[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
  COMPLIANCE WITH REQUIREMENTS OF THE COAST GUARD'S DEEPWATER CONTRACT 
=======================================================================
                                (110-27)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 18, 2007

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure

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34-798 PDF                 WASHINGTON DC:  2007
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia    JOHN L. MICA, Florida
PETER A. DeFAZIO, Oregon             DON YOUNG, Alaska
JERRY F. COSTELLO, Illinois          THOMAS E. PETRI, Wisconsin
ELEANOR HOLMES NORTON, District of   HOWARD COBLE, North Carolina
Columbia                             JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             WAYNE T. GILCHREST, Maryland
CORRINE BROWN, Florida               VERNON J. EHLERS, Michigan
BOB FILNER, California               STEVEN C. LaTOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas         RICHARD H. BAKER, Louisiana
GENE TAYLOR, Mississippi             FRANK A. LoBIONDO, New Jersey
JUANITA MILLENDER-McDONALD,          JERRY MORAN, Kansas
California                           GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
JULIA CARSON, Indiana                JOHN BOOZMAN, Arkansas
TIMOTHY H. BISHOP, New York          SHELLEY MOORE CAPITO, West 
MICHAEL H. MICHAUD, Maine            Virginia
BRIAN HIGGINS, New York              JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
JOHN T. SALAZAR, Colorado            CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      TED POE, Texas
DANIEL LIPINSKI, Illinois            DAVID G. REICHERT, Washington
DORIS O. MATSUI, California          CONNIE MACK, Florida
NICK LAMPSON, Texas                  JOHN R. `RANDY' KUHL, Jr., New 
ZACHARY T. SPACE, Ohio               York
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                CHARLES W. BOUSTANY, Jr., 
JASON ALTMIRE, Pennsylvania          Louisiana
TIMOTHY J. WALZ, Minnesota           JEAN SCHMIDT, Ohio
HEATH SHULER, North Carolina         CANDICE S. MILLER, Michigan
MICHAEL A. ACURI, New York           THELMA D. DRAKE, Virginia
HARRY E. MITCHELL, Arizona           MARY FALLIN, Oklahoma
CHRISTOPHER P. CARNEY, Pennsylvania  VERN BUCHANAN, Florida
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
STEVE COHEN, Tennessee
JERRY McNERNEY, California

                                  (ii)



















                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................     v
C4ISR Overview...................................................    xv
Background Paper on the 110/123 Hull Cracking Issue..............   xxv

                               TESTIMONY

Anton, James E., Executive Vice President of Integrated Coast 
  Guard Systems and Vice President of the Deepwater Program, 
  Northrop Grumman Ship Systems..................................    57
Atkinson, James, President and Senior Engineer, Granite Island 
  Group..........................................................    10
Blore, Rear Admiral Gary T., Program Executive Officer, Coast 
  Guard Integrated Deepwater System..............................   117
Braden, Robert, Senior Technical Staff, Processor and Systems 
  Design, Lockheed Martin........................................    10
DeKort, Michael, Former Project Management Specialist for 123 
  Systems, Lockheed Martin.......................................    10
Ghosh, Debu, Naval Architect, Branch Chief, U.S. Coast Guard Boat 
  Engineering Branch.............................................    88
Jacoby, Lieutenant Commander Chad, Program Manager, Scaleable 
  Composite Vessel Prototype Program Science and Technology 
  Directorate, Department Of Homeland Security...................    88
Lavan, Maryanne, Vice President for Ethics and Business Conduct, 
  Lockheed Martin................................................    57
Mackay, Leo, Vice President and General Manager, Integrated Coast 
  Guard Systems..................................................    57
Martindale, Cathy, Contracting Office Chief, Coast Guard 
  Engineering and Logistics Center...............................    88
Michel, Joe, Assistant Deputy for Systems Implementation, U.S. 
  Coast Guard Nationwide Automatic Identification System Project.    88
Rodgers, Thomas, Vice President, Technical Operations, Lockheed 
  Martin Maritime Systems and Sensors............................    57
Sampson, Scott, Section Chief of the Development Section, U.S. 
  Coast Guard Maintenance and Logistics Command Atlantic in the 
  Vessel Specifications Branch...................................    10
Stanley, Marc, Executive Vice President of Government Affairs, 
  Bollinger Shipyards, Inc.......................................    57
Sullivan, Vice Admiral Paul E., Commander, Naval Sea Systems 
  Command, U.S. Navy.............................................   117
Winterstine, Bruce, Principal Project Analyst, Lockheed Martin 
  Maritime Systems and Sensors...................................    57

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Cohen, Hon. Steve, of Tennessee..................................   134
Costello, Hon. Jerry F., of Illinois.............................   135
Mica, Hon. John L., of Florida...................................   137
Mitchell, Hon. Harry E., of Arizona..............................   141
Oberstar, Hon. James L...........................................   143

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Anton, James E...................................................   146
Atkinson, James M................................................   151
Blore, Rear Admiral Gary T.......................................   319
Braden, Robert K.................................................   337
DeKort, Michael..................................................   340
Ghosh, Debu......................................................   400
Jacoby, Lieutenant Commander Chad................................   405
Mackay, Leo......................................................   407
Martindale, Cathy................................................   412
Michel, Joe......................................................   414
Sampson, Scott...................................................   416

                       SUBMISSIONS FOR THE RECORD

Blore, Rear Admiral Gary T., Program Executive Officer, Coast 
  Guard Integrated Deepwater System:

  Responses to questions from Rep. LaTourette....................   125
  Responses to questions from Rep. Oberstar......................   326
Ghosh, Debu, Naval Architect, Branch Chief, U.S. Coast Guard Boat 
  Engineering Branch, response to question from Rep. Kagan.......   106
Jacoby, Lieutenant Commander Chad, Program Manager, Scaleable 
  Composite Vessel Prototype Program Science and Technology 
  Directorate, Department Of Homeland Security, response to 
  question from Rep. Cummings....................................   112

                         ADDITION TO THE RECORD

U.S. Coast Guard, Pamela K. Bible, Contracting Officer, letter of 
  revocation of acceptance.......................................   421

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



OVERSIGHT HEARING ON COMPLIANCE WITH REQUIREMENTS OF THE COAST GUARD'S 
                           DEEPWATER CONTRACT

                              ----------                              


                       Wednesday, April 18, 2007

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:40 p.m., in 
Room 2167, Rayburn House Office Building, the Honorable James 
L. Oberstar [chairman of the committee] presiding.
    Mr. Oberstar. The Committee on Investigations and Oversight 
will come to order.
    We meet today in full Committee to inquire into compliance 
of the Coast Guard with the Deepwater Contract.
    When I was elected to the chairmanship of the Committee, I 
said at the very outset, that we would have a strong emphasis 
of oversight and investigations into the programs within the 
jurisdiction of our Committee.
    It has long been a role of this Committee going back to 
1959 when the Special Investigating Committee and the Federal-
Aid Highway Program was established by then Speaker Rayburn and 
my predecessor, John Botnick, whose portrait is over there in 
the corner was designated chair of that Committee. It was the 
very first deep investigative work of the House in the post-
World War II era that resulted in conversion of all State and 
Federal highway programs from no internal audit and review 
procedures to every State having internal audit, review and 
accountability for their Federal highway funds.
    It also resulted in 36 people going to Federal and State 
prison for their illegal activities in misuse and abuse of 
public funds in the Federal-Aid Highway Program.
    The Committee continued its work into other areas of 
jurisdiction of the full Committee doing enormous good service 
to the public. We continue that work in the spirit of inquiring 
into the whys, the best and most effective use of public funds 
and ensuring that there is not failure on the part of Federal 
agencies carrying out their public trust.
    Of all the issues that have come before our Committee--we 
have had a lot since the beginning of this session of 
Congress--the failures of the Coast Guard Deepwater Acquisition 
Program are the most disturbing. The Investigations and 
Oversight bipartisan staff has conducted an in-depth 
investigation over the last three months of the conversion of 
110 foot patrol boats to 123 foot boats, which is a 12 percent 
extension, and to modernize their electronics in the new era of 
security and the additional mission of the Coast Guard in 
homeland security.
    The investigation uncovered factors far more disturbing 
than we anticipated at the outset, more than other committees 
that have looked into this have uncovered. Major problems in 
the program, some of the major problems, have already been 
disclosed in hearings of other committees and by news reports. 
But four years after the Coast Guard began the Deepwater 
program to replace or upgrade all of its ships, fixed wing 
aircraft and helicopters, we know that 8 of the 110 foot patrol 
boats have been found unseaworthy and rendered essentially 
useless by a poorly designed hull extension.
    It has already on public record that plans to produce a new 
class of 147 foot ships have been shelved after a new hull 
design was found to be flawed.
    It has already been published that serious questions have 
been raised about the structural integrity of the new National 
Security Cutter and whether it can be expected to meet its 
projected lifetime in service.
    There are problems that have increased the cost of the 
Fleet Renewal Program from $17 billion to more than $24 
billion.
    We know that the Coast Guard's ability to fulfill its 
mission has been compromised, that critically needed assets are 
not going to be available or certainly not available in the 
timeframe within which the Coast Guard needs them. The Coast 
Guard, consequently, has been forced to cut back on patrols. At 
times, it has had to ignore tips from other Federal agencies 
about drug smugglers.
    We are concerned these difficulties will only grow and 
become more acute in the years ahead as older vessels fail and 
replacements are not available.
    What we have learned in our investigation, though, is even 
more disturbing, serious management failings which are 
structural internal to the Coast Guard. We are not going to 
pass final judgment on those charges or allegations until we 
have had the response of the Coast Guard and its contractors.
    I should point out that the testimony we will hear today 
raises serious problems that were known early in the program by 
the Coast Guard and that warnings delivered by very courageous 
persons involved in the program from the earliest days were 
delivered, and many of the warnings consciously rejected by 
various levels of Coast Guard management.
    I commend those who are witnesses here before us today, who 
have helped us in understanding what happened and have put 
their jobs, their careers on the line in order to do the right 
thing and assure that the truth is out, in particular, Michael 
DeKort, Robert Braden and Scott Sampson. Mr. Atkinson is not a 
Coast Guard employee, but he is a similarly public spirited 
person who has proffered an extensive analysis of the internal 
problems.
    Now the Coast Guard has taken a lessons learned approach to 
the tragedies, the failures that have occurred in the 
conversion program, and we hope that today's hearing will make 
a major contribution to improving, changing not only the way 
the Coast Guard does this but the culture, the very culture 
within the culture. Time will tell, but one thing is certain. 
We are going to stay on top of it.
    Mr. Oberstar. The Chair recognizes the gentleman from 
Florida, the Ranking Member, Mr. Mica.
    Mr. Mica. Thank you, Mr. Chairman. I have some comments.
    I am a little bit concerned. This is the first of our 
investigative hearings, and by going forward today under some 
terms that I thought were a little bit different than what I 
had anticipated, I do have some issues that I do want to raise.
    The Committee is continuing today in what I was led to 
believe was the oversight of the Coast Guard's very important 
Deepwater program. Unfortunately, after reviewing the materials 
for this hearing, most of what we are going to hear or go 
through in a series of panels appears to be matters that we 
have already reviewed.
    I guess some of it may be redundant because I have not only 
participated in at least two hearings on this Committee but 
also the Government Reform Committee on which I serve which has 
also looked into this. This is, I believe, the sixth hearing 
held this year, and number seven is next week in the Senate.
    I do want to say that I have been impressed with the 
conduct of the Chairman of the Subcommittee, Mr. Cummings, and 
the Ranking Member, Mr. LaTourette. They stated that they would 
continue to pursue this matter and have subsequent testimony 
from the DHS IG and the General Accountability Office just last 
month. In the January hearing, Mr. Cummings, Chair of the 
Subcommittee, and Commandant Allen agreed that there would be a 
hearing 120 days later in which the Coast Guard would report 
also on changes in the program and progress that has been made. 
I think it is very important that we review that.
    I come from the State of Florida. We have these eight 
cutters that now I am told they have been brought up here to 
the Northeast from Florida. They are not usable.
    These cutters are critical to safety, to national security, 
to questions and problems we face on illegal immigration. Last 
week, we had, I believe, over 100 Haitians just come in, in one 
batch, and warm weather hasn't started. The Coast Guard has a 
mission dealing with illegal narcotics which is critical, and I 
don't have those assets there.
    There are 40 of these cutters. These are eight. A large 
percentage of these cutters are out of service. I know there 
are some plans in place, and it is critical that we deal with 
these issues I mentioned, not to mention the possibility of 
some change in the regime with Castro and critical needs 
without the vessels in place.
    No one is more deeply troubled than I am about the problems 
associated with the 110 foot cutters to 123 foot cutters which 
was the effort underway. However, I am afraid again that this 
hearing merely rehashes some of the issues the IG has gone 
through and reviewed and testified about at our Coast Guard 
Budget Hearing last week.
    I do have the questions that were raised, I would like to 
submit for the record, and then the responses which are some of 
the same questions again today, if I could have that included.
    Mr. Oberstar. Without objection, they will be included.
    Mr. Mica. In addition, I must point out again this is very 
important that this is the first of our investigative hearings, 
and both Mr. Oberstar and I are committed to strong 
investigations and oversight. We think that is an important 
part of our responsibility.
    However, the minority was not included in the selection of 
the interviewing of these witnesses. Given the traditional 
bipartisan nature of the work on Coast Guard and maritime 
transportation, this causes me great concern. In Government 
Reform, for example, we don't interview a witness or depose a 
witness without notification and the opportunity to have 
bipartisan participation. That does concern me, and I hope that 
is not the way we proceed in the future.
    I also understand that one of today's witnesses, as staff 
has told me, is being paid by the Committee, the taxpayers, as 
a consultant, and I think that is Mr. Atkinson. Is that 
correct?
    Mr. Oberstar. Only his travel and expenses are covered.
    Mr. Mica. So he is being paid.
    Mr. Oberstar. As in the tradition of the Committee.
    Mr. Mica. Again, I have concerns about the selection of 
witnesses and particularly those, well, we are going to hear 
from a whistleblower, and I think he has some important 
information to share with the Committee. I am not certain, 
because again our staff was not permitted to interview him at 
the same time, that he is actually in position to be able to 
comment on some of the issues relating to certification, et 
cetera, that he may be testifying on. So that raises a 
question.
    Secondly, with Mr. Atkinson, I am just totally at a loss 
with why he was permitted to be a witness. Now I did not see 
this until yesterday, and staff provided me with this 
yesterday, but anyone can go on to www.tscm.com. That is his 
web site.
    In 15 years of having witnesses before numerous 
subcommittees, some of which I chaired or participating on 
different committees, I have never had a witness who set forth 
a mission statement or qualifications. Let me read from his, 
and you all pull this up and see it.
    These are quotes from his web site: ``I will not have 
anything to do with someone I know to be a criminal, and if I 
have seen the slightest reason to believe that they have a 
criminal history, I will back away from them the second I find 
out about it. In fact, not only will I start backing away from 
them, but they will hear me reloading the shot gun as I do 
it.''
    Second paragraph: ``If someone choose to be an 
eavesdropper, I will hunt them to the ends of the Earth. If 
they are a felon or a crook using electronics in their work, I 
will relentlessly stalk them until they are rendered 
impotent.''
    Third paragraph: ``When the eavesdropper lies on his death 
bed and the angel of death comes to take him away, I want death 
to be holding a scanlock instead of a scythe. I want them 
constantly looking over their shoulder and expecting TSCM 
specialists to pounce on them and start beating them with an 
NLJD. Let them fear black boxes and weird looking antennas. Let 
them eat Xanax by the handful and spend their days in pain.''
    Fourth paragraph: ``Let them be afraid. Let them be very 
afraid, for I am hunting them. If I am not hunting them, then 
someone who I trained will be. Let them be afraid. I perform 
bug sweeps like a contact sport. I don't play fair.''
    I have never heard a witness give those kind of 
qualifications. Again, the rest of it is troubling to me. The 
staff pointed this out. So I do have concerns about the 
witnesses and particularly that witness.
    The Deepwater program, as I said, is critically important, 
and we need to have the best witnesses and access to the best 
information and resources to make certain that we have enhanced 
vessels and aircraft in place as quickly as possible at the 
lowest cost to the taxpayer.
    In January, Admiral Allen appeared before the Committee and 
committed himself and the Coast Guard to improving the 
oversight which is very important.
    Finally, I do have concerns about two things. One, it is 
also the custom that we investigate and then we make a 
determination, and I am prepared to do that and work with the 
Chairman and the Ranking Member before calling the Department 
of Justice to look if we find in this hearing or subsequent 
hearings criminal and civil misconduct that warrants an 
investigation, not to announce that to the media before the 
hearing.
    Then the second concern that I have is that the Coast Guard 
has now made an announcement prompted by some of these 
inquiries, and I am not sure that it is the wisest 
announcement, to go forward with in-house actually control and 
management of these contracts which I don't know they have the 
capability of doing and which testimony we have heard 
previously and in other committees indicated their inability to 
pay, their inability to retain personnel, attract personnel or 
put a program like this into place for oversight. They may not 
have that oversight capability or ability even to maintain that 
capability.
    In the meantime, I am pledged to continue to work with the 
majority. This is a very important issue, and I am sorry that 
we did get off with some unacceptable terms in both procedures 
and witnesses for this first hearing.
    I yield back.
    Mr. Oberstar. I read the same comments on the web site, and 
I took them in a different vein. But, Mr. Atkinson, after he is 
sworn in, will have an opportunity to respond to the Ranking 
Member's comments.
    As to witnesses, I directed the majority staff to share 
with the minority, the names of witnesses, and they are free to 
call and inquire and interrogate them as they wish, and they 
had all the names.
    As for redundancy, I can't control what other committees 
do, I will say to my good friend. If they want to have 
hearings, that is their business, but we are conducting our 
business. We did have a preliminary hearing earlier this year 
on Deepwater. It set the stage for what I felt was necessary 
and what you and I both discussed was a necessary, more 
intensive discussion and inquiry into these matters.
    As for the Justice Department, we make no judgment. Justice 
is conducting its own inquiry into this matter. After the 
conclusion of our hearings and in consultation with the Ranking 
Member, we will decide what next steps to take.
    The gentleman from Maryland, the Chairman of the 
Subcommittee, Mr. Cummings, at the outset, I want to say 
conducted a very thorough inquiry and has given an enormous 
amount of his personal time and been actually on board 
defective vessels.
    I recognize the gentleman for his statement.
    Mr. Cummings. I want to thank the gentleman for yielding, 
and I want to thank you, Mr. Oberstar, for your dedication and 
effective oversight and for convening this hearing today to 
continue requiring accountability, and I emphasize 
accountability on the part of the Coast Guard as well as its 
contractor-partner for implementation of a Deepwater 
Acquisition Program.
    I must say that as I listened to Mr. Mica, I think we have 
to be very careful that we don't assassinate witnesses before 
they even testify. These witnesses come to us, some of them I 
am sure, with some fear, but they have stepped forward bravely. 
I am very, very familiar with their testimony, and I know that 
they have the concerns of the American people and the Coast 
Guard and Coast Guard personnel, by the way, in mind.
    Deepwater is a $24 billion, and I emphasizes billion 
dollar, procurement effort through which the Coast Guard is 
acquiring 91 cutters, more than 100 small surface craft and 244 
new or converted aircraft including helicopters and fixed wing 
airplanes.
    Americans trust the Coast Guard to protect them from 
emerging threats approaching our homeland from the sea, to 
rescue them when they are in danger and to protect the natural 
resources of our marine environments. That trust is well 
placed.
    However, Americans also need to know that they can trust 
the Coast Guard's leaders to manage the taxpayers' hard earned 
dollars effectively and efficiently and to provide the tools 
that the men and women of the Coast Guard need to succeed. 
Further, Americans need to know that when a multibillion dollar 
contract is signed, the parties to that contract will 
accomplish its objectives to the best of their abilities.
    Our expectations for the Deepwater program are not 
unreasonable. We expect it to produce boats that float, planes 
that fly and information technology systems that work, meaning 
that they allow for identification of threats in the maritime 
domain while protecting sensitive and classified communications 
and allowing effective control of deployed assets.
    What is remarkable and completely unacceptable is that a 
program costing on the order of $100 million intended to 
upgrade 110 foot legacy cutters, lengthen them to 123 feet and 
extend their service lives has produced eight cracking hulks 
that are now tied up within a few miles of my house in 
Baltimore, unable to return to service and waiting for the 
scrap heap.
    And guess who paid for them. The American people.
    What is unconscionable is that the simple and 
straightforward expectations of Congress and, more importantly, 
the American taxpayers have not been met because of a 
combination of poor oversight by the United States Coast Guard 
and poor performance by two of the world's largest defense 
contracts, Lockheed Martin and Northrop Grumman.
    I applaud the action taken yesterday by Admiral Thad Allen, 
the Commandant of the United States Coast Guard to begin to 
right what has become a floundering acquisitions effort veering 
far, far off course. I believe that this decisive leadership 
will put this program on a path to success.
    However, though the Commandant has taken bold steps to 
bring the systems integration functions back in-house, to rebid 
parts of the Deepwater contract and to ensure that assets are 
independently certified against highest industry standards, it 
is essential that we learn the lessons of the past five years 
of Deepwater implementation so that past errors are never 
repeated.
    I have said it before, and I will say it again. This is a 
Country that is able to send folks to the moon. We ought to be 
able to build ships that float.
    Today, therefore, we examine the 123 program. We will take 
a close look at all of the actions of the Coast Guard and its 
partner, the integrated Coast Guard systems team that 
contributed to the colossal failure of the program. We want to 
know why the Coast Guard and its partners went ahead with a 
design to lengthen the 110 foot cutters despite warnings from 
the United States Navy that the hulls should have been 
strengthened before they were lengthened, warnings based on the 
Navy's own experience lengthening the 170 foot Cyclone Class 
ships to 179 feet.
    We will also closely examine whether the equipment 
installed inside the converted 123 foot boats met all 
contractual requirements and was designed to ensure safety of 
the crews, and I emphasize that, safety of the crews. We want 
to make sure that Coast Guard personnel are safe.
    Further, we want to examine whether the C4ISR Command and 
Control System was properly certified to ensure the protection 
of national security data.
    I applaud the willingness of the dedicated individuals, who 
worked in various capacities in the Deepwater program, to come 
forward today to share their concerns about what they 
experienced on that program and about the actions taken by 
managers leading the program.
    The Committee's investigation also received critical 
assistance from an outside expert on TEMPEST process who has 
dedicated countless hours of his own personal time to analyzing 
TEMPEST certification process on the 123s.
    I thank Michael DeKort, Robert Braden, Scott Sampson and 
James Atkinson for their dedication to excellence.
    Our Committee shares their dedication. Therefore, while we 
examine what must be done to ensure the success of Deepwater, 
we also will be examining what must be done to build 
acquisitions systems and develop experienced management 
personnel within the Coast Guard who can assure that a single 
dollar is never, ever wasted in the procurement of a ship or 
plane for the Coast Guard fleet.
    With that, Mr. Chairman, I yield back.
    Mr. Oberstar. I thank the gentleman for his very strong 
statement and again for his very diligent work.
    I yield now to the gentleman from Ohio, the Ranking Member 
of the Subcommittee, Mr. LaTourette.
    Mr. LaTourette. I thank you very much, Mr. Chairman, and I 
will try to move along expeditiously. I want to thank you and 
Chairman Cummings for holding this hearing.
    I have to say that I come to this hearing with a deep 
concern over the future success of the Deepwater program. As I 
indicated at the Subcommittee hearing in January, there is no 
more important issue facing the Coast Guard now than the delays 
and setbacks that are jeopardizing this program.
    This hearing today is going to focus on the conversion of 
the 110 foot patrol boat fleet, and I believe that we will use 
this hearing to examine the roots of the problems that resulted 
in this failure, and I hope that what we look at is how the 
Coast Guard can apply the lessons learned to future acquisition 
projects.
    The original Deepwater contract, which has now run a number 
of years, established performance requirements for each asset 
and component system. It appears that in too many cases, the 
responsibilities to oversee, test and certify the construction 
and performance of these assets and systems was invested in the 
contractors and not the Coast Guard.
    The Coast Guard has addressed these issues under Commandant 
Allen's direction that was announced just yesterday, and I have 
confidence that the Coast Guard will take much more active role 
in reviewing and ultimately approving or disapproving asset 
designs, performance testing and compliance with contract 
requirements.
    While I appreciate the Commandant's new directives and 
willingness to address past problems, I remained concern by the 
number and nature of problems that seem to come to light every 
time this Committee holds a hearing. It appears that there were 
several opportunities to make significant changes to the design 
and the structure of the 123 foot patrol boat hull and that the 
Coast Guard chose not to take those corrective actions.
    As a result, the Coast Guard took possession of eight 
vessels that can't be used for any mission by the Coast Guard 
and are now scheduled to be scrapped. The loss of these eight 
vessels and the impending delay in requiring more capable 
vessels hurts the Coast Guard's ability to safeguard and secure 
our Nation's waters and jeopardizes the safety of Coast 
Guardsmen that serve aboard increasingly aged and deteriorating 
vessels.
    I am further concerned by the apparent lack of control 
procedures that allow a contractor to install and self-certify 
component systems that have not been tested against industry or 
military standards. The Coast Guard is responsible for ensuring 
that the assets and systems that it accepts meet all terms and 
conditions of the contract and all relevant performance 
specifications.
    Under the Commandant's new directions, the Coast Guard will 
take on additional responsibilities to verify compliance. I 
can't emphasize enough how critical these new responsibilities 
are for the future of the service.
    The Deepwater program and the assets that will acquired 
under Deepwater are critical to the Coast Guard's future 
mission success. The men and women of the Coast Guard carry out 
brave and selfless service to our Nation each and every day, 
and we need to make sure that the Deepwater program is carried 
out in a way that the best, most capable equipment is acquired 
to allow these Coast Guardsmen to carry out their important 
missions.
    I want to thank the witnesses for appearing today.
    Mr. Chairman, on the way over from my last series of votes, 
I mentioned some matters to Subcommittee Chairman Cummings, and 
I am not going to bring those up at this moment, but they do 
relate to issues that Mr. Mica was addressing. I hope that 
maybe the four of us could have a conversation in the future 
about some of those things.
    I thank you for your courtesy and yield back the balance of 
my time.
    Mr. Oberstar. I thank the gentleman for his statement, for 
his ever public spirited concern about the work of this 
Committee.
    We have had some difficulties in proceeding with this 
hearing because we requested on March 20th documents from the 
Coast Guard. We did not get what we were requesting until April 
6th and not until Subcommittee Chairman Cummings met with the 
Commandant did we get at 5:00 p.m., on Friday, April 13th, the 
full set of documents that we requested much earlier. That 
hampered and made difficult the task of structuring this 
hearing and getting the information we needed. So there have 
been some difficulties along the way.
    We made our best effort to include the Republican side in 
this process and gave to staff the names of witnesses right at 
the outset and how to contact and invited minority staff to 
conduct their own individual inquiry.
    Mr. LaTourette. Will the Chairman just yield?
    Mr. Oberstar. Yes, I will yield.
    Mr. LaTourette. I think the Chairman and the full Committee 
know that there is no member of Congress that I have greater 
respect for and even affection for than the Chairman. My 
invitation was that maybe as we move forward we can do a little 
bit better in talking to each other.
    Mr. Oberstar. Always, we always can do better, and we will.
    Mr. LaTourette. Thank you.
    Mr. Oberstar. Now I ask all witnesses to rise.
    Do you solemnly swear to tell the truth, the whole truth 
and nothing but the truth, so help you, God?
    [Witnesses respond in the affirmative.]
    Mr. Oberstar. Thank you.
    Mr. DeKort, we will begin with you. We welcome your 
statement. Again, I say that you have provided enormous service 
to the public and to the Committee, and I think in the long 
run, the Coast Guard, by the work that you have done.
    Please proceed.

    TESTIMONY OF MICHAEL DEKORT, FORMER PROJECT MANAGEMENT 
  SPECIALIST FOR 123 SYSTEMS, LOCKHEED MARTIN; ROBERT BRADEN, 
SENIOR TECHNICAL STAFF, PROCESSOR AND SYSTEMS DESIGN, LOCKHEED 
    MARTIN; SCOTT SAMPSON, SECTION CHIEF OF THE DEVELOPMENT 
  SECTION, U.S. COAST GUARD MAINTENANCE AND LOGISTICS COMMAND 
 ATLANTIC IN THE VESSEL SPECIFICATIONS BRANCH; JAMES ATKINSON, 
      PRESIDENT AND SENIOR ENGINEER, GRANITE ISLAND GROUP.

