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

                            DEEPWATER IMPLEMENTATION

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

                                    (109-79)

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                    COAST GUARD AND MARITIME TRANSPORTATION

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 14, 2006

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

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

                                      (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, Admiral Thad, Commandant, U.S. Coast Guard...............     2

              PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

    Filner, Hon. Bob, of California..................................    32
    LoBiondo, Hon. Frank A., of New Jersey...........................    35

                  PREPARED STATEMENT SUBMITTED BY THE WITNESS

     Allen, Admiral Thad.............................................    24

                           SUBMISSIONS FOR THE RECORD

     Allen, Admiral Thad, Commandant, U.S. Coast Guard
      Response to a question from Rep. Filner........................     6
      Response to a question from Rep. Fortuno.......................    19
      Response to a question from Rep. Boustany......................    21

                            DEEPWATER IMPLEMENTATION

                                  ----------

                            Wednesday, June 14, 2006

            House of Representatives, Committee on
                Transportation and Infrastructure, Subcommittee
                on Coast Guard and Maritime Transportation,
                Washington, D.C.
        The committee met, pursuant to call, at 1:00 p.m. in room
    2167, Rayburn House Office Building, Hon. Frank A. LoBiondo
    [Chairman of the committee] presiding.
        Mr. LoBiondo. Good afternoon. The Subcommittee will come to
    order.
        The Subcommittee is meeting this afternoon to review the
    Coast Guard's Deepwater Program and the Service's revised
    Deepwater implementation schedule. The Coast Guard's Integrated
    Deepwater System is designed to replace or modernize
    approximately 90 ships and 200 aircraft currently utilized by
    the Service to carry out missions more than 50 miles from
    shore.
        The new assets obtained under this program are extremely
    important and will greatly expand the Coast Guard's ability to
    perform its many traditional and homeland security missions.
    The original Deepwater implementation plan and asset mixture
    were devised prior to September 11th and consequently, the plan
    has been revised to take into account the Coast Guard's greater
    homeland security responsibilities.
        It was important for the Service to do this, and I am
    pleased they did. Nevertheless, it is my duty to evaluate the
    plan, and I have some concerns. First, I am disappointed that
    the plan extends the time period for acquiring the new assets
    from 20 to 25 years. Every year we delay the purchase of new
    assets, the men and women of the Coast Guard, and our
    taxpayers, lose, for a couple of reasons. First, the cost of
    maintaining legacy assets significantly increases, eating more
    and more of the money available to purchase replacement assets.
    And newer and more capable assets are not available to improve
    the performance and safety of the Service's operations.
        My second major concern is with the workhorse of the Coast
    Guard's fleet, the 110-foot patrol boats. These boats are
    rapidly failing, resulting in an estimated patrol boat
    readiness gap of nearly 20,000 hours annually from 2008 through
    2012. Exasperating the problem are the failures surrounding the
    development of the replacement of the 110, the fast response
    cutter, as well as the termination of the agreement with the
    Navy to provide the Coast Guard with 179-foot patrol ships.
        I am especially interested in hearing from the Commandant
    on how he plans to manage the readiness gap and what progress
    has been made in fixing the design problems of the FRC, as well
    as the status of the search for an off the shelf patrol boat
    design as an alternative to the FRC.
        Finally, I would like to congratulate Admiral Allen on
    becoming the Service's 23rd Commandant. We have enjoyed when
    you have been here before and we are especially pleased that
    this is your first visit as Commandant of the Coast Guard. I
    know I speak for the entire Committee: we are absolutely
    thrilled, Admiral Allen, that you got the position.
        When Mr. Filner comes, he may have an opening statement. I
    want to apologize, we have some floor activity. Mr. Coble is
    going to temporarily take over in a minute. But Admiral Allen,
    please proceed.

