include: interoperable network-centric command-
    and-control systems, essential for maritime domain awareness;
    increased speed and integrated weapons systems; helicopter use
    of force and vertical insertion capability; improve fixed-wing
    aircraft for long-range surveillance and transport; enhanced
    anti-terrorist and force protection capabilities; and
    detection-and-defense systems for chemical, biological, and
    radiological threats.
        As a result, Deepwater cutters and aircraft equipped with
    these new capabilities can be employed and leveraged far beyond
    the operational limitations of the original assets. Together
    with recent advancements in maritime domain awareness,
    intelligence effectiveness, and our homeland security partners,
    Deepwater assets will enable us to close existing operational
    shortfalls and execute the full range of homeland security and
    national defense missions more effectively. We will also reduce
    risk in the maritime domain and improve the safety and
    readiness of all platforms through sustainment, modernization,
    and conversion of aging legacy assets.
        Mr. Chairman, as you know, between March and May of this
    year we have been constructively and tirelessly engaged with
    the Congress and the Administration to provide a revised
    Deepwater implementation plan that provides sufficient detail
    regarding asset delivery schedules and still recognizes the
    uncertainty of out-year funding levels. We believe the final
    number of assets will, at a minimum, be sufficient to meet
    homeland security and Coast Guard performance goals.
        Mr. Chairman, the Coast Guard's 2006 budget includes $966
    million for Deepwater, a 33 percent increase over last year's
    appropriations. This investment will make critical important
    contributions to our ability to defend this Nation from
    terrorist attack and execute all Coast Guard missions more
    effectively. I urge this Committee and the Congress to support
    the President's full request for Deepwater funding.
        Mr. Chairman, if I could, just one added piece of
    information, because I know it is of personal interest to you.
    Yesterday afternoon the Commandant signed the order that will
    have the fishing vessel TEXAS removed from Gardner's Basin in
    Atlantic City.
        Glad to be here today, sir.
        Mr. LoBiondo. Thank you. That is very good news.
        Mr. Filner, go ahead and start off.
        Mr. Filner. Thank you, Mr. Chairman.
        Thank you, Admiral, for being here today. As I said in my
    opening statement, it appears--and I will give you some
    specifics to deal with--that there seems to be a fixed budget
    for a system that needs to, in fact, improve its operational
    requirements after 9/11. So we have to trade off, it seems,
    requirements for numbers in that situation.
        For example, your national security cutter, you have added
    requirements to that for homeland security. Has that increased
    the cost? And what does that do for the numbers involved?
        Admiral Allen. Yes, sir, added capability does come with a
    cost. We are in the process right now of negotiating
    engineering change proposals with our contractors. Most
    specifically, we are looking at three areas of enhanced
    capability that are absolutely required in a 9/11 environment
    for those cutters. The first one is the secure compartment for
    the handling of intelligence information, radically needed in a
    post-9/11 environment; the second is upgrade to the weapons
    system, 57 millimeter gun and the mounts associated with that.
        And as we negotiate these engineering change proposals and
    define how much they are going to cost, there will be a cost
    increase. There is money reserved in the budget for that that
    is unobligated at this time, and we are actively negotiating
    that with ICGS at this time, sir.
        Mr. Filner. So you are saying you don't need to cut the
    numbers of the force in any given category?
        Admiral Allen. Sir, if you are referring to the range of
    NSCs that are in the plan that is between six and eight, the
    notion there is, as we deliver these cutters and bring them
    online, we need to understand what kind of performance they
    bring in the operating environment as we look at the final
    force structure. We are allowed under the plan a range of
    cutters from six up to eight.
        I think as we bring the first NSC online and test its
    operational effectiveness, we will get a better view on how
    much more capable that cutter is than the one it is replacing
    and can make a better decision. At the end, the Coast Guard
    feels that, if we need it, we need to go to the high end, which
    is the eight cutters, but we need to demonstrate that in terms
    of performance as the assets are delivered, sir.
        Mr. Filner. It looks like, to me, when you look at the
    ranges that you had for not only the NSC, but the offshore
    patrol cutters, the patrol boats, the CAS aircraft, the range
    is less than we had thought before 9/11. But you are going to
    increase all your older aircraft. It doesn't sound to me that a
    21st century Coast Guard to meet the 21st century post-9/11
    world is being kept here. You have fewer assets and they are
    older. How does that increase your capability?
        Admiral Allen. Sir, if I could make two comments in regard
    to that. First of all, when the acquisition was started and the
    contract was awarded in 2002, it assumed a baseline funding
    level of $500 million a year. That was extremely constraining
    at the time, and as we have added capability and taken a look
    at the forestructure, we have to have different types of assets
    with different types of capability. And we have been successful
    in raising the funding level for Deepwater.
        That said, as you raise capability and the assets become
    more expensive, you have to make tradeoffs within the funding
    stream that is available that brings the best value to the
    Government, and that is what we are trying to do. Even if we
    were to have all new assets, it would be highly improbable we
    would have the amount of funding in one year to fund all of
    those platforms. So you have to sequence these things and trade
    them off, and that is what we have been trying to do since the
    start, sir.
        Mr. Filner. Well, that is what worries me, that the
    tradeoff that you are talking about is shortchanging our
    security. That is, it seems to me that you should say what we
    need, and then see if we can fund it, not to fit an amount of
    money and then you decide what capability we are going to get.
    It just seems to me, after 9/11, that that is not the way the
    Coast Guard in the new Department of Homeland Security should
    be working.
        I mean, I look at some of the threats that we talk about,
    whether it is, say, a high explosives ship attack on a cruise
    ship or a tanker. I am not sure our coastal communities are
    well protected against that. I also wonder about the fact that
    the Deepwater project is aimed at operations, by definition,
    more than 50 miles offshore, and yet the terrorist threat is
    probably a lot closer. So how are we going to protect the
    United States against these kind of terrorist attacks in our
    ports, our coastal communities, when you are dealing with
    Deepwater, by definition?