    Mr. DeKort. Thank you, Mr. Chairman, for that comment.
    Good afternoon, Mr. Chairman and members of the Committee. 
I deeply appreciate your taking the time to hear testimony on 
the C4ISR problems relating to the Deepwater effort.
    While I will be highlighting the C4ISR issues, I am sure 
you realize that they are only examples of the systemic 
engineering and management problems associated with this 
effort. The problems I will be describing are not simply 
mistakes. They were informed, deliberate acts.
    As I will show, I have been trying to resolve these 
problems for almost four years after not being able to convince 
every level of management of every relevant organization in 
Lockheed Martin through to the CEO and board of directors, and 
I believe there is a timeline up that shows some of that 
information. As well as working with integrated Coast Guard 
systems, I turned to the appropriate Government agencies, 
public officials, whistleblower organizations and when all else 
failed, the internet and the press for help.
    What needs to be understood here is that every one of these 
problems was easily resolved with off the shelf products well 
before any of the assets were delivered. Additionally, as the 
contract mandates system commonality, every one of these 
problems is a candidate for inclusion on every other maritime 
asset that ICGS delivers for the lifetime of the contract. This 
plan, if allowed to come to fruition, will literally cripple 
the entire maritime fleet of the U.S. Coast Guard for decades.
    Before delving into the issues, I would like to tell you a 
little bit about my background. I was an electronics technician 
in the U.S. Navy for six years. I specialized in communications 
systems. After my enlistment ended, I spent a brief time in the 
private sector before I joined the U.S. State Department as a 
communications engineer for embassy and consular duties as well 
as for the counterterrorism group.
    After leaving that organization, I became a systems 
engineer in Lockheed Martin. Through the years, I was promoted 
to project, program and engineering manager. During my last 
five years, I was a software project manager for Aegis Baseline 
6/3, the lead systems engineer of C4ISR for the Deepwater 
effort and the software engineering manger for the NORAD 
efforts. It is the period where I held the C4ISR lead systems 
engineer position that is the focus of this testimony.
    At the point I joined the effort in the summer of 2003, the 
final design review had been completed, and most of the 
equipment had been purchased for the first several boats. In 
addition to creating a master schedule, I was tasked with 
identifying final deliverable requirements and planning 
integration of the first boats. It was during this period that 
several critical safety and security issues came to my 
attention.
    The first problem was that we had purchased non-
weatherproof radios for the Short Range Prosecutors or SRPs. 
The boats are small open aircraft that are constantly exposed 
to the environment. Upon first hearing about this issue, I have 
to admit I found it too incredible to believe. Who would put a 
non-weatherproof radio, the primary means of communication for 
the crew, on a boat with no protection from the elements?
    The individual who brought this to my attention strongly 
suggested I look into it no matter how incredible it sounded. I 
called the supplier of the radio who informed me it was true. 
We had purchased four radios for the first SRPs, and they were 
not weatherproof. As a matter of fact, the vendor asked me to 
not use the radios on any of the SRPs which would eventually 
total 91 in all.
    Upon informing Lockheed management that the radios needed 
to be replaced, I was told that there was a design of record. 
This meant the customer had accepted our design at the 
conclusion of the critical design review and that we would make 
no changes that would cause cost or schedule impacts. As a 
matter of fact, we ordered five more radios after I went to 
management about the problem in order to prepare for the next 
set of boats we were contracted to modify.
    I tried for several months to get the radios replaced.
    Just before delivery of the first 123 and its associated 
SRP, the customer asked to test the system. Coincidentally, it 
rained on test day. During the testing, several radios shorted 
out. It should be noted that had we not tested the boats in the 
rain on that day, we would have delivered that system, and it 
would have failed the very first time it was used.
    After this, I was told we would go back to the radio that 
originally came with the SRPs.
    I believe that this example more than any other 
demonstrates the lengths the ICGS parties were willing to go to 
hold to schedule and budget while sacrificing the safety and 
security of the crew.
    The next problem uncovered involved the video surveillance 
system. The Coast Guard wanted a system that would permit 
watching the boats when in a Coast Guard port without someone 
having to be physically on the boats. Our solution was to 
provide a video surveillance system that had significant blind 
spots leaving the bridge or pilot house vulnerable to 
penetration.
    The most frustrating part about this issue is that the 
simple purchase and installation of a fifth camera would have 
resolved the problem. Bear in mind, we knew about the need for 
the extra camera several months before the first 123 was 
delivered.
    Another problem we discovered involved low smoke cables. 
There was a requirement to install low smoke cables so that in 
case of a fire, flames do not spread quickly, equipment is not 
overly exposed to corrosive smoke and the crew is not exposed 
to a large amount of toxic fumes. In a recent report, the 
Inspector General for the Department of Homeland Security 
confirmed that over 80 of these cables are the wrong type and 
that the waiver the Coast Guard gave to the contractor so they 
could avoid having to provide these cables was invalid.
    The next issue involved communications security and the 
standards necessary to ensure those communications are 
safeguarded from the eavesdropping or inadvertent transmission 
of crosstalk. These standards are known as TEMPEST. We 
installed non-shielded cables, 101 in all, on all of the 123s, 
cables that did not meet standard TEMPEST safety and security 
requirements as borne out by their failing of the visual 
inspection which was carried out by the appropriate testing 
authority.
    This situation could lead to serious compromise of secure 
communications not only for the Coast Guard but for other 
Government organizations such as DOD, FBI and DEA. I was 
informed that we had included these cables in the design 
because we had not bid the TEMPEST requirement and, as such, we 
decided we did not have the money to include them.
    The final significant problem was that of the survivability 
of the external mounted equipment. I saved this one for last 
because of how serious the repercussions are for the Coast 
Guard and the Nation, the fact that the DHS IG agreed 
completely with my allegation relative to this issue, the 
incredible position Lockheed Martin has taken on this issue and 
the fact that the Coast Guard seems willing to allow them to 
get away with it.
    Shortly before the first 123 was delivered, we finally 
received the environmental requirements. During the late review 
of the requirements --I am sorry --of the equipment for 
compliance, well after the design review and purchase of the 
equipment, we found the very first item we looked into would 
not meet environmental requirements. Given this failure, we 
feared the rest of the equipment may not meet environmental 
requirements.
    Let me state this in simple terms. This meant the Coast 
Guard ships that utilized this equipment would not operate in 
conditions that could include heavy rain, heavy seas, high 
winds and extreme temperatures.
    When I brought this information to Lockheed management, 
they directed me and my team to stop looking in to whether or 
not the rest of the equipment met these requirements. This 
meant that all of the externally mounted equipment being used 
for the critical communication, command and control and 
navigation systems might fail in harsh environments. Since that 
time, we have learned through the DHS IG report on the 123s 
that 30 items on the 123s and at least a dozen items installed 
on the SRPs did not meet environmental requirements.
    In addition to their technical and contractual findings, 
the IG also made some of Lockheed Martin's responses on this 
issue known in that report. Incredibly, the IG states that 
Lockheed Martin incorrectly stated in their self-certification 
documents that there were no applicable requirements 
stipulating what the environmental requirements were in regard 
to weather, and they actually stated that they viewed the 
certification of those requirements as ``not really 
beneficial.''
    In addition, the IG states that the Coast Guard did not 
know the boats were non-compliant until July of 2005, one and a 
half years after the first 123 was delivered. The report also 
states that none of these problems were fixed, not on any of 
the delivered boats. That, along with this issue not being 
called out in the DD-250 acceptance documents, supports my 
supposition that Lockheed Martin purposefully withheld this 
information from the Coast Guard.
    Finally, the IG states that Lockheed's position on them 
passing the self-certification without testing these items was 
the right thing to do because they thought the tests would be 
``time consuming, expensive and of limited value.'' Bear in 
mind that the contractors have stated time and time again in 
front of this and other oversight committees that they do not 
practice self-certification.
    Where does this situation leave us? Had the hulls not 
cracked or the cracks not appeared for some time, ICGS would 
have delivered 49 123s and 91 SRPs with the problems I 
described.
    In addition to that, the Deepwater Project is a system of 
systems effort. What this means is that the contractor is 
directed to deliver solutions that would provide common 
equipment sets for all C4ISR systems. Said differently, all the 
equipment for like systems need to match unless there is an 
overwhelming reason not to.
    This means that every faulty system I have described here 
will be installed on every other maritime asset delivered over 
the lifetime of the effort. This includes the FRCs, the OPCs 
and the NSCs. If we don't stop this from happening, ICGS will 
deliver assets with these and other problems. I believe this 
could cripple the effectiveness of the Coast Guard and their 
ability to perform their missions for decades to come.
    How have the ICGS parties reacted to the totality of these 
allegations? At first, Lockheed and the U.S. Coast Guard, as 
stated by the ICGS organization, responded to my allegations by 
saying they were baseless, had no merit or that all of the 
issues were handled contractually. That evolved after the IG 
report came out to them, stating that the requirements had gray 
areas and later by actually deciding, after the systems were 
accepted and the problems were found, that in some cases the 
Coast Guard exaggerated their needs as was their comment 
regarding the environmental survivability problems.
    Up until the announcement yesterday, I have heard a lot of 
discussion about the changing of the ICGS contract structure, 
the fixing of the requirement, reorganizing the Coast Guard and 
adding more oversight. While all of those things are 
beneficial, they in no way solve the root problem. Had the ICGS 
organization listened to the Engineering Logistics Center or 
ELC and my recommendations, there would be no problems on these 
boats. We wouldn't be talking about more oversight or making 
sweeping changes. Instead, we would be discussing what a model 
program Deepwater is.
    I guarantee you that had the changes that were made up 
until yesterday, yesterday's announcement, been made four or 
five years ago, it wouldn't have mattered. Even with the 
incestuous ICGS arrangement, the less than perfect requirements 
and minimal oversight, there was plenty of structure in place 
and information available to do the right thing. It is not 
practical to think that one can provide an ironclad set of 
requirements and an associated contract that will avoid all 
problems.
    All that was needed were leaders who were competent and 
ethical in any one of the key contractor or Coast Guard 
positions. Any one of dozens of people could have simply done 
the right thing on this effort and changed the course of events 
that have followed. It is because of that that I strongly 
suggest you shift, suggest you focus, your focus shift to one 
of accountability in an effort to provide a deterrent.
    No matter what structure these parties put in place, no 
matter what spin they come up with or promises they make, no 
matter how many people you spend taxpayer dollars to employ to 
provide more oversight, it still comes down to people. We 
wouldn't need more oversight if the ICGS parties would have 
done as they promised when they bid the effort.
    They told the Coast Guard: We know you have a lack of 
personnel with the right skills. Let us help you. Let us be 
your trusted agent. Let us help write the requirements so we 
can provide you cutting edge solutions. Let us write the test 
procedures and self-certify so we can meet the challenges we 
all face in a post-9/11 world.
    In the end, people have to do the right thing and know that 
when they don't, the consequences will be swift and 
appropriate. I strongly believe that especially in a time of 
war the conduct of these organizations has been appalling.
    As such, I would hope that this Committee and other 
relevant agencies with jurisdiction will do the right thing and 
hold people in these organizations accountable. All defense 
contractors and employees of the Government need to know that 
the high ethical standards, high ethical standards are not 
matters of convenience. If you do not hold these people and 
organizations accountable, you will simply be repackaging the 
same problems and have no way of ensuring the problems don't 
happen again on this or any other effort.
    In closing, I am offering to help you, help in any way I 
can to remedy these issues. As I told the Commandant, 
Commandant Allen's staff and Lockheed Martin before my 
employment was terminated, I want to be part of the fix. With 
the right people in place in the right positions, this project 
can be put back on track rapidly.
    I would like to thank you again for the opportunity to 
testify and look forward to answering your questions.
    Mr. Oberstar. Thank you very much for a very thorough, 
thoughtful and well structured statement.
    Mr. Braden, would you identify yourself and then proceed 
with your statement?
    Mr. Braden. Yes. Thank you, Mr. Chairman and members of the 
Committee.
    My name is Robert Braden, and I have over 40 years of 
engineering experience including nearly 30 years of service 
with Lockheed Martin Corporation. I am currently employed by 
Lockheed as a senior technical staff at Moorestown, New Jersey. 
In this position, I am often expected to provide program and 
project leadership for a variety of programs.
    In early 2003, I was requested to join the U.S. Coast Guard 
Deepwater program as a lead system engineer for the 
Communication Area Master Stations or CAMS and Legacy Cutter 
program. That program was to do upgrades of three different 
classes of cutters that did not include the 123s. Program 
objectives were to provide enhanced satellite communications 
and modern C4ISR systems for these existing Legacy assets.
    This included installations, upgrades and new capabilities 
for 39 existing Legacy Cutters. We provided significantly 
improved satellite bandwidth, improved shipboard networks, new 
law-marine radios, new Automatic Identification Systems and 
expanded secret internet protocol router networks, or SIPRNET, 
communications capabilities. These improved SIPRNET 
capabilities provide the Legacy fleet with the ability to 
significantly improve coordination with law enforcement and 
homeland security actions with the U.S. Navy and within the 
Coast Guard.
    After completing the total replan of the program, we 
submitted an aggressive fixed price proposal to the Coast 
Guard. Unfortunately, the Coast Guard contracting office 
continued to extend negotiations all the way to the end of the 
fiscal year. This required Lockheed Martin to either stop work 
or independently fund the continued engineering and procurement 
of our long lead material. Lockheed elected to support the 
aggressive Deepwater deployment objectives of Admiral Stillman 
and provided several million dollars of internal risk funding 
to allow my team to obtain the material, integrate the system 
and prepare for the first installations.
    During this same period of development and design, I was 
engaged in intensive dialogue with my Coast Guard contracts 
technical representative, with the Coast Guard's ships 
integration personnel and with the Coast Guard's top 
communications security organization known as TISCOM.
    The purpose was to determine and negotiate all requirements 
for the CAMS/Legacy installations. Our key objective was to 
provide a communications installation that would immediately 
achieve a SIPRNET Interim Authority to Operate followed shortly 
thereafter by a full Authority to Operate. The reason that was 
important was that these ships were in port for a limited 
period of time. When those ships left port, our installation 
needed to allow the crew to immediately use the new secure 
capabilities.
    I was also fully engaged in weekly program integration 
meetings involving all Moorestown management of the Deepwater 
program. These PIT meetings were mandatory every week and 
covered all aspects of the program and included at every 
meeting, U.S. Coast Guard representatives and generally 
included representatives from the ICGS or Integrated Coast 
Guard Systems organization. The purposes of the meetings were 
to ensure coordination among the various programs and maintain 
commonality among all the assets. Topics included status of the 
system of systems activities, the CAMS/Legacy Cutter upgrades, 
the 123 foot cutter conversion program and the other various 
assets.
    Approximately once each month, the PIT meetings, Program 
Integration Team meetings, would expand to a full Deepwater 
program review with all management present, and that usually 
included the ICGS, the different subcontractors as well as the 
Coast Guard officers.
    On numerous occasions, I presented the design, installation 
and security briefings appropriate to my cutter class to ensure 
coordination of our CAMS and Legacy plans. During these PIT 
meetings, the various LSEs or Lead System Engineers would 
become aware of the problems and issues faced by their 
counterparts. So part of the purpose of the meeting was to make 
sure we compared notes and make sure that we all met a common 
design. We would occasionally compare notes to see if a common 
resolution to our problems were possible.
    Often, the aggressive pace of my own project and the 
structure of the Deepwater program required that my team 
maintain focus on our own design issues. However, whenever I 
found an issue that concerned me and I was unable to influence 
a change, I would advise upper management of the problem.
    In August, 2003, my team began upgrades of the CAMSLANT or 
master station Atlantic facility and installation of the first 
Deepwater sea-based asset, the U.S. Coast Guard Cutter, 
Northland. We completed these installations within one month, 
thereby establishing the milestone of the first successful 
asset delivery to the Coast Guard Deepwater program. By year 
end, we followed this achievement with a successful 
installation of the Deepwater C4ISR suite aboard the cutter 
Tampa.
    The subsequent string of successful installations has been 
a continuing source of personal satisfaction for my design and 
installation team, and I personally take great pride in 
expeditiously and cost effectively completing the first 
successful and compliant Deepwater installations in the history 
of the program.
    I continued to manage and guide the installation of the 
first nine 270 foot Legacy Cutters and developed the design and 
installation procedures for the remaining 210 and 378 foot 
cutters. In March, 2004, I was removed from the Deepwater 
program and transferred to another program.
    This concludes my testimony. I would be pleased to answer 
any questions the Committee may have.
    Mr. Oberstar. Thank you, Mr. Braden.
    Mr. Sampson, please identify yourself and proceed with your 
testimony.
    Mr. Sampson. Good afternoon, Congressman Oberstar, 
Congressman Cummings and distinguished Committee and 
Subcommittee members.
    My name is Scott Sampson. I have been requested to come 
before you today to discuss my involvement with the 123 program 
as associated with the Deepwater program.
    I have a unique perspective of this program in that I work 
for the DOD agency which expressed grave concern about a 
potential extension of a 110 foot patrol boat to 123 feet, then 
changed jobs to work for a Coast Guard office which supports 
these modified cutters. Today, I will tell you about the people 
I communicated my concerns to that were unfortunately realized.
    If I may request, Mr. Chairman, I would like my written 
statement entered into the record.
    Mr. Oberstar. Without objection, so ordered. Your statement 
will be included in the record.
    Mr. Sampson. Thank you, sir.
    The DOD agency I worked for was the Combatant Craft 
Division, a detachment of the Naval Surface Warfare Center 
Carderock Division, otherwise known as CCD. CCD had designed a 
similar extension on a similar platform and felt, based on 
lessons learned, that the proposed method of modification of 
the 110 was at a high risk for failure.
    While I was with CCD, three key contacts were made to 
express concerns over the proposed design modification. The 
first was Debu Ghosh of the Coast Guard's Engineering Logistics 
Center. Mr. Ghosh was the Branch Chief of the Boat Engineering 
Branch. Second was Diane Burton of the Coast Guard's Deepwater 
Program Office. Ms. Burton was the Deepwater Surface Technical 
Director. The third person that was contacted was Dennis Fanguy 
of Bollinger Shipyard. The Fanguy was the head of their 
engineering department.
    These conversations were conducted in the August to 
September, 2002 timeframe with the exception of Mr. Fanguy who 
was contacted shortly thereafter.
    It was explained to each of these individuals not only 
concerns associated with the proposed modification of the 110 
but where those concerns stem from as they pertain to a similar 
experience with a Navy craft. These concerns centered around 
several items but specifically included longitudinal strength, 
running trim and engineering experience.
    Mr. Ghosh appeared to share our concerns and attempted to 
hire Combatant Craft to assist with oversight. Specifically, 
Mr. Ghosh requested and I provided a statement of work and an 
estimate to provide 14 days of on site support at Bollinger 
shipyard, assisting the two naval architects and also to supply 
a sea keeping analysis comparing the 110 to the 123. The 
estimate for this level of support was $42,000.
    Mr. Ghosh told me shortly thereafter that the Deepwater 
Program Office would not supply the funding.
    Conversations with the other two contacts, Ms. Burton and 
Mr. Fanguy were short and with little discussion.
    The Matagorda was inducted into Bollinger Shipyard on the 
2nd of February, 2003. On the 5th of March, 2004, the MATAGORDA 
was delivered back to the Coast Guard and on the 10th of May, 
2004, entered a Post Delivery Maintenance Availability. Within 
days of leaving this availability in the early part of 
September, 2004, Matagorda suffered damage in the middle of the 
cutter, buckling the side shell and deck.
    This is the type of longitudinal failure that the Combatant 
Craft Division anticipated seeing and had warned the Coast 
Guard and Bollinger Shipyard about. This predicted failure 
occurred not as a result of fatigue or corrosion but rather 
from one short period of operation in a sea reported to be four 
to six feet in height. This longitudinal bending failure was 
acknowledge in a report issued by ELC entitled Matagorda 
Buckling Incident Analysis dated 24 September, 2004, and 
verified our concerns expressed in August of 2002.
    After two attempts to make the 123s usable for service, the 
Coast Guard made the decision to lay the vessels up until a 
final decision could be made as to whether or not they could be 
repaired. The Coast Guard made this decision after extensive 
inspection of the cutters. All eight cutters are currently 
located at the Coast Guard Yard.
    Mr. Chairman, this concludes my statement. I will be more 
than happy to answer any questions you may have.
    Mr. Oberstar. Thank you very much, Mr. Sampson. That is 
very critical testimony for the inquiry of the Committee.
    I have heard a couple of cell phones or other devices going 
off. Under the Committee rules, all communication devices must 
be inaudible. Turn them off or put them on vibrate.
    Mr. Atkinson, you may feel free in your remarks to respond 
to the issues raised by Mr. Mica earlier.
    Mr. Atkinson. Thank you, sir.
    My name is James Atkinson. I am the President and Senior 
Engineer of Granite Island Group located in Gloucester, 
Massachusetts.
    We specialize in electronics engineering. We perform bug 
sweeps. We perform wiretap detection. We stop technical 
espionage. We plug leaks both in classified and unclassified 
communications systems. Essentially, we hunt spies.
    I am considered to be one of the top international experts 
on the subject matter of TSCM, TEMPEST and technical security. 
I have attended private and Government-sponsored TSCM, TEMPEST, 
cryptograph, technical intelligence, electronics and security 
training both in the United States and abroad. I have been 
involved in many hundreds of TSCM, TEMPEST inspections over the 
last 25 years of Government service and private sector 
assignments.
    My clients include major heads of major corporations, heads 
of state, diplomats, Government agencies, defense contractors, 
hospitals, courthouses, political leaders, ministers, small 
business, large ministers in virtually walk of our Country.
    Due to the nature of my, of the services I render to my 
clients, it would not be prudent to disclose precisely who they 
are. However, I have been to Washington, D.C. many times on 
business to render such services.
    I am one of the few people who can clearly explain the 
highly technical and highly classified subject matters such as 
TEMPEST and TSCM to this Committee in an unclassified way so 
that a non-technical layman can understand it, and I can 
provide a voice of reason.
    The documents in this matter are highly technical, and it 
takes a TEMPEST and TSCM expert to fully understand what is 
really in those documents, what it really represents and what 
they really mean and to bring forth the gravity of what is 
really going on.
    The core message here is that TEMPEST is a rigorous series 
of Government standards which have been developed by the 
National Security Agency. The purpose is to protect classified 
equipment, signals and information from eavesdropping. TEMPEST 
focuses on securing classified equipment and systems in order 
to keep electronics from leaking secrets.
    Our foreign adversaries know about TEMPEST and the related 
fields and know how to steal our electronic secrets from 
equipment that does not comply with these rigorous standards. 
For example, the nations of Cuba, Iran, India, China, Colombia, 
France, North Korea and many other countries have become quite 
adept at eavesdropping on our improperly protected classified 
equipment. While most countries are our allies, the United 
States has designated over 30 nations to be openly hostile to 
the United States, and there is strong evidence that these 
countries not only do have the equipment to eavesdrop on our 
leaking equipment but do so on a regular basis.
    Gentleman, it is my unpleasant duty to inform you that the 
Coast Guard, ICGS and Lockheed Martin have been highly 
negligent in their oversight of the Deepwater program, that 
many millions of dollars has been wasted on ships that don't 
float and electronics, classified electronics which leak 
national security secrets.
    During my review of the technical documents in this matter, 
I discovered that the United States Coast Guard was not being 
forthcoming with information to this Committee and that the 
Department of Homeland Security Office of Inspector General had 
previously requested in regards to C4ISR and TEMPEST issues. I 
found that instead they were hiding malfeasance within these 
documents and a deeply flawed procurement process.
    Further review determined that there was significant lack 
of oversight on the part of the United States Coast Guard and 
that they were using doublespeak in their answers to this 
Committee and evading politically uncomfortable questions put 
before them.
    Based on the analysis of the numerous documents to include 
detailed TEMPEST reports which the Coast Guard eventually, 
albeit begrudgingly, provided to the Committee, I was able to 
determine the following:
    From the very beginning, the very first day of the program, 
the Coast Guard did not clearly define the technical 
specifications and standards that these ships had to comply 
with in order to protect the classified information. The 
contractor, in turn, delivered substandard and highly defective 
assets as there was little or no Coast Guard oversight on the 
project even though the Government was paying the contractor to 
provide oversight as the integrator.
    The Coast Guard accepted delivery of these defective ships 
and, instead of correcting many of the defects, merely covered 
them up with waivers or used substandard parts to create the 
illusion of a repair. An example is unclassified and classified 
local area network connection boxes were supposed to be 
separated from each other. The Coast Guard chose to resolve 
this problem merely by putting stickers on the equipment as 
opposed to fixing it. So they patched a leak with a Post-It 
note.
    Not only has the contractor responsible for this waste 
butchered eight valuable ships and rendered them worthless, 
they have endangered national security in delivering ships that 
leak secrets, contain significant vulnerabilities and which 
provide a clear and present danger to our national security. 
The Coast Guard was and still is spending money like a drunken 
sailor on shore leave with minimal oversight. The Coast Guard 
lacks the core competencies and resources to protect this 
classified information through their TEMPEST program. ICGS has 
taken advantage of the United States after 9/11 and has taken 
advantage of the Coast Guard in particular. The Coast Guard put 
more priority on its public relations than it did with their 
TEMPEST program.
    My recommendations is that this Committee pull the plug on 
the Coast Guard's access to classified information, that it 
revoke SIPRNET access and essentially revoke the Coast Guard's 
security clearance. This should be done by the end of business 
today.
    Also, I recommend that you initiate an exhaustive top-down 
study of all COMSEC, Coast Guard COMSEC, TEMPEST, NONSTOP, 
TSCM, emission security and related technical security and 
engineering disciplines and focus on all assets of the Coast 
Guard not just the Deepwater ships.
    I recommend that this Committee assume every Coast Guard 
asset is suspect until it can be scientifically proven secure 
through actual instrumented analysis and not just waivered as 
has been the case of late.
    I recommend that all eight cutters be stripped of anything 
of value and that they be sold off as scrap metal, cancel or 
suspend all current or upcoming contracts with ICGS and 
Lockheed Martin until this matter can be fully resolved and 
consider issuing an interim debarment against Lockheed Martin 
and ICGS until their full management has been forthcoming with 
appropriate answers.
    Also, refuse to allow the Coast Guard to possess, access, 
obtain materials or gain access to any classified networks 
until each asset has been subjected to a rigorous and 
independent, highly detailed technical inspection by somebody 
outside of the Coast Guard.
    Refuse to allow the Coast Guard to purchase any further 
tactical or Deepwater assets unless other elements of the 
United States Government provide very close oversight over the 
specifications, designs and procurement of such systems. The 
natural agency to assist the Coast Guard with this would be the 
U.S. Navy who should handle the procurement and oversight of 
the Coast Guard assets until such time the Coast Guard is 
competent and can be trusted to do this themselves which they 
have not been able to of late.
    Identify the command level officers within the Coast Guard 
who had the ultimate responsibility for the oversight of this 
program and then remove them from any further Government 
service.
    Finally, we have to assume that the Department of Homeland 
Security is not competent in these matters and that their lack 
of oversight is widespread and institutionalized.
    Patrick Henry stated years ago that we are apt to shut our 
eyes against a painful truth, but for my part I am willing to 
know the whole truth, to know the worst of it and to provide 
for it.
    Gentleman, this project was doomed to fail from the very 
beginning. When modern electronics operate, they generate 
electromagnetic fields. Digital computers, radios, typewriters 
and so on generate tremendous amounts of electromagnetic 
energy. Compromising emanations is that electromagnetic energy. 
This can be conducted through the airwaves, over the power 
lines, over the phone lines, cable TV.
    The TEMPEST standards are very rigid as to how these 
emanations are controlled. The Coast Guard completely 
disregarded all of these specifications except one, and the one 
which they chose to pay attention to, they evaded on it 
significantly.
    Most of consumer market equipment leaks significantly. 
However, if somebody's computer leaks a little bit of 
information, they may have personal embarrassment. If a 
National Security Cutter or a Coast Guard Cutter or a B2B 
Bomber or other tactical equipment leaks, national security is 
at risk.
    This project was doomed to failure. It boils down to two 
core issues, a lack of oversight and malfeasance.
    On the issue of my mission statement, the mission statement 
was actually published many years ago. It says that I hunt 
spies and I hunt bad people. That is what it says.
    Lockheed Martin has a real problem with this because that 
issue was brought up repeatedly by Lockheed Martin previously 
after their security people were caught dealing with convicted 
felons to purchase illegal bugging equipment and to do 
moonlighting. This issue was brought up by Lockheed Martin and 
provided to the Coast Guard. I have a full audit trail from my 
web site logs of them doing this.
    That concludes my statement.
    Mr. Oberstar. Thank you very much, Mr. Atkinson.
    Mr. Atkinson has used and throughout the testimony we hear 
the word, the acronym, TEMPEST, which stands for 
Telecommunications Electronics Material Protected from 
Emanating Spurious Transmission. A layman's definition might be 
unclassified signals that leak from improperly shields cables.
    You can go to Radio Shack and buy a device that can tap 
into a model that is not properly shielded and get fax 
information and get computer information from your neighbor's 
home if you wish to do that.
    NATO electronic spies in Germany in the 1950s discovered 
that they could break into classified information by using 
unclassified signals that allowed them to trace back into the 
heart of technology in use. That is why the issue of TEMPEST is 
so critically important here. We will come to that later.
    We have a series of four votes on the floor. We have eight 
minutes remaining on the first vote. We will recess for the 
four votes and resume immediately thereafter with Mr. Cummings 
in the Chair.
    The Committee stands in recess.
    [Recess.]
    Mr. Cummings. [Presiding] Ladies and gentlemen, we are 
going to resume the hearing. We left off with Mr. Atkinson had 
finished testimony.
    I want to thank our panelists for your remarks.
    I am going to start off with a few questions.
    Mr. DeKort, you mentioned in your testimony that you 
brought a number of matters to the attention of senior Lockheed 
management. How high did you take these issues and what 
responses did you receive?
    Mr. DeKort. I took the matters to the CEO, Robert Stevens, 
on at least two occasions and the board of directors, and the 
response I received was that the allegations were baseless or 
had no merit, and I believe that was based on Lockheed's 
contention that they had disclosed all the issues to the Coast 
Guard or resolved them and they were handled contractually.
    Mr. Cummings. Did you ever contact the Coast Guard 
directly?
    Mr. DeKort. Yes.
    Mr. Cummings. Since you did that, who did you contact?
    Mr. DeKort. I contacted a Commander Ciampaglio and Mr. 
Jacoby who is here. I contacted Lieutenant Commander Durr who 
was the, I believe on the Commandant's staff at the time. I 
contacted a group commander of the boats in Key West, and I 
think that is it.
    Mr. Cummings. What kind of responses did you receive?
    Mr. DeKort. Well, thank you was the response I got.
    Mr. Cummings. Thank you?
    Mr. DeKort. Yes, we will look into it.
    Mr. Cummings. But no thank you?
    Mr. DeKort. They didn't say the no thank you part. I 
understand your point.
    Mr. Cummings. As a Lockheed employee, had you ever been 
involved in another Lockheed project in which the company 
failed to meet contractual requirements in the way that you 
describe on the Deepwater program?
    Had you worked on any other contracts?
    Mr. DeKort. Not of the same type or scale, no, sir.
    Mr. Cummings. What was your role in the installation of the 
TEMPEST hardware in the 123s?
    Mr. DeKort. I was the lead system engineer for the 123s for 
C4ISR which meant that the final design, the installation was 
my responsibility and basically the final design. Like I 
explained in my statement, I came on board after the final 
design review, and so everything was pretty much locked in 
concrete at that point, and they ordered all the materials.
    The reason why the requirements were brought back up is 
because as I understand it, after the Rand study, the Coast 
Guard asserted a more aggressive posture in rolling out the 
programs because the Rand study had said, if you want 100 
percent mission satisfaction, you have to pull back your 
schedule 5 or 10 years, and they actually recommended 10, and I 
believe that is what precipitated us rolling out the 123s 
differently than was originally proposed.
    Originally, there was something called Increment 1. 
Increment 1 was the first set of requirements. When I took over 
the systems engineer role, they decided to deliver an Increment 
0 which was a subset of Increment 1. So we were trying to 
decide what would that subset be and what were the requirements 
associated with it. Did we deliver them entirely, not at all, 
partially?
    Part of my job was to figure out what Increment 0 was. And 
then, as I was figuring out what Increment 0 was, I was asking 
then well, what is our implementation? What is it we are doing 
to resolve that requirement and where are we in going down that 
road?
    Mr. Cummings. Did you all ever come to any conclusions as 
to what would be the standard?
    You just talked about the conversations you may have had, 
and I am trying to determine whether or not there was clarity 
at some point with regard to what those standards would be.
    Mr. DeKort. Well, there was basically from the very 
beginning, sir, a difference of opinion.
    When these issues were brought forward, the response was, 
and it occurred over and over again, we have a design of 
record, and what that meant was we don't want to hear it. If 
what you are bringing to me is an issue that is going to cause 
any schedule or financial problems or cost problems, we are not 
going to change it. We are not going to do anything.
    Mr. Cummings. I take it you had some concerns about the way 
things were proceeding. Is that correct?
    Mr. DeKort. Oh, yes, sir.
    Mr. Cummings. What were your major concerns or fears?
    Mr. DeKort. Well, individually, I think the issues are 
pretty severe. I mean it is the Coast Guard. So if you are 
putting equipment on Coast Guard vessels--and I am talking 
about every Coast Guard vessel for the next 20 years, 
everything that Deepwater does--that won't survive the 
elements, okay, that is bad enough.
    You can't use their classified systems without compromising 
and have somebody eavesdrop.
    You have low smoke cables that if they catch on fire could 
cause someone to be overcome with smoke or make the fire spread 
faster.
    The blind spots on the surveillance system, the blind spots 
were very, very large, and they led right up to the bridge.
    So, individually, some of those issue are pretty 
significant. In total, I don't think it is an overstatement to 
say that if they continued, it would have crippled the Coast 
Guard. Had these boats not cracked or had they not cracked for 
some period of time, all 49 boats would have been delivered 
with these issues.
    Mr. Cummings. The ICGS team produced a document called 
Evaluation of TEMPEST Requirements to be Followed Aboard the 
Deepwater 123 Island Class Patrol Boat, and it was authored by 
a Jo Agat. Are you familiar with that document?
    Mr. DeKort. Yes, sir.
    Mr. Cummings. It is dated February 20th, 2003. Is that 
correct?
    Mr. DeKort. Yes, sir.
    Mr. Cummings. To your knowledge, were the procedures for 
installing the TEMPEST hardware spelled in this guide followed 
during the installation of the C4ISR hardware on the 123s?
    Mr. DeKort. No, sir, the majority were not followed.
    Mr. Cummings. This document, I guess this was the Bible as 
far as the guide is concerned, is that right, as to what you 
are supposed to be doing?
    Mr. DeKort. Yes, sir. If I could, a little bit of history: 
As I understand it, going back to the beginning, there was some 
disagreement or lack of understanding on Lockheed's part of 
what it meant to do TEMPEST and to have TEMPEST, and as such, 
as it was explained to me, it wasn't bid or at least not 
entirely.
    Well, at some point, Lockheed realized that they had 
classified circuits. As soon as you put these classified 
circuits on a boat, you assume TEMPEST. It is part of the deal. 
It is what happens. So they asked an internal engineer to go 
tell them what they needed to do in order to satisfy those 
requirements, and keep in mind this is after the bid had been 
accepted and they had already started.
    Mr. Cummings. So what you are saying is that the bid had 
been accepted.
    Mr. DeKort. Yes.
    Mr. Cummings. The requirements were not online to be met 
with regard to TEMPEST.
    Mr. DeKort. They literally didn't know what needed to be 
done.
    Mr. Cummings. The Coast Guard did not know?
    Mr. DeKort. No, no, no, Lockheed.
    Mr. Cummings. Lockheed.
    Mr. DeKort. Lockheed did not know, at the time they asked 
for that report internally, exactly what they needed to do to 
satisfy the TEMPEST requirement.
    Mr. Cummings. That is a very strong statement you just 
made. You understand you are talking about Lockheed Martin, do 
you not?
    Mr. DeKort. Oh, yes, sir. You don't--I am sorry.
    Mr. Cummings. Let me finish.
    You are talking about an organization that is known 
worldwide for producing all kinds of systems in this realm. You 
understand that?
    Mr. DeKort. Yes, sir. I am saying they weren't competent.
    Mr. Cummings. I am sorry.
    Mr. DeKort. I am saying they weren't competent, and I can 
explain how they got to that position.
    Mr. Cummings. Well, tell me.
    Mr. DeKort. And this was explained to me by Mr. Bruce 
Winterstine who is on one of the panels. I was actually on the 
proposal team for three days.
    During that period when I came in, I had asked Mr. 
Winterstine how the bid was going to be structured, and they 
explained to me that the Moorestown group that primarily does 
Aegis was going to be the lead group and that previously to 
that there had been another group that was going to be involved 
or lead out of Eagan, Minnesota where the C4ISR engineers were.
    And they said, well, we are going to bid it out of 
Moorestown so we can leverage Aegis which strategically is a 
great idea. Aegis is a fantastic system. I understand why you 
would want to leverage it.
    But I told them. I said, look, you people are Aegis 
engineers, okay, and you have a software background. You need 
to go back to Eagan, Minnesota, get the C4ISR experts and have 
them as part of your team.
    And I was told no, we don't need to do that.
    And I asked why, and they said because Aegis is difficult. 
We have been doing it for 30 years. We know what we are doing. 
The C4ISR area is easy. We will figure it out, no problem. We 
don't need that other group.
    Okay, that is literally how it happened. It is a perfect 
storm, sir.
    So when you get into an aggressive bidding situation where 
you have to move out fast, you may have underbid and your staff 
and not in all cases.
    Let me say here that there are some very dedicated people, 
lower level engineers, who worked extremely hard and some who 
did have the background required, but there weren't nearly 
enough of them, okay. So they literally shut out the C4ISR 
experts that they had in the company.
    Of course, sir, Lockheed Martin is the world's largest 
defense contractor. They have over 100,000 employees. They have 
plenty of people, sir, who know how to do this well, and I 
recommended to them that they go back to Minnesota and get 
those people, and they said no. I fought the issue for three 
days, and they removed me from the proposal team.
    Mr. Cummings. So, basically, what you are saying is that 
the contracted personnel and the Coast Guard personnel working 
on the C4ISR, the system, you are saying they weren't qualified 
to understand TEMPEST, TEMPEST requirements?
    Mr. DeKort. I am saying, sir, that the people who were 
involved at the time, who were working on the proposal at the 
time I was there, were not. What they were doing is since Aegis 
is a very large command and control system, a very complicated, 
large command and control system, I believe they were trying to 
leverage that expertise.
    The ironic part is C4ISR in these areas since it is all off 
the shelf, compared to Aegis is actually much easier to figure 
out. There is not a lot of complicated engineering. However, 
you still need to know what you are doing.
    Mr. Cummings. Overall, why do you think the 123s had so 
much difficulty achieving TEMPEST certification?
    Mr. DeKort. Because when you have 100 cables that are not 
the right type, I mean you run into problems.
    TEMPEST can be moderately difficult on a very small craft 