      TESTIMONY OF ADMIRAL THAD ALLEN, COMMANDANT, UNITED STATES
                              COAST GUARD

        Admiral Allen. Thank you, Mr. Chairman.
        I have a statement that I would like to submit for the
    record and I have a very brief oral statement that I would like
    to make right now.
        On the 25th of May, I made a compact with the men and women
    of the Coast Guard to do four things as Commandant. The first
    one was to focus on mission execution, to sustain the high
    level of performance that has been demonstrated over the last
    year in response to the hurricanes and since 9/11, with our
    response in homeland security. To do that, we have to have the
    very best people.
        But our people are nothing without platforms. We have to
    put the right tools in the hands of our people, and we have to
    build a command and control structure behind that that
    optimizes mission execution. Then we need to build a mission
    support system that focuses on the right logistics,
    maintenance, financial support, so that all the forces in the
    Coast Guard are optimized on mission execution.
        To that end, we are going to rationalize our force
    structure. We made a major reorganization in the last year by
    establishing Coast Guard sectors that unifies Coast Guard
    effort in and around our ports. The Deepwater acquisition is
    our maritime patrol and presence force that allows us to meet
    and defeat threats as far offshore as possible.
        The final piece of that are our deployable teams, port
    security units, maritime safety and security teams and so
    forth. It is my intention to consolidate all those units under
    a unified command of the Coast Guard to get better synergy out
    of them and to offer that force to the Secretary of Homeland
    Security for all hazards, all threats.
        In regard to today's hearing, I would like the Committee
    know that last week I traveled down to Pascagoula, Mississippi.
    I walked through the shipyard, I got a briefing, and I
    completely toured the national security cutter that is under
    construction. It will be floated later this fall, and we will
    take possession of it next year.
        I have made it clear to our partners in Integrated Coast
    Guard Systems that my watchwords for the Deepwater project are
    ruthless execution. We need to cut steel and float boats, we
    need the right tools in the hands of our people. If we need to
    make tough decisions on requirements, we will do that. We need
    to focus on cost, schedule and performance. We have issued the
    first award term and we are in the process of entering
    negotiations on the criteria and how that contract will be
    managed.
        The Committee has my complete commitment to do just that:
    manage cost, schedule and performance. I think it is very, very
    important that we get these tools in the hands of our people.
        I was very pleased with the walkthrough of the national
    security cutter last week. This is going to be a major step
    forward for our folks who go to sea. It is much more habitable.
    It is going to be a much greater, effective tool for our people
    to use. I took the new Master Chief of the Coast Guard with me.
    He was very pleased with what he saw, and I think we need to
    tell the Coast Guard what they have got coming, I think they
    are going to appreciate this ship.
        There are some technical issues associated with the
    construction that we will address in subsequent hulls. But I am
    here to report to the Committee that my watchword for
    acquisition is ruthless execution.
        I will be glad to take your questions.
        Mr. Coble. [Presiding] Admiral, I want to extend what
    Chairman LoBiondo has said. Pardon my immodesty, but I think I
    may have been the first person to have congratulated you
    prematurely back in January. But I felt confident in extending
    those words of congratulation to you. As Mr. LoBiondo has said,
    I think this was warmly felt on the Hill, your having been
    named Commandant. Good to have you on the Hill again.
        While I am at it, I might as well say a good word to the
    three-striper who sits behind you. They do a good job with
    House liaison. I continue to get good words from them. So two
    thumbs up for them as well, Admiral.
        And Mr. Filner I presume is on his way.
        Admiral, let me ask you this question. We all know the
    significance of Deepwater. But there was a recent GAO report
    that focused on the RESCUE-21 program. One of the major themes
    of that report was that the Coast Guard needs to improve its
    management oversight of the program.
        Let me ask you a two-part question, Admiral. A, do you
    agree with this, and if so, what steps are you taking to ensure
    this critical, life-saving system is successfully deployed?
        Admiral Allen. Thank you, sir. First of all, this is a
    critical system for the Coast Guard for mission execution and
    for the American public. There are issues with this
    acquisition. There are issues on both sides, both Coast Guard
    and General Dynamics.
        What we have agreed to do is put together an executive team
    to address the issues that were raised in the GAO report. The
    GAO report concentrated on a couple of areas. One was
