[Senate Hearing 109-121]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-121
 
  COAST GUARD READINESS, MISSION BALANCE, AND FISCAL YEAR 2006 BUDGET 
                                REQUEST

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

                                HEARING

                               before the

             SUBCOMMITTEE ON FISHERIES AND THE COAST GUARD

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 17, 2005

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMint, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director
                                 ------                                

             SUBCOMMITTEE ON FISHERIES AND THE COAST GUARD

                  OLYMPIA J. SNOWE, Maine, Chairwoman
TED STEVENS, Alaska                  MARIA CANTWELL, Washington, 
TRENT LOTT, Mississippi                  Ranking
GORDON H. SMITH, Oregon              DANIEL K. INOUYE, Hawaii
JOHN E. SUNUNU, New Hampshire        JOHN F. KERRY, Massachusetts
DAVID VITTER, Louisiana              FRANK R. LAUTENBERG, New Jersey


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 17, 2005...................................     1
Statement of Senator Cantwell....................................     3
Statement of Senator Inouye......................................     4
    Prepared statement...........................................     5
Statement of Senator Lautenberg..................................    52
Statement of Senator Snowe.......................................     1
Statement of Senator Stevens.....................................    42

                               Witnesses

Collins, Admiral Thomas H., Commandant, U.S. Coast Guard.........     5
    Prepared statement...........................................     7
Welch, Master Chief Franklin A., Master Chief Petty Officer, U.S. 
  Coast Guard....................................................    14
    Prepared statement...........................................    16
Wrightson, Margaret T., Director, Homeland Security and Justice 
  Issues, U.S. Government Accountability Office..................    19
    Prepared statement...........................................    21

                                Appendix

Barnes, Joseph L., National Executive Secretary, Fleet Reserve 
  Association, prepared statement................................    61
Lautenberg, Hon. Frank R., U.S. Senator from New Jersey, prepared 
  statement......................................................    61
Response to written questions submitted to Admiral Thomas H. 
  Collins by:....................................................
    Hon. Maria Cantwell..........................................    76
    Hon. Daniel K. Inouye........................................    72
    Hon. John F. Kerry...........................................    84
    Hon. Frank R. Lautenberg.....................................    89
    Hon. Olympia J. Snowe........................................    66
Response to written questions submitted to Margaret T. Wrightson 
  by:............................................................
    Hon. Olympia J. Snowe........................................    93
    Hon. Frank R. Lautenberg.....................................    93


  THE COAST GUARD'S READINESS, MISSION BALANCE, AND FISCAL YEAR 2006 
                             BUDGET REQUEST

                              ----------                              


                        THURSDAY, MARCH 17, 2005

                               U.S. Senate,
     Subcommittee on Fisheries and the Coast Guard,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Olympia J. 
Snowe, Chairwoman of the Subcommittee, presiding.

          OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, 
                    U.S. SENATOR FROM MAINE

    Senator Snowe. The hearing will come to order. Now that we 
have the Chair and Ranking here, I think we can get going now.
    Good morning. Admiral Collins, Master Chief Welch, Ms. 
Wrightson, I'd like to thank all of you for being here this 
morning to testify on this critical hearing on the Coast 
Guard's readiness, mission balance, and the Fiscal Year 2006 
budget request.
    Today's hearing will further examine the readiness concerns 
due to the overall degradation of the Coast Guard's assets, to 
review the challenges the Coast Guard's facing in balancing its 
homeland-security and traditional missions, and as well as to 
ensure that we provide the Coast Guard with the 2006 budget 
request to fulfill its many current and increasing 
responsibilities.
    As Chair of the Fisheries and Coast Guard Subcommittee, I 
strongly believe that the Coast Guard serves as a cornerstone 
of our Department of Homeland Security. It is uniquely 
positioned to perform a wide variety of missions critical to 
our nation's domestic safety and security. Last year alone, the 
Coast Guard responded to more than 32,000 calls for assistance, 
and saved nearly 5,500 lives. These brave men and women risk 
their lives to defend our borders from drugs, illegal 
immigrants, acts of terror, and other national-security 
threats.
    In 2004, the Coast Guard prevented 376,000 pounds of 
marijuana and cocaine from crossing the borders. It also 
stopped more than 11,000 illegal migrants from reaching our 
shores, conducting more than 4,500 boardings to protect our 
vital fishery stocks, and responded to more than 24,000 
pollution incidents.
    The Coast Guard also aggressively defended our homeland by 
conducting more than 36,000 port security patrols, and 
conducted 19,000 security boardings. In accordance with the 
Maritime Transportation Security Act, the Coast Guard has also 
reviewed and approved 9,580 domestic vessel security plans, and 
3,119 domestic facility security plans. They also verified 
security-plan implementation for 8,100 foreign vessels.
    This is a tremendous record of success, and I cite these 
statistics because I think, again, it underscores the role that 
the Coast Guard plays on so many different levels. And this 
record of success is really, I think, extraordinary.
    I think, at the same time, we share the concern about the 
toll that such a high operational tempo is taking on the Coast 
Guard's antiquated ships and aging aircraft, and ultimately on 
its personnel.
    So, Admiral Collins, it's unfortunate--and we had this 
discussion yesterday, and repeatedly--that, again, we're 
addressing this issue concerning the high OPTEMPO issue for the 
Coast Guard, but, at the same time, the deterioration of its 
equipment and the resources that has plagued the service 
repeatedly, year after year.
    I'm aware that the 110-foot patrol-boat fleet, a workhorse 
of the Coast Guard, in the past year has experienced 23 hull 
breaches requiring emergency dry docks. This simply is too 
unsafe for the men and women out there on the seas, it 
certainly poses a grave danger to them.
    Additionally, the 378-foot fleet experiences a main-space 
casualty each patrol. Again, an unacceptable safety record.
    The resultant total of unexpected maintenance days for 
medium- and high-endurance fleets has skyrocketed and endured a 
400 percent increase from 1999. This averages to more than two 
lost cutters per year. With the missions assigned to the Coast 
Guard and the pace of the operation the service now endures, 
the Coast Guard and this nation cannot afford to lose 1 day of 
service, let alone 2 years. So the time to act on this is 
obviously now, before we deepen the crisis.
    Today, we're considering the Administration's Fiscal Year 
2006 budget request, which proposes $8.1 billion in funding for 
the Coast Guard, which is an 8 percent increase over the 
previous year. While these increases, on the surface, may 
appear to be sufficient, I am concerned that this is not 
enough, just as I was concerned last year, and expressed that, 
as well, repeatedly.
    Once more, as we delve into this budget request, we find it 
does not significantly increase funding for the Coast Guard's 
Deepwater Project, even though the Coast Guard is clearly in 
desperate need of upgrading its legacy assets. More 
importantly, the Administration's request places this program 
on a 20-plus-year timeline, which obviously does not allow the 
Coast Guard to fulfill its obligations that this nation 
requires of it.
    We cannot expect the Coast Guard to do its job with the 
resources that it currently has, and certainly those that are 
degrading and those that have become inoperative, in many 
respects. I will continue to fight for Deepwater acceleration, 
because it is the best and most cost-effective way to remedy 
the Coast Guard's readiness problems and provide the Coast 
Guard with the tools it needs to carry out all of its missions.
    While these additional resources are desperately needed, a 
new reality requires the Coast Guard to operate more 
efficiently and smarter if it is also going to do its job 
successfully in fulfilling its traditional missions, as well. 
Maintaining a proper mission balance is a significant challenge 
for the Coast Guard, as I'm sure Ms. Wrightson will discuss. We 
have to balance the available resources with our expectations 
for mission performance.
    Admiral Collins, it is great to see you here again this 
morning. I look forward to discussing your agency's budget 
request, as well as the other issues I have discussed and 
raised in our meeting yesterday. Our nation needs the Coast 
Guard today more than ever. I intend to ensure, as the Chair of 
this Subcommittee, that you have the essential resources to 
fulfill the agency's homeland-security as well as non-homeland-
security duties, as well.
    Master Chief Welch, I welcome you to the Senate, as well, 
and look forward to your testimony. The issues you confront are 
equally important to ensure that our men and women in uniform 
are treated fairly. You obviously have a unique perspective. 
You can provide the insights regarding the issues that affect 
our men and women in uniform on a daily basis.
    And, Ms. Wrightson, I thank you for being here today, and 
want to thank you for all the service that you have provided us 
in assisting the Coast Guard in their endeavors to meet and 
fulfill the responsibilities and how they can improve in doing 
so. And I thank you. And I've read your report, and I 
appreciate some of the recommendations you have made. And I 
know Admiral Collins does, as well.
    So, with that, I'll recognize other Members of the 
Committee.
    Mr. Chairman?
    Senator Stevens. Well, thank you very much. I'll yield to 
my colleagues. I've got another appointment later. I'd just as 
soon wait and hear the testimony.
    Thank you.
    Senator Snowe. OK.
    Senator Cantwell?

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Madam Chair. Thank you. At 
this, our first hearing together, I would like to take an 
opportunity to let you know I look forward to working with you 
in the 109th Congress, as representative of states with strong 
maritime traditions from different corners of the country. I 
believe, though, we do share a common interest and perspective 
that we can blend together in creating good policy.
    Mr. Chairman, I'm pleased to hear that we are going to 
discuss the proposal for the Fiscal Year 2006 budget regarding 
the important role of the U.S. Coast Guard in maritime 
security, maritime safety, search and rescue of mariners, and a 
variety of other issues. In addition, the Coast Guard plays a 
critical role in protecting our oceans resource through 
fisheries enforcement and response to oil spills.
    The 13th Coast Guard District, encompassing Oregon, Idaho, 
and Montana, is headquartered in Seattle, and Washington has 
played a major role in maritime industries. The Port of Seattle 
is the third-largest container port in the nation and half of 
the nation's large passenger ferry operations are in the State 
of Washington. So we thank you for your help and coordination 
with law enforcement throughout the country on that issue.
    Seattle is also the home port of many Coast Guard vessels, 
including the nation's polar icebreaker fleet operated by the 
Coast Guard. And I plan to ask a few questions of Admiral 
Collins on that issue this morning, as it's certainly a vital 
national resource to our country.
    Admiral Collins, we also had a chance to talk about the 
aging nature of the Coast Guard fleet and your related 
concerns. I look forward to talking about that this morning, 
and the issues of ship repair.
    Recently, an oil spill in Puget Sound coated miles of 
shoreline with heavy-grade industrial oil. The Coast Guard was 
able to respond and clean up that spill quickly with money from 
the Oil Spill Liability Trust Fund. Because liability for this 
spill has yet to be determined, money from the trust fund was 
critical for fast containment and cleanup. Incidents like the 
Dalco oil spill in Puget Sound are an example of why we need to 
ensure that the Oil Spill Liability Trust Fund exists beyond 
2010. So we thank you for your quick response on that cleanup.
    The Coast Guard's homeland-security activities are also 
vital to our nation's well-being and prosperity. So are, I 
would argue, the traditional mission of the U.S. Coast Guard, 
including maritime safety and protection of natural resources. 
That's why I am concerned about the Coast Guard effectively 
balancing new and old missions. We'll have to work hard to meet 
the challenges as we move ahead. Effective operations of the 
Coast Guard is important for the nation, and I look forward to 
working with Senator Snowe and my colleagues here--the Ranking 
Member and the Chairman of the overall Committee--to make sure 
that we are ensuring both safety and lawful maritime 
operations.
    Thank you, Senator Snowe.
    Senator Snowe. Thank you, Senator Cantwell. And I'm looking 
forward to working with you on this Subcommittee, because I 
know that we share a number of issues of mutual concern and 
interest. And so, I am looking forward to a very productive 
year. Thank you.
    Co-Chair Inouye?

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Thank you, Madam Chair. I'd like to commend 
you, Madam Chairman and Ms. Cantwell, for focusing on the 
critical services of the Coast Guard as your first matter in 
the first Subcommittee hearing.
    Madam Chair, I have a full statement here, but, because of 
the immense importance of this hearing, may I submit it for the 
record?
    Senator Snowe. Without objection, so ordered.
    [The prepared statement of Senator Inouye follows:]

             Prepared Statement of Hon. Daniel K. Inouye, 
                        U.S. Senator from Hawaii

    I would like to commend Senators Snowe and Cantwell for choosing to 
focus on the critical services provided by the United States Coast 
Guard in their first Subcommittee hearing of the 109th Congress.
    The Coast Guard is critical to ensuring the safety and security of 
all coastal states and safeguarding our natural resources. The Coast 
Guard's District 14, based in my home state of Hawaii, covers the 
largest geographical area in the U.S. We rely on the oceans and the 
ships that travel them for most of the goods that come to Hawaii.
    While I am pleased to see that the Administration has requested an 
increase in Coast Guard funding for Fiscal Year 2006, I do have some 
concerns as to whether this is adequate to cover both their security 
and non-security missions. Indeed, the Coast Guard has itself alerted 
us that the amount requested by the President is not sufficient, and 
has shared with Congress a list of unfunded priorities for FY 2006 
totaling $919 million.
    The list includes more than $100 million for maritime security 
efforts. While not the subject of this hearing, the Transportation 
Security Administration's budget makes it very clear that we continue 
to focus more than 90 percent of our resources on aviation security. 
However, port security funding is also critical. We can buy all of the 
patrol boats the Coast Guard seeks, but we will still need to harden 
security at our ports.
    Nearly four years after 9/11, we are still struggling to find the 
right balance in funding and resource allocation to meet all of the 
Coast Guard's important missions. We all know that homeland security is 
our highest priority, but we cannot neglect other key missions such as 
maritime safety and living resource management.
    I am particularly concerned with the fact that over the past five 
years, a total of 216 suspected illegal incursions of foreign fishing 
vessels were detected within the Western/Central Pacific Exclusive 
Economic Zone. The Coast Guard detected only three of these incursions.
    Perhaps the problem is that in District 14, we receive fewer assets 
than any other district in terms of personnel, aircraft, and cutters.
    I also have concerns about the Deepwater program. Costs are 
increasing, and yet the Administration's budget request includes only 
$726 million for new Deepwater assets, essentially a flat budget over 
Fiscal Year 2005, and $240 million for maintaining existing ``legacy'' 
assets. The Coast Guard says that it needs an additional $637 million 
for Deepwater, as well as $63 million to maintain legacy assets. At the 
same time, the Administration has failed to provide us the revised 
Deepwater plan.
    I would like to assure the Commandant in saying that this is a room 
full of friends and if ever there was a time for frankness in your 
statements regarding the budget, that time is now.
    I look forward to the testimony of all of the witnesses.

    Senator Inouye. And I'd like to assure the Commandant that 
this room is filled with your supporters, so come out and tell 
us what you want.
    Admiral Collins. Thank you, sir.
    Senator Snowe. Admiral Collins, please begin.

STATEMENT OF ADMIRAL THOMAS H. COLLINS, COMMANDANT, U.S. COAST 
                             GUARD

    Admiral Collins. Well, thank you, Madam Chair. It's 
terrific to be here with this distinguished Committee, and 
Members of this Committee, and discuss the budget for 2006 for 
the United States Coast Guard.
    Budget time is always important time. And, of course, one 
of my critical job elements is trying to put the best tools in 
the hands of our Coast Guard men and women to do the job for 
America.
    I think since 9/11 we've made great progress in securing 
America's waterways. Still, no doubt, a great deal is left to 
be done to improve our security, but I think we're getting 
better every day, and thanks, in large part, to the 
Administration, the Secretary, and, clearly, this Committee 
that has helped us plot the way forward in this very, very 
important work.
    The budget--the 2006 budget, I think, will help us continue 
this progress. The discretionary part of this budget is 6.9 
billion, about an 11-percent increase over comparable 2005 
funding levels. And the budget provides the necessary 
resources, as you've noted, to continue the recapitalization of 
the Coast Guard aging fleet, while building our maritime safety 
and security capabilities.
    Our overarching goal is to secure America's maritime border 
by managing and ultimately reducing risk. Risk. We've heard the 
new Secretary talk a lot about risk. But that's our focus. How 
do we reduce/mitigate risk in the maritime domain? And doing so 
requires that we identify and intercept threats well before 
they reach our shores by conducting layered multi-agency 
security operations while strengthening security posture of our 
strategic ports. And as we reduce risk, we continually balance 
each of the Coast Guard mission requirements to ensure no 
degradation in service to the American public.
    So, with that in mind, the 2006 budget has three critical 
priorities from our perspective: recapitalizing Coast Guard 
primarily through the Deepwater Program, implementing maritime 
security for the homeland, and enhancing mission performance.
    Now, Deepwater, clearly the issue of the day for the Coast 
Guard, it not only serves to recapitalize this service, but 
it's also the foundation for, and the necessary precursor to, 
implementing the maritime security strategy for our nation and 
to enhance mission performance, across the board.
    I would be remiss if I failed to acknowledge the, I think, 
extremely dedicated service by the Coast Guard workforce over 
the past year, just terrific folks--auxiliarists, reservists, 
active duty, and civilian. What a team. And you've cited some 
of the accomplishments of the last year. And in--my written 
statement fully details some of these extraordinary 
accomplishments.
    I think our workforce is terrific, the young folks that 
have a commitment to selfless service. And I think they're 
making progress, across the board, on every mission. I know the 
focus here is homeland security--has been and should be--but 
we're not forgetting any of our missions.
    Let me just give you an example of several weeks ago. One 
4-day period, about two and a half weeks ago, in 152 cases, 
Coast Guard men and women saved the lives of 87 people, in a 4-
day period. They protected our homeland, both on the East Coast 
and the West Coast, in 12 different cases. They interdicted a 
total of 308 migrants from four different countries who were 
attempting to enter this country illegally. They investigated a 
Greek tanker carrying over 23 million gallons of crude oil 
which ran aground on the lower Mississippi. They detained four 
foreign flag vessels for failing to comply with the Maritime 
Transportation Security Act. And in two separate cases in the 
Caribbean, they interdicted more than 6,000 pounds of cocaine 
in a 4-day period. This is the typical type of multi-mission 
performance that you're getting out of our Coast Guard.
    And, again, my view is to ensuring they are properly 
compensated, that they have the environment to grow 
professionally. Probably my single-highest priority is a 
commitment to our men and women.
    I think this budget is about placing the right tools in 
their capable hands. And they keep showing, and they have shown 
time and time again, that they know just what to do with it 
when we put the tools in their hands.
    With your continued support, I'm confident that we will 
continue to deliver robust maritime safety and securities that 
America deserves and expects.
    Thank you for the opportunity to testify before this 
Committee, and I stand ready to answer any question that you 
might have.
    Thank you.
    [The prepared statement of Admiral Collins follows:]

     Prepared Statement of Admiral Thomas H. Collins, Commandant, 
                            U.S. Coast Guard

Introduction
    Good morning Madam Chair and distinguished Members of the 
Subcommittee. It is a pleasure to be here today to discuss the Coast 
Guard's FY 2006 budget request and the positive impact it will have on 
the Coast Guard's ability to secure America's maritime borders, aid 
persons in distress, and facilitate the safe and efficient flow of 
commerce.
    On 9/10/01, our primary maritime focus was on the safe and 
efficient use of America's waterways. Since 9/11, we have made great 
progress in securing America's waterways, while continuing to 
facilitate the safe and efficient flow of commerce. There is no doubt 
that work remains, but there is also no doubt that we continue to 
improve maritime homeland security each and every day--thanks in large 
part to the continued strong budgetary support of the administration, 
congress, and this committee.
    The Coast Guard's FY 2006 budget continues that support, proposing 
discretionary budget authority of $6.9 billion, an eleven percent 
increase over the comparable 2005 funding level. The budget provides 
the resources necessary to continue recapitalizing the Coast Guard's 
aging cutters, boats, aircraft, and supporting infrastructure, while 
building out maritime safety and security capabilities essential to 
meeting present and future mission demands.

Getting Results
    The Coast Guard's overarching goal is to manage, and ultimately 
reduce, terror-related risk in the Maritime Domain. Doing so requires 
identifying and intercepting threats well before they reach U.S. shores 
by conducting layered, multi-agency security operations; while 
strengthening the security posture of strategic economic and military 
ports. As we seek to reduce maritime risk, we continually strive to 
balance each of the Coast Guard's mission requirements to ensure no 
degradation in service to the American public. Looking at their 
accomplishments, it is clear that Coast Guard men and women continue 
rising to the challenge and delivering tangible and important results 
across both homeland security and non-homeland security mission-
programs. No amount of new technology or capability enhances security 
more than our personnel. They are the indispensable link in any 
strategy and I am continually impressed by their ingenuity, courage, 
and dedication.
    Coast Guard personnel have embraced these priorities, have 
integrated them in daily operations, and have achieved impressive 
results. In 2004, Coast Guard personnel:

   Prevented more than 376,000 pounds of illegal narcotics from 
        reaching the U.S. including seizing over 241,000 pounds of 
        cocaine, shattering the previous record of 138,000 pounds.

   Interdicted nearly 11,000 undocumented migrants attempting 
        to enter the country illegally by sea.

   Dispatched several cutters, aircraft, and personnel for four 
        months as part of U.S. efforts to stabilize Haiti after the 
        departure of President Aristide.

   Aggressively conducted more than 36,000 port security 
        patrols, 6,900 air patrols, and 19,000 security boardings; 
        escorted 7,200 vessels; and maintained more than 115 security 
        zones to reduce maritime risk.

   Provided humanitarian assistance and disaster relief, 
        including 42 personnel, one 378-foot High Endurance Cutter 
        (WHEC), and four C-130 aircraft, to the governments of 
        Indonesia, Sri Lanka, and Thailand in the aftermath of the 
        devastating tsunami of December 26, 2004.

   In support of Operation Iraqi Freedom the Coast Guard 
        protected, safely secured, and escorted to sea over 200 
        military sealift departures at ten different major U.S. 
        seaports, carrying over 25 million square feet of indispensable 
        cargo.

   Deployed two additional patrol boats and two additional 
        LEDETs to DoD's Central Command joining four Coast Guard patrol 
        boats, two LEDETs, one Port Security Unit (PSU), and supporting 
        logistics and command and control support elements already 
        participating in Operation Iraqi Freedom.

   In response to a maritime gap in national law enforcement 
        and counter-terrorism (LE/CT) capability, they stood up an 
        offensive force able to execute across the full spectrum of LE 
        and CT response in support of homeland security and homeland 
        defense objectives. This capability was a critical force 
        addition in protecting the maritime boundaries of several 
        National Special Security Events including the G8 Summit and 
        Democratic and Republican National Conventions.

   Leveraged the Coast Guard's 34,000 member Coast Guard 
        Auxiliary workforce, receiving approximately 3 million 
        volunteer hours of maritime safety and security services.

    Before 9/11 we had no formal international or domestic maritime 
security regime for ports, port facilities, and ships--with the 
exception of cruise ships. Partnering with domestic and international 
stakeholders, we now have both a comprehensive domestic security regime 
and an international security convention in place. Both have been in 
force since July 1, 2004. In executing the requirements of the Maritime 
Transportation Security Act (MTSA) and the International Ship and Port 
facility Security (ISPS) code, the Coast Guard has:

   Reviewed and approved 9,580 domestic vessel security plans 
        and 3,119 domestic facility security plans.

   Overseen the development of 43 Area Maritime Security Plans 
        and Committees,

   Verified security plan implementation on 8,100 foreign 
        vessels.

   Completed domestic port security assessments for 54 of the 
        55 militarily and economically strategic ports, with the last 
        assessment in the final stages of completion.

   Visited 14 key foreign countries to assess the effectiveness 
        of anti-terrorism measures and implementation of ISPS code 
        requirements. An additional 21 countries are scheduled for 
        visits by June 2005.

    Of course the Coast Guard has mission requirements beyond homeland 
security and once again thanks to the tremendous dedication of our 
personnel, last year provided more evidence of the superb contributions 
they make each and every day. In 2004, Coast Guard personnel:

   Saved the lives of nearly 5,500 mariners in distress and 
        responded to more than 32,000 calls for rescue assistance.

   Conducted more than 115,800 recreational vessel safety 
        checks.

   Conducted 10,000 foreign commercial vessel boardings.

   Boarded more than 4,500 fishing vessels to enforce safety 
        and fisheries management regulations.

   Partnered with Federal and state agencies to enhance 
        enforcement of Marine Protected Species regulations.

   Conducted more than 3,000 inspections aboard mobile offshore 
        drilling units.

   Responded to nearly 24,000 reports of water pollution or 
        hazardous material releases.

   Ensured more than 1 million safe passages of commercial 
        vessels.

   Maintained more than 50,000 federal aids to navigation, 
        responding to and correcting over 13,000 aids to navigation 
        discrepancies.

   Provided 99.0 percent availability of Differential Global 
        Positioning System coverage to over 95,000 miles of U.S. 
        waterways.

    With your support, the Coast Guard continues its tradition of 
operational excellence and exceptional service to the nation. I am 
proud of the tireless efforts of our personnel who continue to meet 
every challenge both at home and abroad.

Reducing Maritime Risk
    Despite these accomplishments, there is still much to do. Today's 
global maritime safety and security environment demands a new level of 
operations specifically directed against terrorism without degrading 
other critical maritime safety and security missions. Most importantly, 
the Coast Guard must implement capabilities necessary to mitigate 
maritime security risks in the post-9/11 world. In terms of threat, 
vulnerability, and consequence there are few more valuable and 
vulnerable targets than the U.S. maritime transportation system.

        Threat: While the 9/11 commission notes the continuing threat 
        against our aviation system, it also states that 
        ``opportunities to do harm are as great, or greater, in 
        maritime or surface transportation.''

        Vulnerability: The maritime transportation system annually 
        accommodates 6.5 million cruise ship passengers, 51,000 port 
        calls by over 7,500 foreign ships, at more than 360 commercial 
        ports spread out over 95,000 miles of coastline. The vastness 
        of this system and its widespread and diverse critical 
        infrastructure leave the nation vulnerable to terrorist acts 
        within our ports, waterways, and coastal zones, as well as 
        exploitation of maritime commerce as a means of transporting 
        terrorists and their weapons.

        Consequence: Contributing nearly $750 billion to U.S. gross 
        domestic product annually and handling 95 percent of all 
        overseas trade each year--the value of the U.S. maritime domain 
        and the consequence of any significant attack cannot be 
        understated. Independent analysis and recent experiences on 9/
        11 and the west coast dock workers strike demonstrates an 
        economic impact of a forced closure of U.S. ports for a period 
        of only eight days in excess of $58 billion to the U.S. 
        economy.

    Since 9/11 the Department of Homeland Security (DHS) and the Coast 
Guard have made significant strides to secure our homeland. However, 
maritime safety and security gaps remain. These gaps present risks that 
we must work to reduce, and we continue that work within the FY 2006 
budget.
    The Coast Guard continues to guide its efforts by implementing 
policies, seeking resources, and deploying capabilities through the 
lens of our maritime security strategy. However, continued risk 
reduction is contingent upon Coast Guard readiness and capacity. 
Without these basic building blocks, implementation of maritime 
security strategies will not be sustainable.
    With that in mind, the priorities of the FY 2006 budget are to 
recapitalize the Coast Guard as a necessary foundation to implementing 
the maritime security strategy, as well as ensuring we continually 
enhance mission performance across the entire suite of Coast Guard 
mission requirements.

Recapitalize the Coast Guard
    The FY 2006 budget continues the urgently needed recapitalization 
of our cutters, boats, aircraft and support infrastructure to reverse 
declining readiness trends and enhance operational capabilities to meet 
today's maritime safety and security threats.
    The majority of the Coast Guard's operational assets will reach the 
end of their anticipated service lives by 2010, resulting in rising 
operating and maintenance costs, reduced mission effectiveness, 
unnecessary risks, and excessive wear and tear on our people. Listed 
below are some specific examples highlighting alarming system failure 
rates, increased maintenance requirements, and the subsequent impact on 
mission effectiveness:

   HH-65 helicopter in-flight engine power losses occurred at a 
        rate of 329 mishaps per 100,000 flight hours in FY 2004. This 
        is up from a FY 2003 rate of 63 mishaps per 100,000 flight 
        hours. The comparable Federal Aviation Administration 
        acceptable standard for a mishap of this severity is 
        approximately 1 per 100,000 flight hours. The engine loss rate 
        has resulted in flight and operational restrictions and high 
        levels of risk to our aircrews. Re-engining the HH-65 will 
        remain the Coast Guard's highest legacy asset priority until 
        complete.

   The 110-foot Patrol Boat fleet has experienced 23 hull 
        breaches requiring emergency dry docks. The resultant loss in 
        operational days is unsustainable, and risks to our personnel 
        are unacceptable. By the end of 2005, the Coast Guard will have 
        taken delivery of eight reconfigured 123-foot patrol boats, 
        which are upgraded 110-foot patrol boats designed to sustain 
        this cutter class until replacement with the Integrated 
        Deepwater System's Fast Response Cutter.

   Our high and medium endurance cutters are experiencing sub-
        system failures due to old and unserviceable systems. The 378-
        foot WHEC fleet averages one engine room casualty, with 
        potential to escalate to a fire, on every patrol. One-quarter 
        of our fleet have recently missed operations due to unscheduled 
        maintenance required to repair failing sub-systems. The total 
        number of unscheduled maintenance days for the major cutter 
        (medium and high endurance cutters) fleet has skyrocketed from 
        85 days in FY 1999 to 358 days in FY 2004 (over a 400 percent 
        increase). This loss of operational cutter days in 2004 equates 
        to losing two major cutters, or 5 percent of our major fleet 
        for an entire year. The 2006 budget includes funding for six 
        mission effectiveness projects to help sustain the medium 
        endurance cutter fleet, and funds construction of the third 
        National Security Cutter, the replacement for the Coast Guard's 
        high endurance cutter class.

    These same Deepwater assets are integral to the Coast Guard's 
ability to perform its missions, such as migrant and drug interdiction 
operations, ports waterways and coastal security, fisheries 
enforcement, and search and rescue. In 2004, deepwater legacy assets 
made invaluable contributions to America's maritime safety and 
security:

   Operation ABLE SENTRY blanketed the coastline of Haiti with 
        Coast Guard Deepwater assets, which interdicted over 1,000 
        illegal migrants during this operation and deterred many 
        thousand more from taking to sea in unsafe boats.

   The 378-foot Coast Guard Cutter GALLATIN, and its Airborne 
        Use of Force (AUF) capable helicopter seized more than 24,000 
        pounds of cocaine worth an estimated $768 million and detained 
        27 suspected smugglers in the span of seven weeks.

   The Coast Guard's Deepwater cutters and aircraft patrolled 
        over 28,000 hours in direct support of maritime homeland 
        security missions. 110-foot patrol boats alone patrolled 13,000 
        hours supporting port and coastal security missions including, 
        cruise ship escorts, critical infrastructure protection, and 
        countless security boardings.

   Working in conjunction with the U.S. Secret Service during 
        the national political conventions, 270-foot Medium Endurance 
        cutters and 110-foot patrol boats provided maritime security, 
        enforced security zones, and served as command and control 
        platforms coordinating maritime traffic. Deepwater aircraft, 
        equipped with the AUF package, provided air security and 
        conducted maritime security patrols.

    Despite spending increasing amounts to maintain operational assets, 
the Coast Guard is experiencing a continuing decline in fleet 
readiness. Legacy cutters are now operating free of major equipment 
casualties (equipment failures that significantly impact mission 
performance) less than 50 percent of the time, despite the investment 
per operational day increasing by over 50 percent over the last six 
years. The resulting ``readiness gap'' negatively impacts both the 
quantity and quality of Coast Guard ``presence''--critical to our 
ability to accomplish all missions. The FY 2006 budget continues the 
urgently-needed Coast Guard fleet recapitalization to address this 
readiness gap.
    The Integrated Deepwater System is the enduring solution to both 
the Coast Guard's declining legacy asset readiness concerns and the 
need to implement enhanced maritime security capabilities to reduce 
maritime risk in the post-9/11 world. Continued implementation of the 
Deepwater program will recapitalize the Coast Guard fleet and introduce 
much needed surveillance, detection/clarification, intercept, 
interdiction and command and control capabilities.
    The President's FY 2006 budget provides $966 million for the 
Integrated Deepwater System, taking aim on reversing the Coast Guard's 
declining readiness trends and transforming the Coast Guard with 
enhanced capabilities to meet current and future mandates through 
system-wide recapitalization and modernization of Coast Guard cutters, 
aircraft, and associated sub-systems.
    This level of investment in the Integrated Deepwater System is 
paramount in providing the Coast Guard with the capability and capacity 
essential to meeting our nation's maritime homeland security needs; 
providing a layered defense throughout ports, waterways, coastal 
regions and extending far offshore, as well as sustaining other mission 
area efforts, such as search and rescue and living marine resources. 
Funding included for legacy asset sustainment projects, such as HH-65 
re-engining, and WMEC mission effectiveness projects, is absolutely 
critical to sustain capabilities today, while acquisition of new and 
enhanced Deepwater assets is vital to ensuring the Coast Guard has the 
right capabilities tomorrow.
    The Coast Guard's deepwater assets are not the only capital assets 
in urgent need of recapitalization or replacement. The FY 2006 budget 
also includes funding for:

   Response Boat-Medium--replaces the aging 41-foot Utility 
        Boat fleet with an enhanced platform better able to meet search 
        and rescue and homeland security mission requirements.

   Shore Infrastructure Recapitalization--funds critical 
        projects such as the Coast Guard Academy Chase Hall Barracks 
        rehabilitation, Group/Marine Safety Office Long Island Sound 
        building replacement, and construction of a breakwater to 
        protect boats and mooring facilities at Coast Guard Station 
        Neah Bay Breakwater. These projects will not only improve 
        habitability and quality of life of our people, but also 
        increase effectiveness of the various missions these facilities 
        support.

   High Frequency (HF) Communications System Recapitalization--
        replaces unserviceable, shore-side, high power HF transmitters, 
        restoring long-range communications system availability to 
        enhance Coast Guard mission performance and help meet 
        International Safety of Life at Sea (SOLAS) treaty HF emergency 
        distress monitoring requirements.

   Rescue 21--continues implementation of Rescue 21, vastly 
        improving coastal command and control and communications 
        interoperability with other federal, state, and local agencies.

    Recapitalizing the Coast Guard is the indispensable foundation of 
our ability to continue improving maritime security while facilitating 
the flow of commerce. It is on this foundation that the FY 2006 budget 
continues to build out Coast Guard capabilities necessary to reduce 
risk and implement the maritime strategy for homeland security.

Implement the Maritime Strategy for Homeland Security
    Considering the vast economic utility of our ports, waterways, and 
coastal approaches, it is clear that a terrorist incident against our 
marine transportation system would have a disastrous impact on global 
shipping, international trade, and the world economy in addition to the 
strategic military value of many ports and waterways.
    The four pillars of the Coast Guard's Maritime Strategy for 
Homeland Security are in direct alignment with the Department of 
Homeland Security's strategic goals of Awareness, Prevention, 
Protection, Response and Recovery. These pillars guide our efforts to 
reduce America's vulnerabilities to terrorism by enhancing our ability 
to prevent terrorist attacks and limit the damage to our nation's 
ports, coastal infrastructure and population centers in the event a 
terrorist attack occurs.
    First, we seek to increase our awareness and knowledge of what is 
happening in the maritime arena, not just here in American waters, but 
globally. We need to know which vessels are in operation, the names of 
the crews and passengers, and the ship's cargo, especially those 
inbound for U.S. ports. Global Maritime Domain Awareness is critical to 
separate the law-abiding sailor from the anomalous threat.
    Second, to help prevent terrorist attacks we have developed and 
continue to improve an effective maritime security regime--both 
domestically and internationally.
    Third, we seek to better protect critical maritime infrastructure 
and improve our ability to respond to suspect activities by increasing 
our operational presence in ports, coastal zones and beyond . . . to 
implement a layered security posture, a defense-in-depth.
    Finally, we are improving our ability to respond to and aid in 
recovery if there were an actual terrorist attack.
    Below is an overview of each of the four pillars of the Coast 
Guard's Maritime Strategy for Homeland Security and supporting FY 2006 
budget initiatives:

    Enhance Global Maritime Domain Awareness (MDA). The core of our MDA 
efforts revolve around the development and employment of accurate 
information, intelligence, and targeting of vessels, cargo, crews and 
passengers--and extending this well beyond our traditional maritime 
boundaries. All DHS components are working to provide a layered defense 
through collaborative efforts with our international partners to 
counter and manage security risks long before they reach a U.S. port. 
The FY 2006 budget significantly advances our efforts to implement 
comprehensive MDA, including funding for:

   Automatic Identification System (AIS)--accelerates 
        deployment of nationwide AIS throughout regional Coast Guard 
        command centers.

   Maritime Patrol Aircraft (MPA)--provides additional MPA 
        resources to fill documented flight hour gaps in support of 
        detection, surveillance and tracking activities.

   Common Operational Picture (COP)--deploys COP throughout 
        Coast Guard command centers to fuse surveillance and tracking 
        information from MDA systems such as AIS, Rescue 21, and Ports 
        and Waterways Safety System (PAWSS).

   Radiological-Nuclear (Rad/Nuc) Detection and Response--
        consistent with the President's Proliferation Security 
        Initiative (PSI), this initiative increases the ability of 
        Coast Guard cutters and Maritime Safety and Security Teams to 
        detect Rad/Nuc materials to prevent proliferation in support of 
        terrorist operations; and respond to incidents involving 
        release of these dangerous substances.

   Integrated Deepwater System--Deepwater funding will continue 
        C4ISR enhancements aboard legacy assets and development of the 
        Common Operational Picture for new Deepwater platforms.

    Create and Oversee Maritime Security Regime. This element of our 
strategy focuses on both domestic and international efforts and 
includes initiatives related to MTSA implementation, International 
Maritime Organization regulations such as the International Ship & Port 
Facility Security (ISPS) Code, as well as improving supply chain 
security and identity security processes. As I mentioned previously, 
the Coast Guard has made a critical first step in ensuring the security 
of our ports and protecting our nation's economic prosperity by 
implementing the requirements set forth in the MTSA of 2002. The FY 
2006 budget provides the resources necessary to continue robust 
enforcement of the MTSA, which includes:

   Continued verification of an estimated 3,100 domestic 
        facility and 9,500 domestic vessel security requirements (plans 
        must be revalidated every five years, upon a change of 
        ownership, or significant change in operations), including 
        working with vessel, company, and facility security officers.

   A robust Port State Control program to ensure compliance 
        with international security requirements of over 8,100 foreign 
        vessels calling on the U.S. annually.

