[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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