because of very tight space constraints. So a lot of 
engineering and thought has to be put into how do you co-locate 
systems that are red and black. Mr. Atkinson can explain later, 
but basically red and black are just classifications for the 
part of the system that is clear and unencrypted and the part 
of the system that is encrypted and not clear.
    Well, it is very difficult to do on a small ship, but to go 
the extra degree to not actually purchase the equipment that is 
very, very basic to TEMPEST requirements just starts you off at 
a very bad place. In DOD and the State Department, sir, 
everybody used the proper shielded cable. It was the backbone 
or one of the backbone items that you always do, and they 
didn't do it because of cost.
    Mr. Cummings. The Department of Homeland Security IG 
indicates that the contractor on the 123, Mr. DeKort, used 
aluminum mylar shielded cable as part of the cutter upgrade. 
The IG indicates that these cables met minimum Deepwater 
contract requirements for the shielded cable but do not have 
the mechanical durability of the braided metallic shielded 
cable.
    Do you know which type of cable the ICGS TEMPEST 
requirements document required?
    Mr. DeKort. Again, sir, this is going to get into an area 
where even I have a TEMPEST background relative to working on 
cryptographic equipment and systems, but you are getting into 
some particulars that are better left to Mr. Atkinson, but I 
can say that.
    Mr. Cummings. Well, let me ask you this. What type of 
cabling was installed on the 110s prior to their conversion?
    Mr. DeKort. I have been unable to determine that, sir. I 
was told that they had the braided shielded cable. Not only 
that but Mr. Braden can tell you that the braided shielded 
cable was used on his effort, not on mine or on the 123s, I 
should say.
    Mr. Cummings. Now you know Mr. Braden?
    Mr. DeKort. Yes, sir.
    Mr. Cummings. How did you come to know him?
    Mr. DeKort. We were both lead. We were both system engineer 
leads of our respective parts in the project.
    Mr. Cummings. So you worked with him.
    Mr. DeKort. There were occasions, sir, that we did. Mostly 
it was in program manager meetings. We actually didn't work 
side by side all the time.
    Mr. Cummings. Okay. Now did you raise the issue of 
noncompliance of the topside equipment on the 123s with senior 
Lockheed management?
    Mr. DeKort. All the way to the CEO and board of directors, 
sir.
    Mr. Cummings. All the way up to who?
    Mr. DeKort. The board of directors and the CEO of Lockheed 
Martin. I went up through my functional chain, the program 
management chain, the engineering chains and the ethics chains, 
all the way up to the CEO and board of directors.
    Mr. Cummings. When you say you went up to the CEO and board 
of directors, what do you mean by that? How did you do that?
    Mr. DeKort. I sent e-mails to Robert Stevens, at least two 
of them, and the board of directors, I sent a letter.
    Mr. Cummings. To the entire board.
    Mr. DeKort. Yes. Well, I sent it to a specific individual 
who I believe was the ethics officer on the board.
    Mr. Cummings. Did you discuss with anyone at Lockheed the 
need for noncompliance of the topside equipment with the 
Deepwater contract requirements to be noted on the DD-250s?
    If so, what was the outcome of those discussions?
    Mr. DeKort. I was told before the 123s, the first one 
delivered, the Matagorda, that every item that I had brought 
forth would either be repaired or clearly called down to DD-
250s as being a problem. The first time I actually saw the DD-
250s or was told what they contained was recently, and I 
understand it, the DD-250 for the Matagorda, that item does not 
show.
    Mr. Cummings. Why was topside equipment so crucial?
    Mr. DeKort. The topside equipment is all of the externally 
mounted equipment that supports the C4ISR systems. So for the 
communication systems, it is everything on the outside of the 
boat that you would need for the systems, usually antennas. But 
for sensors like radar, it is the radar antenna, and there is 
other equipment up there like amplifiers.
    For other vessels like the NSC and the FRC, there would be 
many, many more systems.
    Basically, the 123s had communications systems, they had 
sensor systems and they had navigation systems. So for those 
systems it was anything that those systems required to operate 
that was attached to the outside of the boat.
    Mr. Cummings. Let me ask you something. You mentioned a 
moment ago the word, ethics. You said something about an ethics 
complaint or complaints. Did you file complaints?
    Mr. DeKort. Three, there were three separate ethics 
investigations internal to Lockheed Martin conducted.
    Mr. Cummings. Were those with regard to the issues that you 
have just mentioned here?
    Mr. DeKort. Yes, sir, all of them.
    Mr. Cummings. Could you just tell us in a sentence or two 
what those were now?
    Mr. DeKort. The external equipment being able to survive 
the environment, the blind spots for the cameras, the low smoke 
cables and TEMPEST.
    The reason why the non-waterproof radio was not included is 
because, like I explain in my statement, they had actually 
swapped it out right before they delivered the Matagorda. So I 
did not include that in my ethics statement other than to say, 
look, any group who was willing to put a non-weatherproof radio 
in an exposed boat like that, something is wrong and something 
needs to be looked into and especially when they order more 
radios after you tell them it is a mistake. So it was an 
incidental item.
    Mr. Cummings. What happened with regard to those 
investigations?
    Mr. DeKort. The answer for the first one was literally the 
allegations all have no merit. They are all baseless, and we 
are not going to tell you why.
    Mr. Cummings. That was a response from the ethics officer?
    Mr. DeKort. It was from a John Shelton who was the ethics 
investigator for the Lockheed Martin organization out of 
Moorestown.
    And then after that, there were two more investigations. 
Every time they came back to me and said that my allegations 
were baseless, I asked who their boss was.
    Mr. Cummings. Then you still tried to go a step higher?
    Mr. DeKort. Yes, sir.
    Mr. Cummings. Now would Mr. Braden or anybody else have 
known of those?
    You said you worked with Mr. Braden. Would he have known 
about that?
    We will get to him a little later.
    Mr. DeKort. Would he have known that I necessarily filed an 
ethics?
    Mr. Cummings. Right.
    Mr. DeKort. Not that I was aware of, no, sir.
    Mr. Cummings. Did you see any evidence at Lockheed?
    You mentioned a little earlier something about 
underbidding. Is this a conclusion you came to?
    Mr. DeKort. Yes, sir. That is subjective on my part. It is 
an observation in being in DOD. It is aggressively bid. 
Projects are basically priced to win, and more often than not 
they turn out to be extremely aggressive which is usually a 
politically correct term for underbid.
    Mr. Cummings. Did anybody at Lockheed ever tell you to just 
get on with it?
    Mr. DeKort. Yes, sir.
    Mr. Cummings. Is that right?
    Mr. DeKort. Well, everybody I talked to. I mean my manager, 
my functional manager actually told me and so did some other 
people, but they said, you are doing the right thing here, but 
it is going to come back to bite you.
    Mr. Cummings. Say that again. I am sorry.
    Mr. DeKort. Several people including my manager at the time 
told me that I was doing the right thing, but it was going to 
come back to bite me.
    Mr. Cummings. Your immediate supervisor?
    Mr. DeKort. Yes, sir.
    Mr. Cummings. He knew you were doing the right thing, he 
told you.
    Mr. DeKort. That is what he told me, sir.
    Several engineers and program managers on the effort said 
the same thing.
    Mr. Cummings. Now you said that you left the 123 program, 
is that right?
    Mr. DeKort. I was removed from the program, yes.
    Mr. Cummings. How did that come about and when?
    Mr. DeKort. Roughly, January or February. I had sent an e-
mail or letter embedded in an e-mail at the time to the acting 
technical director for the engineering group, saying that I 
wanted to be removed from the project because they were going 
down a road that I just found intolerable.
    However, later on, I met with the VP of the organization, a 
man named Carl Bannar, and he told me everything would be 
resolved, and I said at that point, well, then I would like to 
recall my letter to be removed. If you are going to do the 
right thing, then I want to be part of the right thing. I want 
to see this project to conclusion. But, after that, they 
removed me anyway.
    Mr. Cummings. My last question, Mr. DeKort, you understand 
that today you are under oath, do you not?
    Mr. DeKort. Yes, sir, I am completely aware of that.
    Mr. Cummings. You know what that means?
    Mr. DeKort. It means I should tell you the truth.
    Mr. Cummings. And that you are telling the truth.
    Mr. DeKort. Yes, sir.
    Mr. Cummings. You understand that all kinds of agencies 
will probably review this transcript and some are probably 
looking at this right now?
    Mr. DeKort. I would hope that they do.
    Mr. Cummings. Would you tell us why you have come forward?
    Did they term you a whistleblower? I guess you know that.
    Mr. DeKort. Well, at its essence, I did not want a crew to 
come into harm's way down the road and to know that I could 
have done something about it. It is just that simple.
    My background is Navy, State Department, counterterrorism 
for a while. I have been in DOD programs since I was 18 years 
old in one capacity or another, okay. It is just real simple. I 
couldn't have that on my conscience.
    Mr. Cummings. Thank you very much.
    Mr. LaTourette?
    Mr. LaTourette. Thank you, Mr. Chairman, and thank you all 
for your testimony.
    Mr. DeKort, I made a note during the latter part of your 
responses to the Chairman that it is your allegation that 
Lockheed Martin didn't do the braided shielded cables, the low 
smoke cables, the proper environmental work on the topside and 
360 degree camera radius because of cost. Is that your 
observation?
    Mr. DeKort. I was told we didn't do the TEMPEST cables, the 
shielded cables, because of cost. The rest, to some degree, is 
an inference. Their response consistently was we are not going 
to slip schedule. We are not going to have more budget issues.
    And, to some degree because there was a relationship with 
Northrop Grumman that was extremely contentious at the time, 
and I will refer to it as playing chicken, they didn't want to 
fix the issues for any one or all of those reasons.
    Mr. LaTourette. I guess my question is this. My 
understanding, and we can quibble about the exact value of the 
contract, but this was about a $90 million contract to convert 
these 8 boats from 110s to 123s.
    Mr. DeKort. Yes, sir.
    Mr. LaTourette. Not being in the boat business, I would 
think that the big chunk of change was probably in extending 
the hulls. That is not where the big money is?
    Mr. DeKort. I have been told that the C4ISR proportionally 
was a larger part of the budget. I could be wrong.
    Mr. LaTourette. Okay, so let me get to that. Is it your 
understanding that low smoke cables were called for in the 
Deepwater contract that Lockheed Martin bid for?
    Mr. DeKort. Yes. Yes, sir.
    Mr. LaTourette. But they were not installed?
    Mr. DeKort. Yes, sir.
    Mr. LaTourette. Is it your understanding that they weren't 
installed because low smoke cables cost more than the cables 
that were installed?
    Mr. DeKort. Yes, sir.
    Mr. LaTourette. Is that the same with the braided shielded 
cables?
    Mr. DeKort. Yes, sir.
    Mr. LaTourette. And the weatherization or making sure that 
the antenna on the topside is the same as that?
    Mr. DeKort. It is more supposition because there wasn't. I 
don't know which one of those four issues was the overbearing 
reason for the environmental issue. What I am saying is in the 
others, somebody told me specifically cost. In that one, it was 
any one of the four or all four reasons.
    Mr. LaTourette. Just so I am clear, it is your testimony 
and allegation that the reason that Lockheed Martin didn't 
comply with the specifications that were in the Deepwater 
contract is because they wanted to install cheaper stuff?
    Mr. DeKort. Yes, sir. That is part of it, yes.
    Mr. LaTourette. You understand they say that is not so, 
right? So we are going to be stuck with a problem here sooner 
or later.
    Mr. DeKort. Objectively, sir, if you look at the equipment 
that they wound up delivering and the equipment that I wanted 
them to deliver, the equipment that I wanted them to deliver in 
every case is more expensive. So I don't think it is a leap.
    Mr. LaTourette. I guess I am trying to get expensive. They 
put some cables in.
    Mr. DeKort. Right.
    Mr. LaTourette. You are saying that the cables that the 
contract called for were more expensive. Are we talking on the 
scale of millions of dollars?
    Mr. DeKort. For the external equipment over, understand, 
sir, because it is system of systems, they were leveraging 
designs. So it very well could be millions of dollars. You know 
the 123 was establishing the pattern. So all the rest of the 
systems, they were contractually directed to make them common.
    So while it appears like a small issue for the 123s, 
understand that it was 49 123s and then every other boat they 
delivered. So it is millions of dollars spread out, yes, sir.
    Mr. LaTourette. Mr. Atkinson, to you, one, I want to thank 
you for your testimony and your charts because you truly did 
make the TEMPEST system understandable by people as dumb as I 
am, and I appreciate that. I now have an understanding. I 
thought that your explanation was a good one.
    To you, how did you get involved in this project to the 
point where you wrote us 128 or 138 pages of stuff?
    Mr. Atkinson. Sir, I was contacted by the Committee and 
asked to provide expert guidance as to how to query properly 
the Coast Guard and Lockheed Martin because the documents which 
had been produced to date, this is dating a month ago, were not 
answering the questions that the Committee needed answers, and 
I was asked to assist the Committee in demanding from the Coast 
Guard the relevant documents which the Department of Homeland 
Security OIG had failed to pick up on.
    TEMPEST is a very tricky matter. It is very easy for a 
defense contractor to ignore it. It is also very easy for them 
to conceal their ignorance of it or their ignoring of it.
    And I was engaged by this Committee. I have donated my time 
to this Committee to assist this Committee in finding the truth 
and by helping the Committee identify the documents that the 
Committee needed to conduct its business.
    Mr. LaTourette. Good, I appreciate that, and I think 
everybody on the Committee appreciates your willingness to 
donate and volunteer your time.
    I found the questions in your amendments. I assume those 
are the questions you are talking about that people need to ask 
to get the answers that you think need to be answered.
    Mr. Atkinson. Yes, sir. This Committee needs to ask all of 
those questions on the responsible players.
    Mr. LaTourette. Which brings me to the next part of my 
question, and that is the observations that you make in the 
first 36 odd pages of your testimony relative to the TEMPEST 
tests that were performed and how they were performed and how 
they weren't performed properly and things of that nature. That 
comes about not from an inspection of the systems on the 123. 
That comes about as a result of your examination of the 
documents that were obtained from the Coast Guard?
    Mr. Atkinson. Yes, sir. I advised the Committee on what 
documents to demand from the Coast Guard. The Coast Guard 
provided some of the documents, albeit reluctantly, to this 
Committee. I examined those documents. I found significant 
inconsistencies in those documents which I brought to this 
Committee's attention in the form of my written report.
    Mr. LaTourette. Right, and I saw that. But I guess my 
question to you is I don't know what people in the next panels 
are going to testify, but we have three more panels of people 
including the Coast Guard and people from Navy and so forth and 
so on.
    Based upon your field of study, your expertise, what you do 
for a living, if people come forward and testify under oath 
that, in fact, the TEMPEST tests were performed properly and 
that this system passed, is there any way in your opinion that 
they could give such an answer?
    Mr. Atkinson. Could I get you to repeat the question, sir?
    Mr. LaTourette. No. I don't remember the question.
    [Laughter.]
    Mr. LaTourette. The question is that as I read your 
testimony, you came to a conclusion that there is no way, but 
that this system wasn't properly tested, and you go to great 
lengths to tell us that.
    I don't know who is coming next. I know who is coming next. 
I don't know what they are going to say until they say it. But 
based upon the documents that you reviewed, is there any way 
that you believe someone could sit before this Committee and 
say that this system, these systems that were installed on the 
8 123s could pass the TEMPEST testing system?
    Mr. Atkinson. I will make the answer very straightforward.
    Mr. LaTourette. I would appreciate that.
    Mr. Atkinson. If anybody comes before this Committee and 
indicates that these ships protect national defense 
information, they are committing perjury.
    Mr. LaTourette. That is a very straightforward answer.
    Not to be lawyerly with you but since I don't know the 
TEMPEST tests the way that you do and you went to great lengths 
to talk about how it is appropriate or proper to make the tests 
of the TEMPEST system.
    What I am saying is if we have somebody who comes and says, 
you know what, I tested this TEMPEST system, and it meets the 
standard in the industry, the standard in the military, 
whatever the standard is. Can a person make such a claim based 
upon the knowledge that you have today?
    Mr. Atkinson. No, sir. All of the documents that were 
provided to the Committee stated in the Coast Guard's own 
documents that they failed the TEMPEST inspections and instead 
of correcting the deficiencies, they either ignored the 
deficiencies or they issue waivers to cover the deficiencies 
up.
    Mr. LaTourette. Right.
    Mr. Braden, to you, you have installed TEMPEST systems in 
other programs, have you?
    Mr. Braden. Yes, on the 270 foot cutters, the Legacy 
Cutters and also the design for the 210s and the 383s.
    Mr. LaTourette. To Mr. DeKort's observation, did you, in 
the installation of those systems, have a specification that 
called for these braided shielded cables?
    Mr. Braden. The specification is actually a standard, a 
TEMPEST standard, and as was mentioned before, I initially 
relied on a report from a Ms. Jo Agog who was asked to put 
together a list of criteria, if you will, for how a TEMPEST 
installation was to be done.
    The reason that I met with her to go over that document, 
although it was listed as a document for the 123s, is that some 
years ago I was product manager for a line of TEMPEST terminals 
sold to several national security agencies, and as a result I 
was familiar with TEMPEST requirements in a very detailed 
fashion at that time. A number of years went by. I wanted to 
make sure that the requirements had not changed.
    Mr. LaTourette. The requirement is braided shielded cables?
    Mr. Braden. The requirement consists of recommendations. In 
some cases, those recommendations give alternatives. Braided 
shielded cable is the preferred alternative for ensuring 
security with the cabling.
    Mr. LaTourette. Are you familiar with the cables that were 
installed on the 123 conversions?
    Mr. Braden. No.
    Mr. LaTourette. Do you know what they are called, Mr. 
DeKort?
    Mr. DeKort. The aluminum mylar cables.
    Mr. LaTourette. Aluminum mylar?
    Mr. DeKort. Yes, sir.
    Mr. LaTourette. Mr. Braden, is an aluminum mylar cable one 
of the alternatives that you had, do you know?
    Mr. Braden. It could be an alternative as long as it was 
confirmed that the aluminum mylar was properly shielded and 
that it gave a full coverage under all conditions. As was 
already mentioned, aluminum mylar is not recommended because of 
durability issues. So it would be more appropriate in internal 
compartments or places where movement isn't used.
    Mr. LaTourette. Let me ask you this. Do you know anything 
about what the difference is and how much 100 feet of braided 
shielded cable costs as opposed to how much the mylar aluminum 
cable costs?
    Mr. Braden. No. I couldn't say what the price difference 
is. It certainly is more expensive, but I think the key issue 
is that it is much harder to get schedule-wise.
    Mr. LaTourette. It is harder to get because of the 
manufacturer?
    Mr. Braden. From a schedule, from a schedule standpoint, it 
is not the common ordinary cable that you can buy at CompUSA.
    Mr. LaTourette. But you could buy mylar aluminum cable?
    Mr. Braden. Oh, absolutely, you can get it at almost any 
outlet.
    Mr. LaTourette. You worked for Lockheed Martin for 30 
years?
    Mr. Braden. Yes.
    Mr. LaTourette. Have you experienced a situation where the 
company has made a determination on cable that has the ability 
to be detrimental to national security just based on how much 
it costs?
    Mr. Braden. I have never seen that before.
    Mr. LaTourette. What about scheduling?
    Mr. Braden. I have seen a lot of pressure on schedule in 
many programs.
    Mr. LaTourette. Well, I am sure you have seen pressures, 
but where a decision was made. The allegation that Mr. DeKort, 
I think, is making is his testimony is that part of it was cost 
and part of it was not wanting to get behind schedule. They 
were going to get behind schedule on the stuff.
    Have you experienced the same experiences that Mr. DeKort 
has testified to in any of the work that you have done for the 
company?
    Mr. Braden. On the Deepwater program, I did experience 
intense pressure on both schedule and cost as I stated in my 
opening statement. My project was a fixed price contract, and 
so there was a fair amount of scrutiny on every issue 
associated with cost.
    Mr. LaTourette. Last question, not to be lawyerly with you, 
but did that pressure on cost and schedule cause you or others 
that you worked with to do something that you knew violated 
either the specs or created a situation on the TEMPEST system 
that was likely, as Mr. Atkinson has testified, to be 
vulnerable to leaking national secrets?
    Mr. Braden. I didn't allow that to happen. I had a bit more 
oversight of my program than Mr. DeKort did, a little more 
independence in decision-making, and as a result we implemented 
our system totally correctly.
    Mr. LaTourette. Were you ever asked to do what Mr. DeKort 
says he was asked to do?
    Mr. Braden. No.
    Mr. LaTourette. Okay, thank you very much, Mr. Chairman.
    Mr. Cummings. Thank you very much.
    As we go to Mr. Oberstar, in fairness to Lockheed Martin 
and to the contract team, Mr. Atkinson, you said in the answer 
to a question about if someone were to say that TEMPEST 
certification was done here with these boats, that they would 
be committing perjury. Is that what you said?
    Mr. Atkinson. Yes, sir.
    Mr. Cummings. Could it be that maybe they just didn't know?
    I just want to be fair.
    Mr. Atkinson. Well, let me be very precise on this. In the 
delivery task order that the Coast Guard issued to purchase 
these ships, they listed only one TEMPEST specification, one. 
There is book roughly that thick. It is called MIL Handbook 
232A Red/Black Engineering. I have a copy of it in front of me. 
That was the only document that the United States Coast Guard 
provided to Lockheed Martin as part of the delivery order.
    The United States Coast Guard did not ask for TEMPEST 
ships. They did not ask for these ships to pass classified 
information. I have it right in front of me, documents which 
this Committee has in their possession that irrefutably show 
these ships would not have complied with TEMPEST when they were 
delivered from the contract the Coast Guard gave Lockheed 
Martin.
    Mr. Cummings. Thank you.
    Mr. Oberstar?
    Mr. Oberstar. Mr. Braden, you knew Mr. DeKort during the 
Deepwater program?
    Mr. Braden. Yes, I did.
    Mr. Oberstar. Were you aware of the problems Mr. DeKort 
raised with 123s and how did you come to know about those 
problems?
    Mr. Braden. Well, I was aware of them because of the weekly 
integration team meetings that we had. Many of the issues on 
all the assets were discussed openly, and presentations were 
given by the various lead members, and we would hear issues 
that were trying to be resolved across the entire program.
    Mr. Oberstar. Did you discuss at length the issue of non-
low smoke cabling, cameras that did not provide 360 degree 
coverage, problems with TEMPEST hardware?
    For the record, Mr. Chairman, we have been using this term, 
but it is Telecom Electronics Material Protected from Emanating 
Spurious Transmissions. I may have said that earlier, but I 
think we need to get that on the record because it is a term 
frequently used and it has a very ominous sound to it.
    And non-weatherproof topside equipment, did you discuss 
those matters?
    Mr. Braden. I had occasion to speak on a couple of those 
matters with Mr. DeKort, and that was as a result of an 
integration team meeting we had where I had presented the 
approach that we were using for the Legacy Cutters for our 
certification and accreditation. I was approached after that 
meeting by Mr. DeKort who quizzed me on what we were doing on 
those issues.
    We did not talk about the radios or environmental issues. 
We primarily talked about cabling and TEMPEST issues, that was 
the nature of the conversation, and I related to him what we 
were doing on my cutters.
    Mr. Oberstar. Are you aware of the cabling issue on 
aircraft in the 1980s and 1990s where chafing occurred in the 
bundles of cables on aircraft?
    Mr. Braden. Yes, I have read about it.
    Mr. Oberstar. I am talking about commercial aircraft.
    Mr. Braden. Yes, right.
    Mr. Oberstar. You are aware of that?
    Mr. Braden. Yes.
    Mr. Oberstar. It was similar mylar aluminum non-shielded 
cable. Chafing that occurred inside aircraft resulted in 
wearing away of the shield, the protective mylar covering that 
then resulted in sparking with surge of very low voltage 
through those wires that then caused fire and caused aircraft 
damage and failure. Are you aware of all that?
    Mr. Braden. Yes. Yes, I am.
    Mr. Oberstar. So you understand what the Coast Guard was 
doing in this case when it did not install the proper cabling, 
right?
    Mr. Braden. I believe that the analogy you gave is 
appropriate in a hazardous situation. In the implementation of 
network cabling, at least for the assets that I was responsible 
for, all that cabling was routed through benign areas where no 
hazard would occur if the cable had been chafed. But I do 
understand your point.
    Mr. Oberstar. Making a leap from the hazard to a different 
kind of hazard of leakage of signal, that is the real issue 
here.
    Mr. Braden. Yes, I believe so.
    Mr. Oberstar. You knew about Mr. DeKort raising his 
concerns to Lockheed?
    Mr. Braden. Well, I learned about them through his YouTube 
video which was widely viewed by many employees, and that is 
where I first learned of his allegations.
    Mr. Oberstar. You said your program, the upgrade of the 270 
foot cutters, was successful.
    Mr. Braden. Yes.
    Mr. Oberstar. What cabling did you install there?
    Mr. Braden. We installed shielded braided cable. In some 
instances, we installed fiber optic cable in instances where we 
went from secure compartments to compartments, and we armor 
jacketed that cable to prevent intrusion in non-secured 
locations on the ship, and we also specified low smoke, zero 
halogen jackets on all the cabling.
    Mr. Oberstar. Why were you able to install the more TEMPEST 
standard cabling on the 270 Legacy Cutters?
    Mr. Braden. I can't say explicitly why that was, but I can 
say that the attention of most of the program and the 
management staff was attending to the 123 in terms of its 
schedule difficulties, and more or less I guess I was left 
alone to do it right.
    Mr. Oberstar. Why would the more secure cabling go onto one 
class of vessel and not on the other?
    Mr. Braden. I really can't answer that question. I don't 
know why that would be.
    Mr. Oberstar. But you knew it was happening, and you saw 
the dangers?
    Mr. Braden. Well, I had heard that it had. It was one of 
the items that had been raised, but I think, as Mr. DeKort has 
stated, these are, during the course of any project, there are 
problems. These problems are usually mitigated or removed as 
the course of the program goes on, and I, my team was very, 
very busy meeting our aggressive schedule. I did not have time 
to go investigate personally whether anyone had taken action on 
these or not.
    Mr. Oberstar. Were you asked to use aluminum mylar cable, 
and if you had been, would you have used it on the 270s?
    Mr. Braden. Where appropriate, I would have used it, yes.
    Mr. Oberstar. Now I want to come to the testing. There are 
visual tests and instrument tests. Did the 270 cutters pass the 
visual and then, subsequently, the instrument tests?
    Mr. Braden. We passed the visual on the second cutter.
    The first cutter, we retrofit, and the reason for that is 
that the cabling that we had ordered for the fiber optic 
connections and some of the other connections was a custom 
cable that was being manufactured for us by a firm in Virginia. 
There was a hurricane that hit and pulled the roof off of that 
factory. That caused delays in that cable.
    With the total agreement of the Coast Guard, we went ahead 
with a first installation and planned to retrofit it with the 
higher quality cable at a later date which was subsequently 
done. The visual inspection noted those discrepancies. They 
accepted them on the Interim Authority to Operate, and we did 
replace that cable.
    On the second cutter, we fully passed all visual 
inspections and all subsequent.
    Mr. Oberstar. Then subsequent should be the instrumented 
inspection and testing.
    Mr. Braden. Yes, yes, and I left the program before that 
instrumented test had been performed on the first cutter.
    Mr. Oberstar. Now the IG at the Department of Homeland 
Security has confirmed that the contractor failed to install 
non-low smoke cabling and failed to install topside equipment 
that would function in all weather conditions. How could that 
have happened?
    Mr. Braden. I really can't explain how that would have 
taken place.
    Mr. Oberstar. Did you raise your concerns about the cable 
installation with Lockheed management?
    Mr. Braden. I had discussed with our technical director, 
some of the issues that had come up in the reviews regarding 
the 123, and I discussed them with him only in the sense that I 
was expressing my concern that they really needed to deal with 
them so that we wouldn't keep talking about them.
    Mr. Oberstar. Did you feel that this rose to the level of 
an ethics question and did you file an ethics investigation?
    Mr. Braden. I didn't feel it did at that time, no.
    I subsequently did file an ethics investigation concern at 
a later date.
    Mr. Oberstar. To whom or to which level did you file that?
    Mr. Braden. The ethics office at Lockheed Martin, 
Moorestown.
    Mr. Oberstar. What action was taken subsequent to the 
filing of that?
    Mr. Braden. I received no response.
    Mr. Oberstar. Nothing?
    Mr. Braden. Nothing.
    Mr. Oberstar. Do you know any outcome of any action taken 
later?
    Mr. Braden. Only supposition on my part. One of the 
concerns I had had to do with an employee morale program that 
had not been followed through with, and I suggested that the 
ethics officer might want to contact our HR department to 
reinstate the employee award program, and about one month after 
that, the award program was reinstated. Now I don't know 
whether that was a result of my conversation or just a normal 
course of events.
    Mr. Oberstar. To the best of your knowledge, that is the 
only follow-up that occurred.
    Mr. Braden. That is the best guess I have, and that is it.
    Mr. Oberstar. I will have further questions later. Thank 
you very much.
    Mr. Cummings. Mr. LoBiondo?
    Mr. LoBiondo. Thank you, Mr. Chairman, very much. I want to 
commend you for holding this hearing.
    I think it is absolutely imperative that we try to get to 
the bottom of the situation. I am hoping that we are going to 
hear something about the buckling hulls. I may ask that in a 
couple of minutes.
    But I wanted to say that while I think this hearing today 
is very important, I think it is equally important that we not 
lose sight of the fact that the Coast Guard currently operates 
the second oldest fleet of vessels and aircraft in the world, 
and that was the purpose of operation Deepwater. Some of these 
assets are over 60 years old. They are rapidly failing. 
Operations tempo continues to increase. Service-wide readiness 
is now. Hundreds of patrol days are being lost annually.
    Probably, most importantly, the safety of the men and women 
of the Coast Guard who operate these assets are more in danger, 
I think, every day. The success of the Coast Guard's many vital 
missions, I think, are in serious jeopardy.
    As we move through this, I just hope that we can keep in 
sight that it is critically important that the service get 
these aging assets replaced with fully functioning and capable 
assets and as soon as possible.
    I would hope that we remember the videos of the Gulf 
hurricanes of Katrina and Rita and the job that the Coast Guard 
did. However miserably the Federal Government failed, no one 
faulted the Coast Guard. Part of the ability of the Coast Guard 
to perform so admirably at that time was the result of the 
Deepwater program and the upgrade of communications. Thousands 
upon thousands of lives were saved in that whole process.
    I am very pleased with Admiral Allen's decision yesterday. 
I think it was very proactive. I think it will help rein in 
control of this program, and it is a serious situation that 
needs to be fixed. I have a lot of confidence in Admiral Allen.
    I have a very serious regret that Admiral Allen did not get 
his hands on the helm sooner than what he did. I will leave it 
at that.
    I will say to my colleagues that I know this situation 
makes it pretty easy for us to throw our hands up and to walk 
away from Deepwater and to say that it is fatally flawed and it 
has got to be scrapped, but I plead with you not to turn your 
back on the men and women of the Coast Guard, those young men 
and women who are heroes every day, who are putting their lives 
on the line for us in so many different ways and are depending 
on us to come up with a solution that meets the challenges of 
the problems we are hearing about today but still finds a way 
to give them a replacement of the assets. So the safety and 
success of their missions depend on the replacement of these 
assets, and it is our job to make sure that we do the best 
possible.
    Mr. Chairman, I once again commend you and Mr. Oberstar for 
really getting at the heart of this problem, and I hope we can 
get to a point where we can move forward. I thank you very 
much.
    I will later on try to ask some questions about the 
buckling of the hulls. I don't know when that is an appropriate 
time.
    Mr. Cummings. It would probably be good when we have the 
Coast Guard up.
    Let me just say, Mr. LoBiondo, there is not one syllable, 
not one syllable that you just stated that I disagree with. We 
all are trying to get and make sure that the Coast Guard has 
equipment so that they can do the great job like they did down 
in Katrina and the things that they do everyday, the largest 
seizure that they have ever had in their history just recently 
taken place.
    This is all a part of making sure, and I agree with you, 
that we want them to have that equipment, but we want that 
equipment to be safe and we want it to be safe for our 
personnel, Again, as I said a little earlier, we just want 
ships that float, planes that fly, just what we contracted for.
    Before we get to Mr. DeFazio, I just have one quick 
question.
    Mr. Braden, just in follow-up to Chairman Oberstar's 
question, he asked you whether you would use aluminum mylar 
shielded cable, and you said, in certain instances. Is that 
correct?
    Mr. Braden. Yes.
    Mr. Cummings. Let me ask you this. Would you have used the 
in secure situations where we were trying to make sure that 
there was no eavesdropping, the very thing that Mr. DeKort 
complained about? I think that is the question.
    If you had been asked to use that kind of cabling under the 
circumstances that Mr. DeKort complained about, would you have 
used it?
    Mr. Braden. That is a difficult question to answer because 
the application of the cabling is also dependent on the type of 
compartment that you install it in and whether it is a totally 
shielded and contained and properly grounded compartment.
    What I mean by that, and I am sure Mr. Atkinson can lend 
more detail to this, if I have a piece of equipment that is 
totally contained within a shielded enclosure and it is sharing 
that enclosure with other equipment of its same classification 
level and the same network connection and connectivity. Then if 
that cable is properly grounded, shielded, then yes, the mylar 
cable would be acceptable in that instance.
    Mr. Cummings. I see you shaking your head, Mr. Atkinson.
    Mr. Atkinson. Yes, sir. If you build a cabinet that 
contains classified equipment and the cabinet itself is TEMPEST 
certified, you can take an uncertified piece of equipment, put 
it inside this cabinet and it will provide some level of 
protection. A very common thing is to take a printer or a 
plotter or a certain type of computer that there is no TEMPEST 
equivalent of and to encapsulate it inside of a TEMPEST box or 
a TEMPEST shield which now renders it protected.
    We can do the same thing with cables where we can use a 
non-TEMPEST involved cable to hook up something that is put 
into a box which is itself is protected, and we have to be very 
careful what we put into this box because some things we put in 
this box will cause TEMPEST hazards to occur.
    Mr. Cummings. From all the records that you have read, 
would you agree with Mr. DeKort?
    Mr. Atkinson. In what regard?
    Mr. Cummings. With regard to his complaints about the 
aluminum mylar shielded cable and that it should not have been 
used?
    Mr. Atkinson. Yes, sir. I have actually researched the 
cable that he is referring to and found Coast Guard records in 
regards to them and have identified that we are talking at a 
difference of about $20 for the cable.
    Mr. Cummings. Mr. DeFazio?
    Mr. Oberstar. Would the gentleman yield before he gets to 
his questions?
    Mr. DeFazio. I would certainly yield to the Chairman.
    Mr. Oberstar. Thank you.
    I just want to reassure the gentleman from New Jersey who 
served for a long time as the Chair of the Coast Guard 
Subcommittee that our purpose is not a public hanging. We are 
here to try to fix the underlying problems in the Coast Guard's 
management of its contractual responsibilities to deliver on 
the program that the gentleman played a large part in 
authorizing for the Coast Guard just as we have done over many 
years when I chaired the Aviation Subcommittee and the 
Investigations and Oversight Subcommittee to get FAA on the 
right track, learn how to manage multibillion contracts and 
then fund those programs.
    I assure the gentleman that is the purpose of this hearing, 
to go to the core of the problems uncovered here, fix them and 
then report out a robust Coast Guard authorization program so 
they can fix those old ships and have the equipment they need 
to carry out the many responsibilities we have loaded upon 
them.
    Mr. LoBiondo. Would the gentleman yield for a moment?
    Mr. Oberstar. I yield back.
    Mr. LoBiondo. Mr. Oberstar, I applaud your efforts. I in no 
way meant to intimate that that was the case, but my concern 
was from some other colleagues who are not on the Committee, 
who have just in casual conversation said to me, we ought to 
just scrap the program.
    Mr. Oberstar. No.
    Mr. LoBiondo. I don't think they understand what scrapping 
the program would mean.
    Mr. Oberstar. I just want to reassure the gentleman. We are 
on the same wave.
    Mr. LoBiondo. Okay, we are in synchronization. Thank you, 
Mr. Oberstar.
    Mr. DeFazio. I would certainly second those comments. Ten 
years ago as Ranking Member on the Coast Guard Subcommittee, I 
became very well aware of and was a strong advocate for 
increased funding and new equipment for the Coast Guard. I had 
one of the antique ships in the Coast Guard serving my district 
for a while, and I am well aware of that problem. But it was 
only after 9/11 that Congress and this Administration began to 
recognize the need, and Katrina certainly highlighted the 
efficiency and valor of the Coast Guard.
    None of that is in question here today, but there are 
extraordinary questions about how we got to this point.
    I guess I am going to direct most of my questions to Mr. 
Sampson, and I will be questioning the buckling and the design 
on the 123s which the former Chairman hoped we would get to. I 
have been waiting to get to it too. I am not much of an 
electronics guy, but I am and have been a lifelong sailor and 
boat owner.
    Mr. Sampson, these will be directed to you, but just keep 
this in mind as I ask you the questions. This is a statement 
that will come after you have left, and I want to give you an 
opportunity to respond to it in your responses to me.
    Mr. James Anton, Vice President, Deepwater Program, 
Northrop Grumman Ship Systems, if you look at page two of his 
testimony, he says: HBJV added a 13 foot extension to the 110 
which was similar to the 9 foot extension they had successfully 
added to the Cyclone Patrol Boats starting in 2000--no mention 
there of the early problems with those extensions, but he does 
say they were successful.
    He goes on further on that page to talk about hull 
deterioration.
    He goes on page three to talk about the ships being 
operated in seas beyond their design capacity.
    He goes on, on page four, to say that an outside 
engineering firm designers and planners engaged by the Coast 
Guard, analysis showed the overall hull structure design was 
adequate under all expected operating conditions up to the 
worst operating condition modeled.
    Then in summary, he says it is premature to speculate on 
the final cause and final way forward.
    I assume you probably don't agree too much with that 
analysis of those remarks.
    Mr. Sampson. No, sir, I don't. There are several different 
perspectives that I would like to address. I haven't had the 
opportunity to read the comment that you are discussing. I 
wrote down some quick notes, so if there is something there 
that I missed, please remind me and I will feel free to 
discuss.
    In regards to the Navy's experience with the PCs, I want to 
make sure it is very clear. CCD, Combatant Craft, emphasized to 
the Coast Guard as well as Bollinger Shipyard because this was 
kind of a misconception among many that Bollinger Shipyard 
built the 110. They built the 170. They did the extension.
    What never appears to come to the surface is the fact that 
Combatant Craft Division was the one that did the entire design 
work for the extension. The failures that occurred were 
actually prior to the ones when the 170s were first built. When 
the PCs were first delivered, they started failing immediately.
    That was a function of, after extensive investigation, 
Combatant Craft came to the position that the 1997 ABS rules, 
high speed craft rules with which the PCs were built to had 
underpredicted what they call a dynamic loading condition. The 
ABS later in their high speed naval craft code did correct this 
based on that experience. It was a known issue to ABS, to 
Combatant Craft, and we made that very clear to Bollinger 
Shipyard.
    Mr. DeFazio. Is that what you discussed with Mr. Debu Ghosh 
on 9/3/02?
    Mr. Sampson. That was one of the topics, yes, sir. Yes, 
sir.
    Mr. DeFazio. Okay, go ahead.
    Mr. Sampson. The Combatant Craft, when they did the design 
work, Bollinger is a great fabricator. However, they did not 
facilitate the engineering. Production details, things of that 
nature, but the actual first extension was not performed by 
Bollinger to my understanding. It was actually by another 
shipyard. So they did not perform the engineering. That 
expertise resided with CCD.
    During that 9/3 meeting with Mr. Ghosh, we emphasized to 
him that this was not a simple evolution, that the design was 
very complex. The PC went from a 5 percent length increase of 9 
feet as compared to the 123 or the 110 which added 13 feet to 
12 percent increase. This is a substantial, substantial 
increase in length.
    As a result of that, the rules that were being used or we 
were told were being used for the 110/123 conversion were 
these, what CCD felt were flawed rules of ABS, the 1997 high 
speed craft code.
    Mr. DeFazio. So that was probably the point at which you or 
the Navy CCD offered to provide some design and engineering 
support to Bollinger, Northrop Grumman or the Coast Guard on 
the conversions?
    Mr. Sampson. Yes, sir. Let me make it clear. CCD did not go 
out and necessary try. Combatant Craft is a capital-funded 
program. So, in essence, we are like a contractor. We have to 
go out and sell our services.
    Mr. DeFazio. Right.
    Mr. Sampson. So I can't voluntarily, but.
    Mr. DeFazio. But you made an offer.
    Mr. Sampson. We informed the parties involved, yes, sir.
    Mr. DeFazio. I believe it was not particularly spending in 
terms of how much money has been wasted here. What would the 
costs have been?
    Mr. Sampson. Just for oversight to determine if a problem 
existed would have been $42,000.
    Mr. DeFazio. Forty-two thousand dollars?
    Mr. Sampson. Yes, sir.
    Mr. DeFazio. How much did we spend per ship conversion?
    Mr. Sampson. A lot more than that, yes, sir. I am not aware 
of the exact number.
    Mr. DeFazio. Okay. But that offer was declined.
    Mr. Sampson. Yes, sir.
    Mr. DeFazio. Okay. Was there any particular reason given 
for declining that offer?
    Mr. Sampson. No, sir.
    Mr. DeFazio. Okay. Then you went to the Coast Guard.
    Mr. Sampson. Well, the order that we talked. We had talked 
with Mr. Ghosh first.
    Mr. DeFazio. Right.
    Mr. Sampson. Then we talked to the Deepwater Program Office 
up in Washington, D.C. Talked to Ms. Diane Burton and another 
gentleman. For the of me, I can't remember his name, but I 
remember him as a program manager. I don't recall if he was 
specific to the 123 or in total. Explained the situation to 
them.
    Ms. Burton, being a former NAVC employee, I think, 
understood some of our concerns. However, the discussion was 
very short and thank you very much, and we never heard anything 