        Admiral Allen. Yes, sir. You can well make the claim that
    maybe we had a branding issue at the start. We said Deepwater,
    but what we are really referring to is long-range of mobile
    assets that can move up and down the coast or off the coast.
    These are assets that are not tethered, as opposed to search
    and rescue stations and short-range helicopter that operates
    from a fixed base and are basically fixed in an area of
    operation. We have Deepwater assets operating very close to
    shore in the Aleutian Islands, where there is nothing else
    there.
        So what we are trying to create is a series of mobile
    assets that can be employed where we need them to counter the
    highest risk in the area of responsibility that our operational
    commanders are charged with. And what we are also trying to
    look at is systems performance. It is not just the asset
    itself, it is the maritime domain awareness, it is the
    intelligence that drives it, it is queuing up actionable
    intelligence so our units can respond to it.
        It is not just one asset, it is the accumulation of the
    assets and their capabilities together that produce systems
    performance that is the basis of the acquisition. And through
    layered defense we can, and have, increased the security of the
    Country. We can always do better and there are never enough
    assets, so you have to kind of go to a risk-based decision
    method on how you are going to apply those assets. But it is
    the system that we are trying to produce, sir.
        Mr. Filner. All right. Well, I guess I feel good that the
    Aleutians are protected. But I still have a lot of problems
    with our own ports, one of which I represent.
        I will come back to this, Mr. Chairman. Thanks.
        Mr. LoBiondo. Mr. Hoekstra, questions for Admiral Allen?
        Mr. Hoekstra. Just a couple of questions.
        I am wondering, I guess the Appropriations Committee and
    the Homeland Security bill only had $500 million in it, and one
    of the reasons for that occurring was that the plan coming from
    the Coast Guard that was going to request the $966 was delayed
    in getting over to the Appropriations Committee. Can you
    explain why the delay? I know Deepwater has been something you
    have been working on for a while. And what the impact would be
    if you only get $500 million this year?
        Admiral Allen. Yes, sir. There was a serious discussion
    inside the Administration about the uncertainty of funding
    streams in the future and needing to understand what would
    happen under various funding scenarios with the revised plan,
    so that when the plans came up there would be, whether you want
    to call it trade space or flexibility to handle potential
    constraints in the future. That is what we were negotiating.
        As a result of that, as was referred to earlier, there are
    four different scenarios that assume two different time frames
    and two different funding levels. That was hammered out within
    the Administration to be able to portray a viable course of
    action that would produce this capability for the Country under
    different funding streams as a risk mitigator.
        Mr. Hoekstra. And what is the impact if you only get $500
    million this year, instead of the $966?
        Admiral Allen. It would be considerable. It would result in
    descoping, moving of ship design schedules to the right, and
    significant delay in bringing that capability onboard which the
    Country needs.
        Mr. Hoekstra. Thank you, Mr. Chairman.
        Mr. LoBiondo. Mr. Baird?
        Mr. Baird. Thank you, Mr. Chairman.
        Thank you, Admiral, for your service. I am privileged to
    represent the Colombia River region, and I want you to know
    that your folks out there at the mouth of the river do a great
    job under difficult conditions.
        I have been a long-time supporter of Deepwater, but I also
    have a concern about the need for more rapid craft,
    particularly craft that can obtain the go-fast boats that are
    in the field. I understand you have the helicopter intercept
    program and the sharp-shooting, but one of our concerns has
    been that we believe there is a need for higher speed boats to
    operate in the literal zone and out in more open sea, in fact,
    for several days, and have the speed and flexibility to capture
    the go-fast kind of boats. I wonder what your thoughts are on
    that as an adjunct to the Deepwater mission.
        Admiral Allen. Well, there are two component parts to that,
    one is the over-the-horizon boats that are going to be deployed
    with our cutters, capable of speeds that can intercept the go-
    fast boats from a mobile deployable base, if you will. From
    fixed base in the United States, if that were a threat out
    there, we are in the process of selecting a responsible medium
    that will have the speed and capability to deal with the go-
    fast threat also.
        But, as you said, the real trump card in this whole thing
    is airborne use of force, putting a helicopter overhead with
    the ability to use warning shots and disabling fire. But we
    think we have a pretty good portfolio of either ship-launched
    or shore-launched boats that will be able to counter that
    threat, especially when the Deepwater assets are deployed with
    over-the-horizon boats and the long-range prosecutors and the
    short-range prosecutors.
        Mr. Baird. When you refer to over-the-horizon boats, can
    you discuss that a little bit?
        Admiral Allen. These are boats that will be deployed off of
    the offshore patrol cutter the national security cutter that
    are capable of operating independently from the vessel at
    distances away, that are faster than the vessel themselves,
    that are capable of intercepting go-fast boats. If you team
    that with aircraft helicopter capable of airborne use of force,
    it is a fairly potent package, and we know from our history in
    the Transit Zone right now that airborne use of force and even
    over-the-horizon boats down there are effective in stopping go-
    fast boats.
        Mr. Baird. Can you describe the characteristics of the
    over-the-horizon vehicles?
        Admiral Allen. So I wouldn't make a mistake, I would offer
    to provide that for the record. But they offer significant
    speed advantage over the cutters.
        Mr. Baird. Okay. Could you have one of your staff brief us?
    I would be interested in talking to you about this.
        Admiral Allen. Happy to brief you, sir.
        Mr. Baird. Because I think there is a significant gap in
    the vessels currently at your disposal, and would be interested
    in talking to you.
