[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

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             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.]


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