   Development and continuous updates and improvements to the 
        National and 43 Area Maritime Security plans.

   Assessment of the anti-terrorism measures in place in 
        approximately 140 foreign countries with which the U.S. 
        conducts trade to ensure compliance with international 
        standards.

    Increase Operational Presence. Our collective efforts to increase 
operational presence in ports and coastal zones focus not only on 
adding more people, boats and ships to force structures but making the 
employment of those resources more effective through the application of 
technology, information sharing and intelligence support. The FY 2006 
budget focuses resources toward increasing both the quantity and 
quality of Coast Guard operational presence by providing funding for:

   Airborne Use of Force (AUF) capability--deploys organic AUF 
        capability to five Coast Guard Air Stations, increasing the 
        ability to respond to maritime security threats.

   Enhanced Cutter Boat Capability--replaces existing obsolete 
        and unstable cutter boats on the entire WHEC/WMEC fleet with 
        the more capable Cutter Boat--Over the Horizon and replaces 
        aging, unsafe boat davit systems on 210-foot WMECs.

   Increase Port Presence and Liquefied Natural Gas (LNG) 
        Transport Security--provides additional Response Boat-Smalls 
        and associated crews to increase presence to patrol critical 
        infrastructure patrols, enforce security zones, and perform 
        high interest vessel escorts in strategic ports throughout the 
        nation. Provides additional boat crews and screening personnel 
        at key LNG hubs such as Cove Point, MD and Providence, RI to 
        enhance LNG tanker and waterside security.

   Enhanced Maritime Safety and Security Team (E-MSST)--
        Reallocates existing Coast Guard resources to immediately fill 
        an existing gap in national maritime Law Enforcement and 
        Counter-Terrorism (LE/CT) capability. Permanent establishment 
        of E-MSST Chesapeake, VA will provide an offensive DHS force 
        able to execute across the full spectrum of LE and CT response 
        in support of homeland security and homeland defense 
        objectives, including CT response capability for scheduled 
        security events out to 50 nautical miles from shore and 
        augments to interagency assets in high visibility venues such 
        as National Special Security Events (NSSEs).

   Integrated Deepwater System--Continued investment in 
        Deepwater will greatly improve the Coast Guard's maritime 
        presence starting at America's ports, waterways, and coasts and 
        extending seaward to wherever the Coast Guard needs to be 
        present or to take appropriate maritime action. Deepwater 
        provides the capability to identify, interdict, board, and 
        where warranted seize vessels or people engaged in illegal or 
        terrorist activity at sea or on the ports, waterways, or coast 
        of America.

    Improve Response and Recovery Posture. Understanding the challenge 
of defending 26,000 miles of navigable waterways and 361 ports against 
every conceivable threat at every possible time, we are also 
aggressively working to improve our response capabilities and 
readiness. While many of the increases in MDA and operational presence 
augment our collective response and recovery posture, the FY 2006 
budget funds initiatives that will increase our ability to adequately 
manage operations and coordinate resources during maritime threat 
response or recovery operations:

   High Frequency (HF) Communications System Recapitalization--
        replaces unserviceable, shore-side, high power HF transmitters 
        to restore long-range communications system availability 
        enhancing the Coast Guard's ability to coordinate response 
        activities.

   Continued Deployment of Rescue 21--the Coast Guard's 
        maritime 911 command, control and communications system in our 
        ports, waterways, and coastal areas. This system provides 
        Federal, state and local first responders with interoperable 
        maritime communications capability, greater area coverage, 
        enhanced system reliability, voice recorder replay 
        functionality, and direction finding capability.

Enhance Mission Performance
    Lastly, we must continue to leverage the Coast Guard's unique blend 
of authorities, capabilities, competencies and partnerships to enhance 
performance across the full suite of Coast Guard mission requirements.
    The Coast Guard is the Nation's lead federal agency for maritime 
homeland security and fulfills a crucial role within the Department of 
Homeland Security as the Nation's maritime first responder. The FY 2006 
budget includes resources necessary to effectively execute all of our 
missions and meet associated performance goals. Every resource provided 
to the Coast Guard will contribute to a careful balance between our 
safety, security, mobility, protection of natural resources and 
national defense missions, all of which must be adequately resourced to 
meet the Coast Guard's performance objectives. The FY 2006 budget 
advances several initiatives that will yield increased performance 
across multiple Coast Guard missions:

   Great Lakes Icebreaker (GLIB)--provides funding to operate 
        and maintain the new GLIB scheduled to be commissioned in FY 
        2006, greatly enhancing the Coast Guard's ability to conduct 
        essential icebreaking activities and maintain aids-to-
        navigation to facilitate maritime commerce and prevent loss of 
        life, personal injury, and property damage on the navigable 
        waters of the Great Lakes.

   Maritime Law Enforcement School Co-location--enhances law 
        enforcement training through co-location with the Federal Law 
        Enforcement Training Center, increasing Coast Guard law 
        enforcement training throughput and promoting better 
        coordination among field activities with other federal, state, 
        and local agencies.

   Polar Icebreaking Funding Transfer--shifts base funding for 
        the two Polar Class icebreakers (USCGC POLAR SEA and USCGC 
        POLAR STAR) and the USCGC HEALY to the National Science 
        Foundation. The National Science Foundation is the resident 
        agency with responsibility for the U.S. Antarctic Program and 
        the current primary beneficiary of polar icebreaking services. 
        Under this arrangement, the National Science Foundation will 
        reimburse the U.S. Coast Guard for maintenance and operation of 
        the polar icebreaking fleet.

Conclusion
    I appreciate your strong support over the past several years in 
providing the Coast Guard with the tools necessary to meet our multi-
mission and military demands. I am extremely proud of our Coast Guard's 
accomplishments since 9/11 as we strive to increase maritime homeland 
security while performing a myriad of critical maritime safety 
functions.
    We continue to focus on improving maritime security while 
facilitating safe use of the maritime transportation system for its 
many commercial, environmental, and recreational functions. But, much 
work remains to be done to reduce America's vulnerabilities to 
terrorism and other maritime security threats. The FY 2006 budget 
includes the resources required to continue the multi-year effort to 
modernize the Coast Guard, reduce risks to maritime safety and 
security, and deliver capabilities and competencies necessary to 
enhance mission performance. The requested funding will positively 
impact our ability to deliver the maritime safety and security America 
demands and deserves by focusing resources toward three critical 
priorities:

   Recapitalize the Coast Guard.
   Implement the Maritime Strategy for Homeland Security.
   Enhance Mission Performance.

    Finally, I would be remiss if I failed to acknowledge the 
outstanding service provided by the extremely dedicated Coast Guard 
workforce--a total team of uniformed active duty, Reserve, and 
Auxiliary personnel; dedicated civilian employees, and talented 
contractors. Looking at their accomplishments, it is clear that Coast 
Guard men and women continue to rise to the challenge and deliver 
tangible and important results across both homeland security and non-
homeland security mission programs. Coast Guard men and women are 
unwavering in their commitment to their Service and country. Ensuring 
these same people are properly compensated and given the opportunity to 
grow both personally and professionally is my single highest priority. 
With Congressional and Administration support, we have done much in 
recent years, from pay raises, improved housing allowances to better 
medical care, to support our men and women. The FY 2006 budget builds 
upon those results and provides a pay raise and important funding for 
Coast Guard housing projects through the shore recapitalization 
request.
    Coast Guard members volunteer in order to serve, secure, and defend 
this great nation. Our personnel are faced on a daily basis with a 
daunting set of mission requirements and challenges. We owe them not 
only fair compensation and benefits; we owe them the capabilities and 
tools to get the job done. The FY06 budget is about placing the right 
tools in the capable hands of our personnel. They have shown time and 
again that they know just what to do with them.
    With the continued support of the Administration and Congress, and 
the tremendous people of the Coast Guard, I know that we will succeed 
in delivering the robust maritime safety and security America expects 
and deserves in its' Coast Guard well into the 21st Century.
    Thank your for the opportunity to testify before you today. I will 
be happy to answer any questions you may have.

    Senator Snowe. Thank you, Admiral Collins.
    Master Chief Welch?

STATEMENT OF MASTER CHIEF FRANKLIN A. WELCH, MASTER CHIEF PETTY 
                   OFFICER, U.S. COAST GUARD

    Chief Welch. Good morning, Madam Chair and distinguished 
Members of the Subcommittee.
    Thank you so much for the opportunity to present my views 
in support of the servicemembers and their families that I am 
honored to represent.
    I am very proud of the national contributions made of our 
work force. And, with your support, we have benefited greatly 
from the reductions made between military and private-sector 
pay gaps of years past. The cumulative positive impact of 
military pay raises, coupled with significant reductions of 
housing expenses, has been both timely and well deserved.
    And despite increased personnel tempos experienced by all 
components of our work force, our recruiting and retention 
results continue to remain impressive. In Fiscal Year 2004, we 
slightly exceeded our active-duty recruiting mission, while 
making significant progress to further diversify our work 
force. Minority accessions totaled 36 percent of our overall 
recruiting efforts, representing an 11 percent increase from 
Fiscal Year 2003. Our reserve accessions were equally 
successful.
    Retention rates also remain extremely high. The current 
retention rate within the enlisted work force is 89.6 percent, 
with 1.2 percent of those accessing into our officer corps. 
While there are many factors contributing to our high 
retention, I view our successes as being key and measurable 
results of our Commandant's commitment to our people.
    We have invested to nationally advertise and promote the 
roles and missions of the Coast Guard, and we have made great 
strides in providing our people with enhanced professional 
development opportunities. Recent accomplishments include the 
establishment of a command master-chief course, the 
introduction of a formal enlisted professional military 
education program, increased throughput of our leadership and 
management school, the establishment of a comprehensive unit 
leadership development program, and continued aggressive 
support of tuition assistance funding.
    We consider these human-capital investments key to the 
continued development of our existing work force and essential 
for us to remain attractive to those contemplating military 
service.
    We also remain ever mindful of the quality-of-life needs of 
our people. Housing remains a chief concern of our 
servicemembers and their families. While BAH reform has been 
successful in absorbing housing costs incurred by our people 
who reside in the private sector, we cannot claim total housing 
success until we can provide our people who reside in 
government-owned quarters with the same desirable and well-
maintained housing found on the economy. To that end, we have 
begun privatization in Hawaii, and have privatization 
feasability studies underway in Alaska and Cape May, New 
Jersey.
    Childcare is also an expensive and problematic issue for 
our servicemembers with children. High childcare costs impact 
our work force throughout all geographical areas, but 
particularly those assigned to locations inaccessible to Coast 
Guard or Department of Defense childcare facilities. We have a 
childcare study ongoing to assess the needs of our people and 
to identify areas in which we may make appropriate 
interventions.
    Medical and dental-care concerns remain widespread. The 
majority of our concerns are due to the fact that most of our 
personnel are assigned well beyond the bounds of military 
treatment-facility catchment areas, thereby forcing our members 
to seek providers, which are becoming increasingly difficult to 
secure. I believe that the principal contributing factor to 
limited provider access is that of provider dissatisfaction 
with healthcare reimbursement rates. We continue to work with 
the Department of Defense to resolve these challenges, and we 
look forward to the implementation of the new TRICARE contract, 
which we hope will rectify some of the shortcomings experienced 
with TRICARE in the past.
    In addition to quality-of-life concerns, we also remain 
extremely committed to the needs of our people in the 
workplace; specifically and most critically, our responsibility 
to provide our servicemembers with safe, reliable, and 
effective cutters and aircraft from which to operate. Our 
front-line fleet of cutters continues to deteriorate, resulting 
in significantly degraded readiness capabilities and equally 
degraded crew morale. Fleet readiness issues are having an 
adverse impact on our presence in the maritime domain, 
affecting missions from domestic fisheries enforcement to the 
global war on terrorism, and causing our men and women to work 
even harder to overcome the deficiencies associated with our 
outdated fleet. In fact, if it weren't for the ingenuity, the 
professionalism, and the sacrifices made of our crews, our 
cutter fleet would not be in service today.
    The long-predicted demise of our fleet can no longer be 
overcome at the expense of our people, and we are very grateful 
for your support and understanding of the urgency of need for 
our Deepwater Recapitalization Initiative.
    In conclusion, your support of our efforts to transform the 
United States Coast Guard is greatly appreciated. We thank you 
for your service, and I thank you for the opportunity to speak 
with you today. I look forward to answering any questions that 
you may have.
    [The prepared statement of Chief Welch follows:]

  Prepared Statement of Master Chief Franklin A. Welch, Master Chief 
                    Petty Officer, U.S. Coast Guard

    Madam Chair and distinguished Members of this Subcommittee, I am 
once again very thankful for the opportunity to appear before you to 
present my views in support of the Coast Guard and the Coast Guard 
family that I am honored to represent. I am very proud of our service 
members and equally proud and thankful for the tremendous support 
provided by this Subcommittee during the 108th Congress. I look forward 
to continuing an equally supportive relationship with you and the 109th 
Congress as well.
    I am also grateful for House support of S. 2486, the Veteran's 
Benefits Improvement Act of 2004, S. 2484, the Veterans Affairs Health 
Care Personnel Enhancement Act of 2004, and H.R. 3936, the Veterans 
Health Programs Improvement Act of 2004. Legislative support of these 
acts formally recognizes the sacrifice and dedication of our many 
veterans and I ask for your continued support in ensuring that the men 
and women who serve or have served our country, remain well-served by 
our country.
    The Coast Guard has accomplished much in the past year thanks to 
the dedication and unwavering support of Coast Guard men and women 
stationed throughout this country and assigned globally. I travel 
extensively to meet with our service members, to share information with 
them, and more importantly to listen to their ideas and concerns. These 
personal interactions enable me to better represent their needs and 
interests. One of the things I hear loud and clear from our troops is 
how they have benefited greatly from the reductions made between the 
military and private sector pay gaps. The cumulative positive impact of 
military pay raises coupled with significant reductions of out of 
pocket housing expenses has been well received and is certainly well 
deserved. I believe they are a big reason for our recent workforce 
retention trends being at record high levels.
    Despite increased operational and personnel tempos by all 
components of our service, our recruiting results continue to remain 
impressive. In FY 2004, we slightly exceeded (by nine) our active duty-
recruiting mission of 3,800 enlisted accessions. In addition to meeting 
our numerical goal we also made significant progress in our efforts to 
further diversify our work force. FY 2004 minority accessions 
represented 36 percent of the total. This represents an increase of 11 
percent from FY 2003. We are enjoying similar success in our critical 
reserve component accessions.
    Retention rates also remain extremely high. The current retention 
rate of our enlisted work force is 89.6 percent, with 1.2 percent of 
those accessing to our officer corps. As we continue work force 
expansion, successful recruiting and retention efforts are mitigating 
many of the challenges associated with targeted growth endeavors. 
Growth has produced a temporary service issue that many people refer to 
as ``juniority.'' This means that junior personnel are often filling 
senior positions, resulting in significant billet to pay grade 
mismatches. However, I prefer to define the situation as one of 
``opportunity'' for the younger members of our Coast Guard, who 
continually impress me with their can-do attitudes and ability to 
accomplish the mission.
    There are many factors driving our high retention rates but I view 
our retention successes as being the key measurable result of our 
Commandant's commitment to our people. With your budgetary support, he 
is fulfilling his vision, ``The Coast Guard committed to our people . . 
. and our people committed to the Coast Guard.'' There has never been a 
period during my career in which so many people-oriented initiatives 
have been realized, including:

Raising the Visibility of the Coast Guard
    We have wisely invested in a modern, relevant and attractive 
branding campaign to nationally advertise and promote the roles and 
missions of the Coast Guard, as well as the opportunities afforded the 
men and women of our service. The Shield of Freedom campaign is vitally 
important in attracting a diverse workforce that will lead the Coast 
Guard in accomplishing its vital Homeland Security missions.
Providing Professional Development Opportunities
    The Coast Guard is making every effort to better prepare our people 
for success. Recent accomplishments have placed a permanent senior 
enlisted cadre within the U.S. Coast Guard Academy Corps of Cadets for 
the purpose of providing enlisted perspective, mentorship and 
experienced practical guidance for our future officer corps. As I 
mentioned during last year's hearing, we were working to establish a 
Command Master Chief course that would better prepare our senior 
enlisted leaders with tools to blend personnel representation and 
command advisory roles. We piloted that course last year and based on 
tremendously positive reviews we will continue with the course in FY 
2005. The introduction of our much-anticipated Enlisted Professional 
Military Education Program has also been completed with equally 
positive feedback. We have also significantly increased student 
throughput for our Leadership and Management School; a course designed 
to increase the effectiveness of our mid-grade enlisted work force and 
our junior officers. In addition to expanding our resident training 
opportunities, our Leadership Development Center in New London, 
Connecticut, has designed a comprehensive Unit Leadership Development 
Program (ULDP) that is mandatory at the unit level. A subset to the 
ULDP is the first term-first unit requirement to complete an Individual 
Development Plan that was designed by our Command Master Chiefs in 
concert with our training branch at Coast Guard Headquarters. I am 
proud of collaborative efforts such as these, because they represent a 
renewed sense of alignment between those with oversight 
responsibilities and those charged with implementation.

Providing Personal Development Opportunities.
    Recognizing the importance of continuing education for our people, 
the Coast Guard has continued its support of tuition assistance funding 
that defers the rising cost of education. In FY 2004, the Coast Guard 
authorized 22,212 courses at an expense of $12.2M. As of 7 January 
2005, tuition assistance commitments already totaled $5.1M. We consider 
these human capital investments key to the development of our current 
work force, and critical to remaining an employer of choice for those 
contemplating Coast Guard service. It is imperative that we remain 
competitive with our sister services of the Department of Defense, 
thereby underscoring the importance of discretionary funding as 
provided for in the President's FY 2006 budget. In addition to 
supporting our people who opt to pursue higher education, we remain 
committed to the health and well being of our Coast Guard men and 
women. To that end, we have mandated use of personal fitness plans for 
all of our service members as part of the Coast Guard fitness program.
    These initiatives serve to enhance the important sense of self 
worth of our people and I am proud of our focus. We have more to do, 
but these tangible work force enhancements are highly visible to our 
people and are indicative of our commitment to the workforce. Again, I 
appreciate this Subcommittee's support that has enabled the Coast Guard 
to remain attractive as a service that values our most important 
asset--our people.
    With your support, the Coast Guard continues to increase its 
authorized end strengths. In the post 9/11 environment it is essential 
that the principal agency charged with maritime safety and security be 
adequately staffed to perform its many missions. We are thankful for 
the authority to increase work force end strengths and we are doing so 
in the most responsible and deliberate manner. In addition to ensuring 
that we are appropriately staffed to effectively meet our many 
responsibilities, we are also mindful of the many critical quality of 
life needs of our people.
    Military pay is the single-most important quality of life and 
compensatory issue that we face. Without question, the military pay 
raises of the past four years have been a key contributor to accession 
and retention success. We seek your continued support in enabling the 
armed services to remain competitive with the private sector in order 
for us to attract and retain the skilled and motivated work force that 
our country must rely upon.
    Housing remains a chief concern of our work force. As advertised, 
basic allowance for housing (BAH) reform has eliminated out of pocket 
expenses for housing in most areas throughout our country and reduced 
it in all areas; the aggregate impact of BAH reform has been to reduce 
uncompensated housing expenses by approximately 20 percent. This effort 
is significant, commendable and appreciated by our service members and 
their families who reside in areas in which private sector housing is 
desirable and attainable. We must also remain mindful of the needs of 
our people who do not have access to this ideal housing situation. 
Throughout my personal engagements with our workforce, I have witnessed 
first-hand the poor materiel condition of government owned housing 
units that we mandate for many of our people. As this Subcommittee 
knows, the Coast Guard faces many challenges to address its shore 
infrastructure maintenance and recapitalization programs, and has 
deferred many projects, which is having direct and negative 
consequences to our service members and their families. It also 
negatively impacts the ability of our single and unaccompanied 
personnel to secure adequate housing because our owned unaccompanied 
personnel housing (UPH) is often in the same inadequate condition as 
our family housing.
    In an effort to enhance quality of life as it relates to 
deteriorating shore infrastructure we have expanded our availability of 
leased housing options to our service members who are E-4 and below 
assigned ashore with less than four years time in service. We are also 
pursuing privatization efforts, including the transfer of 318 units 
located at Red Hill, Hawaii, to the U.S. Army. On October 1, 2004, the 
Army subsequently transferred maintenance of their Hawaii inventory 
(over 7,000 units) to Actus Land Leasing with full financial closing 
and property transfer. In the greater New Orleans area, we have entered 
into a limited partnership with Patrician C.G. LLC. As I have seen 
during visits to Department of Defense housing facilities, military 
housing privatization, provides substantial benefits for limited up-
front government investment.
    We currently have privatization feasibility studies underway in 
Alaska and Cape May, New Jersey. These studies will provide us with an 
assessment of the ability to privatize housing in those locations. The 
Alaska study, which includes Kodiak, Valdez, Cordova (our worst), 
Sitka, Petersburg and Homer, is scheduled for completion by next 
spring. The Cape May study will follow closely behind the Alaska study.
    We have also deemed areas absent private sector and government 
owned housing as Critical Housing Areas (CHA's). This designation 
enables our people to receive BAH rates higher than the locales that 
they are assigned to so that they can afford housing in these high 
demand areas. Although this initiative may encourage family separation, 
the alternative of forced financial hardship is unacceptable. The Coast 
Guard has twelve such CHA designated locations. They are: Eastern 
Shore, Virginia; Buxton, North Carolina; Montauk, New York; Cape May, 
New Jersey; Abbeville, Louisiana; Port O'Connor, Texas; Coastal Maine; 
Carrabelle and Marathon/Islamorada, Florida; Provincetown, 
Massachusetts; Oxford, Maryland; and Marinette, Wisconsin. 
Additionally, any area designated as a CHA by the U.S. Navy applies to 
the Coast Guard.
    Child care is also an expensive and problematic issue for our 
service members with dependent children. High child care costs impact 
our workforce throughout all geographical areas but particularly those 
assigned to locations inaccessible to Coast Guard Child Development 
Centers and/or Department of Defense facilities. Due to the typically 
remote locations in which we serve, it is difficult, if not impossible 
to maintain parity with the other armed services in respects to 
providing our people with quality and affordable child care options. 
Recognizing the financial burdens placed upon our people, we have 
recently chartered a child care study to assess the needs of our work 
force and to identify areas in which we may make appropriate 
interventions. This is a key quality of life issue and we appreciate 
your understanding of the impact of the extremely high cost of child 
care nationwide.
    Medical and dental care issues remain chief and common concerns of 
our service members and their families. As I have testified in the 
past, these issues affect the Coast Guard in unique and sometimes 
difficult ways. The Coast Guard continues to work with the Department 
of Defense to resolve these challenges, and we are looking forward to 
the implementation of the new TRICARE contract, which we hope will help 
rectify some of the shortcomings we have experienced with TRICARE in 
the past.
    In addition to quality of life concerns and initiatives, we also 
remain ever mindful of the needs of our people in the workplace; 
specifically our responsibility to provide our service members with 
safe, reliable and effective platforms from which to operate. As I have 
testified during the past two years, our front-line fleet of cutters 
continues to deteriorate; resulting in significantly degraded readiness 
capabilities and equally degraded crew morale. It is important to note 
that during FY 1999, our Deepwater fleet experienced 267 unscheduled 
maintenance days. In FY 2004, the fleet had 742 unscheduled maintenance 
days. This increase does not represent a lack of crew effort, but is 
simply indicative of old cutters and old subsystems--getting even 
older. Fleet readiness issues are having an adverse impact on our 
presence in the maritime domain, and our men and women must work even 
harder to overcome the deficiencies associated with our fleet. If it 
weren't for the ingenuity, professionalism and the sacrifices made of 
our crews, our cutter fleet would not be in service today, and that 
applies to every class of cutter that we have. The demise of our fleet 
can no longer be overcome at the expense of our people, and as this 
Subcommittee knows, our Deepwater recapitalization project is essential 
in order for us to meet the demands that face our service today. We are 
very grateful for your historical support and understanding of our 
Deepwater initiative and urge your support of the President's $966M FY 
2006 Deepwater request, which includes funds both for new vessels and 
for legacy medium-endurance cutter maintenance to help address the 
problem of our aging fleet.
    To conclude, let me again offer my sincere appreciation to this 
Subcommittee for affording me the opportunity to present my views 
before you. I trust that the American public is rapidly coming to know 
the broad range of missions that the Coast Guard is responsible for, as 
well as the global context in which we are involved. I could not be 
prouder of our Coast Guard men and women than I am today. Collectively, 
our active duty, reservists, civilians, auxiliarists, and their 
families alike continue to make endless sacrifices to ensure that our 
service remains ``Always Ready,'' and that our country remains always 
safe! Mr. Chairman, on behalf of the tens of thousands of people that I 
represent, I am thankful for your service in support of our nation's 
Coast Guard and I look forward to your continued support as we 
aggressively transform our service. I welcome any questions that you or 
this Subcommittee may have.

    Senator Snowe. Thank you, Master Chief. We appreciate it. 
Urgency is the operative word, you're correct.
    Chief Welch. Yes, ma'am.
    Senator Snowe. Thank you.
    Ms. Wrightson?

         STATEMENT OF MARGARET T. WRIGHTSON, DIRECTOR, 
          HOMELAND SECURITY AND JUSTICE ISSUES, U.S. 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Wrightson. Thank you very much.
    I'm pleased to be here to discuss the President's 2006 
budget request for the Coast Guard. My testimony focuses on 
GAO's work this past year pertaining to three areas of the 
budget the Coast Guard deems its most important priorities, 
which the Commandant mentioned.
    In summary, I would say the following. Carrying out the 
Coast Guard's maritime security responsibilities continues to 
be a daunting challenge, one that cannot be ignored or 
shortchanged. Although the Coast Guard has worked hard to get 
MTSA off the ground and build its security presence and domain 
awareness, doing so has significantly impacted operations and 
strained mission capacity and capability. The Coast Guard is 
pursuing many initiatives that it believes will be force 
multipliers in these regards. However, by doing so much so 
fast, the Coast Guard has sometimes put dollars and programs at 
risk through less-than-effective design, management, and 
oversight.
    Turning to the most important details. If the Coast Guard's 
budget request is granted, agency discretionary funding will 
have increased each year since 2002, for a total increase of 45 
percent. The Coast Guard will now account for 20 percent of 
DHS's budget.
    By comparison, the Coast Guard's performance measures over 
this past period have been more mixed. For the eight mission 
areas where results are currently available, the Coast Guard 
met half. Some misses represent small differences, which I 
would be happy to talk about, but others are potentially more 
significant. In thinking about these year-to-year fluctuations, 
it is worth noting, as I did last year, the difficulties in 
directly linking resource allocation decisions and performance 
results. For example, to explain performance results for 
foreign fish, the Coast Guard points to oceanic and climatic 
shifts that alter fish migration patterns and draw foreign 
vessels into U.S. waters. At the same time, I know the 
Commandant agrees that there is no doubt that a proactive 
presence is essential.
    Rising budgets and fluctuating performance measures 
underscore how important it is for the Coast Guard to continue 
to improve its measures so they are as robust as possible. 
Also, the better the Coast Guard understands the relationship 
between resources it gets and the results it achieves, the more 
efficient and effective its decision-making will be.
    Regarding the Coast Guard's efforts to implement an 
effective maritime security regime, since MTSA was enacted the 
Coast Guard has taken determined action to establish a 
meaningful regime, including reviewing and approving thousands 
of vessel and facility security plans, increasing its security 
presence at ports, and enhancing intelligence capabilities, to 
name just some. However, this past year we raised concerns in a 
number of areas. For example, whether the Coast Guard would be 
able to devote sufficient resources to its port security 
inspection program, and whether inspectors would be qualified, 
adequately trained, and provided proper guidance.
    Among other things, we urged the Coast Guard to conduct a 
formal evaluation after the first round of compliance 
inspections, and consider unannounced inspections and covert 
testing as part of its program. In response to this and other 
suggestions we made, the Coast Guard has a number of 
improvements ongoing.
    A second Coast Guard priority in the 2006 budget is to 
enhance mission performance. Three broad initiatives that 
deserve particular mention here are the new coastal 
communications system, called Rescue 21, a new field command 
structure, called sectors, and efforts to improve readiness of 
multi-mission boat stations, formerly known as small boat 
stations. All three carry risk. I will mention only the second.
    While there is no doubt that sectors would improve 
performance and efficiency at the Coast Guard, flexibility and 
attention to details will also be important. For example, I was 
in San Diego a couple of weeks ago, and it appears quite clear 
that that pilot is successful. But in San Diego--but the fact 
is that San Diego's key units were already co-located, and 
there was a strong history of communication and partnership 
there. In other cases, commands are physically separated, and 
there is stovepipe culture between operations and marine-safety 
offices. Thus, a relatively easy transition in one case may not 
translate into a smooth transition in all.
    The third priority is recapitalizing the Coast Guard, but I 
will focus on just Deepwater. The Coast Guard is requesting 
nearly a billion dollars for this program this year. Last year, 
we reported that, well into the second year, key components 
needed to manage the program and oversee the contractor had not 
yet been effectively implemented. The Coast Guard also had not 
updated its master schedule, and costs were rising above 
original estimates. More recently, we have seen schedule 
slippages, such as for the national-security cutter, and 
emergency accelerations, such as for the HH-65. Unobligated 
balances are also growing. Finally, we have also seen at least 
one instance of a serious performance problem, at least 
initially; this being the hull breaches on the first converted 
123-foot patrol boats.
    We have made numerous recommendations to improve the 
program's management and oversight, and the Coast Guard has 
agreed with every one. In most cases, however, while actions 
are underway to address our concerns, management issues remain 
that will take some time to resolve.
    Additionally, there is uncertainty around the recently 
revised mission-needs statement, which will almost certainly 
increase costs and require further schedule adjustments once 
the implementation plan is approved.
    Finally, any look at the Coast Guard's budget would be 
incomplete without a discussion of its legacy assets. As of 
Fiscal Year 2005, the Coast Guard had requested 856 million in 
total, and this number could rise significantly. While we are 
not questioning the agency's decisions about which projects 
should receive priority, we believe it is important for the 
Coast Guard to make Congress aware, very aware, of the 
magnitude of the potential funding needs and to provide greater 
transparency. This summer, we will issue a report to you, Madam 
Chairman, on this subject.
    In conclusion, the Coast Guard's 2006 budget request 
reflects the continuing importance the Administration attaches 
to the Coast Guard's missions, especially those related to the 
homeland security. Our recent work indicates that such funding 
increases may be warranted, given the condition of the Coast 
Guard's aging assets and the fact that the systems needed to 
improve maritime domain awareness and security were either 
inadequate or nonexistent prior to September 11th. 
Nevertheless, as GAO's work this past year bears out, dramatic 
infusions of money bring added risk that too much will be 
attempted too fast.
    We look forward to continuing with your Subcommittee to 
mitigate these risks through productive oversight and 
engagement with the Coast Guard.
    Thank you very much.
    [The prepared statement of Ms. Wrightson follows:]

    Prepared Statement of Margaret T. Wrightson, Director, Homeland 
   Security and Justice Issues, U.S. Government Accountability Office
    Madame Chair and Members of the Subcommittee:
    I am pleased to be here today to discuss the President's Fiscal 
Year 2006 budget request for the Coast Guard, focusing on three 
priority areas the Coast Guard believes are critical to improving 
performance and reducing vulnerabilities within the U.S. maritime 
domain. As you know, the Coast Guard continues to face extraordinary, 
heightened responsibilities to protect America's ports, waterways, and 
waterside facilities from terrorist attacks, while also maintaining 
responsibility for many other programs important to the nation's 
interests, such as helping stem the flow of illegal drugs and illegal 
immigration, protecting important fishing grounds, and responding to 
marine pollution. At the same time, the Coast Guard is adjusting to its 
new home in the Department of Homeland Security (DHS) and attempting to 
manage the largest acquisition in its history, replacing or upgrading 
virtually all of its deepwater assets (ships and aircraft capable of 
operating further out to sea). It is an understatement to say that the 
Coast Guard has a lot going on. In recognition of this, the Coast Guard 
has received substantial budget increases since the terrorist attacks 
on September 11, 2001.
    My testimony today provides a brief overview of the Coast Guard's 
budget and performance information, and then discusses key Coast Guard 
programs and activities within the context of a three-part framework 
that the Coast Guard outlines in its Fiscal Year 2006 budget documents. 
The Coast Guard believes that funding three priority areas--
implementing the maritime strategy for homeland security, enhancing 
mission performance, and recapitalizing the Coast Guard--are essential 
to best position the agency to implement the President's strategies and 
reduce vulnerabilities in the U.S. maritime domain. My testimony is 
based on a number of reviews we have conducted in recent years on 
several Coast Guard programs. (See app. II for a listing of recent 
reports.) Our work for this testimony has been conducted from February 
2005 to March 2005 in accordance with generally accepted government 
auditing standards. (See app. I for additional information regarding 
our scope and methodology.)
    In summary, the 2006 request reflects the continuing importance the 
administration attaches to the Coast Guard's missions--especially those 
that relate to homeland security. Our recent work indicates that 
funding increases may be warranted, given the condition of the Coast 
Guard's aging assets and the fact that the systems and processes the 
agency needs to improve maritime domain awareness and security were 
either inadequate or nonexistent prior to the terrorist attacks. 
Nevertheless, as our work also has shown, dramatic infusions of money 
do not guarantee success, but bring added responsibility to ensure that 
these large investments of taxpayer dollars are wisely spent. The risk 
that an agency may simply attempt to do too much and do it too quickly 
is increased when an agency faces as many significant new heightened 
responsibilities as the Coast Guard. We have not evaluated the Coast 
Guard's priorities or whether the funding levels proposed are those 
needed to accomplish these priorities. However, our work does show that 
in key areas the Coast Guard has not always paid as much attention to 
program design and management as it should. These design and management 
issues can often have implications for how effectively money is spent. 
My testimony focuses on findings from our recent work as they relate to 
each of the Coast Guard's three priority areas, the recommendations we 
made, the progress that the Coast Guard has made in addressing them, 
and the issues that remain. First, I would like to put the Fiscal Year 
2006 budget request in a historical context and also provide some 
perspective on the Coast Guard's reported performance results.
Funding Has Escalated in Recent Years, but Is Difficult to Link to 
        Performance Results
    The Coast Guard's 2006 budget request continues a trend of 
increasing budgets that began in Fiscal Year 2002, as figure 1 shows.



    If the Coast Guard's full budget request is granted, its funding 
will have increased by 45 percent in nominal terms in this 5-year 
period. A major portion of this growth will have occurred in the 
acquisition, construction, and improvements account, which grew 81 
percent in nominal dollars between the Fiscal Year 2002 actual funds 
and the Fiscal Year 2006 requested funds--a $568 million increase. Much 
of this increase can be attributed to two major acquisition projects--
Deepwater and Rescue 21. Deepwater is the Coast Guard's largest-ever 
acquisition program. It replaces or modernizes cutters, aircraft, and 
communications equipment for missions that require mobility, extended 
presence on scene, and the capability of being deployed overseas. 
Rescue 21, the Coast Guard's second largest procurement in Fiscal Year 
2006, will replace the Coast Guard's current antiquated coastal 
communication system.
    The Fiscal Year 2006 budget request shows a $570 million increase 
to $8.1 billion, \1\ which is an increase of about 11 percent in its 
discretionary funding over the enacted budget for Fiscal Year 2005. \2\ 
The majority of the total is for operating expenditures: $5.5 billion. 
Capital acquisition accounts for another approximately $1.3 billion, 
and the remainder is primarily for retired pay. (See app. III for more 
detail on the Coast Guard's Fiscal Year 2006 budget accounts.) Much of 
the additional $570 million over and above the 2005 budget covers such 
things as mandatory pay increases for current employees and operating 
expenses for existing programs--many of which relate to homeland 
security functions. In addition, more than $50 million of the increase 
would fund new or enhanced initiatives, all of which relate to homeland 
security. For example, a portion of this funding would be dedicated to 
increasing maritime patrol aircraft operations, increasing the Coast 
Guard's presence in ports, and providing enhanced security for 
liquefied natural gas transports. Of the nearly $1.3 billion requested 
for capital projects, $966 million, or 76 percent, would be dedicated 
to the Deepwater acquisition, while $101 million would be dedicated to 
Rescue 21.
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    \1\ The $8.1 billion request for the Coast Guard represents 20 
percent of the Department of Homeland Security's budget request for 
Fiscal Year 2006.
    \2\ This calculation is based on the Coast Guard's discretionary 
funding and, for comparison purposes, removes the Fiscal Year 2005 
hurricane supplemental ($33 million) and adds in the anticipated Fiscal 
Year 2006 reimbursements for polar icebreaking ($47.5 million) and 
research, development, test and evaluation ($24 million).
---------------------------------------------------------------------------
    By comparison with the pattern of budget increases, performance 
results--indicators that track a program's progress from year to year--
have been more mixed in terms of the number of performance targets met 
each year. \3\ (See app. IV for a detailed discussion of the Coast 
Guard's performance measures and results.) The Coast Guard has a key 
performance target--the goal it aims to achieve each year--for 10 of 
its 11 programs. \4\ For search and rescue, for example, its target is 
to save the lives of at least 85 percent of mariners in distress. For 
the 8 programs with performance results through Fiscal Year 2004, \5\ 
the Coast Guard met or exceeded its targets in 4--a decline from the 
2003 results, when the Coast Guard met 6 of these targets (see fig. 2). 
Such changes can involve relatively small shifts in results. For 
example, in Fiscal Year 2004, 96.3 percent of domestic fishermen were 
found to be in compliance with regulations, compared with 97.1 percent 
the year before--but the percentage for Fiscal Year 2004 was below the 
Coast Guard's target of 97.0 percent, while the percentage for Fiscal 
Year 2003 was above it.
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    \3\ Pursuant to the Government Performance and Results Act of 1993 
(Pub. L. 103-62, 107 Stat. 285 (1993)), performance indicators are to 
be used to assess relevant outputs, service levels, and outcomes of 
each program activity. Performance targets or goals are defined as a 
set of annual goals that establish the agency's intended performance, 
stating a particular level of performance in either an absolute value 
or as a targeted level of improvement.
    \4\ For homeland security (called ports, waterways, and coastal 
security), performance measures are still under development.
    \5\ According to the Coast Guard, performance results for Fiscal 
Year 2004 are not available for two programs. They are: (1) marine 
safety--Fiscal Year 2004 performance results will not be available 
until spring 2005, when the recreational boating data is reported; and 
(2) illegal drug interdiction--Fiscal Year 2004 results will be 
calculated and released once illegal drug flow information for Fiscal 
Year 2004 is known--sometime in the spring of 2005.