    requirements management. The other was project monitoring. The
    other one was risk management. Also contractor costs and
    schedule estimation delivery controls. And most importantly,
    executive oversight.
        We have brought in a distinguished panel of acquisition
    experts to take a look at this. I am going to have an action
    plan presented to me by August. I spoke with the CEO of General
    Dynamics this morning on the need for he and I to take a
    personal leadership role in moving this process forward, that
    we need to take a look at the current contract vehicle that is
    in place, whether or not it is serving the Coast Guard and
    General Dynamics well.
        I will say this, where this equipment has been deployed, it
    has been remarkably effective. We have a much increased
    efficiency and response to search and rescue cases and
    direction finding. This is something the Coast Guard and the
    Country sorely needs, and I am taking it on as a personal
    leadership issue to deal with the CEO of General Dynamics, sir.
        Mr. Coble. Thank you, Admiral.
        We have been joined by the distinguished gentleman from
    California, Mr. Filner.
        Mr. Filner. You have never called me distinguished before.
    Thank you.
        Mr. Coble. I was just trying to impress the Commandant with
    that.
        [Laughter.]
        Mr. Filner. Thank you, Mr. Chairman. And thank you,
    Admiral.
        Mr. Coble. Excuse me. Also the distinguished gentleman from
    Louisiana is with us. Didn't mean to overlook you, Mr.
    Boustany.
        Mr. Filner. I apologize for being late, Admiral. I would
    like my opening statement to be made part of the record.
        Mr. Coble. Without objection.
        Mr. Filner. Let me just ask you, and if you have covered
    these, just say that and I will listen to the tape.
        Admiral, the Deepwater plan to replace the 110-foot boats
    has had one problem after another. I don't think we need to
    detail them now. But cracks in the hull and attempted
    conversion, which did not work, replacement vessels made out of
    composite materials, which also did not work.
        Now you are going to try I think to do an off the shelf
    design for the cutter. Is there one that meets your needs? Are
    you going to be able to do that? What is plan C now that plan A
    and B haven't worked?
        Admiral Allen. Yes, sir, I think there is a craft that will
    work. Let me provide some context, if I could. As you know, we
    attempted, as a bridging strategy to the new fast response
    cutter to extend the 110-foot cutters to 123 feet, put in a
    stern ramp and improve the command and control communications
    on those vessels. We have had significant structural problems
    associated with that, and the project was terminated with eight
    hulls.
        We are now testing those hulls to see if further repairs
    may be needed. Their current operations are restricted to eight
    foot seas or less.
        I would note, though, despite the operational limitations
    of those vessels, they have a significantly improved boat
    handling capability and significantly improved secure
    communications capability, so we are using them to mission
    effect down there, not to the extent that we envisioned or with
    the number that we wanted.
        In the meantime, we have a tired 110-foot fleet out there,
    as you have mentioned. We have tended to stabilize that fleet
    through our mission effectiveness program where we were
    actually looking at hull structural issues. We are running
    these boats through the Coast Guard yard. I think with the
    current 110 fleet that we have out there now, we will stabilize
    it in the near term, so those units can be effectively applied
    to mission effect.
        The problem is that as we have evolved the composite design
    for the fast response cutter, there are some technical issues
    that need to be resolved. As a risk mitigator, we have elected
    to put out a request for information on parent craft or
    replacement type designs where we could get something that is
    pretty much off the shelf that could be a gap-filler for the
    patrol boat hours that were mentioned by Mr. Coble in his
    statement.
        My goal is to proceed with an acquisition as soon as we can
    on a replacement patrol boat as a gap-filler to give us those
    patrol boat hours and simultaneously validate the concept and
    technology of composite hulls. And to the extent that we can
    move forward on that, when the time is right, we can suspend
    the other procurement. But my goal is to have patrol boats
    being brought into the Coast Guard to fill that gap until such
    time as can validate the composite hull and move forward with
    that acquisition.
        Mr. Filner. Where will those boats be built?
        Admiral Allen. That will be subject to a procurement
    process. We have put out a request for information to find out
    what is available. We know there are a substantial number of
    hulls out there that can probably meet our mission
    requirements. It will be a matter of making that selection and
    proceeding with the contract, working with our partners at
    ICGS.
        But in the meantime, we need to be moving ahead and seeing
    what the doability is on the composite design.
        Mr. Filner. But I notice you didn't say there would be any