        Admiral Allen. We have a stepping type of a capability from
    responsible smalls that are currently at our stations after 9/
    11 clear up to the deployable boats from the cutters. We would
    be happy to give you a brief about that spectrum, sir.
        Mr. Baird. That would be terrific. Thank you.
        Thank you, Mr. Chairman.
        Mr. LoBiondo. Mr. Coble?
        Mr. Coble. Thank you, Mr. Chairman.
        Admiral, good to have you with us today. Mr. Filner put a
    question to you regarding a terrorist attack. Let me extend
    that a minute, Admiral. Let us assume that intelligence
    indicates that a particular ship en route to a U.S. port is a
    terrorist threat. Describe what the Coast Guard's role would be
    versus the Navy's role (a); and, (b) how does the revised
    Deepwater system allow you to deal with this potential threat,
    as compared to your legacy fleet.
        Admiral Allen. Yes, sir, very happy to do that. The basic
    way to deal with a threat from the start is maritime domain
    awareness, and maritime domain awareness has several components
    . We tend to think of it as sensors or maybe intelligence, but
    it is a spectrum of information that allows you to deal with
    and have knowledge about conveyance in the maritime
    environment.
        If I would take a hypothetical example of a ship that is
    nearing the United States as a potential threat on board, the
    potential cues that the Coast Guard could receive would be some
    type of intelligence source from overseas; we could get
    information from tracking systems; we could get information
    from vessel sightings. But it would come to our attention that
    a vessel is out there and we could identify it.
        In addition, following the events of 9/11, we issued a
    regulation requiring 96-hour advanced notice of arrival. The
    vessel then provides us their intentions, what port they are
    going to enter, and we have time to do an analysis on both the
    vessel, the crew, and the cargo to see if it might prove any
    threat. If it did--and right now we our acting authority is
    under law enforcement, as opposed to Title X DOD operations--we
    could plan a response to that. And recently we have done
    responses very far offshore, up to 1,000 miles if we think we
    need to do that, and sometimes that is with the cooperation of
    the flag states who are willing to cooperate with us.
        If it appears that the threat out there is something that
    would exceed the Coast Guard's capabilities, we would be in
    active negotiation with the Department of Defense on what the
    right mix and response to that should be. And if it appeared
    that we had the ability to declare hostile intent on the part
    of that vessel or that threat that is approaching the United
    States, DOD would be employed to defeat that threat at the
    farthest distance offshore. That could be a Coast Guard unit
    with support from the Navy or it could be a Navy unit with
    support from the Coast Guard under recent protocols that we
    have negotiated with U.S. Northern Command and the Department
    of Defense. But there is an active negotiation, and what you
    want to do is put the right capability on the threat to defeat
    it as far offshore as you can, sir.
        Mr. Coble. Well, how does the revised Deepwater system
    improve?
        Admiral Allen. I can give you a good scenario, sir. First
    of all, you have a cutter underway, say, 100 miles offshore
    doing fisheries patrol, when they are alerted that you have a
    threat that is, say, 1,000 miles offshore. First of all, with
    the increased maritime domain awareness and command-and-control
    capabilities that are on the upgraded cutters and the new
    cutters, we will be able to transmit what is called a common
    operating picture. That is a display of all the vessels in the
    area, including identifying information. And the common
    operating picture is both on a classified and non-classified
    system, so you are able to put out the picture and creak the
    threat environment out there.
        Secondly, as you are moving in to do the operations,
    because we now have put in secret internet protocol routers on
    all the ships enables us to have classified chat rooms, if you
    will. And if you remember trying to pass voice communications,
    try and find somebody to give you guidance during a breaking
    operations, we now have a virtual chat room set up where people
    can be talking all the time.
        In a recent case for drug interdiction down in the Transit
    Zone, what would normally take 15, 30 minutes for a fast-
    breaking case to obtain a statement of no objection for warning
    shots and disabling fire was done in six minutes over a
    classified chat room. So what you are doing is you are
    increasing your ability to sense what is going on out there,
    you are increasing your ability to know what is going on in
    your environment, and you are rapidly increasing your ability
    to communicate in a covered system, sir.
        Mr. Coble. Thank you, Admiral.
        Thank you, Mr. Chairman.
        Mr. LoBiondo. Mr. Gilchrest.
        Mr. Gilchrest. Thank you, Mr. Chairman.
        Welcome, Admiral and Mr. Giddens. So it sounds like as a
    result of this whole--Deepwater started how many years ago, the
    concept, six, seven, eight years?
        Admiral Allen. You were chairman, Mr. Chairman.
        Mr. Gilchrest. It started some time ago. And as a result of
    the concept of Deepwater and the tragedy of 9/11, the Coast
    Guard and an individual Coast Guard vessel has become more
    technologically advanced and that individual cutter has become
    more versatile with its ability to manage the Nation's
    fisheries, to respond to a drug interdiction or a terrorist
    alert, or any one of a number of other things that have
    happened?
        Admiral Allen. That is absolutely correct, sir. The ability
    to sense what is going on, have rapid communications, to
    understand and have quicker relationships with the higher
    echelon of command not only helps defeat terrorist threats, but
    absolutely enhances operations related to migrant smuggling,
    fisheries, and counter-drug operations, search and rescue,
    environmental protection, all of our missions.
        Mr. Gilchrest. You told Mr. Coble that you could respond to
    a potential terrorist threat 1,000 miles offshore. First of
    all, is that a Coast Guard response, is it coordination with a
    Navy ship that might be in the area, helicopters, C-130s? And
    the potential to know that that might be a terrorist operation
    going on board a vessel that is 1,000 miles offshore, is that
    because of better coordination with host countries from where
    these ships leave, or industry that puts cargo on these ships,
    or the manifests of the captain?