    As we have reported in the past, it is difficult to link spending 
and resource allocations to performance and results, because many other 
factors also are at work. \6\ For example, one of the Coast Guard's 
measures--the number of incursions into U.S. fishing grounds by foreign 
fishing vessels--is affected by oceanic and climatic shifts that can 
cause fluctuations in the migrating patterns of fish. The number of 
foreign vessels drawn to U.S. waters could be affected by these 
fluctuations. In addition, the Coast Guard is still developing its 
performance measures and targets for its primary homeland security 
program, so this major reason for funding increases is not yet 
reflected in the results. These complicating factors suggest caution in 
attempting to read too much into the Fiscal Year 2004 drop. 
Nevertheless, attention to these trends over the long term is 
important, as a way to help ensure that taxpayer dollars are spent 
wisely.
---------------------------------------------------------------------------
    \6\ GAO, Coast Guard: Key Management and Budget Challenges for 
Fiscal Year 2005 and Beyond, GAO-04-636T (Washington, DC: April 7, 
2004); and Coast Guard: Relationship between Resources Used and Results 
Achieved Needs to Be Clearer, GAO-04-432 (Washington, DC: March 22, 
2004).
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Efforts Made on Coast Guard's Maritime Security Strategy Show Promise, 
        but Concerns Remain
    One of the Coast Guard's Fiscal Year 2006 priorities involves 
implementing a maritime strategy for homeland security. Major portions 
of this endeavor are heavily influenced by the requirements of the 
Maritime Transportation Security Act (MTSA) of 2002. \7\ We have 
reviewed the Coast Guard's response to a number of these requirements, 
and our findings have implications for several aspects of the budget 
request.
---------------------------------------------------------------------------
    \7\ Pub. L. 107-295, 116 Stat. 2064, (2002).
---------------------------------------------------------------------------
    MTSA seeks to establish a comprehensive security regime for the 
nation's ports--including planning, personnel security, and careful 
monitoring of vessels and cargo--and charges the Coast Guard with lead 
responsibility for implementing this regime. Since MTSA was enacted, 
the Coast Guard has worked to address vulnerabilities by spurring the 
development of meaningful security plans for thousands of facilities 
and vessels in the nation's ports. The Coast Guard has taken many other 
actions as well, including establishing area maritime security 
committees to improve information sharing, increasing port presence 
through increased security patrols, enhancing intelligence capabilities 
by establishing field intelligence teams in ports, and beginning to 
implement an electronic identification system for vessels in the 
nation's ports. As we have reported, the Coast Guard deserves credit 
for taking fast action on so many MTSA security provisions at once, 
especially with regard to MTSA's aggressive requirement that regulated 
facilities and vessels have security plans in place by July 2004. \8\ 
However, the combination of so many reforms and an aggressive schedule 
posed a daunting challenge, and our review of Coast Guard efforts to 
meet these requirements showed some areas for improvement where we have 
made recommendations--most notably the following three from reports 
issued in 2004.
---------------------------------------------------------------------------
    \8\ GAO, Maritime Security: Partnering Could Reduce Federal Costs 
and Facilitate Implementation of Automatic Vessel Identification 
System, GAO-04-868 (Washington, DC: July 23, 2004); Maritime Security: 
Better Planning Needed to Help Ensure an Effective Port Security 
Assessment Program, GAO-04-1062 (Washington, DC: September 30, 2004); 
and Maritime Security: Substantial Work Remains to Translate New 
Planning Requirements into Effective Port Security, GAO-04-838 
(Washington, DC: June 30, 2004).

   Automatic Identification System (AIS) has potential for cost 
        savings. National development of this system, which identifies 
        vessels traveling to or through U.S. waters, is an important 
        step in the overall effort to increase port safety and 
        security. The Coast Guard faced several key decisions to 
        determine AIS's technical requirements, waterway coverage, and 
        vessels to be equipped with identification equipment. Estimates 
        to establish such a system, however, were well above funding 
        levels. We thought the goals of the system might be achieved 
        more quickly and the costs to the Federal Government reduced by 
        pursuing cost-sharing options. Consequently, we recommended 
        that the Coast Guard seek and take advantage of partnerships 
        with organizations willing to develop AIS systems at their own 
---------------------------------------------------------------------------
        expense.

   Port security assessments could be more useful. The port 
        security assessment program is intended to assess port 
        vulnerabilities and security measures in the nation's 55 most 
        economically and militarily strategic ports. Our review showed 
        that while some improvements were made, the Coast Guard risked 
        producing a system that was not as useful as it could have been 
        because its approach lacked a defined management strategy, 
        specific cost estimates, and a clear implementation schedule. A 
        major factor of the program--a computer-based geographic 
        information system that would provide information to personnel 
        in charge of port security--was developed in such a way that 
        gaps in port security postures could be overlooked. We 
        recommended that the Coast Guard define and document the 
        functional requirements for this computer system and develop a 
        long-term project plan for the system and for the port security 
        assessment program as a whole.

   The Coast Guard's strategy for conducting oversight and 
        compliance inspections of facilities and vessels could be 
        improved. Because the program was new, we recommended that the 
        Coast Guard undertake a formal evaluation after the first round 
        of inspections and use the results to improve the program. The 
        evaluation was to include the adequacy of security inspection 
        staffing, training, and guidance. To improve the program 
        strategy, we also recommended that the Coast Guard clearly 
        define the minimum qualifications for inspectors and link these 
        qualifications to a certification process, as well as consider 
        unscheduled and unannounced inspections, and covert testing as 
        a way to ensure that the security environment at the nation's 
        seaports met the nation's expectations.

    The Coast Guard agreed with many of our recommendations and has 
made progress in implementing some of them, but the remaining issues 
have implications for the availability of funds or the effectiveness 
with which available funds are spent.

   AIS. Coast Guard officials have taken a number of steps to 
        encourage stakeholder participation, although they have not 
        formally sought AIS partners to date. For example, the Coast 
        Guard has a contract with PETROCOMM (a provider of 
        communications services in the Gulf of Mexico) to provide 
        locations, maintenance, and data services for several AIS base 
        stations on offshore platforms in the Gulf of Mexico. \9\ The 
        Coast Guard believes that it is too early to consider 
        partnerships beyond these initial efforts, because the Coast 
        Guard is still developing operational requirements for AIS 
        systems and vetting these requirements with stakeholders and 
        Coast Guard field units. However, Coast Guard officials also 
        reported that in their discussions with private parties, these 
        parties have shown little interest in shouldering any of the 
        financial burden associated with achieving AIS capability. The 
        Coast Guard estimates that the installation of AIS nationwide 
        could cost nearly $200 million. The Fiscal Year 2006 budget 
        requests $29.1 million for this project, in addition to the $48 
        million previously enacted ($24 million per year in Fiscal 
        Years 2004 and 2005)--leaving a substantial sum to be financed.
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    \9\ The other instances are (1) The Coast Guard has a contract with 
the Port Graham Development Corporation (an Alaskan Native corporation) 
in partnership with the Marine Exchange of Alaska to deploy and manage 
a network of AIS receivers at 11 locations in Alaska; (2) the Volpe 
Transportation Systems Center approached the Coast Guard to offer its 
assistance in facilitating partnerships. (This was done in response to 
GAO-04-868.) The Coast Guard entered into an agreement with Volpe for 
the provision of a variety of support for AIS services, including its 
help in setting up AIS capability in areas where partnerships may be of 
assistance.

    Port security assessments. Coast Guard officials said they are 
working with the Department of Homeland Security to determine the focus 
and scope of the Fiscal Year 2006 port assessments and are taking into 
consideration the progress being made by ports to identify shortcomings 
and improve security. However, the Coast Guard continues to move 
forward with the overall program, as well as the geographic information 
system, without a plan that clearly indicates how the program and its 
information component will be managed, what they are expected to cost, 
or when the various work steps should be completed. The lack of a plan, 
in our view, increases the risk that the program will be unsuccessful. 
In response to our recommendation, the Coast Guard has indicated that 
it will develop a long-term plan for the port security assessment 
program but they did not indicate when this effort will begin or when 
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they expect a plan to be completed.

   Strategy for ensuring facility and vessel compliance. The 
        Coast Guard has taken a number of actions but has not focused 
        its resources on doing unscheduled or unannounced spot checks 
        to verify whether domestic vessels are complying with 
        requirements. \10\ We continue to believe that without 
        unscheduled inspections, vessel owners and operators can mask 
        security problems by preparing for the annually announced 
        inspections in ways that do not represent the normal course of 
        business. Unannounced inspections are a way of ensuring that 
        planning requirements translate into security-conscious 
        behavior.
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    \10\ Agency officials reported that they are focusing resources on 
making the initial inspection of the nearly 10,000 vessels subject to 
MTSA requirements. Coast Guard officials say the agency is using 
unscheduled or unannounced spot checks for facilities, and for foreign 
vessels. However, we have not assessed the extent to which this has 
occurred.
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Three Efforts to Enhance Mission Performance Bear Watching
    A second Coast Guard priority is to enhance mission performance. 
Many Coast Guard personnel and assets are involved in performing 
multiple missions. For example, Coast Guard cutters and crews may be 
involved with fisheries patrols, distress calls, oil spills, stopping 
and boarding vessels of interest, and many other tasks. In Fiscal Years 
2005 and 2006, the Coast Guard plans to continue developing several 
initiatives that agency officials believe will yield increased 
performance across multiple Coast Guard missions over time. Three 
initiatives, in particular, deserve mention. These are a new coastal 
communication system, called Rescue 21; a new field command structure, 
called Sectors; and efforts to improve readiness at multimission 
stations that conduct search and rescue as well as other missions. All 
three efforts carry some risk and will merit close attention.

   Rescue 21. The Coast Guard has resolved some initial 
        development problems that delayed the implementation of this 
        new coastal command and control communication system and is now 
        poised to move forward again, with a Fiscal Year 2006 budget 
        request of $101 million. According to Coast Guard officials, 
        Rescue 21 can improve coastal command and control 
        communications and interoperability with other agencies, 
        helping to improve not only search and rescue efforts but also 
        other missions such as illegal drug and migrant interdiction. 
        The program is composed of very-high-frequency-FM radios, 
        communication towers, and communication centers. Rescue 21 was 
        originally scheduled to be ready for operational testing by 
        September 2003, but this was delayed because of problems in 
        developing system software. Operational testing of this 
        software has been completed. \11\ The program is now set--once 
        additional Coast Guard and DHS approvals are obtained--to move 
        into its next phase of production, and the Coast Guard 
        anticipates that the program will be operational by the end of 
        2007.
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    \11\ As a result of these delays, $40 million in Fiscal Year 2005 
funds were reprogrammed within the Coast Guard from Rescue 21 to other 
purposes, and an additional $16 million was rescinded.

    According to the Coast Guard, one risk that remains in moving ahead 
with Rescue 21 involves locating sites for about 330 towers that must 
be built. The Coast Guard must locate these towers in accordance with 
the requirements of the National Environmental Policy Act of 1969 
(NEPA), as amended, which requires federal agencies to prepare an 
environmental impact statement for major federal actions that may 
significantly affect the quality of the human environment. \12\ Towers 
can have environmental effects; for example, when they are built in 
migratory bird locations, birds can fly into the towers or their 
supporting wires. Additionally, for effective communications, each 
tower must be placed in a way that one tower's coverage meets the next 
tower's coverage without interference. Thus, if one tower must be moved 
for environmental reasons, neighboring towers may also have to be 
moved--leading to a potential for schedule slippage, if additional 
sites must be identified and developed. The NEPA process represents the 
Rescue 21 program's greatest risk, according to a program official. 
\13\
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    \12\ Pub. L. No. 91-190, 83 Stat. 852 (1970) (environmental impact 
statements provision found at 42 U.S.C. Sec. 4332(2)(c)).
    \13\ To help address these concerns, the Coast Guard has agreed to 
support U.S. Fish and Wildlife Service's studies examining what can be 
done to prevent birds from hitting the towers or supporting wires. In 
response to the Fish and Wildlife Service's concerns, the Coast Guard 
has adapted the night lighting on the towers to make the towers more 
visible for the birds and has used towers that do not require support 
wires.

   Sectors. This is a new field command structure that will 
        unify previously disparate Coast Guard units such as air 
        stations, groups, and marine safety offices into integrated 
        commands. This effort is a budget neutral effect in the Fiscal 
        Year 2006 request, but it bears attention for operational 
        effectiveness reasons. The Coast Guard is making this change to 
        improve mission performance through better coordination of 
        Coast Guard command authority and resources such as boats and 
        aircraft. Under the previous field structure, for example, a 
        marine safety officer who had the authority to inspect a vessel 
        at sea or needed an aerial view of an oil spill as part of an 
        investigation would often have to coordinate a request for a 
        boat or aircraft through a district office, which would obtain 
        the resource from a group or air station. Under the Sector 
        realignment, these operational resources will be available 
        under the same commanding officer. To date, 8 sectors have been 
        established, with approximately 28 to be established by the end 
        of 2006. \14\ According to Coast Guard personnel, the 
        realignment is particularly important for meeting new homeland 
        security responsibilities, and will facilitate the Coast 
        Guard's ability to manage incidents in close coordination with 
        other federal, state, and local agencies.
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    \14\ Sectors will be organized along existing Captain of the Port 
zones. The eight established sectors as of March 1, 2005, are in 
Boston, Baltimore, San Diego, Honolulu, Miami, Key West, San Juan 
(Puerto Rico), and Guam.

    While the establishment of Sectors appears to be an important step 
that could positively affect the Coast Guard's mission performance, the 
Coast Guard is likely to face a number of implementation challenges 
that it will need to overcome to help ensure success. First, Sectors 
change a longstanding cultural divide within the agency. This divide 
has separated those personnel who typically operate aircraft and boats 
from those personnel who typically enforce marine safety, security, and 
environmental protection laws. Second, it has implications for 
alignment above the field operations level as well. Realignment is 
likely to be needed at the district office and headquarters levels to 
help ensure that management misalignments among these levels do not 
pull the field reorganization off track. Third, it will likely require 
training, such as taking steps to ensure that senior commanders are 
aware of key issues critical for decision making across the various 
Coast Guard mission areas. Coast Guard officials acknowledge these 
challenges but believe that the culture challenge will be overcome in 
time as a result of increased familiarity and training. They also 
acknowledged that further realignments at the district and headquarters 
levels are likely to be needed over time and that efforts are under way 
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to implement training changes.

   Multimission stations. Another area where the Coast Guard 
        has an opportunity to improve mission performance involves its 
        188 multimission stations. These stations located along the 
        nation's coastlines and interior waterways have been the 
        mainstay of one of the Coast Guard's oldest missions--finding 
        and rescuing mariners in danger. In 2001, after a series of 
        search and rescue mishaps, the Coast Guard began efforts to 
        improve station readiness, which had been declining for more 
        than 20 years. This included reconfiguring operations and 
        bolstering resources in four areas--staffing, training, boats, 
        and personal protection equipment used by personnel during 
        operations, such as life vests and survival suits. This effort 
        was complicated by the new and increased homeland security 
        responsibilities that stations assumed after the terrorist 
        attacks of September 11.

    Today, 4 years after efforts began to improve station readiness, 
there have been operational improvements in staffing, training, boats, 
and personal protection equipment, as well as increases in resource 
levels at stations. However, even though readiness concerns have been 
mitigated to some extent, the stations have still been unable to meet 
standards and goals relating to staffing, boats, and equipment, which 
indicates that the stations are still significantly short of desired 
readiness levels in some areas. For example, even though station 
staffing has increased 25 percent since 2001, station personnel 
continue to work significantly longer hours than are allowed under the 
Coast Guard's work standards.
    To address continued readiness concerns, actions are needed in two 
areas, and the Coast Guard says that it has such efforts underway. 
Currently, the Coast Guard does not have an adequate plan in place for 
achieving and assessing readiness in its new post-September 11 
operating environment. The Boat Forces Strategic Plan--the Coast 
Guard's strategy for maintaining and improving essential multimission 
station capabilities over the next 10 years--is the agency's main tool 
for measuring progress in meeting station readiness requirements, but 
it has not been updated to reflect increased homeland security 
responsibilities. However, Coast Guard officials recently reported that 
they will update the plan to reflect its homeland security mission and 
identify actions taken and results achieved. Second, the Coast Guard is 
operating under interim homeland security guidelines, which establish 
recommended security activities for field units according to each 
maritime security threat level. Coast Guard officials said they would 
incorporate measurable station readiness goals into the plan. The Coast 
Guard plans to complete these efforts in the next 6-9 months.

Important but Costly Programs for Maintaining and Recapitalizing 
        Deepwater Assets Need Careful Monitoring
    The third Coast Guard priority involves the single largest and most 
complex acquisition program in the agency's history--a project designed 
to improve the mission performance of the range of cutters and aircraft 
that currently conduct the agency's offshore missions. We have 
previously reported on the risky approach for this acquisition, \15\ 
and although progress has been made to address our past 
recommendations, the risks still remain substantial. As it undergoes a 
transformation to these new or upgraded assets, the Coast Guard is also 
faced with sustaining its legacy assets \16\ to ensure that they can 
continue to perform the Coast Guard's missions until new or upgraded 
assets are in place. Revisions to the Coast Guard's mission 
requirements for Deepwater, slippages in the acquisition schedule, and 
limited information about the condition of and likely costs for 
maintaining the legacy assets all highlight the need for continued 
attention to this area.
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    \15\ GAO, Coast Guard's Acquisition Management: Deepwater Project's 
Justification and Affordability Need to Be Addressed More Thoroughly, 
GAO/RCED-99-6 (Washington, DC: October 26, 1998); GAO, Coast Guard: 
Progress Being Made on Deepwater Project, but Risks Remain, GAO-01-564 
(Washington, DC: May 2, 2001); and GAO, Contract Management: Coast 
Guard's Deepwater Program Needs Increased Attention to Management and 
Contractor Oversight, GAO-04-380 (Washington, DC: March 2004).
    \16\ For purposes of this testimony, we use the term ``legacy 
assets'' to refer to the existing fleet of deepwater aircraft and 
cutters. These legacy assets include the HC-130, HU-25, HH-60, and HH-
65 aircraft and the 378-foot high-endurance cutters, the 210-foot and 
270-foot medium-endurance cutters, and the 110-foot and 123-foot patrol 
boats. We did not include the 213-foot Acushnet, the 230-foot Storis, 
or the 282-foot Alex Haley as part of our analyses of the deepwater 
legacy assets because they are one-of-a-kind vessels.
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Deepwater Acquisition Involves a Major Recapitalization of the Coast 
        Guard
    In 1996, the Coast Guard initiated a major recapitalization 
effort--known as the Integrated Deepwater System--to replace or 
modernize the agency's deteriorating aircraft and cutters. These legacy 
assets are used for missions that require mobility, extended presence 
on scene, and the capability of overseas deployment. Examples of such 
missions include interdicting illegal drug shipments or attempted 
landings by illegal aliens, rescuing mariners in difficulty at sea, 
protecting important fishing grounds, and responding to marine 
pollution. The Deepwater fleet consists of 187 fixed-wing aircraft and 
helicopters, and 88 cutters of varying lengths. As currently designed, 
the Deepwater program replaces some assets (such as deteriorating 
cutters) with new ones while upgrading other assets (such as some types 
of helicopters) so that all of the assets can meet new performance 
requirements. \17\
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    \17\ Current plans call for the Coast Guard to replace all of its 
deepwater legacy cutters and patrol boats, beginning with the 378-foot 
cutters. The Coast Guard also plans to replace the HU-25 aircraft, but 
will upgrade the existing HC-130 aircraft, and HH-60 and HH-65 
helicopters to extend their service lives.
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    In an effort to maintain its existing assets until the Deepwater 
assets are in place, the Coast Guard is conducting extensive 
maintenance work. Notwithstanding extensive overhauls and other 
upgrades, a number of the cutters are nearing the end of their 
estimated service lives. Similarly, while a number of the deepwater 
legacy aircraft have received upgrades in engines, operating systems, 
and radar and sensor equipment since they were originally built, they 
too have limitations in their operating capabilities. For example, the 
surface search radar system on the HC-130 long-range surveillance 
aircraft is subject to frequent failures and is quickly becoming 
unsupportable. Flight crews use this radar to search for vessels in 
trouble and to monitor ships for illegal activity, such as transporting 
illicit drugs or illegal immigrants. When the radar fails, flight crews 
are reduced to looking out the window for targets, greatly reducing 
mission efficiency and effectiveness. A flight crew in Kodiak, Alaska, 
described this situation as being ``like trying to locate a boat 
looking through a straw.'' We have been reviewing the condition of 
Coast Guard Deepwater assets for a number of years, and our work has 
shown that a need exists for substantial replacement or upgrading. \18\ 
We have additional work underway this year regarding the status of 
Deepwater assets, and will be testifying on this work next month.
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    \18\ GAO-01-564 and GAO-04-636T.
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Deepwater Contracting Approach Remains Risky
    While we agree that the case for replacing and upgrading the Coast 
Guard's legacy assets is compelling, the contracting strategy the 
agency is using to conduct this acquisition carries a number of 
inherent risks. This strategy relies on a contractor--called the system 
integrator--to identify and deliver the assets needed to meet a set of 
mission requirements the Coast Guard has specified, using tiers of 
subcontractors to design and build the actual assets. The resulting 
program is designed to provide an improved, integrated system of 
aircraft, cutters, and unmanned aerial vehicles to be linked 
effectively through systems that provide command, control, 
communications, computer, intelligence, surveillance, reconnaissance, 
and supporting logistics. However, from the outset, we have expressed 
concern about the risks involved with this approach because of its 
heavy reliance on a steady funding stream over several decades and the 
potential lack of competition to keep contracting costs in line. \19\
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    \19\ GAO-01-564 and GAO/RCED-99-6.
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    These risks have had tangible effects, including rising costs and 
slipped schedules. Early on in our reviews of the program, we expressed 
concern that the Coast Guard risked schedule slippages and cost 
escalation if project funding fell short of planned funding levels. 
These concerns materialized in the first 2 years of the program, when 
appropriated funding was $125 million less than planned for. And, 
although funding in the fourth year of the program (Fiscal Year 2005) 
exceeded the Coast Guard's request by about $46 million, the early 
shortfalls, according to the Coast Guard, resulted in schedule slippage 
and led to increases in the total projected costs for the program. As 
of spring 2004, it was estimated that an additional $2.2 billion (in 
nominal dollars) would be needed to return the program to its original 
implementation schedule. \20\ In addition, there is clear evidence that 
the asset delivery schedule has also slipped. For example, under 
Deepwater's original schedule, the first major cutter, the National 
Security Cutter was due to be delivered in 2006; the current schedule 
indicates that it will now not be delivered until 2007. Similarly, the 
first nine Maritime Patrol aircraft were due to be delivered in 2005; 
now only two will be delivered in 2007.
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    \20\ GAO-04-636T.
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    When we reviewed the Deepwater program again last year, we found 
that, on many fronts, the Coast Guard was not doing enough to mitigate 
these risks. For example, we found that well into the contract's second 
year, key components needed to manage the program and oversee the 
system integrator's performance had not been effectively implemented. 
\21\ We also reported that the degree to which the program was on track 
could not be determined, because the Coast Guard was not updating its 
schedule. \22\ We detailed needed improvements in a number of areas, 
shown in table 1.
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    \21\ GAO-04-380.
    \22\ GAO, Coast Guard: Deepwater Program Acquisition Schedule 
Update Needed, GAO-04-695 (Washington, DC: June 14, 2004).



    The Coast Guard agreed with nearly all of our recommendations and 
has since made progress in implementing some of them. In most cases, 
however, while actions are under way to address these concerns, 
management challenges remain that may take some time to fully address. 
---------------------------------------------------------------------------
Here are some examples.

   Strengthening integrated product teams. These teams, the 
        Coast Guard's primary tool for managing the program and 
        overseeing the contractor, consist of members from 
        subcontractors and the Coast Guard. In 2004, we found these 
        teams often lacked training and in several cases lacked 
        charters defining clearly what they were to do. Most now have 
        charters setting forth the team's purpose, authority, and 
        performance goals, among other things, and more training is now 
        being provided. However, roles and responsibilities in some 
        teams continue to be unclear, and about one-third of team 
        members have yet to receive entry-level training.
    Holding the systems integrator accountable for competition. The 
Coast Guard has taken a number of steps to improve cost control through 
competition. For example, to improve competition among second-tier 
suppliers, Coast Guard officials said they will incorporate an 
assessment of the steps the system integrator is taking to foster 
competition at the major subcontractor level as one of the factors they 
take into account in deciding whether to award the first contract 
option.
    Besides the risks noted in table 1, the program also bears careful 
watching because it is still being affected in midcourse by the Coast 
Guard's additional homeland security responsibilities. Planning for the 
Deepwater program had been set in motion before the terrorist attacks 
of September 11, and while the initial program included consideration 
of homeland security responsibilities, these responsibilities have 
grown considerably in the interim. In March 2004, the Coast Guard 
developed a revised mission needs statement (MNS) that indicated that 
current specifications for Deepwater assets lacked some functional 
capabilities needed to meet mission requirements. The MNS was approved 
by DHS in January 2005.
    According to the Coast Guard, some of the functional capabilities 
now deemed to be required include the following:

   Rotary wing airborne use of force and vertical insertion/
        vertical delivery capability;

   Greater speed, a larger flight deck, and automated defensive 
        and weapons systems for the National Security Cutter and 
        Offshore Patrol Cutter classes;

   A common operating picture (COP) for the entire Coast Guard 
        (and maritime ports of a unified Department of Homeland 
        Security COP), an interoperable network to improve performance 
        in all mission areas, and a Secure Compartmentalized 
        Information Facility for improved intelligence capabilities; 
        and

   Chemical, biological, radiological defense and 
        decontamination capability for selected Deepwater assets.

    While we have not conducted an analysis of the likely cost and 
schedule impact of the revised MNS requirements, they undoubtedly will 
have an effect on cost and schedule. The Coast Guard's own estimates 
identified in the March 2004 MNS show an increased acquisition cost for 
the original 20-year acquisition of about $1 billion. \23\ According to 
the Coast Guard, the revised MNS requirements and associated cost and 
schedule information have been forwarded to the Department of Homeland 
Security (DHS) and the Office of Management and Budget for approval. As 
of this time, the implementation plan has not been approved.
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    \23\ According to the MNS, the original estimated acquisition, 
construction, and improvement costs were bracketed at between $7.5 
billion to $15 billion in Fiscal Year 1998 dollars. It then notes that 
current Deepwater projections show an approximately $16 billion cost 
for a 20-year implementation plan. However, GAO reported in April 2004 
that the costs for the Deepwater program would reach $17 billion under 
the funding stream that the Coast Guard projected that it would need to 
complete the program in 20 years.
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    These issues point to the need for continued and careful monitoring 
of the Deepwater acquisition program both internally and externally. 
One positive development in this regard involves the Coast Guard's 
efforts to update the Deepwater acquisition schedule--action that we 
suggested in our June 2004 report. \24\ The original 2002 schedule had 
milestone dates showing when work on an asset would begin and when 
delivery would be expected, as well as the integrated schedules of 
critical linkages between assets, but we found that the Coast Guard was 
not maintaining an updated and integrated version of the schedule. \25\ 
As a result, the Coast Guard could not demonstrate whether individual 
components and assets were being integrated and delivered on schedule 
and in critical sequence. While as late as October 2004 Deepwater 
performance monitors likewise expressed concern that the Coast Guard 
lacked adequate visibility into the project's status, the Coast Guard 
has since taken steps to update the outdated schedule, and has 
indicated that it plans to continue to update the schedule--monthly for 
internal management purposes, and semi-annually to support its budget 
planning efforts. We think this is an important step toward improving 
the Coast Guard's management of the program because it provides a more 
tangible picture of progress, as well as a baseline for holding 
contractors accountable. And, as we have said in the past on numerous 
occasions, we will continue to work closely with the Coast Guard to 
monitor how risks are mitigated.
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    \24\ GAO-04-695.
    \25\ Not maintaining a current and integrated schedule lessens the 
Coast Guard's ability to monitor the system integrator's performance 
and take early action to resolve risks that could become problems 
later. Maintaining such a schedule is an industry best practice; the 
Department of Defense is required to do so in order to be able to 
report any breaches in cost, schedule, or performance targets. 
Deepwater performance monitors (the contracting officers' technical 
representatives who represent the contracting officer in monitoring the 
contractor's performance) have likewise expressed concern that the 
Coast Guard lacks adequate visibility to scrutinize schedules for 
component-level items which prevents reliable forecasting and risk 
analysis.
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Attention Also Needed to Planned Transition and Phase out of Legacy 
        Assets
    Although the Coast Guard expects to upgrade a number of its legacy 
assets for use in the Deepwater program, a substantial portion of its 
legacy assets--particularly cutters--are scheduled to be replaced. 
Until their replacements are available, however, many of the cutters 
will need to be kept in service so that the Coast Guard can continue to 
perform its missions. Our visits to field locations and conversations 
with Coast Guard operations and maintenance personnel clearly indicated 
that the maintenance of these assets is already taking increasingly 
more time and effort. For example, air station maintenance personnel 
indicated that aircraft are being subjected to additional corrosion-
related problems. To address these problems, air station maintenance 
personnel at the locations we visited said they have instituted 
additional measures, such as washing and applying fluid film to the 
aircraft prior to each deployment. Similar accounts were told by 
personnel working on cutters. For example, officers of the 270-foot 
cutter Northland told us that because of dated equipment and the 
deteriorating condition of the vessel's piping and other subsystems, 
crewmembers have to spend increasingly more time and resources while in 
port to prepare for the cutter for the next deployment. While we could 
not verify these increases in time and resources because of limitations 
in the Coast Guard's data, the need for increasing amounts of 
maintenance was a message we consistently heard from operations and 
maintenance personnel.
    The Coast Guard is aware that keeping these legacy assets mission 
capable will likely require an additional infusion of funds for some 
assets that are scheduled to be replaced. Since 2002, the Coast Guard 
has annually created a compendium that consolidates information about 
projects needed to maintain and sustain legacy assets. The Coast Guard 
uses this compendium as a tool for setting priorities and planning 
budgets. The most recent compendium (for Fiscal Year 2006), lists more 
than $1 billion worth of upgrades to the Deepwater legacy assets. The 
planned upgrades identified in the compendium that have been approved 
and received initial funding account for an estimated $856 million the 
Coast Guard anticipates it will need to complete those projects. In 
addition, the compendium lists another estimated $409 million in 
sustainment projects for the other legacy assets for which funding has 
not been requested. If the condition of these assets continues to 
deteriorate or replacement assets are further delayed, this additional 
funding will likely be needed.
    We are not questioning the Coast Guard's decisions about which 
projects within the compendium should receive priority. We believe it 
is important, however, for the Coast Guard to make Congress aware of 
the magnitude of the potential funding needs for sustaining the assets 
that are eventually scheduled for replacement. Given the schedule 
slippages we have seen and the continued possibility that Deepwater 
requirements may yet change, this information will be important to 
determine a thoughtful and accurate estimate of future maintenance 
budget needs.
    One planning effort under way within the Coast Guard illustrates 
the kinds of considerations that may be needed with regard to these 
assets. This effort is being undertaken by the Coast Guard's Pacific 
Area Command, which to accomplish its missions, relies on 378-foot 
cutters--the first asset scheduled to be replaced under the Deepwater 
program. \26\ Under the original Deepwater proposal, the final 378-foot 
cutter was to be decommissioned in 2013, but by 2005, that date had 
slipped to 2016. To help keep these cutters running through 2016, 
Pacific Area Command officials are considering such strategies as 
designating some of the 378-foot cutters as capable of performing only 
certain missions, rather than attempting to keep them all fully capable 
of performing all missions. Even so, the Pacific Area Commander told us 
that in order for the 378-foot cutters to be properly maintained until 
their replacements become operational; the Coast Guard will have to 
provide more focused funding. So far, the Coast Guard's budget plans 
and requests do not address this potential need.
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    \26\ The Pacific Area Command is responsible [0] for operations 
covering 74 million square miles, ranging from South America, to the 
Arctic Circle and west to the Far East.
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Concluding Observations
    Over the past several years, the Coast Guard has been in the vortex 
of the nation's response to homeland security concerns. It has been 
charged with many new responsibilities related to ports and to marine 
security in general, and from the outset, we have often used the word 
``daunting'' to describe the resulting tasks. In addition, expectations 
continue that the Coast Guard will be able to rescue those in distress, 
protect the nation's fisheries, keep vital marine highways operating 
efficiently, and respond effectively to marine accidents and natural 
disasters. Congress has acknowledged that these added responsibilities 
carry a price tag and has, through the appropriations process, provided 
substantially more money for the job.
    As these efforts begin to move into a more mature phase, allowing 
lessons that can already be learned to better inform judgments about 
the future, it is increasingly important to explore ways to enhance 
mission effectiveness while stretching taxpayer dollars for maximum 
effectiveness. This is particularly true in the current budget climate. 
While we have found the Coast Guard to be a willing participant in such 
efforts, the agency's focus on achieving all of its missions can make 
it difficult to carry through with the many intermediate steps that may 
be needed to keep management problems to a minimum. We think the issues 
we have highlighted are potential areas for ongoing congressional 
attention, and we will continue to work with the Coast Guard on them.
    Madame Chair and Members of the Subcommittee, this completes my 
prepared statement. I would be happy to respond to any questions that 
you or other Members of the Subcommittee may have at this time.

             Appendix I: Objectives, Scope and Methodology

    To provide a strategic overview of the President's Fiscal Year 2006 
budget request for the Coast Guard, focusing on several areas of 
particular congressional interest, we reviewed the Coast Guard's 
Congressional-stage budget and other financial documents provided by 
the Coast Guard. We also interviewed Coast Guard headquarters officials 
familiar with the Coast Guard's budget and acquisition processes.
    To determine the status of the Coast Guard's performance measures 
and results, we reviewed Coast Guard performance data and performance 
documentation. We also obtained confirmation from knowledgeable Coast 
Guard officials that the performance data sources and the systems that 
produced them have not changed since our 2003 data reliability 
analysis. We determined that Coast Guard performance measures are 
sufficiently reliable for the purposes of this testimony.
    To determine the status of key outstanding Coast Guard 
recommendations, we reviewed past GAO reports and testimonies related 
to the Coast Guard and identified the GAO recommendations contained in 
those reports. In addition, we consulted with GAO staff who performed 
the work that resulted in the recommendations and interviewed Coast 
Guard headquarters officials regarding the status of the 
recommendations--including any progress made to implement them. We also 
obtained and reviewed relevant documents from the Coast Guard.
    To assess the Coast Guard's recapitalization efforts, we analyzed 
data and condition measures used by the Coast Guard for determining 
Deepwater legacy assets' condition, reviewed Coast Guard actions to 
maintain and upgrade the legacy assets, and assessed the improvements 
the Coast Guard is making in its management of the Deepwater 
acquisition. We will be following up this testimony with a written 
report that will contain detailed information related to the condition 
of Deepwater legacy assets, and the actions the Coast Guard is taking 
to maintain and upgrade them. As part of the follow-on report we will 
also provide more detailed information on the Coast Guard's management 
of the Deepwater program.
    This testimony is based on published GAO reports and briefings, as 
well as additional audit work that was conducted in accordance with 
generally accepted government auditing standards. We conducted our work 
for this testimony between February and March 2005.

                   Appendix II: Related GAO Products

    Coast Guard: Station Readiness Improving, but Resource Challenges 
and Management Concerns Remain (GAO-05-161, January 31, 2005).
    Maritime Security: Better Planning Needed to Help Ensure an 
Effective Port Security Assessment Program (GAO-04-1062, September 30, 
2004).
    Maritime Security: Partnering Could Reduce Federal Costs and 
Facilitate Implementation of Automatic Vessel Identification System 
(GAO-04-868, July 23, 2004).
    Maritime Security: Substantial Work Remains to Translate New 
Planning Requirements into Effective Port Security (GAO-04-838, June 
30, 2004).
    Coast Guard: Deepwater Program Acquisition Schedule Update Needed 
(GAO-04-695, June 14, 2004).
    Coast Guard: Station Spending Requirements Met, but Better 
Processes Needed to Track Designated Funds (GAO-04-704, May 28, 2004).
    Coast Guard: Key Management and Budget Challenges for Fiscal Year 
2005 and Beyond (GAO-04-636T, April 7, 2004).
    Coast Guard: Relationship between Resources Used and Results 
Achieved Needs to Be Clearer (GAO-04-432, March 22, 2004).
    Contract Management: Coast Guard's Deepwater Program Needs 
Increased Attention to Management and Contractor Oversight (GAO-04-380, 
March 9, 2004).
    Coast Guard: New Communication System to Support Search and Rescue 
Faces Challenges (GAO-03-1111, September 30, 2003).
    Maritime Security: Progress Made in Implementing Maritime 
Transportation Security Act, but Concerns Remain (GAO-03-1155T, 
September 9, 2003).
    Coast Guard: Actions Needed to Mitigate Deepwater Project Risks 
(GAO-01-659T, May 3, 2001).
    Coast Guard: Progress Being Made on Deepwater Project, but Risks 
Remain (GAO-01-564, May 2, 2001).
    Coast Guard's Acquisition Management: Deepwater Project's 
Justification and Affordability Need to Be Addressed More Thoroughly 
(GAO/RCED-99-6, October 26, 1998).

 Appendix III: Breakdown of the Coast Guard's Fiscal Year 2006 Request

    In addition to operating expenses and acquisition, construction, 
and improvements, the remaining Coast Guard budget accounts include 
areas such as environmental compliance and restoration, reserve 
training and oil spill recovery. (See table 2 below.)



  Appendix IV: Coast Guard Performance Results, Fiscal Years 2001-2004

    Table 3 shows a detailed list of performance results for the eight 
programs for which the Coast Guard has Fiscal Year 2001 through 2004 
data. \1\ Shaded entries in the table indicate those years that the 
Coast Guard reported meeting its target; unshaded entries indicate 
those years that the Coast Guard reported not meeting its target. The 
table also shows that there are three programs for which performance 
results are pending and data is not available across the four-year 
period. Each program is discussed in more detail below.
---------------------------------------------------------------------------
    \1\ According to the Coast Guard, performance results for all four 
Fiscal Years (2001 to 2004) are not available for three programs. They 
are: (a) marine safety--Fiscal Year 2004 performance results will not 
be available until spring 2005, when the recreational boating data is 
reported; (b) illegal drug interdiction--Fiscal Year 2004 results will 
be calculated and released once illegal drug flow information for 
Fiscal Year 2004 is known--sometime in the spring of 2005; and (c) 
ports, waterways, and coastal security--performance measures are still 
under development.