    competition amongst U.S. ship yards for that. I mean, does ICGS
    make that decision themselves, or would there be a bid process?
        Admiral Allen. We fully expect that there will be
    competition everywhere there can be as part of this
    acquisition. We have passed that on to ICGS, and in fact, in
    the next award term, one of the criteria will be competition as
    a means to measure their performance.
        Mr. Filner. When is that contract looked at, again?
        Admiral Allen. We are in the process of beginning to
    negotiate the next award term, which will take effect in June
    2007. We just awarded the award term decision for 43 months to
    Integrated Coast Guard Systems. We have established the basic
    criteria by which we will evaluate that award term, and we will
    shortly enter into negotiations with ICGS on the request for
    proposal.
        Mr. Filner. I lost you. So did you award a 43 month
    extension?
        Admiral Allen. We have established the next award term to
    be 43 months. That becomes a sole source award that has to be
    negotiated------
        Mr. Filner. Why is that less than the 60 that you initially
    did? Were there any problems with them?
        Admiral Allen. That was based on an evaluation of their
    performance against a set of criteria and a board of Coast
    Guard personnel that were actually operating that equipment out
    there. Our chief of operations led the evaluation board and
    made a recommendation to our program executive office that
    given the performance and the evaluation criteria that 43
    months was the proper award term and that is what was conveyed
    to ICGS.
        Mr. Filner. Were there problems that led to not doing it
    for the full 60 months? You said evaluation, but you haven't
    said what.
        Admiral Allen. We were looking at things like operational
    effectiveness, total ownership costs and those sorts of things
    across not only the system but the platform and the component.
    So it is a combination of performance across the system by the
    contractor. In some cases they did better than other places and
    the aggregate score, that led to the decision for 43 months,
    sir.
        Mr. Filner. I don't know if you heard me say this to your
    predecessor, but you should read what you just said sometime
    and see how that translates into English. You get into a
    certain mode of talking and we lose the English. Did they
    perform or not is what I want?
        Admiral Allen. They performed well, they did not perform
    well enough to get a 60 month award term. The reasons for
    that------
        Mr. Filner. And where didn't they perform well enough?
        Admiral Allen.--are embedded in different levels of
    performance related to the specific platforms, how the system
    operates and their ability to control total ownership costs. We
    can disaggregate this for the record for you if you like, sir.
    It is a fairly complex matrix that was evolved, sir.
        [The information received follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Filner. And of course, Congressmen couldn't possibly
    understand anything so complex, right?
        Admiral Allen. It is understandable, sir, but it is pretty
    significant------
        Mr. Filner. Believe me, whatever you get me, I will
    understand it.
        Admiral Allen. Excuse me?
        Mr. Filner. I said get me whatever paper you want, I will
    understand it or I will ask the commander behind you to explain
    it to me.
        Admiral Allen. Yes, sir.
        Mr. Filner. Thank you, Mr. Chairman.
        Mr. Coble. I thank the gentleman.
        The distinguished gentleman from Louisiana, Mr. Boustany.
        Mr. Boustany. Thank you, Mr. Chairman.
        First of all, Admiral, congratulations. And also
    congratulations on your outstanding service and the outstanding
    service of the Coast Guard in my home State of Louisiana in the
    aftermath of the two storms. We certainly appreciate the work
    that you did.
        I want to talk about the risk of accelerating the program.
    We are all aware of the problem with the FRC. But could you
    outline some other risks that are out there if we were to try
    to accelerate the program, the Deepwater program?
        Admiral Allen. One risk that we really haven't talked about
    in prior hearings, and it may be a good time to bring it up
    now, is the actual capacity of the Coast Guard to execute on an
    accelerated time line. As much as we need these platforms
    brought forward and as much as we need to close that aircraft
    and patrol boat gap, there are a certain number of people in
    the Coast Guard and we are limited by appropriations in how
    many people we are able to put at this acquisition project.
        So the ability to, for instance, build three classes of new
    cutter at the same time, bringing on new aircraft and so forth,
    does tax our personnel system in terms of the capacity and the
    amount of people we have to put at the problem.
        Mr. Boustany. Thank you. Are there any parts that could be
    accelerated? Has there been any thought given to that approach?
        Admiral Allen. Where there has already been a contract in
    place or an order in place for platforms, or the requirements
    have been locked down in their production, there is always an