        Admiral Allen. It is all of those things, and that is
    really what constitute maritime domain awareness. As I said
    earlier, it is not just sensors that are fused together to tell
    you what is out there, it is taking a look at cargo
    information, information on crews, information on the history
    of the flag, the owners of the cargo and so forth, in
    cooperation with our
        Mr. Gilchrest. That is extraordinary. I am just curious how
    has that been coordinated, or how are you in the process of
    coordinating all of that kind of data and get that cooperation
    with the shippers, with the host country? Is that being worked
    through the IMO or is it being worked through the State
    Department in some other facet?
        Admiral Allen. Internationally it is being worked through
    IMO. A lot of the protocols and reporting requirements are as a
    direct result of our efforts at IMO. A lot of it has to do with
    the legislation that was recently passed in the Maritime
    Transportation Security Act. A lot of it has to do with our
    great partnerships we have inside DHS right now with Customs
    and Border Protection that operates a national targeting center
    out by Dulles Airport that takes a look at that manifest data
    and is able, through pattern analysis, be able to cue us to
    certain things. And we have done that.
        Mr. Gilchrest. So instead of the Coast Guard being more
    focused on terrorism and some of the other roles that the Coast
    Guard plays, whether it is search and rescue of fisherman in
    the Aleutians or drug detection, which you mentioned, I guess
    either in the Caribbean or the Gulf of Mexico, which a number
    of years ago you were allowed to actually shoot at those fast
    boats, do you feel that the Coast Guard's mission in those
    areas has improved as a result of these actions with Deepwater
    and the terrorism legislation and things like that, or at least
    have not diminished?
        Admiral Allen. I believe that the capabilities we are
    putting into our assets in a post-9/11 environment through the
    Integrated Deepwater System have significantly improved our
    ability to react to any mission.
        Mr. Gilchrest. And so?
        Admiral Allen. Moving beyond that, how you employ those
    assets within an area of responsibility, which is the
    responsibility of the district commanders and the area
    commanders, you have to go through a risk-based decision-making
    process--I was the Atlantic area commander on 9/11--and you
    have to make those decisions of how to deploy your assets. But
    you also have to look at the performance that you are getting
    out of your system.
        We have been able to dramatically improve our drug seizures
    in the last couple of years without a significant amount of
    hours put down there because we have better intelligence,
    better sensors, better command-and-control capability that
    allow us to execute those statements of no objections for
    warning shots and disabling fire to take down those go-fast
    boats.
        Mr. Gilchrest. But you could be hurting if, somewhere along
    the line, we don't make up that $400 million deficit.
        Admiral Allen. We urge you to support the President's
    request, sir.
        Mr. Gilchrest. Thank you very much, Admiral.
        Thank you, Mr. Chairman.
        Mr. LoBiondo. Mr. Reichert.
        Mr. Reichert. Thank you, Mr. Chairman.
        Good morning.
        Admiral Allen. Morning, sir.
        Mr. Reichert. One of the interests I have has always been
    in partnership.
        Admiral Allen. Yes, sir, it does, on two accounts. Number
    one, I think the contract has already demonstrated
    extraordinary flexibility and allowed us to generate a program
    gap analysis on post-9/11 requirements and then include the
    capabilities that we require in a revised mission needs
    statement and revised Deepwater plan. Embedded in that plan,
    and always has been embedded in that plan, is a series of
    technological refreshments when necessary and upgrades of
    assets as they end their service life.
        Now, the timing of those refreshments and upgrades has
    changed as the plan has changed, and we have had to move some
    of those assets to the left, if you will, because of the
    deterioration of our current assets. But the current contract,
    as it stands right now, has flexibility both for requirements
    and technological refresh.
        And I would ask Mr. Giddens to comment further, if he would
    care to.
        Mr. Giddens. Yes, sir. Even when we established the first
    Deepwater contract, it was at that point a long-term
    recapitalization of Coast Guard capabilities and capacities at
    that time, even as we were in the source selection, at a 20-
    year plus effort. So we knew from the beginning we had to
    establish flexibility in the acquisition strategy to
    accommodate change. Whether that change was driven by varying
    mission demands on the Coast Guard or other external factors,
    we established from the beginning a systems approach with the
    acquisition strategy to allow that flexibility to respond to
    the Nation's and the Coast Guard's needs.
        Mr. Reichert. Thank you, Mr. Chairman.
        Mr. LoBiondo. Mr. Fortuno.
        Mr. Fortuno. Thank you, Mr. Chairman.
        I just have a couple questions, Admiral. Welcome. Some
    questions regarding HH-65 helicopter. I would like you to give
    us an update on the re-engining of project for said
    helicopters.
        Admiral Allen. I am pleased to do that. At this point we
    have five helicopters that have been re-engined. We have a
    full-up operating air station at Atlantic City, New Jersey. We
    have a helicopter for training purposes at Mobile, and we are
    in the process of producing helicopters for the roll-out. The
    current planned air station to get the next set of helicopters
    is Air Station Savannah.
        We currently have 13 helicopters that are under upgrades at
    our depot level facility in Elizabeth City, North Carolina. We
    are also testing a business case to start a second line at a
    commercial facility in Columbus, Mississippi, and are doing
    analysis on whether or not, based on the cost and the schedule
    impacts, whether it would behoove us to open up that second
    line. We are on schedule right now to complete the re-engining
    by February 2007. And it is the highest priority of the
    Commandant right now to complete this re-engining.
        Mr. Fortuno. Okay. Are there any other modifications
    planned for the HH-65s?
        Admiral Allen. In the near-term, our focus has been on
    safety and reliability and improving the engine performance. We
    have had problems with what they call torque splits, and that
    is uneven matching of the engine performance that requires the
    pilots actually to simulate the loss of an engine and take
    action to preserve the aircraft. We are, through the re-
    engining, attempting to improve the safety and reliability.
