[Senate Hearing 110-1145]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 110-1145
 
                OVERSIGHT OF THE U.S. COAST GUARD BUDGET 

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

                                HEARING

                               before the

     SUBCOMMITTEE ON OCEANS, ATMOSPHERE, FISHERIES, AND COAST GUARD

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 6, 2008

                               __________

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

                               ----------
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            GORDON H. SMITH, Oregon
BILL NELSON, Florida                 JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington           JOHN E. SUNUNU, New Hampshire
FRANK R. LAUTENBERG, New Jersey      JIM DeMINT, South Carolina
MARK PRYOR, Arkansas                 DAVID VITTER, Louisiana
THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
CLAIRE McCASKILL, Missouri           ROGER F. WICKER, Mississippi
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
   Christine D. Kurth, Republican Staff Director and General Counsel
                  Paul Nagle, Republican Chief Counsel
                                 ------                                

     SUBCOMMITTEE ON OCEANS, ATMOSPHERE, FISHERIES, AND COAST GUARD

MARIA CANTWELL, Washington,          OLYMPIA J. SNOWE, Maine, Ranking
    Chairman                         GORDON H. SMITH, Oregon
JOHN F. KERRY, Massachusetts         JOHN E. SUNUNU, New Hampshire
BARBARA BOXER, California            JIM DeMINT, South Carolina
BILL NELSON, Florida                 DAVID VITTER, Louisiana
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
THOMAS R. CARPER, Delaware
AMY KLOBUCHAR, Minnesota



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 6, 2008....................................     1
Statement of Senator Cantwell....................................     1
Statement of Senator Inouye......................................     1

                               Witnesses

Allen, Admiral Thad W., Commandant, U.S. Coast Guard, Department 
  of Homeland Security...........................................     4
    Prepared statement...........................................     7
Caldwell, Stephen L., Director, Homeland Security and Justice 
  Issues, U.S. Government Accountability Office..................    19
    Prepared statement...........................................    21

                                Appendix

Fleet Reserve Association, prepared statement....................    57
Stevens, Hon. Ted, U.S. Senator from Alaska, prepared statement..    57
Response to written questions submitted to Admiral Thad W. Allen 
  by:
    Hon. Maria Cantwell..........................................    64
    Hon. Thomas R. Carper........................................    98
    Hon. Daniel K. Inouye........................................    62
    Hon. Claire McCaskill........................................    99
Response to written questions submitted by Hon. Maria Cantwell to 
  Stephen L. Caldwell............................................    99


                           OVERSIGHT OF THE 
                        U.S. COAST GUARD BUDGET

                              ----------                              


                        THURSDAY, MARCH 6, 2008

                               U.S. Senate,
Subcommittee on Oceans, Atmosphere, Fisheries, and 
                                       Coast Guard,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:34 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Maria 
Cantwell, Chairman of the Subcommittee, presiding.

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

    Senator Cantwell. The Senate Subcommittee on Oceans, 
Atmosphere, Fisheries, and Coast Guard will come to order.
    We are here today to have a hearing on the U.S. Coast Guard 
budget, and will hear from Admiral Thad Allen, as well as 
Stephen Caldwell, Director of Homeland Security and Justice 
Issues.
    So, thank you, gentlemen, for being here.
    We are joined by the Chairman of the full Committee, and I 
would like to ask Senator Inouye if he would like to make an 
opening statement.

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

    Senator Inouye. I thank you very much, Madam Chair.
    The Coast Guard celebrated significant achievements in 
2007. The men and women of the Coast Guard intercepted and 
seized a record 355,755 pounds of cocaine. And more 
impressively, they saved more than 5,000 lives, reaching an 
incredible landmark of saving more than one million lives since 
the Coast Guard's inception.
    I would like to commend the men and women of the Coast 
Guard for their diligent and tireless efforts. Their many 
accomplishments only begin to illustrate the extent to which 
the American people rely on the Coast Guard. From protecting 
the American people to protecting our natural resources, the 
Coast Guard is tasked with 11 critical missions. The Congress 
must work to ensure that the Coast Guard has sufficient 
resources to carry out all of these critical missions.
    The Coast Guard's Fiscal Year 2009 budget proposal, 
however, fails to include a funding request for the development 
of Interagency Operation Command Centers, which are mandated by 
the SAFE Port Act. The command centers are essential to 
providing a unified and effective command and control structure 
in the event of a transportation disruption in our Nation's 
ports and waterways. Furthermore, in the wake of the events of 
9/11, the Coast Guard has faced new security responsibilities. 
However, I am, once again, concerned that the Coast Guard 
budget proposal does not adequately fund some of the 
traditional Coast Guard missions. While I support priority 
funding for security missions, including the Coast Guard's 
recent efforts to increase its intelligence and awareness 
regimes, we should not neglect programs like the Coast Guard's 
Living Marine Initiatives. I'm particularly concerned with the 
lack of resources in Hawaii's District 14, especially since 
District 14 is responsible for monitoring approximately 43 
percent of the Pacific area. While I applaud District 14's 
recent interceptions of illegal fishing in the Pacific, I am 
concerned it cannot maximize its capabilities if it is faced 
with a budget shortage.
    And so, Madam Chair, I look forward to hearing today's 
testimony from Admiral Allen and Mr. Caldwell, and to working 
together to determine how we can address these important 
issues.
    I thank you very much, Madam.
    Senator Cantwell. Thank you, Senator Inouye. And thank you 
for attending this important budget hearing.
    Again, I want to thank Admiral Allen and Mr. Caldwell for 
being here this morning, and for your dedicated service to our 
Nation, and for your testimony that we are about to hear.
    I want to also thank--take the time now, at the beginning, 
to start off and thank the Coast Guard and Admiral Allen. At 
the end of last year, Washington State was pummeled by a severe 
storm and flooding, and, at one point, 150-mile-an-hour winds 
were clocked, off the coast of Washington. And with what really 
was swift action by the Coast Guard, relocation of a command 
center, the Coast Guard worked in very difficult conditions to 
literally save hundreds of lives, and we are very grateful for 
the efforts that the Coast Guard did in actually becoming the 
command-center focus in rescuing over 100 of our constituents 
who were in very treacherous situations. I think it was an 
example of the Coast Guard at its finest.
    On a national scale, the Coast Guard's responsibilities are 
just as challenging. For example, last year the Coast Guard 
responded to over 27,000 search-and-rescue cases, stopped more 
than 6,000 illegal immigrants from entering the U.S., responded 
to 162 significant oil and chemical spills, protected our 
communities by seizing a record number of illegal drugs, worth 
billions of dollars.
    And a few people are aware of the unique role that the 
Coast Guard plays in Iraq. During 2007, the Coast Guard 
supported operations in Iraq with more than 800 deployed 
personnel and six patrol boats, helping secure sea lanes, train 
Iraqi forces, and protect Iraq's offshore oil infrastructure. 
And again, we are grateful for those services.
    When looking at all of this, we always do have the question 
of asking how you balance the increasing demand in evolving 
homeland security missions, while ensuring the traditional 
missions of the Coast Guard are not set aside. And we will 
definitely discuss that further, and have questions.
    But, I think this morning's hearing--and focus on the 2009 
budget request--that one issue continues to concern me, as a 
Member of the U.S. Senate, and, I think, our Committee, and 
that is the Deepwater Program. The Coast Guard has taken 
important steps toward fixing the failings of the past. And I'm 
glad that the Coast Guard is implementing many of the reforms 
that the Senate passed--the Integrated Deepwater Reform Act, 
including phasing out its focus on a failed private lead 
systems integrator approach, and moving toward a full and more 
competitive acquisition process.
    While these are important steps, make no mistake, I am 
nowhere close to satisfied with the Coast Guard's progress on 
Deepwater, and believe that there is much work to still be 
done. We are not done fixing this program, and there are many 
potential problems that still lie ahead.
    The Offshore Patrol Cutter is estimated to cost more than 
$8 billion, and the largest Deepwater acquisition still exists 
only on paper. That ship, and many of the other acquisitions 
that lie ahead, are fraught with risks and uncertainty.
    The recently completed Alternatives Analysis, a thorough 
review of the Deepwater Program by an independent third party, 
makes a compelling case that Deepwater needs to continue to 
change course.
    We cannot repeat the problems of the past, and I assure you 
that, every step of the way, we are going to make sure that the 
taxpayers' dollars are spent wisely and effectively in this 
program.
    The Coast Guard needs to complete its mission safely and 
effectively, and taxpayers need to know what they are getting 
for their dollar. And, beyond Deepwater, I have concerns about 
the current fulfillment of other responsibilities by the Coast 
Guard.
    Over the past several years, I've heard a growing chorus of 
worry from my constituents, and, I'm sure, from my colleagues, 
about the Coast Guard, in its traditional responsibilities; in 
particular, for--maritime safety to oil spill response, I 
believe list--is on a list of growing concerns, but at the top 
of the list. As you know, Admiral Allen, recent events, such as 
the COSCO BUSAN oil spill in San Francisco, has re-emphasized 
the need for even greater vigilance in the Coast Guard's 
mission of environmental protection and oil-spill response.
    I know that we have had separate hearings on this, and 
rulemaking, and we'll, I'm sure, have a chance, in the 
questions, to elaborate further on that.
    I also am concerned about preparing for the future, and I'm 
concerned that the Coast Guard is unprepared for the coming 
challenges presented by global warming and an increasing 
vulnerable Arctic. I believe our Nation is asleep at the wheel 
on the future of the Arctic, and staying on path with what can 
become very devastating impacts to our national interests.
    The President still refuses to put forward a national 
policy on the fate of our Polar Icebreaker fleet, or Arctic 
issues in general, and, as a result, our icebreaker fleet is 
wasting away, held prisoner under the budget pressures of 
today. This is both unacceptable and dangerous.
    The Coast Guard has always been proud of saying it does 
more with less, and it has worked hard to be efficient, and 
always strived for greater efficiency. At some point, though, 
there is a limit, where the Coast Guard can only do with what 
we are giving them, and we need to start seeing that an agency 
could be overextended and can't go beyond doing more with less.
    I look forward to discussing these issues, and I am 
optimistic that the Coast Guard, if it continues to make 
changes and moves in the right direction, we will continue to 
meet the challenges that our Nation sets before the Coast 
Guard.
    So, I look forward to your testimony, Admiral Allen and, to 
Mr. Caldwell, your statement, as well.
    So, with that, I'm awaiting the arrival of my colleague, 
Senator Snowe. We'll go ahead and start with you, Admiral 
Allen.