    opportunity to do that. The ones that are coming offline right
    now in particular would be the CASA 235. We are looking at both
    an MPA gap and a patrol boat gap.
        Mr. Boustany. So you believe that if we were to take that
    approach, we would probably save some money in the long run?
        Admiral Allen. Well, I tend to look at this in terms of
    requirements. There are always going to be funding issues out
    there and competition for funding. My two priorities as a
    commandant are to close the MPA gap and the patrol boat gap as
    soon as possible. So I am more interested in how quickly we can
    answer our requirements and close gaps as that relates to the
    overall plan. So any opportunity to do that I would be
    appreciative of.
        Mr. Boustany. OK. With the recent exercise of the option
    with ICGS, do you have any concerns about relying on a single
    contractor at this stage, and the potential for lack of
    competition in awarding contracts to subcontractors?
        Admiral Allen. Your question is fair, sir and it relates
    back to Mr. Filner's concern. One of the new criteria we will
    use to evaluate ICGS in the first award term is competition. In
    other words, for the award term following they will be
    evaluated on how well they competed in the subordinate
    contracts.
        Mr. Boustany. OK. Has a baseline been made, or any
    evaluation that would allow us to determine whether the use of
    ICGS and a single package replacement program cost more to
    taxpayers than using a more traditional approach of one-to-one
    asset replacement?
        Admiral Allen. That is a fair question, too, sir. We were
    never looking for a one-for-one asset replacement. We were
    looking for a system that would produce a certain level of
    performance in an operating environment. The system that was
    offered by ICGS is the one we are pursuing. The ability to do
    this another way, you could go out and issue separate projects
    and contracts separately and acquire vessels and aircraft and
    sensors. They would have to be integrated at some point.
        One of the challenges the Coast Guard faces, and was
    instrumental in the strategy on how the Deepwater contract was
    awarded is the fact that there is no equivalent in the Coast
    Guard of the Naval Sea Systems Command, NAVAIR or SPAWARS. In
    other words, we don't have those large systems commands and
    integrators that can do that inside our organization. So there
    is an issue with both capacity and competency right now to be
    able to perform that type of integration.
        Mr. Boustany. OK. On aircraft, could you update us on the
    HH-65 re-engining project, and I guess you expect the fleet or,
    give me a time line on the fleet and when it will be completed
    re-engined and operational.
        Admiral Allen. I can. We originally anticipated that the
    re-engining would be completed around January of 2007. It now
    looks like that will probably be June of 2007. At lot of that
    has to do with the wear and tear we put on those airframes in
    the extensive operations that took place in support of
    Hurricane Katrina, that required more extensive maintenance due
    to more hours being put on, saltwater corrosion and so forth.
    But we are on track now to have the re-engining completed by
    June 2007, and this will mean a significant, significant
    upgrade to our forces out there.
        Mr. Boustany. I am glad to hear that. I was concerned about
    the wear and tear imposed by Hurricanes Katrina and Rita and
    the costs associated with it. So I am pleased to hear your
    answer on that.
        Admiral Allen. Sir, we actually noted that the performance
    of the helicopters that had converted engines were superior
    during Katrina. They carry 1,500 pounds of fuel versus 1,000
    pounds of fuel, they can carry 7 survivors versus 3, and almost
    double the time on scene. So these are sorely needed assets.
        Mr. Boustany. Admiral, thank you very much. I yield back.
        Mr. Coble. I thank the gentleman.
        Admiral, let me revisit the question that Mr. Filner put to
    you. Can you clarify that the new fast response cutters will in
    fact be built in the United States?
        Admiral Allen. Well, the original plans were to build a
    composite FRC and that would be built within the Northrop
    Grumman structure per the teaming arrangements that were
    included in the ICGS. So, yes, sir.
        Mr. Coble. Let me ask you another question, then I will
    recognize Mr. Filner again.
        Admiral, has the Coast Guard been forced to delay the
    acquisition of new Deepwater assets because of the high costs
    associated with maintaining and repairing legacy assets?
        Admiral Allen. I don't believe so. If I could maybe just
    provide a contextual comment. When this program first started,
    and the original plan anticipated that it would be funded at a
    level of $500 million a year, this program is now approaching
    $1 billion a year. It is hard for me to sit here and say that
    it hasn't received funding support by the Administration or the
    Congress. What we have is a set of circumstances that have been
    superimposed on it on increased use of these assets and more
    maintenance problems that are coming about.