Programs Not Meeting Targets in Fiscal Year 2004
   Foreign fish enforcement. The performance results for 
        foreign fish enforcement, which indicate the number of foreign 
        vessel incursions into the United States Exclusive Economic 
        Zone (EEZ), \2\ has experienced fluctuations from 152 
        incursions to 250 incursions in the last 4 years. Such 
        fluctuations can be due to oceanic and climatic shifts that 
        affect the migratory patterns of important fish stocks, and 
        limited Coast Guard assets, which the Coast Guard believes are 
        unable to cover the entire 3.4 million square mile EEZ. We 
        reported previously that performance measures for foreign fish 
        may not reflect agency efforts. \3\ Because EEZ encroachments 
        can be affected by oceanic and climatic shifts that can cause 
        significant fluctuations in the migratory patterns of fish, 
        they could increase (or decrease) as fishermen follow their 
        intended catch across EEZ boundaries. According to Coast Guard 
        officials, this type of migratory factor can influence the 
        number of encroachments in a given year. Consequently, the 
        Coast Guard has added two additional measures to foreign fish 
        that focus on interception and interdiction. These two 
        submeasures are not reflected in the Coast Guard's foreign fish 
        performance goal. However, the Coast Guard believes that they 
        help it to better distinguish between those incursions that it 
        is able to identify (for example, with a C-130 it can identify 
        a foreign fishing vessel incursion) and those incursions that 
        it can actually respond to (for example, 378-foot cutter can 
        interdict a stray foreign fishing vessel).
---------------------------------------------------------------------------
    \2\ Pursuant to the 1976 Magnuson-Stevens Fishery Conservation and 
Management Act, as amended, the EEZ for the U.S. is an area within 200 
nautical miles of U.S. shores in which the U.S. has sovereign rights to 
natural resources such as harvesting rights to fish stocks. Pub.L. 94-
265, 90 Stat. 333 (1976).
    \3\ GAO, Coast Guard: Relationship between Resources Used and 
Results Achieved Needs to Be Clearer, GAO-04-432 (Washington, DC: March 
22, 2004).

   Living marine resources. The performance measure for living 
        marine resources--defined as the percentage of fishermen 
        complying with federal regulations--has varied from 96.3 
        percent to 98.6 percent between Fiscal Years 2001 to 2004. 
        According to Coast Guard performance documents, the agency 
        missed the Fiscal Year 2004 target because of poor economic 
        conditions in the U.S. shrimp fisheries, which appear to have 
        made U.S. fishermen in the Southeast region more willing to 
        violate regulations in order to maintain operations. However, 
        the Coast Guard reported that while the number of fishermen in 
        compliance decreased slightly, its total number of fishery 
        boardings (4,560) was the highest number of boardings since 
---------------------------------------------------------------------------
        2001.

   Ice operations. To meet this performance target, the Coast 
        Guard's ice operations program must keep winter waterway 
        closures under 8 days per year for severe winters and under 2 
        days per year for average winters. In Fiscal Year 2004, the 
        Coast Guard reports missing its target for an average winter 
        with 4 days of waterway closures instead of 2 or less. The 
        Coast Guard reports that it extended the ice-breaking season 
        for an additional 10 days and because of worsened winter 
        conditions within that period, its icebreaking assets were 
        challenged to provide services in nine critical waterways of 
        the Great Lakes. In Fiscal Year 2006, the Coast Guard plans to 
        complete the construction of the Great Lakes Icebreaker, which 
        will significantly improve icebreaking on the Great Lakes.

   Defense readiness. Defense readiness, as measured by the 
        percentage of time units that meet combat readiness status at a 
        C-2 level, \4\ improved from 67 percent to 78 percent during 
        Fiscal Years 2001 to 2003 but decreased to 76 percent in Fiscal 
        Year 2004 due to a personnel shortage according to the Coast 
        Guard. The Coast Guard identified its need to supply personnel 
        for the war in Iraq as the main reason for failing to meet this 
        performance target. To support Fiscal Year 2004 efforts in 
        Iraq, the Coast Guard provided personnel for six patrol boats, 
        one patrol boat support unit, one port security unit, four law 
        enforcement detachments, as well as two ships and cutters.
---------------------------------------------------------------------------
    \4\ According to Coast Guard information, the C-2 level is defined 
as the level at which a unit possesses the resources and is trained to 
undertake most of the wartime missions for which it is organized or 
designed.
---------------------------------------------------------------------------
Programs Meeting Fiscal Year 2004 Performance Targets
   Undocumented migrant interdiction. The Coast Guard reported 
        that it achieved its Fiscal Year 2004 performance goal of 
        interdicting or deterring 87 percent of undocumented aliens 
        attempting to enter the United States. The undocumented migrant 
        interdiction performance measure assesses the percentage of 
        migrants interdicted or deterred on maritime routes. \5\ In 
        2004, the Coast Guard identified 4,761 successful arrivals out 
        of an estimated threat of 37,000 migrants. In Fiscal Year 2003, 
        the Coast Guard missed this target, interdicting or deterring 
        85.3 percent of migrants. Since 2001, the greatest percentage 
        of migrants deterred or interdicted--88.3 percent--was achieved 
        in Fiscal Year 2002.
---------------------------------------------------------------------------
    \5\ According to Coast Guard officials, the undocumented migrant 
interdiction performance target was set at 87 percent based on a study 
done to incorporate deterrence as a measure of Coast Guard performance.

   Search and rescue. The Coast Guard's performance in this 
        area, as measured by the percentage of mariners' lives saved 
        from imminent danger, was 86.8 percent, above the goal of 85 
        percent for Fiscal Year 2004. The Coast Guard identified 
        continuing improvements in response resources and improvements 
        made in commercial vessel and recreational boating safety as 
---------------------------------------------------------------------------
        the main reasons for meeting the target.

   Marine environmental protection. The Coast Guard measures 
        the marine environmental protection target as the 5-year 
        average of oil and chemical spills greater than 100 gallons per 
        100 million tons shipped. Since Fiscal Year 2001, the reported 
        average number of oil and chemical spills has dropped from 40.3 
        to 22.1 in Fiscal Year 2004. The Coast Guard identified its 
        prevention, preparedness, and response programs--including 
        industry partnerships and incentive programs--as reasons for 
        the drop.

   Aids to navigation. The aids to navigation program 
        performance measure--which assesses the total number of 
        collisions, allisions, and groundings--improved to 1,876 in 
        Fiscal Year 2004, more than a 6 percent improvement over Fiscal 
        Year 2003's total of 2,000, and below the target of 1,923. \6\ 
        (Since the aim is to prevent these accidents, a lower number 
        than the target represents attaining the goal). The number has 
        varied from year to year, but has remained below or at the 
        target in each of the 4 years. The Coast Guard attributes this 
        success to a multifaceted system of prevention activities, 
        including radio aids to navigation, communications, vessel 
        traffic services, dredging, charting, regulations, and 
        licensing.
---------------------------------------------------------------------------
    \6\ The Coast Guard defines allisions as vessel collisions with 
fixed objects, as distinguished from collisions, which are vessel 
collisions with movable objects.
---------------------------------------------------------------------------
Programs with Pending Results
   Marine safety. The marine safety measure, a 5-year average 
        of passenger and maritime deaths and injuries, decreased from 
        1,651 in Fiscal Year 2001 to 1,307 in Fiscal Year 2003. The 
        Coast Guard is currently waiting on the states to supply 
        recreational boating numbers in order to release their total 
        performance result for calendar year 2004. Coast Guard 
        officials identified ongoing inspection, investigation, 
        prevention, and response programs, as well as work with 
        industry, states, and volunteers to promote boating safe 
        operations, as factors in reducing the number of deaths.

   Illegal drug interdiction. The illegal drug interdiction 
        performance measure \7\--the rate at which the Coast Guard 
        seizes cocaine--is currently being modified by the Coast Guard. 
        The Coast Guard expects their performance results will be 
        available in April 2005.
---------------------------------------------------------------------------
    \7\ The illegal drug interdiction performance measure includes only 
cocaine, because cocaine has an analyzed flow rate and is the 
preponderant illegal drug.

   Ports, waterways, and coastal security. The Coast Guard is 
        currently developing a performance measure for ports, 
---------------------------------------------------------------------------
        waterways, and coastal security.

    Senator Snowe. Thank you, Ms. Wrightson, for your testimony 
and also for your evaluation of the current challenges facing 
the Coast Guard with respect to Deepwater, and also the 
sustainment of the legacy assets, as well, and we'll get into 
that in a moment.
    Let me begin with you, Admiral Collins. I think, first and 
foremost, obviously, of concern, as we discussed yesterday--and 
I know it's a mutual concern--is the issue of the Deepwater 
Recapitalization Program and where it currently stands. And I 
know we can expect a rebaselining report. Is that going to be 
forthcoming, you said, on March 25th?
    Admiral Collins. March 25th is the date that has been 
discussed on the House side that we're committed to providing 
the report. And it's, again, the final tuning of that report 
and consensus-building within the Administration on the out-
year dimensions of that plan being finalized, as we speak, and 
a full expectation that we will meet that deadline.
    Senator Snowe. Well, I think it is going to be critical 
that we do so, because that, obviously, is going to run 
concurrent with the budgetary considerations and what we can 
expect from that rebaselining in terms of projected increases. 
And so, I think it's going to be absolutely paramount that we 
see that sooner rather than later, and hopefully that you can 
meet that deadline of March 25th in order to submit it to the 
Committees.
    Admiral Collins. Absolutely. And it'll forecast in detail 
the five--the next 5 years, and then summarize the balance over 
the course of the entire project, and it'll give detailed 
information about the capability adjustments, asset by asset, 
that we have incorporated into this new baseline, based upon 
two factors, primarily. One, the post-9/11 environment and what 
that means to the Deepwater requirement that was developed back 
in 1998, and what adjustments need. And then, second, the 
impact of the current state of our legacy systems, the current 
fleet, and what that means. Those drive the--the former drives 
a lot of capability adjustments that you put in each system, 
and the latter impacts which ones you do first, second, and 
third, because of the condition of the current asset. So those 
are the variables, and the rebaseline will delineate all those 
issues.
    Senator Snowe. Have you seen the RAND studies?----
    Admiral Collins. Absolutely. That----
    Senator Snowe.--in that regard of post-9/11 evaluation?
    Admiral Collins. The course of events here in developing 
this new baseline was direction from me, as soon as I got 
aboard in the new Department, by the Secretary--Deputy 
Secretary, ``We want to take a re-look at Deepwater, based upon 
9/11. The fact that you're a new department, 9/11, please 
review the bidding, in terms of the requirement.'' We had an 
effort by RAND to look at that issue, by CNA, Center for Naval 
Analysis, to take a look at that issue, and then we had our own 
internal assessment, which we called a Performance Gap 
Analysis. And so, we had, sort of, triangulated lines of 
position, if you will, on the issue. And the mission needs 
statement that we have put forth to the Department, a revised 
mission needs statement, which is, of course, part of the 
formal acquisition process, was submitted to the Department and 
approved last January, that details all those new capabilities, 
based on the collection of these multiple analyses.
    Senator Snowe. Well, suffice it to say, I think, the deep 
concern that we all have is the proposed schedule for the 
recapitalization of the Deepwater Project and fleet readiness. 
And I know that you've mentioned in your statement that the 
Coast Guard is experiencing a continuing decline in fleet 
readiness; and it goes to the point that Master Chief Welch 
mentioned, in terms of the impact on the ground, and as Ms. 
Wrightson mentioned, on schedule slippages. And even with the 
increase proposed by the Administration, it doesn't put us even 
on a 20-year schedule. That concerns me. You know, we're close 
to being behind schedule by 10 years. Would you agree with 
that?
    Admiral Collins. Well, clearly, the--you know, the one 
thing that has--you know, we forecasted, back in 1998, you 
know, the condition of the legacy fleet and how it would 
deteriorate over time. And we had a certain curve plotted--a 
negative slope, obviously, over time. That is steeper and more 
negative than we anticipated. And so, that fleet is eroding in 
front of our eyes. You can expect that when you have ships that 
range anywhere from, you know, 30 to 60 years old. And so, you 
see, in this request--and we've talked about it, Madam Chair--
the fact that the legacy systems are taking more money out of 
the pot to keep them going while we replace. So that is a 
balancing act that we have to continue to juggle.
    One of the things I should note in the 2006 budget, 
Deepwater request, which, incidentally, that request is 
simpatico with the new mission needs statement. Everything 
that's in that Deepwater request is consistent with the new 
capability adjustments. And even in the timing adjustments--
you'll note, in that 2006 request, two design works going on--
108 million for the middle cutter, the offshore patrol cutter, 
and design work for the patrol boat. That's much advance of the 
initial Deepwater baseline. Initially, the offshore patrol 
cutter was supposed to be, like, a 2012 phenomenon, and the 
response cutter, the new patrol boat, the ultimate patrol-boat 
replacement, like, at 2018. We're designing them in 2006. And 
because that's some of the adjustment--those are the two parts 
of our fleet that are wearing out the most, and we need to get 
the new things designed quicker.
    So, there's a reflection of our urgency--I guess what I'm 
saying is that 2006--a reflection of our urgency to get design 
work done, the up-front engineering done, so we can prepare to 
go to production for those two aspects of the fleet.
    Senator Snowe. No, I understand that, I think the bottom 
line is, we're unacceptably behind schedule on the Deepwater 
recapitalization. When you're talking about your oldest ships 
being 30 years old, 40 years old, and the maintenance 
requirements is taking two cutters per year out--since 1999, 
maintenance increased, as I said in my opening statement, 400 
percent. This is unacceptable, it's unconscionable. I've 
suggested maybe some members of the OMB should be on some of 
those Coast Guard cutters, in treacherous waters when you're 
having to perform your missions, to get an understanding of 
what we're dealing with here.
    And so here we are, we're 20 years-plus to get this program 
fully underway, let alone sustaining all the rest of the 
fleet--20 years-plus, that is where we are right now. We're 
behind schedule. I don't know if the realities are permeating 
downtown. Is there anybody understanding the conditions of the 
fleet?
    Admiral Collins. I think that there's a clear----
    Senator Snowe. Does anyone understand the degradation of 
this fleet?
    Admiral Collins.--I think there is a clear support for this 
issue. No one's questioning the requirement. And----
    Senator Snowe. Well, I know, but I think it's reconciling 
the requirements with reality. I mean, it's not enough to send 
up a budget that doesn't reflect the true reality, the grim 
reality that, really, ultimately, men and women's lives are at 
stake here.
    Admiral Collins. We are pleased----
    Senator Snowe. It does not make sense. And It's 
unconscionable we're at this point that there has been no 
adjustments made to this score. We have said it repeatedly, as 
Members of this Committee.
    Admiral Collins. We are pleased----
    Senator Snowe. And I can't believe that they're not 
understanding it.
    Admiral Collins. We are pleased that the level is close to 
a billion dollars, because the budget did come up. It's the 
highest it's been.
    Senator Snowe. It's not doing what it needs to do.
    Admiral Collins. I think----
    Senator Snowe. That's great, but it's not doing what it 
needs to do. We know that. If the requirement is so much 
greater to get some of these ships onboard now--to do it now--
your oldest ship is, what, 65? What is it, 62, 65?
    Admiral Collins. The Storis--the venerable Storis, up in 
Kodiak, is approaching 65.
    Senator Snowe. Sixty-five years old. Great age, right?
    [Laughter.]
    Admiral Collins. I think the key--we're pleased--in a 
nutshell, I think we're pretty pleased with the 2006 budget. 
We're pleased that we've got this level. And the key, going 
forward, is the out-year budgets.
    Senator Snowe. That's right, The point is, we're still 
looking at 20-plus years. That's the point. It's not moving 
anything. The need is so great.
    Admiral Collins. The consequence, of course, is, depending 
on the rate at which we replace these assets--has a direct 
bearing on the amount of money we pour into the maintenance and 
the sustainment of the existing fleet. So the direct--there's a 
direct relationship, a balance, between those two things. And 
you'll see the legacy sustainment curve costs go up. And it--
you can look at every asset we have, and that's the curve.
    Senator Snowe. Thank you. And I will get to the other 
panelists in a moment. I'll move to Senator Cantwell, and 
hopefully you can respond. Thank you.
    Senator Cantwell. Madam Chairman, did you want to recognize 
the Chairman of the full Committee?

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. I would like to go forward, thank you.
    I do hope, Senator, that we'll keep things in perspective. 
Senator Inouye and I, on the Appropriations Committee, have 
seen to it that this budget's been increased every year. We put 
168 million more in 2004 bill. We put 724 million into the 
Deepwater in 2005. And we now have a 242 million increase over 
2005, and up to almost a billion dollars in 2006. That's a 
total of almost 2.4 billion in the last 3 years on this 
Deepwater side alone. The problem is that because of the 
homeland-defense missions, these ships, planes, and helicopters 
are being used, I am told, at 40 percent higher levels than 
scheduled in the plan that was for 20 years.
    Now, I--you know, we have half the coastline of the United 
States, and the Admiral and I are old friends, and I'm inclined 
to be more realistic, I think. There's no possibility of going 
much further than we've gone right now. And the question is, 
How can we improve, really, the utilization of the funds that 
we have available?
    I would like to go into some of the--we all have available 
the GAO reports. What has really happened is that the Deepwater 
funds have been used for--increasingly, for maintenance and 
repair and restoration of existing facilities, and not for 
modernization. That's not the Coast Guard's fault. It's not 
anyone's fault. It's the result of 9/11 and of the change of 
the society.
    Now, Admiral, have you reshaped your--do I understand--is 
that what I understand? You're going to get a----
    Admiral Collins. Yes, sir. On the 25th, you'll see the new 
revised plan that'll--new timeline and some of the changes and 
when each asset starts to appear--you know, the sequence of 
them. And, as I mentioned, for example, we have adjusted the 
ship schedules of the two--the there's classes of ships--the 
two lower classes, we've moved that schedule to the left, or 
we've advanced that design schedule, given the current 
condition of the legacy systems. So the idea is to get those 
new ones starting to come onboard sooner, rather than later, so 
we can reduce the amount of money we have to invest in the 
maintenance.
    Senator Stevens. Well, I appreciate that. I mean, we are 
going to some smaller ships. I was told the other day the 
Chinese are building a ship now that's got 45 knots on it, and 
it's the size of our small destroyers from World War II. Most 
of the navies of the world are going to smaller, faster ships. 
Are you going to do the same thing?
    Admiral Collins. Yes, sir. Of course, we've been in the--
you know, below the frigate category forever, building smaller 
vessels. That's where we are. Those three classes of ships are, 
I think, well conceived. The lowest one, the smaller one, the 
patrol-boat replacement, Senator, is a--we're very excited 
about it--it's a composite technology design. And the advantage 
of that is that it has double the life of a steel hull, less--a 
lower life-cycle maintenance to it. And that's going to be--
we're going to--presently designing that, and have a sort of a 
proof of concept, the prototype, that Northrop will be building 
down in Pascagoula. That's being designed as part of the 2006 
budget. So that's great use of--that's innovation to extend the 
life of these five forms, to reduce the maintenance and the 
maintenance burden on the crews, and so forth. So we're excited 
about that.
    The other thing we're doing----
    Senator Stevens. Let me interrupt.
    Senator Lautenberg. What size is that vessel?
    Admiral Collins. It's--really, it's conceptual design right 
now, Senators, but 140 feet.
    Senator Stevens. Do you want to comment, Ms. Wrightson?
    Ms. Wrightson. Yes, I would, thank you.
    I have two things I'd like to add to the discussion which I 
think might help. Number one, we have work ongoing now on the 
condition of legacy assets, and we will be issuing that report 
this summer. Work to date suggests that, while it takes a fair 
amount of digging and qualitative data to show it, the Coast 
Guard's assets really do have significant condition problems. 
But it's important to distinguish between their aircraft and 
their cutters in this regard.
    And when you think of aircraft and cutters and how much of 
the resources in Deepwater are being pulled away to take care 
of aging assets, we did an analysis for this hearing that I 
thought would be helpful. And it's nothing that I haven't 
spoken to Admiral Stillman about or that he doesn't agree with. 
We think there needs to be more transparency in this situation. 
For example, there's a figure that's touted, 25 percent of the 
Deepwater 2006 is going to take care of legacy assets, but if 
you take--break that out by Deepwater legacy assets that are 
really hybrid assets and are going to be part of the Deepwater 
solution, such as the HC-130, the HH-65, and the HH-60, which 
are their helicopters and fixed-wing, you see that 20.9 percent 
of 2006 is for those; whereas, for cutters, which is truly the 
sustainment part of the picture, it's only 3.9 percent. Even 
the contract management is 4.1 percent.
    So we're not seeing the resources sucked away in the way 
that's being discussed. And, in fact, I would argue, as I did 
to Admiral Stillman, that accelerating the HH-65 represents a 
prudent decision and an investment.
    So it's important to have that kind of transparency in 
the--in looking at it, without at all discounting the cost of 
maintenance that you mentioned, Senator, are rising 
exponentially. That is true. They're in different accounts----
    Senator Stevens. Thank you. I want to get to another 
subject----
    Ms. Wrightson. Yes, thank you.
    Senator Stevens.--Admiral. Senator Cantwell mentioned the 
Oil Spill Recovery Fund. That started as a Trans-Alaska 
Pipeline Liability Fund, and we changed it into a general tax 
on refined crude oil. It's paid at the refinery, and it's got a 
cap of a billion dollars.
    Now, it's my understanding that, currently, according to 
the briefing you gave our staff, that funding will run out 
something like 2010, and, for the first time, it's gone down 
below a billion dollars. But we're consuming more and more oil 
every year, and it's a fixed fee of five cents a barrel. Tell 
me, why are we dipping below the cap right now? Why do you 
predict that it will be--it would be a net loss of 200 million 
a year?
    Admiral Collins. Of course, the tax is no longer in effect. 
I think--I want to say--looking at Senator Lautenberg--I think 
it was 1994 or 1995 that was--that tax stopped. And so, there 
is that--incoming source isn't--doesn't--is not there. That tax 
is no longer in--that's no longer in existence.
    And so, what we've had since--we've had since the mid-
1990's is about 19 spill cases, where the spill exceeded, you 
know, the liabilities of the spiller, and so forth, and the 
spill had to be underwritten by the fund.
    So our projection is that continuing negative drain on this 
fund is about 200--projected to be about 200 million.
    Senator Stevens. Admiral, I've got to tell you, the statute 
says no tax applies if the unobligated balance in the fund 
exceeds a billion dollars. But you're--you brought it down 
below a billion dollars last year. The tax should go back into 
effect. I want to make sure we find out what's going on here, 
because I don't want to see a request for money to be 
appropriated to go into that fund. It is a fund that is charged 
against both domestically produced and imported oil at the 
refinery. So, under the circumstances, it should be going back 
into effect if it has, in fact, dropped down. And I am told it 
did drop down below a billion dollars, in terms of the net in 
the fund as of the end of last year.
    Admiral Collins. Let me consult with my fund center, 
National Pollution Fund Center, and my staff on the details of 
that. But my brief was that that source is no longer available.
    Senator Stevens. But the fund is still there. It does not 
exceed a billion dollars anymore. And, under the statute, it's 
supposed to go back into effect when the fund drops below a 
billion dollars. So I think you ought to have your people check 
it.
    Admiral Collins. We will, sir. And, of course, there's 
categories within the fund for spill response, and there may be 
some relationship there. Let me consult with my experts on 
that. But, again, I've been repeatedly briefed----
    Senator Stevens. We'll consult with the Finance Committee, 
also. But it does seem to me--Madam Chairman, I do hope we'll 
look into the question of how the money is being used. We have 
had an annual increase over your request for--and it has been 
for the Deepwater Program. But because of the circumstances of 
the Administration and the Department, they have taken, from 
the Deepwater Program, the moneys for operation and maintenance 
of your existing assets, as I understand it. Now, I think we'd 
better have some conversation about that with the Department as 
a whole, because I don't see that we can continue to increase, 
at the rate we're increasing right now and the period we're 
in--we have the same problem with airplanes in the military. We 
have the same problem with almost every single agency of the 
Federal Government because of 9/11.
    Admiral Collins. Right.
    Senator Stevens. 9/11.
    Admiral Collins. The point that Ms. Wrightson made, I 
think, is right on target. I mean, she said that it's--you've 
got to look at that money that we've called legacy sustainment. 
A good chunk of that portion, sir, is really an investment in 
Deepwater, because the--give you an example. The best example 
is the HH-65 re-engining. The HH-65 is not an asset that's 
going to be replaced by Deepwater. It's going to be one of the 
new Deepwater assets, because it's going to be transformed into 
new engines, new gearbox, and so forth. So it is, in fact----
    Senator Stevens. Well, let me close with this. I'm using 
too much of my--we fought putting the Coast Guard in Homeland 
Security for just this reason. The moneys have been taken for 
homeland security from the basic funding for the Coast Guard in 
Deepwater. Now, that's not homeland security out in Deepwater, 
necessarily. But what you're spending on, basically, is--40 
percent increase in deterioration of your assets, is within the 
50 miles offshore. We're talking about further than 50 miles 
offshore, as I understand it, in terms of Deepwater, right?
    Admiral Collins. Sir, Deepwater goes from our ports and 
out, it's--they're very versatile assets, and they can cover 
that whole range. The other part--but, again, let me reiterate, 
without abusing this point--but the--a lot of that legacy 
sustainment category is, in fact, ultimate Deepwater assets. So 
it really is an investment in the replacement. Not only the 
helicopters, sir, but the part of--you'll see the new baseline 
report, coming up, and it will propose doing a service-life 
extension on the C-130's, doing a service-life extension on the 
H-60s----
    Senator Stevens. Thank you very much. I look forward to----
    Senator Snowe. Well, I agree with--and let me just say, to 
the Chairman's point, because it's a good one--we need to 
separate out. Because if 25 percent of the Deepwater 
recapitalization funds are being used for legacy sustainments, 
we have to make the distinction, in terms of what is going to 
be continuing ongoing equipment, as opposed to total 
replacement. So if we're investing in ongoing equipment, that's 
one thing. It's quite another if that equipment needs to be 
replaced. And so, we have to make those distinctions. And I'd 
appreciate it if you could submit to the Committee a cataloging 
of that by aircraft----
    Admiral Collins. We would be----
    Ms. Wrightson. Actually, I was just----
    Senator Lautenberg. Madam Chairman?
    Senator Snowe. Yes.
    Senator Lautenberg. Before Senator Stevens leaves, it is my 
understanding that the tax is not reinstated once the trust 
fund balance falls below a billion dollars. That was an all-
time cap; that, at a billion dollars, the tax would stop being 
collected. Is there any staff question about that? Do you know, 
Commandant?
    Admiral Collins. Again, I've been briefed that that source 
is no longer available----
    Senator Lautenberg. Yes.
    Admiral Collins.--Senator, that the mechanism is no longer 
available to support----
    Senator Lautenberg. Right.
    Admiral Collins.--that spill fund.
    Senator Lautenberg. Right. That's our understanding.
    Senator Stevens. We examined the statute before we came in. 
We've got it right here. You can look at it right here. It says 
it resumes when it drops below a billion dollars. Now, whether 
it has or not----
    Senator Lautenberg. Well, it hasn't, but, OK, we'll--thank 
you.
    Senator Snowe. Yes, we need to clarify that.
    Senator Cantwell?
    Senator Cantwell. Thank you, Madam Chairman. And, 
obviously, we're very interested--given the oil spill in Puget 
Sound for which liability has yet to be determined--we 
certainly want to continue the program. And so, we'll look for 
clear resolution of that issue and whether the fund 
automatically starts up again or not. It sounds like there is 
some confusion about that, but it is my understanding that it 
doesn't automatically startup again.
    Senator Lautenberg. That it does?
    Senator Cantwell. That it doesn't. But hopefully we will 
get this resolved and get the commitment. I think we're at 
least all heading in the same direction, even if we don't have 
agreement yet on the current statute language.
    I'd like to turn to the issue of the polar icebreakers. 
Part of the Administration proposal is that the Coast Guard no 
longer be responsible for the operation and maintenance of the 
three polar icebreakers. I don't know if you know why the 
Administration has made the proposal to transfer maintenance 
and operation responsibility to NFS, but I'm very interested. 
Don't you think that this creates a certain amount of 
uncertainty regarding the stream of funding, if responsibility 
is transferred to NSF? How can we be sure that the funding 
needed for the program is maintained if responsibility is 
transferred out of the Coast Guard? I think the Coast Guard's 
Ice Breaker Budget is something like 47.5 million, and I think 
estimates are that closer to 75 million is needed. So aren't we 
already, with this proposal, short-changing the operations and 
maintenance of this program?
    Admiral Collins. Senator, the current thinking in that 
proposal in the 2006 was that the requirement owner--in this 
case, the National Science Foundation--as the customer for this 
service, should have the funding base for the icebreakers, the 
three icebreakers--the Healy, the Polar Sea, and the Polar 
Star--in their appropriation, and then allow them to articulate 
the requirement and justify the requirement to their approp's 
committees. And then they would reimburse us for services 
provided. We would still operate and maintain. They would be 
the customer, justifying the money and providing the money to 
us. So that is the theory--that is the theory of it.
    The problem here, of course, is that, not only--the 47 was 
the existing icebreaker base of funding, historical base of 
funding, for the three breakers. The issue is a funding problem 
relative to the short-term operation, the continued operation 
of those vessels, and then follow-on long term. Our engineers 
estimate that, from 2006 to--well, actually 2005 through 2008--
that there is an additional requirement--and we keep those 
vessels running--of another $14 million per year above that $47 
million base. And that has a lot to do with this legacy-system 
curve we talked about. It has to do with--they're approaching 
30 years old, they have been running very hard. The last 
several years, we've had--except this year--the previous 
several years, we've had two icebreakers down in the ice 
because of the severity of the ice. They're older vessels, and 
they require money to keep them going.
    So that's the fundamental dilemma. And then in the post-
2009--if you could keep them going to 2009, how do you sustain 
the operation? How do you have a capability for this nation in 
the polar regions beyond that timeframe? How do you sustain 
this for the long haul?
    So you've got a short-term problem of keeping the existing 
platforms alive, and you've got a longer-term problem of, How 
do you sustain the nation's ability to exert its influence in 
the Arctic and Antarctic from now into the future?
    There is a----
    Senator Cantwell. Admiral, how can you maintain your 
operations of those facilities when someone who's determining 
what it takes to maintain those operations isn't even operating 
those facilities and is somewhere else?
    Admiral Collins. We then--we have to communicate--it is--
there's a communications challenge. We've got to communicate to 
them each year, as they prepare their budget, what the next 
year's requirement is. They have to put it in their budget. 
They have to justify it to their appropriations staff. Then 
they have to, again, reimburse us that amount so we can provide 
the operation.
    Senator Cantwell. Just so I can be clear: they're not 
involved in the operations and maintenance at all?
    Admiral Collins. No. So it is--part of the direction was 
for us to develop a memorandum of agreement with NSF on the 
mechanics of this arrangement and how it would--how it would 
play out. I have to be candid with you that I have some level 
of anxiety about how efficient this process will be over time 
and the difficulties of being coordinated and having everyone 
on the same sheet of music. So, it will be a challenge.
    In terms of the long-range planning for the--What is this 
nation going to do with polar icebreakers in the future?--we're 
responding to congressional direction to conduct a strategic 
study, in partnership with the National Academy of Sciences. 
And there is a deliverable that'll happen in September. It 
looks like it will be an interim report, and then a final 
report the following, I want to say, spring. But it will 
project the strategic requirement in the future for these.
    So we've got, again, to make a long story short, a short-
term problem about keeping these existing--Polar Sea, Polar 
Star alive and then a longer term problem, How are we going to 
maintain this capability for the nation? It's the only breakers 
that this nation has.
    Senator Cantwell. Are you concerned that this change will 
eliminate that capacity for the future?
    Admiral Collins. Yes, I am. I think that--my personal 
opinion is, this nation--I think the ultimate study is going to 
say--we've done these studies before. We did one in--10 years 
or so ago that said this nation needs at least three polar 
icebreakers. And I think this--I would--I don't want to presume 
what this next study's going to say, but I would--if I was a 
betting man, I would bet some money that it would say, ``This 
nation needs polar icebreakers. There is strategic importance 
to this nation to have an ability to exert a presence in the 
Arctic and the Antarctic.'' I think that's what it will--would 
say. And I--but we have to, of course, do the study. And we 
will.
    But I am concerned that this very unique capability--
there's only two--the Healy is an Arctic research vessel, 
really not a full-fledged powerful polar breaker. Only two. And 
they--at the end of their service life. We're at a very 
critical juncture of keeping them alive for the next couple of 
years, and then replacing them, ultimately--either extending 
their life or replacing them.
    Senator Cantwell. Admiral, before my time runs out in this 
first round, we've had a lot of discussion from my colleagues 
already about the Deepwater Program, in general. And one of the 
concerns that I have is how you maintain that expertise, from a 
workforce perspective, in shipbuilding. You mentioned something 
about the new level of manufacturing in shipbuilding relating 
to composites. That's near and dear to the Northwest, because 
composites are playing a larger role in airplane manufacturing. 
It already played a pretty large role in commercial boat-
building, so we're glad to see it transfer to the Coast Guard 
side.
    But one of the questions that I think would be important 
for Members to know is how many of these assets right now are 
being built by foreign companies?
    Admiral Collins. How much of the Deepwater?
    Senator Cantwell. Yes.
    Admiral Collins. Of course, all the Deepwater is consistent 
with Buy America and all the necessary constructs on that end 
of the business. There are portions of a given system that are 
foreign. For example, the two major cutters--the national-
security cutter--the high-end cutter and the middle cutter--
their engines are Mercedes engines that are going in. That was 
determined to be the best value and the best fit for the design 
of that ship. The whole ship is made in Pascagoula. But 
portions of it could be foreign.
    The HH-65 engine replacement that we're proceeding with 
right now--replacing engines for almost 100 helicopters, a 
little less than 100 helicopters--that's a Turbomeca engine, 
and--but it's assembled in the United States and installed in 
Texas, and then installed at our air--our aircraft repair 
facility in North Carolina. And there's potential for a second 
line in Columbus, Mississippi.
    So, Deepwater is an interesting thing. It's got contractors 
and subcontractors, systems and subsystems, and suppliers 
span--I think the latest count was 35 states. There are 
subcontractors, suppliers, and contractors in 35 states across 
the country that are supplying for Deepwater.
    The one aircraft, fixed wing, the CASA, which is also a 
Deepwater asset, that is--EADS CASA is Spanish aircraft 
manufactured in Spain, final assembly and configuration in the 
United States. That's a Deepwater component. So, it's kind of 
mixed, consistent with acquisition rules and Buy America, and a 
lot of players involved.
    Senator Cantwell. Thank you, Madam Chairman. I see my time 
is expired.
    Senator Snowe. Thank you, Senator Cantwell.
    Co-Chair Inouye?
    Senator Inouye. Thank you very much.
    I'd like to change the pace. Most Americans, Admiral, would 
look up on the Coast Guard as an agency to guard the coastline 
of America--intercepting smugglers and rescuing fishermen. But 
we know that, all during World War II and every war since then, 
the Coast Guard has received assignments in war zones. What 
sort of assets are now in war-zone assignments?
    Admiral Collins. Thank you for that question, Senator. And 
you're absolutely right, we've been in every major war or 
confrontation this country's had since 1790. And we played a 
role--at the height of Operation Iraqi Freedom, we had about 
1200 men and women and 11 ships, some in the Eastern Med.--
supporting Navy ops in the Eastern Med.--the bulk in the 
Northern Arabian Gulf, even including a buoy tender from Hawaii 
that supported operations in the approach to Umm Qasr, in terms 
of aids to navigation.
    Currently, we have six patrol boats there. They're working 
in tandem with four Navy patrol boats in a unified squadron. 
The commodore of that squadron is a Coast Guard Captain working 
out of Bahrain. And their mission is marine intercept 
operations, intercepting ships going back, boarding them, and 
also providing security for the very valuable offshore oil 
platforms for Iraq.
    The Master Chief and I just got back from a trip where we 
got out and--got offshore, got a little wet and sloppy and went 
out--staged off the Duluth, the Navy vessel Duluth, took an 11-
meter RIB and visited all our patrol boats underway providing 
such security. And there, it's a year deployment for each one 
of those crews, Senator. So six vessels.
    Senator Inouye. Are your people also in the Philippine and 
China Seas?
    Admiral Collins. There is a--periodically, Senator, we 
participate in--if you're familiar with CARAT, which is 
Cooperation Afloat for Readiness and Training. It's a PACOM 
engagement strategy in the Pacific Rim, mil-to-mil training and 
so forth. We, every other year, participate in that.
    We had the MUNRO--Coast Guard Cutter MUNRO--that--a high-
endurance cutter that was involved in the tsunami relief with 
the seventh--under the seventh--the PACOM in the 7th Fleet, and 
provided--worked in that theater, and now proceeded on--that's 
another--quite another vessel--we have it working with the Navy 
in the Med.--excuse me, in the Arabian Gulf.
    Senator Inouye. And your ships were assigned to the tsunami 
relief effort, also, weren't they?
    Admiral Collins. Yes. We had a 378 that moved thousands and 
thousands of pounds and tons of relief material, and we had two 
C-130s from Barber's Point that also provided relief, flying 
into Sri Lanka, the Maldives, Indonesia, with relief supplies. 
So we're a full-fledged armed-force partnership. We have 
transparent operations with our counterparts, the Department of 
Defense--transparent, meaning very highly coordinated, 
effective operations--to this day.
    Senator Inouye. So your assignments and your services are 
very similar to those of the Navy?
    Admiral Collins. We are interoperable with the Navy, 
Senator. We've spent a lot of time working--Vern Clark and I 
engage a lot, plan a lot, and develop our fleets so they are 
simpatico. In other words, non-duplicative, but complementary 
capability built into our fleet.
    Senator Inouye. And may I now ask the Master Chief, How 
does your housing compare with naval housing?
    Chief Welch. Senator, I think the Coast Guard's government-
owned housing is comparable to DoD housing, carte blanche, sir. 
We have done wonderful work for our people who reside on the 
economy by increasing significantly the basic allowances for 
housing that they receive. Those people, throughout the 
country, for the most part now have reduced their out-of-pocket 
housing expenses to zero. That's significant. Around a 20-
percent increase over the course of the past 4 years.
    Government-owned quarters, in the case of the Coast Guard, 
sir, faces the dilemma of deferred maintenance; in some cases, 
10-year maintenance deferrals. And we, as the Coast Guard, have 
decided to pursue privatization, to the extent it makes sense 
and that it is possible.
    But, categorically speaking, government quarters in the 
Coast Guard--Cordova, Alaska, being probably the worst of our 
worst--is in poor shape. And it is my opinion that we either 
privatize the housing or divest the housing altogether, 
particularly from a business case, sir.
    Senator Inouye. Are you suggesting to me that the quality-
of-life programs that you have are just as good as those of the 
Navy or the Army or the Air Force?
    Chief Welch. I think the programs, Senator, are on par with 
the rest of the Department of Defense. Where the Coast Guard, 
however, has challenges is that most of our people are assigned 
far beyond the bounds of the facilities offered by the 
Department of Defense, and, in many cases, the facilities 
offered by our Coast Guard. We are typically in remote, high-
cost, rural sorts of areas. So we have significant challenges 
to provide parity with respect to DoD quality-of-life programs, 
but we do our very best to see that that happens, Senator.
    Senator Inouye. Thank you, Master Chief.
    Chief Welch. Thank you, sir.
    Senator Inouye. Admiral, I will be submitting a question on 
the Coast Guard station on Maui, something we discussed 
earlier. And, if I may, I'd like to have a written response to 
that.
    Admiral Collins. Yes, sir. We will be glad to. But that's 
the issue where we're looking at the adequacy of that boat to 
deal with the current weather conditions and operational 
profile of that station. And I think we've come to the 
conclusion we've got a mismatch between the operational 
conditions there and the size of the boat we have. And so, we 
will provide some options. We're working through some options 
to fix that, and we'll clearly communicate that to your staff.
    Senator Inouye. My last question, if I may, Madam Chair. 
District 14 has responsibility for the largest geographical 
area. That's correct, isn't it?
    Admiral Collins. It sure is, sir.
    Senator Inouye. However, it has the smallest billet of 
personnel. Is that correct?
    Admiral Collins. It's one of our smaller districts, 
absolutely.
    Senator Inouye. Smallest number of cutters?
    Admiral Collins. Um----
    Senator Inouye. I think I'm correct.
    Admiral Collins. You're probably correct.
    Senator Inouye. And the smallest number of aircraft. How do 
you explain the largest area having the smallest number of 
personnel and assets?
    Admiral Collins. I think you've got to look beyond the 
numbers and look what the capability that we build into those 
ships that we--the ships that are there, as you know, are high-
endurance cutters, they're very capable cutters. They have long 
legs, longer legs. And the C-130s have long legs. That's a 
reason C-130's are in--at Barber's Point and sustained there. 
So what we're trying to do is put--and we've got, of course, 
three brand-new buoy tenders that we've put in--so, in terms of 
the workload, the aids-to-navigation workload relative to buoy 
tenders, for--to give you an example--is a pretty good match. 
So we're trying to match capability and workload with the type 
of assets. And I think we--other than--and, of course, we've 
got a new coastal patrol boat there--other than Maui, I think 
we've got a pretty good match between workload, capability, and 
the type of assets.
    Senator Inouye. So you have sufficient assets to carry out 
your mission?
    Admiral Collins. To optimize every mission, probably not. 
To be able to respond to, on a risk basis--allocate to the 
highest risk, that's what we do--I think we're--this budget 
clearly will help us continue to do that.
    Senator Inouye. I thank you very much, sir.
    Admiral Collins. Thank you, Senator.
    Senator Inouye. Thank you, Madam Chairman.
    Senator Snowe. Thank you, Senator Inouye.
    Senator Lautenberg?