        Under the larger Deepwater solution, there is a plan to
    evolve the H-65 into a multi-mission cutter helicopter by
    looking at the landing gear, the tail rotor, and some other
    equipment on board that will make it more shipboard capable,
    more capable of airborne use and vertical insertion. However,
    just with the re-engining itself and the safety and reliability
    improvements that we gain, plus the increased power, we were
    able to use these aircraft before they are converted to multi-
    mission cutter helicopters for airborne use, of course.
        Mr. Fortuno. Would you say that once the re-engining
    program is completed, that the safety issues with the HH-65s
    will be pretty much taken care of?
        Admiral Allen. They will be, safety and reliability. After
    that, then we need to look at how you enhance capability as
    that asset is integrated into the Deepwater family of assets.
    And the real thrust of both of our helicopter programs, both
    the H-60 and H-65, is to make them airborne use of force
    capable and capable of vertical insertion. Against that larger
    discussion of a system performance, that, combined with the new
    cutters and our small boat interceptors, is a potent package
    for dealing offshore with threats.
        Mr. Fortuno. Thank you, Admiral.
        Thank you, Mr. Chairman.
        Mr. Filner. I think what Mr. Fortuno wanted to know is if a
    Congress member would be able to fly in the aircraft when all
    this is done.
        Admiral Allen. I am aware that due to the flight
    restrictions imposed until the re-engining occurs, that we are
    restricted from carrying VIPs.
        Mr. Filner. Thank you.
        Mr. LoBiondo. Mr. Diaz-Balart.
        Excuse me, Mr. Taylor, welcome. Are you ready? Do you want
    to wait? Okay.
        Mr. Diaz-Balart?
        Mr. Diaz-Balart. Admiral Allen, we have talked a lot about
    the congressional mandate which resulted in the Coast Guard
    submitting the Capital Investment Plan that included a complete
    funding projection and acquisition schedule beyond the first
    five fiscal years. What I am interested in hearing about is,
    given the uncertainties in projecting legacy asset sustainment
    costs and out-year acquisition costs, do you intend to
    reallocate the program's long-term cost projections each year?
        Admiral Allen. That is the basic business model that was
    established within the four plans. What it calls for, as you
    may be aware of, is a certain amount of money that would be
    dedicated to new assets and then a secondary amount of money
    that would be available for legacy asset sustainment and
    upgrades. The difference in the two plans is one focuses on
    locking in the funding level for the new assets; the second one
    assumes that within an investment level there would be legacy
    asset sustainment, the difference being that in the first one
    you would make year-to-year decisions based on other funding
    priorities about how much money could be allocated into legacy
    asset sustainment. That is the difference in the two plans,
    sir.
        Mr. Diaz-Balart. Also, when will decisions be made about
    which of the four options the service intends to follow? And
    unless my guess is wrong, you are going to be getting this
    question tomorrow, too.
        Admiral Allen. Yes, sir. Well, quite frankly, the Coast
    Guard, in order to do its mission, would like the maximum
    capability and the maximum forestructure we can buy. What you
    have is a high level plan that is focused on $24 billion in 25
    years and then graduated steps down from that, which would be
    coping mechanisms to deal with unknown out-year funding
    streams. I am sure the Commandant would like to be at the
    higher end of that, at the 24/25 level. As you back off from
    that, then you have to make risk-based decisions regarding the
    assets themselves, the condition of the assets, the performance
    of the new assets you are bringing online.
        As we bring the NSC on board or the FRC or the OPC, I think
    we need to, through operational tests and evaluate, assess
    their impact on performance. We may be able to achieve some
    forestructure reductions if these units are that capable in
    covering certain parts of the ocean, as we discussed earlier,
    but that is going to have to play out. We have established an
    envelope that would give us what we need, and we are going to
    try to drive the capability we need. But a lot of those
    decisions will be taken year-to-year on what is available
    against other priorities, sir.
        Mr. Diaz-Balart. Are you going to be able to take the
    decisions year-to-year indefinitely? I mean, at some point
    don't you have to come down on a particular plan?
        Admiral Allen. Well, sir, if you noticed, after a five-year
    period, after around 2011, to get the programs funded within
    the required time frames, there is more money put on legacy
    assets, depending on which plan you look at, or new production.
    Again, the focus right now is on system performance and seeing
    how these assets, once they are brought online, contribute to
    the overall performance as one asset to the system and better
    inform what the ultimate fleet size needs to be. We also need
    to take into account total ownership cost; not only the
    acquisition cost, but the increased cost of operating these
    vessels, and that will also come into play, sir.
        Mr. LoBiondo. Mr. Taylor, are you prepared to start at this
    point?
        Mr. Taylor. Admiral, I am curious. Being from the area
    where a lot of the ships are going to be built, I was
    obviously, as were a lot of my constituents, a bit disappointed
    when I believe Chairman Rogers had some questions that he felt
    were unanswered and therefore was holding up a good portion of
    the funding. My question is what were the questions that he had
    of you, and do you feel like they have been sufficiently
    answered?
        Admiral Allen. Well, I think the questions had to do with
    details on the asset delivery schedule and the cost per year.
    We believe we provided all of that. There are some issues that
    they have been interested in. One of them is regarding the
    truncation of the 123 conversion program, where the future is a
    fixed-wing aircraft. We provided issue papers to them in
    briefings to their staffs. We think we have been responsive to
    that, and we look forward to collaborating in achieving the
    President's budget.
        Mr. Taylor. I am curious. I also, with several of my
    colleagues, get to serve on the Armed Services Committee, and I
    really have noticed a difference. The Navy almost always has a
    major program in play and, therefore, you have an institutional
    history of young guys starting off lieutenants working big
    programs, working their way up to admiral and are in pretty
    good position to justify by the time that comes.