        So there are resources being put out, both new
    acquisitions, supporting the legacy assets. But there is also a
    third category where we are taking legacy assets and upgrading
    the equipment on them to make them part of the Deepwater system
    to make them more effective. This is taking the older cutters
    that are operating out there and for instance, giving them SIPR
    net chat rooms, so when we are doing drug interdiction, we have
    the tactical officers actually talking to each other, and we
    can trade radar pictures between ships, which we could never do
    before.
        So it is three phases. It is the new stuff, it is putting
    new capability on the old stuff and it is maintaining the old
    stuff. But we are very pleased that we have been able to move
    from $500 million a year up to a billion dollar a year program.
        Mr. Coble. Thank you, Admiral. The distinguished gentleman
    from California, Mr. Filner.
        Mr. Filner. Thank you, Mr. Chairman.
        I just wondered if I talk as fast as you if I might get a
    brain aneurysm there.
        Admiral Allen. Tell me to slow down if I am talking too
    fast.
        [Laughter.]
        Mr. Filner. No, I like your style, Admiral.
        It looks to us up here that Deepwater has changed from a
    program to modernize the Coast Guard with new equipment to a
    program because of forced resource squeezing to a program that
    buys too few new ships and keeps the old aircraft. I think OMB
    has been saying that you can't increase the program costs.
        So it looks like you are not getting the support that you
    need to be the Coast Guard of the 21st century, where we ask
    you to not only do your traditional mission, but the post-9/11
    homeland security mission. It doesn't seem like you are getting
    the support. I don't know if you can answer this, Admiral, I
    mean, if you weren't getting the support that you needed to do
    the job that you need to do, would we know about it in
    Congress?
        Admiral Allen. You would from me, sir. Let me restate
    something I said earlier, because I think it is really------
        Mr. Filner. That is your reputation. I was hoping so.
        Admiral Allen. When this program started, the envisioned
    funding level annually was supposed to be $500 million a year.
    The fact that we are up to a billion dollars is indicative that
    we have had support, both inside the Administration and on the
    Hill. I can't deny that as a sitting commandant, speaking to
    you about it today.
        Can any Federal agency in town use more money? Sure. Would
    we spend it wisely? Yes, we would, sir. But I cannot say that
    we have not been supported and we are not moving this project
    forward. The problem is there is a convergence of events with
    the operational tempo the Coast Guard has encountered, not only
    after 9/11, but as you saw with our response to Hurricane
    Katrina. Over the next few months, as I formulate the fiscal
    year 2008 budget with the Department and OMB, we are going to
    have to craft a strategy coming forward where we are credibly
    demonstrating to you that we are moving this project along,
    sir.
        Mr. Filner. I want you to save your original memos, because
    I am going to ask you how much you asked for versus how much
    you got.
        Admiral Allen. I will acknowledge receipt of those
    questions, sir.
        Mr. Filner. Just one last point of concern of mine, and
    that is the drug interdiction. Your predecessor, Admiral
    Collins, testified, and I am not sure how exactly you know
    this, but he estimated 15 percent of the drugs entering the
    U.S. were interdicted. Are we going to do better and how are we
    going to do that? You said, I think, in your opening statement,
    at least in your written one, that Deepwater does result in a
    modest, near-term operational hour shortfall, followed by long-
    term gains. Does that mean we can expect, say, more drugs in
    this short-term situation? How are we going to deal with all
    those issues in your view?
        Admiral Allen. Yes, sir. The drug problem is fairly
    complex. We have had three straight years of record cocaine
    seizures, as you may know. We have done that, in some cases,
    with fewer assets out there. The reason we have been able to
    achieve that level of performance is through intelligence, and
    mostly human intelligence.
        Mr. Filner. I want you to clarify. You said you have had
    record cocaine seizures. You are not talking about personally,
    now, are you sir?
        Admiral Allen. I am talking about------
        Mr. Filner. Just my humor, just ignore me. I thought you
    shifted off the cocaine.
        Admiral Allen. We have had three very successful years in
    counter-drug operations. We may not come to that level this
    year, as we are looking at the current operations down south.
    We are hitting some challenges where, in spite of good
    intelligence, we are not able to take cocaine we know is moving
    north off the sea routes out there. It is due to a couple of
    issues. One of them has to do with the shift of traffickers to
    different flag states that make it difficult for us to get on
    board and board them. We are going to have to take a look at
    new strategies and how to deal with that.
        But heretofore, in the last three years, we have been