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thanks, Madam Chairman.
    And, first, I want to say to our two uniformed friends at 
the table that we're proud of your service, both individually 
and collectively. And I would also tell you that I don't 
remember seeing as many hash marks, Chief, as you've got there. 
I don't know whether they're putting lights on or what, but 
there are a lot of them. They signify a lot of service. And 
thank you for your excellent testimony. Admiral, you and I have 
known each other for some time. But hearing your report is 
really significant, and it was just a very good idea to make 
your statement here.
    Madam Chairman, you said something before. You talked about 
reality--What's the reality here? When we look at the Coast 
Guard we realize, as you know, that the assignments have 
changed so radically. It's my view that the combat theater for 
the war on terror has moved from Iraq and Far East to the 
internal boundaries of the United States. As a consequence, 
you're on a lifesaving mission every day, whether--and I'm not 
just talking about search and rescue, I'm talking about this 
constant high-tempo, on-guard mode that you're in. I'm on the 
Hudson River, and--funny enough--you had not only bi-coastal 
representation here, to use the expression, but you also had--
before my two colleagues left, you had 240 years of mankind. 
All three of----
    [Laughter.]
    Senator Lautenberg.--all three of us are veterans of World 
War II, and I think we're the only ones remaining in the Senate 
who were in the combat theater.
    And so, when I looked at the assignment, Madam Chairman and 
colleagues on the Committee, it's extremely difficult and, Ms. 
Wrightson, you do a great job, and your report was excellent, 
but I take exception with it, not to the extent that we ought 
to correct what it is that we're not doing well, in terms of 
the Administration's effort but even farther, we ought to try 
to catch up. Without looking at this thing in its global 
context--and I'm not talking about the Earth--I'm talking about 
where Coast Guard used to be as a service and what the missions 
were and NAVAIDs and buoys and, you know--I was a bit of a 
sailor, and--all those things are important. We built a 
gigantic marine industry that only one country has in its 
entirety, and that's America. And the Coast Guard helped build 
this by being out there to help when mariners are in distress 
and by making sure that the navigation obstacles are 
identified, and so forth. But the list of assignments just kept 
getting bigger and bigger and bigger.
    I would ask you, What was the maximum population of people 
in uniform, Admiral, at any time in the history--recent history 
of the Coast Guard?
    Admiral Collins. Well, World War II, we had 240,000 people 
in the United States Coast Guard. That, of course--it was a 
wartime footing.
    Senator Lautenberg. What would you say, post-World War II?
    Admiral Collins. We're--we are starting to approach the 
level that we were at in the late 1960's--was probably the high 
point, in terms of the population of the Coast Guard. I can 
give you--I can get you some historical data on that.
    Senator Lautenberg. It's just general reference. Because I 
listen--and this is not just for Ms. Wrightson's benefit, but 
just anybody who might hear what we're discussing--and that is, 
not only has the personnel reduction been significant over the 
years, but the legacy equipment, all of that--my daughter had 
the privilege of swinging the bottle of whatever was in there 
at the--I think the cutter Mohawk, if I'm not mistaken. And 
that was thought to be new and--and when we talk about ships 
that are 60 years old, or 50 years old, or 40 years old, and 
just know what the maintenance requirements are like, we're not 
being realistic. So we have larger assignments, more 
assignments--and the question about oil spill came up with 
Senator Stevens. The oil spill that we recently had in the 
Delaware River is--it's going to cost substantially over $100 
million. The liability limit for the carrier is $45 million. 
So, there it is. And we've had these massive spills. One of the 
biggest ones was probably Exxon Valdez. And we're still paying 
a price for that spill. We had someone down from Alaska who 
picked up a rock on the beach--no depth to it--inches--and 
there's still an oil pool below--just below the surface, or 
right at the surface, left over from 15 years ago.
    So, I'm concerned about the breadth and the expansion of 
the Coast Guard's assignments, and the depth of their 
responsibilities. When I look out the Hudson River from where I 
live, and where I used to be able to see the World Trade 
Centers very clearly, the empty space now is a constant 
reminder of what happened on 9/11. And I see a couple of 
fellows out there--it looks like either rubber or fiber little 
tenders out there, with the blue light and the machine gun, and 
I see the Coast Guard is out there. That can't be very 
interesting duty, but they're out there doing it, and doing it 
diligently. Wherever we look, we always want to know that the 
Coast Guard is nearby. Maybe that comes from my ``on-water'' 
days as a recreational sailor, but it is still true for many 
Americans.
    So, I start and end with a commendation of the Coast Guard, 
the services that you bring, and to say that we've got to face 
up to the lack of serious response by our government, in terms 
of maintaining a fleet that doesn't require so much of its 
energy, so much of its resource expended on keeping things 
going that should have been retired. Now, I look in the mirror 
sometimes, and I say the same thing about me. But----
    [Laughter.]
    Senator Lautenberg.--the fact of the matter is that it 
takes a fair amount of maintenance to keep these old----
    [Laughter.]
    Senator Lautenberg.--old ships afloat.
    I forgot about--I'm reminded that Senator Warner and Akaka 
also served in uniform, World War II.
    So, one thing I want to ask you before I close up here. The 
Coast Guard's report, Admiral, on the Oil Pollution Act of 
1990, we're still waiting. What's the status of that report. 
Can you tell me?
    Admiral Collins. We're looking at the--an April timeframe, 
no later than the end of April, to get that report. It's in the 
final stages of review, and that's the timeframe we're looking 
at now, Senator.
    Senator Lautenberg. It's really critical. And the debate 
that we had about whether or not the trust fund gets 
replenished is something we have to sort out, because we don't 
think that there is the provision that automatically kicks in 
to replenish the base.
    Ms. Wrightson, do you have any knowledge of that?
    Ms. Wrightson. You know, while that discussion was going 
on, I was thinking to myself that, if it would be of 
assistance, we would ask our GAO lawyers to take a look at it 
and get the Committee----
    Senator Lautenberg. Yes, that----
    Ms. Wrightson.--an answer.
    Senator Lautenberg.--it would be very----
    Ms. Wrightson. Absolutely.
    Senator Lautenberg.--very helpful.
    And the--one of the things that concerns us is the fact 
that the IG has found major problems with port-security 
funding, because the funds, largely, are not based on security 
risk at the ports. Now, does the Coast Guard have a role in 
deciding which ports get special attention, particular 
attention? Do you have the liberty of assigning resources to 
these places? Or is that coming from the Secretary's office?
    Admiral Collins. Sir, our--the extent of our involvement 
is, sort of, as a expert witness. We provide, both at the field 
level--our Captain of the Ports will review the grant 
applications, from a maritime-security perspective and their 
knowledge of the port and the port vulnerability assessment 
that has been conducted in the port, and so forth, and makes 
some comment about the merits of that particular application. 
And then that goes up at the national level, and there is 
another interagency body that reviews that. But the ultimate 
decision is at the Secretary level, sir.
    Senator Lautenberg. And, Ms. Wrightson, will the GAO look 
at the problem about this----
    Ms. Wrightson. We actually have work ongoing for a 
different Committee on the Coast Guard's efforts, which I 
would--I don't want to be premature, but our, sort of, leading 
edge in using risk-based management in resource-allocation 
decisions----
    Senator Lautenberg. But we----
    Ms. Wrightson.--the--we will, and it will probably be 
issued in the early summer. I'll make sure you get a copy.
    Senator Lautenberg. All right. Because if we leave the 
Coast Guard out of it, the----
    Ms. Wrightson. Oh, we're----
    Senator Lautenberg.--the generic question----
    Ms. Wrightson. Right. We're looking at it from the DHS 
perspective, as well.
    Senator Lautenberg. Madam Chairman, thank you very much. 
And I commend you for having called this hearing----
    Senator Snowe. Thank you.
    Senator Lautenberg.--and for your conduct of it. It really 
got--we got to the nub, I think, of things today.
    Senator Snowe. Thank you, Senator Lautenberg, and thank you 
for your contributions here this morning. They certainly are 
invaluable to the goal that we all share and want to accomplish 
as a result of this hearing.
    I just have a couple of questions. And the remainder we 
will submit for your responses.
    Admiral Collins, I wanted you to respond to Ms. Wrightson 
and the GAO with respect to the schedule slippages. I 
understand that it could be well exacerbated with the 
rebaselining. And I would like to have you address that 
question. Have you been able to resolve those issues for the 
future?
    Admiral Collins. In terms of the GAO audit on the project 
and the project management, I think there was a--Ms. Wrightson, 
correct me if I've got the number wrong--I think it was 11 
different issues that were cited. And we've been working 
collaboratively with GAO to address each and every one of 
those. And some have been a check next to them that they've 
been addressed, others are still work in progress, as Ms. 
Wrightson has noted. And we feel that they're very valuable 
contributions or recommendations that they've made, whether 
it's how we coordinate the project teams, how we ensure cost 
competitiveness, and the like, were the recommendations, and we 
take them very, very seriously, and we're working hard to put 
them into effect.
    Some of the schedule slippage, you know, is a function--
overall, in the project management perspective--is a function 
of what--when you get the dollars, you know, and what level of 
dollars you get, relative to the initial schedule 
implementation. You know, that--it required a certain amount of 
dollars, the implementation plan, as designed. We said, ``We 
need X amount of dollars, adjusted for inflation on this 
timeline to keep this schedule.'' In the first several years of 
Deepwater, we did not get those levels. And so, that directly 
impacted the schedule.
    Other cases, we've taken a breather on a system or 
subsystem because we thought we--we had some issues that had to 
be dealt with, and, before launching forward, we wanted a 
pause. An example is the conversion of the 110 to 123. It has 
some initial structural problems--the MATAGORDA is the name of 
the vessel--and we needed to totally evaluate that, make the 
appropriate adjustments, and do operational evaluation on it 
before we made an additional commitment for additional hulls. I 
think that was the right thing to do. And so, every one, I 
think, has been a prudent decision.
    But the real driver on schedule, it all comes down to cash-
flow. I mean, I--and hopefully there--we will minimize schedule 
slippage based on management problems. We want to minimize 
that. And with the help of GAO, we'll continue to refine and 
improve that, to eliminate that, or reduce that as a cause of 
this slip. But there's, again, certainly variables in there.
    Senator Snowe. Ms. Wrightson, do you have anything to add 
on that particular question?
    Ms. Wrightson. Well, I would concur that--you know, that 
we've had a constructive engagement with the Coast Guard in 
this. And in the next month or so, I plan to meet with Admiral 
Stillman and go over the list again.
    I want to make one compliment to the Coast Guard, and one 
caution on this. We had an issue last year with the Coast 
Guard's not updating its master schedule. And in an acquisition 
of this kind, it's very important for them to understand the 
relationship between the subcontracts the first year, and so 
on. They have done that now, and it should give them a much 
better visibility into where they are with each particular part 
of the acquisition, and that should help.
    Other things, though, are well beyond their control. And 
just speeding up the dollars won't do it. HH-65, good example, 
doubled the money the Coast Guard wanted. The Coast Guard is 
probably not going to make a 24-month implementation schedule. 
If they try to do it, they could be at risk for paying premiums 
to the contractors who do the work. They could be at risk of 
taking too many assets out of service.
    So, we want to be cautious. I appreciate the admonition to 
be kind to the Coast Guard, as Senator Lautenberg said. But I 
think our relationship with the Coast Guard is just right, and 
we're continuing to work the issue.
    Thanks.
    Senator Snowe. Yes, that's certainly been my perception. 
And you work very well together, and I appreciate that, because 
it benefits everybody. So, it's a very constructive 
relationship, and a cooperative one, so it makes it work, and 
we thank you for that, and we applaud you, as well.
    Would you be evaluating this rebaselining report, as well?
    Ms. Wrightson. Absolutely. We continue to monitor 
Deepwater----
    Senator Snowe. OK.
    Ms. Wrightson.--and provide our comments to the Committee 
and others and the Coast Guard.
    Senator Snowe. Thank you.
    Master Chief Welch, I want to ask you a couple of 
questions. One is on a very high retention rate. What accounts 
for that? Do bonuses help? An 89.5 percent retention rate is 
amazing, I really applaud you, Admiral Collins, and all the men 
and women of the Coast Guard. I think that's astounding.
    Chief Welch. Yes, Madam Chair. As you know, there are many 
variables that impact retention, whether in the Coast Guard or 
externally. But I believe that, as a result of our Commandant's 
sincere and productive efforts to improve, not only the quality 
of life, but the quality of work for our work force, is 
probably the single-most important governing factor.
    Never during the course of my career has there been a 3-
year period in which so many people initiatives have been 
delivered to our work force. Tuition assistance has been 
significant, in terms of helping our people pursue their 
education. It's also a very effective retention tool. We have 
made significant investments to provide our people with other 
personal and professional-development opportunities, some of 
which I mentioned during my verbal statement. We have a senior 
enlisted command master-chief course. We have enlisted cadre in 
with the core cadets at the Coast Guard Academy. We've expanded 
our leadership school throughput. We've introduced an enlisted 
professional military education program. We've revised our 
Class A School training curriculum.
    Our mission also drives high retention, because the whole 
notion of being a humanitarian service with full-time 
employment in peace and at war and at the same time has a great 
deal of positive feel to it.
    And, last, Madam Chair, I would like to say that also at no 
point during my 25-year career have I heard the word 
``patriotism'' by the young men and women of our service as I 
have in the course of the past 3 years.
    Thank you.
    Senator Snowe. That says it all. And we deeply appreciate 
that, and we're profoundly grateful. I know I've seen them on 
the front lines, and I just think they're extraordinary. Thank 
you.
    Chief Welch. Thank you.
    Senator Snowe. Thank you.
    Senator Cantwell?
    Senator Cantwell. Thank you, Madam Chairman. And thank you, 
Master Chief, for that last comment. We had a celebration in 
Seattle at Maritime Days where we had members of the Coast 
Guard and various National Guard services back from Iraq who 
helped with the deployment of goods in Basra. It was exciting 
to see the interagency involvement and the success of that 
operation of both public- and private-sector individuals and 
various agencies working together to make that mission 
successful.
    Admiral Collins, I had a question for you that is in 
regards to the security mission of the Coast Guard. And I know 
you have a list of over $100 million in additional funding 
requests for security on the unfunded priority list, for needs 
not in the budget. Does that mean we have serious gaps? That's 
an awfully big number for an unfunded list, and it leaves one 
questioning where that leaves us.
    Admiral Collins. Right. This was the--as you may know, 
Senator, this is the first year that the Coast Guard has 
submitted such a list, that this was prior--this was a 
tradition for the other services to their committees to provide 
this type of mission and the information, and then the guidance 
last year in legislation called for me to do this.
    Basically, this represents--you know, if you had the next 
dollar, beyond the President's budget, you know, where would it 
fall? What are your highest priorities beyond the President's 
budget? Clearly, the President's budget, as submitted, reflects 
the highest priorities of the United States Coast Guard. And 
this is if there was additional resources, where would you put 
it, and why? And it's listed in priority order, that list. And 
it's very consistent with our priorities in the 2006 budget, 
because the number-one item is Deepwater, over $600 million of 
that total. The next one is legacy asset sustainment, or 
current-day readiness. We're managing future readiness with 
Deepwater, and current readiness with legacy sustainment. Those 
are our two top priorities, and they absorb the vast percentage 
of that request. So I think it reads very consistent with the 
2006 budget, very consistent with the dialog we've had in this 
Committee this morning. And it would help, obviously--we're the 
subject of macroeconomics and budget tradeoffs and all those 
things that happen, and we're thankful for the support in the 
2006 budget from the Administration and the Secretary, and 
these just represent the next increment that would allow us to 
move out a little more sharply----
    Senator Cantwell. Well, Admiral, would you say that you 
have enough assets, particularly, say, at District 13 in the 
Northwest, to implement security protocols if the maritime 
threat level is elevated?
    Admiral Collins. I think so. And we'll continue to refine 
and look at that--dynamic process, not a static one. We've 
added new patrol boats, we've added new--we've got a contract 
that would--with Safeboat, from up there--for--they're terrific 
boats, by the way, Senator--that are outfitting across the 
Coast Guard that--the perfect boat for coastal port security. 
And we've rolled those in.
    We've created 13 new commands called Maritime Safety and 
Security Teams around the country, one of which is in Seattle--
I believe, the first one is in Seattle that we put--and those 
are--that's--those are huge accomplishments. And in the 2006 
budget, we have the enhanced Maritime Safety and Security Team, 
which even a--sort of, even a higher-end assault capability 
team that we have available now, as well.
    So, we're building out at a pace that makes sense, I think, 
and we're building it out at a pace that we can manage, I 
think. And it would--so, I'm pleased where we are. I'm pleased 
where the 2006 budget supports continued progress in this area.
    Senator Cantwell. With the majority of the nation's car/
passenger ferries in the Northwest, where do you think we are 
in implementing security requirements for that system? Since 9/
11 this Committee has frequently discussed security 
implementation as it relates to air transportation, most 
recently in a security bill, and rail transportation, yet we 
have millions of Americans transported back and forth on this 
ferry system. Where do you think we are on implementing 
security plans with respect to Washington State ferries?
    Admiral Collins. Our focus--it's subject to the Maritime 
Transportation Security Act and the regulation that we've 
promulgated. The ferry system is included in the MARSEC, 
Maritime Security, condition 1, 2, and 3, and some of the 
things we do in each phase of that. And Seattle is our--one of 
our primary focuses, Puget Sound, because our focus is on high-
capacity ferries, ferries with--and those are--we define as 
people--over 500 passengers. And you--and Seattle, Puget Sound 
area, is the largest is the operator of high-capacity ferries, 
by far, in the country--22 of them, over 500 people.
    And we--although there's no specific threat that says, 
``This is going to happen at this time,'' the general 
vulnerabilities and risks associated with that kind of 
transportation, with that kind of people carrying--in the 
particular case of Puget Sound, carrying vehicles--it is the 
vehicle-carrying ferry system. And, you know, the--one of the 
major tactics of terrorist organizations and terrorists is 
using vehicles to carry explosives. And so, that whole--all 
those variables together means we've really got to pay 
attention to this as a--from the state, local, and federal 
perspective.
    What we've tried to do is collaborate--and we've had 
enumerable discussion with Washington State ferry folks--and 
how we put this together--that provides you the kind of 
deterrence you need and the transparency of potential threats, 
while not adversely impacting the flow of--which is commuter 
system--the flow, and not impinging on anyone's rights. And so, 
we've--there's a careful balance to put that all together. And 
I think we're striking the--we've struck the right balance.
    I refrain from talking about the actual screening levels, 
because they're--that's classified. But I'd--pleased to give 
you a classified brief on that. But I think we've set screening 
levels that are--we've done it collaboratively, and that make 
sense for the environment. We'll continue to tweak that.
    Senator Cantwell. So you're satisfied with the direction 
that we're going today, and you have no concerns about this 
unfunded priority list, as it relates to the ferry system?
    Admiral Collins. No, I'm pleased where we're going with the 
ferry. If the question is--the ferries--I'm pleased where we're 
going with that. We're going to--again, it's a--again, continue 
to evaluate the risks, the threats, and the consequence type of 
an assessment of that. We have funded over--I want to say $1.6 
million, as I recall, in R&D funding to look at the study of 
vehicle-borne explosives, relative to carriage in ferries and 
all that. We've looked at--tried to take a systems look, and 
look at what the technology of that--the vulnerabilities of 
that, and the threats of--the consequences of those kind of 
threats. And we'll continue to do that. And as--work with the 
stakeholders involved to make adjustments over time, as 
required.
    But I'm really happy where we are. We just had, about, I 
want to say, a month ago, a meeting in Coast Guard headquarters 
of all the major ferry operators in the country, including the 
Washington State system, and it was--we were very successful in 
getting the right classification to all the private sector, so 
they had secret classification. We could talk very detailed 
classified information. I think that was the first time that we 
had private sector together to do that. I think we're leading 
the way, and have been collaborative, detailed conversations. 
And the whole construct of Maritime Transportation Security Act 
is a collaborative enterprise. You know, we've learned from--I 
think we've learned from the Oil Pollution Act of 1990 and that 
infrastructure we created, and we've created a similar type of 
thing with area maritime security committees, where all the 
stakeholders from port are--can participate and get their views 
on the table and get a common view, a collaborative view.
    So, a lot more work to be done, but I'm happy with where we 
are. I'm appreciative of the support of this Committee. For 
instance, we've added over 500 billets in the 2004-2005 
timeframe for--2005 mostly, to--additional capacity and force 
structure within our maritime security to implement the--force, 
maritime security force--to implement the Maritime 
Transportation Security Act. So----
    Senator Cantwell. Well, thank you. Thank you, Admiral.
    And thank you, Chairwoman Snowe, for holding this hearing. 
I don't think there is an agency that has a bigger challenge in 
carrying out such a diverse set of missions than the Coast 
Guard under this new Homeland Security regime as well as 
continuing day-to-day security and non-security missions. This 
is particularly true in the Northwest, where you have a major 
port with major traffic, issues of oil spill, issues on the 
border relating to moving illegal drugs and trying to stop and 
intervene that traffic. We also have the larger security 
mission of the ferry system and the complexity associated with 
agencies like NSF tied to the Coast Guard budget through the 
Polar Icebreaker. I can't imagine a more complex job. Maybe 
Admiral Collins would volunteer for an extension of his command 
to get us through this new period.
    [Laughter.]
    Senator Cantwell. I certainly appreciate the hard work of 
the Coast Guard in these challenging times.
    Admiral Collins. Thank you, Senator.
    Senator Snowe. I Couldn't agree more. I certainly share the 
sentiments expressed by Senator Cantwell. I concur. And having 
seen what the men and women do, and all of you who provide the 
extraordinary leadership, we thank you and we commend you.
    I also wanted to followup on the Oil Spill Liability Fund. 
It was funded by five-dollar tax back in 1990. And if the fund 
fell below one billion prior to 1995, the tax would reactivate. 
After 1995, the tax can only be reinstated by legislation. Is 
that your understanding?
    Admiral Collins. That's what--that's how I've been briefed, 
Senator, that it no longer is operative after the mid 1990's.
    Senator Snowe. OK.
    Admiral Collins. Without legislation.
    Senator Snowe. Without legislation, exactly.
    Well, thank you, again. Thank you for your patience. Thank 
you for your testimony. And we'll be following up on some of 
these key matters.
    Thank you, again.
    Admiral Collins. Thank you, Senator.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]

                            A P P E N D I X

            Prepared Statement of Hon. Frank R. Lautenberg, 
                      U.S. Senator from New Jersey

    Mr. Chairman, we often say that the world changed on September 11, 
2001. And that is certainly true for the United States Coast Guard. The 
Coast Guard has always been a multi-mission agency with a broad and 
expanding range of responsibilities. Since 9/11, however, significant 
new Homeland Security demands have been placed on the Coast Guard. 
Prior to that tragic day, only two percent of the Coast Guard's 
operating budget was devoted to security activities.
    This year's budget request for security activities represents 28 
percent of the Coast Guard's total budget--and an $81 million increase 
over last year. And that might not be enough. More than $100 million in 
additional security needs are included in the Coast Guard's list of 
``unfunded priorities.'' I take a great interest in the security 
mission of the Coast Guard, as I'm sure all my colleagues do. New 
Jersey lost 700 citizens on 9/11 . . . and since then, several warnings 
have indicated that we are at high risk for another attempted attack.
    The security mission of the Coast Guard is critical . . . but we 
can't neglect the Guard's other responsibilities. Last fall, I offered 
an amendment to restore $100 million that was authorized by Congress 
for non-security operations, to ensure that the Coast Guard has the 
resources it needs to perform all of its missions.
    I am particularly concerned with the Coast Guard's activities that 
protect our waterways from pollution. Just a few months ago we had an 
oil spill on the Delaware River that resulted in a single-hull ship 
dumping 265,000 gallons of crude oil into that important shipping 
channel and environmental habitat. Under the oil spill protection 
scheme established in 1990 the liability limit of the company that 
caused the spill was only $45 million. Now the cleanup cost has grown 
to more than $100 million, and the Federal Government has taken it 
over.
    That spill alone will cost between $150-$200 million in the end. 
But the Oil Spill Liability Trust Fund only has about $800 million, and 
will be empty by 2010. I am interested in introducing legislation 
shortly to address some of these problems, including getting rid of 
single-hull vessels.
    I look forward to hearing the views of our witnesses today.
                                 ______
                                 
  Prepared Statement Joseph L. Barnes, National Executive Secretary, 
                       Fleet Reserve Association

Certificate of non-receipt of federal funds
    Pursuant to the requirements of the House Rule XI, the Fleet 
Reserve Association has not received any federal grant or contract 
during the current fiscal year or either of the two previous fiscal 
years.

Introduction
    Madame Chairman and distinguished Members of the Subcommittee, the 
Fleet Reserve Association (FRA) appreciates the opportunity to present 
its recommendations on the United States Coast Guard's FY 2006 Budget. 
Celebrating its 80th Anniversary, the Association is a Congressionally 
Chartered non-profit organization representing the interests of U.S. 
Coast Guard, Navy, and Marine Corps personnel with regard to 
compensation, health care, benefits, and quality of life programs.
    Prior to addressing these issues, FRA wishes to thank Congress for 
the generous pay, health care and benefit enhancements enacted in 
recent years. Of special importance are the targeted pay increases for 
senior enlisted personnel, health care access improvements, higher 
housing allowances and additional benefits for Reserve personnel. The 
Association is also grateful for the passage of legislation authorizing 
the Commandant of the Coast Guard the authority to express his or her 
personal opinion, if asked, while testifying before Congress.
    Coast Guard parity with DoD personnel programs remains a high 
priority for FRA with regard to the Coast Guard.

Pay
    Congress has for the past few years improved compensation that, in 
turn, enhanced the recruitment and retention of quality personnel in an 
all-volunteer environment. Adequate and targeted pay increases for 
middle grade and senior petty and noncommissioned officers have 
contributed to improved morale and readiness. With a uniformed 
community that is more than 50 percent married, satisfactory 
compensation helps relieve much of the tension brought on by demanding 
operational and personal tempos.
    For FY 2006, the Administration has recommended a 3.1 percent 
across the board basic pay increase for members of the Armed Forces. 
This is commensurate with the 1999 formula to provide increases of 0.5 
percentage point greater than that of the previous year for the private 
sector. With the addition of targeted raises authorized by Congress in 
FY 2001, the formula has reduced the pay gap with the private sector 
from 13.5 percent to 5.2 percent following the January 1, 2005, pay 
hike.
    FRA, however, is disappointed that no targeted pay increases are 
recommended for FY 2006, particularly for mid-grade and more senior 
enlisted personnel. FRA, the 9th Quadrennial Review of Military 
Compensation (9thQRMC), and even the Department of Defense have 
advocated the necessity for additional targeted pays. In spite of the 
targeted pay increases authorized in recent years, the pay of our 
noncommissioned and petty officers remains compressed, a situation that 
has existed since the advent of the all-volunteer force.
    FRA has recommended the House and Senate Armed Services Personnel 
Subcommittees adopt a targeted pay table for FY 2006, at least 
proportionate to that of January 1, 2004, and urges this Subcommittee 
to support the initiative as it would greatly benefit Coast Guard 
personnel and their families.

Health Care
    Due in large part to the unique range of geographic locations in 
which they are assigned, Coast Guard personnel and their families often 
struggle to find medical providers who accept the TRICARE Standard 
benefit. While implementation of TRICARE Prime Remote alleviated many 
of these problems, the standard benefit fee for service option's low 
reimbursement rates can still make finding health care providers a 
daunting task. Unfortunately, Coast Guard personnel who choose to 
receive care at Military Treatment Facilities (MTFs) may have to travel 
long distances to receive care. FRA is concerned that low reimbursement 
rates will continue to make health care access a challenge for Coast 
Guard personnel stationed in remote locations.
    Dental costs and associated reimbursement rates are also 
challenging for Coast Guard personnel. For example, the orthodontic 
benefit is capped at $1,500 thereby causing substantially increased 
personal expenses to Coast Guard personnel, especially in high cost 
areas.
    Reserve Health Care--FRA is grateful to Congress for including in 
the FY 2005 National Defense Authorization Act language allowing 
Reservists to continue receiving TRICARE coverage for up to 180 days 
following separation from active duty. While the new provision will aid 
many Reservists who experience a lapse in coverage following 
demobilization, more needs to be done. Some Reservists have coverage 
through private employers, others through the Federal Government, and 
still others have no coverage. Reserve families with employer-based 
health insurance must, in some cases, pick up the full cost of premiums 
during an extended activation. Although TRICARE ``kicks in'' at 30 days 
activation, many Reserve families prefer continuity of care through 
doctors and their own health insurance. Disenrollment from private 
sector coverage as a consequence of extended activation adversely 
affects family morale and military readiness and is a disincentive for 
Reservists to reenlist. FRA recommends that Congress authorize 
legislation granting permanent authority for cost-share access to 
TRICARE for all members of the Selected Reserve and their families in 
order to ensure medical readiness and provide continuity of health 
insurance coverage.
    Like their active duty colleagues, many Reserve families live in 
locations where it is difficult or impossible to find providers who 
will accept new TRICARE Standard patients. In 2001, DoD recognized this 
problem and announced a policy change under which DoD would pay the 
premiums for the Federal Employee Health Benefit Program (FEHBP) for 
DoD Reservist-employees activated for extended periods. Since the 
current program only benefits about ten percent of the Selected Reserve 
Force, FRA urges expanding this program to include the authority for 
federal payment of civilian health care premiums (up to the TRICARE 
limit) for dependents of mobilized Coast Guard Reserve personnel.

Housing Standards and Allowances
    FRA supports revised housing standards that are more realistic and 
appropriate for each pay grade. Many enlisted personnel are unaware of 
the standards for their respective pay grade and assume they are 
entitled to a higher standard than authorized. Enlisted members, for 
example, are not eligible to receive BAH for a three-bedroom single-
family detached house until achieving the rank of E-9--representing 
only one percent of the enlisted force--yet many personnel in more 
junior pay grades do in fact reside in detached homes. As a minimum, 
the BAH standard (single-family detached house) should be extended over 
several years to qualifying service members beginning in grade E-8 and 
subsequently to grade E-7 and below as resources allow.
    FRA is pleased that the Administration's FY 2006 budget request 
includes full funding for Coast Guard military pay and benefits. The 
Coast Guard also continues to receive strong support for benefit parity 
with DoD and is on par with DoD benefits including requirements to 
collect Hazardous Duty Incentive Pay (HDIP).
    The Association appreciates Congressional support for increased BAH 
rates for Coast Guard personnel and enactment of a plan to eliminate 
average out of pocket housing costs over several years. The President's 
FY 2006 budget includes funding to support these improvements. BAH 
rates allow Coast Guard members and their families to maximize housing 
choices in communities where adequate housing exists, helping alleviate 
the need for government housing. That said, with a large number of 
Coast Guard personnel stationed in high cost areas, the issue of 
ensuring that average out of pocket costs housing expenses are 
eliminated needs to be tracked closely.
    FRA also appreciates enactment of Coast Guard Housing Authorities 
legislation, to improve government housing. As a result of this 
legislation, the Coast Guard is proactively exploring the Public 
Privatization Venture (PPV) program with the hopes of replicating the 
successes DoD has experienced. It transferred 318 units in Red Hill, 
Hawaii to the U.S. Army, which subsequently transferred more than 7,000 
units to Actus Land Leasing in October 2004. The Coast Guard has also 
entered into a similar venture with the Navy in New Orleans, and 
privatization feasibility studies are currently underway in Alaska and 
Cape May, New Jersey.

Permanent Change of Station (PCS) Reform Initiatives
    FRA commends Congress for authorizing the Families First Program, 
which upon full implementation will usher in much needed reforms to the 
Permanent Change of Station (PCS) process including the full 
reimbursement of the cost of lost or damaged household goods. The 
Association strongly supports full funding for the program in FY 2006.
    Dislocation Allowance--Relocating on government orders is costly 
and throughout a military career, service members undergo a number of 
permanent changes of station. Each move usually requires additional 
expenses for relocating to a new area far removed from the service 
members' current location.
    Dislocation allowances are authorized for military-ordered moves. 
To aid service members in defraying these additional costs, Congress in 
1955 adopted the payment of a special allowance--termed ``dislocation 
allowance''--to recognize that duty station changes and resultant 
household relocations reflect personnel management decisions of the 
armed forces and are not subject to the control of individual members.
    Odd as it may appear, service members preparing to retire from the 
Armed Services are not eligible for dislocation allowances, yet many 
are subject to the same additional expenses they experienced when 
effecting a permanent change of station during the 20 or more years of 
active duty spent earning the honor to retire. In either case, moving 
on orders to another duty station or to retire are both reflective of a 
management decision. Retiring military personnel after completing 20 
years of service is advantageous to the Armed Services. It opens the 
ranks to much younger and healthier accessions.
    FRA recommends amending 37 U.S.C. Sec. 407, to authorize the 
payment of dislocation allowances to members of the armed forces 
retiring or transferring to an inactive duty status who perform a 
``final change of station'' move of 50 or more miles, and urges the 
Subcommittee to support such an amendment.
    Weight Allowances--FRA also recommends modifying PCS household 
goods weight allowance tables for personnel in pay grades E-7, E-8 and 
E-9 to coincide with allowances for officers in grades 0-4, 0-5, and 0-
6, respectively. These allowances were recently increased for grades E-
1 through E-4, but weight allowance increases are also needed for 
service members in other grades, to more accurately reflect the normal 
accumulation of household goods over the course of a career.
    Shipment of Privately Owned Vehicles--Expanding the number of 
privately owned vehicles a military family can ship during a PCS from 
one to two for personnel assigned to Alaska and Hawaii is another FRA 
supported initiative which falls into the category of family readiness 
as well as PCS reform. This is an issue of particular concern to Coast 
Guard personnel stationed in these locations as it is becoming 
increasingly difficult to commute to the workplace of the now common, 
two working adults, and would greatly benefit from the Subcommittee's 
support.