        STATEMENT OF ADMIRAL THAD W. ALLEN, COMMANDANT, 
       U.S. COAST GUARD, DEPARTMENT OF HOMELAND SECURITY

    Admiral Allen. Thank you, Madam Chair. I'm pleased to be 
here today. And thank you, Chairman Inouye, for being here, as 
well.
    I'm pleased to discuss the President's Fiscal Year 2009 
budget. I have a written statement, that I'd offer for the 
record, and will make brief opening remarks.
    Madam Chair, last year I sat before you and opened with a 
brief discussion on the direction I wanted to take the Coast 
Guard, followed by a more detailed discussion of the Deepwater 
Program. Despite challenges with Deepwater, and the concerns 
that you've raised, I'm proud to say that we have taken action 
to get the program back on track, and we're moving ahead 
smartly.
    Deepwater assets are taking to sea and the sky for 
development and evaluation, and initial indications are, they 
are performing admirably at every turn. The Flagship National 
Security Cutter BERTHOLF begins sea trials in December and is 
on track for a summer delivery.
    Just 2 weeks ago, one of our new HC-144 Alpha Ocean Sentry 
aircraft diverted from training, unexpectedly, to complete the 
aircraft's first search-and-rescue case for the Coast Guard. 
Its on-scene capabilities exceeded expectations, particularly 
command-and-control. You may remember, there were two F-15s 
that collided, south of Tyndall Air Force Base, in the Gulf of 
Mexico. The aircrew leveraged a modern suite of avionics to 
locate a downed Air Force F-15 aircraft in the Gulf of Mexico, 
identified Good Samaritan vessels nearby, and coordinated the 
rescue of a surviving pilot. At various times during that 
evolution, the aircraft was controlling the movements of seven 
to ten other aircraft, and used AIS to locate a Good Samaritan 
vessel to divert.
    And, although we still face challenges with Deepwater, we 
are solving problems, we remain committed to transparency, and 
we are steaming ahead. As I have said before, I am responsible 
[inaudible] task. You've indicated your ongoing concern; that 
matches mine. I commit to working with you, moving forward.
    I'd like to shift gears now and provide a context for our 
Fiscal Year 2009 budget request, if you would indulge me as I 
share some personal thoughts on the pressing challenges the 
service faces today.
    As I said, last month in my second State of the Coast Guard 
Address, the spectrum of threats, hazards, and challenges we 
face continues to grow on all fronts, and increases demands for 
our services. Threats to our maritime safety, security, and 
prosperity at home and on the high seas are real, and they are 
dynamic.
    The demands we face from the rapidly growing global 
maritime transportation system, expanding coastal development, 
and changing conditions in the Arctic strain our current 
capacity and challenge conventional notions of mission 
responsibilities.
    We're also facing threats of transnational terrorism, 
increased sophistication in human smuggling and drug 
trafficking, and expeditionary demands to support the global 
war on terror in a time of persistent conflict.
    Internally, we face pressing challenges that transcend all 
missions and threaten our ability to meet national 
responsibilities. Our first and most significant challenge is 
that we have a bona fide capacity shortage. We have 
authorities, capabilities, and competencies for all missions, 
but there is a limit to what any organization can accomplish 
when the overall end strength has not materially changed in 50 
years, despite steadily increasing statutory responsibilities 
and external demands.
    The President's Fiscal Year 2009 request for the Coast 
Guard helps build new capacity in critical areas; most notably, 
it adds 276 new positions for our marine safety program, and 
over 100 new multimission watch standards for our busiest 
sector command centers. Make no mistake, however; these are 
downpayments in critical areas that demand a broader discussion 
of capacity.
    Second, we are hamstrung by the burdens associated with 
operating and maintaining an aging and rapidly deteriorating 
inventory of cutters, aircraft, and shore facilities. We 
operate the 37th oldest of 39 similar naval fleets in the 
world. Our oldest cutter, the ACUSHNET, earned battle scars in 
World War II, is beginning her 64th year of commissioned 
service to the Nation. Several weeks ago, one of her two 
propellers broke off during routine operations in the North 
Pacific, and she is now out of service, standing by for major 
repairs.
    The average age of our 378-foot High Endurance Cutters, the 
flagships of our fleet, stands at nearly 40 years, and their 
age is showing. Earlier this year, the High Endurance Cutter 
RUSH had to abort a search-and-rescue mission south of the 
Aleutian Islands due to a split seam in the forward hold that 
caused it to take on water.
    The Medium Endurance Cutter ALEX HALEY had a failure of its 
onboard drinking-water system, creating a hazardous condition 
for the health and safety of the crew.
    The High Endurance Cutter DALLAS aborted a drug 
interdiction mission last month due to a failure of flight-deck 
lighting just as she was preparing to launch a helicopter in 
pursuit of a smuggling vessel. In the words of the DALLAS's 
commanding officer, ``It appears the inopportune failure of 
another piece of obsolescent equipment lost the day.''
    Be assured, our failing assets, increasing operating costs, 
reduced readiness, and--adversely impact our workforce and our 
capabilities.
    We face similar challenges sustaining our aging shore 
infrastructure, in the buoy tender fleet, and Polar 
Icebreakers, all of which are old and growing ever more 
obsolete.
    Additionally, our maintenance costs are rapidly escalating. 
During the past year, we've spent over $76 million on 
unanticipated repairs to cutter and--cutters and aircraft. 
Today, we carry an estimated maintenance backlog of nearly $750 
million. We are replacing aging assets and repairing shore 
infrastructure as fast as resources permit, but it is not fast 
enough. In the near term, maintenance costs will continue to 
rise, and we will struggle to maintain our readiness. Our 
recapitalization needs have multi-mission impacts. They are 
urgent, and they are real. I need every dollar in the budget.
    Finally, like our other Armed Forces, our challenges are 
compounded by an environment of fiscal constraint and 
unprecedented scrutiny over preparation of financial statements 
which threaten policy development and mission execution. I am 
committed to modernizing our organizational structure to focus 
on mission execution, including improved command and control, 
life cycle support, fiscal accountability, and base management. 
However, management efficiencies, while workable in the near 
term, are inconsistent with the long-term need to grow capacity 
and accelerate recapitalization.
    With regard to our workforce, I was surprised to learn, 
last week, of dramatic trends in forfeiture of leave among 
Active Duty personnel. As background, any leave balances beyond 
60 days are generally forfeited at the beginning of each fiscal 
year. In Fiscal Year 2003, the Coast Guard workforce lost some 
10,000 days of leave due to this standard policy. The trend has 
increased in each subsequent year, culminating in more than 
70,000 lost days of leave in Fiscal Year 2007. This profound 
increase troubles me, and I believe growth in demands for our 
services and the maintenance needs of our aging vessels, 
aircraft, and shore infrastructure are taking a toll on our 
workforce.
    I'd like to briefly update you on plans and progress with 
two major issues, I know, that are especially important to the 
Committee: efforts to improve rulemaking and review of the 
COSCO BUSAN response.
    Our current slate of rules to be developed by the Coast 
Guard exceeds 90; on 9/11/2001, it was approximately 50. 
Despite tremendous effort by our personnel, many important 
rules have been queued, awaiting required resources. This is 
unsatisfactory, as I testified in December. We are taking 
aggressive action. I sent a letter to the Committee, with our 
current priority for rulemaking, and I look forward to the 
discussion on rulemaking as we move forward.
    I also testified, in December, I initiated an incident-
specific performance review of our response to the COSCO BUSAN 
which involved third parties. Phase one of the report was 
released on the January 28, 2008. It addressed the first 2 
weeks of the response and provided 110 lessons learned and 128 
recommendations to improve preparedness and response in the San 
Francisco Bay community. The recommendations fall into several 
broad categories that include emphasis on area contingency 
planning processes, the use of drills and exercises, the 
incorporation of local response capabilities and information 
sharing throughout the incident command structure. The second 
phase of the report will address the remainder of the response, 
and is due to me in May 2008. I will provide the results of my 
plans for the way ahead to the Congress.
    Beyond this incident-specific review, we are partnering 
closely with the DHS IG on their audit of the response.
    In closing, our people are courageous, dedicated, and 
resilient. They defend our Nation and our values every day. 
They are confronting historic national challenges, protecting 
against a radical enemy, and ensuring safe and efficient 
commerce within an increasingly sophisticated maritime 
transportation system. Their opportunity is now, and they're 
facing the greatest challenges of any Coast Guard generation in 
history.
    I request your full support of our funding request in 2009. 
I look forward to answering any questions you may have.
    [The prepared statement of Admiral Allen follows:]

       Prepared Statement of Admiral Thad W. Allen, Commandant, 
           U.S. Coast Guard, Department of Homeland Security
    Good morning, Madam Chair and distinguished Members of the 
Committee. I am pleased to be here to discuss the President's Fiscal 
Year (FY) 2009 budget request for the Coast Guard.
    First, I thank you for the enduring support you have shown to the 
men and women of the United States Coast Guard and ask for your full 
support of the President's request. The Coast Guard FY 2009 budget 
request sustains service delivery, continues critical recapitalization 
efforts and builds capacity in three strategic areas: marine safety, 
command and control, and intelligence and awareness. We need every 
dollar the President has requested.
    I open by sharing my professional views as Commandant on our 
strategic operating environment and the most immediate challenges 
facing the service today. These challenges provide an important 
backdrop for our budget request and the premium our workforce places on 
growth, pace of recapitalization and emergency sustainment.
    The Coast Guard delivered historic national results in 2007. We 
saved over 5,000 lives, removed a record $4.7 billion of cocaine from 
the global narcotics stream, rescued over 6,000 migrants on the high 
seas, and cosponsored one of the largest oil spill exercises ever 
conducted. It was a banner year for the Coast Guard on all fronts, 
punctuated by celebration of our one millionth life saved since 
Alexander Hamilton established the Revenue Cutter Service in 1790 as 
Secretary of the Treasury.
    As you know, our people are courageous, dedicated and resilient. 
They defend our Nation and our values every day. They are confronting 
historic national challenges such as protecting America against a 
radical enemy while ensuring safe and efficient commerce within an 
increasingly sophisticated maritime transportation system. In addition, 
they are working longer and harder than ever before. In fact, multi-
year trends presented to me last week show record levels of increasing, 
obligatory annual leave forfeiture among the active duty workforce. I 
am committed to reviewing the associated drivers in more detail but 
know the President's FY09 request will bring critical resources needed 
to alleviate field burdens associated with emergency maintenance and 
sustainment, as well as increased demand for our services.
    Despite our successes, significant challenges lie ahead. The 
rapidly growing global Marine Transportation System (MTS), expanded 
coastal development, and changing conditions in the Arctic challenge 
conventional notions of our approach to mission execution. Added to 
this are specters of transnational terrorism, increased sophistication 
in human smuggling and drug trafficking, and expeditionary demands to 
support the global war on terror in a time of persistent conflict.
    Looking forward, we must position ourselves to meet the emerging 
challenges of the 21st century. As with our Armed Service counterparts, 
I believe we must reset, reconstitute and revitalize the Coast Guard to 
meet today's demands and those of the future. The President's FY 2009 
budget request begins this process on many fronts.
Our Aging Fleet
    Our readiness is continually challenged by our reliance on 
outdated, rapidly-aging assets, systems, and shore infrastructure. In 
fact, during the past 12 months, the Coast Guard spent over $76M on 
major unanticipated repairs to cutters and aircraft. These and other 
casualties have a direct impact on our readiness and ability to execute 
our missions for the Nation. In FY 2007 alone, High Endurance Cutter 
operational days were reduced 27 percent due to engineering casualties. 
Our large deferred maintenance backlogs (i.e., $631M shore, $87M 
aircraft, and $27M cutters) also present a major challenge to Service 
readiness, and they continue to grow. I ask that you fully fund our 
request for AC&I and OE resources to ensure our recapitalization and 
emergency maintenance needs are met.
Operating Efficiencies, Financial Management Scrutiny, and Reporting 
        Requirements
Efficiencies
    We are operating in an austere fiscal environment with growing 
demands for our services. Our budget request maximizes efficiencies and 
reflects the realities of very difficult top line choices. Our request 
balances many important priorities including continuing critical 
recapitalization efforts, annualizing FY 2008 Emergency Funding, and 
starting new initiatives that leave the homeland more secure. We are 
identifying $68 million in efficiencies to fund these priorities.
    I remain committed to modernizing our organizational structure to 
focus on mission execution, including better command and control, 
lifecycle support of our assets, fiscal accountability, and base 
management.
Financial Management Transformation
    While certain weaknesses are impediments to CFO Act compliance, I 
strongly disagree with portions of Inspector General Skinner's latest 
testimony before the Committee. We are making significant strides 
identifying and tackling the root causes of our financial material 
weaknesses. It is important to understand that remediation of internal 
controls is just the first step to improving our financial statement 
assertions. We must also establish a strong financial management 
organization, integrate our vast IT systems, and remediate our legacy 
balances. This is a long journey, but we have a trackline and are 
committed to it.
    Over the past 3 years, we have reallocated over $100M in base 
funding to pay for financial transformation and audit initiatives, 
including last year's establishment of the Office of Financial 
Transformation and Compliance (CG-85). CG-85 is coordinating our 
Financial Strategy for Transformation and Audit Readiness (FSTAR), a 
multi-year plan to earning a sustainable clean audit opinion.
    Within DHS, the Coast Guard faces unique challenges with respect to 
CFO Act compliance. These challenges are not excuses, they are 
realities. We are the Department's only Armed Service and most capital 
asset-intensive component. Our broad spectrum of missions, authorities, 
and diverse operating assets creates a complex web of financial 
management challenges. Moreover, our financial management capacity was 
``Streamlined'' in the 1990s because, at the time, it was not deemed a 
core competency in a military organization focused on operational 
effectiveness. We changed this culture long ago and are moving forward 
smartly.
Reporting Requirements
    I have serious concerns over the growing burden of reporting 
requirements.
    I assure you, I am committed to transparency on all fronts and have 
no objections to providing comprehensive information to our 
Congressional committees of jurisdiction. However, the current scheme 
of overlapping reports, with widely divergent submission schedules, 
will ultimately have an adverse impact on policy formulation and 
mission execution.
    Each mandated report diverts scarce resources from project 
management to report management. This approach is not sustainable.
    I propose a consolidated reporting scheme, developed through 
collaboration with our committees of jurisdiction, that I believe would 
satisfy congressional needs without unduly burdening Coast Guard 
program staffs. I seek your full support as we move forward.
``A Cause for Action''
    These conditions form the basis of what I call `a cause for 
action.' That is, a call to create a Coast Guard that is more 
appropriately structured and adaptable to meet our modern, 21st Century 
mission demands and responsibilities Our Fiscal Year 2009 budget 
request seeks resources needed to begin this journey and I again seek 
your full support as we move forward.
    Before discussing the details of the request, I would like to 
explain how I view the roles and missions of the Coast Guard and the 
strategic direction in which we are taking the Service. The Coast Guard 
sources and operates to strategy, and our Fiscal Year 2009 request 
directly supports our strategic imperatives.
Roles and Missions
    The U.S. Coast Guard is one of the five Armed Services of the 
United States and the only military organization within the Department 
of Homeland Security (DHS).
Responsibilities
    The U.S. Coast Guard is the principal Federal agency responsible 
for maritime safety, security, and environmental stewardship. As such, 
the Coast Guard protects vital economic and security interests of the 
United States including the safety and security of the maritime public, 
our natural and economic resources, the global transportation system, 
and the integrity of our maritime borders. The Coast Guard is committed 
to addressing all threats and all hazards throughout the maritime 
domain including in U.S. ports and inland waterways, along the coasts, 
on the high seas, and in other regions where U.S. maritime equities are 
at stake.
Service to the Public
    The Coast Guard's value to the Nation resides in its multi-mission 
authorities, resources, and capabilities. The Service's safety, 
security, and stewardship missions are integrated like a tightly-knit 
fabric; valued for its protective durability and light weight. The 
Service's operational model is flexible, efficient, and effective 
across a wide range of complex maritime scenarios. Indeed, the Coast 
Guard's ability to field versatile platforms and personnel with broad 
authorities is the U.S. Government's most important strength in the 
maritime environment, adjacent coastal areas, and inland waterways. The 
Service is unique in the Nation and in the world.
    Coast Guard roles and missions are enduring--long standing 
responsibilities, accrued over two centuries of service. They are 
inherently governmental, serve the collective good and are accomplished 
most effectively by a single Federal maritime force. The Coast Guard 
creates value for the public through solid prevention and response 
efforts. Activities involving oversight and regulation, enforcement, 
maritime presence, and public and private partnerships foster increased 
maritime safety, security, and stewardship. Additionally, unified, 
immediately-deployable and adaptive force packages are always poised 
and available to respond to attacks, disasters, and casualties.
Multi-Mission Integration
   Effective maritime governance hinges upon an integrated approach to 
safety, security, and stewardship.
    The United States is a maritime nation, reliant upon the seas for 
trade, security, and access to critical natural resources. To protect 
our maritime interests, the U.S. Government must safeguard our 
sovereignty and protect the environment, facilitate the safe 
transportation of people and cargo, rescue people in distress, and 
preserve marine resources for future generations. None of these 
objectives are independent--they are interlocking challenges requiring 
an in-depth understanding of the maritime domain as a system of inter-
related public and private activities.