        It struck me that the Coast Guard has not had a major
    acquisition program, other than a few icebreakers, since the
    late 1960s, early 1970s, when the 378s were built. I am just
    curious, did the Coast Guard find themselves at a disadvantage
    not having any institutional memory as to how do you go make a
    pitch for that money?
        Admiral Allen. I think we do have institutional memory and
    have had shipbuilding programs, albeit not on the scale of
    Deepwater nor the complexity of Deepwater. I think it is safe
    to say
        Mr. Taylor. Certainly not of this scale, right.
        Admiral Allen. I think it is safe to say this is a
    precedent-setting acquisition for the Coast Guard, and maybe
    for the Country. But the people that are populating our program
    offices and working on these things do have a history of
    working in programs of acquisition. I have myself. The real
    paradigm shift
        Mr. Taylor. Where were you in 1968, Admiral?
        Admiral Allen. Where was I in 1968?
        Mr. Taylor. Yes.
        Admiral Allen. I was in the U.S. Coast Guard Academy.
        Mr. Taylor. All right.
        Admiral Allen. But following the production of the 378s, we
    built our 270-foot medium endurance class, we have had two very
    successful procurements of large and medium buoy tender
    projects, we had a very successful program on our 47-foot motor
    lifeboats barrier launch on responsible medium. So there is
    continuity of experience and corporate knowledge in the Coast
    Guard regarding project management and acquisition.
        But as I said, I think anybody probably grant you that the
    Deepwater program, in its complexity and scope, is something
    that is unprecedented, but we are bringing the best and
    brightest to bear on it that we have.
        Mr. Taylor. I hate to throw a monkey wrench into this mix,
    because I have seen, unfortunately, over at Armed Services, how
    the Navy, by changing the game plan and moving the goal post on
    the DDXs I think put that program in jeopardy. But I am
    curious, and I have got to ask as a citizen and a taxpayer,
    given the huge price and increase in the price of fuel since
    this program started,--I know you have worked towards
    minimizing maintenance, I know you have worked towards
    minimizing crew size--to what extent has fuel efficiency been a
    factor in this next generation of cutters?
        Admiral Allen. Well, we are always looking for a best
    value, especially in the density of the propulsion plants that
    we are buying. I think that is of a technical nature. I am
    going to throw it over to Greg Giddens, the program officer,
    and let him take a stab at it.
        Mr. Giddens. Good morning, sir. From all classes of cutters
    that has been a factor in the design, from combining up a gas
    turbine with diesels, the number of diesels that is needed to
    meet the maximum speed, and then our ability to operate more
    efficiently on one or two of those diesels. It is also a
    factor, as I suggested, their competitive process determines
    propulsion in power systems. They look for power density
    against the weight to try to make sure we get the most
    efficient engines that we can for their volume, as well as
    their efficiency in terms of input-output, fuel intake versus
    power output.
        Admiral Allen. If I could add one comment, you almost have
    to have a bias towards fuel efficiency for the national
    security code and the OPC, which have a range of 12,000 and
    9,000 miles, respectively.
        Mr. Taylor. On your smaller vessels, I noticed just a few
    years back, when the price of gasoline was fairly inexpensive,
    there was a move on a lot of your smaller vessels away from
    diesels and back towards outboards. How is that affecting your
    operations? Do you find yourself having to cut back on
    operating hours because of the shift? At the time I pointed out
    to some people I thought it was kind of shortsighted.
        Admiral Allen. Well, any reduction in operations we have in
    the past weren't necessarily related to fuel cost, they were
    related to larger budgetary issues and stressers on the Coast
    Guard's operating base. In regards to small boat and cutter
    operations, though, we have tried to rationalize those systems
    over the years where, for instance, the boats that are
    operating off of cutters, trying to migrate them where they are
    using the same type of fuel the cutter does, rather than having
    to carry gasoline.
        But on the shore side, based on the requirements, they tend
    to be gasoline-driven engines, so it kind of falls into two
    camps, what you are trying to support from a cutter and what
    you are trying to support from a shore station. And we have
    tried to make those as consistent across those two separate
    worlds of work as we can.
        Mr. Taylor. What has it done to your operating cost as a
    rule from your shore stations? Have you seen a doubling in your
    fuel bills? And how do you respond to that?
        Admiral Allen. Separate from the subject of the hearing at
    hand today, there are extraordinary fuel costs that we are
    dealing with this year. We have, in the operating side of the
    budget, taken a look at how we can mitigate and mediate the
    impact of those. We have got some extra resources through
    supplemental funding and so forth. But we do have this year,
    and are likely to have next year, a shortfall in energy funding
    in the Coast Guard, and it is one of those issues where you
    have to manage your base.
        Mr. Taylor. Thank you, Mr. Chairman.
        Mr. LoBiondo. Admiral Allen, I want to talk a little bit
    about the 110s.
        Admiral Allen. Yes, sir.
        Mr. LoBiondo. I think almost by anyone's standards they
    have experienced unexpected levels of problems. In the schedule
    for what we are proposing for Deepwater and where these 110s
    come in, sort of at the end, I don't understand how we are
    going to sustain the 110s and what the plan is by the Coast
    Guard as we continue to experience higher failure rates.
        Admiral Allen. Yes, sir. I would say following the H-65
    challenge, which is our number one pressing safety and
    reliability problem, I think following right behind that would
    be the 110 issue, 123 conversion. Under the original Deepwater
    plan, we had scheduled to an extension of the 110s to 123s as a
    bridging strategy, not for a new asset.