Family Readiness
    It is often said that the military recruits the service member, but 
retains a family. As our nation asks its all-volunteer force, at least 
50 percent of whom are married, to deploy into harms way, family 
readiness has never been more important.
    FRA wholeheartedly supports initiatives to enhance survivor 
benefits to include increasing the death gratuity to $100,000 and the 
amount of Service members Group Life Insurance (SGLI) coverage from 
$250,000 to $400,000 at no additional cost to the service member. The 
Association also maintains that eligibility for death benefit 
enhancements should include dependents of any service member who dies 
in the line of duty regardless of whether or not the death was combat 
related.
    Another effective method of maintaining a high level of family 
readiness is through the effective and consistent communication of 
existing programs and resources available to active and Reserve 
personnel and their families. The increased use of Reserve units to 
serve along side active duty components has caused considerable 
challenges for certain individual Reservists. Not only has their 
mobilization placed a strain on employment and income, but on the 
family as well.
    Benefits information, spouse employment assistance, options for 
child care and guidance on utilizing the TRICARE benefit are just a few 
issues that are constantly being updated, creating a need for easily 
accessible and current information. DoD services have worked to enhance 
the lines of communication via its Military One Source web sites, and 
the Coast Guard provides family members with a multitude of resources 
on its Personnel Service Center's web site ( http://www.uscg.mil/hq/
psc/ ). Online resources combined with a strengthened Ombudsman program 
will help Coast Guard family members stay up to date on their benefits.
    Availability and Affordability of Child Care--The availability and 
accessibility of affordable childcare is a very important quality of 
life issue for Coast Guard personnel and their families. There are 
approximately 700 children in Coast Guard childcare facilities and the 
program operates under the same standards for care as that of DoD.
    High cost childcare can often be attributed to the fact that most 
of the unit locations preclude access to DoD and Coast Guard child 
development centers. As in the past, FRA stresses the importance of 
adequately funding this important program.
    The Coast Guard continues to explore ways to defer childcare costs 
to members in remote, high cost areas. This includes exploring possible 
partnerships with GSA and private industry. FRA strongly supports these 
initiatives and encourages timely research and implementation for the 
benefit of personnel and their families.

Education Benefits
    Increased funding for personnel benefits in the President's FY 2006 
budget will enable the Coast Guard to adequately support its education 
programs, specifically the Tuition Assistance Program. This enables the 
service to maintain parity with DoD. Tuition Assistance is a high 
priority for the active and Reserve forces and is a key element 
associated with successful recruiting initiatives. Enhancements to this 
program and Montgomery GI Bill (MGIB) have significantly impacted 
recruiting and retention efforts.
    FRA advocates the creation of a benchmark for the MGIB so its 
benefits will keep pace with the cost of an average four year college 
education. Even with the October 1, 2004 increases in basic rates, the 
MGIB only covers about 60 percent of current tuition expenses.
    Coast Guard personnel are among the 61,000 senior enlisted 
personnel who entered service during the Veterans Education Assistance 
Program (VEAP) era (1977-1985), and have not had the opportunity to 
sign up for the MGIB. FRA urges authorization of an open enrollment 
period giving enlisted leaders the opportunity to sign up for increased 
educational benefits provided by the GI Bill.
    The Montgomery GI Bill is often characterized as a form of 
compensation or as a ``recruiting tool.'' However, FRA would argue that 
it would be more appropriate to consider the benefit an investment in 
our nation's future. Military personnel can use the MGIB on active duty 
to aid in their professional development, giving them the tools to 
become better leaders, mentors and representatives of their respective 
service. Many veterans who leave the military and use the GI bill to 
further their education have become more productive members of our 
society. From the offensive backfield of the Denver Broncos to the 
halls of Congress to several Fortune 500 Companies to small businesses 
in Main Street, America, there are college graduates who used the MGIB 
stipend to help pay for their education. These veterans pay taxes, 
returning more in revenue to the Treasury than what they might have 
contributed without a degree. ( Persons with Bachelor Degrees earn 70 
percent more on average than those with a high school diploma. )
    Our nation has a responsibility to ensure the MGIB investment 
remains a relevant supplement to completing one's education. We must 
give our veterans the tools to excel in an academic environment.
    MGIB-SR--The Selected Reserve MGIB has failed to maintain a 
creditable rate of benefits with those authorized in Title 38, Chapter 
30. Other than cost-of-living increases, only two improvements in 
benefits have been approved since 1985. In that year MGIB rates were 
established at 47 percent of active duty benefits. This past October 1, 
the rate fell to 27 percent of the Chapter 30 benefits. While the 
allowance has inched up by only 7 percent since its inception, the 
average cost of tuition at a 4-year university increased by 10.5 
percent in the 2004-2005 school year alone.
    FRA stands four square in support of the Nation's Reservists. To 
provide an incentive for young citizens to enlist and remain in the 
Reserves, FRA recommends that Congress enhance the MGIB-SR rates to the 
intended level for those who choose to participate in the program.
    Academic Protection for Reservists--There are cases where 
Reservists, attending higher institutions of learning, called to active 
duty in the defense of the Nation and its citizens, lose credits or 
prepaid tuition costs because they did not complete the course of 
instruction. FRA believes Congress should adopt legislation requiring 
colleges and universities to retain and reactivate the credits and 
prepaid costs for the Reservists upon demobilization.

Other Reserve Initiatives
    Eliminate BAH II--To ensure Reservists' compensation reflects the 
duties our Nation has asked them to perform, FRA recommends a policy 
change authorizing Reservists activated 30 days or more to become 
eligible for locality based Basic Allowance for Housing (BAH). Current 
policy requires Reservists serving less than 140 days to receive ``BAH-
II,'' which is generally a flat-rate amount based on pay grade and 
marital status rather than the market-influenced, geographically driven 
allowance that active duty personnel receive.

Training and End Strengths
    FRA fully supports the Coast Guard's professional development 
enhancements including the placement of a senior enlisted cadre within 
the U.S. Coast Guard Academy Corps of Cadets for the purpose of 
providing an enlisted perspective, mentorship and experienced physical 
guidance. Other initiatives include the successful launch of an 
Enlisted Professional Military Education Program, increased 
participation in the Coast Guard's Leadership and Management School for 
mid grade enlisted personnel, and the development of a comprehensive 
Unit Leadership Development Program (ULDP) for unit-level training.
    The Coast Guard's focus on developing opportunities for, and 
encouraging participation in, professional development is a clear 
indicator of the service's commitment to retaining quality personnel. 
Not only does it better prepare enlisted and commissioned leaders for 
negotiating an oftentimes rigorous operations tempo, but it helps the 
Coast Guard continue to define itself as an ``employer of choice'' for 
prospective recruits.

Recruiting and Retention
    FRA is pleased that the President's FY 2006 budget fully supports 
all Coast Guard recruiting initiatives and incentives. The Coast Guard 
exceeded its active duty recruiting mission and the current retention 
rate within its enlisted workforce is at impressive 89.6 percent. 
Increased visibility and a robust recruiting system coupled with 
enlistment bonuses is enabling the Coast Guard to maintain a steady 
flow of new recruits.
    The Coast Guard has also opened new recruiting offices to target 
diversity rich communities. Increased opportunities for advancement, 
improved sea pay and selected reenlistment bonuses contributed to the 
aforementioned retention rates.
    Recent officer continuation legislation as well as steadily 
increased promotion selection opportunities for mid-grade officers has 
also helped contribute to a better officer retention rate. The Coast 
Guard continues the always-difficult recruiting challenge to meet the 
diversity and skill sets required to best fill the future workforce.

USSBP Reform
    With an average age of 68 on its membership roll, reform of the 
Uniformed Services Survivor Benefit Plan (USSBP) remains a legislative 
priority for the Association. The FRA commends Congress for passing 
legislation to eliminate the social security offset, ending an unfair 
policy that adversely affected nearly 1.7 military retirees and 
survivors alike, and views changing the effective date for paid-up 
coverage from 2008 to 2005 as the next step in reforming the plan.
    There are three compelling reasons to amend the Plan. One, the cost 
of participating in USSBP has increased from 60 percent for the 
military retiree to more than 80 percent allowing the Department of 
Defense to renege on its original charge to provide 40 percent of the 
cost. Two, the USSBP was fashioned from the survivor program for 
retired federal employees, yet the military retiree on the average will 
pay more for participating in his or her Plan. Three, the military 
retiree on the average will pay into the USSBP over a longer period 
than the federal retiree. Although Congress has adopted a time for 
USSBP participants to halt payments of premiums (when payments of 
premiums equal 30 years and the military retiree is 70 years of age) 
the date is more than three years away. Military retirees enrolling on 
the initial enrollment date (1972) will this September be paying 
premiums for 33 years, by 2008, thirty-six years. FRA recommends and 
urges Congress to restore the value of participating in the program by 
adopting legislation to change the date 2008 to 2005.

Exchange/MWR Programs
    The Coast Guard relies heavily on vital non-pay compensation 
programs to provide for the health and well-being of its personnel and 
their dependents, and to ensure good morale as well as mission 
readiness.
    The Coast Guard's Morale, Welfare, and Recreation (MWR) program and 
the Coast Guard Exchange System (CGES) provide important services to 
members and their families. Proceeds from CGES sales generate funds for 
MWR programs including retail stores, fitness centers, gymnasiums, 
libraries, and child development centers. All indirectly support the 
Coast Guard's mission while helping ease the challenges and rigors of 
often demanding duty assignments.
    FRA is closely tracking the development of DoD's Unified Exchange 
Task Force's proposal for shared services among military exchanges, and 
asks that Congress provide appropriate funding support for CGES and MWR 
programs to ensure the well-being and morale of all Coast Guard 
personnel and their families.
Conclusion
    Madame Chairman, FRA appreciates the opportunity to submit its 
views for the record on pay, health care and other programs important 
to Coast Guard personnel. The Association salutes you and Members of 
your distinguished Subcommittee for effective oversight of our Nation's 
all-important fifth Armed Service, and for your untiring commitment to 
the men and women serving so proudly in our United States Coast Guard.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to
                       Admiral Thomas H. Collins

Mission Balance
    Question. What checks and performance goals have you established to 
ensure the Coast Guard effectively maintains its traditional missions 
as well as its expanded homeland security role? Of particular concern 
to myself and several Members of this Committee as you know is 
fisheries enforcement and also commercial fishing vessel safety (the 
recent tragedies in New England alone has cost the lives of 10 
fishermen in recent months).
    Answer. The Coast Guard continues to implement the President's 
Management Agenda (PMA).
    Consistent with the PMA and PART, the Coast Guard has established 
performance targets and long-term goals for each of the 11 Coast Guard 
missions, as defined in Section 888 of the Homeland Security Act of 
2002. The Coast Guard monitors and tracks performance within each of 
these missions, and documents results in an annual report. The Coast 
Guard continues to strive toward meeting performance targets across the 
entire spectrum of Coast Guard missions. In Fiscal Year 2004 the Coast 
Guard met or exceeded Fiscal Year 2001 performance levels in five of 
its six non-homeland security missions and met 2004 performance targets 
for Search and Rescue, Migrant Interdiction, Aids-to-Navigation, and 
Marine Environmental Protection. Specifically, in Fiscal Year 2004 the 
Coast Guard:

   Rescued 86.8 percent of all mariners in imminent danger, 
        exceeding the performance goal of 85 percent.

   Prevented illegal entry into the U.S. of 10,899 illegal 
        migrants--the highest level in 10 years--meeting the 
        performance target to interdict or deter at least 87 percent of 
        illegal migrants entering the U.S. through maritime means.

   Continued to safely and efficiently manage America's 
        waterways, meeting Aids to Navigation mission performance 
        targets, reducing the number of distinct collisions (down to 
        218 from 280), allisions (down to 616 from 738), and grounding 
        events (down 709 from 802) by 15 percent from 1,820 in FY03 to 
        1,543 in FY04.

   Protected the marine environment by reducing the five-year 
        average of oil and chemical spills greater than 100 gallons per 
        100 million tons shipped to 22.1 from 29.4 in Fiscal Year 2003 
        and well below the Marine Environmental Protection mission 
        performance target of 41.

   Continued to focus on improving maritime safety, reducing 
        the number of maritime worker and passenger injuries and deaths 
        from 597 in 2003 to 582 in 2004, well below the program sub-
        target of 771. (Full calculation of program performance 
        includes recreational boating fatalities, which depends on 
        state data which will not be available until later this 
        Spring).

   Broke previous counter drug seizure records, seizing 241,713 
        pounds (previous record was 138,393 pounds) of cocaine and 
        removing over 350,000 pounds of cocaine from the marketplace. 
        (Full calculation of the Coast Guard's counter drug performance 
        (Removal Rate) depends on flow rate data which will be provided 
        by the Interagency Assessment of Cocaine Movement later this 
        Spring).

   Continued to achieve high Ice Operations and Living Marine 
        Resources mission performance levels, despite just missing 
        performance targets. Efforts in connection with the Ice 
        Operations mission-program resulted in four days of waterways 
        closures (target was two days or less). The Living Marine 
        Resources mission achieved a compliance rate of 96.3 percent 
        vice a goal of 97 percent--although the total number of 
        fisheries boardings soared to 4,560, the highest total since 
        Fiscal Year 2001.

    The Coast Guard also employs several readiness standards to ensure 
mission performance. For example, all units with primary Search and 
Rescue responsibility (most notably, multi-mission small boat stations 
and rotary wing air stations) are required to be able to respond within 
a set time frame to a distress call. Compliance with these types of 
readiness standards helps to ensure desired performance outcomes (e.g. 
save 85 percent of mariners in distress) are achieved.
    The President's Fiscal Year 2006 budget requests an increase of 
$570 million over Fiscal Year 2005 funding levels, ensuring the Coast 
Guard is adequately funded and prepared to meet its mission demands, 
reduce maritime risk and improve performance across all missions.
    In addition to sustaining current levels of operational funding, 
the Coast Guard's Fiscal Year 2006 budget funds several recapitalizing 
initiatives (e.g. Deepwater, Rescue 21, Response Boat-Medium, High 
Frequency Communications Recapitalization), critical to restoring 
readiness to Coast Guard operational assets and subsystems--the very 
foundation of Coast Guard operational capability and capacity. The 
enhanced capabilities delivered through these major acquisition 
projects will ensure readiness and contribute to improved performance 
in all Coast Guard missions and activities, including fisheries 
enforcement and commercial fishing vessel safety.
    The Fiscal Year 2006 budget continues aggressive implementation of 
Maritime Security Strategy to increase Maritime Domain Awareness (MDA), 
operational presence, and response posture with the ultimate goal of 
reducing maritime risk. Fiscal year 2006 initiatives include 
implementing the Common Operational Picture, continuing the nationwide 
deployment of the Automatic Identification System, increasing maritime 
patrol aircraft flight hours, enhancing radiological and nuclear 
detection capabilities, equipping organic helicopters with Airborne Use 
of Force capability, replacing obsolete cutter small boats with more 
capable Cutter Boats--Over the Horizon, and providing additional 
Response Boat-Small allowances. These initiatives will enhance MDA and 
operational presence--improving maritime security and the Coast Guard's 
ability to perform all Coast Guard missions.

Future Port Security Grants
    Question. How would port and facility operators be assured that 
port security funds would be available to carry out the federally-
mandated security plan requirements if a single grant program was 
established?
    Answer. The Office of State and Local Government Coordination and 
Preparedness (SLGCP) and the Coast Guard are currently working together 
to design a coordinated risk management planning process that builds on 
and compliments work already accomplished under the Maritime 
Transportation Security Act (MTSA). The port-wide planning process will 
be prototyped during Fiscal Year (FY) 2005 and implemented as a program 
requirement during FY 2006. Development of this process will ensure 
that the security needs of our ports are documented and addressed 
through a risk-based framework consistent with the decision information 
needs of the Targeted Infrastructure Protection Program (TIPP) program.
    DHS is committed to providing the resources needed to secure our 
Nation's critical infrastructure, including seaports and port 
facilities. The TIPP proposed in the President's FY 2006 budget would 
consolidate grants to protect critical infrastructures such as 
seaports, mass transit, railways and energy facilities into a single, 
comprehensive program based on risk. The President's FY 2006 budget 
request for TIPP also represents an increase of approximately $235 
million above the FY 2005 appropriated level for all infrastructure 
protection, including port security, mass transit security, and buffer 
zone protection efforts among others.

Proposal of RDT&E Consolidation
    Question. The budget request proposes to consolidate the Coast 
Guard's research and development efforts within the Department of 
Homeland Security's (DHS) Science and Technology Directorate. Section 
888 of the Homeland Security Act requires the Coast Guard to remain 
intact within DHS, and Congress rejected this proposal last year. Could 
you inform the Committee as to why the Department once again makes this 
proposal when it is contrary to Section 888 of the Homeland Security 
Act and it was rejected by the Congress last year?
    Answer. The intent of this proposal is not to consolidate or 
eliminate Coast Guard Research and Development (R&D) functions. Rather, 
it is focused on consolidating R&D funding to maximize efficiencies and 
effective use of R&D funding across the entire Department while 
eliminating redundant R&D efforts. The Coast Guard and the Department 
of Homeland Security's Science and Technology Directorate (S&T) are 
proposing to continue a productive collaborative relationship in 2006 
through reimbursable agreements. As presented in the budget, the Coast 
Guard anticipates receiving $24 million from the S&T directorate in FY 
2006 as reimbursement for the R&D projects it will execute.
    The Coast Guard will work in close coordination with DHS S&T to 
ensure R&D programs address known capability gaps and scarce resources 
are most effectively leveraged to the Nation's best advantage.

Availability of RDT&E Funding
    Question. Under the budget proposal, it is estimated that the 
Service's Research and Development Center could receive up to $24 
million in Fiscal Year 2006 for the research and development efforts of 
the center. Is it also possible that the Coast Guard could receive no 
funds under this consolidation scenario?
    Answer. No. The Coast Guard and the Department of Homeland 
Security's Directorate of Science and Technology (DHS S&T) will 
continue a productive and collaborative relationship. The Coast Guard 
anticipates receiving $24 million in Research and Development (R&D) 
reimbursable funds from DHS S&T, including funding to operate the Coast 
Guard R&D Center. Throughout the remainder of the year the Coast Guard 
can also compete for additional Departmental R&D in accordance with DHS 
S&T prioritization protocols.

Communications Interoperability
    Question. What efforts is the Coast Guard taking to insure the full 
communications interoperability among its own assets, and between those 
assets and other federal, state and local emergency responders that 
allows for information within the maritime domain to be shared?
    Answer. The Coast Guard currently has communications 
interoperability between its assets; primarily with voice 
communications and some data communications capabilities. The Deepwater 
and Rescue 21 acquisitions will provide enhanced voice and data 
communications interoperability among Coast Guard assets. In addition, 
the Coast Guard is working closely with the DHS Wireless Management 
Office (WMO) and the Office of Interoperability and Compatibility (OIC) 
to develop seamless communications interoperability between the Coast 
Guard, DHS, and other federal, state, and local emergency responders to 
allow information within the maritime domain to be shared. Through the 
DHS Wireless Management Office, DHS is coordinating all wireless 
initiatives (e.g. Rescue 21, Project SAFECOM, Integrated Wireless 
Network) to ensure interoperability with Federal, State, and local 
emergency responders.
    The Coast Guard remains focused on technology to integrate or make 
communications more interoperable. The Coast Guard recently revised the 
Integrated Deepwater System (IDS) Mission Need Statement (MNS) to 
outline the C4ISR Architecture Framework and provide uniform methods 
for describing information systems and their performance in context 
with mission and functional effectiveness. The C4ISR suite on each IDS 
asset will collect and transmit raw data to an operations center that 
uses the data to produce a Common Operational Picture which in turn is 
sent back to assets for their use. The Common Operational Picture is 
being designed to ensure seamless interoperability with Coast Guard 
units, DHS, DoD, Navy, and other agencies--a true force multiplier in 
the fullest sense. When Deepwater is fully implemented, Coast Guard 
cutters and aircraft will have improved capabilities to receive 
information from a wide array of mission-capable platforms and 
sensors--enabling them to share a Common Operating Picture as part of a 
network-centric force operating in tandem with other cutters, boats, 
and both manned aircraft and unmanned aerial vehicles.
    The Coast Guard is also updating our short-range communications 
systems through the Rescue 21 acquisition to be compatible with the 
Association of Public Safety Communications Officials (APCO P25) 
standard. For example, Rescue 21 provides the capability to ``patch'' 
our communications systems to other responders' communications 
infrastructure so that our mobile assets will be able to exchange 
sensitive but unclassified (SBU) information with non-Coast Guard 
mobile assets. This standard was established to improve 
interoperability between federal, state, and local emergency 
responders. Rescue 21 is updating the shore-based National Distress 
System and numerous small vessel types.

Rescue 21 Status
    Question. Could you please update the Committee as to where the 
Rescue 21 program stands now? What level of funding would you 
anticipate needing in the out years to complete full implementation of 
Rescue 21?
    Answer. Rescue 21 completed Operational Testing and Evaluation 
(OT&E) on February 25, 2005. The results have been evaluated and the 
Coast Guard is developing a plan to address OT&E issues in order to 
achieve Initial Operating Capability (IOC) as soon as possible. 
Approval of Key Decision Point (KDP) 3, currently scheduled for May 
2005, will allow the project to complete installation within the first 
21 regions and design for an additional 11 regions. The FY06 budget 
request of $101 million is critical to keep the project on track to 
complete installation at the next 11 regions and complete design of the 
final 14 regions.
    The Coast Guard's Capital Investment Plan (CIP) includes $100M in 
FY 2007 to complete the project.

Coast Guard and DoD BRAC
    Question. What role is the USCG playing in the DoD's BRAC process?
    Answer. The United States Coast Guard (CG) does not have a formal 
role in the Department of Defense (DoD) Base Realignment and Closure 
(BRAC) process. The CG is potentially impacted, however, due to co-
locations, shared resources and support agreements. In locations where 
the Coast Guard is potentially impacted, the DoD services have afforded 
the CG to provide input into their process.
    The CG has and will continue to share concerns with DoD regarding 
sites where CG operations and/or facilities are co-located and where 
CG/DoD service agreements exist.
    The CG will work with DoD to develop mitigation strategies for 
impacted units and services.

Pay Gap
    Question. Do you believe there is more progress to be made [in] the 
area concerning pay gaps? Is the gap still too large in your opinion 
for comparable civilian occupations?
    Answer. Military compensation has improved significantly in the 
areas of Basic Pay, Basic Allowance for Housing (BAH), and Basic 
Allowance for Subsistence (BAS). As a result, Military Basic Pay raises 
have greatly contributed to the reduction of the gap between equivalent 
military and civilian compensation levels. According to DoD--including 
the proposed 2006 Basic Pay increase, military compensation is within 
an estimated 93 percent overall comparability with similar civilian 
compensation levels. BAH is now a market-based allowance that provides 
an allowance to offset the cost of median rental housing for Coast 
Guard members. BAS benefits all enlisted personnel and is appropriately 
indexed to the actual cost of food (as measured by USDA market basket 
indices). For enlisted ranks, I believe more attention is needed at the 
mid-grade (E5) and lower senior grade (E7) levels.

Educating Members on Non-Pay Benefits
    Question. What efforts does the Coast Guard undertake to educate 
its members on the value of the other, non-pay compensation benefits of 
serving?
    Answer. Non-pay benefits are a critical part of the overall 
compensation of Coast Guard members. Recognizing the impact non-pay 
benefits have on member morale and retention, the Coast guard strives 
to take advantage of every opportunity to educate its members of those 
benefits--beginning with initial indoctrination during the recruiting 
process and continually throughout a member's career to ensure they are 
kept abreast of any changes to the benefits.
    Recruiters explain non-pay benefits to potential recruits and their 
families. Below is a list of the non-pay benefits covered during 
recruiting activities:

   Available Work-Life services (e.g., divorce, marital, & 
        bereavement counseling, etc.)
   Morale, Welfare and Recreation (MWR) benefits
   Commissary and exchange privileges (Non-Tax)
   Coast Guard owned housing opportunities
   Medical and dental benefits
   Legal assistance
   Tuition assistance
   Mutual assistance
   Veterans Administration benefits (home buying, educational, 
        retirement)
   Coast Guard spouses clubs

    During a member's career, the Coast Guard employs various 
communication mediums through which current benefits and any new 
changes are explained. Examples of some of the main communication 
vehicles are as follows:

   ALCOAST messages (sent to all Coast Guard units)

   Navy Times/Coast Guard Magazine/Reservist Magazine articles

   Flag Voices (notifications from the Assistant Commandant for 
        Human Resources Coast Guard field units)

CG Biggest Challenge
    Question. If you had to pick just one item, what would you say is 
the biggest concern facing your men and women? What is their biggest 
challenge?
    Answer. The biggest challenge facing our Coast Guard men and women 
is having the resources and time to do their best work, and balancing 
that work with family and life goals. Data shows that our people see 
that we have made progress in providing the resources they need and the 
time necessary to do their best work, but we still have more to do in 
these areas. Those with families have the challenge of how best to 
balance their duties to their country and family. Those looking to 
start a family are concerned about how they will deal with this 
challenge.
    The Coast Guard uses the U.S. Office of Personnel Management's 
Organizational Assessment Survey (OAS) to gauge the perceptions of the 
Active Duty, Selected Reserve, and Civilian workforces. Coast Guard OAS 
results are used by leadership to gain a better understanding of the 
issues and concerns affecting members/employees and to determine the 
Coast Guard's success in addressing these issues and concerns.

Denied Privileges from Other Services Installations
    Question. Have there been any instances where members of the Coast 
Guard have been denied privileges from other services or their 
respective military installations?
    Answer. To the Coast Guard's knowledge, no Coast Guard personnel 
have been denied privileges from other services or their respective 
military installations.

Military Families Military Health Care System Concerns
    Question. Is the military health care system broke in your opinion? 
I understand that many military families experience extreme 
difficulties with simple tasks like making routine appointments or 
scheduling well-baby checks . . . is this true?
    Answer. The Military Healthcare System, while it needs improvement, 
is not broken. Based on current customer survey results, the overall 
satisfaction rate with TRICARE is good. While some individuals may 
experience difficulties making appointments, most of these problems are 
resolved expeditiously when the customer contacts either a TRICARE 
Service Center or a Coast Guard Health Benefits Advisor. The Coast 
Guard has not received reports of individuals experiencing extreme 
difficulties. Reported difficulties are relatively minor in nature and 
are due, in part, to the recent change in TRICARE Regional Contractors 
along with revised operating guidelines under the new contracts. As 
beneficiaries, providers, and the TRICARE Regional Contractors gain 
more experience, the frequency of even minor difficulties is expected 
to decline. Military Treatment Facilities (MTFs) and the TRICARE 
contractors monitor their performance in making appointments and 
arranging referrals. TRICARE has access-to-care standards that must be 
adhered to by the MTFs and civilian providers. Alternate health care 
source referrals are made when these standards can not be met. Military 
families experiencing extreme difficulties may contact a TRICARE 
Service Center (usually co-located with a military clinic) or contact 
the Health Benefits Advisor assigned to the military clinic. In 
addition, the Coast Guard Maintenance and Logistics Commands, located 
on both the East and West coasts, operate a toll-free Health Benefits 
Advisor call line (1-800-9HBA-HBA) to assist our members and their 
families who are unable to resolve their health care problems locally.

Benefits of Having a Reserve Force
    Question. Can you share some of the benefits of having a reserve 
force and the challenges you experienced in attempting to integrate 
reserve and active forces?
    Answer. The U.S. Coast Guard (CG) must be prepared to respond to a 
wide range of contingencies at home and abroad in accordance with the 
authorities and responsibilities vested in the Service by law. The 
proper training and use of the CG Reserve component is vital to 
accomplishing the CG's contingency missions. The CG Reserve is fully 
organized and integrated within the CG's Active Duty component force 
structure.
    Benefits of the CG Reserve:

   The CG Reserve component exists for contingency 
        mobilization, while providing a cost-effective peacetime 
        augmentation force.

   The CG Reserve component is available to dramatically expand 
        the CG's active duty force at an annual cost of less than 2 
        percent of the Service's budget.

   The Reserve forces provide a critical ``flex'' factor in the 
        CG's ability to respond immediately to contingency 
        requirements.

   Reservists can be called up on short notice to respond to 
        natural disasters/national emergencies, and then stood down as 
        conditions stabilize.

   Augmentation (on-the-job) training supports CG operational 
        missions and requirements, thereby adding substance to the 
        total force and supporting day-to-day operations. Mobilization 
        readiness, however, is always the paramount consideration when 
        implementing a mobilization training program during normal 
        drills and two-week annual active duty periods.

   The CG continues its effective mission performance by 
        leveraging technology and optimizing the employment of all its 
        human resources.

   CG Reserve forces provide a visible and exercised 
        relationship between the CG and DoD, as well serve as a link to 
        the public.

   These benefits have a tremendous impact on the CG's ability 
        to perform its missions. Most recently, they have been 
        exercised extensively in the implementation of the Maritime 
        Transportation Security Act (MTSA) as well as contributing to 
        operations in support of the Global War on Terrorism. Without 
        its Reserve component, it would have been impossible for the CG 
        to implement MTSA on schedule, support overseas operations or 
        the domestic military outloads in support of those operations.

    Challenges facing the CG Reserve:

   Identifying the highest priority use of the Reserve Force in 
        a post-September 11th environment, given the vast amount of 
        contingency requirements.

   Ensuring augmentation performed by Reservists directly 
        relates to their mobilization assignments.

   Educating the Active Duty component regarding the nuances, 
        unique polices, and employer issues specific to the CG Reserve.

   Assuring that a strong focus remains on the Reserve force so 
        that Reservists are fully ready to mobilize to respond to a 
        wide variety of contingencies on short notice.

   Sustaining an effective Reserve recruiting effort to meet 
        the needs of the service.

   Maintaining the specialty skill sets needed to meet Reserve 
        component workforce requirements.

Administrative and Processing Nightmares
    Question. What measures have been put into place to ensure that 
Coast Guard members do not suffer from the administrative and 
processing nightmares that we continue to read and hear about with 
members from other services?
    Answer. The Coast Guard has made it a priority to minimize pay and 
personnel issues resulting from reserve mobilization/demobilization 
while cumulatively recalling 6,813 Reservists since September 11th, 
representing 84 percent of the 8,100 member reserve workforce, the 
highest percentage of any of the military services.
    Coast Guard efforts to quickly address pay and personnel issues 
focused on execution of a very aggressive plan that mobilized teams of 
senior-level pay and personnel experts to regions where the largest 
recall processing requirements existed.
    In conjunction with lessons learned since September 11th, the Coast 
Guard chartered the Reserve Strategic Assessment Team (RSAT) to conduct 
a review of the Reserve program. The RSAT review identified 84 
corrective actions that address administrative and procedural problems 
experienced by Reservists and their families during mobilization and 
demobilization. An action plan was developed to correct these problems 
over the next three years.
Morale or Retention Negative Effects of CG Assets
    Question. Do you believe the condition of the Coast Guard's assets 
is having a negative effect on the morale or retention of enlisted 
personnel?
    Answer. The Coast Guard does not have data that indicates a 
relationship between the condition of its assets and morale or 
retention.

Enlisted Personnel Safety Concerns
    Question. Have enlisted personnel ever expressed concerns to you 
about their safety while they are on Coast Guard assets?
    Answer. Among the military services, the Coast Guard has an 
enviable safety record. There has not been a Coast Guard fatality 
resulting from an operational accident in over four years. Through the 
adoption and use of operational risk management programs, a web-based 
accident reporting system, and other web-based, stand-alone safety risk 
management systems, the Coast Guard has been able to dramatically 
reduce risk to personnel and equipment.
    Both formal and informal processes are in place within the Coast 
Guard for individuals to address safety questions and concerns. 
Specific figures regarding the perception of safety among Coast Guard 
enlisted service members were provided in the 2004 Organizational 
Assessment Survey (OAS). Unit-specific OAS results were provided to 
unit commanding officers, enabling them to focus their leadership 
efforts on any areas that needed attention and/or improvement. Seventy-
two percent of enlisted respondents to the OAS agreed with the 
statement that they are ``protected from health and safety hazards on 
the job,'' while only 10 percent disagreed.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to
                       Admiral Thomas H. Collins

Is the Coast Guard's Budget Adequate
    Question. It is unclear whether the budget request for security 
missions is adequate. Over $100 million in additional funding for 
security is included in the Coast Guard's ``unfunded priorities'' list. 
This includes $31 million for maritime domain awareness, and $70 
million for enhanced maritime safety and security teams. The Coast 
Guard has indicated that it does not have sufficient assets to 
implement its own security protocols at District 14 and elsewhere when 
the maritime security level is elevated due to threats.
    Is the budget request for security missions adequate? Why is over 
$100 million additional funding for security included in the Coast 
Guard's ``unfunded priorities'' list, and not in the budget?
    Answer. Increased resources provided by the Congress over the past 
several years have significantly enhanced the Coast Guard's ability to 
continue performing traditional missions while considerably improving 
maritime security. For example, the Fiscal Year 2005 enacted budget 
represents 51 percent growth in funding authority since September 11, 
2001. This increased funding by enabling the Coast Guard to establish 
13 Maritime Safety and Security Teams across the nation, deploy over 80 
new small boats and accompanying crews, expand our intelligence 
capabilities, and implement the 2002 Maritime Transportation Security 
Act (MTSA). Each of these initiatives, among many others, have been 
critical to allowing the Coast Guard to meet post 9/11 mission demands, 
while ensuring no degradation in other performance areas.
    The President's Fiscal Year 2006 budget request represents an 11 
percent increase over the comparable Fiscal Year 2005 discretionary 
funding levels, and demonstrates extremely strong commitment by the 
Administration to ensure the Coast Guard is adequately funded. The 
resources contained in the budget continue to aggressively implement 
the core elements of the Department's Maritime Security Strategy.
    For the Fiscal Year 2006 budget, more specifically, robust 
implementation of organic Airborne Use of Force capability, replacement 
of obsolete cutter small boats with more capable Cutter Boats--Over the 
Horizon, additional Response Boat-Small allowances, and continued 
replacement of aging 41-foot utility boats with the more capable 
Response Boat-Medium will greatly improve the Department's maritime 
operational presence and response posture. The President's budget also 
includes several maritime domain awareness initiatives; such as 
implementing the Common Operational Picture, continuing the nationwide 
deployment of the Automatic Identification System, increasing maritime 
patrol aircraft flight hours, and enhancing radiological and nuclear 
detection capabilities. Finally, the Fiscal Year 2006 budget requests 
$966 million in Deepwater funding (a $242 million increase over Fiscal 
Year 2005) to recapitalize the Coast Guard's aging fleet of cutters and 
aircraft, delivering new/modernized assets equipped with post-9/11 
capabilities critical to reducing maritime security risk and enhancing 
the Coast Guard's ability to execute all its missions.
    The initiatives contained in the Fiscal Year 2006 budget represent 
the Coast Guard's highest priorities and are the necessary next steps 
in the Coast Guard's multi-year plan to implement its Maritime Security 
Strategy.

Insufficient Assets for Security Protocols in the 14th District
    Question. The Coast Guard has indicated that it does not have 
sufficient assets to implement its own security protocols at District 
14 and elsewhere when the maritime security level is elevated due to 
threats. How does the budget request address these gaps?
    Answer. The 2006 Budget continues to improve the Coast Guard's 
maritime homeland security capabilities and reduce maritime risk. 
Specifically, it provides for critical Maritime Domain Awareness (MDA) 
initiatives and increased or enhanced Coast Guard operational presence, 
both critical components of the Coast Guard's maritime security 
strategy and posture.
    The 2006 Budget furthers efforts to improve MDA by:

   Continuing deployment of a nationwide Automatic 
        Identification System (AIS) infrastructure throughout regional 
        Coast Guard command centers;

   Providing additional Maritime Patrol Aircraft (MPA) 
        resources to fill documented flight hour gaps in support of 
        detection, surveillance, and tracking activities;

   Deploying a Common Operational Picture (COP) through Coast 
        Guard command centers nationwide. The COP will help fuse 
        surveillance and tracking information from systems such as AIS, 
        Rescue 21, and the Ports and Waterways Safety System (PAWSS);

   Increasing the capability of Coast Guard cutters and 
        Maritime Safety and Security Teams (MSSTs) to detect Rad/Nuc 
        materials, intercept suspect ships, and respond to incidents 
        involving the release of Rad/Nuc substances.

    In addition, the 2006 Budget further increases and enhances the 
Coast Guard's operational presence by:

   Accelerating deployment organic Airborne Use of Force (AUF) 
        capability to five Coast Guard Air Stations, increasing the 
        ability to respond to maritime security threats;

   Replacing existing obsolete and unstable cutter boats on the 
        High Endurance Cutter (WHEC) and Medium Endurance Cutter (WMEC) 
        fleet with the more capable Cutter Boat--Over the Horizon (CB-
        OTH). This platform nearly doubles the speed of the existing 
        cutter boat, increases secure communication capabilities, and 
        when used in conjunction with AUF capability has a 98 percent 
        success rate in stopping suspicious vessels;

   Providing 14 additional Response Boat-Smalls (RB-S) and 
        associated crews to provide vessel escorts, and enforce 
        security zones near critical infrastructure including enhancing 
        the LNG tanker and waterside security;

   Reallocating existing Coast Guard resources to immediately 
        fill an existing gap in national maritime Law Enforcement and 
        Counter-Terrorism (LE/CT) capability. The permanent 
        establishment of the Coast Guard's Enhanced MSST (E-MSST) will 
        provide an offensive DHS force able to operate across the full 
        spectrum of LE and CT response in support of homeland security 
        and homeland defense objectives, including CT response 
        capability for scheduled security events out to 50 nautical 
        miles from shore and augments interagency assets in high 
        visibility venues such as National Special Security Events 
        (NSSEs).

IDS Implementation Plan
    Question. The budget requests $996 million for the Coast Guard's 
Deepwater recapitalization program, yet $240 million of this is for 
legacy assets. It is unclear whether the budget request is adequate. 
Quite telling is the fact that the Coast Guard's ``unfunded 
priorities'' list includes an additional $637 million of money for 
Deepwater, and an additional $63 million for maintaining existing 
``legacy'' assets. However, it is difficult to evaluate the budget 
request or this statement of additional needs because the Coast Guard 
has not provided Congress with its revised Deepwater plan--requested by 
Congress last year. Moreover, it is unclear that the Coast Guard is 
adequately planning for its shore-based infrastructure needs as 
Deepwater assets are delivered.
    We have been expecting a revised plan for the Coast Guard's 
Deepwater program, but have not received such a plan. Given the 
increasing costs and the post-9/11 environment, is the amount requested 
adequate? When do you anticipate providing us with the plan?
    Answer. The Deepwater Revised Implementation Plan was delivered to 
Congress on March 25, 2005. Further information requested by Congress 
is under development and will be submitted shortly.