    extremely successful in drug interdiction. We will attempt to
    sustain that. But we are having some problems to the shifting
    of the routes to flags other than what we have bilateral
    agreements with, sir.
        Mr. Filner. You have some of your patrol boats in Iraq
    right now, right?
        Admiral Allen. Six, sir.
        Mr. Filner. I assume that if you had them you could do
    better with your drug interdictions?
        Admiral Allen. We could always use more resources, sir. But
    those six patrol boats are currently supporting the one single
    remaining offshore platform for Iraq, sir.
        Mr. Filner. Well, I am glad one member of the
    Administration knows why we are in Iraq, to protect the oil.
        Admiral Allen. Sir, I know why we are there.
        Mr. Filner. Thank you, Admiral.
        Mr. Boustany [Presiding]. Admiral, we have been joined by
    the distinguished gentleman from Puerto Rico, Mr. Fortuno, and
    I yield to him for questions.
        Mr. Fortuno. Thank you, Mr. Chairman. I truly appreciate
    it.
        Welcome, Admiral Allen. First of all, I want to say, and I
    have said it in the past and I will say it again, we are really
    thankful for the work that your men and women are doing in the
    San Juan sector. It is a large area. It covers essentially
    everything from the DR, the Dominican Republic, to Venezuela,
    way out there. Your men and women do a great job and I am very
    thankful. Our office works very closely with you over there.
        Mr. Filner. Have you flown in any HH-65s lately?
        [Laughter.]
        Mr. Fortuno. My first question was going to be, you do
    recall as to the status of the re-engining of the HH-65s right
    now and not just in the San Juan sector, but overall?
        Admiral Allen. Yes, sir. Let me say at the start I am a
    Puerto Rican at heart, having served in San Juan when I was a
    Lieutenant JG down at La Punta, it is a place that holds a
    great affection for me.
        Mr. Fortuno. Beautiful property.
        Admiral Allen. As I stated earlier, we anticipate that the
    re-engining will be completed in June of 2007. We originally
    thought that that would be done by January. We have encountered
    some additional wear and tear on the aircraft, associated with
    a concentrated response to Hurricane Katrina, that has required
    us to do some more work regarding some of the mechanical
    overhauls that need to be done and look at some of the
    corrosion associated with that.
        But we are very happy with the way this is proceeding.
    These re-engined helicopters are extremely, extremely effective
    in what they are doing, and we hope to get them online by June
    of next year, sir.
        Mr. Fortuno. Excellent. My other question is San Juan
    specific. As I am sure you know, there is a resurgence in the
    trafficking, illegal trafficking of arms, drugs and people
    through the Caribbean area. And Puerto Rico is directly
    affected by it. We are seeing something quite interesting. When
    the traffickers know that there is an area where they feel not
    all the resources that are needed are deployed there, they move
    in from all over. We are getting a lot of Chinese nationals
    coming in through the Caribbean, specifically through Puerto
    Rico. So that tells you that as far away as the Orient, they
    already know that we have a need for resources.
        Our Committee last year put out some language, report
    language specifically requesting that you all do an analysis of
    the resources that are needed to adequately address the needs
    of the San Juan sector. I would like to know if you have any
    feedback that you can give us today.
        Admiral Allen. Sir, if I could offer to provide you a more
    detailed response for the record. I will give you an assessment
    right now. I would add that I was down in the Gulf Coast for
    almost six months. So as I move back into it, I am reassessing
    some of the strategies and everything that is going on inside
    the Coast Guard.
        But I can tell you most recently, there has been an
    increase in the amount of traffic across Mona Pass between the
    Dominican Republic and the west coast of Puerto Rico. We are
    seeing more frequent incidents that does not involve just
    Dominican nationals, it involves other nationalities and also
    Cubans, who, once they land on Mona Island become feet-dry and
    we have that issue to deal with, too.
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        Mr. Fortuno. If I may, I am sorry to interrupt you,
    actually we welcome the Cubans. We have a very large Cuban
    community in Puerto Rico. However, it is interesting, there are
    more Cubans getting to the U.S. through Puerto Rico than
    through Florida. That should tell you something as well. Go
    ahead.
        Admiral Allen. I was just going to make the point, as you
    have, sir, that we have detected the trend that there is a new
    line or a new way that Cubans are arriving in the United
    States, and it is via Mona Pass, sir. We are looking at that.
    We are also looking at the trends on the migrant interdictions
    that are happening on Mona Pass. As you know, occasionally we
    are involved in an interdiction over in the U.S. Virgin Islands
    from either the British Virgin Islands or further down, down-