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    The Coast Guard is ideally-structured to meet these challenges and 
advance the Nation's maritime interests. Today, as in the past, the 
Coast Guard continues to leverage its multi-mission structure, diverse 
capabilities, and established partnerships to protect the American 
public and global marine transportation system.
             Strategies for Success in the Maritime Domain
Strategic Context: Emerging Threats
    America's security, resilience and economic prosperity are 
intrinsically-linked to the oceans. Our maritime domain is larger than 
our land domain, providing shipping channels, recreational 
opportunities and access to natural resources that help to sustain the 
Nation and the world. The maritime domain is also vulnerable to a wide 
range of threats and challenges. The U.S. Coast Guard must be prepared 
to meet these challenges today and in the future.
Border Security
    The United States has over 95,000 miles of shoreline that is in 
parts international border, coastal shipping route, tourist and 
recreation attraction, and home to a variety of economic enterprises. 
Criminals and terrorists seek to exploit the maritime border by 
smuggling people, weapons, illicit drugs and other items into the 
country. As controls over our land and air borders tighten, the sea 
borders become an attractive alternative for greater exploitation. The 
key to effective border security is a layered, networked system across 
the land, air, and maritime domains. We must look beyond our borders to 
defeat threats far from our shorelines through the continual maturation 
of maritime security regimes, awareness, and operational capabilities.

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Safety and Security of the Marine Transportation System (MTS)
    The global MTS is a complex, inter-connected system of public and 
private seaports, waterways, terminals, intermodal trans-shipment 
points, vessels, and people. This system is the economic lifeblood of 
the global economy and critical to U.S. national economic and security 
interests. Total global maritime cargo volume has tripled over the past 
10 years, and seaborne trade through U.S. ports is expected to double 
by 2025. The Coast Guard must have the capabilities and authorities 
needed to ensure the continued safety, security, and efficiency of the 
rapidly-growing global MTS.
Transnational Terrorists and Criminals
    Terrorists and criminals, including modern-day pirates, regularly 
seek to exploit the maritime domain and global transportation network. 
WMD, contraband smuggling, armed hijacking, and small vessel threats 
such as water-borne improvised explosive devices (WBIEDs) present the 
greatest terrorism and security risks to maritime commerce. 
Additionally, today's trafficking of illegal drugs and migrants is 
becoming increasingly sophisticated. Defeating transnational terrorists 
and criminals in the maritime domain requires effective use of the 
Coast Guard's broad authorities and adaptable multi-mission 
capabilities.
Expanded Use of the Arctic and Other Regions
    Changing environmental conditions and advances in technology are 
expanding activity in the Arctic Region, U.S. Exclusive Economic Zone 
(EEZ), and Outer Continental Shelf (OCS). The potential for access to 
new energy reserves and more efficient shipping routes is fueling 
demand. The U.S. EEZ covers over 3.4 million square nautical miles of 
ocean territory and is among the most valuable and productive natural 
resources on Earth. Continued growth in commerce, tourism and 
exploratory activities is increasing risks to mariners and ecosystems 
while challenging law enforcement regimes, operational capabilities, 
and conventional assumptions of sovereignty. The U.S. Coast Guard must 
be capable of protecting America's interests in the Arctic Region, EEZ 
and OCS.
Coastal Development
    Coastal regions and ports have in recent years become heavily-
developed and densely-populated. Catastrophic incidents, whether 
natural or man-made, have enormous consequences in coastal areas that 
quickly disrupt regional, national, and global commerce. The 
devastation of Hurricanes Katrina and Rita illustrates the potential 
scope of coastal disasters. The Coast Guard must continue to provide 
immediately-deployable and adaptive force packages to mitigate the 
safety, security, and environmental impacts of catastrophic events.
    The Coast Guard is best-suited to address these challenges through 
its comprehensive, complementary authorities, flexible and adaptive 
operational capabilities, and centuries of expertise protecting 
America's national interests.
    In the near term, the Coast Guard will defeat these threats by:

   recapitalizing operating assets and sustaining aging 
        infrastructure;

   enhancing our Marine Safety Program;

   improving command and control capabilities; and

   establishing comprehensive intelligence and awareness 
        regimes.
Strategic Intent: The Way Ahead
    The Coast Guard sources and operates to strategy. Our near-term 
decisions are guided by a family of strategic documents outlining 
organizational imperatives and executive intent as articulated in the 
National Security Strategy and National Strategy for Homeland Security. 
These include The National Strategy for Maritime Security, the DHS 
Strategic Plan, The Coast Guard Strategy for Maritime Safety, Security, 
and Stewardship, and the joint, ground-breaking A Cooperative Strategy 
for 21st Century Seapower co-authored by the Navy, Marine Corps and 
Coast Guard. We will continue to refine strategy and doctrine to guide 
response and enforcement activities in the future. Implementation of 
strategy requires effective integration of budget, programs, policy, 
and legislation.
Coast Guard Modernization Strategy
    The Coast Guard is modernizing its legacy command and control 
structures, support systems, and business practices to ensure continued 
superior mission execution in a changing global environment. Integral 
to this modernization effort is new authority to realign field-level 
leadership positions for improved service delivery.
    Strategic modernization is designed to create efficiencies that 
make the Coast Guard more capable of addressing 21st century threats 
and challenges. The strategic modernization effort will improve 
resource allocation, financial management, risk management, training, 
and unity of effort within the DHS and across multiple layers of 
government. It will strengthen Headquarters and field alignment, 
improve readiness management, and greatly enhance mission execution in 
all areas.
Legislative Priorities--Coast Guard Authorization Act of Fiscal Year 
        2008
    The Administration is seeking authorities to enhance the 
organization and operations of the Service and, by extension, the 
maritime safety, security, and stewardship of the United States. The 
more significant provisions of the Coast Guard Authorization Act would 
facilitate--

   The Coast Guard's strategic modernization effort, by 
        increasing alignment with other armed forces and Federal 
        agencies, ensuring greater organizational flexibility, and 
        enhancing command, control and system support improvements.

   The government's prosecution of maritime alien smugglers. 
        The recent escalation of lucrative maritime human smuggling 
        operations poses a significant threat to the lives of migrants 
        and our national security. Although the Coast Guard continues 
        to improve its ability to detect and interdict smugglers, 
        current law impedes prosecution.

   The protection and fair treatment of seafarer witnesses. 
        This provision would facilitate the availability of foreign 
        seafarer witnesses for Coast Guard investigations and support 
        seafarers abandoned by shipowners in the United States. This 
        provision fits into the Coast Guard's overall efforts to ensure 
        the fair treatment of all seafarers in all circumstances.

    The House of Representatives is poised to consider these provisions 
when it takes up H.R. 2830, the ``Coast Guard Authorization Act of 
2007.'' Although we have some important concerns with the H.R. 2830, we 
strongly support these provisions of the bill and note that a swift 
enactment of a bill that includes these provisions would significantly 
improve safety, security, and stewardship in the maritime domain.
Strategy for our People
    The Coast Guard succeeds through the courage, devotion, and 
sacrifice of its people. Our Service members epitomize core values of 
honor, respect, and devotion to duty in words and deeds. Our future 
success hinges upon our ability to continue building competencies to 
meet emerging demands and mission responsibilities.
    Our goal is to foster and deploy an energetic, diverse, well-
educated, highly-capable workforce of active, reserve, and civilian 
personnel dedicated to mission execution and Coast Guard core values, 
supported by the Nation's premier volunteer organization, the U.S. 
Coast Guard Auxiliary.
Strategic Budget Priorities for Fiscal Year 2009
    In order to meet emerging threats and growing demand for services, 
the Coast Guard is focusing on the following major strategic areas in 
Fiscal Year 2009. Our comprehensive effort to address these challenges 
requires coordinated budget, program, policy, and legislative action.