        This gets back to the constrained funding level, how you
    have to operate in a portfolio over a number of years. It was
    anticipated that we would go to the fast response cutter around
    2018, and as a result of the experience we have had with the
    110 to 123 conversions, we are attempting to accelerated the
    FRC 10 years and bring that online by 2008, subject to
    successful competition in the budget this year and follow on
    years. What we try to do is remove the bridging requirement,
    where we are having problems with the converted 123s both
    structurally.
        And they were only intended to replace 1998 type capability
    in terms of their sensors, communications, and so forth, so
    that ability to exert command-and-control have a common
    operating picture and utilize Cypronet chat rooms is something
    we will get in the FRC but is not present in a post-9/11 123.
    So there are two things: one is sustainability of the hull
    itself, the ability of those hulls to operate, but the second
    one is the capability we put into them as a bridging strategy
    doesn't reflect the true requirements we are going to need in a
    post-9/11 environment, sir.
        Therefore, the reason the FRC needs to move to the left and
    probably--if you look at the priority of any shortfall that
    exists in the $966 right now, it is to be able to complete the
    design and build the first FRC, sir.
        Mr. LoBiondo. Let me switch for a minute to the HC-130Js.
        Admiral Allen. Yes, sir.
        Mr. LoBiondo. Can you tell us a little bit about where we
    stand with this? What is the cost of missionizing these? What
    can they do without the upgrades? Where do we stand with this
    whole situation?
        Admiral Allen. Happy to do that, sir. We currently have six
    C-130Js. They are operating out of an aviation program office
    in Elizabeth City in North Carolina. That is not the permanent
    home base, that is where we brought them on board and got them
    operational. An APO is usually used to transition to the
    permanent air station where they are going. Since we have got
    the C-130, several things have happened.
        First of all, we were appropriated $120 million to
    missionize them and make them capable for Coast Guard use. We
    had an unsuccessful first try with Lockheed Aero, where the
    price to integrate the missionization of those aircraft into
    the airframe was deemed too high by the Coast Guard. We have
    gone back and asked ICGS for a more simpler solution and have
    them basically giving us an estimate to cost at $120 million to
    missionize those six aircraft.
        What has been challenging for those aircraft is that we
    have six and they are unique. They look like a C-130 on the
    outside, but on the inside it is a totally different aircraft
    in terms of the avionics and the computer systems that are in
    there. They are not like the rest of our C-130s. And prior to
    recent events, we were looking at whether or not C-130Js were
    something that should remain in the Coast Guard inventory of
    assets.
        A couple of things have affected that. Number one, as you
    may be aware of, the entire C-130 fleet around the world has
    been impacted by the discovery of cracking in the wing boxes
    that are producing problems and potential structural failures
    in C-130s. We are in the process right now of waiting for a
    service bulletin from Lockheed Martin that will allow us to
    inspect these aircraft and find out whether or not we have true
    problems. We have two types of C-130Hs, separated from the Js.
    We have 1500 series. There are five of those, which are much
    older than the 1700 series. These need to be inspected and we
    need to ascertain the condition of the wing boxes before we
    make a decision.
        So what we are playing off is the six C-130s that are
    unique, the need to missionize those, and then how they play
    against the remaining C-130s we have in the overall fixed-wing
    fleet and where we want to be at an end state for Deepwater.
    The variable right now that we are waiting for is the Lockheed
    Martin technical bulletin to allow us to assess the conditions
    of those airframes. Then, after that, we are going to have some
    decisions to make inside the Coast Guard about the disposition
    of the C-130s and the overall makeup of the C-130 fleet that we
    finally want in the Deepwater asset mix.
        Mr. LoBiondo. What do you use them for now?
        Admiral Allen. Right now, pending missionization, they are
    used for logistics flight. And that does relieve the
    requirement from other aircraft so they can be used for
    maritime surveillance and other missions. So they are being
    used and they are adding value to the Coast Guard right now.
    They could add more value with proper radar workstations that
    would allow them to be maritime patrol aircraft to help us go
    out there and detect go-fast boats and so forth.
        Mr. LoBiondo. Do you have any idea when you might hear back
    from Lockheed what the time frame is to determine if they are
    going to be able to do the upgrades with the resources that are
    available?
        Admiral Allen. Integrated Coast Guard Systems presented us
    a proposal yesterday, and we are reviewing that and the price
    attached to it now, and I can tell you right now it is the
    Commandant's desire to make a decision as fast as we can on
    that, sir. And as soon as there is anything available on that,
    we will pass it on to you, sir.
        Mr. LoBiondo. Thank you.
        Mr. Filner?
        Mr. Filner. Just one additional question, if I might. I
    talked sort of in an abstract way and you answered abstract.
    Let me just bring it down to the Port of San Diego, which I
    represent.
        Admiral Allen. Yes, sir.
        Mr. Filner. There may be in the port at any one time two or
    three cruise ships, two or three nuclear carriers, dozens of
    destroyers and other craft. And in joint operations meetings
    that I have been at, people say that the biggest terrorist
    threat to that mixture there is as simple as a high speed
    recreational vessel loaded with high explosives, like we saw in
    the Kohl, for example. So what does Deepwater do to stop that
    threat to the coastal ports that many of us represent here?
        Admiral Allen. Well, I would give you a couple of
    scenarios, sir. Based on the current Coast Guard planning for
    securing this Country, we have different maritime security
    levels we employ, and they are called MarSec I, MarSec II, and
    MarSec III. We are continually at MarSec I right now, which
    would roughly correspond to the yellow status of the threat in
    the Country right now.
        As those threat levels go up, we take more protective
    action in our ports and harbors, up to and including bringing
    large cutters close in to increase command-and-control,
    maritime awareness, and our response capability. So at higher
    threat levels, Deepwater assets can be employed in and around
    ports and harbors to increase the layered protection there,
    increase maritime domain awareness, and create a response
    capability.