    island there. They do constitute threat vectors. We are taking
    a look at it and if you would like, I can give you a detailed
    answer for the record.
        Mr. Fortuno. We would love to get that detailed information
    if we may, Mr. Chairman. Again, I want to thank you for what
    you are doing there. I urge you to look into the resources that
    are needed to complete the job. The men and women you have down
    there are doing an excellent job. But I believe, I have been
    out there in cutters and planes. Any time I have a chairman of
    any committee, I try to get them out there to join me with
    members of the Coast Guard. That is how proud I am of the work
    you are doing.
        By the same token, I must tell you, I am doing that as well
    just to get the resources needed to the San Juan sector. I will
    be eagerly awaiting the information you provide to our office.
    With that, I will yield back, Mr. Chairman. Thank you.
        Mr. Boustany. Admiral, we have a few other questions we
    would like to ask. The Coast Guard received funding to acquire
    the HC-130J aircraft in fiscal year 2004. It used these funds
    to acquire six of these ships, but has not outfitted these
    aircraft with specialized avionics required for long range
    search and rescue missions.
        This year, the Administration requested $4.95 million for
    that work. Will this funding complete the work necessary to
    make the existing six aircraft mission capable?
        Admiral Allen. Sir, we have enough money in previously
    appropriated funds to mission-ize or what I would say more
    appropriately, appropriately sensorize those six aircraft. What
    we are looking for in fiscal year 2007, first of all, in the
    ACNI portion of our budget, is to establish a spare line and a
    simulator as a follow-on support for the aircraft. And on the
    operating side, it would be to increase the number of hours we
    are flying those aircraft from 1,200 hours a year to 3,200
    hours a year, sir.
        Mr. Boustany. Thank you. The Coast Guard has $66 million in
    fiscal year 2006 funds to purchase HC-235 maritime patrol
    aircraft. What is the supplier quoting as the per plane price
    as of today?
        Admiral Allen. If I could, I would like to answer that for
    the record. We are looking at the first initial products that
    are being rolled out. I am not sure we have come to a final
    price, once we level out the production line. And we are in the
    process of integrating those aircraft into the fleet right now.
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        Mr. Boustany. OK. The Coast Guard has repeatedly assured
    the Committee that the assumption of the National Capital
    Region Air Defense Mission will not reduce the Service's search
    and rescue capability. How does the Coast Guard intend to
    acquire the additional HH-65s necessary to carry out this new
    mission?
        Admiral Allen. The $62.4 million that are included in the
    fiscal year 2007 request are there to fund five aircraft, the
    personnel to support them and the operating funds. Those
    aircraft will be placed at our air station in Atlantic City,
    New Jersey, and they will be rotated down with a crew to
    support them of about 40 here in Washington, D.C. In addition,
    there were funds reprogrammed within the Department to the tune
    of $4 million to help us get started in fiscal year 2006. We
    look forward to standing that operation up in late September.
        Mr. Boustany. Thank you, Admiral. And one final question
    with regard to unfunded priorities. In conjunction with fiscal
    year 2006, the fiscal year 2006 budget request, the Coast Guard
    submitted a list of unfunded priorities for the next fiscal
    year. The top priority on the list was an additional $639
    million for the Deepwater program.
        What Deepwater-related items would be on the fiscal year
    2007 unfunded priority list?
        Admiral Allen. Well, as I mentioned earlier, things that
    might be suitable for funding would be those that are already
    under production, what is not a requirements issue, we have
    fixed all the technical issues associated with it. That would
    be the CASA 235 line. Once we have made a selection on a
    replacement patrol boat, to fill a patrol boat gap, that would
    be a priority.
        Also, we are pretty much stabilizing the national security
    cutter design and that can move forward, too.
        Mr. Boustany. Admiral, thank you.
        Those are all the questions I have at this time. We may
    have some additional questions that we will pose in writing to
    you.
        Mr. Filner, do you have anything, do you want to make any
    closing statements?    Mr. Filner. No, thank you, Mr. Chairman.
        Mr. Boustany. Mr. Fortuno, do you have anything in addition
    to add?
        Mr. Fortuno. No, thank you, Mr. Chairman.
        Mr. Boustany. Well, again, Admiral, we thank you again.
    Congratulations on assuming your new post as Commandant. We
    look forward to working with you. We have a lot of confidence
    in what you will bring to the Coast Guard activities as we move
    forward.
        Thank you. The Committee stands adjourned.
        [Whereupon, at 1:39 p.m., the subcommittee was adjourned.]

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