Deepwater Unfunded Priorities
    Question. The ``unfunded priorities'' list includes an additional 
$637 million of money for Deepwater, plus another $63 million for 
maintaining existing ``legacy'' assets. Is that, plus the $966 million 
the amount Coast Guard thinks is needed as part of the new plan?
    Answer. The Coast Guard's Fiscal Year 2006 budget requests $966 
million for the Integrated Deepwater System to fund the Coast Guard's 
highest priority Deepwater recapitalization and modernization 
initiatives:

   Production of the third National Security Cutter,

   Design and long lead materials for the first Offshore Patrol 
        Cutter,

   Six legacy Medium Endurance Cutter mission effectiveness 
        projects,

   Acquisition of the third Vertical Take Off and Landing 
        Unmanned Aerial Vehicle,

   Design and demonstration of the first Fast Response Cutter,

   Re-engining the operational fleet of 84 HH-65 helicopters to 
        eliminate safety and reliability issues and restore operational 
        effectiveness of these critical aircraft,

   Enhanced legacy fixed and rotary wing aircraft capabilities 
        through recapitalization of avionics and radar systems,

   Continued development of the command and control system, 
        common operating picture, and integrated logistics system.

    As discussed in the transmittal letter that accompanied the Coast 
Guard's list of ``unfunded priorities,'' to the extent that provisions 
of the Act requiring the list (Public Law 108-334), including section 
514, called for submission of legislative recommendations to the 
Congress, the executive branch construed such provisions in a manner 
consistent with the President's constitutional authority to supervise 
the unitary executive branch and to recommend for the consideration of 
the Congress such measures as the President judged as necessary and 
expedient. However, the Commandant of the Coast Guard provided the 
``unfunded priorities'' list to Congress as a matter of comity.
    Coast Guard staff and managers are available to discuss the 
contents of the ``unfunded priorities'' list.

Foreign Fishing Vessel Incursions
    Question. During Fiscal Year 2000 to Fiscal Year 2004, the Coast 
Guard reported a total of 216 suspected illegal incursions of foreign 
fishing vessels within the Western/Central Pacific Exclusive Economic 
Zone. Coast Guard assets detected only three of these incursions. All 
other incursions during this five-year time period were reported from 
other national or industry sources. None of the 24 incursions detected 
in 2004 were interdicted, and it is unclear whether any of the 
incursions in previous years were interdicted.
    Over the past five years, only 3 of 216 suspected illegal foreign 
fishing incursions into the Western/Central Pacific Exclusive Economic 
Zone were observed by the Coast Guard during the Fiscal Years 2000 
through 2004. Isn't this part of Coast Guard's responsibility? Why 
aren't the C130s or cutters spotting these incidents?
    Answer. The Coast Guard is responsible for patrolling the 1.3 
million square nautical miles of ocean comprising the Western/Central 
Pacific (WCP) Exclusive Economic Zones (EEZ). Recognizing the 
surveillance challenges for such a vast ocean area, in 1993 the Coast 
Guard entered into a MOU with the Secretaries of Defense and Commerce 
for the use of all source intelligence assets to monitor, collect and 
report vessels that may be in violation of U.S. and international 
fisheries law. This federal agency partnership has improved U.S. 
fisheries surveillance capability in the WCP.
    From 2000 to 2004, the Coast Guard dedicated over 6,900 cutter 
hours and 908 aircraft hours to patrol the WCP EEZ. The vastness of the 
WCP EEZ, combined with the limited number of Coast Guard assets with 
long-range capabilities to patrol this area, makes detecting illegal 
fishing activity solely by Coast Guard assets difficult. For example, a 
10 hr C-130 surveillance patrol may result in only 2 hrs of on scene 
EEZ patrol time due to the lengthy transit time and involves forward 
deployment of a C-130 to Guam to patrol the EEZs of Guam, Wake and the 
Commonwealth of the Northern Marianas Islands. It takes 1-week for a 
high endurance cutter to transit to the scene of suspected illegal 
activity; by then the suspect vessel has usually departed. The Coast 
Guard relies on federal agency and fishing industry partnerships to 
overcome these gaps in capability and capacity to monitor this vast 
ocean area. Improved maritime domain awareness and asset capability, 
such as unmanned aerial vehicles acquired through the Coast Guard's 
Fiscal Year 2006 Integrated Deepwater System budget request, will 
improve surveillance and monitoring of not only the WCP but all high 
threat EEZ areas. The Coast Guard's Fiscal Year 2006 budget also 
includes funding for additional C-130H and C-130J flight hours, a 
portion of which will help increase patrols in Coast Guard District 14, 
which includes the WCP EEZ.

Successfully Interdicted Incursions
    Question. How many of the 216 incursions detected were successfully 
interdicted?
    Answer. None of the 216 detected incursions from 2000 to 2004 were 
interdicted. The vastness of the 1.3 million square nautical miles of 
ocean comprising the Western/Central Pacific (WCP) Exclusive Economic 
Zones (EEZ), combined with the limited number of Coast Guard assets 
with long-range capabilities to patrol this area, makes intercepting 
illegal fishing activity difficult. For example, it takes approximately 
1 week for a high endurance cutter to transit to the scene of suspected 
illegal activity. For a C-130 to respond to suspected illegal activity 
in the EEZs of Guam, Wake and the Commonwealth of the Northern Marianas 
Islands, it requires a long-range flight to Guam to re-fuel, then 
another flight to the location of suspected activity. If the suspect 
vessel departs the U.S. EEZ before a Coast Guard unit arrives on scene 
to establish hot pursuit or document the violation for flag state 
enforcement, the Coast Guard lacks legal authority under international 
law to interdict the vessel.

District 14 Maritime Patrol Aircraft
    Question. There is approximately $34 million being requested for 
improvements and expansion of the use of maritime patrol aircraft 
(MPA). How much of the new resources, both in terms of actual aircraft 
and flight time, are being allocated to District 14?
    Answer. The referenced MPA budget request reflects a collation of 
multiple requests focused on the build up and support of the Coast 
Guard's MPA capabilities. Initiatives included are:

        (1) C-130H maintenance and sensor personnel, flight hour 
        augments;
        (2) C-130J flight hours and missionization;
        (3) Contract logistics flight services to free up existing MPA 
        airframes;
        (4) Personnel and logistics support for the stand-up of the 
        first three EADS CASA C-235Ms due for initial delivery in 
        Fiscal Year 2007.

    Within these requests, at least one 100-hour C-130H augment is 
planned for Air Station Barbers Point, including funding for operating 
expenses and 3 additional enlisted aviation personnel for maintenance.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to
                       Admiral Thomas H. Collins

Operations and Maintenance Cost Responsibility for Polar Ice Breakers
    Question. Admiral Collins, why is the Administration proposing that 
the Coast Guard no longer be responsible for the operations and 
maintenance costs of the three polar icebreakers?
    Answer. The Budget proposes to transfer funding for the Polar 
Icebreaking Program to the National Science Foundation to better align 
resources with those who benefit from the program. While the Coast 
Guard will continue to operate the polar icebreaking fleet on a 
reimbursable basis in FY 2006, the National Science Foundation will 
ultimately be responsible for the long-range planning required to 
refurbish or replace the ships, as necessary, which are nearing the end 
of their serviceable lives.

Funding Uncertainties for Polar Ice Breaking Capability
    Question Admiral Collins, won't this approach lead to significant 
uncertainty in funding streams needed to maintain these vessels? Are 
any other Coast Guard assets maintained solely through funding from 
other agencies? How likely is it that this move could eliminate our 
nation's polar icebreaker capacity?
    Answer. The Coast Guard is working closely with the NSF to address 
maintenance of the nation's polar icebreakers and pay for the Coast 
Guard personnel who operate them. The agencies are developing a new 
Memorandum of Understanding (MOU) that will detail the responsibilities 
of both parties.
    The Coast Guard does not operate any other assets solely through 
reimbursement from other agencies. The intent of this arrangement is to 
align funding responsibilities with the benefiting agency in the short-
term in order to maintain existing polar icebreaker capabilities. With 
several studies planned and/or ongoing, including a National Academies 
of Sciences study, we anticipate further policy decisions will be 
forthcoming regarding our nation's future polar icebreaker capacity.

NSF Contracting for Ice Breaking Services
    Question Admiral Collins, does anything prevent NSF from 
contracting with icebreakers from other countries, such as Russia, 
which they did this year while the Polar Sea was undergoing repairs?
    Answer. There are no restrictions stated explicitly; however this 
approach is inconsistent with existing policy decisions such as the 
1990 Presidential Decision on U.S. polar icebreaker requirements and 
the 1996 Presidential Decision (PDD/NSC-26) on U.S. Antarctic Policy. 
These documents envision only U.S. owned and operated ice breakers for 
the Arctic and Antarctic missions.

American Interest for Polar Ice Breaking
    Question. Admiral Collins, how would the loss of our nation's only 
polar icebreaking fleet affect American interests in the Arctic and 
Antarctica?
    Answer. In general terms, the loss of our nation's polar icebreaker 
fleet would severely limit our nation's ability to project sovereignty 
and influence in the polar regions. The specific long-term affects on 
American interests will be addressed by the ongoing National Academies 
of Sciences polar icebreaker study, which is on schedule to provide an 
interim report by September 2005 and a final report by July 2006.

Resource Hours on Non-Homeland Security Missions
    Question. Admiral Collins, are resource hours that Coast Guard 
spends on non-security missions still lower than their pre-9/11 levels?
    Answer. Coast Guard operational efforts will continue to be focused 
to meet the performance targets of all our eleven mission-programs. 
Adherence to specific target-levels of activity for particular mission 
areas is detrimental to achieving performance targets in a multi-
mission service. We must allocate resources based on the greatest need 
as dictated by the changing risk picture within the maritime domain. 
This risk-based decision-making by local commanders will continue to be 
the driving factor in how the Coast Guard manages towards an effective 
mission balance, not striving toward historical resource-hour totals 
that don't fully reflect effort or the current threat environment.

        Total Non-Security mission hours in 2004 were 297,106.
        Total Non-Security mission hours in 2001 were 344,113.

    Per Section 888 of the Homeland Security Act of 2002 (Pub.L. 107-
296), the Coast Guard's activities are categorized within eleven 
missions. As summarized below, five of these missions are considered 
homeland security, while the other six are considered non-homeland 
security missions.

------------------------------------------------------------------------
      Homeland Security Missions         Non-Homeland Security Missions
------------------------------------------------------------------------
Ports, Waterways & Coastal Security     Marine Safety
Drug Interdiction                       Search and Rescue
Migrant Interdiction                    Aids to Navigation
Defense Readiness                       Living Marine Resources
Other law enforcement                   Marine Environmental Protection
                                        Ice Operations
------------------------------------------------------------------------

    In Fiscal Year 2004, the Coast Guard met its performance targets 
for six of the ten mission-programs that have performance measures. In 
particular, the Coast Guard met performance targets for four of its six 
non-homeland security mission-programs: Search and Rescue, Marine 
Safety, Aids to Navigation, and Marine Environmental Protection.
    The remaining two non-homeland security missions nearly met their 
performance targets for Fiscal Year 2004. Efforts in connection with 
the Ice Operations mission-program resulted in four days of waterways 
closures while the target was two days or less. The Living Marine 
Resources mission achieved a compliance rate of 96.3 percent vice a 
goal of 97 percent--although the total number of fisheries boardings 
soared to 4,560, the highest total since Fiscal Year 2001.
    Furthermore, it is important to understand that several of our 
mission-programs such as Marine Safety and Marine Environmental 
Protection are performed with very little use of the boats, ships or 
aircraft that figure into resource hour summaries. This is another 
reason the Coast Guard focuses on the outcomes represented by our 
performance targets rather than the outputs of resource hours.

District 13 Resource Hours on Non-Homeland Security Missions
    Question. Is this also the case in District 13 (Washington State/
Oregon/Idaho/Montana)? Please provide specific examples.
    Answer. The Coast Guard manages performance on a nationwide level 
by empowering local Coast Guard operational commanders from the 
District Commander down to the local Station Commanding Officer to use 
their specialized knowledge and understanding of regional conditions as 
additional factors in making risk-based decisions regarding employment 
of operational assets to effectively balance mission activities.
    Through local management of operations, the Coast Guard is able to 
target use of personnel and operational assets to best respond to local 
threats. For example, in areas where there is a large volume of oil 
cargo traffic and/or commercial fishing activity (e.g. District 13, 
District 17), local operational commanders are able to allocate the 
appropriate amount of resources to perform Marine Environmental 
Protection and Living Marine Fisheries activities to meet these 
regional threats and meet mission performance goals.
    Coast Guard operational efforts will continue to be focused upon 
simultaneously meeting the performance targets of all our eleven 
mission-programs at the national level. Adherence to specific target-
levels of activity for particular mission areas is detrimental to 
achieving performance targets in a multi-mission service. The Coast 
Guard will continue to allocate resources based on the greatest need as 
dictated by the changing risk picture within the maritime domain. This 
risk-based decision-making by local commanders will continue to be the 
driving factor in how the Coast Guard manages towards an effective 
mission balance, not striving toward historical resource-hour totals 
that don't fully reflect effort.
    In Fiscal Year 2004, the Coast Guard met its performance targets 
for six of the ten mission-programs that have performance measures. In 
particular, the Coast Guard met performance targets for four of its six 
non-homeland security mission-programs: Search and Rescue, Marine 
Safety, Aids to Navigation, and Marine Environmental Protection.

Non-Homeland Security Missions and Fewer Resource Hours
    Question. Although the Coast Guard claims that it can do ``more 
with less,'' it seems that only the non-homeland security missions are 
suffering from fewer resources. Is that a fair statement?
    Answer. The Coast Guard continues to strive toward meeting 
performance targets across the entire spectrum of Coast Guard missions. 
In Fiscal Year 2004 the Coast Guard met or exceeded Fiscal Year 2001 
performance levels in five of its six non-homeland security missions 
and met 2004 performance targets for Search and Rescue, Migrant 
Interdiction, Aids-to-Navigation, and Marine Environmental Protection. 
Specifically, in Fiscal Year 2004 the Coast Guard:

   Rescued 86.8 percent of all mariners in imminent danger, 
        exceeding the performance goal of 85 percent.

   Continued to safely and efficiently manage America's 
        waterways, meeting Aids to Navigation mission performance 
        targets, reducing the number of distinct collisions (down to 
        218 from 280), allisions (down to 616 from 738), and grounding 
        events (down 709 from 802) by 15 percent from 1,820 in Fiscal 
        Year 2003 to 1,543 in Fiscal Year 2004.

   Protected the marine environment by reducing the five-year 
        average of oil and chemical spills greater than 100 gallons per 
        100 million tons shipped to 22.1 from 29.4 in Fiscal Year 2003 
        and well below the Marine Environmental Protection mission 
        performance target of 41.

   Continued to focus on improving maritime safety, reducing 
        the number of maritime worker and passenger injuries and deaths 
        from 597 in 2003 to 582 in 2004, well below the program sub-
        target of 771. (Full calculation of program performance 
        includes recreational boating fatalities, which depends on 
        state data which will not be available until later this 
        Spring).

    Efforts in connection with the Ice Operations mission-program 
resulted in four days of waterways closures while the target was two 
days or less. The Living Marine Resources mission achieved a compliance 
rate of 96.3 percent vice a goal of 97 percent--although the total 
number of fisheries boardings soared to 4,560, the highest total since 
Fiscal Year 2001.
    The President's Fiscal Year 2006 budget requests an increase of 
$570 million over Fiscal Year 2005 funding levels, ensuring the Coast 
Guard is adequately funded and prepared to meet its mission demands, 
reduce maritime risk and improve performance across all missions.

Insufficient Assets for Security Patrols in the 13th District
    Question 1. The Coast Guard has indicated in staff briefings that 
it does not have sufficient assets to implement its own security 
protocols at District 13 and elsewhere when the maritime security level 
is elevated due to threats. How does the President's Fiscal Year 2006 
budget request address these gaps?
    Answer. The 2006 Budget continues to improve the Coast Guard's 
maritime homeland security capabilities and reduce maritime risk. 
Specifically, it provides for critical Maritime Domain Awareness (MDA) 
initiatives and increased or enhanced Coast Guard operational presence, 
both critical components of the Coast Guard's maritime security 
strategy and posture.
    The 2006 Budget furthers efforts to improve MDA by:

   Continuing deployment of a nationwide Automatic 
        Identification System (AIS) infrastructure throughout regional 
        Coast Guard command centers;

   Providing additional Maritime Patrol Aircraft (MPA) 
        resources to fill documented flight hour gaps in support of 
        detection, surveillance, and tracking activities;

   Deploying a Common Operational Picture (COP) through Coast 
        Guard command centers nationwide. The COP will help fuse 
        surveillance and tracking information from systems such as AIS, 
        Rescue 21, and the Ports and Waterways Safety System (PAWSS);

   Increasing the capability of Coast Guard cutters and 
        Maritime Safety and Security Teams (MSSTs) to detect Rad/Nuc 
        materials, intercept suspect ships, and respond to incidents 
        involving the release of Rad/Nuc substances.

    In addition, the 2006 Budget further increases and enhances the 
Coast Guard's operational presence by:

   Accelerating deployment of organic Airborne Use of Force 
        (AUF) capability to five Coast Guard Air Stations, increasing 
        the ability to respond to maritime security threats;

   Replacing existing obsolete and unstable cutter boats on the 
        High Endurance Cutter (WHEC) and Medium Endurance Cutter (WMEC) 
        fleet with the more capable Cutter Boat--Over the Horizon (CB-
        OTH). This platform nearly doubles the speed of the existing 
        cutter boat, increases secure communication capabilities, and 
        when used in conjunction with AUF capability has a 98 percent 
        success rate in stopping suspicious vessels;

   Providing 14 additional Response Boat-Smalls (RB-S) and 
        associated crews to provide vessel escorts, and enforce 
        security zones near critical infrastructure including enhancing 
        liquefied natural gas and waterside security;

   Reallocating existing Coast Guard resources to immediately 
        fill an existing gap in national maritime Law Enforcement and 
        Counter-Terrorism (LE/CT) capability. The permanent 
        establishment of the Coast Guard's Enhanced MSST (E-MSST) will 
        provide an offensive DHS force able to operate across the full 
        spectrum of LE and CT response in support of homeland security 
        and homeland defense objectives, including CT response 
        capability for scheduled security events out to 50 nautical 
        miles from shore and augmenting interagency assets in high 
        visibility venues such as National Special Security Events 
        (NSSEs).

    Question 2. Admiral Collins, what is the Coast Guard's role in 
protecting sensitive facilities, such as the Bangor Naval Submarine 
Station in Silverdale, Washington? Does the Coast Guard have adequate 
resources to fully implement this responsibility at all such facilities 
nationwide?
    Answer. In accordance with Homeland Security Presidential 
Directive-7 (HSPD-7)--Critical Infrastructure Identification, 
Prioritization and Protection, each federal department and agency is 
responsible for the protection of its own physical and cyber critical 
infrastructure and key resources, including sensitive facilities. 
Primary protection responsibility for the Bangor Naval Submarine 
Station in Silverdale, Washington rests with the U.S. Navy (Department 
of Defense). The Coast Guard works with DoD to supplement security in 
those areas where the Coast Guard is better situated to provide the 
necessary expertise or resources. The Coast Guard's most direct role in 
supporting security for sensitive DoD assets is to provide armed escort 
for certain high-value Navy and DoD vessels such as submarines, 
aircraft carriers, and military supply vessels while transiting U.S. 
ports and waterways, and providing waterside security during military 
outload operations at commercial port terminals. Generally, the Coast 
Guard relies upon its Reserve Forces to bolster security operations in 
support of military outloads. The Coast Guard has not been called upon 
to implement similar measures at all sensitive DoD facilities, but 
applies resources as needed to address the greatest risks.

Resources Needed to Protect LNG Terminals
    Question. Interest in building Liquid Natural Gas (LNG) facilities 
is increasing around the country. The Coast Guard is familiar with the 
risks to such facilities as well as the transportation infrastructure 
for LNG delivery. How is the Coast Guard addressing these risks as LNG 
development expands? What new resources will the Coast Guard need to 
protect any new LNG terminals?
    Answer. Recognizing the surging interest in LNG importation in the 
U.S. over the past 24 months, the Coast Guard entered into an 
Interagency Agreement with the Federal Energy Regulatory Commission 
(FERC) in February 2004. The FERC is the federal agency that authorizes 
the construction of shore side LNG terminals. Under this agreement, the 
Coast Guard works with the FERC to ensure that both land and marine 
security issues are addressed in a coordinated and comprehensive 
manner. In particular, the interagency agreement requires the FERC to 
address maritime security related issues in the Environmental Impact 
Statement (EIS) process required under the National Environmental 
Policy Act (NEPA), and disclose this information to the public to the 
extent permitted by law.
    The FERC is processing 13 applications for new shore side LNG 
terminals in the U.S., and there are an additional 10 potential sites 
being contemplated. The Coast Guard is now in the process of finalizing 
policy guidance on the scope of waterway security assessments that need 
to be conducted as part of the FERC's EIS process, as well as timelines 
to be met. This comprehensive guidance will be based in part on the 
consequence distances and risk mitigation measures discussed in the 
December 2004 Sandia National Labs report, and will provide a 
nationally uniform risk assessment process that yields port specific 
security recommendations. The Coast Guard's Fiscal Year 2006 budget 
request resources for additional Response Boat-Smalls and screening 
personnel to provide increased security for LNG facilities in Cove 
Point, MD and Everett, MA. Once the port specific waterway security 
assessments have been completed for subsequent LNG facilities, precise 
Coast Guard resource requirements can then be determined based upon the 
specific security measures that have been recommended.

DW Budget Adequacy/Asset Mix/Plan Submission Date
    Question. Admiral Collins, the Coast Guard has not provided 
Congress with a revised Deepwater plan that reflects its needs for 
capital improvements in the post-9/11 environment, despite direction 
from this Committee and the Appropriations Committee to do so. Thus, it 
is unclear whether the budget request of $966 million for Fiscal Year 
2006 is adequate, or if the mix of assets covered by this amount are 
appropriate. When can we expect this plan?
    Answer. The Deepwater Revised Implementation Plan was delivered to 
Congress on March 25, 2005. Further information requested by Congress 
is under development and will be submitted shortly.

Why is the Revised Deepwater Plan Only Five Years Long?
    Question. The Coast Guard presented its original Deepwater plan 
covering all of the 20 years of the program; why is a revised plan 
covering all of the future years of Deepwater not forthcoming, 
particularly when Congress, in asking for such a plan in the Coast 
Guard Authorization Act of 2004, and in the DHS Appropriations bill for 
Fiscal Year 2005, did not limit its request to the next five year term 
of the program?
    Answer. Further information covering all years of the program is 
under development and will be submitted shortly.

Long-Term Revised Plan for Deepwater
    Question. How can Congress scrutinize the Fiscal Year 2006 budget 
request and understand what it will cover, and whether it is 
sufficient, if we are not provided with the long-term plans for 
Deepwater?
    Answer. The Deepwater Revised Implementation Plan was delivered to 
Congress on March 25, 2005. Further information requested by Congress 
is under development and will be submitted shortly.

Additional Funding for DW on Unfunded Priorities List
    Question. The ``unfunded priorities'' list that the Coast Guard 
provided to Congress includes an additional $637 million of money for 
Deepwater and an additional $63 million for legacy assets. Do these 
amounts bring Deepwater in line with the Coast Guard's post-9/11 plan?
    Answer. The revised Deepwater implementation plan delivered on 
March 25, 2005 articulates the Coast Guard's post-9/11 plan for the 
Deepwater program. Consistent with the revised Deepwater implementation 
plan, the Coast Guard's Fiscal Year 2006 budget requests $966 million 
for the Integrated Deepwater System to fund the Coast Guard's highest 
priority Deepwater recapitalization and modernization initiatives:

   Production of the Third National Security Cutter,

   Design and long lead materials for the first Offshore Patrol 
        Cutter,

   Six legacy Medium Endurance Cutter mission effectiveness 
        projects,

   Acquisition of the third Vertical Take Off and Landing 
        Unmanned Aerial Vehicle,

   Design and demonstration of the first Fast Response Cutter,

   Re-engining the operational fleet of 84 HH-65 helicopters to 
        eliminate safety and reliability issues and restore operational 
        effectiveness of these critical aircraft,

   Enhanced legacy fixed and rotary wing aircraft capabilities 
        through recapitalization of avionics and radar systems,

   Continued development of the command and control system, 
        common operating picture, and integrated logistics system.

    As discussed in the transmittal letter that accompanied the Coast 
Guard's list of ``unfunded priorities,'' to the extent that provisions 
of the Act requiring the list (Public Law 108-334), including section 
514, called for submission of legislative recommendations to the 
Congress, the executive branch construed such provisions in a manner 
consistent with the President's constitutional authority to supervise 
the unitary executive branch and to recommend for the consideration of 
the Congress such measures as the President judged as necessary and 
expedient. However, the Commandant of the Coast Guard provided the 
``unfunded priorities'' list to Congress as a matter of comity. Coast 
Guard is available to discuss the contents of the ``unfunded priorities 
list.''

GAO Audit Management Concerns--CG Response
    Question. Last year, GAO provided a report that was critical of the 
Coast Guard's management and oversight of the Deepwater program. How 
have these concerns been addressed?
    Answer. Since its March 2004 report was issued, we have updated GAO 
regularly on the implementation of these improvements through four 
detailed reports and a day-long conference in January 2005. We have 
taken specific actions to improve program management efforts to measure 
and evaluate cost, schedule, and performance; improve communications, 
and to encourage future cost control through rigorous competition.
    In short, the Coast Guard has aggressively implemented the GAO 
report recommendation. Its 11 recommendations were grouped by three 
categories: program management, contractor accountability, and cost 
controls through competition. Action has been taken by the Coast Guard 
on all of these recommendations, GAO has closed 2 of the 11 
recommendations as completed by the Coast Guard, and we anticipate 
further closures shortly.

Response Boat-Medium Contract
    Question. When do you expect the contract for the Response Boat-
Medium to be awarded?
    Answer. The Coast Guard anticipates awarding the limited rate 
production contract in the 4th Quarter of Fiscal Year 2005. Should the 
proposal evaluation require discussion with the offerors, contract 
award may not occur until early Fiscal Year 2006.

The OSLTF Balance is Declining
    Question. The Coast Guard testified that the Oil Spill Liability 
Trust Fund (OSTLF) will run out of funding by 2010. Does the Fiscal 
Year 2006 budget address this issue? Describe steps that the 
Administration is planning to address this projected decline.
    Answer. The Fiscal Year (FY) 2006 Budget does not address this 
issue. The Coast Guard and Maritime Transportation Act of 2004 requires 
the Coast Guard to submit a report on the health of the Oil Spill 
Liability Trust Fund (OSLTF), which was provided to Congress in April.
    The OSLTF has now assumed full financial responsibility for the T/V 
Athos I spill response in Philadelphia, PA. Due to projected expenses 
from this and other spills exceeding revenues by approximately $250 
million per year over the next two years, the Coast Guard now 
anticipates that the OSLTF to be exhausted by the start of FY 2008. 
Additional major oil spills like that involving the ATHOS I will only 
accelerate exacerbate the rate of decline of the Fund.
    Based on the findings contained in the OSLTF report to Congress 
discussed above, the Coast Guard is working with the Department of 
Homeland Security and the Administration to develop a plan to address 
the projected decline in OSLTF balances.

Changing OPA Liability Limits
    Question. Why has the Administration not raised the liability caps 
for responsible parties, as it is required to do under the Oil 
Pollution Act of 1990?
    Answer. The Coast Guard is currently seeking the authority under 
the provisions in Oil Pollution Act of 1990 (OPA 90) to increase 
liability limits to reflect significant increases to the Consumer Price 
Index (CPI). The President delegated that authority in section 4 of 
Executive Order 12777 to various agency heads (Administrator, 
Environmental Protection Agency, Secretary of the Interior, Secretary 
of Transportation) in respect to various classes of facilities and 
vessels. Certain authorities transferred from the Secretary of 
Transportation to the Secretary of Homeland Security when the 
Department of Homeland Security was created and we are currently 
requesting this authority be delegated further to the Coast Guard.
    In anticipation of the Secretary of Homeland Security further 
delegating this authority to the Coast Guard, the Coast Guard is 
proceeding with a rulemaking project to make CPI based adjustments for 
vessels through regulation. The Coast Guard anticipates that with 
notice and comment and required reviews it may take more than a year to 
finalize the required rulemaking.

Polar Texas Spill in Puget Sound
    Question. According to a March 23, 2005 article in the Seattle Post 
Intelligencer, ``the Coast Guard said a ConocoPhillips ship, the POLAR 
TEXAS, was the likeliest culprit in a crude oil spill in Puget Sound.'' 
Please provide the context and analysis that resulted in this 
determination by the Coast Guard. Do you feel that under the status quo 
a Puget Sound oil spill is likely in the next decade? What can be done 
to further minimize this risk?
    Answer. The oil analysis conducted by the Coast Guard for the 
October 2004 Dalco Passage oil spill is part of an ongoing 
investigation and is currently not releasable. However, this analysis, 
performed by the Coast Guard's Marine Safety Laboratory (MSL), 
indicates that the oil spilled matches with oil from the tank vessel 
POLAR TEXAS. The MSL, a forensic laboratory for oil pollution, draws 
upon four analytical methods to measure different chemical properties 
of an oil to match spilled oil to source oil.
    It is impossible to predict with any degree of certainty the 
likelihood of an oil spill occurring in any particular location. 
However, prevention measures, especially those measures enacted as part 
of the Oil Pollution Act of 1990 have greatly reduced the number and 
size of marine oil spills in the United States.
    Active continuation of existing prevention measures provides a 
significant protection against potential future marine oil spills. Such 
prevention measures, however, can not provide complete protection from 
incidents that may involve terrorism, severe weather, human error, and/
or mechanical failure.

Coast Guard R&D Funding With New DHS Process
    Question. Admiral Collins, the budget proposes no money directly to 
the Coast Guard for research and development, which in the past has 
funded a variety of important initiatives for both security and non-
security missions. Is the Coast Guard assured of getting this money 
within the proposed new Department process?
    Answer. As presented in the budget, the Coast Guard anticipates 
receiving $24 million in Research and Development (R&D) reimbursable 
funds from the DHS Science and Technology directorate (S&T) in FY 2006. 
The Coast Guard and the Department of Homeland Security's Directorate 
of Science and Technology (DHS S&T) have established and will continue 
a productive and collaborative relationship wherein S&T ensures that 
Department-wide R&D priorities are being met and the Coast Guard 
Research and Development program proposes and executes R&D programs 
that are important for the Coast Guard. Throughout the fiscal year the 
Coast Guard can also compete for additional Departmental R&D funding in 
accordance with DHS S&T prioritization protocols.

Strait of Juan de Fuca Vulnerabilities to Spills
    Question. Admiral Collins, the outer coast of Washington and the 
western Strait of Juan de Fuca are vulnerable to oil spills from the 
high volume of marine traffic carrying large quantities of oil as cargo 
and fuel. As you may know, since the late 1990s a dedicated rescue tug 
has been established in Neah Bay, WA to be able to respond to emergency 
maritime situations. Please describe the Coast Guard historic 
involvement and use of resources towards this effort.
    Answer. The Coast Guard provided limited support for a dedicated 
rescue tug in Neah Bay in 1999.
    A Coast Guard sponsored regulatory assessment considered a 
dedicated rescue tug alternative alongside 200 other potential risk 
reducing measures as a part of the ``Use of Tugs to Protect Against Oil 
Spills in the Puget Sound Area'' assessment conducted in 1999. This 
analysis supported the use of the International, private-sector Tug of 
Opportunity System (ITOS) as the most cost effective risk reducing 
measure. This system employs the use of transponders on a fleet of 
voluntary tugs of opportunity that are monitored by both U.S. Coast 
Guard and Canadian Vessel Traffic Services. This provides trans-
boundary decision makers with the awareness essential to direct a tug 
that is closest to a potential threat.
    The low probability of drift groundings compared to other types of 
accident limits the cost effectiveness of rescue tugs. In fact, a 
substantial portion of the potential pollution averted by the rescue 
tug is attributable to its use as an escort for laden tank vessels. 
While the use of pre-positioned rescue tugs would reduce the risk of 
drift groundings in specific high traffic areas, the ITOS provides a 
more cost effective means to prevent pollution throughout the Strait of 
Juan de Fuca.

Federal Funding for Tug Boats in WA State
    Question. Admiral Collins, the State of Washington maintains that 
the Federal Government should provide funding for future tug 
deployments based upon the following premises:

   The Federal Government is a trustee of natural resources in 
        the area including the Olympic National Marine Sanctuary, 
        Olympic National Park, and the coastal national wildlife 
        refuges;

   The Federal Government has designated certain species found 
        in the area as threatened and endangered. These species and 
        their habitats would be affected by major oil spills;

   The Federal Government has a responsibility to protect the 
        treaty rights of Puget Sound tribes in their usual and 
        accustomed fishing areas;

   Washington is meeting a regional energy supply need. The 
        north Puget Sound marine transportation corridor contains a 
        regional crude oil refining center and is a conduit of refined 
        petroleum products to other western states;

   The Strait of Juan de Fuca conveys more tonnage of cargo to 
        and from Pacific Rim ports than any other west coast waterway;

   Puget Sound is homeport for a large portion of the nation's 
        strategic naval fleet which also poses a risk of major spills; 
        and

   There is potential for international tension with Canada 
        should a major transboundary oil spill occur in this waterway.

    I would appreciate hearing your response to each of these potential 
federal obligations and what role you feel the Coast Guard should play 
in meeting these responsibilities.
    Answer. The Coast Guard recognizes the federal responsibilities 
outlined above, but does not agree that a rescue tug is required to 
meet those responsibilities. The Coast Guard has a vigorous program in 
place to prevent oil spills in the Strait of Juan de Fuca. This program 
includes:

        Northwest Area Contingency Plan.

        International Tug of Opportunity System, paid for by industry 
        fees collected through Puget Sound Marine Exchange,

        Participating tugs have transponders to make them 
        readily identifiable by Vessel Traffic Services Puget Sound 
        radar and the Marine Exchange.

        Allows for quicker identification & dispatch of tugs.

        The US-Canadian Joint Coordination Group established a 3-5 year 
        strategic plan to formally link our radar and communications 
        networks across the border, synchronize training, and jointly 
        embed our operational processes.

        Annual exercise of CANUSPAC Spill Response Plan 
        involves deployment of equipment and joint training on behalf 
        of both countries; including annual exercise of joint emergency 
        procedures

        The Cooperative Vessel Traffic Service (CVTS), established in 
        1979 by international agreement between U.S. and Canada and

        Partnership between the United States and Canada to 
        manage vessel traffic in the shared waters of the Strait of 
        Juan de Fuca and the connecting waterways.

        The CVTS assists in preventing collisions, groundings, 
        and other maritime casualties, dividing the region into several 
        zones each managed from one of several vessel traffic centers 
        (Tofino, Victoria, and Seattle.)

        A Traffic Separation Scheme, adopted by the International 
        Maritime Organization.

    A Coast Guard sponsored regulatory assessment considered a 
dedicated rescue tug alternative alongside 200 other potential risk 
reducing measures as a part of the ``Use of Tugs to Protect Against Oil 
Spills in the Puget Sound Area'' assessment conducted in 1999. This 
analysis supported the use of the International, private-sector Tug of 
Opportunity System (ITOS) as the most cost effective risk reducing 
measure.
    The low probability of drift groundings compared to other types of 
accident limits the cost effectiveness of rescue tugs. In fact, a 
substantial portion of the potential pollution averted by the rescue 
tug is attributable to its use as an escort for laden tank vessels. 
While the use of pre-positioned rescue tugs would reduce the risk of 
drift groundings in specific high traffic areas, the ITOS provides a 
more cost effective means to prevent pollution throughout the Straight 
of Juan de Fuca.

Moving Coast Guard Headquarters to St. Elizabeth Hospital
    Question. Admiral Collins, why is the Administration requesting $38 
million with a view to moving the Coast Guard headquarters to the St. 
Elizabeth Hospital West Campus in DC, when no studies have apparently 
been done on the costs to the Coast Guard of such a move, or of 
alternative locations? Are such studies forthcoming?
    Answer. The Coast Guard submitted its requirements for a Coast 
Guard Headquarters facility to the General Services Administration 
(GSA) last year.
    In the GSA Public Buildings Service Federal Buildings Fund for 
Fiscal Year 2006, GSA requested $24.9 million for Coast Guard 
Consolidation in response to the Coast Guard requirements and $13 
million to redevelop the St Elizabeth's West Campus Infrastructure.
    GSA is the project lead for the Coast Guard headquarters move and 
would also be the lead for any studies.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John F. Kerry to
                       Admiral Thomas H. Collins

Northern Edge Marine Casualty Investigation
    Question. Five crew members of the Northern Edge fishing vessel 
died after their boat capsized off the coast of Nantucket in December 
2004. While the Coast Guard personnel acted bravely in their Search and 
Rescue (SAR) effort, the operation faced difficulties including 
equipment failure. This incident, while hopefully isolated, highlighted 
concerns that I and others have expressed over funding for Coast Guard 
SAR operations and its aging infrastructure. On January 26, I sent you 
a letter outlining these concerns. I have your responses, however 
several questions still remain.
    In my letter I asked the Coast Guard to investigate the incident. 
Your letter states that you have investigated the cause of the 
mechanical failures and that the Coast Guard will conduct a Marine 
Casualty Investigation, which is not a formal internal investigation.
    Will the informal Marine Casualty Investigation be released to the 
public after it is completed?
    Answer. Yes, the Marine Casualty Investigation will be available to 
the public as soon as it is completed.

Formal Investigation of Northern Edge SAR Case
    Question. Will the Coast Guard conduct a formal investigation into 
the Northern Edge incident in addition to the Marine Casualty 
Investigation? If not, why?
    Answer. The Coast Guard is using the informal rather than the 
formal investigation process in this case. By using a single officer, 
the investigation will proceed more efficiently, and enable the Coast 
Guard to share findings with the public more quickly. Given the 
findings from the preliminary investigation, the existence of only one 
survivor, and the inability to complete an extensive post-casualty 
vessel examination, we believe that in this case, a formal 
investigation would not reveal any more information than would a 
comprehensive informal investigation.