further from them.
    Northrop Grumman, Combatant Craft did not contact directly. 
However, Bill Moss, who is our point of contact for the 
Carderock Division, did provide a capabilities brief to 
Northrop Grumman to explain what the Navy had to offer them, 
but specific to the 123, nothing was mentioned.
    Mr. DeFazio. Do you think that there is any possibility 
that Mr. Anton who raises these other issues was aware of these 
concerns as a Northrop Grumman executive?
    Mr. Sampson. I have no idea, sir.
    Mr. DeFazio. Perhaps he will be asked that on the next 
panel under oath and why action wasn't taken.
    I have got to jump ahead here because the time is valuable 
and we have been holding people on time.
    This is, I think, a critical question because there was 
some concern raised earlier by Mr. Mica that we are plowing old 
ground and that, in fact, this has all come out before. Did Mr. 
Casamassina of Navy CCD warn the Coast Guard that it was in 
danger of losing a ship if the hull cracking problem was not 
corrected?
    Mr. Sampson. I don't have firsthand knowledge of that 
specific conversation or those words were used. I do, however, 
know that Mr. Casamassina and myself talked at length to the 
Coast Guard and Bollinger and explained the severity of the 
situation, and we felt confident that they understood that.
    Mr. DeFazio. Apparently, the Navy did give us that 
statement that they afforded that warning, but I thought you 
had knowledge of it.
    Mr. Sampson. Not that specific phone call.
    Mr. DeFazio. You had conversations similar to that with Mr. 
Casamassina.
    Mr. Sampson. Yes, sir.
    Mr. DeFazio. So the risk here was catastrophic failure, 
hull failure, loss of the ship, potentially loss of life?
    Mr. Sampson. Potentially, yes, sir.
    Mr. DeFazio. Then, finally, it is our understanding the 
Coast Guard made two efforts to fix the 123s after the problems 
with the decks appeared. Did the Coast Guard consult with CCD 
on these proposed fixes that you are aware of?
    Mr. Sampson. I, as employed by the Coast Guard, did consult 
with CCD but purely on a professional peer level.
    Mr. DeFazio. Right.
    Mr. Sampson. Having worked with them, I consulted them and 
asked them their thoughts or to confirm what I was suspecting 
or believing which they provided to me as a personal interest 
that, yes, these fixes were not going to work. However, there 
was no direct involvement, to my knowledge, between CCD and 
parts.
    Mr. DeFazio. Did you report that up the chain, that these 
proposed fixes were not likely to work according to your 
consultation with CCD?
    Mr. Sampson. Absolutely. My command, the Maintenance and 
Logistics Command Atlantic voiced those concerns repeatedly.
    Mr. DeFazio. But they went ahead anyway.
    Mr. Sampson. Yes, sir.
    Mr. DeFazio. And they didn't work.
    Mr. Sampson. Correct.
    Mr. DeFazio. Well, so none of the efforts to fix the 123s 
succeeded. Would you then disagree with Mr. Anton's statement 
that it is premature to speculate on the final cause and the 
way forward of the failure?
    You think we know the cause?
    Mr. Sampson. I think there is a strong case to be made that 
the cause is due to the hull strength or the hull girder issue. 
The localized failures that have occurred on deck and some 
other places were, in my opinion, a result of the modifications 
where they just moved stress from one location to another. The 
actual initial failure of the Matagorda was a clear classical 
failure due to bending.
    Mr. DeFazio. Mr. Chairman, I want to thank you for the 
generous grant of time and for your leadership on this issue.
    I do want to say in closing that Mr. DeKort in his 
testimony said that and he was referring to a number of things 
here, that these were actually informed and deliberate acts. I 
hope if through our investigation we find that any of these 
acts were informed and deliberate, that both defrauded the 
taxpayers and jeopardized national security and potentially 
jeopardized the health and safety of our Coast Guard crews, 
that we will be providing all of that to the Justice 
Department. I hope that maybe some of those responsible could 
enjoy Federal hospitality.
    Mr. Cummings. Thank you very much.
    I take it, Mr. Sampson, that you did not believe.
    I have seen the ships. I saw them last Thursday, and I can 
tell you they are a mess.
    Mr. Sampson. Yes, sir.
    Mr. Cummings. Have you see them?
    Mr. Sampson. Yes, sir. I have done extensive investigations 
and inspections on those craft.
    Mr. Cummings. The amazing thing is that I thought we were 
talking about a big ship. Some of these boats are not as big as 
some yachts.
    Mr. Sampson. Yes, sir.
    Mr. Cummings. It is incredible, and they so happen to be in 
Baltimore where I live. So I happen to be there, and I wanted 
to go see them.
    But, anyway, I am sorry, Mr. Gilchrest.
    Mr. Gilchrest. Thank you very much, Mr. Chairman.
    I too want to make sure that that Coastie who is today 
similar to Gene Taylor 30 years ago, whether they are breaking 
ice to McMurdo. Maybe 10 years ago, I don't know when Gene 
Taylor was in the Coast Guard. When those are Coasties are 
breaking ice to McMurdo Station in the Antarctic on that ship, 
when they are at Cape Disappointment rescuing people, when they 
are in the Gulf of Alaska because a crab boat is in trouble, or 
the Chesapeake Bay, or these guys are out there determining 
international standards at the IMO in London, it is an 
extraordinary service.
    But I do remember a time 40 years ago when I was using an 
M-14 in Vietnam. It worked every time we pulled the trigger. 
Sadly, we had to pull the trigger occasionally. Rain, monsoons, 
heat, mud, you name it.
    We were given an M16, about February of 1967, and it didn't 
work. Who was responsible for that?
    In 1967, these young men, like we have now in Iraq and in 
Afghanistan, assume the chain of command is competent.
    We are here to praise the stunning abilities of the Coast 
Guard people, and we also want to find out the chain of command 
that whomever and wherever it is that changed the basic 
physics. They changed the physics of the boat when they wanted 
to put in some add-ons which would have made it more 
serviceable under certain conditions. But they changed the 
physics of the boat.
    So who was responsible for proving that chain up the chain 
of command including everybody and the contractors?
    I am glad the Chairman is holding this hearing. We are not 
here to unfairly reprimand anybody, but we would like to know 
how this came about that we have eight boats now that don't 
work.
    Mr. Sampson, did the Coast Guard consult with the Navy 
engineers when reviewing the proposed design of the 110 foot 
patrol boat conversion?
    Mr. Sampson. No, sir, they didn't necessarily consult us. 
We at CCD did notify them of our experience with the PC and the 
lessons learned, and we shared that with the Coast Guard 
voluntarily.
    Mr. Gilchrest. There was a basic consultation that took 
place.
    Mr. Sampson. Yes, sir. On that 3rd of September with Mr. 
Ghosh in addition to the Deepwater Program Office, we shared 
that we had extensive knowledge and experience with this type 
of design and modification and that they were at very high risk 
of failure if they were to proceed.
    Mr. Gilchrest. What were the specific concerns that would 
cause the high rate of failure if they proceeded?
    Mr. Sampson. As I stated earlier, that ABS 1997 high speed 
craft rules, that uses two methods of prediction for the 
strength of the boat. One is a static-loading. One is a 
dynamic-loading. The 1997 rules underpredicted the dynamic 
loading. As a result, the static was a driving factor according 
to that rule set.
    Combatant Craft, through investigation, realized that that 
was actually not the case, and they used another classification 
society's rules in conjunction with some additional 
calculations to determine the actual correct strength that the 
vessel had to be. Because of that, we cautioned the Coast Guard 
extensively because we knew they were going to use that, the 
old set of ABS rules.
    Mr. Gilchrest. Did they take your caution seriously?
    Mr. Sampson. I felt, we felt that they understood our 
concerns. I do not know what they did with our information. Mr. 
Ghosh certainly tried to, I think understood, and he tried to 
hire us to provide.
    Mr. Gilchrest. But you don't know if those recommendations 
were followed through by anybody in the Coast Guard?
    Mr. Sampson. Eventually, they weren't, sir, because the 
boats were built as proposed.
    We also shared--real quick, sir--that when you lengthen a 
boat, those bending moments, that static bending and dynamic 
loading, those are affected primarily by the length of the 
vessel, and the dynamic also has a speed component. But the 
length of the vessel is a significant contributor to that 
bending force. And so, when you lengthen a boat by 12 percent, 
that is a tremendous length increase for that size craft, and 
so you have to add strength to the vessel, vessels that are 
high speed craft such as the 110.
    Mr. Gilchrest. So strength was not added to the vessel?
    Mr. Sampson. No, sir, not at all.
    Mr. Gilchrest. Can you just tell us--I know my time is up, 
why wasn't strength added to the vessel if those 
recommendations were made?
    Mr. Sampson. The only thing that I can speculate, sir, is 
that the static condition was a driving factor, and they felt 
they complied with that static condition. Other than that, I 
have no idea, sir.
    Mr. Gilchrest. I see. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Cummings. Thank you.
    Mr. Taylor?
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Sampson, I want to follow up on what you were just 
touching on because I have heard now three different 
explanations for the 110 problems.
    First, I was told they never did hogging and sagging 
calculations. Then I was told, yeah, we did them, but we didn't 
figure in fatigue. Yeah, we figured in fatigue, but we 
misjudged the steel.
    Apparently, the initial hull had some high tensile steel. 
Apparently, it got a Made in U.S.A. waiver. I am told it was 
from England, but I am told no one ever tested it on the 
initial building of the hull and that, like you said, when the 
hull is only 110 feet and you stress between two waves, you 
didn't have the hogging and sagging problem. You make it 123 
feet, get between two waves, and you have substantial problems.
    My question to you is since I am getting so many different 
stories from people who ought to hopefully be telling me the 
truth and since we have now got eight ruined ships, $40 million 
down the drain. To my knowledge, no one has been fired. To my 
knowledge, no one has claimed responsibility. I can assure you 
if this had happened in the private sector, a bunch of people 
would have been fired by now.
    So what do you think happened?
    Mr. Sampson. Sir, you bring up some good points.
    Mr. Taylor. I also want to say, Mr. Cummings, if you owned 
a crew boat, a boat that takes people out to an off-shore oil 
rig and you wanted to stretch that crew boat and still have it 
certified to carry passengers, the Coast Guard would have run 
the tests before they ever recertified that vessel again. So it 
is absolutely crazy that something they do every day in judging 
the private sector, they apparently didn't do for themselves, 
and no on has ever answered that question.
    Mr. Sampson. Sir, I think to clarify, I think there are 
some issues there that may have been crossed over. The metal 
fatigue and the material properties were things that were 
subsequently looked at well after the Matagorda failed. Those 
were things that were addressed after the fixes did not work in 
the hopes to try to figure out exactly what transpired.
    Mr. Taylor. To the point I was told they never looked at 
metal fatigue in the beginning when they were running the 
hogging and sagging calculations. Is that true?
    Mr. Sampson. That, I am not aware of, but I would suspect 
that is the case.
    Mr. Taylor. Did they run hogging and sagging calculations 
up front just like they would have if a crew boat operator had 
gone to them, wanting to stretch their vessel?
    Mr. Sampson. Mr. Ghosh would probably be the best one to 
answer that, sir. My understanding is they did, and there were 
some errors in those calculations, but he would give you a 
definitive answer on that, sir.
    Mr. Taylor. Did anyone ever test the steel that I am told 
came from England which probably would have required a Made in 
U.S.A. waiver and that, if we did that, we undoubtedly paid a 
premium for it in the first place to see whether or not it was 
up to the spec that we probably paid the premium for?
    Mr. Sampson. Okay, to my understanding, no steel was 
imported from England.
    The initial design, both the 110s and the 170s, all those 
craft were designed by a British company called Vosper 
Thornycroft. They had a material requirement in their design of 
what they call British steel 4316. It is a British standard 
saying this is a material property.
    It is my understanding, and Bollinger may be able to 
correct this, but it is my understanding that they had 
specifically mill runs performed by U.S. steel mills and all 
that material made to that British standard and delivered to 
Bollinger Shipyard for construction of the 110. Whether or not 
they had any material testing done at that time, I am not aware 
of.
    Mr. Taylor. To the point, what do you think happened? I am 
game now for the fourth opinion of why these ships failed and 
yet no one is responsible.
    Mr. Sampson. Sir, I think there is a combination of things, 
but I believe that the longitudinal bending. In real simple 
terms--and I will try to make this brief--when you take a hull 
and you put it in the water, it has to be designed to handle, 
to go in through waves and over waves.
    Mr. Taylor. Mr. Sampson, I have stretched a steel boat, my 
boat. So I am familiar with all of that.
    Mr. Sampson. Okay, okay. You have to design for both of 
those loading conditions. The loading conditions that were 
initially assessed by the 1997 ABS rules underpredicted those 
loads that the boat would have to meet.
    It may have been the FE-I do not know. Mr. Ghosh may be 
able to provide the information.
    But we understood, as Combatant Craft, that those rules 
were faulty. We did our own simplified investigation to 
determine that the loadings would have been much more 
significant to require, to provide strength of that hull 
sufficient enough to withstand the operations.
    There were other issues later on where the specification, 
the performance specification came into question. I have read 
the performance specification that was issued. To me, it is 
very clear that the intent was to have a platform that was as 
capable as the 110 WPB at the end of the conversion. That did 
not happen, obviously.
    At all the times of the failures of the 123s, we had 110s 
out and operating that suffered no hull damage whatsoever.
    Mr. Taylor. For the record, who did you notify?
    Mr. Sampson. I notified ELC, Mr. Debu Ghosh. I notified the 
Deepwater Program Office, Ms. Diane Burton and another 
gentleman who I cannot remember his name. I notified Bollinger 
Shipyard, Dennis Fanguy and anybody else would listen. But 
those were the three primary contacts that we notified.
    Mr. Taylor. For the record, did any of them change their 
plans in any way or did any of them recalculate the tests to 
address your concerns?
    Mr. Sampson. At the time, sir, I was with CCD. The Coast 
Guard, I was not intimate with the Coast Guard. I do not know 
what they did.
    Mr. Ghosh took the matter very seriously. I am not sure 
what he did.
    Mr. Taylor. Okay.
    Thank you, Mr. Chairman.
    Mr. Cummings. Before we get to Mr. Diaz-Balart, let me just 
ask you one question. I would direct this to Mr. Braden and to 
Mr. Sampson.
    Yesterday, the Coast Guard announced its intention to bring 
the systems integration functions back in-house. How do you 
think this changed process will help?
    I mean do you think it will help at all? Do you think we 
will still have the same kind of problems?
    I am following up on what Mr. Taylor just talked about. I 
am just wondering. Nobody has been fired to my knowledge 
either, and it seems like this is a situation that all parties 
involved have some responsibility and some issues.
    But I am just wondering. He has made this announcement 
apparently in an effort to try to cure the situation and make 
it better for the future. I was just wondering are you familiar 
with that, what he said?
    Mr. Braden. Yes, I am.
    Mr. Cummings. Mr. Braden, do you have an opinion on that?
    Mr. Braden. Well, I feel, and I think this was mentioned 
previously, that the Coast Guard is ill prepared at this time 
to provide quality systems engineering and integration 
oversight. I have heard from the members that there are efforts 
to beef up their staff, to hire the necessary people. I think 
that is going to be a major challenge for them to do that.
    I think they will still need to rely heavily on industry to 
provide that guidance. I believe, personally, that oversight, 
meaning an independent assessment of what the requirements have 
been agreed to, is the biggest key to success on the program.
    In the past, as a performance-based requirement, there is a 
good bit of subjectivity as to how you achieve the final 
performance goal, and that subjectivity was, I would say, a 
major point of contention between the Coast Guard, in my direct 
experience on the 270s, and ourselves in terms of debating 
probably needlessly and sometimes seemingly endlessly as to 
someone's interpretation. And I think by getting clear 
requirements and then having oversight of those requirements, 
that would go a long way towards making sure that things get 
done exactly right the first time.
    Mr. Cummings. It sounds like, Mr. Braden, that you are very 
strong with regard to your standards, and you are not going to 
bend, no pun intended, but you are not going to bend.
    It sounds like to me basically they let you alone, and you 
did what you had to do. Apparently, as we see now, it worked 
out fine. That is what it sounds like now.
    Mr. Braden. Well, I will echo what I have heard previously 
too, and that is that I had the utmost respect for the people 
who put their lives on the line daily in the Coast Guard, and 
it was my intention to be certain that we delivered the best 
quality system we possibly could.
    And I found that, in some instances, I saw in other areas 
of the program, sort of an adversarial relationship between the 
Coast Guard and the contractors. I tried to nurture a friendly, 
cooperative, open discussion, and that is how we did finally 
nail some of the issues we had to contend with in terms of 
interpretation.
    Mr. Cummings. Mr. DeKort, same question.
    Mr. DeKort. We had a different experience, Mr. Braden and 
I. If I had the ability to be that independent and to have that 
relative authority, we would not be talking right now.
    Mr. Cummings. Mr. Sampson?
    Mr. Sampson. Sir, I guess my FE
    Mr. Cummings. See, you have a unique perspective, Mr. 
Sampson. You had the Navy and the Coast Guard experience.
    Mr. Sampson. Yes, sir.
    Mr. Cummings. What we have been hearing is that the Navy is 
well equipped to do a lot of these things and maybe the Coast 
Guard isn't there yet.
    But you go ahead. I am listening.
    Mr. Sampson. I love the Coast Guard, sir, through and 
through.
    Mr. Cummings. We do too.
    Mr. Sampson. It is the best organization out there. I think 
the Coast Guard, one of the more trying aspects that the Coast 
Guard has is resources.
    If you look at the Navy, it is a huge organization, lots of 
money, lots of human capital to take care of many of the 
challenges that are put before them.
    With the Coast Guard, now this is Scott Sampson's personal 
opinion, but the Coast Guard, we are asked to do more and more 
and more. I had to give up billets out of the section that I 
supervise to provide people for Pat Forswa, the 110s that we 
have overseas supporting our men and women over there. I have 
to give up a lieutenant JG for an admiral's billet that doesn't 
get replaced.
    We are continuing to do more and more. I have a friend of 
mine who is in the acquisition office, that puts in routinely 
12 to 14 hour days including weekends, and he doesn't get to 
see his wife much because we ask more and more of our folks, 
and we are never provided or very rarely are we provided the 
men, the resources to try to get those tasks accomplished.
    While I have the utmost in confidence in the Commandant's 
direction and leadership, I think this is going to be a 
significant challenge for the Coast Guard to provide that 
additional oversight that is going to be placed upon us.
    Mr. Cummings. Thank you very much.
    Mr. Diaz-Balart?
    Mr. Diaz-Balart. Thank you, Mr. Chairman. I actually really 
don't have a question, more just a couple of comments.
    First, I want to thank you, Mr. Chairman, for what I think 
has been a very important hearing, and I want to thank also 
those of you who have come forward for spending all this time 
with us. I think it has been very helpful to allow us to 
understand what the issue is.
    Secondly, when I was listening to Mr. Taylor, I share his 
concern and his frustration, the fact that what he said, and I 
am paraphrasing, Mr. Taylor, but about the fact that nobody has 
been fired. We shouldn't be surprised, either Mr. Taylor and I, 
that in the public sector, it is very hard to fire people 
anyway which is one of the problems with creating a larger 
bureaucracy is you can never get rid of them. But it is clearly 
frustrating for him and for me, and I don't think it should 
surprise us.
    Number three is that I think it is very important, and you 
all have not done that, but it is very important that anybody 
listening doesn't. When we speak about the Coast Guard or 
Lockheed Martin, it is not the Coast Guard or Lockheed Martin. 
There may be some individuals that have made mistakes, and that 
is not the entire entity. You all understand that. We 
understand that. I just want to make sure that everybody else 
understands that.
    Lastly, Mr. Chairman, I just want to thank you and also 
Chairman Oberstar for your statements to Mr. LoBiondo's 
question or comments and your commitment to that because, as 
Mr. Sampson just stated, the Coast Guard has always been 
underfunded which is why this project, this Deepwater project 
is so important. But, obviously, it is important not only that 
it receives a funding but that it is funded and the money is 
spent efficiently and effectively. That is the purpose.
    I want to thank both of you gentlemen for clarifying that. 
Again, nothing that we didn't expect to hear from you, but it 
is always, I think, important that we thank you for that strong 
statement of support for an efficient, effective Deepwater 
program that does protect our national interests, our national 
security and obviously the men and women who perform.
    Mr. Oberstar. Would the gentleman yield?
    Mr. Diaz-Balart. Yes.
    Mr. Oberstar. Just briefly for an observation, I have 
served on the Coast Guard Subcommittee since I came to Congress 
32 years ago. We have added 27 new functions to the Coast Guard 
in those years, but the Congress and administrations, 
Democratic or Republican, have not given the Coast Guard the 
funding they need to carry out those functions. That is what I 
am talking about. That is the frustration. By damn, we are 
going to work on that and do that in this Congress.
    Mr. Diaz-Balart. I thank the Chairman if I may claim my 
time back. I thank the Chairman for that, for his commitment. I 
know that. I have been in conference with you not that many 
years obviously, and I have seen that commitment. Clearly, the 
Coast Guard deserves the funding.
    I think one of the problems that I am seeing here from Mr. 
Sampson's statement. Again, I don't want to paraphrase. I am 
paraphrasing what you said.
    One of the issues that may be unfolding here is that yes, 
frankly, with this Deepwater program, we have finally funded 
some assets for the Coast Guard that frankly since probably the 
Coast Guard has been underfunded for so many years, they just 
weren't ready for it, no excuse there.
    But, anyway, I just wanted to make those statements.
    I wanted to thank the Chairman of the Subcommittee and the 
Chairman of the full Committee for allowing us this 
opportunity. I think it has been very fruitful. Thank you.
    Mr. LaTourette. Will the gentleman yield to me on your 
time?
    Mr. Diaz-Balart. Yes, sir. I give you the rest of my time.
    Mr. LaTourette. Thank you very much. I just wanted so I 
don't have to drag out this panel.
    Mr. Atkinson, could you clarify your $20 remark? I have 
asked Mr. DeKort and Mr. Braden about it. I thought I heard you 
say, and I don't want to put words in your mouth but the 
difference between the mylar aluminum and the braided shielded 
was 20 bucks. Is that 20 bucks a foot, 20 bucks a mile?
    Mr. Atkinson. No, sir. The Coast Guard, excuse me.
    ICGS purchased a cable made by a company called Cable 
General. This was an ethernet cable similar to what many of you 
have in your offices, but it was a heavier duty version of that 
cable.
    Now this cable is made in two formats. It is called a ship 
LAN cable designed for local area networks aboard ships. The 
first version is an unshielded twisted pair with a mylar shield 
only. There is also another version which is only slightly more 
expensive, which is a double shielded braid and foil. On the 
ends of this cable is a connector made by Sentinel Connector 
Company or Sentinel Connector Systems, Inc., which the actual 
connector itself was developed by Lockheed Martin.
    The price difference between the shielded cable and the 
mylar shielded cable or the double shielded cable, if you will, 
and the mylar shielded cable, the total cost for a 10 foot 
cable that is mylar shielded is about $7.50.
    Mr. LaTourette. For 10 feet?
    Mr. Atkinson. For a 10 foot cable.
    Mr. LaTourette. Anybody have any idea how many feet of 
cable we are talking about in the 110 conversions? Mr. DeKort?
    Mr. DeKort. There are almost 400 cables in total. I don't 
know how many there are, but I would imagine several dozen. But 
again, sir, that would need to multiplied times 49 times the 
rest of the vessels because it is a system of systems.
    If I could because I understand why you are going down, if 
I could clarify really quickly, when you have a program where 
you bid $4 million per boat and you know you are over-running 
double that and it is $8 million per boat, it is very possible 
that they thought their potential profit literally was in five 
cents per cable.
    Also, though, by the time these issues had snowballed, I 
believe Lockheed Martin, part of their thought was this is 
embarrassing. So, at some point, they just didn't want this to 
come out because how avoidable it was and how crucial these 
issues were. So it is the combination, sir, of the costs, 
schedule as well as not wanting to necessarily come out.
    Mr. LaTourette. I got you. I thank you and Mr. Diaz-Balart 
for yielding. Thank you.
    Mr. Cummings. Mr. Hall?
    Mr. Hall. Thank you, Mr. Chairman and Chairman Oberstar.
    I thank you for the patience of all our witnesses and our 
other witnesses. I will keep this really brief.
    Mr. Sampson, I gather you are, among other things, a Naval 
architect.
    Mr. Sampson. Yes, sir, that is correct.
    Mr. Hall. When one builds a 110 foot vessel or any vessel, 
I would guess that the Naval architect tries to make it of the 
ideal proportions to begin with. In other words, you are going 
to have the right proportion of length overall, beam draft, 
deck strength and so on and so forth, and the boat is designed 
to handle varying sea states in its existing proportion.
    There have been a number of famous cases of failures or 
believed failures, perfect Storm being one, for instance, where 
a fishing boat was altered without consulting a Naval architect 
in that case and wound up, some people think, capsizing because 
it had lockers installed on the deck that caught a sea that 
came transverse and pushed hard on it and it just rolled over. 
We will never know about that.
    But my question is when you take a 110 foot boat that was 
originally designed to be the ideal proportions, aren't you 
taking it off of its ideal proportions by lengthening it, 
almost by definition?
    Mr. Sampson. Absolutely, yes, sir. That was our, one of our 
main points, that this was such an elementary decision point or 
observation, that if you lengthen a vessel, the midship section 
modules or the strength of that vessel has to be increased.
    This is a high speed craft. You don't have that much 
reserve margin built into an existing craft or you would 
overdesign it, and it wouldn't make the speed. So to make the 
assumption that the craft did not have that or that had that 
reserve strength.
    Mr. Hall. That is what I thought.
    I just noticed in some of the testimony, the written 
testimony of the later witnesses that the design specs call for 
it to operate up to Sea State 5, 8 to 13 foot seas. I used to 
have a 39 foot cutter myself that I sailed in seas bigger than 
that.
    That seems to me rather like a low threshold for a ship 
that may have to operate, or a boat. It is a ship to me. But 
anyway, it is a boat that may have to operate under 
considerably more extreme weather and does probably.
    On top of everything else, I am just curious how one could 
not overbuild in this situation when you know you are cutting a 
boat open and then sending it. Has that occurred to you?
    Mr. Sampson. Absolutely. There are several things that are 
associated with that performance specification and later 
information that I was told in regards to the requirements.
    We were always verbally told that it was designed to be the 
same capability as a 110, just a 123, so that a 110 for 
purposes of the operators. Mr. Ghosh has commented to me, and 
he will probably confirm this is that the 110 is, in essence, 
unrestricted. It can go out and operate in a sea that normally 
the human will give up long before the ship.
    Mr. Hall. Right.
    Mr. Sampson. They will pull the throttles back. With the 
123, after the failure, it was explained by Mr. Jacoby that the 
design spec was actually poorly written and that the 
requirements that were being interpreted were actually lower 
than what we felt was operationally needed.
    Mr. Hall. Thank you.
    Mr. Atkinson, I just wanted to ask you. I understand that 
by Coast Guard accounts the Matagorda was given its ATO in 
January of 2005 and then later that year had a visual 
inspection. Do you know if the deficiencies identified in that 
visual inspection were severe and was it appropriate that they 
were waivered?
    Mr. Atkinson. No, sir. None of the items that were detected 
in the visual inspection should have been waivered. By issuing 
these waivers, they quite literally were covering up 
significant vulnerabilities. While our enemies may not have 
directly exploited those vulnerabilities, they did nonetheless 
create vulnerabilities that the Coast Guard decided were 
acceptable.
    Mr. Hall. What is the risk to national security if a 
TEMPEST certifications testing process is not done properly and 
the vessel operates and broadcasts to other vessels?
    Mr. Atkinson. National security, a foreign government will 
be able to access our classified communications not just on a 
one ship basis but more of an everything our Country has. If 
they can a detect our codes, our ciphers, our hopping patterns, 
our communications, they can exploit that not just on the 
Matagorda but on everything in our inventory. You give them the 
keys to the kingdom when you breach TEMPEST.
    Mr. Hall. Let them in. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Cummings. Thank you.
    First of all, I want to thank all of you for your 
testimony. I was just sitting here, thinking about what you all 
have said, and I am so glad that we have Americans who care as 
much as all of you care, and I really mean that.
    One of the things that is really nagging at me, though, is 
Mr. DeKort, and I am wondering.
    Mr. Braden, you have been with Lockheed Martin how long?
    Mr. Braden. Thirty years.
    Mr. Cummings. Thirty years.
    You have heard the complaints of Mr. DeKort. In your mind, 
I mean the things that you know about that you can express an 
opinion. Were those reasonable things to raise?
    I just want to make sure. Here is a man who, just like 
everybody else, has made it clear that he wants the best for 
the Coast Guard and the best for our Country. I am just 
wondering. What was your opinion on those things?
    Mr. Braden. I think the issues he raised, I would expect to 
be raised by any competent program manager, project manager or 
engineer.
    Mr. Cummings. All right. Thank you very much.
    Mr. Chairman?
    Mr. Oberstar. I just want to nail a couple of things down 
with Mr. Atkinson.
    The difference between a visual test and an instrumented 
test, a visual review and certification through follow-up 
instrumentation testing, what is the significance of the one 
and the other and the two in combination?
    Mr. Atkinson. The physical inspection tells us if hardware 
has been properly placed onto the equipment, that cables are 
properly bonded, that cables are connected properly, that they 
are properly grounded, that isolation distances have been 
rigorously adhered to. Those must be done in a visual 
inspection before you do an instrumented inspection.
    Mr. Oberstar. Is it sufficient to do the visual? If those 
factors are verified, can the inspector say that is sufficient?
    Mr. Atkinson. No, sir. It must pass a visual inspection and 
then pass an instrumented inspection.
    Mr. Oberstar. The instrumentation will tell us whether 
there is linkage and what distance and what can happen, how the 
signal can be intercepted, is that correct?
    Mr. Atkinson. Yes, sir. It is very similar to going to the 
doctor with a cough. The doctor can hear your cough. He can see 
that you are in pain, but he doesn't know that you have water 
on your lungs. So he will send you to a radiologist to have 
your chest examined and x-rayed. The x-ray is an instrumented 
test. An instrumented test is an absolute measure based on 
scientific principles, not just a visual observation.
    The two must be done, but the visual needs to be done 
before the instrumented, and then the visual needs to be 
repeated on a fairly regular basis.
    Mr. Oberstar. There is a risk to national security in a 
vessel handling classified information and conducting 
classified communications with shoreside and airborne 
equipment. What is the risk to national security if a vessel 
handles such traffic without proper TEMPEST certification?
    Mr. Atkinson. If a Coast Guard cutter goes into the 
territorial waters of Cuba and while they are in the 
territorial waters of Cuba they transmit a classified message 
through their satellite communications link or through other 
means and they have leaky equipment and Cuba picks up on those 
leaks, they will have just disclosed to the Cuban government 
how our cryptographic equipment works, how our C4ISR equipment 
works, the coding that it works on and they will be giving away 
not only their position, but they will be giving away, again, 
the keys to the kingdom. They will allow Cuba to listen in now 
on any of our ships.
    Mr. Oberstar. It can be at close range or at long range?
    Mr. Atkinson. It can. Depending on the specific 
vulnerability, it can be as little as somebody getting within 
30 to 50 feet of a vessel or, in other cases, it can be in 
excess of several hundred miles.
    Mr. Oberstar. Under those circumstances, was it an 
acceptable risk that the Matagorda received Authority to 
Operate in January, 2005?
    Mr. Atkinson. No, sir.
    Mr. Oberstar. Without an instrumented test?
    Mr. Atkinson. The Matagorda had an instrumented test. It 
failed.
    Mr. Oberstar. Without a successful test.
    Mr. Atkinson. Without a successful test. However, in Coast 
Guard documents, there is indication that they had planned a 
second instrumented test which was never accomplished.
    Mr. Oberstar. Never accomplished, that is right.
    I thank you very much.
    Mr. Chairman, as you said earlier, I think we should move 
on to the next panel.
    I am grateful to these four public spirited citizens who 
take their sense of responsibility deeply and genuinely, and I 
am grateful for your testimony today. It will help us get the 
Coast Guard on a better track.
    Mr. Cummings. I understand Mr. Kagen has a few questions.
    Mr. Kagen. Thank you, Mr. Chairman. I apologize for being 
late.
    Mr. DeKort, I will keep you only very briefly. Would you 
agree that this process of self-certification by Lockheed 
Martin played a key role in the failure that you observed?
    Mr. DeKort. Yes, sir. It was the fox in the henhouse.
    Mr. Kagen. So you think this process of self-certification 
should be continued anywhere else?
    Mr. DeKort. I don't know that there is a place where you 
would allow self-certifying anywhere whether it is in the 
Government or private enterprise. It just doesn't sound like 
something you would want to do.
    Mr. Kagen. Very good.
    Would you also agree that in this project overall there was 
no effective oversight?
    Mr. DeKort. Yes. The oversight was not effective, and the 
reason I hesitated is because I want to draw a distinction 
between the oversight that existed and needing more. I don't 
necessarily. I know you need more, okay, because of coverage 
issues.
    Again, there was plenty of oversight, though, with these 
issues being raised with the people who were there who had the 
authority to make changes. So more in this case wouldn't have 
solved a thing. It was the decisions that the people, they had 
made, and every bit of it could have been avoided.
    Mr. Kagen. It was the effectiveness of that oversight that 
was lacking.
    Mr. DeKort. Yes, sir.
    Mr. Kagen. On a personal note, have you ever, at any time. 
felt that your health or your life was in danger? Do you ever 
feel nervous?
    Mr. DeKort. No, sir. I feel that I suffered retribution 
after this while I was in Lockheed Martin, but it never 
elevated to the point where I thought that myself or my family. 
I never, and nothing ever occurred to make me actually think 
that.
    Mr. Kagen. Very good. Thank you very much.
    I yield back.
    Mr. Cummings. Just to clear up, following up on Chairman 
Oberstar's questions, Mr. Atkinson, one of the most troubling 
things is this whole idea of waivers because you can have all 
the standards in the world, but if you are waiving, that is a 
problem.
    The Matagorda, the visual TEMPEST test results are the most 
troubling or dangerous from a perspective of protecting 
classified materials, is that right?
    Mr. Atkinson. No, sir. My concerns would be with all of the 
ships. The Matagorda received extra attention because it was a 
prototype. That which was on the Matagorda is also on the other 
ships because Lockheed Martin was required to make it identical 
on every ship. Therefore, if the first ship failed, all the 
ships fail. If the first ship passes, all the ships pass. All 
eight ships failed.
    Mr. Cummings. Although there were waivers, I guess you are 
saying that even without the waivers, they would have probably 
failed.
    Mr. Atkinson. Yes, sir. It is akin to developing a hull 
breach and putting duct tape on it. It will fix it but not 
really.
    Mr. Cummings. So this is a mess.
    Mr. Atkinson. It is an enormous mess.
    Mr. Oberstar. One last question, Mr. Chairman, if I may, I 
know the panel has visited this subject. On the question of 
certification, would you recommend that for hull for TEMPEST, 
that the Coast Guard engage or be subjected to an outside 
independent party for certification purposes?
    Mr. Atkinson. That is a very difficult issue. The Coast 
Guard lost their, it is referred to as a CTTA which is a 
Certified TEMPEST Authority that attends and graduates a 
TEMPEST school. They lost that person due to death prior to the 
Matagorda being commissioned or inspected.
    This person's second in command was then appointed an 
acting CTTA. He was not formally recognized at, by the National 
Security Agency as the cognizant authority. This is a matter of 
documentation which the Committee has in their possession. As a 
result, he was not recognized by the NSA as being competent to 
perform these inspections not competent to make the 
instrumented inspections.
    The Coast Guard turned to the Navy. The Navy sent their 
CTTA to the shipyards. He performed the instrumented inspection 
which had three failure points.
    The report then went back to the Coast Guard acting CTTA, 
and they started issuing waivers. Things were found bad. 
Instead of fixing it, they threw a waiver on top of it.
    Mr. Oberstar. Let me ask the other members of the panel, 
briefly, your response to that question.
    Mr. Sampson. In regards to structural certifications and 
such, sir, Mr. Ghosh would probably be better suited for that 
question.
    The issue primarily is focused, I think, for purpose of the 
hull. We have the capabilities. It is a matter of whether or 
not we have time, resources or the administrative authority to 
correct the contractor.
    Many times, as it has been stated before, that I have been 
told many times as an engineer by a contracting officer that we 
have to give the contractor the opportunity to fail, and that 
is a very frustrating position to be when we know for a fact 
that they are going to fail. But because we are required to 
give them that option, if we try to correct the contractor, it 
is always, well, delay and disruption or you are telling me or 
my way would have worked, and it is a very tenuous situation.
    Mr. Oberstar. Mr. Braden and Mr. DeKort, do you have a 
comment?
    Mr. Braden. As I said earlier, I believe that I would say 
that an independent third party that would provide some degree 
of oversight would go a long way towards resolving differences, 
subjective differences of what a requirement is or isn't, and I 
think that would help immensely both with efficiency of the 
Coast Guard side and the contractor sides.
    Mr. Oberstar. Would the American Bureau of Shipping perform 
that function?
    Mr. Sampson. That would be for the hull. ABS does have that 
capability to do certifications of designs, yes, sir.
    Mr. Oberstar. Thank you. Thank you.
    Mr. DeKort?
    Mr. DeKort. Relative to TEMPEST, I could see utilizing, 
sir, the Navy to do that because of their capabilities. 
However, I would come back to ships that float, planes that 
fly. These are basic items that are just done, and they are 
considered to be elementary. So I don't know that we 
necessarily need to overthink oversight or who should be 
testing.
    You get in your car. You put it in drive. You punch the 
gas, and the car goes forward. If it doesn't go forward, it 
failed. I mean, sorry. These are basic things.
    The Coast Guard should have equipment that survives the 
elements. If they don't, then who is?
    I mean if you have every ship in the Coast Guard inventory, 
matching designs like I have said and Mr. Atkinson, 20 years 
from now, if the Coast Guard gets in level Sea State 6 or 
whatever condition or excessive whatever it is, who is going to 
rescue the Coast Guard?
    And I would imagine, sir, that you could find pleasure 
craft, okay, especially research vessels that are in much 
better shape than these craft would have been going forward.
    Mr. Oberstar. Thank you.
    Mr. Gilchrest. Mr. Chairman, to your left, to the left of 
the Chairman.
    Mr. Cummings. Yes. Sorry, Mr. Gilchrest, my Maryland buddy.
    Mr. Gilchrest. A quick question to Mr. DeKort or anybody 
else who wants to answer this, standard design, and I am 
curious. People have been making these Coast Guard cutters for 
a long time now. So if you go from 110 feet to 123 feet, why 
should that be a problem?
    Mr. DeKort. Mechanical engineering is not my background, 
sir. But I will just say from an observer at 30,000 feet, 
looking in on this, it shouldn't.
    I mean here is the thing. If the contract was that loose or 
the requirements were that gray, I would like to know how is it 
ELC, Mr. Sampson or I figured it out. I don't know that we had 
some special insight capabilities or we are clairvoyant.
    So we had the same requirement set, the same contract, the 
same everything. Now it wasn't perfect. Did we need more 
oversight? Yes.
    Was ICGS potentially a contractual mess? Fine, yeah.
    Could the requirements have been written better? Yeah.
    But we are talking about just elementary items there that 
really don't take much discussion.
    Mr. Gilchrest. This is Lockheed Martin. This is not a new 
boat builder.
    If it is elementary design to go from 110 feet to 123, I 
mean is this that difficult that the hulls are going to breach? 
What happened?
    Mr. DeKort. Sorry. Well, sir, and I can't speak for the 
breach, but I can speak for all C4ISR.
    Again, it was the perfect storm. They just, they made a 
strategic decision to bid the job without enough C4ISR 
engineers and to use people who literally didn't have enough 
background or they didn't have enough people who had the 
background, and when they got into it, they were behind right 
away because it was aggressively bid. So they quickly had to 
make decisions so that they could stay on schedule.
    Like I said, the person who picked the non-waterproof 
radios background was a software configuration management 
specialist. It was a hardware item. I mean it sounds kind of 
incredible, I suppose, but it is literally what happened.
    So that perfect storm just hit it. Sorry, I am mixing 
metaphors. But then it snowballed, and they just got in so deep 
that I don't know that they could figure a way out.
    Mr. Gilchrest. This was like the chaos theory in reverse.
    Mr. DeKort. Yes, sir.
    Mr. Gilchrest. Thank you, Mr. Chairman.
    Mr. Cummings. Well, again, I thank you all.
    Mr. DeKort, what you just said, it seems you are right. It 
seems so elementary. It seems so elementary, it is painful, 
really, and it is painful from the standpoint that we are 
talking about lives, lives of our Coast Guard folks. We are 
talking about ships that are not out there now, guarding our 
coasts, interdicting drug runners, and the American people are 
paying big time.
    So I want to thank all of you. All I can say is--and I will 
say it 50 million times--if we can send people to the moon, we 
ought to be able to fix a ship that is no bigger than this 
room. It is incredible to me.
    We ought to be able to have communications whereby Cuba and 
other countries don't even have the capability of eavesdropping 
onto those communications. It is incredible and literally 
shocking to the conscience.
    Thank you all very much.
    We will move on to the next panel.
    Before you all sit down, I am going to administer the oath.
    Do you solemnly swear to tell the truth, the whole truth 
and nothing but the truth, so help you, God?
    [Witnesses respond in the affirmative.]
    Mr. Cummings. Thank you.
    Dr. Mackay?