   Recapitalizing Operating Assets and Sustaining Aging 
        Infrastructure;

   Enhancing the Marine Safety Program;

   Improving Command and Control Capabilities; and

   Establishing Comprehensive Intelligence and Awareness 
        Regimes.
Recapitalizing Operating Assets and Sustaining Aging Infrastructure
    The Coast Guard needs to replace aging vessels, aircraft, and shore 
infrastructure. The cost of maintaining and operating the out-dated 
assets is continually increasing, as are major unplanned maintenance 
evolutions and reductions in readiness. Vital shore infrastructure 
required to maintain our front line assets is also in critical need of 
renovation and repair. Ultimately, the future operational success of 
the Coast Guard is dependent upon a comprehensive recapitalization of 
front line assets and shore and support infrastructure.
    Earlier this year, the aging High Endurance Cutter USCGC RUSH had 
to divert to homeport from a search and rescue mission south of the 
Aleutian Islands when she began taking on water due to a hull crack in 
one of the vessel's compartments. Though numerous modifications and 
refits have taken place over their service life, the average age of our 
High Endurance Cutters stands at over 39 years and, like much of our 
fleet of cutters and aircraft, their age is showing. Cutters like RUSH 
and ACUSHNET are preeminent examples of the Coast Guard's urgent need 
to recapitalize and sustain.
Enhancing the Marine Safety Program
    With strong Congressional support, we recognized the potential 
threat posed to our Nation by radical extremists and took prompt and 
substantial action to fortify our ports, waterways, coastal areas, and 
maritime infrastructure after 9/11. Today, with maritime security needs 
better-addressed, we are revitalizing our long-standing efforts to 
enhance the safety of the Marine Transportation System (MTS).
    The success of the marine transportation system hinges upon an 
integrated approach to safety, security, waterways management, and 
environmental protection. The goals in preventing or responding to 
safety and security incidents in our ports and waterways are the same: 
save lives and protect property, the environment, and the global 
economy.
    The maritime industry is experiencing unprecedented growth and 
intermodal complexity, while also facing increased risk from 
transnational threats. The Coast Guard is acting now to improve marine 
safety capacity and performance, enhance service delivery to mariners, 
and expand outreach and advisory mechanisms. As a result of a 
comprehensive Marine Safety program review, the Coast Guard established 
a roadmap to improve the effectiveness, consistency, and responsiveness 
of the program to promote safe, secure, and environmentally sound 
marine transportation. This roadmap includes reinvigorating industry 
partnerships, improving mariner credentialing services, bolstering 
inspector and investigator capacity, improving technical competencies 
through new marine safety Centers of Excellence, and expanding 
rulemaking capability to ensure we meet current and future program 
needs. Additional details on the Coast Guard's strategy to enhance 
marine safety can be found under the ``Marine Safety'' tab at http://
homeport.uscg.mil.
Improving Command and Control Capabilities
    The maritime environment continues to grow in complexity as the 
global transportation system matures. The Coast Guard faces a critical 
need to update its command and control capability to better identify 
and classify safety and security threats in the maritime realm and 
coordinate an integrated response.
Polar Presence and Capabilities
    Recent years have seen a significant increase in Polar activity, 
including efforts by multiple Arctic nations to define and claim Arctic 
seabed and access to natural resources. Energy security needs, 
protection of U.S. sovereignty, increased Arctic shipping, prevention 
and response activities, as well as the growing need for Arctic domain 
awareness will increase the tempo of Coast Guard operations in the 
region. The Coast Guard is often the sole Federal presence in the 
Arctic and the only entity positioned and capable of protecting U.S. 
sovereignty while supporting scientific research. The Coast Guard is 
aggressively considering alternatives to improve and sustain 
operational presence in the Polar Regions, and I am requesting funds to 
study future mission requirements in the Polar Regions in the FY 2009 
budget.
Establishing Comprehensive Intelligence and Awareness Regimes
    Collecting, fusing, and sharing intelligence is critical to 
securing the border and protecting the Nation against determined 
terrorists and criminals. It is equally important to safeguard our 
intelligence resources from compromise and exploitation. As a member of 
the Intelligence Community, the Coast Guard must be fully and properly 
vested in equipment and intellectual capital capable of meeting 
responsibilities of intelligence collection, information sharing, long-
range tracking, and interagency partnerships.
Fiscal Year 2009 Budget Request
    The Coast Guard's FY 2009 budget request sustains service delivery 
and continues critical recapitalization efforts while focusing on: 
enhancing marine safety, improving command and control, and 
establishing comprehensive intelligence and awareness regimes. Budget 
request highlights include:
Recapitalizing Aging Vessels, Aircraft, and Shore Infrastructure
Integrated Deepwater System (IDS) Surface Assets--$540.7M
    The budget requests $540.7M for the following IDS surface asset 
recapitalization or enhancement initiatives:


     Completion of National Security Cutter #4          $353.7M
     Production of three Fast Response Cutters          $115.3M
     Operational enhancement of five Medium              $35.5M
     Endurance Cutters
     Operational enhancement of three 110-foot           $30.8M
     Patrol Boats
     Offshore Patrol Cutter requirements analysis           $3M
     Development/production of IDS Cutter Small           $2.4M
     Boat


Integrated Deepwater System (IDS) Air Assets--$231.3M
    The budget requests $231.3M for the following IDS air asset 
recapitalization or enhancement initiatives:


     Delivery of two HC-144A Maritime Patrol             $86.6M
     Aircraft
     HH-65 conversion to modernized components,          $64.5M
     cockpit, and enhanced interoperability for 22 aircraft
     HH-60 engine sustainment and avionics, wiring,      $52.7M
     and sensor upgrades for eight aircraft
     HC-130H avionics and sensor upgrades for nine       $24.5M
     aircraft and one center wing box replacements
     Unmanned Aircraft System project analysis              $3M


Integrated Deepwater System (IDS) Other--$218.4M
    The budget requests $218.4M for the following IDS equipment and 
services:


     Upgrades to IDS command, control, computer,         $88.1M
     intelligence, surveillance, and reconnaissance (C4ISR)
     items
     Government Program Management for contract            $58M
     oversight and execution
     Development of logistics capability and             $37.7M
     facility upgrades
     Systems Engineering and Integration funds           $33.1M
     Prevention of IDS asset obsolescence by              $1.5M
     replacing aging technology


Depot Level and Emergency Maintenance--$29.2M
    The budget requests $29.2M for urgent extraordinary maintenance 
requirements including vital crew safety needs on cutters, emergency 
maintenance, and post-casualty maintenance. Specifically, this request 
funds overhauls of habitability, sanitary, electrical, fire/flooding 
alarm systems and asbestos/lead remediation on cutters; restores 
required cutter dockside scope and intervals, restores aircraft repair 
intervals, funds required spare parts replenishment; and funds 
unanticipated repairs on legacy cutters and aircraft, unscheduled 
drydocks/dockside availabilities, and fire damage remediation.
Inland River Assets--$9M
    The budget requests $4M in critical maintenance and renovation 
funding to address emergency safety and habitability needs on 25 aging 
Aids to Navigation (ATON) cutters. This project will serve as a 
bridging strategy to future replacement. The $5M AC&I request will be 
for survey and design funding to chart a suitable course of action 
which may include additional sustainment measures and/or a multi-
mission replacement due to obsolescence. Although originally designed 
specifically for ATON work, many of these vessels serve as a critical 
Federal presence on the inland waterways.
Response Boat-Medium (RB-M)--$64M
    The budget requests $64M for 14 boats to replace the aging 41-foot 
utility boat (UTB) and other non-standard boats with an asset more 
capable of meeting the USCG's multi-mission requirements.
Shore Facilities and ATON Recapitalization Projects--$50M
    The budget requests a total of $50M, an increase of $12.1M over FY 
2008. The Coast Guard occupies more than 22,000 shore facilities with a 
replacement value of approximately $7.4B. The FY 2009 funding is 
crucial to maintaining safe, functional and modern shore facilities 
that efficiently and effectively support USCG assets and personnel. FY 
2009 projects include:


     Sector Delaware Bay--Construct new                    $13M
     consolidated facilities; upgrade work spaces and
     living quarters
     CG Housing Cordova, AK--Six new duplex units        $11.6M
     CGA Chase Hall--Renovate cadet barracks             $10.3M
     AIRSTA Cape Cod--Replace runway lighting               $5M
     Waterways ATON Infrastructure                          $4M
     TISCOM--Construct a 5,000 square-foot addition       $2.5M
     Survey and Design--Planning and engineering of       $2.1M
     outyear shore projects
     Station Montauk--Purchase three housing units        $1.6M


Operation & Maintenance (O&M) of Surface and Air Assets
$40.2M/199 positions
    The budget requests a total of $40.2 million to fund O&M of the 
following cutters, boats, aircraft and associated subsystems delivered 
through the IDS acquisition project:


     Four HC-144A aircraft                                 $24M
     C4ISR upgrades for legacy cutters, boats,            $7.1M
     aircraft, and operations centers
     National Security Cutters #1-#2                      $5.6M
     Fast Response Cutter (FRC-B) Primary Crew            $1.4M
     Assembly Facility
     FRC-B #1                                             $1.2M
     Airborne Use of Force aircraft & equipment           $0.8M


Enhancing the Marine Safety Program
Marine Inspection Program--$20M/276 positions
    The budget requests $20M for 276 additional Marine Inspectors to 
address growth in maritime commerce and the Nation's regulated vessel 
fleet, including the inspection of approximately 5,200 towing vessels 
mandated by the FY 2004 Coast Guard Authorization Act. Inspection and 
investigation demand is expected to increase as a result of additional 
Liquefied Natural Gas ships and facilities, towing vessel examinations, 
non-tank vessel response plan reviews, ballast water management 
oversight, and regulatory development. This initiative is critical to 
maintaining the safety and efficiency of the Nation's MTS.
DHS Regulatory Program--$2.6M
    The budget requests $2.6M to fund additional contract support and 
improve rulemaking throughput and capacity. Before 9/11, there were 59 
Coast Guard rulemaking projects outstanding. In the year following 9/
11, this backlog increased to 75 and now stands at approximately 100 
rulemaking projects. This initiative provides much needed technical 
writers and environmental and economic analyses critical to the 
development of safety, security, and environmental protection 
regulatory regimes. In the interim, we are completing a rulemaking 
review and reform project and implementing performance measures to 
maximize throughput.
Improving Command and Control
Rescue 21--$87.6M/97 positions
    The budget requests $87.6M to continue full rate production of 
towers and equipment for sectors including Great Lakes, Hawaii, Guam, 
and Puerto Rico. This request also includes funding for one additional 
watch section (five persons) at 15 of the busiest Sector Command 
Centers. Rescue 21 replaces the existing National Distress and Response 
System and enhances the Coast Guard's ability to execute all of its 
missions through improved communications and command and control 
capabilities in the coastal zone. The additional watchstanders included 
in this request support the increased capability provided by Rescue 21 
and ensure proper monitoring of the additional communications circuits 
and coordination of response operations.
Situation Unit Watchstanders--$6.3M/101 positions
    The budget requests $6.3M for additional watchstanders at Sectors, 
Districts, Area, and Headquarters Command Centers to meet increasing 
operational demands and support the additional vessel monitoring, 
information collection and interagency coordination capability provided 
by the Command 21 initiative. The additional watchstanders are 
responsible for fusing intelligence and information with vessel 
movements and other port activities to increase Maritime Domain 
Awareness (MDA) and maintain a thorough, integrated local tactical 
picture.
Acquisitions Directorate Personnel Increase--$9M/65 positions
    The budget requests $9M to complete consolidation of the Integrated 
Deepwater System, the existing Acquisition Directorate, the Head 
Contracting Authority, and the procurement policy staff into a combined 
Acquisition Directorate (CG-9). This request provides funding for 65 
personnel to perform the lead system integrator role for all 
acquisition projects, and develop lifecycle support plans for newly 
delivered Deepwater assets. This initiative complement's the 
Acquisition Directorate's formal assignment of technical authority to 
the Directorates for Engineering & Logistics, Personnel, and 
Information Management for all acquisition projects.
Establishing Comprehensive Intelligence and Awareness Regimes
Nationwide Automatic Identification System (NAIS)--$25.5M/10 positions
    The budget requests $14.6M to provide Initial Operational 
Capability for Increment Two of NAIS, providing receive coverage out to 
50 nautical miles and transmit coverage out to 24 nautical miles for CG 
Sectors Hampton Roads, Delaware Bay, and Mobile. This request also 
includes $10.9M for network operating and maintenance requirements for 
Increment One of NAIS already installed in 55 ports and nine coastal 
areas.
MAGNet 2.0--$12.3M/17 positions
    The budget requests $12.28M for Maritime Awareness Global Network 
(MAGNet) 2.0. MAGNet 2.0 provides the intelligence information 
technology capability that serves as a data repository, fusion platform 
and enterprise-sharing device to consolidate information from 20 
separate national level sources and provide timely intelligence and 
maritime related information to operational commanders, interagency, 
and port partners. MAGNet is a proven, robust intelligence-sharing 
architecture.
Command 21--$1M
    The budget requests $1M for Command 21 to continue the survey and 
design, software development and project management initially funded in 
FY 2008. Command 21 provides an integrated system of ``surveillance and 
notice'' to meet the requirements of the Maritime Transportation 
Security Act (MTSA) and the SAFE Port Act, which states, ``the 
Secretary shall establish interagency operational centers for port 
security at all high-priority ports. . . .'' Command 21 will support 
interagency operations centers at Coast Guard Sectors by providing 
information-sharing and situational awareness tools to close the gaps 
in our current port and coastal surveillance capability while 
facilitating greater cooperation and coordination with port partners.
Cryptologic Service Group & Direct Support--$3.3M/46 positions
    The budget requests $3.34M to establish three Coast Guard 
Cryptologic Service Groups and five Direct Support Teams for deployment 
on legacy cutters. Cryptologic capabilities greatly contribute to the 
number of successful security and intelligence-related missions at-sea, 
including security and law enforcement interceptions, vessel boardings, 
and drug and migrant interdictions. DOD's current personnel support for 
Coast Guard cryptologic needs terminates in FY 2009.
Counter-Intelligence (CI) Service Initiative--$2.0M/29 positions
    The budget requests $2M to bring the Coast Guard's Counter-
intelligence Service to a minimum staffing level necessary to execute 
counter-intelligence activities. A functional counter-intelligence 
service will preserve the operational integrity of the Coast Guard by 
shielding its operations, personnel, systems, facilities, and 
information from the intelligence activities of foreign powers, 
terrorist groups, and criminal organizations.
Fiscal Year 2009 Organizational Reinvestments
    The Coast Guard's FY 2009 budget request creates efficiencies which 
shift resources to support new assets scheduled for delivery in FY 2009 
and offset required annualizations from FY 2008 program initiatives.
Organizational Reinvestments--($139.4M)/(295 positions)
    FY 2009 savings include:


     Termination of FY 2008 one-time costs             ($36.2M)
     Management Efficiencies                           ($68.2M)
     Decommissioning of six aging aircraft             ($22.4M)
     Decommissioning of four aging cutters              ($9.5M)
     Annualization of FY 2008 Management of             ($3.1M)
     Technology Efficiencies


    Migrating LORAN-C to DHS Directorate for National Preparedness and 
Protection.
LORAN-C Modernization--($34.5M)/[294 positions]
    The administration of the LORAN-C program will migrate to the DHS 
National Protection and Programs Directorate (NPPD) in preparation for 
conversion of LORAN-C operations to Enhanced LORAN (eLORAN). NPPD will 
oversee the development of eLORAN to provide national backup 
capabilities for position, navigation, and timing. The 2009 request 
reflects transfer of LORAN-C operations to NPPD, however the Coast 
Guard will continue operation of the system in 2009 on a reimbursable 
basis.
Allocation of Budget Authority Across All Missions
    I recognize our Mission Cost Model (MCM) tables have generated 
concerns over the display of allocated budget authority across our 11 
missions. The Coast Guard does not budget by mission, however, program 
performance is informed through the alignment of resources and 
missions.
    Let me be clear, the MCM is not an accurate indicator of our FY 
2009 budgetary emphasis nor is it a reliable estimation tool for future 
level of effort in any mission or allocation or budget authority.
    Our appropriation structure supports our multi-mission requirements 
by allowing us to surge and shift resources across all mission areas. 
This level of resource flexibility is critical to successful mission 
execution in our dynamic, demand-driven operational environment. Owing 
to the nature of our appropriations, it is impossible to definitively 
determine a particular mission's ``level of effort'' through analysis 
of the MCM-projected FY 2009 budget authority allocations.
    The MCM is also not an accurate tool for forecasting mission 
emphasis. MCM tables are merely a function of the cost to perform a 
mission and not a representation of level of effort expended on that 
mission. This is due to asset-intensive missions being inherently more 
expensive than personnel-intensive missions. For example, the cost to 
operate a cutter, boat, or aircraft in support of the Ports, Waterways, 
and Coastal Security (PWCS) mission for 1 hour is substantially greater 
than the cost for a marine inspector to conduct a 1-hour safety 
inspection on a commercial vessel.
    The MCM's FY 2009 forecasted allocations are based on an average of 
historical operating hours by mission activity, not actual resource 
allocations outlined in our budget request. As a result, there is often 
a significant disparity between forecast allocations and actual expense 
data from the most recently completed fiscal year. For completed fiscal 
years, the MCM is a good lagging indicator of mission cost because 
allocations are based on actual operational data.
    In short, our true budgetary emphasis is most accurately discerned 
through a line-by-line review of our entire budget request in the 
Congressional Justifications, not the MCM tables.
    I am committed to working with Congress to ensure that our 
Congressional Justification clearly displays our allocation of budget 
authority. Separately, we will look to improve the MCM as a tool for 
budget-performance integration.
Unprecedented Service to the Public During FY 2007
    The President's Fiscal Year 2009 budget request for the Coast Guard 
builds on our recent mission successes. Coast Guard professionals 
delivered unprecedented operational service and record results for the 
American public in 2007:

   Celebrated one million lives saved since the Service's 
        inception in 1790.

   Seized/removed a record 355,000 lbs of cocaine, 12,000 lbs 
        of marijuana, and 350 pounds of heroin from the global 
        narcotics stream, including a 33,359 lbs cocaine seizure from 
        the Panamanian flagged motor vessel GATUN--the largest cocaine 
        seizure in Coast Guard history.

   Responded to over 27,000 Search and Rescue cases and saved 
        over 5,000 lives.

   Supported the Global War on Terror through both Operation 
        Iraqi Freedom and Operation Enduring Freedom with over 800 
        active and reserve personnel deployed around the world.

   Interdicted over 6,000 migrants attempting to gain illegal 
        entry to the United States.

   Interdicted and seized six Chinese High Seas Drift Net 
        (HSDN) vessels during the 2007 multi-national HSDN enforcement 
        campaign, Operation North Pacific Watch.

   Conducted 44,896 domestic commercial vessel certification or 
        general compliance inspections, 38,837 of which were on 
        commercial vessels requiring a Certificate of Inspection for 
        operation.

   Completed 8,840 Port State Control safety and environmental 
        examinations and 8,814 International Ship and Port Facility 
        Security Code examinations of foreign vessels arriving at U.S. 
        ports.

   Collected biometric information from over 1,100 migrants in 
        the Mona Pass using state-of-the-art handheld scanners. As a 
        result of integration with the US-VISIT database, 257 migrants 
        with criminal records were identified and 72 were brought 
        ashore for prosecution under U.S. laws. Under this program, 
        migrants with criminal histories were detained and prosecuted 
        instead of repeatedly repatriated.

   Asserted U.S. rights of sovereignty, facilitated maritime 
        commerce and supported Operation Deep Freeze (a 40-nation 
        collaborative research project) in the Polar Regions.

   Protected and safely escorted 75 military sealift movements 
        carrying over 6,000,000 square feet of indispensable military 
        cargo in support of ongoing Global War on Terror operations.

   Partnered with FEMA, DHS and other agencies to revise and 
        improve the National Response Plan, now referred to as the 
        National Response Framework.
Established the Deployable Operations Group (DOG)

   Aligned all Coast Guard deployable, specialized forces under 
        a single, unified command, providing ``one-stop shopping'' for 
        Coast Guard and interagency partners seeking adaptive, tailored 
        force packages for rapid response to worldwide threats. The DOG 
        encompasses 3,000 Coast Guard personnel from 12 Maritime Safety 
        and Security Teams, one Maritime Security Response Team, two 
        Tactical Law Enforcement Teams, eight Port Security Units, and 
        the National Strike Force.
Conducted a Major National Environmental Stewardship Exercise

   Cosponsored (with EPA) the largest SONS exercise to date, 
        involving 11 states, 14 Federal agencies, two Coast Guard 
        Districts, four Coast Guard Sectors, 15 industry partners, and 
        over 5,000 emergency management personnel.
Created the Centralized Acquisition Directorate

   Created a centralized acquisition directorate to be 
        responsible for the Coast Guard's major acquisition projects. 
        As part of this reorganization, the Coast Guard implemented the 
        Blueprint for Acquisition Reform to enhance mission execution, 
        creating a more responsive, competent and efficient acquisition 
        organization. Since inception, program execution, contracting 
        practices, research and development, and industry oversight 
        have significantly improved.

   Commenced an Alternatives Analysis for major Deepwater 
        assets, designated technical authorities for Hull, Mechanical, 
        Engineering and C4ISR design review, and resolved many 
        outstanding contractual issues on the National Security Cutter 
        through an acquisition and academic best-practice known as a 
        Consolidated Contracting Action (CCA).
Recapitalized Aging Assets, Maintaining and Improving Capability

   Improved Search and Rescue capability by establishing state-
        of-the-art Rescue 21 VHF-FM communications systems in three 
        additional major coastal areas.

   Achieved NAIS ``receive'' capability in 55 ports and nine 
        coastal waterways. The NAIS system substantially enhances MDA 
        by providing the ability to continuously track the movement of 
        AIS-equipped vessels both within and in the approaches to major 
        ports.

   Leveraged existing organic maintenance capability to 
        complete successful Mission Effectiveness Projects (MEPs) on 
        four 210-foot/270-foot Medium Endurance Cutters (MECs) and one 
        110-foot Patrol Boat (WPB). MEP replaces obsolete, 
        unsupportable and maintenance-intensive systems allowing for 
        the continued operation of the current MEC and WPB fleets in a 
        more economical manner until they are replaced by more capable 
        IDS assets. Post-MEP MECs have shown a 22 percent improvement 
        in Percent of Time Free of major casualties.

   Completed replacement of engines on 95 HH-65 helicopters on 
        budget and ahead of schedule. This replacement increased 
        aircraft power by 40 percent, significantly increasing aircraft 
        capability and operating safety margins.

   Established an in-house maintenance capability to overhaul 
        HC-130s at the Aircraft Repair and Supply Center in Elizabeth 
        City, NC. In 2007, the Coast Guard achieved the best C-130 
        quality and schedule for Progressive Structural Inspections in 
        agency history. This directly resulted in higher availability 
        rates, fewer operational gaps, and the ability to respond 
        quickly to mandated inspections of an aging aircraft.
Conclusion
    As a maritime Nation, our security, resilience, and economic 
prosperity are intrinsically linked to the oceans. Safety and freedom 
of transit on the high seas are essential to our well-being, yet are 
very fragile. Moreover, threats to border security, growth in the 
global marine transportation system, expanded use of the Arctic, and 
burgeoning coastal development are challenging conventional paradigms. 
The Coast Guard is ideally-suited to address these and other challenges 
through its comprehensive, complementary authorities, flexible and 
adaptive operational capabilities, and centuries of experience 
protecting America's national security interests. The Coast Guard's 
integrated approach to safety, security, and stewardship remains the 
most effective method of governance in the maritime domain.
    The people of the Coast Guard delivered record national results in 
2007. Punctuated by the celebration of over one million lives saved 
since 1790 and removal/seizure of over 350,000 pounds of cocaine, 
``Semper Paratus,'' the Coast Guard motto, guides our effort every day 
and in every mission. Our men and women performed with courage, 
sacrifice and dignity, and are eager and prepared to answer the 
Nation's call now and into the future.
    As our Nation faces the long-term struggle against radical 
extremism in a period of persistent conflict, the Coast Guard must be 
prepared to conduct operations across a broad spectrum of potential 
threats and hazards. We must position America's Coast Guard to answer 
the call, to be Semper Paratus, and to execute the mission. While much 
has been achieved, developing comprehensive maritime safety, security, 
and stewardship regimes for the Nation remains a work in progress. Our 
Fiscal Year 2009 budget request and current legislative priorities are 
critical steps in the right direction.
    Thank you for the opportunity to testify before you today. I am 
pleased to answer your questions.

    Senator Cantwell. Thank you, Admiral Allen.
    Mr. Caldwell?