Coast Guard Overall Preparedness
    Question. You recently presented Congress with a list of the Coast 
Guard's unfunded priorities totaling nearly $1 billion. If the Congress 
does not provide the needed funding, what will you do to maintain 
overall preparedness, including in SAR?
    Answer. The Coast Guard continues to maintain high overall 
preparedness as evidenced by consistently strong performance in all 
mission areas. The Coast Guard met its 2004 performance targets for 
Search and Rescue, Migrant Interdiction, Aids-to-Navigation, and Marine 
Environmental Protection. Specifically, in Fiscal Year 2004 the Coast 
Guard:

   Rescued 86.8 percent of all mariners in imminent danger, 
        exceeding the performance goal of 85 percent.

   Prevented illegal entry into the U.S. of 10,899 illegal 
        migrants--the highest level in 10 years--meeting the 
        performance target to interdict or deter at least 87 percent of 
        illegal migrants entering the U.S. through maritime means.

   Continued to safely and efficiently manage America's 
        waterways, meeting Aids to Navigation mission performance 
        targets, reducing the number of distinct collisions (down to 
        218 from 280), allisions (down to 616 from 738), and grounding 
        events (down 709 from 802) by 15 percent from 1,820 in Fiscal 
        Year 2003 to 1,543 in Fiscal Year 2004.

   Protected the marine environment by reducing the five-year 
        average of oil and chemical spills greater than 100 gallons per 
        100 million tons shipped to 22.1 from 29.4 in Fiscal Year 2003 
        and well below the Marine Environmental Protection mission 
        performance target of 41.

   Continued to focus on improving maritime safety, reducing 
        the number of maritime worker and passenger injuries and deaths 
        from 597 in 2003 to 582 in 2004, well below the program sub-
        target of 771. (Full calculation of program performance 
        includes recreational boating fatalities which depend on state 
        data which will not be available until later this Spring).

   Broke previous counter drug seizure records, seizing 241,713 
        pounds (previous record was 138,393 pounds) of cocaine and 
        removing over 350,000 pounds of cocaine from the marketplace. 
        (Full calculation of the Coast Guard's counter drug performance 
        (Removal Rate) depends on flow rate data which will be provided 
        by the Interagency Assessment of Cocaine Movement later this 
        Spring).

    The President's Fiscal Year 2006 budget requests an increase of 
$570 million over Fiscal Year 2005 funding levels, demonstrating 
extremely strong commitment by the Administration to ensure the Coast 
Guard is adequately funded and prepared to meet its mission demands and 
improve operational performance.
    In addition to sustaining current levels of operational funding, 
the Coast Guard's Fiscal Year 2006 budget funds several recapitalizing 
initiatives (e.g. Deepwater, Rescue 21, Response Boat-Medium, High 
Frequency Communications Recapitalization), critical to restoring 
readiness to Coast Guard operational assets and subsystems--the very 
foundation of Coast Guard operational capability and capacity.
    The Fiscal Year 2006 budget continues aggressive implementation of 
Maritime Security Strategy to increase Maritime Domain Awareness, 
operational presence, and response posture with the ultimate goal of 
reducing maritime risk. Fiscal year 2006 initiatives include 
implementing the Common Operational Picture, continuing the nationwide 
deployment of the Automatic Identification System, increasing maritime 
patrol aircraft flight hours, enhancing radiological and nuclear 
detection capabilities, equipping organic helicopters with Airborne Use 
of Force capability, replacing obsolete cutter small boats with more 
capable Cutter Boats--Over the Horizon, and providing additional 
Response Boat-Small allowances.
    The Coast Guard's Fiscal Year 2006 budget also provides operation 
and maintenance funding for the new Great Lakes Icebreaker, scheduled 
to be commissioned in 2006. This cutter will replace the less capable 
Coast Guard Cutters ACACIA and MACKINAW resulting in improved Aids-to-
Navigation and Ice Operations performance on the Great Lakes.
    The funding provided in the Coast Guard's Fiscal Year 2006 budget 
funds the Coast Guard's highest priority initiatives and represents the 
resources necessary to meet Fiscal Year 2006 performance goals.

SAR Aircraft in Ready Status for Northern Edge SAR Case
    Question. In my January 26 letter, I also expressed concern that 
Coast Guard protocol in District 1 requires only one rescue helicopter 
to be in Bravo (ready) status. Your letter provides the readiness rate 
for the H-60 helicopters based in Cape Cod but does not respond to this 
specific concern that a single helicopter in Bravo state is inadequate 
to respond to fishing, commerce, recreation, and security needs. Will 
the Coast Guard increase the number of aircraft required to be in ready 
status for SAR in District 1? If not, explain the Coast Guard readiness 
strategy.
    Answer. The Coast Guard maintains one Bravo-0 (B-0) HH-60J and one 
B-0 HU-25A at Air Station Cape Cod. Additionally, the southern portion 
of the First District is also supported by a B-0 HH-65A maintained at 
Air Station Atlantic City. These aircraft are on search and rescue 
(SAR) standby. This response posture has been steady for several 
decades, and was not altered after September 2001.
    The SAR case load and SAR resource hours for Air Station Cape Cod 
(Both HH-60 and HU-25 aircraft) are listed in the table below. The 
figures reflect a relatively consistent workload in the SAR program for 
the Air Station over the past four years.

------------------------------------------------------------------------
                                               FY01   FY02   FY03   FY04
------------------------------------------------------------------------
# SAR Cases                                    248    318    262    271
SAR Resource Hours                             688    808    768    770
------------------------------------------------------------------------

    As outlined in the Coast Guard's March 11, 2005 letter, the 
problems with the aircraft response to the fishing vessel NORTHERN EDGE 
incident were mechanical in nature. They were not related to the 
availability of aircraft or B-0 response crews. All four HH-60J's at 
Air Station Cape Cod were available, and the helicopter ready crew 
responded through the four of them.
    The SAR readiness requirements for the First District are met with 
the existing number of B-0 aircraft. Barring extensive mechanical 
failures, this posture has been sufficient to provide a search and 
rescue response even in the most severe weather and sea conditions 
encountered in the North Atlantic.

Search and Rescue and Traditional Mission Preparedness
    Question. In your response to my inquiry, you point out that the 
Coast Guard met its SAR program goals as they relate to the 2004 
Government Accountability Office report. However, that same report 
found that resources allocated to traditional missions such as foreign 
fishing enforcement and SAR are still down considerably from pre-9/11 
levels. Please outline for the Committee the Coast Guard's preparedness 
for SAR and other traditional missions. Explain any shortcomings in the 
Coast Guard's preparedness related to funding or any other issue.
    Answer. While the Coast Guard recognizes the difference between the 
baseline resource hours and the actual Search and Rescue (SAR) activity 
level, we emphasize that performance is our primary concern, and in 
Fiscal Year 2004, the Coast Guard rescued 86.8 percent of all mariners 
in imminent danger, exceeding our performance goal of 85 percent. SAR 
will continue to receive all of the resource hours required to meet 
mission demand and there has been no reduction in the SAR readiness 
posture at any Coast Guard units.
    Baseline resource hours for all cutters, aircraft and boats 
represent estimated mission employment based on historical information. 
SAR by its very nature is an ``on demand'' mission. Due to the 
complexity of maritime distress cases and their varied resource 
requirements, it is difficult to precisely predict SAR activity levels 
beyond our baseline estimates.
    While mission performance remains our primary concern, the decrease 
in SAR hours can be attributed to a myriad of factors. Some of these 
factors include: improvements in technology for system reporting and 
vessel identification, success from recreational boating safety 
efforts, and a rise in commercial towing and salvage enterprises.
    In broader terms, the Coast Guard continues to strive toward 
meeting performance targets across the entire spectrum of Coast Guard 
missions. In Fiscal Year 2004 the Coast Guard met or exceeded Fiscal 
Year 2001 performance levels in five of its six non-homeland security 
missions (as defined in Section 888 of the Homeland Security Act of 
2002) and met 2004 performance targets for several of these non-
homeland security missions (e.g. Search and Rescue, Migrant 
Interdiction, Aids-to-Navigation, and Marine Environmental Protection) 
while continuing to successfully prosecute homeland security missions. 
Specifically, in Fiscal Year 2004 the Coast Guard:

   Rescued 86.8 percent of all mariners in imminent danger, 
        exceeding the performance goal of 85 percent.

   Continued to safely and efficiently manage America's 
        waterways, meeting Aids to Navigation mission performance 
        targets, reducing the number of distinct collisions (down to 
        218 from 280), allisions (down to 616 from 738), and grounding 
        events (down 709 from 802) by 15 percent from 1,820 in Fiscal 
        Year 2003 to 1,543 in Fiscal Year 2004.

   Protected the marine environment by reducing the five-year 
        average of oil and chemical spills greater than 100 gallons per 
        100 million tons shipped to 22.1 from 29.4 in Fiscal Year 2003 
        and well below the Marine Environmental Protection mission 
        performance target of 41.

   Continued to focus on improving maritime safety, reducing 
        the number of maritime worker and passenger injuries and deaths 
        from 597 in 2003 to 582 in 2004, well below the program sub-
        target of 771. (Full calculation of program performance 
        includes recreational boating fatalities which depend on state 
        data which will not be available until later this Spring).

   Broke previous counter drug seizure records, seizing 241,713 
        pounds (previous record was 138,393 pounds) of cocaine and 
        removing over 350,000 pounds of cocaine from the marketplace. 
        (Full calculation of the Coast Guard's counter drug performance 
        (Removal Rate) depends on flow rate data which will be provided 
        by the Interagency Assessment of Cocaine Movement later this 
        Spring).

   Prevented illegal entry into the U.S. of 10,899 illegal 
        migrants--the highest level in 10 years--meeting the 
        performance target to interdict or deter at least 87 percent of 
        illegal migrants entering the U.S. through maritime means.

   Although the Coast Guard did not meet target levels for its 
        Ice Operations and Living Marine Resources missions, 
        performance remained high. Efforts in connection with the Ice 
        Operations mission-program resulted in four days of waterways 
        closures while the target was two days or less. The Living 
        Marine Resources mission achieved a compliance rate of 96.3 
        percent vice a goal of 97 percent--although the total number of 
        fisheries boardings soared to 4,560, the highest total since 
        Fiscal Year 2001.

    The Coast Guard will continue seeking the appropriate balance among 
all its mission-programs while relentlessly pursuing stated performance 
goals. In so doing, the Coast Guard will continue to focus not only on 
activity levels (hours), but most importantly on achieving the desired 
outcomes from those levels. The ability to achieve desired outcomes and 
performance goals has been significantly enhanced through improved 
technology, tactics and procedures. Risk-based decision-making by local 
commanders will continue to be the primary driving factor behind the 
specific activity levels (hours) accrued in the course of Coast Guard 
operations.

Increased Costs of Deepwater Program
    Question. The Coast Guard operates an aging fleet of cutters and 
helicopters, and the costs of the Deepwater program have been higher 
than anticipated. Why are the costs higher than predicted?
    Answer. The original Deepwater Integrated Coast Guard System (ICGS) 
implementation plan was developed around a set of assumptions about the 
service life and materiel condition of the Coast Guard's legacy assets. 
This plan includes investment in legacy sustainment during the 
recapitalization effort to maintain capability until the assets could 
be recapitalized. It has become very apparent that our legacy fleet was 
in even worse shape than we understood. Compounding this, increased 
operating tempo required to meet homeland security mission demands has 
resulted in accelerated degradation of the Coast Guard's legacy assets.

Revised DW Implementation Plan
    Question. When will the Coast Guard issue a revised plan of the 
Deepwater program's projected mix of assets and their costs?
    Answer. The Deepwater Revised Implementation Plan was delivered to 
Congress on March 25, 2005. Further information requested by Congress 
is under development and will be submitted shortly.

Coast Guard Loran
    Question. What is the Administration's or the Coast Guard's 
official policy regarding the Loran system? When will the Loran-C 
modernization process be accomplished?
    Answer. Consistent with the 2001 Federal Radionavigation Plan and 
an April 2003 Memorandum of Agreement between the Coast Guard, the 
Federal Aviation Administration and Department of Transportation, the 
Coast Guard will plan to disestablish the Loran system by the end of 
Fiscal Year 2008, with appropriate public notice, if a national policy 
is not established that requires Loran-C as a multi-modal backup to the 
Global Positioning System (GPS).
    As part of the Loran-C modernization, the FAA transfers funds 
(which were not requested by the Coast Guard) from its budget to the 
Coast Guard. At the current rate of transfer, the modernization of the 
20 continental U.S. Loran facilities will be completed by August 2005. 
If funds continue to be transferred from the FAA, the Alaskan Loran 
facility modernization would extend beyond 2008. Those facilities would 
be modernized at the rate of one a year, starting with LORSTA Kodiak 
this year and finishing with LORSTA Port Clarence in 2010.
    Question. The Coast Guard is one of several federal agencies that 
have jurisdiction over port security. Port Authorities, shippers, ocean 
carriers, and other maritime interests are looking to the government 
for a contingency plan in the event of a terrorist incident at a U.S. 
port. What is the status of the contingency planning?
    Answer. The Coast Guard has developed the National Response Options 
Matrix (NROM) for use by Coast Guard senior leadership following a 
Transportation Security Incident (TSI) or when credible intelligence 
information indicates that a TSI is imminent. The emphasis of the NROM 
is to provide pre-planned and pre-agreed upon options to focus the 
maritime industry's Maritime Security level posture and the Coast 
Guard's Ports, Waterways and Coastal Security activities in the 
nation's non-affected ports to help prevent further attacks and to 
protect the remaining U. S. Marine Transportation System, maritime 
critical infrastructures and key assets, and population centers. 
Recognizing the utility of making NROM an inter-agency tool; Customs 
and Boarder Patrol has joined the Coast Guard in development of a DHS 
inter-agency NROM to include initial short-term response and recovery 
options, protocols and priorities for re-opening ports, while 
facilitating the continued flow of legitimate maritime commerce and use 
of the marine environment.
    In addition, the President has signed a maritime security policy 
directive outlining his vision for a fully coordinated U.S. Government 
effort to protect U.S. interests in the maritime domain. This document, 
the Maritime Security Policy National Security/Homeland Security 
Presidential Directive (NSPD/HSPD), reiterates the President's 
commitment to maritime security and aims to integrate and align all 
U.S. Government maritime security programs and initiatives into a 
comprehensive and cohesive national effort involving appropriate 
Federal, State, local and private sector entities. One of several 
specific actions, the NSPD/HSPD directs the development, in 
consultation with key industry stakeholders, of recommended minimum 
Federal standards for maritime recovery operations, and a comprehensive 
national maritime infrastructure recovery standards and a plan, 
complementary to the national preparedness goals and standards required 
by HSPD-8.

Criteria Used to Re-Open Ports After an Attack
    Question. What criteria will be used to re-open a port after a 
terrorist incident?
    Answer. Due to the wide range of threats, conveyances, cargo and 
infrastructure in the Maritime Transportation System, a list of 
specific criteria universally applicable to any incident can not be 
established. Instead, the Coast Guard, in close cooperation with other 
government agencies and the private sector, has developed decision 
making processes that guide decision makers through the factors 
applicable to each incident.
    The Coast Guard has developed the National Response Options Matrix 
(NROM) for use by Coast Guard senior leadership following a 
Transportation Security Incident (TSI) or when credible intelligence 
information indicates that a TSI is imminent. The emphasis of the NROM 
is to provide pre-planned and pre-agreed upon options to focus the 
maritime industry's Maritime Security level posture and the Coast 
Guard's Ports, Waterways and Coastal Security activities in the 
nation's non-affected ports to help prevent further attacks and to 
protect the remaining U.S. Marine Transportation System, maritime 
critical infrastructures and key assets, and population centers. 
Recognizing the utility of making NROM an inter-agency tool, Customs 
and Border Protection has joined the Coast Guard in development of a 
DHS inter-agency NROM to include initial short-term response and 
recovery options, protocols and priorities for re-opening ports, while 
facilitating the continued flow of legitimate maritime commerce and use 
of the marine environment.
    The National Maritime Security Plan (NMSP) will function as the 
capstone of the three-tiered system of domestic maritime security plans 
required by MTSA: The National Maritime Security Plan; Area Maritime 
Security Plans prepared by Federal Maritime Security Coordinators; and 
Vessel and Facility Security Plans prepared by owners and operators. 
The NMSP will establish processes for: setting incident specific 
national priorities, restoration of cargo flow and recovery of maritime 
infrastructure.
    Area Maritime Security Plans outline priorities and procedures for 
re-opening the port at the local port level. Generally the Captain of 
the Port/Federal Maritime Security Coordinator (FMSC) will work with 
Area Maritime Security Committee (AMSC) members and other appropriate 
stakeholders to develop an incident specific strategy for re-opening 
the port. The AMSC advises the FMSC on potential priorities or 
conflicts with respect to re-opening strategies. The FMSC retains final 
decision making authority with respect to re-opening all or a section 
of the port.

Who's in Charge After an Attack?
    Question. Who will be in charge at our major ports in the event of 
a terrorist attack?
    Answer. The National Response Plan (NRP) and its directed 
implementation of the National Incident Management System (NIMS) serves 
as standing guidance for the coordination and execution of interagency 
responses at the federal, state, and local level. The Coast Guard is 
the lead federal agency for maritime security. The Coast Guard will 
work closely with the Transportation Security Administration (TSA), as 
other modes of transport are also involved in the routine operations of 
ports, including pipelines, trucking, and rail. The Coast Guard Captain 
of the Port (COTP), who is also designated as the Federal Maritime 
Security Coordinator (FMSC) for their zone of responsibility, is in 
charge of ensuring the safety and security of port operations, and for 
coordinating protective, mitigation, and recovery activities within the 
port following a terrorist incident. To successfully carry out this 
mission, the COTP/FMSC works in a unified command setting with other 
federal, state, and local agencies with authority, responsibility and 
jurisdiction to respond to the event. These officials, under the 
leadership of the COTP/FMSC, execute pre-planned strategies developed 
in the Area Maritime Security Plans or develop and execute incident 
specific strategies and action plans in response to the incident. The 
COTP/FMSC also oversees the maritime industry response actions outlined 
in vessel and facility security plans to protect individual vessels and 
facilities within the port. Since the Federal Bureau of Investigation 
(FBI) is the lead agency with respect to investigating and responding 
to the actual terrorist event, port level protection and mitigation 
actions are also coordinated with the FBI's response and investigation 
activities. These protocols and actions are also coordinated with the 
Special Agent in Charge of the local ICE Office of Investigations, as 
ICE is the largest investigative body of the Department of Homeland 
Security, and our partner in the war on terrorism.

Expectations on Industry and Foreign Governments
    Question. What, in general, will be expected from the commercial 
maritime industry and from foreign governments in the event of a 
terrorist attack at a major port?
    Answer. The United States commercial maritime industry facility and 
vessel owners and operators will be expected to implement the 
transportation security incident response measures as indicated in 
their Coast Guard approved security plans as mandated by the Maritime 
Transportation Security Act (MTSA) of 2002. Maritime industry security 
plan holders are also expected to respond to changes in the Maritime 
Security (MARSEC) level by implementing measures outlined in their 
plans. Additionally, members of industry would be called upon to assist 
senior Coast Guard decision makers at the national level with 
strategies and priorities to restore cargo flow. Foreign governments 
that are party to the International Maritime Organization would be 
expected to implement measures outlined in their maritime security 
plans under the International Ship and Port Facility Security (ISPS) 
Code to help secure global commerce systems. Foreign governments might 
also be called upon to assist in restoring cargo flow, such as 
implementing screening or inspection procedures deemed necessary to 
mitigate the identified threat vectors for cargo bound for the United 
States. Foreign flagged and owned entities in U.S. territorial waters 
must also abide by the declared MARSEC conditions.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
                       Admiral Thomas H. Collins

The OSLTF Balance is Declining
    Question. The Oil Spill Liability Trust Fund is running out of 
money. Under current projections, when will it be bankrupt? Will the 
Administration ask Congress for general appropriations to pay for oil 
spill cleanup costs if the trust fund is depleted?
    Answer. The balance of the Oil Spill Liability Trust Fund (OSLTF) 
at the end of Fiscal Year (FY) 2004 was approximately $842 million. Due 
to projected expenses exceeding revenues by approximately $250 million 
per year over the next two years, the Coast Guard expects the OSLTF to 
be exhausted by the start of FY 2008. This projection takes into 
account that the OSLTF assumed full financial responsibility for the T/
V Athos I spill response in Philadelphia, PA. Additional major oil 
spills like the ATHOS I will only accelerate the rate of decline of the 
OSLTF.
    The Coast Guard and Maritime Transportation Act of 2004 requires 
the Coast Guard to prepare a report on the health of the OSLTF. That 
report was submitted to the Congress on May 12, 2005.
    Based on the findings contained in the OSLTF report to Congress 
discussed above, the Coast Guard is working with the Department of 
Homeland Security and the Administration to develop a plan to address 
the projected decline in OSLTF balances.

Inspector General Findings: Port Security Grant Program
    Question. The Inspector General found major problems with the port 
security grant program, mainly that funds are not being distributed on 
the basis of security risk. Please describe the Coast Guard's role in 
deciding which projects should get funded at which ports?
    Answer. Within the risk management framework of the National 
Infrastructure Protection Plan (NIPP), the Coast Guard is an active 
partner in the Port Security Grant program conducting field level 
reviews of applications to make risk-based recommendations to the 
multi-agency national review board. The Coast Guard also sends two 
representatives to the National Review Board which makes final 
recommendations to the Executive Review Board. The Office of State and 
Local Government Coordination and Preparedness (SLGCP), as the Port 
Security Grant program administrator, is working with the Coast Guard, 
Transportation Security Administration, Customs and Border Protection, 
Information Analysis and Infrastructure Protection, and the Maritime 
Administration to reevaluate aspects of the program to ensure that 
funds are allocated to the highest port security priorities based on 
risk factors, ensuring the majority of grants are directed to the 
Nation's highest risk ports. Other objectives include: identifying 
specific risk-based factors to guide funding distribution and 
identifying a limited set of high-risk ports based on the Coast Guard's 
listing of militarily and economically strategic ports and other port 
criticality and threat data.
    In support of the proposed Targeted Infrastructure Protection 
Program (TIPP), the process will be further refined in Fiscal Year 2006 
to create a port-wide risk management plan by combining elements of 
existing security models used by SLGCP and the Coast Guard. Future 
plans involve requiring recipients of funding to participate in a port-
wide security planning process through each Area Maritime Security 
Committee (AMSC's are chaired by Coast Guard Captains of the Port). As 
part of this approach, emphasis will be placed on port-wide security 
enhancements based on risk reduction. To achieve this strategy, each 
AMSC will be required to develop a port-wide risk management plan based 
on previously completed Coast Guard and AMSC risk assessments and 
security plans as well as risk methodologies used by SLGCP. The AMSC 
will inform the office of Information Analysis and Infrastructure 
Protection on the results of this port-wide risk management plan.

Balance Between Homeland Security and Non-Homeland Security Missions
    Question. It's been well-documented that since 9/11, the Coast 
Guard's security effort has increased massively, at the expense of 
resource hours for traditional missions. Do you have specific plans to 
restore some balance to the homeland security and non-homeland security 
missions of the Coast Guard?
    Answer. The Coast Guard continues to achieve consistently strong 
performance in all mission areas. The Coast Guard met its 2004 
performance targets for several non-homeland security missions (e.g. 
Search and Rescue, Migrant Interdiction, Aids-to-Navigation, and Marine 
Environmental Protection) while continuing to achieve high performance 
in several homeland security missions. Specifically, in Fiscal Year 
2004 the Coast Guard:

   Rescued 86.8 percent of all mariners in imminent danger, 
        exceeding the performance goal of 85 percent.

   Prevented illegal entry into the U.S. of 10,899 illegal 
        migrants--the highest level in 10 years--meeting the 
        performance target to interdict or deter at least 87 percent of 
        illegal migrants entering the U.S. through maritime means.

   Continued to safely and efficiently manage America's 
        waterways, meeting Aids to Navigation mission performance 
        targets, reducing the number of distinct collisions (down to 
        218 from 280), allisions (down to 616 from 738), and grounding 
        events (down 709 from 802) by 15 percent from 1,820 in Fiscal 
        Year 2003 to 1,543 in Fiscal Year 2004.

   Protected the marine environment by reducing the five-year 
        average of oil and chemical spills greater than 100 gallons per 
        100 million tons shipped to 22.1 from 29.4 in Fiscal Year 2003 
        and well below the Marine Environmental Protection mission 
        performance target of 41.

   Continued to focus on improving maritime safety, reducing 
        the number of maritime worker and passenger injuries and deaths 
        from 597 in 2003 to 582 in 2004, well below the program sub-
        target of 771. (Full calculation of program performance 
        includes recreational boating fatalities which depend on state 
        data which will not be available until later this spring).

   Broke previous counter drug seizure records, seizing 241,713 
        pounds (previous record was 138,393 pounds) of cocaine and 
        removing over 350,000 pounds of cocaine from the marketplace. 
        (Full calculation of the Coast Guard's counter drug performance 
        (Removal Rate) depends on flow rate data which will be provided 
        by the Interagency Assessment of Cocaine Movement later this 
        Spring).

    The President's Fiscal Year 2006 budget requests an increase of 
$570 million over Fiscal Year 2005 funding levels, demonstrating 
extremely strong commitment by the Administration to ensure the Coast 
Guard is adequately funded and prepared to meet its mission demands and 
improve operational performance.
    In addition to sustaining current levels of operational funding, 
the Coast Guard's Fiscal Year 2006 budget funds several recapitalizing 
initiatives (e.g. Deepwater, Rescue 21, Response Boat-Medium, High 
Frequency Communications Recapitalization), critical to restoring 
readiness to Coast Guard operational assets and subsystems--the very 
foundation of Coast Guard operational capability and capacity.
    The Fiscal Year 2006 budget continues aggressive implementation of 
Maritime Security Strategy to increase Maritime Domain Awareness, 
operational presence, and response posture with the ultimate goal of 
reducing maritime risk. Fiscal year 2006 initiatives include 
implementing the Common Operational Picture, continuing the nationwide 
deployment of the Automatic Identification System, increasing maritime 
patrol aircraft flight hours, enhancing radiological and nuclear 
detection capabilities, equipping organic helicopters with Airborne Use 
of Force capability, replacing obsolete cutter small boats with more 
capable Cutter Boats--Over the Horizon, and providing additional 
Response Boat-Small allowances.
    The Coast Guard's Fiscal Year 2006 budget also provides operation 
and maintenance funding for the new Great Lakes Icebreaker, scheduled 
to be commissioned in 2006. This cutter will replace the less capable 
Coast Guard Cutters ACACIA and MACKINAW resulting in improved Aids-to-
Navigation and Ice Operations performance on the Great Lakes.

Additional Funding Needed to Conduct MTSA Assessments
    Question. How much of the additional funding for the homeland 
security mission in the President's request will be needed to conduct 
the vulnerability assessments required by the Maritime Transportation 
Security Act? When will these assessments be completed?
    Answer. There is no additional Coast Guard funding requested in the 
2006 Budget for vulnerability or port security assessments. The Coast 
Guard has completed port security assessments at the 55 U.S. ports 
previously identified as militarily and economically strategic. While 
efforts are underway to augment these assessments with specialized 
needs such as assessments of specific infrastructure as well as 
analyses of specific vulnerabilities, no additional funding beyond that 
currently available is being requested at this time.

Intelligence Operations
    Question. It is frequently overlooked that the Coast Guard and 
Customs Service have intelligence operations. They have had some 
operational experience working together on the war on drugs. Are there 
plans to integrate these two intelligence operations? Was their 
cooperation in counter-drug operations generally successful?
    Answer. The Department of Homeland Security (DHS) is currently 
examining all of its intelligence activities to ensure alignment and 
also assess whether certain intelligence support and other functions 
should be integrated. However, there are no current plans to integrate 
the operations of the Coast Guard Intelligence Program (CGIP), which is 
a designated member of the Intelligence Community, with the 
intelligence activity that is part of U.S. Customs and Border 
Protection (CBP). The CGIP does however, work closely with CBP 
intelligence and U.S. Immigration and Customs Enforcement (ICE) 
intelligence program.
     Wherever law enforcement intelligence requirements are similar and 
where ICE and other-agency analysts are located, the CGIP works 
collaboratively with the other federal agencies involved. The CGIP has 
military requirements that go beyond law enforcement because the Coast 
Guard is not only a law enforcement agency, but one of the five 
branches of the Armed Forces. Additionally, The Coast Guard operates in 
many places--in domestic ports and coastal waters, offshore regions, 
and even in foreign ports--where other U.S. Government agencies, 
including CBP and ICE, typically are not present. This access affords 
Coast Guard personnel the opportunity to collect intelligence that 
supports not only Coast Guard missions, but other important national 
security objectives as well. Coast Guard collectors and analysts also 
have significant expertise in the maritime regions and functions that 
is acquired through performing Coast Guard missions. Finally, Coast 
Guard intelligence specialists are best able to understand, prioritize 
and support the myriad of Coast Guard operational commanders' 
intelligence requirements.
    While full integration of the Coast Guard and CBP intelligence 
operations is not desirable, the Coast Guard routinely coordinates 
intelligence efforts with DHS and DHS components, including CBP and 
ICE, as well as with the other Intelligence Community members. These 
coordination efforts are designed to develop new sources, improve 
analytical processes, and provide actionable (timely and accurate) 
intelligence to operational and tactical units.
    Coast Guard staff can provide Congress with specific examples of 
counterdrug intelligence efforts in an appropriate setting, since that 
information is classified.
CG Analysis of Maintenance Costs by Accelerating DW Program
    Question. Has the Coast Guard performed an analysis on how much in 
maintenance costs could be saved by accelerating the Deepwater program?
    Answer. The Coast Guard has conducted some informal assessments as 
to the potential cost savings and cost avoidance if the Deepwater 
assets were provided sooner. To date, our assessments have identified 
the following potential savings:

   Contract Performance Management: If Deepwater were to be 
        completed sooner, total project cost of system integrator and 
        government contract management personnel could be reduced. 
        Additionally, a shorter contract term will lessen the number of 
        performance award fee determinations paid out contributing to 
        further future years savings. These award fees typically 
        average approximately $5M.

   Legacy Cutter Maintenance Costs: Legacy cutters could be 
        retired much sooner. Due to increasing age and continued high 
        op tempo, legacy cutter maintenance costs have been increasing 
        at an increasing rate, much faster than estimated in our 
        Deepwater pre-9/11 baseline planning. The early retirement of 
        these assets will stop these increasing costs sooner. It will 
        also reverse the disturbing trend of increasing lost days due 
        to unscheduled maintenance to repair casualties.

    However, as GAO has recently testified, acceleration of a program 
as complex as Deepwater carries with it significant inherent risks of 
concurrent cost acceleration and schedule disruptions. In total, the 
Administration believes the best approach for the Deepwater program is 
to implement the Revised Deepwater Plan, as proposed in the FY 2006 
budget.

Increasing Funding for Port Security
    Question. There is a great need for increasing funding for port 
security. In the ports of New Jersey and New York, three million 
containers are moved annually, and the Coast Guard estimates we need 
more than seven billion dollars to improve port security. Given the 
President's budget cuts and fiscal restraints, how are we going to 
effectively protect our ports?
    Answer. Protecting our ports requires a continued emphasis on 
executing a broad range of strategies to implement a system of layered 
defenses. Port security cannot start and end within the confines of any 
particular port. A goal line defense is no defense at all and thus 
public and private investments must be balanced across all appropriate 
layers and prioritized on the basis of risk. Port security plans and 
strategies also acknowledge that protecting the foundations of 
American's free society requires the recognition that risk cannot be 
totally eliminated. A transportation system as vital and thriving as 
the marine transportation system cannot become hermetically sealed. As 
a result the Coast Guard, as the lead DHS agency for maritime security, 
will continue refining its understanding of maritime and port risks and 
champion the flow of private resources (e.g., grants) and public 
capabilities (Coast Guard Cutters, aircraft, boarding teams, etc) 
toward the highest risks; recognizing also that resources will always 
be finite.
    The Department of Homeland Security (DHS) has awarded over $560 
million in grants for port security, funding more than 1,100 security 
enhancement projects in some of the Nation's most critical port 
facilities. These funds have been used for projects like lighting, 
fencing and surveillance systems to name a few. In Fiscal Year 2005 an 
additional $150 million will be targeted by DHS to enhance the security 
of the nation's ports. For Fiscal Year 2006, port security will 
continue to be addressed as part of the $600 million requested by the 
President as part of the Targeted Infrastructure Protection program. As 
the program owner, the Department's Office of State and Local 
Government Coordination and Preparedness (SLGCP), in coordination with 
the Coast Guard and the Information Analysis and Infrastructure 
Protection Directorate (IAIP) will continue to ensure that port 
security priorities are set, needs identified and resources brought to 
bear to effectively secure our ports.
    The 2006 budget also continues to improve the Coast Guard's 
maritime homeland security capabilities and reduce maritime risk. 
Specifically, it provides for critical Maritime Domain Awareness (MDA) 
initiatives and increased or enhanced Coast Guard operational presence, 
both critical components of the Coast Guard's maritime security 
strategy and posture.
    The 2006 budget furthers efforts to improve MDA by:

   Continuing deployment of a nationwide Nationwide Automatic 
        Identification System (AIS) infrastructure throughout regional 
        Coast Guard command centers;

   Providing additional Maritime Patrol Aircraft (MPA) 
        resources to fill documented flight hour gaps in support of 
        detection, surveillance, and tracking activities;

   Deploying a Common Operational Picture (COP) through Coast 
        Guard command centers nationwide. The COP will help fuse 
        surveillance and tracking information from systems such as AIS, 
        Rescue 21, and the Ports and Waterways Safety System (PAWSS);

   Increasing the capability of Coast Guard cutters and 
        Maritime Safety and Security Teams (MSSTs) to detect Rad/Nuc 
        materials, intercept suspect ships, and respond to incidents 
        involving the release of Rad/Nuc substances.

    In addition, the 2006 budget further increases and enhances the 
Coast Guard's operational presence by:

   Accelerating deployment of organic Airborne Use of Force 
        (AUF) capability to five Coast Guard Air Stations, increasing 
        the ability to respond to maritime security threats;

   Replacing existing obsolete and unstable cutter boats on the 
        High Endurance Cutter (WHEC) and Medium Endurance Cutter (WMEC) 
        fleet with the more capable Cutter Boat--Over the Horizon (CB-
        OTH). This platform nearly doubles the speed of the existing 
        cutter boat, increases secure communication capabilities, and 
        when used in conjunction with AUF capability has a 98 percent 
        success rate in stopping suspicious vessels;

   Providing 14 additional Response Boat-Smalls (RB-S) and 
        associated crews to provide vessel escorts, and enforce 
        security zones near critical infrastructure including enhancing 
        liquefied natural gas and waterside security;

   Reallocating existing Coast Guard resources to immediately 
        fill an existing gap in national maritime Law Enforcement and 
        Counter-Terrorism (LE/CT) capability. The permanent 
        establishment of the Coast Guard's Enhanced MSST (E-MSST) will 
        provide an offensive DHS force able to operate across the full 
        spectrum of LE and CT response in support of homeland security 
        and homeland defense objectives, including CT response 
        capability for scheduled security events out to 50 nautical 
        miles from shore and augmenting interagency assets in high 
        visibility venues such as National Special Security Events 
        (NSSEs).
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to
                         Margaret T. Wrightson

    Question 1. What troubles me about the current time frame for the 
Deepwater program is by the time we have finished the program twenty 
something years down the road we will most likely have to immediately 
embark on another wholesale replacement of Coast Guard assets. What has 
the Coast Guard done to project how long the Deepwater assets will 
continue to be useful before another acquisition program is required?
    Answer. We have not reviewed the Coast Guard's strategy for 
determining how long the replacement Deepwater assets will last before 
they themselves would need to be replaced. However, information about 
the expected useful life of any asset that the government may wish to 
purchase is a critical piece of information for effective and efficient 
acquisition management, so this is a reasonable question for the Coast 
Guard to answer.
    Question 2. In your opinion, would the Coast Guard be able to 
manage Deepwater if it was accelerated? If not, what does the Coast 
Guard have to do in order to successfully manage it?
    Answer. My answer here is not a simple one. Although the Coast 
Guard is making progress on our recommendations, the recommendations 
have yet to be fully addressed. Moreover, over the past year we have 
seen schedule slippages, growing unobligated balances, and at least one 
instance of performance problems. The Coast Guard has just started 
using the Integrated Master Schedule that we recommended last year so 
it remains to be seen whether this will translate into better Coast 
Guard visibility into the program. Finally, the revised mission needs 
statement (MNS) and new implementation plan add to these uncertainties. 
However, I will say this. If the Coast Guard successfully implements 
our recommendations, we would be a lot more comfortable than we are 
today with a more aggressive schedule. I would also add that we would 
look more favorably on acceleration for assets after they are proven, 
that is after they have been built, fielded and tested so that 
identified improvements can be made in follow-on assets. Accelerating 
the production of proven replacement assets is a lot less risky than 
accelerating unproven assets. In saying this, I would also add the 
caveat that in making a determination about the advisability of 
accelerating a particular asset, one would also need to consider 
potential industrial base, manpower, and training implications as part 
of the decision.
    Question 3. Have you looked at the feasibility of accelerating 
Deepwater to either a 15 year or 10 year implementation plan? Are you 
aware of any costs involved in accelerating Deepwater? How much would 
it cost each year to accelerate it to 15 years? 10 years?
    Answer. We have not looked at the feasibility of accelerating 
Deepwater. This past year we worked with the Coast Guard in an effort 
to ascertain the relative costs of replacement versus sustainment, but 
the Coast Guard was unable to provide the data we required for an 
accurate analysis.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
                         Margaret T. Wrightson

    Question. Will GAO be studying the problems with the port security 
grant program identified by the Inspector General and the 
Administration's efforts to address them?
    Answer. GAO is studying the port security grant program. Our 
examination of the grant program involves determining the extent to 
which risk management approaches are used to compare and prioritize 
grant applications across port locations. It is part of a broader 
effort that is looking at risk management practices at the Coast Guard 
as well as the role that the Information Analysis and Infrastructure 
Protection (IAIP) Directorate of the Department of Homeland Security is 
playing in setting uniform policies and guidelines on risk management 
so that it can compare and prioritize critical infrastructure across 
various sectors, such as transportation and energy. We are doing this 
work in response to a request from Representative Henry A. Waxman, 
Ranking Minority Member, Government Reform Committee, House of 
Representatives; and Representatives C.A. Dutch Ruppersberger and 
George Miller. We plan to issue our report this summer.

                                  
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