 TESTIMONY OF LEO MACKAY, VICE PRESIDENT AND GENERAL MANAGER, 
 INTEGRATED COAST GUARD SYSTEMS; MARC STANLEY, EXECUTIVE VICE 
  PRESIDENT OF GOVERNMENT AFFAIRS, BOLLINGER SHIPYARDS, INC.; 
 JAMES E. ANTON, EXECUTIVE VICE PRESIDENT OF INTEGRATED COAST 
  GUARD SYSTEMS AND VICE PRESIDENT OF THE DEEPWATER PROGRAM, 
NORTHROP GRUMMAN SHIP SYSTEMS; THOMAS RODGERS, VICE PRESIDENT, 
  TECHNICAL OPERATIONS, LOCKHEED MARTIN MARITIME SYSTEMS AND 
SENSORS; BRUCE WINTERSTINE, PRINCIPAL PROJECT ANALYST, LOCKHEED 
   MARTIN MARITIME SYSTEMS AND SENSORS; MARYANNE LAVAN, VICE 
   PRESIDENT FOR ETHICS AND BUSINESS CONDUCT, LOCKHEED MARTIN

    Mr. Mackay. Good evening, Mr. Chairman and Ranking Member.
    I am very grateful to be here on behalf of the people of 
Lockheed Martin and get the chance to explain the progress that 
Lockheed Martin is achieving on the integrated Deepwater system 
program where we are responsible for aviation, C4ISR integrated 
logistics and system engineering.
    Lockheed Martin has enabled deployment of more than 75 
upgraded HH-65 helicopters featuring more powerful engines, 
delivered 2 new HC-144A maritime patrol aircraft with 6 more in 
varying stages of contracting and construction, progressed 
through developmental tests and evaluation of the HC-144A 
electronic mission system, commenced mission system and sensor 
installation on all 6 J Model HC-130 long range search aircraft 
and sustained service of the MH-68A armed helicopters comprised 
in the Coast Guard's helicopter interdiction squadron.
    Lockheed Martin has upgraded command and control systems 
aboard all the Coast Guard's 39 medium and high endurance 
cutters, resulting in significant increases in the seizure of 
illicit drugs.
    In March, the Coast Guard issued full Authority to Operate, 
the Deepwater command and control system at its district 
command center in Miami in District 7. Achieving Authority to 
Operate is the Government certification that the system 
performs and operates correctly. This system provides enhanced 
mission planning tools and facilitates rapid exchange of 
information through a common operating picture among Coast 
Guard commands, cutters and aircraft.
    The system is now being installed in Sector San Juan in 
Puerto Rico, soon to be followed by a major Coast Guard 
commands in Massachusetts, Virginia, Washington, Hawaii, 
California and Louisiana.
    Deepwater is delivering and making a real difference 
impacting drug seizures, migrant interdiction and lives saved. 
On the Pacific Coast earlier this year, the Coast Guard 
performed a rescue utilizing an HH-65 Charlie helicopter under 
conditions that would have been impossible for the aircraft 
that it replaced.
    Just last month, the Coast Guard Cutter Sherman, patrolling 
off Central America, utilized its Lockheed Martin installed 
electronics to track passively a ship of interest, to board her 
without alerting her and to coordinate the seizure of a record 
21 tons of cocaine with a street vale of $300 million via 
secure satellite communications.
    We take the concerns raised by the Department of Homeland 
Security's Inspector General, seriously.
    For example, during a Lockheed Martin review of 123 foot 
patrol boat cabling, it was determined that 85 out of 
approximately 490 cables per ship cannot be confirmed as having 
low smoke properties. Subsequently, the Government determined 
that the risks were low enough to grant a waiver. The cables 
extend outside on the mast or on the deck, are surrounded by 
windows enabling easy ventilation and are short in length.
    After C4ISR equipment environmental requirements were 
updated in 2005, it became necessary to resolve inconsistencies 
in the specifications. A joint Coast Guard-Lockheed Martin 
working group was established, and after their consideration of 
the mission criticality of each component, its specification 
compliance and its function aboard the boat, a request for 
waiver was determined to be the appropriate action.
    This action permitted reconciliation of the program's 
acquisition strategy to maximize the use of ruggedized, off the 
shelf commercial and Government equipment with a multitude of 
military standards incorporated into the requirements. By 
requesting a waiver, the Coast Guard was afforded the ultimate 
decision as to a course of action according to its standards of 
cost effectiveness and safety.
    While there has been much discussion regarding C4ISR 
TEMPEST capabilities, the Inspector General determined in its 
report that the installed C4ISR system was not a security 
vulnerability. In fact, an independent third party, the U.S. 
Navy Space and Naval Warfare Systems Center or SPAWAR as it is 
colloquially known, determined the system on the 123 foot 
patrol boats did not have compromising emissions in two 
instrumented tests, and it was subsequently approved by the 
Coast Guard to operate in a classified environment.
    Finally, as the Inspector General found, the camera system 
on the 123 foot patrol boats fully complies with the video 
surveillance system requirements. It was designed as part of an 
overlapping series of measures including sentries and an 
intruder detection system. Lockheed Martin did not consider it 
prudent to unilaterally increase costs by providing 
functionality that the customer did not want or need.
    We continue to support the implementation, contractual and 
program management process improvements initiated by the Coast 
Guard as well as the active incorporation of lessons learned. 
We have supported the creation of a joint configuration control 
board and the participation of third parties for independent 
certification.
    In closing, I would like to read a short quote from the 
commanding officer of the Coast Guard's new Lockheed Martin 
installed C4ISR training center in Petaluma, California: ``The 
contrast between our tools of 1983 and the tools of the future 
ships like the Bertholf is significant. I remember analog 
radar, message traffic by teletype, paper charts and 
maneuvering boards, Polaroid cameras and slow criminal history 
checks.''
    ``By contrast, our new National Security Cutters will train 
on computerized digital sensors, radar and charts, have live 
sharable digital video, message traffic by PC, voice 
communications with anyone, clear or secure, and real time 
criminal histories and intelligence checks.''
    ``The Coast Guard will have increased maritime domain 
awareness to identify threats and a common operating picture to 
act when necessary, all to protect our coastlines and 
citizens.''
    Thank you again for the opportunity to present and explain 
the progress we are achieving on the Deepwater program. I look 
forward to answering your questions.
    Thank you, Mr. Chairman, Mr. Ranking Member.
    Mr. Cummings. Thank you very much.
    Mr. Stanley, do you have a statement?
    Mr. Stanley. No, I don't have a statement. I am here to 
answer questions.
    Mr. Cummings. Thank you very much.
    Mr. Anton?
    Mr. Anton. Good evening, Mr. Chairman and Ranking Member of 
the Committee, and thank you for the opportunity to appear 
before you to discuss the Deepwater program.
    I am the Executive Vice President of Integrated Coast Guard 
Systems and the Vice President of the Deepwater Program of 
Northrop Grumman Ship Systems.
    As you may know, NGSS has nearly 70 years of experience 
designing, constructing and maintaining ships of all types. In 
that time, NGSS Gulf Coast operations has produced a total of 
534 ships and has built nearly a quarter of the Navy's current 
fleet.
    On behalf of the Northrop Grumman and all the men and women 
working in support of this program, I would also like to thank 
this Committee for their strong support of the Coast Guard and 
of the Deepwater program.
    The 110 foot patrol boats have seen extensive duty since 
their entry into service some 20 years ago. The 123 conversion 
was intended as an interim measure to enhance the capabilities 
of the aging patrol fleet until a new vessel, the Fast Response 
Cutter, was available to replace it.
    The conversion work was performed by Bollinger Shipyards, 
the original builder of the 110s under subcontract to Northrop 
Grumman.
    The conversion project underwent a traditional set of 
design and review processes with contractor and Coast Guard 
personnel. After being awarded the patrol boat conversion work 
but before beginning the actual conversion work, the Coast 
Guard, ICGS, NGSS, Lockheed Martin and Bollinger with their 
joint venture partner, Halter, engaged in design reviews 
including a preliminary design review, a critical design review 
and a production readiness review. These reviews were reviews 
of the 123 conversion design which were presented to the Coast 
Guard in increasing levels of details.
    Although not a contract requirement, ICGS conducted the 
Preliminary Design Review or PDR. As part of the PDR process, 
drawings and analysis were submitted to the Coast Guard for 
consideration and review. Half of the attendees at the PDR were 
Coast Guard personnel.
    The next stage was Critical Design Review or CDR. In 
conjunction with CDR, the Coast Guard reviewed a series of 
design deliverables. CDR presentations included results from a 
number of design tests, and the Coast Guard represented nearly 
half of the attendees.
    CDR was followed again by a Production Readiness Review. 
During the PRR, the production process, procedures and state of 
the design to convert the 110 vessel into the 123 were 
presented. As with the design reviews, the Coast Guard fully 
participated in the PRR process.
    Four days later, the Coast Guard delivered the Matagorda to 
Bollinger for conversion in Lockport, Louisiana.
    In addition to these various reviews with the Coast Guard 
during the conversion of the first vessel, the Matagorda, the 
American Bureau of Shipping examined the design of the hull 
extension, the new deckhouse and monitored key elements of the 
work being performed. The Coast Guard also had a Program 
Management Resident Office on site to oversee the 123 
conversions.
    At the completion of each conversion and as part of the 
acceptance process, the Coast Guard, similar to what the Navy 
does, established an In-Service Inspection Board to examine the 
performance of the converted cutter and make a formal 
recommendation of acceptance.
    At the conclusion of the Matagorda work, Abs issued a 
letter of approval for the conversion work and expressed no 
reservations with the feasibility of the conversion.
    Based on all of these reviews and actions, the Coast Guard 
accepted delivery of the Matagorda. This same process was 
applied to each of the seven patrol boats delivered to and 
accepted by the Coast Guard.
    To date, the problems associated with the 123 conversion 
include buckling or hull deformation and shaft and propeller 
line problems. Neither Coast Guard engineers nor our engineers 
have been able to determine the root cause for the 123 patrol 
boat structural problems.
    We understand that Admiral Allen has decided to 
decommission the eight 123 boats converted under the Deepwater 
program. We are not privy to the research, tests and reports 
that led to this decision. We will continue to support the 
Coast Guard's effort to address its mission needs.
    Thank you again for the opportunity to discuss with you the 
Deepwater program.
    Mr. Cummings. Does anyone else have a statement?
    Thank you very much.
    Let me just begin the questioning. To Mr. Rodgers, what 
position did you hold with regard to the Deepwater program?
    Mr. Rodgers. From January, 2003 through September, 2005, I 
was the Lead Program Manager for Lockheed Martin.
    Mr. Cummings. Did that position give you the overall day to 
day costs and schedule responsibility for the entire Deepwater 
and C4ISR effort?
    Mr. Rodgers. The C4ISR effort was part of that 
responsibility.
    Mr. Cummings. All right. Was there ever any suggestion 
provided by you or your superiors at Lockheed Martin that costs 
and schedule goals were paramount and that the mission needs of 
the Coast Guard took a back seat to these considerations?
    Mr. Rodgers. No, sir.
    Mr. Cummings. Was there pressure to produce this?
    You were here when Mr. Braden testified, were you not?
    Mr. Rodgers. Yes, I was.
    Mr. Cummings. I think he talked a little bit about 
pressure. I am not trying to put words in his mouth, but he did 
talk about pressure. So you don't know anything about that 
pressure, the pressure that he talked about?
    Mr. Rodgers. From an overall program, there is always 
pressure to perform in that sense. In my 24 years, there is 
always pressure to execute the job you are assigned to.
    Mr. Cummings. Is it the case that employees of Lockheed 
Martin regarding an assignment to the Deepwater project as a 
type of punishment? Did you ever get that impression?
    Mr. Rodgers. No, I did not.
    Mr. Cummings. To what degree did limited resources 
available for the C4ISR components of the Deepwater project 
contribute to the failure of Lockheed to meet all contractual 
requirements of the systems installed in the 123s?
    In other words, were there budgetary problems?
    Mr. Rodgers. Overall, we had a schedule challenge. We 
missed the original schedule in November of 2003, and it was 
replanned with the Coast Guard to March of 2004. The major 
focus area was how do we achieve the first delivery.
    Mr. Cummings. Wait a minute. I am sorry. I didn't hear a 
word you said.
    Mr. Rodgers. Okay.
    Mr. Cummings. Say that again.
    Mr. Rodgers. The original schedule for delivery of the 123 
was November of 2003, and we did a replan with the Coast Guard 
to make that March of 2004.
    Mr. Cummings. All right.
    Mr. Rodgers. So from a schedule point of view, we replanned 
the original schedule.
    Mr. Cummings. All right. Now you heard the testimony of Mr. 
DeKort, did you not?
    Mr. Rodgers. Yes, I did.
    Mr. Cummings. Were you here for the entire testimony?
    Mr. Rodgers. Yes, I was.
    Mr. Cummings. Did Mr. DeKort raise each and every one of 
these issues to you and your superiors, the ones that he 
stated?
    Mr. Rodgers. Not to me personally.
    Mr. Cummings. Did you know about them?
    Mr. Rodgers. I knew. I knew after the fact in a sense that 
I knew there were some issues. I facilitated him meeting with 
some of senior management. To that point, I was aware of them.
    Mr. Cummings. In other words, did you know what he was 
going to meet with senior management about?
    Mr. Rodgers. I know he had some concerns with the program 
that were not being addressed, and he wanted to have the 
ability to talk to some people in more senior management.
    Mr. Cummings. In other words, you made it possible for him?
    Mr. Rodgers. That was facilitated.
    Mr. Cummings. So you never really discussed them in any 
kind of detail, is that what you are saying?
    Mr. Rodgers. Yes, from my seat, I would not. I was the 
overall program manager. So I would not have spoken in 
technical detail to his concerns. We would have relayed that to 
engineering.
    Mr. Cummings. Let me ask you this. Do you know whatever 
became? Do you know who he met with as a result of your 
facilitating discussions? Do you know who he met with after 
that, in other words, who you made it possible for him to talk 
to?
    Mr. Rodgers. He mentioned in his testimony that he met with 
the Vice President of Engineering, Carl Bannar. I was aware of 
that meeting.
    Mr. Cummings. You know for a fact that he did meet with the 
Vice President. What is his name again?
    Mr. Rodgers. Carl Bannar.
    Mr. Cummings. You know for a fact that he met with him?
    Mr. Rodgers. I knew that meeting was being set up and I 
have no reason to believe that did not happen.
    Mr. Cummings. You did hear. I guess to facilitate the 
meeting, you had to hear a little bit about what he was 
concerned about. Did you have an immediate response other than 
facilitating a meeting?
    Mr. Rodgers. Overall, he has a chain of command within his 
department. His concerns, I believe, were expressed to his 
chain of command as he testified.
    Mr. Cummings. Where would you have been on the chain of 
command in regard to him?
    Mr. Rodgers. I was the overall Program Manager.
    Mr. Cummings. In other words, what I am trying to say is he 
had to go two steps up to get to you? Were you on the same 
level? I am trying to figure out.
    Mr. Rodgers. In general -
    Mr. Cummings. Hear my question. I am just trying to figure 
out where you fit on the chain.
    Mr. Rodgers. Overall, from a Lockheed perspective, there 
was approximately 350 people in the Deepwater program. I was 
the overall lead.
    Mr. Cummings. The last words?
    Mr. Rodgers. I was the overall lead.
    Mr. Cummings. So you were like at the top?
    Mr. Rodgers. Or second to the top, yes.
    Mr. Rodgers. Okay, so in order for him to get to you, that 
meant he skipped over some folks.
    In other words, what I am trying to get to is he got to 
you, and you said there is a chain of command. You said there 
are some 300 people. You are at the top. So you then told him 
to meet with somebody above you. Is that it?
    Mr. Rodgers. Overall, he had some engineering concerns. We 
had him meet with the head of engineering to share his 
concerns.
    Mr. Cummings. The person who you facilitated the meeting 
with, the vice president that you spoke of.
    Mr. Rodgers. Yes.
    Mr. Cummings. That person was above you.
    Mr. Rodgers. Correct.
    Mr. Cummings. Okay, gotcha.
    You are familiar with the Deepwater program, and you just 
said that you were responsible for the day to day costs and 
schedule responsibilities. So you are pretty familiar with it, 
are you not?
    Mr. Rodgers. I left the program 18 months ago. So I am 
familiar with it up until September of 2005.
    Mr. Cummings. Well, let me ask you. You heard the 
complaints of Mr. DeKort today, did you not?
    Mr. Rodgers. Yes, I did.
    Mr. Cummings. I am just wondering. Do you have an opinion? 
Do you think they were reasonable complaints?
    Mr. Rodgers. The first time I read his complaints was in 
the Inspector General's report which when I called to testify I 
read. I understand the Inspector General's report. I don't have 
a specific opinion on his complaints from a technical 
perspective because his complaints to me are technical 
perspectives.
    Mr. Cummings. Is that unusual for employees to have 
complaints of this nature, to have had them with regard to this 
Deepwater program? I am just curious.
    I am sure you have done other programs too. Is it unusual 
for people to bring issues like this to you?
    Mr. Rodgers. No, it is not unusual for people to bring 
issues like this to me.
    Mr. Cummings. Now did you ever have a conversation with the 
vice president that you referred him to about his complaints? 
Was there ever a conversation, ever?
    Mr. Rodgers. No, not about his complaints, specifically.
    Mr. Cummings. Say that again.
    Mr. Rodgers. Not about his complaints, specifically.
    Mr. Cummings. About him?
    Mr. Rodgers. Other than facilitating the meeting, I did not 
get feedback from the meeting.
    Mr. Cummings. All right. Now were you aware that Lockheed 
had planned to install a non-waterproof radio in the 
prosecutors' launch from the 123s? Were you aware of that?
    Mr. Rodgers. No, I was not.
    Mr. Cummings. Were you aware that the installation of a 
non-waterproof radio would put the crew or the prosecutors at 
risk of potential electric shock?
    Mr. Rodgers. Can you clarify when you say are you aware?
    Mr. Cummings. Well, this is what I am asking you. You are 
the day to day guy.
    Mr. Rodgers. Right.
    Mr. Cummings. You are number one and number two. You are up 
there. You are up there, and you said, I didn't say this, you 
said it. You are the day to day costs and schedule 
responsibility guy, and you said you are familiar with the 
project.
    Mr. Rodgers. Correct.
    Mr. Cummings. I mean is that right? I am not trying to put 
words in your mouth.
    Mr. Rodgers. 123 is just one of many projects within the 
Deepwater program.
    Mr. Cummings. Okay. Now what I am asking you is that I 
think you would agree if you heard Mr. DeKort, and I think 
maybe another person may have said it too. This radio that they 
use is their means of communication. Is that right?
    Mr. Rodgers. I am not a technical expert on the 123 design.
    Mr. Cummings. Let me ask you this. If you are producing a 
boat and water is splashing up on it and there is a radio, 
would you deem it prudent to have a radio that is waterproof?
    Mr. Rodgers. Yes, I would.
    Mr. Cummings. Let me ask you something else. Were you aware 
that the topside equipment was installed on the 123s that would 
not meet environmental requirements?
    Mr. Rodgers. No, I was not aware at that time.
    Mr. Cummings. Were you aware that Mr. DeKort tried to 
identify this noncompliant equipment and have it replaced and 
that Lockheed directed him not to do so?
    Mr. Rodgers. No, I was not aware of that.
    Mr. Cummings. Were you aware that the contractor eventually 
self-certified that the topside equipment met specifications 
when, in fact, it did not? Did you know that?
    That is from the IG report? Are you aware of that?
    Mr. Rodgers. I have read the IG report once. I am not 
familiar. I have not studied its contents.
    Mr. Cummings. Let me ask you this. Do these things that I 
am saying to you concern you?
    I mean, in other words, you were the top guy.
    Mr. Rodgers. Right.
    Mr. Cummings. We have a radio that is not waterproof. We 
have got topside equipment that they claimed met specifications 
but didn't, and you are the top guy. You are the one, I guess, 
that if anything goes wrong, somebody says, wait a minute, what 
happened? Is that right?
    You are the one that I guess the President would ask the 
questions of.
    Mr. Rodgers. I have overall program oversight.
    Mr. Cummings. Does it concern you that these things have 
come out in the IG report when you were responsible for this?
    Mr. Rodgers. From an IG report, as I said, I read it. I 
have not studied its results. I have been off the program. The 
first time I saw the IG report was on Tuesday of this week.
    Mr. Cummings. Maybe you can answer this and maybe you 
can't. Why was the deficiency in the topside equipment on the 
123s not clearly spelled out on the Matagorda's DD-250 as the 
intention to submit a waiver for noncompliance when the 
requirement for low smoke cabling was clearly singled out in 
the DD-250?
    Mr. Rodgers. I don't know.
    Mr. Cummings. Was the deficiency with the topside equipment 
noted on any of the DD-250 forms or any of the eight 110 foot 
patrol boats lengthened to 123 feet?
    Mr. Rodgers. I would not have had the day to day cognizance 
of what went on that 123 DD-250.
    Mr. Cummings. Did the integrated team indicate on self-
certification forms that there were no applicable environmental 
requirements for the topside equipment?
    Mr. Rodgers. I am not familiar with the self-certification 
form.
    Mr. Cummings. Is there anybody up here that would be 
familiar with that? Do you know? Nobody?
    Can you all, can anybody tell us who we can get the answers 
to these questions from? Anybody?
    Mr. Mackay, you seem like you have got an answer?
    Mr. Mackay. Mr. Chairman, if I might.
    Mr. Cummings. This concerns us because we are here just 
trying to get to the bottom of some things, and you tell us 
that you are in charge. This is a major corporation, major 
project. You are sitting there under oath, and then you tell us 
you don't know anything.
    Mr. Taylor said something that was very interesting when he 
talked about the fact that he couldn't understand why nobody 
had been fired. I guess nobody has been fired because nobody 
knows anything.
    Mr. Mackay?
    Mr. Mackay. Mr. Chairman, if I might, just to explain some 
things about the way the certifications and the other things, 
the requirements on the program are determined. As other people 
have mentioned, it is an IPT environment, and issues are vetted 
in a joint environment--Coast Guard, Lockheed Martin, Northrop 
Grumman, industry.
    In specifying a ship program and the C4ISR specifically on 
that, the way the program operated was that there is a cutter 
certification matrix, some 1,700 documents that have all the 
requirements and specifications that cutter, that go into 
outlining the requirements for a cutter, that industry must 
meet as it presents the cutter for DD-250 and acceptance.
    What happens is from those universal requirements, the 
cutter specific certification matrix or a subset of those 
requirements is called out, and they are either assigned to the 
HM&E lead, Northrop Grumman, Bollinger, Halter-Bollinger, those 
folks or to C4ISR.
    In the event as I understand it and have talked to people 
who have contemporaneous knowledge, the issue is that if you 
look in the IG report, the standard that is called out, Mil. 
Standard 1399 Charlie, at the time was only specified for HM&E. 
It was not specified for C4ISR. It was not until the July, 2005 
timeframe that that specification was deemed and agreed to by 
Coast Guard and industry working together, that that specific 
sort, Sort 21, if you look on the document, presented in the IG 
report, photostatically copied there, was deemed to apply to 
C4ISR.
    That is why if you look closely at that document, the 
signature attesting to the S016 is from Bollinger. They were 
attesting to environmental standards with respect to HM&E.
    Once those, it was understood that those should be assigned 
properly to C4ISR, a joint working group was undertaken, and as 
the IG outlines in its report, eventually a request for waiver 
process was undertaken.
    And let me be clear about what that process entails. 
Industry presents to Government the conditions, specifications, 
costs of complying with the requirement. Then Government looks 
at that data and makes an independent judgment based on its 
standards of cost effectiveness, its assessment of the safety 
consideration and either grants the waiver or deviation or does 
not do so. And so, it is a very disicplined process in which 
all the facts relevant come out on the table, and the 
Government is allowed to make a decision about the prudence of 
a waiver or deviation or compliance to the requirement.
    And so, the form S016 that is photostatically copied in the 
IG report does not bear a Lockheed Martin signature because at 
that time on the program in March, 2005-FE I think if you look 
on the document-FE those specifications, Mil. Standard 1399 
Charlie or Sort 21 as it is also called right there on the form 
were not understood by either Government or industry to pertain 
to the C4ISR portion of the program.
    That judgment was subsequently corrected or changed, 
altered by mutual agreement.
    Mr. Cummings. The Coast Guard has always said that the 
certification was required. Are you familiar or aware of that?
    You haven't heard the testimony. But are you aware of that?
    Mr. Mackay. No, sir, I am not.
    Mr. Cummings. They have consistently said that.
    Mr. Mackay. The facts that I am aware of, Mr. Chairman, are 
that it was not until July, 2005, that that specific sort was 
deemed to apply to C4ISR. It was given to the HM&E side of the 
program. It was not given to the C4 side until later in the 
spring, summer timeframe of 2005.
    Mr. Cummings. Would it concern you if we produced a system. 
C4 system, where the Cubans and others could eavesdrop?
    I am just curious. Would that concern you?
    You know I look, I watch when a President comes to the 
capital, and they go through 50 million changes. They bring in 
all kinds of experts to make sure he has got a secure line. I 
mean they have somebody guarding the line. I mean literally. I 
wish you could see the operation.
    When I listen to the testimony that we heard a little 
earlier about countries being able to eavesdrop, I am just 
wondering is that something that would concern Lockheed Martin?
    Mr. Mackay. Yes, sir, it very well would, and I would like 
to just read from the DHS IG report on page five. You know the 
complaint. I am quoting here. I am reading from the report 
itself.
    The complaint also alleged that the use of non-braided 
cable would limit the 123 cutter's ability to meet TEMPEST 
testing requirements which we have talked about at length here. 
However, TEMPEST testing conducted on the Matagorda and Padre 
between February, 2004 and July, 2006, indicated the cabling 
installed on the C4ISR upgrade was not a source of compromising 
emissions. Those instrumented tests were conducted by SPAWAR, 
by the Navy Space and Electronic Warfare Command, the U.S. Navy 
with all their expertise.
    Mr. Cummings. To your knowledge, was there ever 
certification, TEMPEST certification done and it passed?
    Mr. Mackay. I am not.
    Mr. Cummings. Are you familiar with any TEMPEST 
certification that took place with regard to the systems that 
you put in place?
    Mr. Mackay. I am aware of these tests that were done by the 
Navy's Space and Electronic Warfare Command. One was done prior 
to the DD-250 or the acceptance of the vessel in the February, 
2004 timeframe, and the other was done in 2006 after the 
allegations were raised in the IG report, sir.
    Mr. Cummings. Now, why were you testing in 2004?
    Mr. Mackay. That would be testing pursuant to the DD-250 
which is the turning over of the vessel from industry to 
Government. It is an acceptance form. That is what a DD-250 is, 
sir.
    Mr. Cummings. You were testing then. So then there were 
tests later on. Is that correct?
    Mr. Mackay. Yes, sir. After the IG report and the concerns 
were raised, another instrumented test was performed by the 
Navy and SPAWAR, and I just read the quote from the IG report 
about the results of those instrumented tests conducted by the 
Navy. I can read it again, sir, if you would like.
    Mr. Cummings. No. I am going to come back.
    Mr. Mackay. Yes, sir.
    Mr. Cummings. Mr. LaTourette?
    Mr. LaTourette. Thank you very much, Mr. Chairman.
    Just a couple of observations before I make my questions, I 
would say to the Chairman over my spring vacation, one of the 
places that I visited was the Lockheed Martin site in Akron. 
Mr. Chairman, you should see. They have taken over the air dock 
down in Akron, Ohio. It is one of three, it is my 
understanding, that are existing still in the Country, and they 
are going to build a high altitude airship. We are not only 
excited about that, but we are happy with the work of the 
aerostats that are protecting our border and also doing 
yeoman's work at 5,000 feet in the Middle East.
    Having said that, I know that you were all in the room for 
the first panel. There is nobody, I think, on the Committee, 
there is nobody in the audience, there is nobody in the Country 
that thinks that spending $90 million for eight ships that 
don't work is a good idea or that it is acceptable. If anybody 
think that it was a good idea, then you can chime in, but I 
don't think I am going to get any responses.
    There is a big difference between that in my mind because 
you prosecute people. You sue people. Money damages are 
awarded. There is a big difference between that and some of the 
stuff that came up during the first panel and then some of the 
accusations, quite frankly, that are being leveled against 
Lockheed Martin.
    The staff tells me that these cameras located around here, 
60 Minutes, and I am going to tell you that there are two types 
of stories. There is bad performance on a contract which is 
unacceptable, but there are also two allegations that I really 
think, Dr. Mackay, I would like you to address, that have been 
made during the course of the first panel and maybe as we 
proceed.
    Mr. DeKort, the whistleblower in this case, and let us 
start with one first and that is national security. The story 
sort of perking under the surface here is that because of a 
difference between $7 a cable, $7.95 for 10 feet of a cable and 
$27.95 for 10 feet of cable, that Lockheed Martin in the 
reconfiguration of these 110 foot ships made either a schedule 
decision or a cost decision to put our national security at 
risk by installing aluminum mylar cable instead of the braided 
shielded cable.
    I think I need you to tell me what you think about that 
allegation.
    Mr. Mackay. Well, what I will tell you is what I know, sir, 
is that, and these facts are verified by the IG report, the 
aluminum mylar cable met contract specifications. I think the 
experts that were here said that there are design choices that 
are made. Braided cable has some superior characteristics, but 
it is not always and universally a superior or the appropriate 
choice.
    As verified by the IG report, the aluminum mylar met 
contract specifications and both these tests conducted by the 
Navy's SPAWAR and reported in this IG report said that there 
were no compromising emissions. That is what.
    Mr. LaTourette. That is my next question because Mr. 
Atkinson said. You may remember I asked Mr. Atkinson, can any 
witness under oath, but even not under, I mean I don't think 
everybody has to be under oath. If they don't tell the truth, 
that is a bad thing, the oath notwithstanding.
    But I believe in response to my question, can any witness 
come before us and indicate that this system passed the TEMPEST 
test, and he said that anybody that said that would be 
committing perjury.
    Now I understood you to not only read that section on page 
five of the IG's report but I understood you to say in your 
introductory testimony that the TEMPEST system passed. Is that 
right?
    Mr. Mackay. Sir, what I am attesting to is what I read.
    Mr. LaTourette. Right.
    Mr. Mackay. There were no compromising emissions. That was 
the judgment of the DHS IG reviewing that data.
    Mr. LaTourette. Okay, but for your sake as well as the 
Country's sake, I want that in language that people sitting 
home apparently some Sunday evening can understand.
    The allegation was made that Fidel Castro is going to be 
listening in on our most secure communications. The keys to the 
kingdom was the phrase used by the first panel. Because 
Lockheed Martin made a design choice to put in the $7.95 cable 
as opposed to the $27.95, the keys to the kingdom are given to 
Fidel Castro and our enemies. I want you to tell me that that 
is not so if you believe that.
    Mr. Mackay. Sir, that is what I believe, and that is what, 
if you read the Inspector General's report, that is what they 
attest to.
    Mr. LaTourette. Now let me get to the second issue because 
just as important, if not more important, than national 
security are the lives and the well being of the Guardsmen that 
serve on these ships. Mr. DeKort's second observation was about 
low smoke cabling.
    I think Mr. Oberstar was exact. I think many of us remember 
what happened when the bundled cables ignited, and we had 
horrible problems on airplanes. There has to be a reason for 
low smoke cabling specifications for fires as well as certainly 
the health and safety of the crew.
    I understood you to say that you went to the Coast Guard. 
Who came to who on the low smoke cabling?
    I am sorry for not remembering. Did you go to them for the 
waiver or did they come to you and ask for a waiver?
    Mr. Mackay. Since we are in an IPT, it is sort of we always 
discover these things in almost simultaneously, sir.
    Mr. LaTourette. Okay, but regardless, a waiver was granted. 
So somebody reached the conclusion, and maybe jointly if you 
are all in these meetings, that low smoke cabling wasn't 
required on these 110 conversions or at least waived that 
requirement.
    Mr. Mackay. The determination was made that in a situation 
like this, you examine all of the relevant facts which is where 
the low smoke cabling is, what the density of it is. Those are 
just a couple of things. When an analysis was done, 85 of 490 
C4ISR cables that are on each individual ship were not low 
smoke.
    A couple of facts: 16 of the 85 cables were actually 
extended outside to the mast or on deck. So if the issue is 
that when there is a fire, that there are fumes, those fumes 
immediately waft away.
    Seventy-one of the 85 cables run into the pilothouse which 
is surrounded by windows enabling easy ventilation and the 
cables.
    We are using commercial off the shelf or Government off the 
shelf equipment, trying to maximize savings. That is our 
acquisition strategy. And so, a lot of times you have 
proprietary cable assemblies where there is not a low smoke 
equivalent available. There are cable assemblies that are 
attached to equipment, to radar masts and the like. Sometimes 
if you remove the manufacturer supply cable, you void the 
manufacturer's warranty, and in some situations it might be 
cost prohibitive due to the employment of unique connectors.
    But all of that data, and it is a request for waiver or 
deviation. All of that data, all those considerations are 
bundled together. They are given to the Government.
    The Government makes a judgment based on cost 
effectiveness, its safety standards, how much risk it is 
willing to take and whether it is a prudent risk, and they 
either grant a waiver or they say no, you have to. That is the 
process, sir.
    Mr. LaTourette. I get that. I get that. During these 
hearings, I think there was bad judgment all the way around.
    But, again, I want this to be real clear on the record. The 
allegation is made, and people aren't being shy about the 
allegation here. The allegation is made to save money, to meet 
a deadline, Lockheed Martin installed low smoke cables on a 
ship that endangered the lives of Coast Guardsmen, and I want 
you to tell me whether that is true or not.
    Mr. Mackay. No, sir.
    Mr. LaTourette. Because of the explanation, I assume.
    Mr. Mackay. The explanation, I assume? I am not saying that 
there is no low smoke, that there is not, that all the cabling 
is low smoke
    Mr. LaTourette. I know that.
    Mr. Mackay. I said that for all the factors that I 
mentioned.
    Mr. LaTourette. But my question was the allegation is that 
by not using low smoke cables, you put Coast Guardsmen at risk 
and you put the ship at risk. I believe your answer is no, but 
could you just say no if that is your answer.
    Mr. Mackay. No, sir, not in the judgment of the Government 
which granted the waiver.
    Mr. LaTourette. Okay. The last question, Mr. Chairman, just 
so we are not parsing words.
    On the TEMPEST system passing, I think that if Mr. Atkinson 
were able to come back in here and take another swing, he would 
say that the reason that the TEMPEST system passed the SPAWAR 
test was because so many waivers were granted that it really 
didn't pass the test; it passed a test that wasn't a test. 
Would he be right if he said that?
    Mr. Mackay. Sir, that is a question that would have to be 
asked to the Government agencies that granted that.
    Mr. LaTourette. Then I will.
    Mr. Mackay. And also to, I guess, the IG that made the 
determination that there were no emanations that compromised 
those standards, sir.
    Mr. LaTourette. Right. Okay, thank you very much.
    Thank you, Mr. Chairman.
    Mr. Cummings. In fairness, I want to be real clear. We are 
under oath, and I want to be real clear.
    SPAWAR has stated to this Committee that they did not 
certify the ships in an instrument test. They simply ran a 
test. They gave the data to the Coast Guard. It had 
deficiencies. The Coast Guard has turned over records that we 
have in our possession, that we have reviewed, that showed that 
they could not have passed and if they did ``pass'' it was 
because of waivers.
    The IG told the Committee that the Coast Guard told them 
they passed. In other words, the Coast Guard says they passed, 
but the IG did not have the expertise, and that is according to 
the IG, to evaluate the records. And so, the Committee did have 
the records evaluated.
    We can mess with words from now until forever, but we have 
gone through 50 million changes getting records. As a lawyer, I 
have never seen anything like it, from the Coast Guard mainly. 
Our staffs have spent literally 19 hour days going through 
those records. We got records as late as yesterday evening that 
we requested almost a month ago.
    I hear you, Mr. LaTourette, but I don't want the record to 
remain there, that there is something where there has been 
TEMPEST certification because I know you are as concerned as I 
am that certification has been, in fact, done. All I can say is 
that is what we have.
    I am going to come back to you, Mr. Rodgers, because I have 
some concerns about some of your testimony, but now we will go 
on to Mr. Oberstar.
    Mr. Oberstar. Was there a contract specification for a 
particular type of radio for these vessels?
    Mr. Mackay. Mr. Chairman, if you are directing that at me, 
I was not on the program at that time. My entry to the program 
was in July of 2005. I don't have any contemporaneous knowledge 
of that.
    Mr. Oberstar. Well, in the contract, this is an unusual 
type of contract in which there was an absence of very specific 
contract specifications. So in the agreement, in the 
contractual agreement between the Coast Guard and Lockheed who 
is the electronics suppliers, was the contractor free to choose 
what it, in its judgment, felt was the proper equipment to put 
on board this class of vessels?
    You don't know? You can't answer that question?
    Mr. Mackay. With specific reference to those radios, no, 
sir, I cannot.
    Mr. Oberstar. Is anyone on the panel able to answer that 
question?
    Mr. Rodgers. Dr. Mackay mentioned the IPT. Within the IPT 
environment, the Coast Guard working with ICGS, with Northrop 
Grumman and Lockheed Martin would then have gone through that 
process to choose which radios.
    Mr. Oberstar. So somebody made a choice for a radio that 
was not waterproof to be operating at sea in an exposed 
situation where it could short out or shock someone or worse, 
right?
    No one wants to take responsibility for that. No one knows 
anything about it on the panel.
    Lockheed was the contractor, right?
    Mr. Mackay. Yes, sir, I just, my experience on the program 
just doesn't extend back that far, Mr. Chairman.
    Mr. Oberstar. The issues that I think Mr. LaTourette was 
raising about whether individuals were compromised is not a 
question of whether he made a deliberate choice of the type of 
cable to achieve a particular end, but the fact is that this 
cable was not sufficient. The cable used on the to-be 123 foot 
patrol boats was not sufficient to prevent leakage, correct?
    That is what we heard from the previous panel.
    But on the 170s, that cable, the more secure cable was, in 
fact, used. Now why was cabling on one class of vessels used at 
a higher level and a different level used on the other class of 
vessels?
    Dr. Mackay, have you got an answer?
    Mr. Mackay. I don't, Chairman. As I mentioned, my tenure on 
the program doesn't extend back to that timeframe. I can take 
the question for the record if you would like.
    Mr. Oberstar. Mr. Winterstine, do you believe Lockheed made 
the right technical, contractual and ethical decisions on the 
123 program?
    Mr. Winterstine. Mr. chairman, Lockheed Martin entered into 
a contract arrangement to satisfy the 123 requirements that we 
had under contract. We went through the design processes, 
shared those designs with the Coast Guard, discussed those 
designs with the Coast Guard and then implemented those 
designs. So, yes, sir.
    Mr. Oberstar. You are the Program Management Liaison of the 
integrated team.
    Mr. Winterstine. Yes, sir.
    Mr. Oberstar. Are the allegations made that you heard 
previous by Michael DeKort, are they with or without merit?
    Mr. Winterstine. Mr. Chairman, Mr. DeKort made quite a few 
allegations. I would rather not offer opinion, sir.
    Mr. Oberstar. Well, on January 7th, 2004, Mr. DeKort sent a 
memo to a number of people including Mr. Rodgers, and there are 
others, Mr. Clifford; Mr. Ewing, Patrick; McLaverty, Brian. 
Brian McLaverty, I am sorry, I just got the names in reverse 
order.
    In which he says: ``I have become increasingly frustrated 
with the direction the Deepwater project is following, and we 
have sacrificed hard earned and well founded engineering and 
customer focused principles in order to meet the needs of 
nonrealistic schedules. I believe this path will lead, at best, 
to the delivery of a substandard product that will harm our 
reputation and, at worst, the delivery of a product that will 
hamper our customers' ability to successfully carry out their 
mission.''
    Are you aware of that memo?
    Mr. Winterstine. No, sir, I am not.
    Mr. Oberstar. Mr. Rodgers, you were on that memo. Are you 
aware of it?
    Mr. Rodgers. Not specifically.
    Mr. Oberstar. If you received such a memo, would that get 
your attention?
    Mr. Rodgers. Was it a memo? Was it e-mail?
    Mr. Oberstar. Whether it was an e-mail or a memo makes no 
difference. It was a message sent on January 7th, 2004, time, 
11:53 a.m. Maybe it was an e-mail.
    The question is it is a very strong allegation: a 
substandard product that will harm our reputation and, at 
worst, the delivery of a product that will hamper our 
customer's ability to successfully carry out their mission.
    Mr. Rodgers. Sir, what you are referring to is an e-mail, 
and I am not specifically familiar with this e-mail itself.