          STATEMENT OF STEPHEN L. CALDWELL, DIRECTOR,

             HOMELAND SECURITY AND JUSTICE ISSUES,

             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Caldwell. Senator Cantwell, Senator Inouye, thank you 
very much for inviting GAO back to testify on the Coast Guard's 
budget and performance and other related issues.
    It's been 10 years now that GAO has been providing Congress 
with detailed analysis of the Coast Guard's budget and 
performance, and we appreciate being able to help with hearings 
like this.
    Overall, this budget request represents about a 7-percent 
increase over last year. Some of the major increased items in 
the OE request are for people, which is as Commandant Allen 
said, one of his key priorities. Those additional people are 
generally for marine inspections, watchstanding, maintenance, 
command and control, cryptology, counter-intelligence, and 
acquisition.
    The AC&I request includes a funding increase for Deepwater 
as that program's funding regains momentum after taking a pause 
last year. But, again, Deepwater dominates AC&I funding to such 
a degree that it leaves relatively little room for other items, 
including ATON, which is another item mentioned by Commandant 
Allen.
    Now I'll discuss mission balance, which is a key issue with 
this Committee.
    In the aftermath of 9/11, the Coast Guard, understandably, 
shifted a lot of its resources to security. This shift has 
raised concerns, because of the magnitude of this shift, 
regarding the resources for traditional missions. Some may have 
concluded that, with 9/11 getting further in the rearview 
mirror, the security missions had somehow leveled off, which 
would allow rebalancing, and even a growth, in potential 
resources for the non-homeland security missions. However, 
GAO's recent work has, instead, shown continued growth in 
security mission requirements. These increases have been 
brought about through a number of factors, from MTSA to the 
SAFE Port Act to internal Coast Guard initiatives, as well as 
increasing maritime activity across the board.
    My written statement provides some examples of areas where 
security requirements have been on the increase. And today we 
are releasing a report, to the full committee, on Coast Guard 
inspections of domestic maritime facilities. As you know, the 
SAFE Port Act doubled the number of facility inspections 
required of the Coast Guard. This will likely increase the 
number of Coast Guard resources needed to complete those 
missions, and to ensure that such facilities are complying with 
their security plans.
    But, similar to the security requirements, nonsecurity 
requirements are also growing in such areas as all-hazard 
planning, oil-spill prevention and management, protection of 
marine sanctuaries, and increasing Polar operations.
    Some additional resources are on the way. Congress provided 
plus-ups, in the 2008 appropriation, for small boats and their 
crews. This will allow additional vessel escorts in water-borne 
security patrols.
    In addition, the Coast Guard's 2009 request, as already 
noted, has asked for more personnel in a variety of areas.
    As for the Deepwater Program, which is of big concern to 
this Committee, I'd like to recognize my colleague, John 
Hutton, sitting behind me here. Mr. Hutton is leading GAO's 
work on the acquisition and contractual aspects of Deepwater 
and I may call upon him if there's a question that comes up I 
can't answer.
    The Coast Guard appears to be turning the corner on 
Deepwater. But, just as you can't turn a big ship on a dime, it 
takes some time to fully turn the Deepwater Program in the 
right direction. Nevertheless, our report to this Subcommittee, 
which will be released next week, does point out several 
positive steps that the Coast Guard has taken to implement 
needed changes.
    Even if the Coast Guard changes to the Deepwater Program 
accomplish the hoped for turnaround and provides the needed 
assets within the revised budgets and schedules, the sheer size 
of the funding for Deepwater will continue to be a long-term 
challenge for both the Coast Guard, as well as Congress, in 
terms of funding longer-term needs.
    Finally, Deepwater problems in the recent past, such as the 
123, patrol boats being taken out of service, continue to 
affect operations. Costs have increased, in terms of added 
maintenance for the legacy assets; and also, costs have 
increased, in terms of opportunity costs in lost or reallocated 
missions. This last type of cost, the opportunity cost, 
includes such things as shifting boats to District 7 to 
continue the operations of the migrant interdiction mission, 
but at a cost in the Living Marine Resources mission in other 
districts.
    That concludes my remarks. Thank you. And I'd be pleased to 
answer any questions.
    [The prepared statement of Mr. Caldwell follows:]

Prepared Statement of Stephen L. Caldwell, Director, Homeland Security 
       and Justice Issues, U.S. Government Accountability Office
    Madam Chair and Members of the Subcommittee:

    I am pleased to be here today to discuss the Coast Guard's Fiscal 
Year 2009 budget and related issues. For more than 10 years, we have 
provided Congress with information and observations on the Coast 
Guard's budget and related issues.\1\ Consistent with this approach, 
this statement will periodically include information from our prior 
work to help provide perspective as appropriate. During the last 10 
years, the Coast Guard's budget and missions have continued to grow. 
For example, the Coast Guard's budget was $3.8 billion for Fiscal Year 
1997 compared to $9.35 billion for Fiscal Year 2009. In terms of 
missions, the terrorist attacks of September 11, 2001, have led to a 
myriad of additional and complex Coast Guard missions related to 
homeland security, such as conducting harbor patrols, reducing the flow 
of undocumented migrants, and participating in global military 
operations.
---------------------------------------------------------------------------
    \1\ The back of this statement includes a listing of related GAO 
products, including budget reviews going back to 1997.
---------------------------------------------------------------------------
    To help fulfill its missions, the Coast Guard is implementing a 
program to modernize its fleet. The Coast Guard's Deepwater program is 
a 25-year, $24 billion effort to upgrade or replace existing vessels 
and aircraft to carry out its missions along our coastlines and farther 
out at sea. The program is eventually to include 10 major classes of 
new or upgraded vessels and aircraft, and 5 other classes of projects, 
including command, control, communications, computer, intelligence 
surveillance, and reconnaissance systems.
    This statement will discuss:

   budget request and trends, and performance statistics on 
        achieving its missions,

   challenges in balancing its operations across its multiple 
        missions, and

   Deepwater affordability, management, and its impact on 
        operations.

    The Coast Guard is a multi-mission, maritime military service 
within the Department of Homeland Security. The Coast Guard's 
responsibilities fall into two general categories--those related to 
homeland security missions, such as ports, waterways, and coastal 
security (including conducting harbor patrols and other activities to 
prevent terrorist attacks), defense readiness, and undocumented migrant 
interdiction; and those related to non-homeland security missions, such 
as search and rescue, marine environmental protection (including oil 
spill response), illegal drug interdiction, and polar ice operations.
    An assessment of the Coast Guard's Fiscal Year 2009 budget should 
be considered in the context of broader Federal budgetary issues. As we 
have reported elsewhere, the Federal Government's deteriorating long-
range financial condition and long-term fiscal imbalance are matters of 
increasing concern. The Nation faces large and growing structural 
deficits due primarily to rising healthcare costs and known demographic 
trends that will constrain the government's ability to pay for other 
obligations and discretionary expenses.\2\ Addressing this long-term 
fiscal issue is an overarching challenge. As a result, there is a need 
to engage in a fundamental review, repriorization, and reengineering of 
the base of the government. Understanding and addressing the Federal 
Government's financial condition and long-term fiscal imbalance are 
critical to maintain fiscal flexibility so that we can respond to 
current and emerging social, economic, and security challenges.\3\
---------------------------------------------------------------------------
    \2\ See GAO, Long-Term Fiscal Outlook: Action Is Needed to Avoid 
the Possibility of a Serious Economic Disruption in the Future, GAO-08-
411T (Washington, D.C.: Jan. 29, 2008).
    \3\ See GAO, A Call for Stewardship: Enhancing the Federal 
Government's Ability to Address Key Fiscal and Other 21st Century 
Challenges, GAO-08-93SP (Washington, D.C.: Dec. 17, 2007).
---------------------------------------------------------------------------
    An assessment of the Coast Guard's budget should also be considered 
in the context of risk management. Risk management is a strategy for 
helping policymakers to make decisions about allocating finite 
resources and take actions in the face of uncertainty. The Coast Guard 
cannot afford to protect all maritime areas and facilities against all 
possible threats. As a result, it must make choices about how to 
allocate its resources to most effectively manage risk. Risk management 
has been widely supported by the President and Congress, as a 
management approach for homeland security, and the Secretary of 
Homeland Security has made it the centerpiece of departmental policy. 
The Coast Guard has used risk management to develop security plans for 
port areas.\4\
---------------------------------------------------------------------------
    \4\ For more information on risk management and the Coast Guard's 
related efforts, see GAO, Risk Management: Further Refinements Needed 
to Assess Risks and Prioritize Protective Measures at Ports and Other 
Critical Infrastructure, GAO-06-91 (Washington, D.C.: Dec. 15, 2005).
---------------------------------------------------------------------------
    This statement is based in part on ongoing work being done for this 
Subcommittee and on prior GAO work focusing on the Coast Guard's 
programmatic and management initiatives completed over the past 10 
years.\5\ In assessing the Coast Guard's budget resources, we analyzed 
budget, performance, and acquisitions documents and conducted 
interviews with Coast Guard officials. With regard to the budget 
assessment, our scope was limited due to the short time available since 
the release of the President's Fiscal Year 2009 budget request. 
Additionally, this review did not include evaluating whether the 
proposed funding levels are appropriate for the Coast Guard's stated 
needs. Our work on homeland security is based on a series of reviews we 
conducted in the aftermath of 9/11. This work involved discussions with 
appropriate Coast Guard and other Federal officials at headquarters and 
field units in domestic and international locations, reviews of related 
program documents, analysis of program databases (including reliability 
assessments), as well as discussions with other domestic and 
international stakeholders in the maritime industry.
---------------------------------------------------------------------------
    \5\ In conjunction with this testimony, we are releasing two 
reports: GAO, Maritime Security: Coast Guard Inspections Identify and 
Correct Facility Deficiencies, but More Analysis Needed of Program's 
Staffing, Practices, and Data, GAO-08-12 (Washington, D.C.: Feb. 14, 
2008); and Status of Selected Aspects of the Coast Guard's Deepwater 
Program, GAO-08-270R (Washington, D.C.: Mar. 6, 2008).
---------------------------------------------------------------------------
    To assess the status of the Deepwater program, we reviewed key 
Coast Guard documentation such as the Major Systems Acquisition Manual, 
acquisition program baselines, and human capital plans. We also 
conducted interviews with Coast Guard officials, including program 
managers, contracting officials, and subject matter experts to discuss 
acquisition planning efforts and actions being taken by the Coast Guard 
and to obtain information on shipbuilding. In reviewing patrol boat 
operations and Coast Guard efforts to mitigate the loss of the 123-foot 
patrol boats, we reviewed reports, memoranda, operational hour data, 
and other documents. We also interviewed Coast Guard officials 
responsible for developing and implementing these sustainment and 
mitigation strategies. Finally, we provided a draft of this testimony 
to DHS and the Coast Guard and incorporated their technical comments as 
appropriate.
    We conducted this performance audit from October 2007 to March 2008 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives.
Summary
    The Coast Guard's Fiscal Year 2009 budget request is approximately 
7 percent higher than its Fiscal Year 2008 enacted budget, which 
continues the upward trend seen in recent years. Major increases in 
this year's budget are attributable to operating expenses for the 
funding of additional marine inspectors and new command and control 
capabilities. Major increases in this year's budget are also attributed 
to acquisition, construction and improvements for continued enhancement 
and replacement of aging infrastructure. Within this budget, there are 
also a number of reallocations that do not impact the total amount of 
funding. With respect to the agency's performance, the Coast Guard 
expects to meet its performance goals for 6 of its 11 mission areas for 
Fiscal Year 2007, consistent with its performance for Fiscal Year 2006. 
The Coast Guard also continues to develop additional performance 
measures in an effort to capture additional segments of program 
activity and to develop ways to better understand the links between 
resources it expends and the results it achieves.
    The Coast Guard continues to face challenges balancing its various 
missions within its finite resources. For several years, we have 
reported that the Coast Guard has had difficulties fully funding and 
executing both homeland security missions and its traditional non-
homeland security missions. Our work has shown that the Coast Guard's 
requirements continue to increase in homeland security in part due to 
additional statutory requirements. In several cases, the Coast Guard 
has been unable to keep up with these security demands, for example, by 
not meeting its own requirements for providing vessel escorts and 
conducting security patrols at some ports. In other cases, the Coast 
Guard is facing additional requirements to conduct more inspections of 
maritime facilities or provide security at a growing number of 
facilities that import hazardous cargos such as Liquefied Natural Gas 
(LNG). The Coast Guard faces additional non-homeland security 
requirements such as updating port plans (as part of an all-hazards 
approach) and updating regulations related to oil spills and the Oil 
Spill Liability Trust Fund. The Coast Guard also has additional longer 
term non-homeland security requirements, such as those related to the 
protection of marine areas near Hawaii and increased vessel traffic in 
the Arctic and surrounding areas.
    The Deepwater acquisition program continues to present challenges 
and progress in terms of affordability, management, and operations. 
With respect to affordability, the Coast Guard faces challenges based 
on the magnitude of the funding requirements--which represents about 11 
percent of the agency's proposed budget for Fiscal Year 2009--compared 
to the agency's overall and AC&I budgets. For example, Deepwater 
represents nearly 82 percent of the Coast Guard's total AC&I budget of 
$1.21 billion, leaving little room, in the AC&I budget especially, for 
other pressing needs such as inland Aids to Navigation vessels. With 
respect to the management of the Deepwater program, the Coast Guard has 
made progress through a number of actions to improve the management of 
the program. These actions include taking over many of the management 
functions that the contractor formerly conducted. The Coast Guard also 
continues to make progress in implementing some of our prior 
recommendations on how to better manage the program. With respect to 
operations, the delay in the acquisition of new assets has created 
challenges in keeping older legacy assets operating until they can be 
replaced. For example, problems and delays with the Coast Guard's 
acquisition of new patrol boats forced the agency to incur additional 
costs to maintain older patrol boats and incur opportunity costs in 
terms of lost or reallocated missions. The Coast Guard plans to acquire 
replacement patrol boats beginning in 2010.
Background
    The Coast Guard is an Armed Service of the United States and the 
only military organization within the Department of Homeland Security 
(DHS). It is the principle Federal agency responsible for maritime 
safety, security, and environmental stewardship through multi-mission 
resources, authorities, and capabilities. To accomplish its 
responsibilities, the Coast Guard is organized into two major commands 
that are responsible for overall mission execution--one in the Pacific 
area and the other in the Atlantic area. These commands are divided 
into 9 districts, which in turn are organized into 35 sectors that 
unify command and control of field units and resources, such as multi-
mission stations and patrol boats. In its Fiscal Year 2009 posture 
statement, the Coast Guard reported having nearly 49,100 full-time 
positions--about 42,000 military and 7,100 civilians. In addition, the 
agency reported that it has about 8,100 reservists who support the 
national military strategy or provide additional operational support 
and surge capacity during times of emergency, such as natural 
disasters. Finally, the Coast Guard reported that it utilizes the 
services of about 29,000 volunteer auxiliary personnel who conduct a 
wide array of activities, ranging from search and rescue to boating 
safety education. The Coast Guard has responsibilities that fall under 
two broad missions--homeland security and non-homeland security. The 
Coast Guard responsibilities are further divided into 11 programs, as 
shown in Table 1.
 