        I can tell you, as the Atlantic commander on 9/11, I
    immediately diverted larger cutters and actually put them into
    ports just to make sure that we didn't have a problem that we
    didn't know about. For instance, within five miles of New York
    Harbor, I had three medium endurance cutters clear up to the
    Statue or Liberty with their guns uncovered. You hope you never
    have to do that again, but we have the capability to move these
    assets around because they are floating command-and-control,
    maritime domain awareness platforms.
        Now, having said that, in the normal everyday life in the
    Port of San Diego, we won't have a cutter sitting in the port,
    because the threat level won't be that high. The answer there
    then moves away from Deepwater and focuses on maritime domain
    awareness, the standup of the new Coast Guard sector commands.
    And I might add, the benchmark, the gold standard for
    operations in a port is joint harbor operation center in San
    Diego, where we have co-located with the Port Authority, the
    Navy, and our terrorism force protection folks and the Border
    Patrol to increase surveillance, including the radar out of
    Point Loma importing that back, sir.
        Mr. Filner. Thank you. I am still worried about that small
    vehicle.
        Admiral Allen. As are we, sir.
        Mr. Filner. Thanks.
        Mr. LoBiondo. Admiral Allen, on the 110s, since we are not
    going to be pursuing the 110s to the 123s, House appropriators
    have $89 or $90 million to be used for either vessel
    acquisition or 110 sustainment. Which of these options do you
    intend to pursue?
        Admiral Allen. Sir, it is our desire to take any unused
    money--and we don't know what the excess costs are regarding
    the 123 conversions. There is $30 million for that particular
    purpose in the budget right now. We know there are probably
    going to be some excess costs associated with that, request for
    equitable adjustment and so forth. But our desired position
    would be to take all of the available money regarding patrol
    boats and put it into the design and construction of the first
    fast response cutter, number one priority of the Commandant,
    sir.
        Mr. LoBiondo. Different topic. On the fuel, does the Coast
    Guard buy fuel on its own or in conjunction with the Navy for
    economies of scale, or how does that work?
        Admiral Allen. Works a couple of ways. Mostly, for the
    large cutters, work off the Defense fuel contracts that we are
    part of every year; down at the local levels we may have
    contracts with local marinas. I could give you a more in depth
    answer about how we do it, but it probably varies by region.
    But for the very large cutters we work off the annual Defense
    fuel contracts.
        Mr. LoBiondo. Okay.
        Mr. Taylor? Mr. Reichert?
        Mr. Reichert. I have one more question. Approximately
        Admiral Allen. Sir, I believe the question was how much
    funding has the Coast Guard obligated against the $2 billion to
    date, sir.
        Mr. Reichert. Yes.
        Admiral Allen. The answer is we obligated about 95 percent
    of that. And as we sit here this morning, the unobligated
    balance is about $105 million. That is broken down in the
    following three elements: we are reserving $61 million for the
    changes on the national security cutter that I mentioned
    earlier that have to do with the construction of the skiff on
    board it and the increases due to chemical, nuclear, and
    biological detection capability; there is another $30 million
    that is in reserve right now that I just spoke to Chairman
    LoBiondo about that was reserved for the 123 conversions that
    we would like to see applied to the fast response cutter; and,
    finally, there is $14 million identified to be used on a covert
    aircraft.
        We are in the process of developing an operational
    requirements document right now and we intend to execute the
    solicitation for that test aircraft through the U.S. Air Force
    Big Safari program, and we are working to best speed on that.
    Again, the total is about $105 million.
        Mr. Reichert. Thank you.
        Mr. LoBiondo. Mr. Filner?
        Admiral Allen, Mr. Hoekstra talked about this a little bit,
    and that was in reference to the unfortunate scenario that we
    proceed with the $500 million number, and not are able to raise
    that, we know that it is devastating to the program, but can
    you give us some details in terms of time delays? Does this
    push us to a 40-year program if that were to be pushed out? Can
    you give us some sense? You know, you talked about some of the
    decisions in actual asset acquisition and upgrade, but I am
    more interested in time line references from you, if you can.
        Admiral Allen. Well, I will make a general comment and then
    I will ask Greg Giddens to comment. One would find it hard to
    imagine that you could build any more than one type of cutter
    per year, if that, under this funding scenario, especially
    given some of the legacy asset issues that we are dealing with.
    I think almost everything would push to the right. We have a
    national security cutter that is already under construction. We
    are in the process of designing, but have not started, on the
    OPC or the FRC.
        So those would be very difficult decisions that would have
    to be made and most likely would move them to the right. Then
    what you get is it moves beyond a death spiral, where you are
    trying to maintain legacy assets without the new ones there.
    You probably are going to start seeing obsolescence and vessels
    taken out of service with any capability replacement and a
    complete performance gap while you work your way through it.
        We would be glad to give you some scenarios for the record
    and talk to the staff, but it would be significant, sir.
        Greg, do you want to comment?
        Mr. Giddens. Just to add, indeed, it would be significant.
    It would push development efforts out to a year or two. If it
    reset the baseline for Deepwater funding, it would put us at a
    level that was a pre-9/11 level and create definite performance
    gaps and capacity gaps. As Admiral Allen indicated, we would
    likely have to decommission some of our assets.
        Admiral Allen. It would probably question the viability of
    the current contracting vehicle.
        Mr. LoBiondo. Thank you.
        Mr. Taylor? Mr. Filner? Mr. Reichert? No?
        Well, Admiral, thank you very much. Good luck tomorrow.
    That is an important one.
        Okay, meeting is adjourned.
        [Whereupon, at 11:03 a.m., the subcommittee was adjourned.]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]

        [GRAPHIC] [TIFF OMITTED]