    Mr. Oberstar. If you had gotten that, would that trouble 
you?
    Would you want to do something about it?
    Mr. Rodgers. Overall, with that said, I would encourage him 
to express his concerns to his management and let us get them 
adjudicated.
    Mr. Oberstar. Well, it doesn't appear that much was done 
about it. It was sent. You didn't see it, and you were one of 
the assignees.
    Mr. Rodgers. I receive many, many e-mails in a day.
    Mr. Oberstar. This is a big contract.
    Mr. Rodgers. Yes, sir.
    Mr. Oberstar. This goes to the expertise of your 
organization. You are supposed to pay careful attention to this 
stuff and not dismiss it saying I get many e-mails. I get 
thousands. All of us get thousands of communications a week.
    Mr. Rodgers. Yes, sir, I did not specifically
    Mr. Oberstar. Something of this magnitude, it is serious. 
You have got to pay attention to it.
    Mr. Cummings. Will the gentleman yield for just one 
question?
    Mr. Oberstar. Yes.
    Mr. Cummings. Thank you, Mr. Chairman, for yielding.
    In answer to one of my questions, you said that the first 
time you had heard about this was, I think recently and you 
just did not have very much detail about it. This memo really 
outlines everything very, very carefully. I am just wondering 
does this refresh your recollection at all, this memo, now that 
you have it in your hand because he really lays out everything 
and you are one of the top people on the project.
    If somebody came and said I have got these issues, Mr. 
Rodgers, and they put them in writing, and they are talking 
about issues that go to our national security and go to the 
safety of the wonderful, brave men and women, patriotic men and 
women of the Coast Guard that we are supposed to be producing a 
vessel for, that is safe. It seems to me that is something that 
would go to the very essence of your thought process.
    It would also concern you that your corporation, Lockheed 
Martin, you don't want them, I am sure, to be placed in an 
embarrassing position.
    But what you are saying is that you don't remember the e-
mail at all?
    Mr. Rodgers. Let me clarify, sir. Overall, I mentioned the 
schedule issue in November of that year. With that, we added 
resources. We added additional talent. Some of the people on 
this e-mail were added, such as Mr. Clifford and Mr. Ewing and 
Mr. Wilhelm. They were added to the team. My day to day 
interaction was with those gentlemen.
    So to clarify, after the November timeframe, I did not 
interface with Mr. DeKort on a day to day basis.
    Mr. Cummings. Did any of those gentlemen bring it to your 
attention, the memo?
    Mr. Rodgers. This memo? Not to my recollection, sir.
    Mr. Cummings. All right, I yield back.
    Mr. Oberstar. What is emerging from the questioning and 
from the responses is that the fundamental issue we are 
concerned about, there is a structural failure in the way this 
program was carried. There is a structural failure in the Coast 
Guard self-certifying and allowing the contractor to self-
certify, and there was not a third party oversight of this in 
an effective way.
    Ms. Lavan, you are Vice President of Ethics and Business 
Conduct for Lockheed, correct?
    Ms. Lavan. That is correct. Actually, right now I am Vice 
President of Internal Audits since February.
    Mr. Oberstar. But you were at the time.
    Ms. Lavan. For the past three and a half years since 
October of 2003.
    Mr. Oberstar. When you got an ethics complaint, what was 
your procedure for dealing with it?
    Ms. Lavan. Well, just as a bit of background on Lockheed 
Martin and its ethics program, we have a very solid program 
that is comprised of a number of components. One of the most 
important components is that we have ethics officers at each of 
our major locations, for instance, here where Deepwater is 
located. And so, those ethics officers are tasked with taking 
in any kind of complaints that employees bring forward.
    So they are to conduct thorough and complete investigations 
of any complaints that are brought forward, and that is what 
Mr. DeKort brought forward in October of 2004 to the ethics 
office.
    Mr. Oberstar. He brought forth very technically complex 
complaints?
    Ms. Lavan. He did, yes, and the ethics officers that 
investigated it, both had engineering backgrounds.
    Mr. Oberstar. They had the technical expertise to evaluate 
the complaint from Mr. DeKort. Then in what way was it disposed 
of?
    Ms. Lavan. They conducted an investigation that took over 
two months. They looked at all his concerns, talked to people 
on the program and reviewed documents and determined that his 
concerns about an ethical issue were not substantiated and that 
they, we believed, they believed that the customer was well 
informed and involved in the decision-making process on the 
issues that were raised.
    I do want to mention that Mr. DeKort at that time had 
raised the radio issue.
    Mr. Oberstar. Yes.
    Ms. Lavan. It was not investigated because, as Mr. DeKort 
himself mentioned to the Committee, it was replaced under 
warranty by Lockheed Martin. So those radios were never put on 
the boat.
    Mr. Oberstar. Do you have a document of exoneration, of 
self-exoneration of Lockheed?
    You said the issue was resolved, and it was determined that 
there was not an ethical issue here. Was that in writing?
    Ms. Lavan. The issue about the radio?
    Mr. Oberstar. No. The other, the previous question.
    Ms. Lavan. We keep a record of our ethics investigations. 
That is not something we typically share with the complainants. 
It is internal to Lockheed Martin.
    Mr. Oberstar. Mr. DeKort said that you told him that the 
official response to the allegations, that his allegations were 
baseless and had no merit. Is that how the ethics issue was 
resolved?
    Ms. Lavan. Actually, there were three separate ethics 
investigations. As Mr. DeKort continued to be unsatisfied with 
the results of the investigations, they went to increasingly 
different levels.
    The next level involved what we call our business area 
where we put together a team of experts that had technical 
background, procurement background as well as programmatic 
background, and they again looked at the original 
investigation. They talked to people on the program, looked at 
documents, talked to Mr. DeKort and found that his concerns 
were unsubstantiated because they were being worked with the 
customer through the customer system.
    Mr. Oberstar. Did you dismiss the DeKort complaint, ethics 
complaint, on grounds of ethics or on substance of the work to 
be accomplished?
    Ms. Lavan. But we never dismissed his complaint. We took 
his complaint very seriously and invested.
    Mr. Oberstar. You said it was disposed of.
    Ms. Lavan. Internally, we talked. We would go back to Mr. 
DeKort.
    Mr. Oberstar. You found it not substantiated.
    Ms. Lavan. Exactly, yes.
    Mr. Oberstar. So I call that a dismissal.
    That is a very important element in this whole inquiry. 
When you said that you hold these matters internally, could the 
Committee receive a copy of your internal documents for our 
review if you wish in a confidential manner?
    Ms. Lavan. Yes, the ethics investigation certainly. You 
would be entitled. You could receive a copy of that.
    Mr. Oberstar. We would like to have that.
    Ms. Lavan. They are actually, they are fairly substantial 
documents.
    Mr. Oberstar. It is a very substantial issue, and I think 
it goes to the core of our inquiry here.
    In the end, did your office at the time or did Lockheed 
conclude that the deficiencies existed as listed by DeKort but 
that Lockheed was not responsible for them because the Coast 
Guard took contractual delivery of the boats?
    Ms. Lavan. The way we looked at it, then there was a third 
investigation which I spoke with Mr. DeKort myself and looked 
at the program myself, personally, and the way we looked at it 
from the issues that Mr. DeKort raised was that what was the 
customer informed, were they fully aware and were there 
decisions being made in terms of for the benefit of the 
customer and the program?
    We knew that at that point, that SPAWAR had approved the 
TEMPEST. It has passed the TEMPEST test. We also knew the 
ongoing IPT was looking at the C4ISR specifications and that 
was to be resolved on a contractual basis. So we knew that 
there was ongoing dialogue and debate between the customer and 
Lockheed Martin.
    Mr. Oberstar. In the end, Lockheed took the position that 
if the Coast Guard wanted the problems fixed, they would deal 
with it, extend the schedule and add the funds to do so. Is 
that correct?
    Ms. Lavan. We viewed that there was an open and honest 
dialogue between Lockheed Martin and the Coast Guard and that 
both Lockheed Martin and the Coast Guard through the IPT 
provisions of the contract would reach a decision that was well 
informed on both sides.
    Mr. Oberstar. Mr. Chairman, I will withhold at this point.
    Mr. Cummings. Mr. Coble?
    Mr. Coble. Thank you, Mr. Chairman.
    I was here earlier but I have missed a good portion of this 
panel. It appears what we have is a dependable, respected armed 
service in the U.S. Coast Guard and two highly regarded defense 
contractors plagued by an expensive fiscal error.
    Dr. Mackay, let me ask you a question. In light of the 
Commandant's proposal for a new direction for the Deepwater 
program and the problems that have been revealed today and in 
previous hearings, what suggestions would you have to improve 
the protocols and the procedures that govern acquisition, 
design, construction, coordination, et cetera, for future 
projects?
    Mr. Mackay. Sir, I will limit my remarks to the Deepwater 
project. I think that the course of action that the Commandant 
has laid down is prudent and goes to a direct and active 
dealing with issues that have surfaced on this program. 
Industry, both Lockheed and Northrop Grumman, both myself, Mr. 
Anton, and well above us extending to our CEOs, have been in 
active consultation and discussion about the way forward on 
this program.
    The new acquisition plan that the Commandant has laid out, 
the features of it, some of the other things at a lower level, 
like the joint configuration control board, the incorporation 
of ABS, I think are an affirmative series of steps to meet the 
challenge and the issues that have been raised by this 
Committee and other bodies. We look forward to continuing to 
cooperate with the Coast Guard to effectuate those steps to 
improve this program and to continue to deliver the kind of 
performance that I alluded to in my opening statement.
    The fact that every Coast Guard Station now has new HH-65 
Charlie helicopters, that all of their medium and high 
endurance cutters in the Coast Guard have been touched by not 
one but two rounds of upgrades, the fact that though we have 
spent a lot of the program time upgrading legacy cutters, in 
this year of 2007 we now turn to deliver all new systems--the 
HC-144, and eventually the national security cutter, and 
redeliver the C130Js to the Coast Guard, which will be their 
longest range and most capable maritime patrol aircraft.
    There is a lot that can be gained as this program goes 
forward. I think the Commandant has laid out a prudent and 
well-considered way to get there.
    Mr. LoBiondo. Thank you, sir. Let me ask you this, Doctor. 
What level of responsibility do the system integrator and the 
contractors have for the failure of the 110-foot conversion 
project?
    Mr. Mackay. Lockheed Martin is responsible for the C4ISR. I 
am not aware of a C4ISR issue that is directly connected to the 
issues that led to the lay-up of these cutters.
    Mr. LoBiondo. Anybody else want to weigh in on that?
    Mr. Stanley, Mr. Sampson, the naval architect who was 
employed by the Navy and the Coast Guard, appeared on the first 
panel. Did he ever contact you regarding this matter?
    Mr. Stanley. Not to my recollection, no, sir.
    Mr. LoBiondo. Do you know whether he contacted anyone in 
your company?
    Mr. Stanley. It could have happened. But not to my 
knowledge.
    Mr. LoBiondo. All right. I thank you, Mr. Chairman. I yield 
back.
    Mr. Cummings. Thank you very much.
    Mr. Taylor.
    Mr. Taylor. First of all, I want to thank all of you 
gentlemen and ladies for staying around till 8:20 tonight. I am 
going to go back to my question to the last panel. Well over 
$50 million was spent, eight working Coast Guard cutters are 
now rendered useless, and everybody says it was not me. Now if 
I were running a large supply boat company and had tasked a 
company to design a change to those vessels to make them 
longer, and had hired a company to implement that, and then I 
found out in a subsequent Coast Guard inspection that those 
vessels are now rendered useless, I would do one of several 
things. I would sue the company that designed it, I would sue 
the company that built it, and I would tell all the authorities 
involved that my company is not going to do another dime's 
worth of business with any of you until someone accepts 
responsibility.
    The reason I say that is that I am fortunate enough to 
serve, as is Mr. Cummings, not only on this Committee but also 
on the Armed Services Committee. There is a heck of a lot of 
similarities between this vessel and the LCS; both very similar 
thin hulled vessels designed to operate in very tough 
conditions. The Navy is counting on the LCS program to ride to 
the rescue as far as getting the numbers of the fleet back up. 
We are having substantial problems with the LCS program dollar-
wise. Some very serious mistakes I think were made in the 
construction of it, not addressing problems as they arose but 
continuing to build the vessel so that when it came time to fix 
those things it cost a heck of a lot more than it should have.
    So again, using that analogy, I do think this Congress has 
some very substantial leverage when it comes to someone 
stepping forward. It is really easy in my capacity to say we 
are not going to build any LCSs. If the folks who made the 
screw-ups here are being counted on to do great work there, and 
no one is going to admit a mistake, I have got to believe they 
are going to make the same mistakes on the next one. So at what 
point does one of you step forward and say we made a horrible 
mistake. We are not going to bill our Nation $50 million-plus 
for the mistakes we made and we are going to accept 
responsibility for ruining eight ships that still had a good 
ten to fifteen years of life left in them.
    That really is an option that is available to me. I cannot 
guarantee that the other members of my Subcommittee or the 
other members of my Committee will go along with it. But at 
this point, I am dead serious when I make that statement. I 
cannot look 700,000 Mississippians in the eye and say you all 
have treated us fairly, and I sure as heck cannot look 300 
million Americans in the eye and say that you all have treated 
our Nation fairly.
    I will open that up to the panel, because, apparently, all 
of the decisionmakers are represented right there. I think the 
stakes are pretty high, folks. I am giving you an opportunity 
to tell me what went wrong and who is going to accept 
responsibility. Because we do know that there are eight ruined 
ships that the Coast Guard is not even trying to fix at this 
point. They are either going to scrap them or sink them and 
hope that it is swept under the rug. It is now swept under the 
rug. It is a very real problem and it is a problem that could 
very well occur again in the LCS. I cannot in good faith let 
that happen.
    Mr. Mackay. Mr. Taylor, I will tell you that I have met 
with, and Lockheed Martin has put forward to the Coast Guard 
for the C4ISR----
    Mr. Taylor. Let us talk about the hull, sir. Because the 
reason that the ships are being retired is not because the 
radios were not waterproof, which strikes me as really dumb, or 
that we had vulnerabilities on the communications, particularly 
if you are a Colombian drug lord and want to know whether or 
not the Coast Guard is going to be in a certain place, and 
there are countries around the world that might be cooperating 
with them, so I can see that one, too. But the reason the ships 
are being retired is because of hull failure. No one has 
stepped forward to say we screwed up--the builder says he did 
not do it, the designer says he did not do it. I can tell you 
one thing, apparently the two welders I hired in Bay St. Louis 
with a sketch that I did on the back of an envelope, we built a 
boat that still works. All these experts apparently could not 
do what those couple of guys in Bay St. Louis did for me.
    Mr. Mackay. Mr. Taylor, I cannot address the hull aspects. 
Lockheed Martin was not under contract for that. But I will 
tell you that we have approached the----
    Mr. Taylor. I think, as a point of clarification, I think 
Lockheed Martin was the lead contractor on that.
    Mr. Mackay. No, sir. No, sir.
    Mr. Taylor. You were not involved in any way in the 
stretching of that vessel?
    Mr. Mackay. No, sir, not with respect to the hull, the hull 
machinery and the electricity. No, sir. That was a----
    Mr. Taylor. You were not involved in the design?
    Mr. Mackay. No, sir.
    Mr. Taylor. You did not hire someone to do the design work? 
You did not pay the folks who did do the work?
    Mr. Mackay. No, sir. As a point of clarification, sir, and 
then I will turn it over to my partners to comment. In ICGS, 
Lockheed Martin is responsible for C4ISR. With respect to 
shipbuilding, that is the responsibility of Northrop Grumman 
and its partners, one of which is represented here in Halter 
Bollinger. What I wanted to tell you is, in respect to C4ISR, 
we have discussed with the Coast Guard Lockheed Martin 
proposals for the reuse of the 123 C4ISR data, equipment on the 
123s, and the Coast Guard has considered that and they will 
dispose of that as they deem fit. We were not contractually 
responsible or otherwise participated in the design or 
fabrication of the hull. That was a responsibility under the 
joint venture of Northrop Grumman Ship Systems and their 
partners on that side.
    Mr. Taylor. Mr. Anton?
    Mr. Anton. The Coast Guard yesterday made the announcement 
that they were going to lay up the 110 to 123 converted 
vessels. In that announcement, the Commandant indicated that 
there were multiple pieces of analysis that have been done and 
that the root cause cannot be determined based on that 
analysis. Now, we are not privileged to that analysis, but we 
have requested a copy of it.
    We need to determine the cause of the failure, sir. When we 
determine the cause of the failure, we will determine 
accountability. And when we determine accountability, we will 
know who needs to stand up.
    Mr. Taylor. How long does that take? What was it, two years 
ago, right around the time of the hurricanes? Now I realize 
some of us were busy with other things. But to the best of my 
understanding, the problems on Matagorda were better than two 
years ago.
    Mr. Anton. The first problem on Matagorda did occur two 
years ago. We immediately dispatched a team, both the Coast 
Guard, industry, Bollinger, Northrop Grumman, Bollinger, and 
the Coast Guard dispatched a team to the Matagorda to survey 
that ship and to find out what had happened and why the ship 
had buckled. In that survey, we found an unwelded stringer 
right in the area where the buckling occurred. When we went 
back and reviewed the analysis, we felt like the stringer had 
caused the problem. At that point, Bollinger welded the 
stringer, under no cost, and we thought we had the problem 
solved.
    For the record, I will have to tell you for the record the 
string of events, but I cannot tell you when the next failure 
occurred, but I can tell you all eight boats were already in 
conversion. When the next failure occurred, I believe four or 
five of the boats had been delivered.
    So, it does take a long time. A lot of people have looked 
at it. Just today, testimony from Scott Sampson indicates that 
the 1997 ABS rules were flawed. It takes time. We were not 
aware of that comment until today.
    With respect to the design, and with respect to the 
fabrication of the extension, and the vessel, I will have to 
let Mr. Stanley comment on that.
    Mr. Taylor. For the record, because I think I have heard 
otherwise and so I would like a clarification from you 
gentlemen under oath, for the record, was anyone from Bollinger 
Shipbuilding ever invited to look at the vessels after the 
problem occurred to see if they could identify what they 
thought was causing the problem?
    Mr. Anton. I will let Mr. Stanley answer that.
    Mr. Oberstar. Will the gentleman yield? The gentleman is 
right on with the line of questioning. In fact, I was going to 
pursue it at a later point. But at this stage, Bollinger also 
did the Navy's extension of the 170 to 179 foot and you had no 
failures there.
    Mr. Stanley. That is correct.
    Mr. Oberstar. From what I understand, the work proceeded by 
strengthening the hull. And you advised the Coast Guard that 
they needed to do the same because they were doing a much 
greater percentage extension of hull than the Navy was doing 
and they did not take your counsel. I want you to add that on 
in your response to the question that the gentleman from 
Mississippi raised.
    Mr. Stanley. I will be glad to answer all the questions. If 
we could, Congressman Taylor, there are several periods of 
damage to the Matagorda and you have got to decipher and 
discuss for clarity where Bollinger was involved and where it 
was not. I would like to offer if I could, and I think it might 
be helpful, if we would spend a couple of seconds and go back 
over the history of the Matagorda and then----
    Mr. Taylor. Okay. Can we go back to my direct question 
first, and then I certainly want to give you an opportunity to 
say what you want to say.
    Mr. Stanley. All right.
    Mr. Taylor. I thought I heard representatives from 
Bollinger Shipyard say that they had never been invited to 
inspect the failed vessels so that they could give their 
opinion of what went wrong.
    Mr. Stanley. That is correct. You heard that in your office 
and I was there the day it was said.
    Mr. Taylor. That seems to be a little different from what 
the gentleman from Northrop just said.
    Mr. Stanley. No, it is not.
    Mr. Taylor. So, again, I am giving everyone an opportunity 
to clarify that.
    Mr. Stanley. That is what I was trying to do. I need to 
spend just a moment with you. After the Matagorda came out of 
completion at Bollinger's of the work that was contracted under 
Deepwater, Matagorda went into what they call a PDMA, it went 
into a maintenance period. So there was work done on the ship 
that was separate and apart from the Deepwater scope of work. 
Before it went into its PDMA, it went through an operational 
test evaluation period to see if it effectively would perform 
to the specifications of the contract for the conversion. It 
went into the PDMA. Then after the PDMA, it went to Key West, 
and then following its arrival at Key West it left Key West 
fleeing one of the storms that year enroute to Miami. This is 
the September timeframe of 2004. In fact, several of the boats, 
all of the boats in Key West left for Miami fleeing that same 
storm that year.
    The first damage on Matagorda, the buckling damage happened 
at that time. That was reported to Bollinger. The ship was 
brought back to Bollinger, to Lockport, Louisiana, and repaired 
by Bollinger, with a joint discussion with the Coast Guard of 
what had happened, what has caused the failure, and what should 
be done to correct it. Northrop Grumman was in that discussion, 
ICGS was in that discussion, all the Coast Guard collectively 
was in that discussion. We recognized that in the early 
calculations of the 110's conversion that some mistakes were 
made in those calculations, we all identified those mistakes, 
and for the mistakes that Bollinger made, Bollinger certainly 
stepped up to the table and said that was a mistake and this is 
the correct number and this is what should be done with this 
number.
    Then what happened was that ship sailed. It had other 
damage and it had other decisions made to correct that damage. 
Believe it or not, I did not know until January, in some of the 
Coast Guard's testimony, of some of the repairs that were done 
to the Matagorda after it left us.
    So it is very difficult for us as a shipyard. You 
personally have known our owners many years. We are very proud 
of our work and very proud of what we have done with the Coast 
Guard. We built all the hourglass, we built all the CPBs. Our 
employees have married Coast Guard people, our employees have 
son and daughters that serve in the Coast Guard. We take this 
very seriously. We are at a loss as to what happened. And 
although we respect the Commandant's decision, we do not 
believe that this question should remain unanswered. There is 
an answer. You are absolutely correct.
    The Commandant, and I cannot speak for him, but I think his 
decision was that in the best interest, considering everything, 
it is better to decommission those ships and move forward. I 
think that is what he is thinking, but I certainly cannot speak 
for him. But if you want an answer, there is an answer. And 
there has been, as Mr. Anton said, many independent studies 
done that neither Bollinger nor Northrop has seen. I think we 
could be very helpful in resolving the situation. But that 
information needs to be shared.
    Mr. Taylor. Well, I appreciate the gentleman's answer. I 
stick by what I am saying. If all the parties involved are also 
involved in the LCS and none of the parties involved are going 
to step forward and say that is the problem, this is who ought 
to pay, then I do not see why our Nation ought to be doing 
business with you for the LCS.
    Mr. Chairman, I yield back my time.
    Mr. Oberstar. Mr. Chairman, I would like to follow up on 
Mr. Taylor's. Mr. Stanley has said some extremely important 
here. We had a loss as to what happened. There should be an 
answer. And is the answer that Bollinger built both the 170 and 
the 179, and the 110 and the 123. The 179 did not crack because 
the hull and the hull girders were strengthened. The Navy 
specified that strengthening and the Coast Guard did not.
    Mr. Stanley. That is not quite correct, Mr. Chairman. If I 
could, let me separate two issues for you.
    Mr. Oberstar. All right.
    Mr. Stanley. The patrol coastals, the PCs for the Navy were 
strengthened very early after their delivery into service, long 
before the extensions were added to them and for a much 
different reason. The patrol coastals, like the Island Class 
and like the specifications for the 123, and like most 
operating equipment in the marine and in the air environment, 
they have operational restrictions. In the case of the PC, the 
PC was actually designed and specified to work in the 
Latorials, but it found itself making many transits on open 
ocean.
    And as it made transits in normal Navy operations, it made 
those with large ship convoys at convoy speeds. Sometimes the 
speed of the convoy and the size of the ship would get into 
weather that would not affect big ships but it really affected 
small ones, like the PC. And we had cracking on the PC because 
the PC was operating outside of its planned and designed 
environmental envelop. We strengthened the PCs which allowed 
them to then transit with the big ships in heavy seas at 
transit speeds.
    Much later on some of the PCs, not all, but some of the PCs 
received stern extensions for a very similar reason that we 
extended the 110s to all out for the boarding of a small rigid 
hull inflatable, for the safe boarding and exit of a rigid hull 
inflatable. But the two are not necessarily connected together. 
I think that is very important. It is true that the hulls of 
the PCs were strengthened. In the case of the 110, this 
calculation----
    Mr. Oberstar. But did the Navy specify hull strengthening 
for the extension of the 170 to 179? Did they not give a 
specific----
    Mr. Stanley. No. No. Because the hulls had already----
    Mr. Oberstar. That is what the Navy told us.
    Mr. Stanley. Well, no. I do not think there is a----
    Mr. Oberstar. The Carderock division, the David Taylor 
Model Basin specialist told us that, and you are saying they 
did not?
    Mr. Stanley. I think it is a matter of timing. The Navy and 
Bollinger strengthened the hulls on the PCs, all of the PCs, 
long before, long before, several years before the stern 
extensions were added. So to say that the Navy instructed 
Bollinger to increase the strength of the hull because they 
wanted to add stern is incorrect. The hull had already been 
changed for another reason and its strength increased for 
another reason.
    Mr. Oberstar. All right. We will desist there because there 
are other members who have questions and we need to go on, in 
all fairness. Thank you, Mr. Gilchrest, for forebearing here.
    Mr. Cummings. Mr. Gilchrest.
    Mr. Gilchrest. Thank you, Mr. Chairman. I guess I would 
like to stick with the hull design here for a little while. Mr. 
Anton, you are executive vice president of Northrop Grumman; is 
that correct?
    Mr. Anton. Yes, sir.
    Mr. Gilchrest. And so you, working with the ICGS, got the 
contract to work on the hulls on these 110s; is that correct?
    Mr. Anton. ICGS is the prime contractor. When the contract 
comes into ICGS, the HM&E portion of the work is given to the 
Northrop Grumman partner of the joint venture.
    Mr. Gilchrest. So Northrop Grumman has this contract and 
you subcontract to Mr. Stanley, with Bollinger?
    Mr. Anton. We did.
    Mr. Gilchrest. So when Bollinger Shipyard was done with 
each of these boats at various times, what was your 
responsibility before the boat was put into service after 
Bollinger Shipyard finished the boats?
    Mr. Anton. Could you ask that again?
    Mr. Gilchrest. Northrop Grumman is the contractor to extend 
the hull or make the 110 into the 123. So you subcontract to 
Bollinger Shipyard to do the work.
    Mr. Anton. Yes, sir.
    Mr. Gilchrest. Once Bollinger Shipyard is done, what is 
your responsibility to ensure that the work was done 
appropriately?
    Mr. Anton. During the production effort at Bollinger, we 
had a QA plan and a quality assurance team and we worked side-
by-side with the program office from the Coast Guard reviewing 
the work that Bollinger was accomplishing. In addition to that, 
the Coast Guard again formed an in-serve team, and in service 
inspection team which actually took the ship out on trials and 
then made a recommendation as to whether to accept the ship or 
not.
    Mr. Gilchrest. Apparently you and the Coast Guard accepted 
each of these ships at various times.
    Mr. Anton. Bollinger certified to Northrop Grumman that the 
work was in accordance with the specs. In the case of the hull 
extension, ABS monitored the structural part of the conversion 
process and they also signed a certification that the work was 
done in accordance with the design and we accepted that 
certification based on our on site QA team, and we certified 
that, yes.
    Mr. Gilchrest. So as a result of that, looking in hindsight 
at each of these eight ships going into service, the Matagorda 
7 February 2005 went into service and the hull problem was 
identified 10 September 2004. That is what I have here. Rather 
than go through all the dates, in hindsight, was there a design 
flaw in this extension, or was there less than top grade 
material used? Mr. Stanley and Mr. Anton, what was the problem 
with the breach of the hull?
    Mr. Anton. I am going to tell you we have to determine the 
root of the cause for the failure then we will understand and 
we will be able to answer that question.
    Mr. Gilchrest. Are each of the eight ships different in 
their failure?
    Mr. Anton. Yes. Each ship, in fact, fails in a different 
area. The modeling that has been done to date, to my knowledge, 
I know the modeling that we have done, but the modeling I 
believe that the Coast Guard has done as well has not been able 
to predict the occurrence of these failures on each vessel.
    Mr. Gilchrest. Has there ever been a 110 extended to a 123 
that passed?
    Mr. Stanley. No, not to my knowledge.
    Mr. Gilchrest. This is the first time.
    Mr. Stanley. Yes.
    Mr. Gilchrest. Did you, Mr. Anton or Mr. Stanley, who 
conducted the technical review of the design prior to the 
beginning of construction?
    Mr. Stanley. We initiated the design which Northrop 
reviewed as well as the Coast Guard reviewed in the design 
process. Before we took the design to construction or to 
conversion, that design was generated and vetted many different 
times.
    Mr. Gilchrest. How was the design vetted? Was it vetted 
with third parties, other engineers, other boatyards, other 
shipbuilders?
    Mr. Stanley. No. It was vetted inside of the Deepwater or 
the ICGS structure. Parts of that design, the stern extension, 
the superstructure, was vetted to ABS outside to review that 
design.
    Mr. Gilchrest. Now the hull failures went from 10 September 
2004 to 24 March 2006. Can you tell us about once you had a 
failure in 2004, was there any sense or anticipation that you 
were going to have another failure in another boat? Was the 
design changed in future boats?
    Mr. Stanley. As I outlined for Congressman Taylor, we were 
involved in the initial failure of the Matagorda.
    Mr. Gilchrest. You say you were not involved?
    Mr. Stanley. No, I said we were involved. The boat was 
brought back to Louisiana, calculations reviewed with the Coast 
Guard, and hull strengthening on the Matagorda and all the 
boats that followed her was applied. Failures that happened 
after that point, and studies that happened after that point, 
and events that happened after that point, we do not have any 
knowledge of. That has not been shared with us.
    Mr. Gilchrest. So you were the contractor that worked on 
the hulls of all these eight boats?
    Mr. Stanley. Yes, sir.
    Mr. Gilchrest. But you are not familiar with the problem of 
the breaches in the hull other than the Matagorda?
    Mr. Stanley. That is pretty much correct. Let me say, we 
are not the only contractor that worked on the breaches in the 
hull. As I reported, the ships left us, they went into an 
availability, and then at some point in time those ships also 
received modifications to their hull structure that----
    Mr. Gilchrest. Where did they receive modifications? From 
different shipyards----
    Mr. Stanley. From different shipyards, in Savannah and 
Alabama.
    Mr. Gilchrest. But regardless of the modifications, every 
one of them that had this extension failed.
    Mr. Stanley. I am not sure of that. We do not have those 
records of how many boats failed.
    Mr. Gilchrest. Thank you, Mr. Chairman.
    Mr. Cummings. All eight failed. According to what I saw. 
All eight of them failed.
    Mr. Kagan, you can go ahead.
    Mr. Kagan. Thank you, Mr. Chairman. I recognize the hour is 
late and the interest is still quite high, at least for this 
new Representative. I have been here 100 days and change, so I 
am new to shipbuilding. I am a physician, a doctor. I design 
laboratory tests. I have never designed a boat. I want to thank 
you all for being here and giving your best opinion. But I am 
still trying to sort out in my mind about the these ships that 
have a hull that does not work. It is obvious to me that the 
design was less than perfect, and that no matter who touched 
and tried to repair the ship after this design was put into 
place, they were unable to keep it together. So I am trying to 
decide where the buck stops. Earlier when you were testifying 
about the electrical wire and how well or unwell it is wrapped 
for security purposes, I got a little bit dizzy and confused 
trying to decide who is in charge. So with regard to who is in 
charge, where does the buck stop with regard to the hull 
design? Would that be Northrop? Would that be Bollinger? And 
just to make it easy for me, I built this for you. I will hand 
it to you and you can pass it around, but when it stops that is 
the person I want to talk to. The buck stops here. Who is going 
to take it?
    Mr. Anton. Bollinger did the design work for the 110 123 
extension. And so I think it is appropriate that Mr. Stanley 
answer your question.
    Mr. Kagan. So, Mr. Stanley?
    Mr. Stanley. I would be glad for the buck to stop here.
    Mr. Kagan. Very good.
    Mr. Stanley. I can only supply the information that we 
have, and I can only tell you the reason that I am here today, 
and one of our basic corporate tenets in our company is to not 
shy away from good times or bad times, I cannot answer your 
question where the buck stops yet. I really cannot. I can tell 
you that we did the design.
    Mr. Kagan. All right. So the answer is, yes, you did do the 
design for the hull?
    Mr. Stanley. We did the design.
    Mr. Kagan. And if that design has been proven to be 
inadequate for the task at hand, would you agree with me that 
your company then would be responsible for the failures that 
follow?
    Mr. Stanley. That could be possible.
    Mr. Kagan. And so if I represent the people in northeast 
Wisconsin and we got something designed, the designed failed, 
would it be too much to ask for our money back?
    Mr. Stanley. You certainly could do that.
    Mr. Kagan. If you did accept damages and we did get all of 
our money back including loss of use for these eight ships in 
their future years, would that permanently damage your company? 
Would that put you out of business?
    Mr. Stanley. There is a question before that. There are 
very clear ways contractually in Deepwater as well as naval 
shipbuilding that Mr. Taylor refers to, to determine where the 
buck stops.
    Mr. Cummings. Mr. Stanley, we cannot hear you. This 
testimony is, I really want to hear this.
    Mr. Stanley. There are very clear ways and established ways 
to settle where the buck stops. There are contractual 
obligations that are placed on the contractors, there are 
obligations the Government undertakes in its side of the 
contract, and in the case of the 110 and in the case of any 
dispute where the contractors and the Government have a 
problem, there are very clear ways forward. We encourage ways 
at Bollinger to be pursued. And I hope that answers your 
question.
    Mr. Kagan. It does in part, and it leads to some other 
queries. When you do design a piece of work to extend a ship 
off the rear end, I am sure you had other people take a look at 
your plans and your designs. Is that true?
    Mr. Stanley. Yes. And I cannot tell you how many.
    Mr. Kagan. But would that also mean that there might be 
other people besides your own company that should accept at 
least partial responsibility for this failure of design?
    Mr. Stanley. That is part of the process that is described 
that I tried to describe.
    Mr. Kagan. Are any of those companies represented here this 
evening?
    Mr. Stanley. Well, the Coast Guard is here, Northrop 
Grumman is here.
    Mr. Kagan. So that is two other individuals.
    Mr. Stanley. And Bollinger is here. I do not know if there 
are ABS people here, I have not seen them. But certainly all 
three of those groups have a responsibility to share a part of 
the success or failure of a contract.
    Mr. Kagan. Well, I want to applaud your honesty in 
accepting the buck stops here sign. I think it takes a great 
deal of courage to be here when things are bad. I know in the 
practice of medicine sometimes doctors will do everything right 
but things still do not work out; people still succumb even to 
an illness that is treated appropriately. I am a little 
saddened because no one has really gotten to the bottom line in 
figuring out why this unprecedented modification of a light 
weight, high speed craft has not been analyzed to the point 
where you could present the data here this evening to someone 
who really understands shipbuilding that could explain exactly 
where a single or multiple failures occurred in the design. 
But, obviously, this is a troubled project, and you would 
accept that.
    Mr. Stanley. Yes, it is.
    Mr. Kagan. I applaud you for accepting if not total at 
least partial responsibility. I yield back my time.
    Mr. Cummings. Thank you very much. Mr. Stanley, I just 
heard what you said and let me make sure I am clear. Are you 
trying to tell us, because I just want to make sure I am clear 
on this because I want the record very, very, very clear 
because a lot is riding on what you just said, are you telling 
me that you believe that Bollinger is responsible for the hull 
problem? Is that what you are telling us?
    Mr. Stanley. No, not at all.
    Mr. Cummings. Then what are you saying? Because I want to 
make it clear. I want to make sure that whoever is responsible, 
going back to what Mr. Taylor was talking about, is held 
responsible because we are not going to be able to prevent 
these things from happening in the future if we do not get to 
the bottom line. And so, as I listen to your answers that you 
just gave, I am sitting here as a lawyer and I am saying if 
this were my case and I were representing Northrop Grumman, I 
would be saying hallelujah because apparently somebody had 
taken responsibility. I am just asking you to be clear. What 
are you saying? He has talked about the buck stopping, and when 
I hear the buck stopping and hear what you just said, it 
sounded like you were accepting liability here. Sworn 
testimony, I would think somebody would be able to take that 
into a court of law and do something with it. So, I am just 
curious.
    Mr. Stanley. I would like to be very clear with you. I 
thought I was very clear with the Congressman. I said there is 
a process in Federal contracting, a very clear one, that 
adjudicates disputes and the adjudication of the dispute places 
responsibility and accountability. In our interchange, the 
Congressman asked me how many people was here in that process 
that could have responsibility, and I said three.
    Mr. Cummings. Okay. I got you. I just wanted to make that 
clear and I wanted to make sure that the people back at your 
company would not be mad at you when you got back.
    Ms. Lavan, let me go to something that you said that is 
troubling me. You said that the Coast Guard was kept informed 
when we were talking about Mr. DeKort's complaints, and there 
is a letter sitting up there somewhere from Mr. DeKort where he 
made some complaints, would you pass that to her, Mr. Rodgers, 
you said that the Coast Guard was kept informed of the various 
things that were happening with this contract. Is that correct?
    Ms. Lavan. Yes, sir.
    Mr. Cummings. Would they have been kept informed of the 
topside issue?
    Ms. Lavan. You are referring, first of all, to the email, 
this is January 2004, before the ethics complaint came in, 
which was October 2004. And in terms of the topside equipment 
where I was talking about the flowdown of the specifications 
and where, as Dr. Mackay was talking about, where the sort 
should have been placed, Coast Guard was part of the IPT, which 
is the integrated product team, that was looking at that issue.
    Mr. Cummings. Okay. So when DeKort raises topside, and that 
memo was January 2004; is that right?
    Ms. Lavan. That is right.
    Mr. Cummings. It was dated January 2004, the Matagorda is 
received and a DD-250 is dated around March 2004; is that 
right?
    Ms. Lavan. Yes.
    Mr. Cummings. Now the Coast Guard becomes aware of 
noncompliance, according to the IG, and I notice everybody is 
very familiar with the IG report, which I am very impressed 
with, thank you very much, July of 2005. Are you aware of that?
    Ms. Lavan. Yes.
    Mr. Cummings. And August 29 of 2006, the Coast Guard gets a 
letter from the integrated team indicating that the topside 
equipment did not meet minimum standards. Are you familiar with 
that?
    Ms. Lavan. Not specifically, no.
    Mr. Cummings. Well they did. Are you familiar with that, 
Mr. Mackay?
    Ms. Lavan. I think we are talking about two different----
    Mr. Cummings. All right. Help me.
    Ms. Lavan. One is the Tempest issue, the other is the 
topside equipment issue. The Tempest issue is the one that was 
approved by SPAWAR in March of 2004. Separate issues.
    Mr. Cummings. Okay. So the Coast Guard was made aware of 
that; is that right?
    Ms. Lavan. The Coast Guard, as I understand it, was part of 
the testing.
    Mr. Cummings. Right. That clears that up. That is good.
    Ladies and gentlemen, any other questions? Well, we have 
heard a lot of testimony here today and, I will tell you, if I 
were a judge I would let a higher authority try to ferret all 
this out. I am being very frank with you. We have so many 
documents that, to be frank with you, show all kinds of 
inconsistencies. I am at a point right now where I have 
questions but I think it is better that I turn them over to 
somebody else, a higher authority, because this concerns me 
tremendously. Thank you very much. You are dismissed.
    Mr. Cummings. We will now call our third panel. Mr. Debu 
Ghosh, Mr. Joe Michel, Lieutenant Commander Jacoby, and Ms. 
Martindale. Please come forward.
    If you will please repeat after me, I swear to tell the 
truth and nothing but the truth, so help me God.
    [Witnesses answered in the affirmative.]
    Mr. Cummings. Thank you. We will begin with Mr. Ghosh.