------------------------------------------------------------------------

    Table 1.--Homeland Security and Non-Homeland Security Programs by
                              Mission Area
------------------------------------------------------------------------
                                       Activities and functions of each
         Mission and program                    mission-program
-------------------------------------------------------------------------------------------Homeland security mission-programs-------------------
------------------------------------------------------------------------
 Ports, waterways, and        Conducting harbor patrols,
 coastal security                      vulnerability assessments,
                                       intelligence gathering and
                                       analysis, and other activities to
                                       prevent terrorist attacks and
                                       minimize the damage from attacks
                                       that occur.
------------------------------------------------------------------------
 Undocumented migrant         Deploying cutters and aircraft to
 interdiction                          reduce the flow of undocumented
                                       migrants entering the United
                                       States by maritime routes.
------------------------------------------------------------------------
 Defense readiness            Participating with the Department
                                       of Defense (DOD) in global
                                       military operations, deploying
                                       cutters and other boats in and
                                       around harbors to protect DOD
                                       force mobilization operations.
------------------------------------------------------------------------
                 Non-homeland security mission-programs
------------------------------------------------------------------------
 Search and rescue            Operating multimission stations
                                       and a national distress and
                                       response communication system,
                                       conducting search and rescue
                                       operations for mariners in
                                       distress.
------------------------------------------------------------------------
 Living marine resources      Enforcing domestic fishing laws
                                       and regulations through
                                       inspections and fishery patrols.
------------------------------------------------------------------------
 Aids to navigation and       Managing U.S. waterways and
 waterways                             providing a safe, efficient, and
  management                           navigable marine transportation
                                       system, maintaining the extensive
                                       system of navigation aids,
                                       monitoring marine traffic through
                                       vessel traffic service centers.
------------------------------------------------------------------------
 Ice operations               Conducting polar operations to
                                       facilitate the movement of
                                       critical goods and personnel in
                                       support of scientific and
                                       national security activity,
                                       conducting domestic icebreaking
                                       operations to facilitate year-
                                       round commerce, conducting
                                       international ice operations to
                                       track icebergs below the 48th
                                       north latitude.
------------------------------------------------------------------------
 Marine environmental         Preventing and responding to
 protection                            marine oil and chemical spills,
                                       preventing the illegal dumping of
                                       plastics and garbage in U.S.
                                       waters, preventing biological
                                       invasions by aquatic nuisance
                                       species.
------------------------------------------------------------------------
 Marine safety                Setting standards and conducting
                                       vessel inspections to better
                                       ensure the safety of passengers
                                       and crew aboard commercial
                                       vessels, partnering with states
                                       and boating safety organizations
                                       to reduce recreational boating
                                       deaths.
------------------------------------------------------------------------
 Illegal drug interdiction    Deploying cutters and aircraft in
                                       high drug-trafficking areas and
                                       gathering intelligence to reduce
                                       the flow of illegal drugs through
                                       maritime transit routes.
------------------------------------------------------------------------
 Other law enforcement        Protecting U.S. fishing grounds by
 (foreign fish                         ensuring that foreign fishermen
  enforcement)                         do not illegally harvest U.S.
                                       fish stocks.
------------------------------------------------------------------------
Source: Coast Guard.
Note: The Coast Guard's homeland security and non-homeland security
  missions are delineated in section 888 of the Homeland Security Act of
  2002 (P. L. 107-296, 116 Stat. 2135, 2249 (2002)). Starting with the
  fiscal year 2007 budget, however, the Office of Management and Budget
  (OMB) designated the Coast Guard's illegal drug interdiction and other
  law enforcement mission-programs--which were originally homeland
  security missions--as non-homeland security missions for budgetary
  purposes.


    For each of these 11 mission-programs, the Coast Guard has 
developed performance measures to communicate agency performance and 
provide information for the budgeting process to Congress, other 
policymakers, and taxpayers. The Coast Guard's performance measures are 
published in various documents, including the Coast Guard's Posture 
Statement, which includes the Fiscal Year 2009 Budget-in-Brief. The 
Coast Guard's 2009 Budget-in-Brief reports performance information to 
assess the effectiveness of the agency's performance as well as a 
summary of the agency's most recent budget request. The performance 
information provides performance measures for each of the Coast Guard's 
mission-programs, as well as descriptions of the measures and 
explanations of performance results.
    To carry out these missions, the Coast Guard has a program 
underway--called the Deepwater program--to acquire a number of assets 
such as vessels, aircraft, and command, control, communications, 
computer, intelligence surveillance, and reconnaissance systems. 
Appendix I provides additional details on specific vessels and 
aircraft. The Coast Guard began the Deepwater program in the mid-1990s 
and it is the largest acquisition program in the agency's history. 
Rather than using a traditional acquisition approach of replacing 
individual classes of legacy vessels and aircraft through a series of 
individual acquisitions, the Coast Guard chose a system-of-systems 
strategy, that would replace the legacy assets with a single, 
integrated package.\6\ To carry out this acquisition, the Coast Guard 
decided to use a systems integrator--a private sector contractor 
responsible for designing, constructing, deploying, supporting, and 
integrating the various assets to meet projected Deepwater operational 
requirements at the lowest possible costs, either directly or through 
subcontractors. In June 2002, the Coast Guard awarded the Deepwater 
systems integrator contract to Integrated Coast Guard Systems (ICGS)--a 
business entity led and jointly owned by Lockheed Martin and Northrup 
Grumman Ship Systems. For 10 years, we have reviewed the Deepwater 
program and have informed Congress, the Departments of Transportation 
and Homeland Security, and the Coast Guard of the risks and 
uncertainties inherent in such a large acquisition.\7\
---------------------------------------------------------------------------
    \6\ The Coast Guard's ``system of systems'' approach integrates 
ships, aircraft, sensors, and communication links together as a system 
to accomplish mission objectives.
    \7\ For example, see Coast Guard Acquisition Management: Deepwater 
Project's Justification and Affordability Need to be Addressed More 
Thoroughly, GAO/RCED-99-6 (Washington, D.C.: Oct. 26, 1999).
---------------------------------------------------------------------------
Budget Increases are for Both OE and AC&I, Recent Performance is Steady
    The Coast Guard's Fiscal Year 2009 budget is about 6.9 percent 
higher than its 2008 enacted levels.\8\ Major increases in this year's 
budget are attributable to operating expenses for the funding of 
additional marine inspectors and new command and control capabilities. 
Major increases in this year's budget are also attributed to 
acquisition, construction and improvements for continued enhancement 
and replacement of aging vessels, aircraft, and infrastructure. The 
Coast Guard expects to meet 6 of 11 performance targets for Fiscal Year 
2007, the same level of performance as Fiscal Year 2006.
---------------------------------------------------------------------------
    \8\ According to Coast Guard officials, when also taking into 
account supplemental funding appropriated for Fiscal Year 2008, such as 
operating expenses emergency funding, the Fiscal Year 2009 increase is 
4.6 percent.
---------------------------------------------------------------------------
Overall Budget Request is 6.9 Percent Higher than Previous Year's 
        Enacted Budget
    The Coast Guard's budget request in Fiscal Year 2009 is $9.35 
billion, or 6.9 percent more than the enacted Fiscal Year 2008 budget 
(see Fig. 1).\9\ About $6.2 billion, or approximately 66 percent, is 
for operating expenses. This operating expense funding supports 11 
statutorily identified mission-programs and increases in salaries, 
infrastructure and maintenance costs. This also includes increased 
funding for additional marine inspectors, new and existing command and 
control and intelligence capabilities, and to address rulemaking 
projects. The greatest change from the previous year is in the AC&I 
request, which at $1.2 billion reflects about a 35 percent increase 
from Fiscal Year 2008. This increase includes funding for such things 
as Deepwater program enhancements to the Coast Guard's operational 
fleet of vessels and aircraft, and for continued development of new 
assets, as well as emergency maintenance. The remaining part of the 
overall budget request consists primarily of retiree pay and health 
care fund contributions. If the Coast Guard's total budget request is 
granted, overall funding will have increased by over 37 percent (or 17 
percent after inflation) since Fiscal Year 2003. Looking back further, 
overall funding will have increased by approximately 143 percent (or 87 
percent after inflation) since Fiscal Year 1997.
---------------------------------------------------------------------------
    \9\ GAO's analysis of the Coast Guard's Fiscal Year 2009 budget 
request is presented in nominal terms. Supplemental funding received 
during Fiscal Year 2008 is not included in the analysis.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Source: GAO analysis of Coast Guard data.
    Note: The Coast Guard's budget consists of discretionary and 
mandatory funding line items. The operating expenses and acquisition, 
construction, and improvements line items make up the biggest portion 
of discretionary funding. Other line items in the Coast Guard's 
discretionary budget include environmental compliance and restoration, 
health care contributions, research and development, and reserve 
training costs. Retiree pay is the largest item in the Coast Guard's 
mandatory funding budget, and the Coast Guard is requesting $1.23 
billion for retiree pay in 2009. Other mandatory funding line items 
include boating safety, the Oil Spill Liability Trust Fund, and the 
gift fund.