 TESTIMONY OF DEBU GHOSH, NAVAL ARCHITECT, BRANCH CHIEF, U.S. 
  COAST GUARD BOAT ENGINEERING BRANCH; JOE MICHEL, ASSISTANT 
DEPUTY FOR SYSTEMS IMPLEMENTATION, U.S. COAST GUARD NATIONWIDE 
 AUTOMATIC IDENTIFICATION SYSTEM PROJECT; LIEUTENANT COMMANDER 
   CHAD JACOBY, PROGRAM MANAGER, SCALEABLE COMPOSITE VESSEL 
     PROTOTYPE PROGRAM SCIENCE AND TECHNOLOGY DIRECTORATE, 
    DEPARTMENT OF HOMELAND SECURITY; AND CATHY MARTINDALE, 
CONTRACTING OFFICE CHIEF, COAST GUARD ENGINEERING AND LOGISTICS 
                             CENTER

    Mr. Ghosh. Good evening, Mr. Chairman and distinguished 
members of the Committee. It is a pleasure to appear before you 
today to discuss compliance with requirements of the Deepwater 
contract. I am Debu Ghosh, executive officer of the Coast 
Guard's Asset Project Office Standard Boats. I am a naval 
architect with over 33 years of experience specializing in the 
design of high speed craft. I have been in the boat engineering 
branch of the United States Coast Guard for the last 23 years, 
serving as the branch chief for the last 15 years. Mr. 
Chairman, I would like you to include my written statement in 
the record.
    I have a Bachelor's degree in naval architecture from IAT, 
a MBA from Tulane University in New Orleans, and a Master of 
Science degree from ICAF.
    I have been involved with all recent patrol boat 
acquisition programs in the Coast Guard including the 110 
Island Class, 87-foot coastal patrol boat, the 123-foot 
conversion, and the fast response cutter. My branch's 
participation in the Integrated Deepwater Systems 123-foot 
patrol boat program began in the spring of 2002 following the 
contract award to Integrated Coast Guard Systems. After 
identifying our initial concerns with possible longitudinal 
strength problems, I asked both Coast Guard and the Bollinger 
members of the technical management information team to award 
contracts to the Navy's Combatant Craft.
    I also suggested that Bollinger consult Vosper Thornycraft, 
the original designer of the Island Class patrol boats. I was 
unable to get support for this because the Deepwater contact 
was a performance based contract so the contractor was solely 
responsible for the success of the design. Nonetheless, I 
advised Bollinger to study this matter more carefully, due to 
the unusual nature of the lengthening a lightweight vessel by 
adding length aft instead of by adding length at midships, 
which is the normal process.
    After the cutter Matagorda failure, the section modulus 
calculation of the midship section submitted by Bollinger was 
found to be in error and did not meet the ABS Guide for high-
speed craft 1997. A detailed review of the longitudinal 
strength and buckling calculations by ELC revealed that the 
primary stress of the deck and the side shell would exceed the 
critical buckling strength of the damaged panels. Subsequently, 
the Coast Guard accepted the ICGS proposed solution known as 
Modification One, comprising three straps welded on to each 
side. This raised the section modulus enough to meet ABS high-
speed craft guide. This modification reduced the stress to an 
adequate level and also increased the allowable buckling load 
on the critical plates.
    After the cutter buckling damage, I took over as the 
project engineer from Deepwater to find the root cause of the 
problems with the cutters when such problems continued. I 
awarded six different contracts to nationally and 
internationally known consultants to resolve the problems. A 
variety of tests, analyses, and reviews were performed 
including independent third party verifications of the 
analyses. It is important to note that although this problem 
originates in longitudinal bending and involves overall hull 
girder strength, the light structure required for high speed, 
small patrol boats results in various types of buckling 
failures, not merely cracking. These are much more complicated 
structural responses than those commonly seen in larger ships.
    I believe this shows that the Coast Guard has to have more 
direct responsibility for, and control of future acquisitions, 
and oversight for vessel designs, as this Committee has advised 
and as the Commandant is now implementing. The Coast Guard has 
to rely more on the experience of existing proven vessels and 
experienced designers of these specialized high speed craft. 
This had been the practice that produced the successful 87-foot 
coastal patrol boat and the original 110-foot Island Class 
patrol boat, and this is the strategy that Coast Guard is now 
following for the replacement patrol boat, FRC-B. This also 
suggests that independent survey and design funding should be 
available to Coast Guard engineers as it was in the past so 
that the Coast Guard can investigate potential problems like 
this in a proactive fashion.
    Thank you for the opportunity to testify before you today. 
I will be happy to answer any questions you may have.
    Mr. Cummings. Thank you very much. Mr. Michel.
    Mr. Michel. Good evening, Mr. Chairman and distinguished 
Committee members. It is a pleasure to appear before you today 
to testify on the Compliance with Requirements of the Deepwater 
contract. My name is Joe Michel. Currently I am an assistant 
deputy with the Nationwide Automatic Identification System 
project, the Coast Guard Office of Acquisition. Prior to that, 
I was engineering technical lead with the Ports and Waterways 
Safety System also with Coast Guard Acquisition. And from 
December 2001 to March of 2004, I was the Coast Guard's lead 
C4ISR engineer on the 123-foot patrol boat integrated product 
team.
    I am pleased at the opportunity to appear before you and I 
will be happy to answer any questions that you have.
    Mr. Cummings. Thank you very much. Lieutenant Commander 
Jacoby.
    Lieutenant Commander Jacoby. Good evening, Mr. Chairman and 
distinguished members of the Committee. It is a pleasure to 
appear before you tonight to discuss the Compliance with 
Requirements of the Deepwater contract.
    I am Lieutenant Commander Chad Jacoby. I served as the 
program manager for the 123-foot patrol boat conversion project 
from July 2004 to October 2006. As the 123 program manager, I 
managed the delivery task orders under the Deepwater contract 
that pertained to the production, delivery, and warranty 
support of the 123-foot cutters.
    During my time as program manager, I supervised the 
delivery of Coast Guard Cutter ATTU, Coast Guard Cutter 
NUNIVAK, Coast Guard Cutter VASHON, Coast Guard Cutter 
MONHEGAN, and Coast Guard Cutter MANITOU. I managed contracts 
with engineering firms to diagnose structural issues, I 
administered the one-year warranty period on all eight 
delivered 123s, and I managed the contract modifications to 
install structural upgrades on the cutters.
    Thank you for the opportunity to testify before you 
tonight. I will be happy to answer any questions that you may 
have.
    Mr. Cummings. Thank you very much. Ms. Martindale.
    Ms. Martindale. Mr. Chairman, I have a brief oral 
statement. I request that my written statement be entered into 
the record.
    Good evening, Mr. Chairman and distinguished members of the 
Committee. It is a pleasure to appear before you today to 
discuss Compliance with Requirements of the Deepwater contract. 
I am Cathy Martindale. I am currently the chief of the 
contracting office for the Coast Guard's Engineering and 
Logistics Center located in Baltimore, Maryland. I have been a 
contracting officer for the U.S. Coast Guard for 15 years. I 
hold a Bachelor of Science degree in business administration 
from the University of Maryland. I also hold a Certificate in 
procurement and contract management from the University of 
Virginia, and a Defense Acquisition University level III 
certification.
    I was a contracting officer with Coast Guard Headquarters 
and assigned to the Deepwater program beginning January 2000 
through March 2006. While assigned to the Deepwater program, I 
served at various times as a contracting officer in both the 
surface and air domains at the systems integration program 
office located in Rosslyn, Virginia. I was one in a series of 
three contracting officers responsible for administering the 
110/123 conversion of the Matagorda. As a contracting officer I 
had responsibility for administering, interpreting, and 
ensuring compliance with contract requirements. I worked daily 
with my contracting officer technical representative, the 
program office, and Integrated Coast Guard Systems. I attended 
design reviews, participated in integrated product team 
meetings, and accepted contract deliverables.
    Thank you for the opportunity to testify before you today. 
I will be happy to answer any questions that you may have.
    Mr. Cummings. Thank you very much. I want to thank all of 
you for being here. We really appreciate it.
    Mr. Michel, was anyone in the Coast Guard aware during the 
123 program of the internal disputes at Lockheed or of the 
actions of Michel DeKort to raise awareness of his concerns? 
Would those kinds of issues have been things that would have 
come to your attention?
    Mr. Michel. Not as such, sir. I was not aware until 
sometime later that Mr. DeKort had actually pursued alternative 
action up through his management team.
    Mr. Cummings. Mr. DeKort indicates that he contacted the 
Coast Guard to raise his concerns with them. Do you know 
whether any action was taken? I take it that you found out 
later on that he had raised issues. Did you ever find out 
whether action had been taken in regard to the issues that he 
raised?
    Mr. Michel. No, sir, I did not. He was extremely vocal 
during my tenure with the IPT.
    Mr. Cummings. And when you say he was extremely vocal, how 
did it come to your attention that he was extremely vocal?
    Mr. Michel. He made his concerns known inside and outside 
of Integrated Product Team meetings.
    Mr. Cummings. And so you did have knowledge of those 
concerns, did you not, based on what you just said?
    Mr. Michel. I did, sir, but I did not know that he had gone 
as far up his management chain.
    Mr. Cummings. When he was complaining, were you aware of 
specific complaints?
    Mr. Michel. I was, sir.
    Mr. Cummings. And did you have an opinion back then when 
you were hearing them as to whether or not you considered them 
to be valid complaints and things that you all should be 
concerned about?
    Mr. Michel. Well, sir, he and I shared a lot of the same 
concerns.
    Mr. Cummings. Is that right?
    Mr. Michel. Yes, sir.
    Mr. Cummings. Why not tell us about the concerns that you 
shared and why you had the concerns that you had.
    Mr. Michel. I think we have talked a lot about the Tempest 
concerns this evening.
    Mr. Cummings. Yes.
    Mr. Michel. A few things that he might have perhaps----
    Mr. Cummings. Let me go back for one moment, because I want 
us to be clear. Mr. DeKort had his concerns, as I understand 
it, and you had concerns. Was this a thing where it just so 
happened that you sort of ended up with the same concerns, or 
were you all talking and he say, you know what, I really do not 
like this Tempest situation, and you sort of joined in to that? 
Were these things that you could have observed sort of 
independently, is what I am asking?
    Mr. Michel. Yes, sir, independently. Any two C4ISR systems 
engineers looking at the same problem would have come to the 
same sort of conclusions.
    Mr. Cummings. No doubt about it?
    Mr. Michel. Absolutely, sir. No doubt.
    Mr. Cummings. Tell me the concerns that you had that were 
common to his complaints, his concerns.
    Mr. Michel. Early on during the design reviews and during 
the review of various contract data exhibits, it was apparent 
that there either was not a clear understanding of Tempest 
requirements, for example, within the Lockheed design 
community, or they were not addressing them. So during design 
reviews. During review of contract documents, designs, and 
submission of comments via the IPT process these concerns were 
made known to Lockheed from the Coast Guard perspective. And I 
was not alone. There were many folks in the C4I community that 
were matrixed into the IPT that made these concerns known. So 
Lockheed went and did this study that was referred to earlier 
this evening, and they came to the same conclusion that yes, in 
fact, Tempest was a requirement processing classified 
information, we are going to have to adhere to Tempest if we 
are going to get this cutter certified and operate on 
classified networks.
    So, a round turn was taken on the design. Lockheed did try. 
They did try. The equipment racks were reconfigured, red and 
black equipment was separated, red and black cables were 
separated. I cannot say that there was any material solution 
pursued, that is, the equipment that they had procured, the 
cables that they had procured, that is what they were using.
    Mr. Cummings. So, in other words, he was saying, if I 
understood his testimony correctly, that he felt there should 
have been some other kind of cables. It seems like there has 
been a big deal made of the kind of cable that was used as 
opposed to the kind that he thought would be best for Tempest 
certification. Did you have that same concern?
    Mr. Michel. Yes, sir.
    Mr. Cummings. So what you are saying is that the same type 
of cabling, although there were the complaints, Lockheed 
Martin's reaction to that was to keep the same type of cabling 
but to just kind of reconfigure it. Is that a fair statement of 
what you just said?
    Mr. Michel. Yes, sir. Yes.
    Mr. Cummings. Did you ever make any complaints?
    Mr. Michel. I did, sir. During the design reviews and 
during the review of the designs themselves, I made numerous 
comments and raised my concerns. Some of the problems, and I 
think we have talked about the structure of the Deepwater 
contract at length this evening, I was trying to work within 
the structure of the contract.
    Mr. Cummings. Speaking of working within the structure of 
the contract, did you take your concerns to the higher ups in 
the Coast Guard?
    Mr. Michel. I elevated those concerns as high as I could 
within the program.
    Mr. Cummings. And how high is that?
    Mr. Michel. To the deputy at the Systems Engineering and 
Integration Team.
    Mr. Cummings. And who would that have been?
    Mr. Michel. Mr. Giddons was at the time.
    Mr. Cummings. And what reaction did you get when you took 
those to his attention?
    Mr. Michel. He was extremely concerned and he wanted the 
issues to be resolved.
    Mr. Cummings. And do you know why they were not resolved?
    Mr. Michel. Well, regrettably, I had mentioned that in 
March 2004 my time with the Deepwater program came to an end. 
There were many issues that were unresolved, they were 
contractually identified on the DD-250, which was also referred 
to earlier this evening, that were, quite frankly, still up in 
the air.
    Mr. Cummings. Why were you so concerned about the Tempest 
issue?
    Mr. Michel. For some of the same reasons that the first 
panel indicated, sir--compromise of classified information.
    Mr. Cummings. When did you leave?
    Mr. Michel. About three weeks after Matagorda was 
delivered.
    Mr. Cummings. All right. I will come back to you.
    Ms. Martindale, you were the contracting officer for 
Deepwater?
    Ms. Martindale. Yes, I was the contracting officer 
administering the 110/123 delivery task order for the 
Matagorda.
    Mr. Cummings. And does the contacting officer have the 
authority to decline to accept delivery of a ship or a boat?
    Ms. Martindale. Yes, sir.
    Mr. Cummings. And is that something that you have done in 
the past with regard to Deepwater? In other words, have you 
declined----
    Ms. Martindale. I have declined acceptance of a data 
deliverables, but not a ship, sir.
    Mr. Cummings. I see. Explain that. Explain what you just 
said. You declined a date but not a ship.
    Ms. Martindale. No. I am sorry, sir, a data deliverable. We 
had delivery requirements for data, design documents, and when 
they did not comply with contract requirements, we did not 
accept delivery. We gave them our comments, asked that 
corrections be made, and then they were accepted once those 
corrections were made.
    Mr. Cummings. So, basically, you would get documents from 
the integrated team; is that right?
    Ms. Martindale. That is correct, sir.
    Mr. Cummings. With regard to, let us say, for example, a 
ship, a vessel.
    Ms. Martindale. Yes. Technical specifications, yes, sir.
    Mr. Cummings. And then you would not necessarily see the 
ship itself. You would actually base your judgement on 
documents that you received. Is that a fair representation?
    Ms. Martindale. No, sir. Prior to delivery of the ship, 
there is a series of data deliverables, technical 
specifications, design documents. If they did not comply with 
the requirements of the contract, then I would reject those 
deliverables.
    Mr. Cummings. Okay. Then how do you confirm the quality of 
the items for which you accept delivery?
    Ms. Martindale. I rely on the technical expertise of my 
contracting officer technical representative.
    Mr. Cummings. And so if a technical representative comes to 
you and says something is, for example, certified, Tempest 
certified, then you basically accept that. Is that correct?
    Ms. Martindale. That is correct, sir.
    Mr. Cummings. And the procedure, I take it, is that if they 
are incorrect, you would not necessarily know that. All you do 
is you get a document saying that it is fine or not fine.
    Ms. Martindale. Yes, sir. I rely on their technical 
expertise.
    Mr. Cummings. Were you at all concerned about the condition 
in which the 123s were delivered?
    Ms. Martindale. Yes, sir. There were areas where it did not 
comply with the contract. As a contracting officer, it would be 
my preference not to take delivery of something not in full 
compliance. But we had discussions with regard to that on the 
COTR and myself and the noncompliance issues were such that 
they could be resolved after delivery.
    Mr. Cummings. In other words, let me make sure I get this 
right, you are saying that you would accept the delivery and 
you would accept it but there were assurances made to you that 
things would be corrected later?
    Ms. Martindale. That is correct.
    Mr. Cummings. Was that standard procedure?
    Ms. Martindale. It is not unusual, sir. It is a common 
practice in contracting where you sign a DD-250 accepting 
delivery of a product or service and you may withhold some 
aspect of payment or identify noncompliance areas with the 
expectation that at some point in the future they will bring 
the product into conformance.k
    Mr. Cummings. Were all the major deficiencies noted in the 
DD-250 for the Matagorda and each subsequent ship?
    Ms. Martindale. I cannot speak to the subsequent ships, 
sir, but for the Matagorda, to my knowledge, all the 
nonconformances were identified in the DD-250, sir.
    Mr. Cummings. Was the noncompliance of the topside 
equipment noted on the DD-250 with regard to the environmental 
standards?
    Ms. Martindale. No, sir.
    Mr. Cummings. It was not. And if it was not, why would that 
not have happened? In other words, if there was a problem with 
the topside equipment with regard to environmental standards 
and it had not been met, why would that not be noted on the DD-
250?
    Ms. Martindale. If there was an area of noncompliance, it 
should have been noted, sir.
    Mr. Cummings. And the IG said that it was an area of 
noncompliance. Are you aware of that?
    Ms. Martindale. No, sir.
    Mr. Cummings. Does it concern you that we may have accepted 
a ship that did not have that notice on a DD-250?
    Ms. Martindale. Yes.
    Mr. Cummings. When, in fact, there was a problem.
    Ms. Martindale. Yes. That would be a concern, yes, sir.
    Mr. Cummings. Are there occasions when this has happened in 
the past where maybe something came in, you accept the 
compliance, DD-250 prepared, and then you later found out there 
was something that was not right? Has that happened?
    Ms. Martindale. I have not had any firsthand experience 
with that, sir.
    Mr. Cummings. Okay. I want to just make sure I am clear on 
this. With regard to the 123 program, I will call it the 
program, were there other things that concerned you overall? 
Was there anything unusual that concerned you?
    Ms. Martindale. It was a very large, complex program, sir. 
I was not only responsible for the 110/123 DTO administration, 
but I also had responsibility for administering the NSC, the 
SRP, and FRC. So I was spread very thin, sir.
    Mr. Cummings. You did all of that by yourself?
    Ms. Martindale. Yes, sir. I was the sole contracting 
officer responsible for all of those delivery task orders. So 
that was certainly a concern.
    Mr. Cummings. Now with regard to change orders, how were 
they dealt with?
    Ms. Martindale. If the COTR identified an area of the 
contract requirements that they wanted to modify or add or 
subtract from, I would request a proposal from the contractor 
and then we would receive that proposal, review it, negotiate 
and modify the contract.
    Mr. Cummings. Did that happen often with the 123 project?
    Ms. Martindale. No, sir.
    Mr. Cummings. You have been sitting here during all the 
earlier testimony, have you not?
    Ms. Martindale. Yes, sir.
    Mr. Cummings. And you heard that there were some concerns 
with regard to wiring and whether one piece of wire/cable costs 
a little bit more than the other. Did those kinds of things 
ever come to your attention in any way? In other words, did the 
integrated team ever come back and say, look, we have got a 
problem here, we need to change the wiring?
    Ms. Martindale. On the 110/123 contract, that delivery task 
order?
    Mr. Cummings. Yes.
    Ms. Martindale. That was a firm fixed price, performance-
based contract. So as far as the contractor and the type of 
cable that they would install, for them to correct that issue 
would not have necessitated a modification to the contract. 
They needed to do whatever was necessary to meet the standards 
that were incorporated into the contract.
    Mr. Cummings. Period?
    Ms. Martindale. Period.
    Mr. Cummings. Let me make sure I am clear on this. Even if 
it cost more, you are saying that if the specifications asked 
for a certain thing, if they wanted to change, do something 
other than the specifications with regard to cabling----
    Ms. Martindale. The specifications of the 110/123 contract 
did not specify a type of cable. It specified a standard. They 
may have had to decide what type of cable to use to comply with 
that standard. If they chose the wrong cable and needed to use 
a different type of cable, a contract modification is not 
necessary to make that change. They just need to make whatever 
changes are necessary to comply with the standard that was 
incorporated into the contract.
    Mr. Cummings. But if their complaint was that it was going 
to cost more money----
    Ms. Martindale. That is the firm fixed price risk nature of 
performance of that type of contract.
    Mr. Cummings. So it would fall on the contractor?
    Ms. Martindale. Yes.
    Mr. Cummings. So you might not ever even know about that. 
Is that what you are saying?
    Ms. Martindale. That is correct, sir.
    Mr. Cummings. Let me just ask you a final question. The 
Defense Acquisitions University, are you familiar with them?
    Ms. Martindale. Yes, sir.
    Mr. Cummings. Its report on Deepwater indicates that the 
contractors and the Coast Guard were both incentivized to 
underestimate the cost of the new systems and their technical 
support needs. Do you think that was the case?
    Ms. Martindale. No more than any other contractor is 
incentivized to do that to capture a contract in their bidding 
process. They may have underestimated things in an attempt to 
come in with the lowest possible bid to capture the contract.
    Mr. Cummings. That is not unusual?
    Ms. Martindale. No. And we did do cost realism analysis 
when we evaluated the initial proposals at the award of the 
Deepwater contract to try to ferret out those types of 
concerns.
    Mr. Cummings. And did the integrated team ever develop cost 
estimates that it knew were low-ball?
    Ms. Martindale. Not that I am aware of.
    Mr. Cummings. Basically, what you are saying to me is that 
folks can come in with a low bid to get the contract, get the 
contract, and then when they get it come back for change orders 
and things of that nature, and that is not unusual? Yes or no?
    Ms. Martindale. I do not know that I can say unusual or 
not.
    Mr. Cummings. But you have seen it? You believe that you 
have seen that happen?
    Ms. Martindale. Yes, sir.
    Mr. Cummings. You cannot say for sure, but based upon your 
judgement you believe that has happened?
    Ms. Martindale. Yes, sir.
    Mr. Cummings. Okay. And I am not trying to put words in 
your mouth. I am just asking a question.
    Mr. LaTourette?
    Mr. LaTourette. Thank you, Mr. Chairman. Ms. Martindale, I 
want to pick up a little bit where the Chairman left off. I 
think I have in front of me the DD-250 for the delivery of the 
Matagorda. Just so I am clear, under the exceptions section, 
there is no reference to the shielded braided cable. The 
requirement left on the Tempest system is that the Tempest and 
classified testing will occur after the delivery of the ship.
    Ms. Martindale. That is correct.
    Mr. LaTourette. Have you looked at the Inspector General's 
report, the DHS Inspector General's report?
    Ms. Martindale. No, I have not, sir.
    Mr. LaTourette. The reason for that not being listed on 
here, on Page 5 of the Inspector General's report it indicates 
that the contract required the use of only shielded, not 
braided, metallic shielded cable as recommended by the National 
Security Telecommunications. And so, because the contract did 
not make the requirement of braided, you would not list that as 
an exception, what was yet to occur as the Tempest testing. Is 
that correct?
    Ms. Martindale. That is correct, sir.
    Mr. LaTourette. Mr. Michel, I do not know if you are the 
right one to ask this series of questions or not, but we have 
sort of been going round and round on this Tempest testing 
business. We had a witness on the first panel that said no way 
could this ever pass the Tempest testing. We have in the 
Inspector General's report not a clear indication that it 
passed the Tempest testing, but the sentence is: ``The Tempest 
testing conducted on the Matagorda and Padre between February 
2004 and July 2006 indicated that the cabling installed...'' so 
I guess this is the mylar aluminum cabling, ``during the C4ISR 
upgrade was not a source of compromising of missions.'' Are you 
familiar with that finding by the Inspector General?
    Mr. Michel. I am not, sir.
    Mr. LaTourette. And do you have any opinion on that in 
light of your observation that you shared the same concerns as 
one of our previous witnesses?
    Mr. Michel. I had examined the visual inspection report 
that was provided to the program by TISCOM and I was made aware 
of the instrumented Tempest survey results that had been 
performed by SPAWAR. In neither case at the initial survey was 
the vessel recommended for certification. Basically, it failed 
both tests. So what we did to simplify matters, on the DD-250 
the items were rolled up into this one line item, this Tempest 
in classified testing, because it was simply impossible to do 
classified testing until we could get the vessel to pass 
Tempest; you just cannot do it.
    Mr. LaTourette. Let me ask you this. This observation by 
the IG that whatever testing was conducted indicated that there 
was not--the big issue in the first panel, if you were here, is 
that we had national security stuff floating all over the 
country and our enemies could have the ability to listen in on 
these ships, compromising national security. Do you think this 
statement that the cabling installed, even though it is not the 
braided cable that everybody prefers, was not a source of 
compromising of missions is an accurate statement or not?
    Mr. Michel. It is possible, sir. I did not actually see the 
instrumented Tempest results for that particular compartment?
    Mr. LaTourette. Who would have been in charge of that?
    Mr. Michel. That would have been Mr. Ron Porter at TISCOM. 
The report itself was classified.
    Mr. LaTourette. Okay. Back to you, Ms. Martindale, for a 
minute. One of the exceptions listed, number seven, is low 
smoke cable, that we heard some things about. We have also 
heard from Lockheed Martin that I think at some point in time, 
I think after the delivery of the fourth ship, that a waiver 
was granted. Were you involved in that process?
    Ms. Martindale. No, sir.
    Mr. LaTourette. Who would have been involved in that 
process? Yes, Commander Jacoby, thank you. Could you sort of 
walk us through that process?
    Lieutenant Commander Jacoby. Yes, sir. In July of 2004, I 
reported on board. One of the issues that was pending, sir, was 
a request for waiver from the contractor to the Coast Guard for 
around eighty cables that did not meet the low smoke 
requirement. I could see from the documentation that the IPT 
had worked this issue for close to a year. The number of low 
smoke cables in the waiver request originally was very high. 
Through the IPT process the number of cables on the waiver was 
reduced to eighty. I consulted with the IPT, got their input, I 
also called the C4ISR lead, Mr. Michel's replacement, and got 
his input on recommendation on approval or disapproval of the 
waiver, I signed recommendation of the waiver, forwarded it to 
the contracting officer, and the contracting officer approved 
the waiver.
    Mr. LaTourette. Okay. Again, there are a couple of 
storylines that can come out of this investigation and this 
hearing, and one, relative to the low smoke cable, is that 
because that requirement was waived that guardsmen are put at 
risk if there should be a fire aboard that vessel. So I guess I 
appreciate your observations as to why you agreed to that 
waiver, if that were an accurate assessment.
    Lieutenant Commander Jacoby. Yes, sir. To be accurate, the 
requirement was not waived, the request for deviation was 
approved for specific cables and those specific cables, as was 
addressed before, were either on the mast, which the rationale 
that was provided from the IPT and from the C4 community was 
that a cable on the mast that produces smoke does not put 
anyone at risk. Also, some of the cables on the waiver request 
were, for example, phone cords or keyboard cords, not cables 
that were installed by Lockheed Martin but cables that came on 
equipment. The determination from the IPT and from the C4 
community was that you would not want to cut the phone cords 
off the COTS equipment and have Lockheed try to put low smoke 
cables in their place, sir. Those were the rationales that I 
received before signing the waiver.
    Mr. LaTourette. Okay. And were you involved at all in the 
Tempest cabling issue?
    Lieutenant Commander Jacoby. I was involved not with the 
initial design, no, sir, but I did make the cutters available 
to the Tempest inspectors. And then also as the PM, when 
discrepancies were identified, I pursued either physical 
correction of those discrepancies by enforcing the requirements 
of the contract, or correcting the discrepancies to the 
satisfaction of Mr. Porter, the certifying authority at TISCOM, 
sir.
    Mr. LaTourette. Okay. And let us get to that. Again, when I 
was talking to Mr. Michel and when I was talking to the other 
witnesses, the allegation is that even though the contract was 
not violated according to the IG's finding, that the contractor 
had a choice, there is a preferred cable, the preferred cable 
was not used, and because the preferred cable was not used, we 
had a danger of national security being compromised. What is 
your take on that?
    Lieutenant Commander Jacoby. My take, sir, is I relied on 
the recommendations and counsel of the C4 experts in the Coast 
Guard, which, to my knowledge, are certified to certify Tempest 
requirements. Like I said, we made the ships available for the 
inspections, we received the discrepancies from the 
inspections, we satisfied those discrepancies to the 
satisfaction of the Tempest authority.
    Mr. LaTourette. This is kind of key to me because I think 
everybody wants to be clear. When you say satisfied ``to the 
satisfaction of the Tempest authority,'' is there, when this 
thing passes, I know when it does not pass you get a report and 
say here are the problems, when it passes is there some kind of 
certificate that is issued? How do you know that it has passed?
    Lieutenant Commander Jacoby. An Interim Authority to 
Operate or an Authority to Operate is granted once Mr. Ron 
Porter is satisfied with the Tempest results. For some 
perspective from the program management standpoint, the time 
period between the inspections and the final Authority to 
Operate or even the Interim Authority to Operate was a span of 
months, which was weekly meetings of the program office, the 
contractor, and Mr. Porter working off those discrepancies. So 
from a program management point of view, for one, it was very 
difficult to work through this process and gain that ATL. And 
how we knew that we had done that was satisfied the 
requirements of Mr. Porter, the Coast Guard's Tempest 
certifying authority, sir.
    Mr. LaTourette. Is it fair, because I do not operate in 
your world, but is it fair that when the ATO, the Authority to 
Operate was issued on these ships that the Tempest test had 
been completed and the system was installed in a manner that 
was acceptable to the service?
    Lieutenant Commander Jacoby. Yes, sir.
    Mr. LaTourette. And would acceptable to the service include 
a system that was leaking national security information out of 
its cables?
    Lieutenant Commander Jacoby. I would have to assume that 
the Tempest certifying authority would not grant an ATO if that 
were the case, sir.
    Mr. LaTourette. And did you get ATOs on all eight ships?
    Lieutenant Commander Jacoby. Yes, sir.
    Mr. LaTourette. Okay. I thank you. Nothing else, Mr. 
Chairman.
    Mr. Cummings. Mr. Oberstar.
    Mr. Oberstar. Mr. Ghosh, you are internally and integrally 
involved with the design. So who was primarily responsible for 
the design for lengthening the hull 110 to 123 feet?
    Mr. Ghosh. In my opinion, sir, it is Bollinger and ICGS.
    Mr. Oberstar. It was----
    Mr. Ghosh. ICGS as the----
    Mr. Oberstar. ICGS.
    Mr. Ghosh. ICGS as the prime contractor and support 
contractor Bollinger.
    Mr. Oberstar. What was your role in all of this? You are a 
naval architect, are you not?
    Mr. Ghosh. Yes, sir. Yes, sir, we got involved in the sense 
that in review of the design. But again, Bollinger calculations 
solved that the required strength exceeds the calculations, the 
123 exceeds the stand by 100 percent but also I was the first 
person to contact Carderock and VT and Bollinger to get these 
people on board.
    Mr. Oberstar. Now you had conversations with, as we 
understand it, Scott Sampson, a Navy employee at the Carderock 
facility, which I always called the David Taylor Model Basin. 
In September 2002, Mr. Sampson warned the Coast Guard at that 
time of a likely design flaw. Did you get detailed information 
about that?
    Mr. Ghosh. Yes, sir. Before even then, actually, the 179 
problem, the cracks on the 179, I knew about that. And they are 
correct that the 179 was lengthened only five percent, but 
under 123 it was 12 percent. But there is a distinction between 
the length. The 110-foot versus 175-foot, that length 
difference makes this problem different. In our analysis, for 
the analysis in the future, what we found and we knew for a 
small boat the failure which the PC had is a yielding failure, 
meaning steel has yield strength of 40,000 pounds per square 
inch. The failure on the 179 PC was cracking due to tensile 
strength exceeding that 40,000 pounds. But in our case, the 
110, because of the short length, the failure is completely 
different. It is a buckling failure, which could be much lower. 
Like in our Matagorda case, it was only 7,200 pounds per square 
inch. So the two failures are completely different and all the 
knowledge and ABS rules and DNV rules, everybody suggested 
that, like for example the DNV rules only apply to more than 
150-foot length. The ABS rules, the 1997 rule which Mr. Scott 
Sampson mentioned, did not apply. In that rule it said that 
this buckling, and all this conversion needs to be done if it 
is more than 20 feet. Subsequently, of course, ABS changed that 
rule in 2003 to 79 feet.
    Mr. Oberstar. ABS changed the rule?
    Mr. Ghosh. ABS changed the rule. Yes, sir.
    Mr. Oberstar. Now, did the Navy offer to provide design and 
engineering support for Bollinger, for Northrop Grumman, and 
for the Coast Guard?
    Mr. Ghosh. Yes, sir.
    Mr. Oberstar. We understand that offer was declined.
    Mr. Ghosh. Because I couldn't get the funding. I didn't 
have any funding.
    Mr. Oberstar. The funding was how much?
    Mr. Ghosh. Forty two thousand dollars, as stated.
    Mr. Oberstar. Forty two thousand dollars, did you say? 
Total cost, we understand, was somewhere between $50,000 and 
$60,000. This is a $90 million project?
    Mr. Ghosh. Yes, sir.
    Mr. Oberstar. Commander Jacoby, could you not find that 
money?
    Lieutenant Commander Jacoby. Respectfully, sir, this was 
two years before I joined the program. I cannot really speak 
for whether they could find the money or not, sir.
    Mr. Oberstar. All right. The Navy offered, and it was not 
going to do this free, they were going to do it on a cost 
reimbursable basis, and the cost was in the range of $60,000 on 
a $90 million contract. I do not understand this. When did you, 
Mr. Ghosh, become aware of the deck cracking issue on the 123s?
    Mr. Ghosh. After September 2004 Matagorda.
    Mr. Oberstar. By a year later, at least six of the eight 
converted ships had developed severe cracking. Is that correct?
    Mr. Ghosh. It is not cracking, sir. There is cracking in 
the aluminum deck, but the main problem has been the buckling 
on the side cells. The current problem is buckling of the 
bottom and misalignment of shafts, we cannot keep the shafts 
aligned. It is a much more complicated problem.
    Mr. Oberstar. You can have buckling without cracking?
    Mr. Ghosh. Yes, sir.
    Mr. Oberstar. I understand.
    Mr. Ghosh. Because the stress level for the buckling is 
much, much lower.
    Mr. Oberstar. Did you think it was useful to have the Navy 
advise the Coast Guard on this?
    Mr. Ghosh. Well, the current problem, the way we have 
analyzed it--yes, of course, it would have been good. But the 
solution they would have presented at the time, like we have 
already done in our Mod 1, Mod 2 structures, we have increased 
the section modulus as well as the buckling, in case the 
buckling, and still there are problems. So it is a much more 
complicated problem than Navy size to think.
    Mr. Oberstar. You said something very interesting earlier 
in your statement. You are comparing strength of steel. I know 
a good deal about steel. My district is very much involved in 
it and I have spent a great deal of time on the steel industry. 
You talked about 14,000 pound strength per square inch?
    Mr. Ghosh. Forty, sir.
    Mr. Oberstar. Pardon me?
    Mr. Ghosh. Forty thousand, sir.
    Mr. Oberstar. Forty thousand?
    Mr. Ghosh. Yes, sir.
    Mr. Oberstar. I misunderstood.
    Mr. Ghosh. It is a high strength steel.
    Mr. Oberstar. Very high strength. Yes. And was it 7,200 
pounds per square inch----
    Mr. Ghosh. For the buckling failure, sir, yes.
    Mr. Oberstar. So what was the specification for 
strengthening of the hull, if any, on the 123?
    Mr. Ghosh. The contract is supposed to look at this 
critical buckling strength, 7,200. But, again, the section that 
was calculated was so high, almost 200 percent than required, 
so they did not do any calculations. Plus, it did not require 
it.
    Mr. Oberstar. A previous panel said that this was not a 
problem at all. That the problem of hull buckling or cracking 
was due to an underlying stringer in the ship construction that 
was not attached and therefore did not provide strength, and 
that the failure was due to something else, not to the design 
of the hull extension.
    Mr. Ghosh. That is true. The Matagorda----
    Mr. Oberstar. True that there was a stringer----
    Mr. Ghosh. A stringer not welded.
    Mr. Oberstar. Did that have a relationship to the strength 
of the hull?
    Mr. Ghosh. That stringer not being welded, the Matagorda 
failed at very low wave height, at very low systems. But 
eventually, when we fixed the problem and increased the 
strength based on when we found the calculus mistake and we 
increased the strength, which Carderock would have suggested 
the same thing, still we had failure. That failure is not due 
to just not having the welders stiffen her. It is much more 
complicated. And our theory is, again, we have spent half a 
million dollars almost in trying to solve this problem with 
experts from Europe, the original designer VT, and several fine 
detail analyses we have done.
    The main theory, what we think is that because the engine 
room hatch basically does not have the deck, it has a soft 
patch to remove the engines, that moved towards the midship of 
the hull. Also one other problem would be the 110 and 123 has 
aluminum deck, not steel. Aluminum basically behaves like 
rubber in this particular case. And that is like a canoe, if 
you have an open canoe, you can push it and it sort of buckles. 
And that is what is happening. We cannot prove it by analysis 
and we have gone to many experts, nobody could pinpoint the 
exact failure mode.
    Mr. Oberstar. Why would that not have shown up prior to 
actual construction work undertaken on the vessel? Why would 
there not have been a design evaluation before you put the 
vessel to construction? And secondly, why in the lengthening 
and strengthening, why did not someone notice the stringer was 
not attached? I do not understand that.
    Mr. Ghosh. Okay. Sir, the stringer not attached was----
    Mr. Oberstar. And was that endemic to the other vessels?
    Mr. Ghosh. No, sir.
    Mr. Oberstar. Just to this one?
    Mr. Ghosh. Just that one.
    Mr. Oberstar. But the others cracked, the others buckled.
    Mr. Ghosh. Buckled. And the main problem right now is that 
we cannot keep our shafts aligned.
    Mr. Oberstar. All right. So the testimony we got in the 
previous panel was, not your words but mine, a coverup for 
their failure. When you received this information from the Navy 
and then you passed it on and recommended their guidance and 
action was not taken because, in the Coast Guard's words, they 
did not have the money to do this, did you have any further 
leverage in this arena? Were your hands tied at that point?
    Mr. Ghosh. No, sir. We could not use our own money plus we 
did not have our money also, because these engineer projects we 
have like kind of money to use, you can use can mix and match.
    Mr. Oberstar. All right. Thank you, Mr. Chairman. I think 
that testimony is very helpful and sheds important light. I am 
going to come back and review this matter of steel strength and 
take a closer look at it later, not in this hearing but in 
another context. I appreciate that. That is very, very useful 
testimony.
    Mr. Cummings. Mr. Gilchrest.
    Mr. Gilchrest. Thank you, Mr. Chairman. Maybe if you wrote 
a letter to the Coast Guard Auxiliary they would have 
contributed that $40,000 for that extra evaluation.
    Mr. Ghosh, you have in your testimony on Page 3, I just 
want to read a couple of sentences, second paragraph, ``I asked 
both the contracting officer's technical representative and the 
Bollinger members of the technical management information team 
to award contracts to the Navy's Combatant Craft division 
because of its experience with similar problems that occurred 
after lengthening the 179-foot Patrol Craft and its earlier 
involvement with the 110-foot Island Class Patrol Boat. I also 
suggested that Bollinger consult Vosper Thornycraft because it 
was the original designer of the Island Class Patrol Boats. I 
was unable to get support for this.'' Who did you need to get 
support to have this done?
    Mr. Ghosh. I would say the project office.
    Mr. Gilchrest. Who was in the project office that did not 
give you support for this?
    Mr. Ghosh. While I was a member of the team I could go 
there and I could not go any further. But also I would like to 
point out that even if we had gotten the support at the time, 
the section modulus, suppose we had gone to Carderock at the 
time, they would have told us to increase the section modulus, 
and that is exactly what we have done to date. But still the 
boat fails.
    Mr. Gilchrest. So what I am saying is you had some concern 
about design flaws I guess and you could not get support for 
further evaluation for those proposed design flaws.
    Mr. Ghosh. No, sir. I did not know there was a design flaw. 
I just wanted them to look at the design because they have the 
experience, more than I did.
    Mr. Gilchrest. Now why were you not able to get support for 
this further evaluation?
    Mr. Ghosh. I cannot speak for--I did not control the money.
    Mr. Gilchrest. Who specifically was the person that turned 
you down?
    Mr. Ghosh. I cannot remember exactly, but everybody in the 
Deepwater program knew about that we wanted to get the money to 
get the----
    Mr. Gilchrest. I would just like, Mr. Chairman, I would 
like to follow up and find out who that person was that you 
suggested that you get this other information, and I think I 
would just like to follow through so we that we can find out 
who that person or persons were.
    I would like to go to Page 5 of your testimony, the second 
from the last paragraph, about the middle way down. I just want 
a clarification from you, Mr. Ghosh, that it seems from what 
you say here that you now understand what caused the damage on 
the hull buckling on these ships: ``After analyzing all 
additional information, the Coast Guard's Engineering Logistics 
Center has developed a solution that might address all the 
possible mechanisms of damage; add a stiff beam in a closed 
tube to the upper edge of the deck. I believe this will address 
the major structural problems, but I cannot provide complete 
certainty that this will work, or that there are no other 
unanticipated problems.'' So what we are talking about here, 
what Mr. Oberstar is talking about, the hull breaches, the hull 
buckling and all of those issues, a stiff beam in a closed tube 
to the upper edge of the deck will solve some of those problems 
possibly?
    Mr. Ghosh. Possibly so, yes. The thing is that increasing 
the strength by just putting plates or stiffener did not work. 
What we have come to the theory about that, if we have a closed 
cell which is several hundred times stronger in torsion and 
that will stabilize the deck.
    Mr. Gilchrest. We have eight ships sitting up at Curtis Bay 
just outside of Baltimore City. If you think you might have a 
solution to this problem, should we scrap those boats or should 
we pick out one and see if it will work?
    Mr. Ghosh. Well, that is not----
    Mr. Gilchrest. That is not your decision to make.
    Mr. Ghosh. That is not my decision to make. I do not have a 
100 percent guarantee. I cannot guarantee.
    Mr. Gilchrest. Considering all the money that has been put 
into this project--there are some pretty good workers up there 
at Curtis Bay. Is it possible to hold the line, say let us not 
scrap all these ships, let us see if we can salvage one, put it 
out on the high seas for a year? And I will sail down to the 
McMerdo on it if need be, Mr. Chairman, give me six months 
leave of absence. Are these ships so far gone that salvaging 
one and testing it out just is not worth it?
    Mr. Ghosh. No, sir. I agree, you could do that, what you 
say, sir.
    Mr. Gilchrest. So these 110 boats changed to 123, that has 
never been done before? This is the first time we took 110s to 
make them 123s?
    Mr. Ghosh. Yes, sir.
    Mr. Gilchrest. This is really a silly question I guess, but 
considering all the potential problems that we are seeing here, 
both from Lockheed Martin and from Northrop Grumman, from the 
aviation, the logistics, the hulls and all that, would it not 
have been more prudent to do one, set it out there, because the 
first one entered service in 2005 but there were already hull 
problems in 2004 on that same boat, set it out there and see if 
you could get the kinks out?
    Mr. Ghosh. Yes, sir.
    Mr. Gilchrest. Did the Navy have similar problems when they 
went from 170 to 179?
    Mr. Ghosh. Not similar problems, sir. I just said that the 
stress level on the deck, their's is in the 40,000 pounds per 
square inch level and ours is between 7,000 to 12,000, in that 
range.
    Mr. Gilchrest. You talked about solving--this will be my 
last question, Mr. Chairman--you talked about as far as add a 
stiff beam in a closed tube to the upper edge of the deck would 
have solved some of those damage problems with the 123. Is 
there a similar design in the 179?
    Mr. Ghosh. No, sir. They have, again because the problem is 
different, they have increased the strength. Though my solution 
also calls for increasing the strength, but in the 123 case, 
just increasing the strength does not help. It has to have a 
closed cell because of the open deck. In the PC, though they 
have some hatch, but by increasing the strength that solved 
their problems. There was cracking in their case. In our case 
it is mostly buckling.
    Mr. Gilchrest. How many 110s are left in the Coast Guard?
    Mr. Ghosh. Forty-one, sir.
    Mr. Gilchrest. Are any of those going to be 123s?
    Mr. Ghosh. No.
    Mr. Gilchrest. Okay. Thank you, Mr. Chairman.
    Mr. Cummings. Before we go to Mr. Kagan, let me ask you 
this, Mr. Michel. Given that you agreed with Mr. DeKort's 
concerns, did you believe that Lockheed Martin did anything 
unethical?
    Mr. Michel. I would not say unethical, sir, no.
    Mr. Cummings. Did you file an ethics complaint?
    Mr. Michel. I did not, sir.
    Mr. Cummings. Okay. Mr. Kagan.
    Mr. Kagan. Thank you, Mr. Chairman. I did not know when I 
took this job we might be having sleep-overs. I do not think I 
brought all my equipment.
    Mr. Cummings. At least you are a doctor, so if we get sick 
you can take care of us.
    Mr. Kagan. That is right. But I am not allowed to write 
myself those prescriptions.
    Is it Doctor Ghosh? Ph.D?
    Mr. Ghosh. No, sir. I have just a Bachelor's degree in 
naval architecture from Indian Institute of Technology.
    Mr. Kagan. With 33 years of experience in architecture 
related to naval vessels?
    Mr. Ghosh. Yes, sir.
    Mr. Kagan. And were you here during the earlier testimony 
when I questioned Mr. Stanley?
    Mr. Ghosh. Yes, sir.
    Mr. Kagan. And do you agree with his answers with regard to 
potential responsibility?
    Mr. Ghosh. I would say yes, sir.
    Mr. Kagan. Is there anybody else that you think you should 
add to the list of three?
    Mr. Ghosh. No, sir.
    Mr. Kagan. And with regard to the name of the person, 
either your superior or someone in your organization that may 
not have been able to come up with the money necessary to do 
some more studies, is it possible that you could find that 
person's name, if not tonight then in the next several days, 
certainly during my first term here?
    Mr. Ghosh. It has been five years, sir. I did not keep that 
good notes on that. But again, it was in a meeting and all 
names have been given.
    Mr. Kagan. All right. Well can you offer perhaps three 
things that you think were the primary things that went wrong 
with the 110? Give me a list. I have a scientific mind. But do 
not shake your hands because I teach medical students when a 
professor does this we put out notes down, do not write 
anything, because it is just a bunch of bull. So just give me 
three things that you think were the key things that went wrong 
with this project. Design. You mentioned the space in the hull, 
the hatch, so to speak. Let me ask you yes or no: Can you come 
up with three things that you think were central to the failure 
of this project?
    Mr. Ghosh. I guess I could.
    Mr. Kagan. Perhaps then you could write to me and give me 
the answers in writing at a later time.
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    Mr. Kagan. Mr. Michel, you mentioned in your statement that 
you are an assistant deputy for systems implementation with the 
Coast Guard's nationwide automatic identification system 
project.
    Mr. Michel. Yes, sir.
    Mr. Kagan. I am sure they do not answer the phone that way. 
But can you give me just a little background about what that 
means, what you do?
    Mr. Michel. These days I am more of a program management 
type than an engineering technical lead. But the two are 
closely related in my present responsibilities.
    Mr. Kagan. So someone in that organization depends on your 
judgement?
    Mr. Michel. Yes, sir.
    Mr. Kagan. And your judgement is based not just on your 
education, but your training and your experience. Is that 
correct?
    Mr. Michel. Yes, sir.
    Mr. Kagan. Sir, you were involved in this project. Let me 
ask you this. Do you agree with everything offered in sworn 
testimony by Mr. Atkins?
    Mr. Michel. I do not.
    Mr. Kagan. Is there anything that you disagree with him on?
    Mr. Michel. I think that some of his statements were a bit 
of a stretch.
    Mr. Kagan. So the adjectives might be a problem. But what 
about the facts? Is it not a fact that some wiring and covering 
of wiring created the possibility, as you testified earlier 
this evening, for eavesdropping?
    Mr. Michel. For compromising emanations, yes, sir.
    Mr. Kagan. And when you left the project, is it not also 
true that that same wiring was in place?
    Mr. Michel. Yes, sir.
    Mr. Kagan. Do you think your judgement was sound in 
allowing it to continue to be present?
    Mr. Michel. I made my concerns known during my tenure.
    Mr. Kagan. Well you did talk about it. But what happened? 
What were the results? What do you think? Was it poor judgment 
to walk away from that project knowing that there were 
unshielded wiring?
    Mr. Michel. Perhaps, sir. But it was a promotion.
    Mr. Kagan. Okay. Okay. I will tell you, I am new around 
these parts and I think, Joe, you testified earlier that you 
thought there was really a contract problem. I do not think it 
is a contract problem. I think it is a people problem and it is 
really a problem of oversight. And I can, as my time expires 
here, reassure you that the 110th Congress is intently 
interested in providing oversight. And in my evening that I am 
spending here with you, there was one man who was honest thus 
far, and that gentleman from Bollinger is sitting in the back 
row. Mark fessed up, he accepted responsibility, and he has 
invited everybody else to accept responsibility.
    If I may just ask Cathy Martindale a question. Are you 
understaffed? Do you have a lot more responsibility to do 
personally than you think one person should be doing?
    Ms. Martindale. While assigned to the Deepwater project, 
yes, sir.
    Mr. Kagan. So how many other staff members do you feel 
would be adequate to get the job done right?
    Ms. Martindale. There should be an over-arching surface 
contracting officer, there should be a contracting officer 
assigned to each asset; that would be the SRP, the 123, the 
NSC, the FRC, the OPC. That would be five contracting officers, 
and they would need two to three specialists working for each 
of those contracting officers.
    Mr. Kagan. Is that not a staff of close to 18 in addition 
to you?
    Ms. Martindale. Yes, sir.
    Mr. Kagan. And who would be responsible for providing all 
that staff? Who is the decisionmaker? Where does that buck 
stop?
    Ms. Martindale. I really do not know, sir.
    Mr. Kagan. See, one of the principles in my businesses that 
I have run is that if I give someone a job that they cannot do, 
shame on me. Someone gave you a job that was humanly not 
possible in my early estimation. Would you agree with that?
    Ms. Martindale. Yes, sir.
    Mr. Kagan. All right. So it is a question again of failure 
of oversight. It is not a failure of contracts. I do not think 
this is necessarily a problem that is going to be solved by 
attorneys. This is going to be solved by this Congress in its 
oversight of activities, not just in the Coast Guard but 
elsewhere.
    Any other comments from the panel before I yield back my 
time?
    Ms. Martindale. I have a comment, sir. I believe another 
issue of concern is the construct of the contractor. It has 
been a struggle in administering the contract when you have a 
joint venture, ICGS, which is a shell of a company, and then 
you have subcontractors, Lockheed Martin, Northrop Grumman 
Ships Systems, and then another tier subcontractor, Bollinger. 
Not necessarily do those contract relationships reflect that of 
the Coast Guard's with ICGS making it an additional challenge. 
Also, the work was divided up. C4ISR was focused on doing their 
C4ISR work, HM&E was focused on doing their HM&E and not 
necessarily when the two would come together do they work 
compatibly. That was just a fallout of the organizational 
construct with whom we had a contract relationship.
    Mr. Kagan. You have just described a disorganized orchestra 
where everyone is playing their own musical instrument but 
there is no conductor. So we have Madam Speaker Pelosi to 
guarantee there is going to be oversight in this Congress. I 
yield back my time.k
    Mr. Cummings. Thank you very much. I just wanted to say 
that Admiral Blore, who is right over there, Ms. Martindale, is 
the guy who can get you some more help. Okay?
    Mr. Altmire.
    Mr. Altmire. Thank you, Mr. Chairman. I wanted to clarify 
one thing. This question is for Commander Jacoby. You talked 
earlier about Ron Porter and the visual Tempest exam of the 
Matagorda.
    Lieutenant Commander Jacoby. Yes, sir.
    Mr. Altmire. My question is, was Ron Porter a fully 
certified Tempest authority at the time he conducted the visual 
Tempest exam of the Matagorda?
    Lieutenant Commander Jacoby. To my knowledge, he was. 
Although I did not verify his certification, sir.
    Mr. Altmire. Okay. Thank you. My next question is also for 
you Commander. According to records supplied by the Coast 
Guard, Matagorda received its Interim Authority to Operate its 
C4ISR on October 14, 2004. It then has a visual Tempest 
inspection on December 19, 2004, which noted a few lingering 
discrepancies. It received its Authority to Operate on January 
19, 2005. Next, the 123 class received a class waiver for 
visual discrepancies on July 12, 2005. Matagorda itself was 
reinspected for visual Tempest on October 28, 2005. So the 
question is, why did Matagorda receive its ATO before the class 
waiver for the 123's visual discrepancies was granted and 
before Matagorda was given a visual Tempest inspection to 
assess the condition of remaining deficiencies?
    Lieutenant Commander Jacoby. I tried to keep up with you on 
dates there, sir. I believe that there is a mixing of two 
issues there. The class-wide waiver which applied not to the 
Matagorda but the follow-on hulls was granted I believe on the 
date you mentioned. If I can just run through the Matagorda 
dates, I think that would clear up things.
    Mr. Altmire. Please.
    Lieutenant Commander Jacoby. The Matagorda received a 
visual Tempest inspection and an instrumented Tempest 
inspection in the February 2004 timeframe, it received Interim 
Authority to Operate in October 2004, and a final Authority to 
Operate in January of 2005. Those dates in sequential order I 
believe are the only ones applicable to Matagorda. The class-
wide waiver, in my understanding from what I have received from 
Mr. Porter, was after several cutters had been tested, his 
confidence level that the class met a configuration management 
standard that was consistent across the class and so he felt 
comfortable granting a class-wide Authority to Operate.
    Mr. Altmire. Okay. Thank you. My final question we pulled 
from the testimony and it has some acronyms in there which I am 
going to try to pronounce correctly, but forgive me if I do 
not. From March 11 to April 5, 2005, Matagorda was among a 
group of ships reassessed by Navy's COMOPTEVFOR unit and the 
Navy wrote the following, which I think we were going to put up 
on the screen but it is late now: ``Tempest discrepancies and 
COMSEC discrepancies were corrected in Coast Guard Cutter 
Matagorda; however, there were unsolved installation 
discrepancies which precluded SPAWAR CISCOM recommendation for 
Coast Guard 62 to release an IATO. Without an IATO cutters were 
not authorized to transmit and receive classified information, 
significantly limiting their participation in U.S. Coast Guard 
tactical operations'' And then later they wrote: ``In spite of 
this progress, physical connectivity was still assessed as a 
high risk based upon the inability to establish and maintain 
classified two-way data exchanges with other Coast Guard and 
naval vessels.''
    Lieutenant Commander Jacoby. Yes, sir. It is my 
understanding that the date on which COMOPTEVFOR, the Navy 
Command, assessed the Matagorda it did not have an ATO, 
therefore could not energize their secure communications. So 
COMOPTEVFOR noted that they could not test certain gear during 
that evaluation. And I believe the ATO for Matagorda came 
several weeks after COMOPTEVFOR had done their evaluation, sir.
    Mr. Altmire. Commander, had the Matagorda been handling 
classified information by this time?
    Lieutenant Commander Jacoby. No, sir.
    Mr. Altmire. They had not?
    Lieutenant Commander Jacoby. No, sir.
    Mr. Altmire. Okay. Why did the Coast Guard issue an ATO in 
January 2005 to the Matagorda when the Navy noted that 
unresolved installation discrepancies precluded SPAWAR from 
recommending the Coast Guard to release IATO when the system is 
still considered high risk at that time, March-April of 2005?
    Lieutenant Commander Jacoby. Sir, I believe there are two 
separate processes, the Navy's operational evaluation of the 
cutter is not linked to Mr. Porter's working with SPAWAR and 
determining the suitability of the Tempest system, sir.
    Mr. Altmire. Okay. Thank you, Commander. Last question. Did 
the sequence of events pose a risk of compromising national 
security at any time?
    Lieutenant Commander Jacoby. It has always been my belief 
based on input from the C4 community and the Coast Guard that 
that is not the case.
    Mr. Altmire. Okay. Thank you, sir.
    Mr. Cummings. Tell me again, when did the Matagorda get its 
ATO?
    Lieutenant Commander Jacoby. I show a final ATO granted on 
19 January 2005, sir.
    Mr. Cummings. And was that before the Navy assessment?
    Lieutenant Commander Jacoby. I do not have the Navy report 
in front of me, sir.
    Mr. Cummings. March-April of 2005. How does that affect 
your testimony?
    Lieutenant Commander Jacoby. I would have to check those 
dates, sir.
    Mr. Cummings. That is very, very important because you just 
gave us some information that we want to make sure is accurate. 
We can tell you that the information we got is that the Navy's 
examination was in March of 2005.
    Lieutenant Commander Jacoby. Yes, sir. I believe what I am 
reading off of is something we provided for the record. I would 
be happy to provide this and the actual reports for the record, 
sir.
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    Mr. Cummings. Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman. Commander Jacoby, you 
were the project officer?
    Lieutenant Commander Jacoby. I was the program manager for 
the 123 program.
    Mr. Taylor. In previous testimony I heard the gentlemen 
talking about electronics that were exposed to the weather that 
were not required to be waterproof. I kept waiting for someone 
to say, no, you are wrong, it was in the specs. I still have 
not heard anyone say that. How does something as basic as that 
happen? Any boatswain mate third class is going to go the first 
time it rains, the first time we catch a wave this stuff is 
ruined. How does something like that happen?
    Lieutenant Commander Jacoby. I agree with your assessment, 
sir, that that does not seem like something that could happen. 
In reality, coming on the program halfway through, I still know 
the contract states environmental requirements for operation of 
the equipment and that a certain radio was installed on the SRP 
that did not meet those environmental requirements, sir.
    Mr. Taylor. Were you empowered to catch mistakes like that?
    Lieutenant Commander Jacoby. It actually happened two years 
before I reported, sir. But yes, if I as program manager saw 
items that did not meet the contract requirements, I was 
empowered to work through the contracting officer and make 
corrections.
    Mr. Taylor. Okay. So your predecessor program officer, was 
he a lieutenant also at the time? I am taking it you were a 
lieutenant a couple of years back.
    Lieutenant Commander Jacoby. The prior program manager, 
there were several, some were GS-14s, I am not sure of all the 
ranks of the previous ones.
    Mr. Taylor. I realize the Coast Guard, as all the services 
do, throws a heck of a lot of responsibility on very young 
officers. But it strikes me that a program with a $90 million 
expenditure, eight ruined cutters, did you at any time then or 
since think you just were not high enough of a pay rate to 
address these problems?
    Lieutenant Commander Jacoby. Sir, I think I mirror Ms. 
Martindale's feelings of the program early on, the staffing 
levels were very bleak. When I reported aboard my billet was 
actually to be the deputy surface program manager with an over-
arching view of all the cutters construction. Shortly after 
arriving I saw the 123 program with a need for some change and 
some guidance and I took that over in addition to the deputy 
surface job. After some months of work on the 123 it was clear 
that was a full-time job plus. So in that timeframe of 2004, 
people were wearing two and three hats and moving the program 
forward. The Commandant yesterday talked about increasing 
manning levels and oversight. I can attest I witnessed over my 
two and a half years on the program the increase of staffing 
levels. After a while the people who were wearing three hats 
got replacements and before I left in October of 2006 we were 
properly manning each billet instead of asking people to cover 
two and three billets, sir.
    Mr. Taylor. Again, and I would invite you to correct me, 
but that one jumps out at me as so glaring that I find it 
inconceivable.
    Let us take it to something a little bit more complicated, 
the hogging and sagging calculations. Is that your normal 
expertise within the Coast Guard? If a crewboat company or a 
ferryboat operator were going to lengthen their vessel, is that 
the sort of calculation that you would run?
    Lieutenant Commander Jacoby. I am not a naval architect or 
a marine safety inspector, sir. But I am a shipboard engineer 
for the Coast Guard, an engineer on 2-through 78-foot ships and 
even an engineer supporting the patrol boats down in Key West 
prior to my deepwater career. I think, from a commonsense 
standpoint, I share your concern that that does not pass the 
commonsense test. But I am not a naval architect to back that 
up with calculations, sir.
    Mr. Taylor. Commander, let me ask you this, and I very much 
appreciate your frankness, what is being done so it does not 
happen again? I have told you my concerns with the LCS, I have 
told you my concerns with the next generation cutters. Shame on 
me if a mistake is made once, but shame on all of us, enlisted, 
officer rank, Members of the Congress, members of the 
Administration if we let this happen again. I really, based on 
what I have heard here tonight, do not have any confidence that 
we are doing this any better. And what is particularly 
troubling, I sense this is the shipboard equivalent of sweeping 
it under the rug when you cut this ship up for scrap or if it 
is sunk offshore for a fishing reef and it is no longer there 
to be on 60 Minutes. We have got a real problem here.
    Lieutenant Commander Jacoby. Yes, sir.
    Mr. Taylor. I would like to hear from you as an up and 
coming officer in the United States Coast Guard that you have 
got a high degree of confidence that this is being addressed 
rather than just let us hope nobody asks that question again.
    Lieutenant Commander Jacoby. Yes, sir. I firmly believe 
that the factors that led to the structural as well as the C4 
issues we have talked about tonight I could see the evolution 
of the things that will keep those from happening again in my 
two and a half years in the Coast Guard. One of them was the 
manning level that we talked about, the wearing three hats. I 
think there has been comparisons between Deepwater manning and 
Navy shipbuilding manning and we were trying to build ships 
with very few people.
    Another major contributor is the specificity of the 
requirement in the contract. In all these situations, we were 
dealing with contract language that was signed in 2002 and left 
the contractor and the Government in many cases unclear on the 
exact requirements. It was a performance-based contract but it 
still could have specificity that both the Government and 
industry could use to manage costs, manage expectations, manage 
requirements.
    Additionally, the oversight and the input from regulatory 
agencies, the Commandant and the PEO have mandated the use of 
regulatory agencies in further designs, and I have personally 
been involved in incorporating the things that brought us 
problems on this contract, like specific words in the contract 
or lack of words in the contract, into future contracts for the 
FRC and the OPC. So I do have a sense that I have contributed 
by the painful lessons learned to better contracts and better 
oversight and better manning for the Deepwater program, sir.
    Mr. Taylor. If a contract passed your desk tomorrow that 
called for a radio, a radar, fill in the blank, that is going 
to be exposed to the weather and did not mandate that it be 
waterproof, and we all know the difference between weatherproof 
and waterproof, would you be empowered to say, no, we are going 
to fix this right now rather than buy two or three or four of 
these at Government expense and replace the ones that do not 
work?
    Lieutenant Commander Jacoby. Absolutely, sir. I do have 
examples of issues that arose in the Deepwater program that the 
program office felt did not meet contract requirements and were 
able to enforce those requirements and get design changes and 
even retrofits on the cutters. So there are examples of 
successes in enforcing the contract requirements, and then 
there are examples of the program office unsuccessfully 
enforcing, mostly because of the wording that was incorporated 
into the contract in 2002, either vague or lacking the 
specificity.
    Mr. Taylor. Who in your opinion should have caught the 
hogging and sagging problem before it happened?
    Lieutenant Commander Jacoby. The Coast Guard's contract is 
with ICGS. I feel the responsibility was with ICGS. In fact, I 
worked with my contracting officer to issue two latent defect 
letters to the contractor; one days after the Matagorda 
buckling incident, the other several months later when the 
deformations appeared on other cutters.
    Mr. Taylor. Okay. Thank you very much, Commander.
    Lieutenant Commander Jacoby. Yes, sir.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Cummings. Mr. Oberstar.
    Mr. Oberstar. Yes. I have a follow-up for Mr. Jacoby. In 
January of 2005 the Matagorda got authority to operate; meaning 
that they also had authority to transmit and receive classified 
data. But at that time, according to all testimony we have 
seen, they had not yet passed the instrumented test, as it is 
called. The only instrument test which allegedly was passed was 
in July 2006 but for another ship in the same class as the 
Matagorda. Was it legal for the Matagorda to operate under 
those circumstances?
    Lieutenant Commander Jacoby. I believe so, and I will tell 
you from my perspective why I believe that, sir. The two 
instrumented Tempest inspections, one on Matagorda, one on 
Padre, were not related. The Padre inspection was not meant to 
validate Matagorda's Tempest system. The original instrumented 
Tempest inspection on Matagorda, which you referred to as 
failed, was in my view as a program manager, Ron Porter 
assessed the vulnerabilities or issues with that, over time the 
physical discrepancies were corrected or Mr. Porter waived the 
discrepancies that were noted, and that original Tempest 
inspection was eventually the basis for Mr. Porter approving 
Authority to Operate, sir.
    Mr. Oberstar. How does that authority compare to the 
judgement of the Navy which said in a document we have that the 
system is still high-risk.
    Lieutenant Commander Jacoby. That is from a COMOPTEVFOR 
report sir?
    Mr. Oberstar. Yes.
    Lieutenant Commander Jacoby. I believe that the authority 
for Tempest certification lies with for the Coast Guard Mr. Ron 
Porter, for the Navy SPAWAR and not with COMOPTEVFOR, sir. I 
cannot speak to whether they would determine----
    Mr. Oberstar. There is this gray area here which is now 
becoming somewhat clearer that there were deficiencies and 
these deficiencies were granted waivers instead of being 
repaired rather than being covered up.
    Lieutenant Commander Jacoby. I do not know the waiver 
process or the mentality that goes behind the waiver process at 
Mr. Ron Porter's shop.
    Mr. Oberstar. Okay. Thank you. We need to proceed on to the 
next panel. I particularly want to thank Mr. Ghosh, a naval 
architect, for his very candid and straightforward and helpful 
answers.
    Mr. Cummings. Thank you. Thank you all very, very much for 
being with us. Your testimony has been extremely helpful. You 
are excused.
    Mr. Cummings. We will call our next panel now. Rear Admiral 
Gary T. Blore, and Vice Admiral Paul E. Sullivan.
    Raise your right hands, please. Do you swear to tell the 
whole truth and nothing but the truth, so help you God? Thank 
you. Let the record reflect that the witnesses answered in the 
affirmative.
    Thank you all very much. I know it has been a very, very 
long day. Hopefully, we will not take you into tomorrow.
    Rear Admiral Blore.

  TESTIMONY OF REAR ADMIRAL GARY T. BLORE, PROGRAM EXECUTIVE 
OFFICER, COAST GUARD INTEGRATED DEEPWATER SYSTEM; VICE ADMIRAL 
 PAUL E. SULLIVAN, COMMANDER, NAVAL SEA SYSTEMS COMMAND, U.S. 
                              NAVY

    Admiral Blore. Thank you, sir, and the members who have 
stuck it out with us. Good evening, Mr. Chairman, and 
distinguished members of the Committee. It is a pleasure to be 
here today with my colleague Admiral Sullivan. I respectfully 
request my previously submitted written testimony be entered 
into the record.
    Mr. Cummings. Without objection, so ordered.
    Admiral Blore. I would like to thank the Congress, in 
particular this Committee, for your oversight of the integrated 
Deepwater system. We have adopted many of your Committee 
recommendations as we reform the Deepwater acquisition process. 
I believe the Deepwater program is our best strategy for 
building a 21st century Coast Guard capable of executing our 
missions in maritime safety, environmental protection, homeland 
security and homeland defense. As part of our effort to 
strengthen the Deepwater program, and with the Commandant's 
leadership, we have met extensively with Integrated Coast Guard 
Systems, ICGS, Lockheed Martin and Northrop Grumman. We have 
had frank discussions with industry about our intentions moving 
forward. We have strengthened the Coast Guard's acquisition 
process and revamped our procedures to ensure that the contract 
expectations of the Coast Guard and the American taxpayer are 
crystal clear.
    This hearing is focused on mistakes the Coast Guard made in 
our first Deepwater shipbuilding project. Not a day goes by 
that I am not fully committed to avoiding a recurrence of this 
disappointment. Our Coast Guard men and women deserve better as 
does the public we serve. You have my assurance that I will 
take every step necessary to redress insufficiencies in 
analysis and communications that led to the premature 
decommissioning of the 123-foot patrol boats. However, we must 
not fall victim to living in the past which neither 
recapitalizes the Coast Guard nor serves the public interest. 
Instead, we must apply lessons learned to ensure a successful 
future for the Coast Guard, our acquisitions, homeland 
security, and the American people.
    The Coast Guard has options in choosing from whom to 
acquire our assets, consistent with the Federal Acquisition 
Regulations. With the Commandant's support, I intend to use 
robust business case analysis, competition, and best value 
criteria in choosing which manufacturers will execute our 
projects. In many cases that may continue to be Lockheed Martin 
and/or Northrop Grumman, and to that end the Commandant and the 
company CEOs recently signed an agreement asserting the Coast 
Guard would: transition into becoming the systems integrator, 
lead management of all lifecycle logistics, expand the use of 
the American Bureau of Shipping, accelerate the resolution of 
remaining national security cutter issues, and where 
practicable work directly with the prime vendors. These actions 
combined with numerous other acquisitions and program 
management reforms will make the Deepwater program of tomorrow 
fundamentally better than the Deepwater program of today.
    This Committee has been a catalyst for much of this change. 
But the fundamental underpinnings of this reform began the day 
Admiral Allen became Commandant, just under a year ago. His 
first, very first new initiative as our Commandant was to 
direct a consolidation of our acquisition organization. Shortly 
thereafter, he adopted the blueprint for acquisition reform 
which called for a restructuring and prioritization of our 
agency's entire acquisition process. We will stand up this new 
structure beginning July 13th and it will take shape fully over 
the next several months.
    For the upcoming award term, which starts this June, the 
Commandant has asked me to focus on more favorable Government 
terms and conditions and on those priority delivery task orders 
occurring during the first 18 to 24 months. This allows the 
recapitalization of the Coast Guard to continue unabated while 
acquisition reforms are implemented, at the same time allowing 
a full spectrum of options for future Government purchases.
    Today marks the start of my second year in this assignment. 
Critical to our acquisition is the partnership we have built 
with our sister service. The Navy is our third party 
independent assessor of choice. They speak Coast Guard, they 
understand us, and have superb engineering and technical 
expertise to share. For example, a quarter of my resident 
project office staff at the Pascagoula shipyard is on loan from 
NAVSEA on a reimbursable agreement. Our daily contact is across 
dozens of NAVSEA's divisions, involving millions of dollars 
transferred from everything such as Navy-type, Navy-owned 
equipment to technical review. And now with the elevate role of 
our Coast Guard Technical Authority, the relationship with 
NAVSEA is even more integrated.
    In conclusion, a properly equipped Coast Guard is critical 
to our Nation, and reforming the Deepwater acquisition is 
critical to a 21st century Coast Guard. I look forward to 
working with you to ensure we can accomplish acquisition reform 
without derailing recapitalization but while focusing on the 
acquisition fundamentals of cost control, schedule integrity, 
and the surpassing of performance expectations. Thank you, Mr. 
Chairman. I would be pleased to answer your questions.
    Mr. Cummings. Thank you very much.
    Vice Admiral Sullivan.
    Admiral Sullivan. Good evening, Mr. Chairman. Thanks for 
having us here tonight. My name is Vice Admiral Paul Sullivan. 
I am the Commander of the Naval Sea Systems Command. Before I 
had the job I have today I was the deputy commander for ship 
design, integration and engineering. I have also been a program 
manager of two submarine acquisition programs.
    I am here to discuss our partnership with the Coast Guard 
with regard to acquisition and also technical authority. I 
would be happy to answer any of your questions, sir.
    Mr. Cummings. Very well. Thank you very much to both of 
you.
    Rear Admiral Blore, first of all, I want you to know that I 
think everybody on our panel on both sides of the aisle have 
tremendous confidence in Admiral Allen. He has clearly been a 
man of action and he has made it clear that he is going to make 
some significant changes. I had an opportunity to review his 
statement yesterday, his press statement, and I was very 
impressed and was glad that he was moving in the direction he 
is moving in.
    That being said, you have heard the testimony today. I 
think we can actually start with Ms. Martindale. She seems to 
be very diligent and hard working employee, contracting 
officer, given that she has got not enough people. I do not 
think that she was trying to make you all look bad, she was 
just answering questions honestly. We have heard testimony 
throughout about how it appears that there are problems with 
having the personnel to do the Tempest test and the resources 
to properly do them. So while we listen and we hear, and I can 
go on and on, you have heard the testimony, it is clear to me 
and it is a worry that I have expressed to Mr. Oberstar on at 
least two occasions, if not more, that we have got to make sure 
that if the Coast Guard is taking on these responsibilities 
that they have the personnel, the expertise, and the resources 
to take them on. To me, if that is not the case, then I think 
that we move from one bad situation to another bad situation.
    So I am just wondering where does that stand? I will be 
very frank with you. At this moment, just based upon what I 
have read and what I have heard, I do not know that the Coast 
Guard is in a position to do certification with regard to 
Tempest. I am not sure. And there are a lot of other things I 
am concerned about. That is not beating up on the Coast Guard, 
because we want to be the Coast Guard's number one advocates, 
but we want to make sure that the Coast Guard has what it 
needs. So taking into consideration what was said by the 
Admiral yesterday, are we prepared to take on that 
responsibility?
    Admiral Blore. Yes, Mr. Chairman, I believe we are. I share 
your respect for Ms. Martindale and I would like to hire her 
back as a contracting officer for the Deepwater program if she 
would like to return and join us.
    Since I became the program executive officer a year ago, we 
have brought on about 45 new staff positions. That was the 
first increment that the Commandant and I had worked out 
together as we started preparing to build out our system 
integrator capability. I would not disagree with you for a 
moment that we are not prepared tomorrow to take over entirely 
the system integrator role. The Commandant has a plan to 
transition. We are much more capable on the logistics and the 
material side of the Coast Guard. We still need to do a lot of 
build out especially on our C4ISR side, and I will be depending 
on my colleague heavily and other Government sources to assist 
the Coast Guard with that.
    Right now, we have 22 contracting officer billets within 
the program. We have expanded that since Ms. Martindale left. 
Again for full disclosure, and I believe NAVSEA probably shares 
this issue, while I have 22 contracting officer positions, I do 
not always have 22 contracting officers. Hiring in the 
Washington, DC general area for what is called an 1102 general 
schedule person is difficult, especially at the junior 
classification rates, although we work on that very hard again 
with our colleagues. We will continue to use SPAWARs as a 
facility to run our Tempest testing. I think some of the 
confusion earlier is we have always used them for the 
instrumented testing. The actual certification is done by a 
Coast Guard official, and that is why sometimes it may have 
been confusing who was doing the certification. Tempest for 
Coast Guard assets is certified by the Coast Guard based on 
SPAWAR testing.
    Mr. Cummings. Let me ask you this. In the Admiral's 
statement yesterday he said something that while it impressed 
me and it made me feel good, left me kind of slightly with 
question marks. He said the Coast Guard will expand the role of 
the American Bureau of Shipping or other third parties as 
appropriate for Deepwater vessels to increase assurances that 
Deepwater assets are properly designed and constructed in 
accordance with established standards. What does that mean, if 
you can tell me? In other words, one of the things that we have 
run into here with regard to Tempest is what is the standard. 
Is the standard a moving target? Is the standard something that 
can be waived or whatever? But putting Tempest aside, let us 
just deal with the American Bureau of Shipping, in talking to 
all of our experts they tell me if we would adhere to their 
standards we would be in pretty good shape, very good shape. I 
am wondering, does this statement mean that is the standard we 
will be using, or what does this mean?
    Admiral Blore. Do you mind if I just ask Admiral Sullivan 
to comment on ABS because we try to pattern off his program.
    Mr. Cummings. Sure. Please. Whoever is best to explain it.
    Admiral Sullivan. Yes, sir, Mr. Chairman. When you are 
building a ship or any complex system there obviously has to be 
a standard that that ship or system is built to. Either the 
service can maintain a set of standards that you design and 
construct the ship in accordance with those standards and then 
you certify that ship that it has been built to the design that 
meets the standards. The third party aspect can either be 
handled by the service or by this third party, such as the 
American Bureau of Shipping. In the case of what we have in the 
Navy, we have been partnering with ABS, we have had a situation 
where we were unable to maintain our own standards due to lack 
of funding, we partnered with the ABS and developed a new set 
of standards that are not ABS standards, they are Navy-ABS 
partnership standards called the Naval Vessel Rules.
    We have had a lot of discussions in Mr. Taylor's Committee 
on what that meant to the LCS program. But they are the rules 
to which you certify the ship. Either the service can perform 
that certification by an examination inspection, looking at 
paper signatures, objective quality evidence we call it, to 
make sure that the ship has been certified to those standards, 
or we can actually hire the third party, which in this case is 
the American Bureau of Shipping, to what we call ``class the 
ship'' by examining first the design and making sure the design 
meets that standards, and then by inspecting the ship as it is 
being constructed and certifying that the ship was built in 
accordance with the design which met the class standard.
    Mr. Cummings. So who would do, say, the third party 
certification of things like the systems such as electronics? 
Who would do that?
    Admiral Sullivan. Yes, sir. ABS does not have experience to 
do that. So for naval ships, as Admiral Blore said, the Space 
and Naval Warfare Systems Command, otherwise known as SPAWAR. 
They would do that certification for the Navy.
    Mr. Cummings. Admiral Blore, can you guarantee that none of 
the problems found on the 123s will be repeated on the NSCs?
    Admiral Blore. Mr. Chairman, I can guarantee you that when 
we discover them we will address them individually and 
correctly, and will communicate, and will do the analysis 
necessary so that we knowingly walk into the future. I am not 
going to suggest for a moment that a platform as complex as the 
National Security Cutter is not going to encounter issues. I 
have 20 or 22 right now that I look at at my level but we 
address each one, we address the risk, we address the potential 
consequences, we work with our colleagues primarily at SUPSHIPS 
down in Pascagoula and eliminate them as discrepancies.
    Mr. Cummings. Are you anticipating, other than beyond what 
you just said, are you anticipating those problems similar to 
the 123s in any way?
    Admiral Blore. Absolutely not. The National Security Cutter 
will be the finest Coast Guard cutter we have ever had. It will 
be more capable, we are working through all the issues, and we 
are doing it before we accept delivery of the cutter.
    Mr. Cummings. Thank you. Thank you. That is helpful. Is 
that a new way of doing business?
    Admiral Blore. I think Congressman Taylor would say it is 
the only way of doing business. It is the way we should have 
always been doing it to work out these things before the 
Government accepts final delivery. In almost probably every 
case when you do a DD-250 and accept custody there is going to 
be some discrepancies, but there should be no major high-risk 
discrepancies that you are accepting when the Government takes 
ownership.
    Mr. Cummings. Thank you. As far as low smoke cabling, is 
that used in the NSC?
    Admiral Blore. Yes, sir.
    Mr. Cummings. Is it meeting specifications?
    Admiral Blore. Yes, sir. But there is similar issues to 
what we discussed before in that one of the tenets of the 
Deepwater program, and I think it is a good tenet, is to 
attempt to use commercial off-the-shelf equipment when it is 
appropriate. So we have a lot of the little like the mouse 
cable to the computer, a water fountain that just does not come 
with low smoke cabling. It is possible for the Government to 
request that all to be switched out, but we do not think 
anybody is at any degree of risk because of a couple feet of 
cable. When it is longer, for example, the main mount, the 57 
millimeter came with non-low smoke cable and we asked the 
manufacturer to switch that out before we installed it because 
it was a pretty long run.
    Mr. Cummings. You have heard the testimony with regard to 
these waivers. Do you think that the Coast Guard appropriately 
waived in the past, and do you see any changes with regard to 
waivers in the future? One of the concerns, it seems to me, and 
I heard the testimony of some earlier witnesses about how there 
were certain things that maybe were connected to telephones and 
things of that nature, wires, but it seems to me we would try 
to be in front of all of that so that we lessen the disputes. I 
am just wondering, are there any lessons learned with regard to 
waivers? You know what happens when we hear about waivers, we 
begin to think, well, is somebody trying to get around the 
provisions of the contract. And when you are talking about low 
smoke cabling, then it sends up bright lights and alarms 
because we are concerned that your personnel might be harmed in 
case of an emergency. So I am just wondering, are there any 
lessons learned with regard to these waivers?
    Admiral Blore. Yes, sir. I think there are a lot of lessons 
learned. But let me just speak to one of them because I think 
it is probably the singularly most significant event in the way 
we conduct the Deepwater program now. When Deepwater was first 
organized it was basically our organic organization; everything 
was contained within it. We did our own logistics, this is 
going back to 2002/2003, and it became somewhat isolated. It 
originally started with only 75 Government personnel. We are 
much larger than that now.
    We have formally established the role of our technical 
authority, which is Admiral Dale Gable, which is, in essence, a 
smaller version of NAVSEA that we have within the Coast Guard, 
and we have another Admiral Dave Glen who functions in the same 
role for C4ISR. I am not an engineer. Even the engineers will 
offer different opinions occasionally, some of which you have 
heard today. The beauty of the current system is I do not try 
to sort that out. I go to the chief engineer of the Coast Guard 
and say what would you like me to do, or I go to the chief 
C4ISR admiral in the Coast Guard and say what would you like me 
to do. Because, in the end, it is their opinion that I am going 
to value and follow. So I think that is the most significant 
thing. If the chief engineer of the Coast Guard said that we 
should accept a waiver on something, I would certainly discuss 
it with him to make sure I understood what his rationale was, 
but that is why he was appointed in that position for the 
Commandant, and the same thing on the electrical side.
    Mr. Cummings. Now would you send the cutter one to the Navy 
COMOPTEVFOR, is that how you pronounce it?
    Admiral Blore. Yes, sir, COMOPTEVFOR. It is Commander, 
Operational Test Forces.
    Mr. Cummings. Will you do that? In other words, are you 
going to send them to that center for the same analysis that 
was performed on the 123s?
    Admiral Blore. Yes, sir. In fact, we have established a 
huge staff of eight Coast Guard men and women that are actually 
assigned the COMOPTEVFOR that work with the larger staff that 
is there so that we can help advise the testers and evaluators 
with COMOPTEVFOR of what the Coast Guard unique requirements 
are, and the Coastees are actually assigned there full-time and 
sit next to our Navy and Marine colleagues.
    Mr. Cummings. Now the Defense Acquisitions University 
recommends that the Coast Guard should convene a summit of the 
Coast Guard, the integrated team, and the Navy to examine all 
opinions about fatigue life on the NSCs. Will you convene that 
summit?
    Admiral Blore. Yes, sir. I actually hired Defense 
Acquisition University to come in and do that analysis because 
we wanted to get the opinion of acquisition professionals on 
our acquisition policy. As you know, they gave us a good number 
of recommendations which we are incorporating. We have already 
had that summit. We have worked with the Carderock division of 
NAVSEA, and we have actually worked out a technical solution 
now with Northrop Grumman. It is not on contract yet, it should 
be on contract by the end of this month. It is typically 
referred to in the Coast Guard as the ``one break solution,'' 
but it assures the fatigue life of the National Security Cutter 
of 30 years, 30-plus years.
    Mr. Cummings. What measures will now be taken to increase 
the role of the Navy in testing the C4ISR security, in 
assessing the effectiveness of the ship designs, and improving 
the management of the Deepwater contract?
    Admiral Blore. Specifically for C4ISR, Mr. Chairman, we are 
trying to build our own Coast Guard organic capability a little 
bit more. It is going to probably take us 18 months before we 
have our own evaluators within the Coast Guard. In the 
meantime, we are completely dependent on NAVSEA for any of the 
instrumentation and testing. We certainly have some expertise 
in the Coast Guard but it is certainly not our intention to go 
it alone for C4ISR. That will be an area in particular that we 
will be heavily dependent on Admiral Sullivan and others.
    Mr. Cummings. The Defense Acquisition University report 
suggests that the acquisitions excellence in business 
competencies are not valued in the Coast Guard as much as 
operational excellence. Can you comment on this finding, and 
what will you do to cultivate acquisitions and financial 
management expertise among your personnel? I want to go back to 
something that the Commander said when he talked about, and 
this has come up in other hearings, the capacity to have 
contracting officers, folks who have expertise in putting 
together these contracts. I think Admiral Allen has admitted, 
along with many others, that part of the problem with this 
contract is that a lot of the provisions are not necessarily in 
our best interest, and some place us in a position where they 
just call out for dispute because there are some ambiguities. 
Perhaps we could have resolved a lot of this, I think Ms. 
Martindale may have mentioned it too, if we had had the 
experienced contract folks involved in the process of creating 
the contract that was more balanced and certainly in the best 
interests of the Coast Guard and the American people.
    Admiral Blore. I agree with what you just stated, Mr. 
Chairman. We have a type of contract that probably requires the 
most sophisticated expertise in contracting officers as opposed 
to a contract that has a lot more specifications. That is why 
we are changing the terms and conditions as we go into the next 
award term. We really do believe that the contract is the key, 
which is why we want to work on the terms and conditions, and 
at least enough specificity that, while it is still a 
performance-based contract, there is enough specificity so 
there is no misalignment with what we expect from industry.
    Mr. Cummings. Thank you. Mr. LaTourette.
    Mr. LaTourette. Thank you very much, Mr. Chairman. Admiral 
Blore, in your written testimony you state, ``At no time did 
the 123-foot patrol boats engage in mission operations without 
first successfully completing standardized testing.'' Does that 
mean that at no time did these vessels operate without the 
Authority to Operate designation?
    Admiral Blore. Sir, to the best of my knowledge, they have 
never transmitted on a classified frequency or received on a 
classified frequency without the correct authority to operate. 
These cutters have commanding officers, they know when they 
have authority to operate; they will and have in the past 
gotten underway and not energized any of their secure gear 
because they did not have the authority to operate. I can also 
say as part of my sworn testimony that I have never been made 
aware of any compromise that has ever occurred off a 123-foot 
cutter. We are also, the Coast Guard, a member of the 
intelligence committee, and neither has my chief of 
intelligence of the Coast Guard ever notified me that there has 
been a detected compromise from a 123-foot cutter.
    Mr. LaTourette. And to both admirals. The Chairman talked 
about waivers and we have spent a good portion of the hearing 
talking about Tempest and Tempest testing and waivers. Is it 
unusual for waivers to be granted in the Tempest testing 
program either in the Coast Guard or in the Navy?
    Admiral Sullivan. It is not unheard of but it is not 
common.
    Mr. LaTourette. Admiral Blore?
    Admiral Blore. I really do not think I know the answer to 
your question. I am sorry. It certainly appears to have 
happened in the 123. I would be happy to submit something for 
the record and go through the rest of our cutters and see 
whether they have any waivers.
    Mr. LaTourette. If you could.
    [Information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. LaTourette. As a follow up question, and if you cannot 
answer this today maybe you can get back to me too, but Admiral 
Sullivan, if you know, can these waivers ever be granted if 
there is a risk that national security will be endangered?
    Admiral Sullivan. I think I would rather take that for the 
record so I could pass it to the proper people. I am more the 
ship engineering guy than the C4ISR.
    Mr. LaTourette. Okay. And Admiral Blore, maybe you could 
get back to us on that one as well.
    Admiral Blore, yesterday in the Commandant's statement he 
made about three insightful and succinct points that led us to 
that point. He stated that the Coast Guard relied too much on 
the contractors to do the work of Government. As a result, the 
tightening AC&I budgets, a dearth of contracting personnel in 
the Federal Government, and a loss of focus on critical 
Government roles and responsibilities in management and 
oversight of the program. I think the principles that he laid 
out clearly address the third item.
    But relative to the contracting officers, I think it would 
be my observation that contracting officers, like Ms. 
Martindale, do not fall from the sky. And one of my questions 
was does the service have the ability to do that today, and I 
think you said no, and I think you said something about 18 
months. Maybe I am mixing your answers. Can you just share with 
us how many of these experts the Coast Guard thinks it needs to 
hire to adequately do the job, and how the service plans to 
identify and hire these folks?
    Admiral Blore. Yes, sir. I believe currently we have 
sufficient contracting officer positions, the 22 that I alluded 
to before. I think right now we have 17 filled, so I would like 
to bring that up to complement. There are a couple things that 
the Office of Personnel Management is allowing us to do now. We 
can do what is called direct hires. So if I find somebody that 
is fully qualified, I can basically offer him a job on the spot 
if they are qualified to be a Government contracting officer.
    So that has helped. We have also had a shift in processes 
where we are using our contracting officers in the field more 
than we did originally with the Deepwater program. For example, 
I have a contracting officer in Elizabeth City at the aircraft 
repair and supply center, and I am doing a lot of the spare 
parts purchases for the CASA and also through Eurocopter for 
the H-65 helicopter through the facility at ARNSC. We are 
starting to set up the same thing. I have a contracting officer 
that is about to be warranted in Pascagoula so that much of the 
contracting work can be done on site, which I think frankly is 
the Navy model where contracting officers are typically on site 
where the construction is taking place.
    Mr. LaTourette. Okay. My last question, Mr. Chairman. The 
first panel, I know Admiral Blore you were in the room for the 
first panel, I think I have tried to boil down the essence of 
the allegation that was made. The allegation that was made by 
some folks in the first panel is that Lockheed Martin underbid 
the 110 conversion contract without the expertise to properly 
complete it. Then when discovering that they were over their 
head, they made business decisions based on cost and schedule 
on, among other things, low smoke cables and shielded cables 
for the Tempest system that compromised national security and 
endangered Coast Guard personnel. Do you think that is an 
accurate representation of what happened with this conversion 
program?
    Admiral Blore. I do not believe I have the necessary 
information to make a judgement, sir. The one thing I would 
say, and I think this would support what Ms. Martindale said, 
is a properly run acquisition would run enough Government cost 
estimates and other surveys, including using our Government 
audit agency, to ensure that a contractor is not bidding a 
price that on its appearance could not possibly do the work 
that the Government is asking for. That is the way the 
Government protects against what someone earlier referred to as 
an aggressive bid. If it is that aggressive, then the good 
Government cost estimate should show that it is too aggressive 
and work should not be awarded. I do not know enough about the 
details to really answer the question you asked, sir.
    Mr. LaTourette. Specifically on the waivers and the low 
smoke cabling that Commander Jacoby talked about, are you in 
agreement or in a position to be in agreement with the decision 
he made relative to the placement of those cables on the ship?
    Admiral Blore. I think I would, based on everything I know, 
I think I would agree that the waivers were appropriate for the 
non-low smoke cables that were used. One of the things that the 
Inspector General pointed out, which was very true, is that 
often the waivers and deviations were given after the fact; in 
other words, they were following installation. That is another 
bad acquisition practice. If you are going to do something like 
that, it ought to be done before anything is installed. But I 
think the actual location, and I think even the Inspector 
General agreed with this, that there was no risk to the Coast 
Guard crew for the non-low smoke cables that were installed. 
But they did find fault with the process and why the deviations 
were given after the fact.
    Mr. LaTourette. And the fact that four ships had been 
delivered out of spec until that waiver was requested and 
granted. Okay. Thank you very much. Thank you, Mr. Chairman.
    Mr. Cummings. We are going to do business differently now, 
right? I am just following up on what Mr. LaTourette just asked 
you. We are not going to be having these waivers after the 
stuff is already done, are we?
    Admiral Blore. Not unless the waiver is in the interest of 
the Government. There is always going to be considerations made 
that perhaps a piece of equipment is in the interest of the 
Government to have installed before the fact, otherwise we will 
not accept it.
    Mr. Cummings. Before we get to Mr. Oberstar, I think one of 
the things that we are most concerned about, when you talk 
about this low smoke cable and things that would go to the very 
survival, I am talking about life and death of the very people 
that you command, I think that we have to have a certain hope, 
a standard where if we are going to err with regard to waivers, 
we err on the side of life and safety. And sometimes I just 
wonder, I have read what has been written in the IG report or 
what has been represented to us, and I just wonder whether we 
have done that consistently with those waivers. I think when we 
are dealing with things like that, you know what, if we are 
granting these waivers and then something happens and we in the 
Congress knew about it and did not try to address it, then I 
think we become a part of the problem.
    Mr. Oberstar.
    Mr. Oberstar. Well said, Mr. Chairman. And Mr. LaTourette, 
I also appreciate your line of questioning and the issues you 
raise. They are extremely important.
    Admiral Blore, at the outset of your testimony, and Admiral 
Allen's remarks in a news conference yesterday, ``avoid 
recurrence.'' Good. We want to avoid recurrence. But let us 
avoid living in the past. Let us not review the past. 
Philosopher George Santayana wrote ``Those who do not study the 
past are condemned to relive it.'' Thirty years ago, the Coast 
Guard in 1978 completed construction of two polar icebreakers. 
It was my first or second term in Congress. The Polar Sea and 
the Polar Wind. The Polar Sea went on mission to break ice in 
the North Pole. In February of 1981 it got stuck and stayed 
there for two months. We are about learning lessons from the 
past and making sure they are not repeated in the future. I do 
not want to be lectured in this Committee and all our members 
be lectured about learning from the past.
    Were you aware that Admiral Kraymek [phonetically] after he 
retired went to head the ABS, American Bureau of Shipping?
    Admiral Blore. Yes, sir.
    Mr. Oberstar. And that during his tenure, he is now retired 
from there, he offered to Bollinger to do structural 
engineering analysis and to do it free. Are you aware of that? 
And was refused.
    Admiral Blore. I am not aware of the details, sir. I have 
certainly heard that but not from a necessarily credible 
source. But certainly I have heard the story that it was 
offered.
    Mr. Oberstar. In one case the Coast Guard said, gee, we do 
not want to take the Navy's offer of doing this design analysis 
because it is going to cost us $42,000. On the other hand, the 
shipyard gets an offer of free review and analysis and they 
will not take it either. There is something wrong with this.
    Admiral Allen announced yesterday the Coast Guard is going 
to take the lead role of systems integrator for Deepwater. I am 
not convinced you are ready to do that. Tell me how you think 
you are going to be able to do that in light of the testimony 
we have heard today.
    Admiral Blore. Yes, Mr. Chairman. Before I answer that, let 
me say it was never the intent on the part of the Coast Guard, 
and certainly I speak for the Commandant, to sound like we were 
lecturing anyone on learning from the past. There is perhaps a 
little bit of a semantic difference. We do believe in learning 
from the past. We do believe in applying those lessons to the 
future. I think we meant it more in the context of not to fight 
the last war. We need to learn from the past and apply it to 
the future acquisition, because we know, and as you know, we 
have a responsibility to recapitalize the Coast Guard so we can 
keep doing our missions. That is what we meant. I am not 
suggesting for a moment we should not learn lessons from what 
occurred----
    Mr. Oberstar. I appreciate that, but we want to know that 
the Coast Guard is learning those lessons and that they are 
ready to in various ways shoulder the responsibility of 
handling multibillion dollar contracts that are going to carry 
the Coast Guard's capital equipment program into the future 
with a high degree of certainty that it can succeed. I have 
been through this years ago with the FAA.
    They were unable, as it turned out, and it was again the 
Navy who came in and did an assessment, Admiral Sullivan, of 
FAA's procurement program in the STARS acquisition an the 
Advanced Automation Replacement System, and said they just do 
not have the personnel, they do not have the systems, they do 
not have the structure, they do not have any understanding of 
how to handle these multibillion dollar contracts.
    And it seems to me the Coast Guard was in the same mess. 
You got in way over your head and you allowed these contractors 
to certify themselves. And we want to know when we go forward, 
we want to do this Coast Guard authorization bill and do it 
right, put the money out there that is needed, give you the 
resources you need to move ahead, we want to know you are going 
to be able to do the job right.
    Admiral Blore. Yes, sir. I appreciate that and I appreciate 
your support for the resources. I believe we can do it right. 
That is why we have increased our staffing, that is why we have 
changed our processes on how we address things, and that is why 
we have a much closer working relationship with the United 
States Navy, because we know what we can do and we know what we 
cannot do and that is where we will depend on other Government 
agencies, primarily the Navy.
    Mr. Oberstar. To whom does the Navy turn when it needs 
advice on hull, machinery, and electronics? Or are you really, 
as everyone says, the gold standard?
    Admiral Sullivan. Sir, I do not know if we are the gold 
standard, but we have worked very hard to keep the expertise 
for hull, mechanical, electrical, and electronics in-house 
because we believe that only the service can be in charge of 
knowing what it wants and specifying what it needs and in 
directing the contractors to deliver the performance that we 
need. Now that is a very precious core capability, we feel it 
is inherently governmental, and it takes years to grow.
    Mr. Oberstar. In the upcoming authorization bill, it seems 
to me this would be an appropriate time to craft, as we have 
done for the Corps of Engineers in a bill that is coming up on 
the House floor tomorrow, a process of independent review. 
Admiral Blore, what would be the Coast Guard's reaction to, in 
general, an independent review authority for major contracts?
    Admiral Blore. Well I think generally our reaction would be 
if it is the desire of the Congress that we would execute it. I 
do not know that we need congressional authority to do that. I 
think much of the independent reviews, such as hiring Defense 
Acquisition University and using third parties, we have ample 
authority to do ourselves.
    Mr. Oberstar. There is no question you have ample authority 
to do it. You have showed you have not used that authority and 
maybe what you need is direction from the Congress.
    Admiral Blore. Mr. Chairman, respectfully, I think that I 
would agree with your statement for 2002 through about 2004-
2005. I think that the Commandant has changed the way we do our 
processes. Having said that, our number one priority as far as 
any legislative language is just that the Coast Guard be 
allowed the opportunity to continue our recapitalization 
program. Anything else that the Congress desires us to do, if 
it is passed in the legislation, obviously we would do it, but 
we would hope that we would be allowed to continue to 
recapitalize the Coast Guard so we can execute our missions. 
And anything else, if the Congress would like to suggest it, we 
would be happy to execute it.
    Mr. Oberstar. We do not want to slow down that process at 
all. We do not want to stop it in its tracks. But the same with 
the Corps of Engineers who act only on direction of the 
Congress, and yet we have felt for some time that there was a 
need for independent review. The Corps of Engineers came to an 
agreement with us on that and we have language that tomorrow 
will be on the House floor that will provide for that 
independent review. We will explore this further as we move 
into the authorization process and draw on the great resources 
we have in the members on this Committee on both sides of the 
aisle. Thank you, Mr. Chairman. And thank you very much, 
Admiral. We are about to set a record for endurance in this 
Committee. In another 15 minutes we will have done that. I 
thank you for your endurance.
    Mr. Cummings. Mr. Gilchrest.
    Mr. Gilchrest. Thank you, Mr. Chairman. Admiral, how did 
these cutters get to Curtis Bay? These eight cutters, how did 
they get up there?
    Admiral Blore. I believe we towed the cutters. They may 
have gotten underway because they were capable of it to meet 
whatever cutter was towing them. It was our choice to tow them 
because we had put operational restrictions on them to keep the 
crew safe and not at risk and we felt it progressed to the 
point that we did not want the cutters functioning 
independently.
    Mr. Gilchrest. So I understand they are going to be 
scraped.
    Admiral Blore. Yes, sir.
    Mr. Gilchrest. Where are they going to be scraped?
    Admiral Blore. I do not think that has been determined yet, 
sir.
    Mr. Gilchrest. So they are in such a condition that none of 
them could be salvaged or fixed?
    Admiral Blore. Again, I am speaking on what I have been 
told because I am not an engineer. Admiral Gable, our chief 
engineer, did do a fairly exhaustive study on the cutters. 
There was about six recommendations presented to the 
Commandant. I think right now there are three competing 
theories on what the root cause is.
    One is a naval architectural effect called channeling. 
Another is that the stern section, because of the way the lines 
are, was overly buoyant. The third is that the metal itself was 
so fatigued it did not have enough structural strength from the 
original 110s. It is Admiral Gable's opinion that he has a very 
low confidence that any----
    Mr. Gilchrest. At any rate, it is likely that the best 
thing to do rather than go through any more expense is to just 
scrap all eight?
    Admiral Blore. Yes, sir. Because it is going to involve 
millions of dollars. A single cutter, probably 18 to 24 months 
to develop whether your solution actually works. And I think 
the Commandant would like to focus elsewhere, sir.
    Mr. Gilchrest. Just a couple of other questions. This would 
be to Admiral Sullivan. Do you feel that the Coast Guard 
adequately addressed the concerns that apparently the Navy 
shared with its engineers about the hull integrity of these 
123s?
    Admiral Sullivan. I can tell you, we said to the Coast 
Guard we were worried about the plate thickness in the section 
modulus of the hull, and we offered to help beyond that. I 
would be remiss to try to explain----
    Mr. Gilchrest. Was this consultation in the early stages of 
the consideration of the design of these vessels?
    Admiral Sullivan. I think the consideration stared with 
very casual conversations in 2002 and nothing came of those, 
and then there were more serious conversations in 2005 when we 
actually produced a cost estimate for what we would do. And 
then that was about it, sir.
    Mr. Gilchrest. So, Admiral Blore, do you think that the 
problems that we have seen here today about adequate 
communication, consultation, recommendation between you and the 
Navy regarding this kind of issue has been adequately resolved?
    Admiral Blore. Yes, sir, especially as far as relationships 
between us and the Navy, and in this particular case, using CCD 
or the Carderock division for expert counsel.
    Mr. Gilchrest. This ranges from hull design to logistics to 
C4ISR, the whole ball of wax. Do you feel the integration here 
is pretty well complete on these issues?
    Admiral Blore. Yes, sir. And I would say really at all 
levels between C&O and the Commandant, between me and my 
colleague and certainly PEO ships, and same thing on the 
logistics and the naval engineering side and C4ISR side.
    Mr. Gilchrest. Let me ask, the capabilities that the Navy 
has for in-house engineering, is that also part of your 
conversation that those capabilities, that in-house engineering 
capability, can any of that be available to the Coast Guard?
    Admiral Sullivan. Yes, sir. We stand ready to help. We are 
heavily loaded today. We have our own issues with cost 
reduction and staffing reduction at headquarters. But compared 
to the capability that the Coast Guard lacks, we are robust, 
and subject to workload, we would definitely be ready to work.
    Mr. Gilchrest. Is that something that you would solicit, 
Admiral Blore, from the Navy?
    Admiral Blore. Yes, sir. You are expressing it, 
respectfully, as if there is some hesitation on our part. There 
is no hesitation for us to work with the United States Navy.
    Mr. Gilchrest. Have the Coast Guard and Navy discussed the 
possibility of enhancing the commonality of the Navy and Coast 
Guard vessel designs and component systems?
    Admiral Blore. Yes, sir. I could just give you two quick 
examples. Certainly for much of the navy-type, navy-owned 
equipment on the National Security Cutter, we are using the 
recommendations of the Navy. Our preference is to stay standard 
with them if we can, because they bring----
    Mr. Gilchrest. You say your preference is to stay standard. 
Would it not be better if it were standard, and can it be made 
standard?
    Admiral Blore. Yes, sir. But, for example, they would put 
many more weapons systems on a patrol boat than we would. So 
there are some cases where we will not be standard because we 
just will not have as powerful a weapons suite as they would. 
In the case of the Offshore Patrol Cutter, which is still a 
couple of years away, we are currently working with NAVSEA to 
actually do a study together on how the LCS, and original 
design offshore cutter, or even our National Security Cutter 
might be used to kind of form the basis of a design. We are 
very interested in seeing how the Latorial combat ship develops 
and whether it would be possible to have potentially, for 
example, a Coast Guard version of that. So we are very 
interested in being aligned and have commonality when we can.
    Admiral Sullivan. Let me give a couple more examples, sir. 
The gun on the National Security Cutter is the same as the gun 
on the LCS, and that gun is also going to be used on a DDG-
1000. We are sharing all of our information across the services 
to work to make sure we are as common as we possibly can be in 
the installation of that gun. Additionally, I mentioned Naval 
Vessel Rules before where we were developing them in 
conjunction with ABS. The Coast Guard signed on I guess about 
two years ago and there is a Coast Guard annex to the Naval 
Vessel Rules.
    So we are sharing all the lessons learned and all of the 
rule development. My chief engineer, Kevin McCoy, and Admiral 
Gable, his counterpart in the Coast Guard, have co-signed an 
agreement that they will work together, and Admiral Gable is 
now attending all the meetings of the Naval Vessel Rules 
Committee. So there is an awful lot going on there now.
    Mr. Gilchrest. Thank you very much, gentlemen. Thank you, 
Mr. Chairman.
    Mr. Cummings. Thank you very much. Mr. Kagan.
    Mr. Kagan. Thank you, Mr. Chairman. I will make no 
reference to icebreakers because by the time we get out of here 
all the polar ice caps are going to be melted.
    Admiral Blore, I just want to get your opinion on record 
here about Mr. Ronald Porter. Is Ron Porter a CTTA?
    Admiral Blore. Again, as was mentioned before, I do not 
think I have actually met him or asked to see his credentials. 
I would go to the assistant commandant for command control and 
information to get certification on Tempest and I believe they 
used Mr. Porter.
    Mr. Kagan. Okay. Then I will ask you a hypothetical 
question. Assuming that he is not CTTA, then would it be true 
that those ships that have been firing up their communications 
equipment have been doing so in violation of our rules and 
laws?
    Admiral Blore. I would assume you need to have the proper 
certification and authority to grant the Authority to Operate, 
yes, sir.
    Mr. Kagan. Okay. Thank you, gentlemen, for your service to 
the country. I yield back my time.
    Mr. Cummings. Thank you very much. I want to thank you all 
for your testimony. I want to thank the Members of Congress for 
sticking around this long. I know they have fifty million 
things to do.
    This does conclude our hearing. But please understand that 
Mr. Oberstar and many of us have expressed our concerns with 
regard to where the Coast Guard is going. We want to make it 
very, very clear, and I said it from the very beginning when I 
was appointed the Subcommittee Chairman, I am going to be a 
number one fan of the Coast Guard. But in being a number one 
fan, that also means that we want the Coast Guard to be the 
very, very, very best it can be so that it can do all the 
things that it is mandated to do and do them effectively and 
efficiently.
    So this has in no way been an effort to try to make anybody 
look bad. We just need to look to see what has happened in the 
past, as Mr. Oberstar said, so that we can chart a most 
effective and efficient course for the future. I think this 
hearing has gone a long way towards doing that. We certainly 
will look very carefully at what has transpired here and act 
accordingly. I am sure that there will be some follow up 
questions. We thank you all very much.
    This hearing is adjourned.
    [Whereupon, at 11:30 p.m., the committee was adjourned.]

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