    Overall, the Coast Guard's budget request for homeland security 
missions represents approximately 40 percent of the overall budget, 
with the non-homeland security funding representing approximately 60 
percent. However, the Coast Guard does not request funding by mission; 
it does so by appropriation account. Nonetheless, the Coast Guard 
provides a comparison of homeland security versus non-homeland security 
funding as part of the President's Fiscal Year budget request. 
According to the Coast Guard, an activity-based cost model is used to 
estimate homeland security versus non-homeland security funding for its 
missions. This is done by averaging past expenditures to forecast 
future spending, and these amounts are revised from the estimates 
reported previously. Although the Coast Guard reports summary financial 
data by homeland security and non-homeland security missions to the 
Office of Management and Budget, as a multi-mission agency, the Coast 
Guard can be conducting multiple mission activities simultaneously. For 
example, a multi-mission asset conducting a security escort is also 
monitoring safety within the harbor and could be diverted to conduct a 
search and rescue case. As a result, it is difficult to accurately 
detail the level of resources dedicated to each mission. Figure 2 shows 
the estimated funding levels for Fiscal Year 2009 by each mission 
program. However, actual expenditures are expected to vary from these 
estimates, according to the Coast Guard.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Source: GAO analysis of Coast Guard data.
Performance Remains Steady
    The Coast Guard expects to meet 6 of 11 performance targets in 
Fiscal Year 2007, the same overall level of performance as 2006, and 
overall performance trends for most mission-programs remain steady.\10\ 
In Fiscal Year 2007, as in Fiscal Year 2006, the Coast Guard met 5 
targets--Ports, Waterways, and Coastal Security; Undocumented Migrant 
Interdiction; Marine Environmental Protection; Other Law Enforcement; 
and Ice Operations--and agency officials reported that the Coast Guard 
expects to meet the target for one additional program, Illegal Drug 
Interdiction, when results become available in August 2008.\11\ This 
potentially brings the number of met targets to 6 out of 11. In 
addition, the Coast Guard narrowly missed performance targets for 3 of 
its non-homeland security mission-programs, Search and Rescue, Living 
Marine Resources, and Aids to Navigation; and more widely missed 
performance targets for two other mission-programs, Marine Safety and 
Defense Readiness. Performance in 6 of 11 Coast Guard mission-programs 
improved in the last year, although improvements in the Marine Safety 
and Search and Rescue mission-programs were insufficient to meet 2007 
performance targets. Alternatively, while performance decreased for the 
Ports, Waterways, and Coastal Security program, the performance target 
was still met. Meanwhile, three mission-programs that did not meet 2007 
performance targets, Defense Readiness, Living Marine Resources, and 
Aids to Navigation, demonstrated lowered performance in 2007 compared 
to 2006 performance. (See App. II for more information on Coast Guard 
performance results.)
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    \10\ For each major Coast Guard mission-program, the Coast Guard 
reports on both a performance measure target and actual performance 
achieved, by Fiscal Year. In addition, performance results are based 
upon targets that may change from year to year.
    \11\ The Other Law Enforcement mission-program is also known as 
U.S. Exclusive Economic Zone Enforcement, and is referred to 
accordingly in Appendix II.
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    In 2006, we completed an examination of the Coast Guard's non-
homeland security performance measures to assess their quality.\12\ We 
reported that while the Coast Guard's non-homeland security measures 
are generally sound and the data used to collect them are generally 
reliable, the Coast Guard had challenges associated with using 
performance measures to link resources to results. Such challenges 
included comprehensiveness (that is, using a single measure per 
mission-program may not convey complete information about overall 
performance) and external factors outside of the agency's control (such 
as weather conditions, which can, for example, affect the amount of ice 
that needs to be cleared or the number of mariners who must be 
rescued). According to Coast Guard officials, new performance measures 
are currently under development to further capture performance for its 
mission-programs, and that link resources to results. For example, 
officials described efforts to develop a new measure that captures an 
additional segment under its search and rescue mission-program, called 
Lives Unaccounted For. Also, two new measures are under development to 
further capture the Coast Guard's risk management efforts and link 
resources to results under the ports, waterways and coastal security 
mission-program. As we have reported, the Coast Guard appears to be 
moving in the right direction with these efforts. However, since these 
efforts are long-term in nature, it remains too soon to determine how 
effective the Coast Guard's larger efforts will be at clearly linking 
resources to performance results as certain initiatives are not 
expected to be implemented until 2010.\13\
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    \12\ GAO, Coast Guard: Non-Homeland Security Performance Measures 
Are Generally Sound, but Opportunities for Improvement Exist, GAO-06-
816 (Washington, D.C.: Aug. 16, 2006).
    \13\ For more details on the Coast Guard's efforts to match 
resources to performance results, see GAO-06-816 (App. III).
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Coast Guard Continues to Face Challenges in Balancing Its Homeland 
        Security and Non-Homeland Security Missions
    After the September 11, 2001 terrorist attacks, the Coast Guard's 
priorities and focus had to shift suddenly and dramatically toward 
protecting the Nation's vast and sprawling network of ports and 
waterways. Coast Guard cutters, aircraft, boats and personnel normally 
used for non-homeland security missions were shifted to homeland 
security missions, which previously consumed only a small portion of 
the agency's operating resources. Although we have previously reported 
that the Coast Guard was restoring activity levels for many of its non-
homeland security mission-programs, the Coast Guard continues to face 
challenges in balancing its resources among each of its mission-
programs. Further complicating this balance issue is the understanding 
that any unexpected events--a man-made disaster (such as a terrorist 
attack) or a natural disaster (such as Hurricane Katrina)--could result 
in again shifting resources between homeland security and non-homeland 
security missions. It is also important to note that assets designed to 
fulfill homeland security missions can also be used for non-homeland 
security missions. For example, new interagency operational centers 
(discussed in more detail below) can be used to coordinate Coast Guard 
and other Federal and non-Federal participants across a wide spectrum 
of activities, including non-homeland security missions.
Homeland Security Mission Requirements Continue to Increase
    The Coast Guard's heightened responsibilities to protect America's 
ports, waterways, and waterside facilities from terrorist attacks owe 
much of their origin to the Maritime Transportation Security Act (MTSA) 
of 2002.\14\ This legislation, enacted in November 2002 established, 
among other things, a port security framework that was designed to 
protect the Nation's ports and waterways from terrorist attacks by 
requiring a wide range of security improvements. The SAFE Port Act, 
enacted in October 2006, made a number of adjustments to programs 
within the MTSA-established framework, creating some additional 
programs or lines of efforts and altering others.\15\ The additional 
requirements established by the SAFE Port Act have added to the 
resource challenges already faced by the Coast Guard as described 
below:
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    \14\ Pub. L. No. 107-295, 116 Stat. 2064 (2002).
    \15\ Pub. L. No. 109-347, 120 Stat. 1884 (2006).

   Inspecting domestic maritime facilities: Pursuant to Coast 
        Guard guidance, the Coast Guard has been conducting annual 
        inspections of domestic maritime facilities to ensure that they 
        are in compliance with their security plans. The Coast Guard 
        conducted 2,126 of these inspections in 2006. However, Coast 
        Guard policy directed that they be announced in advance. The 
        SAFE Port Act added additional requirements that inspections be 
        conducted at least twice per year and that one of these 
        inspections be conducted unannounced. More recently, the Coast 
        Guard has issued guidance requiring that unannounced 
        inspections be more rigorous than before. In February 2008, we 
        reported that fulfilling the requirement of additional and 
        potentially more rigorous inspections, may require additional 
        resources in terms of Coast Guard inspectors. Thus, we 
        recommended that the Coast Guard reassess the adequacy of its 
        resources for conducting facility inspections. The Coast Guard 
        concurred with our recommendation.\16\
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    \16\ GAO-08-12.

   Inspecting foreign ports: In response to a MTSA requirement, 
        the Coast Guard established the International Port Security 
        Program to assess and, if appropriate, make recommendations to 
        improve security in foreign ports. Under this program, teams of 
        Coast Guard officials conduct country visits to evaluate the 
        implementation of security measures in the host nations' ports 
        and to collect and share best practices to help ensure a 
        comprehensive and consistent approach to maritime security in 
        ports worldwide. The SAFE Port Act established a minimum number 
        of assessments and Congressional direction has called for the 
        Coast Guard to increase the pace of its visits to foreign 
        ports. However, to increase its pace, the Coast Guard may have 
        to hire and train new staff, in part because a number of 
        experienced personnel associated with this inspection program 
        are rotating to other positions as part of the Coast Guard's 
        standard personnel rotation policy. Coast Guard officials also 
        said that they have limited ability to help countries build on 
        or enhance their own capacity to implement security 
        requirements because--other than sharing best practices or 
        providing presentations on security practices--the program does 
        not currently have the resources or authority to directly 
        assist countries with more in-depth training or technical 
        assistance.\17\
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    \17\ For more information on these foreign port inspections, see 
GAO, Information on Port Security in the Caribbean Basin, GAO-07-804R 
(Washington, D.C.: June 29, 2007).

   Fulfilling port security operational requirements: The Coast 
        Guard conducts a number of operations at U.S. ports to deter 
        and prevent terrorist attacks. Operation Neptune Shield, first 
        issued in 2003, is the Coast Guard's operations order that sets 
        specific security activities (such as harbor patrols and vessel 
        escorts) for each port. As individual port security concerns 
        change, the level of security activities also change, which 
        affects the resources required to complete the activities. As 
        we reported in October 2007, many ports are having difficulty 
        meeting their port security requirements, with resource 
        constraints being a major factor.\18\ Thus, we made a number of 
        recommendations to the Coast Guard concerning resources, 
        partnerships, and exercises. The Coast Guard concurred with our 
        recommendations.\19\
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    \18\ See GAO, Maritime Security: The SAFE Port Act: Status and 
Implementation One Year Later, GAO-08-126T (Washington, D.C.: Oct. 30, 
2007).
    \19\ The details of this recommendation are contained in a report 
that is restricted from public release and cannot be further disclosed.

   Meeting security requirements for additional LNG terminals: 
        The Coast Guard is also faced with providing security for 
        vessels arriving at four domestic onshore LNG import 
        facilities. However, the number of LNG tankers bringing 
        shipments to these facilities will increase considerably 
        because of expansions that are planned or underway. For 
        example, industry analysts expect approximately 12 more LNG 
        facilities to be built over the next decade. As a result of 
        these changes, Coast Guard field units will likely be required 
        to significantly expand their security workloads to conduct new 
        LNG security missions. To address this issue, in December 2007 
        we recommended that the Coast Guard develop a national resource 
        allocation plan that addresses the need to meet new LNG 
        security requirements. The Coast Guard generally concurred with 
        our recommendation.\20\
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    \20\ For additional information on the challenges the Coast Guard 
faces with regard to energy commodity shipments, see GAO, Maritime 
Security: Federal Efforts Needed to Address Challenges in Responding to 
Terrorist Attacks on Energy Commodity Tankers, GAO-08-141 (Washington, 
D.C.: Dec. 10, 2007) and Maritime Security: Public Consequences of a 
Terrorist Attack on a Tanker Carrying Liquefied Natural Gas Need 
Clarification, GAO-07-316 (Washington, D.C.: Feb. 22, 2007).

   Boarding and inspecting foreign vessels: Security compliance 
        examinations and boardings, which include identifying vessels 
        that pose either a high risk for non-compliance with 
        international and domestic regulations, or a high relative 
        security risk to the port, are a key component in the Coast 
        Guard's layered security strategy.\21\ According to Coast Guard 
        officials and supporting data, the agency has completed nearly 
        all examinations and boardings of targeted vessels. However, an 
        increasing number of vessel arrivals in U.S. ports may impact 
        the pace of operations for conducting security compliance 
        examinations and boardings in the future. For example, in the 
        3-year period from 2004 through 2006, distinct vessel arrivals 
        rose by nearly 13 percent and, according to the Coast Guard, 
        this increase is likely to continue.\22\ Moreover, officials 
        anticipate that the increase in arrivals will also likely 
        include larger vessels, such as tankers, that require more time 
        and resources to examine. Similarly, the potential increase in 
        the number of arrivals and the size of vessels is likely to 
        impact security boardings, which take place 12 miles offshore, 
        and are consequently even more time- and resource-intensive. 
        While targeted vessels remain the priority for receiving 
        examinations and boardings, it is unclear to what extent 
        increased resource demands may impact the ability of the Coast 
        Guard field units to complete these activities on all targeted 
        vessels.\23\
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    \21\ Security compliance examinations are integrated into the Coast 
Guard's Port State Control program and are carried out by marine 
inspectors, who are also responsible for ensuring compliance of safety 
and environmental regulations. These examinations may be completed in 
port or at-sea depending on the relative risk factors of the vessel. 
Security boardings are a related, but separate, effort conducted by 
armed law enforcement officers. Security boardings are typically 
carried out at-sea before the vessel arrives at a U.S. port.
    \22\ ``Distinct'' vessel arrivals include vessels, greater than or 
equal to 500 gross tons, which called upon at least one U.S. port 
during the calendar year. It also includes passenger vessels carrying 
more than 12 passengers on an international voyage. A vessel that 
called upon numerous U.S. ports in a given year only counts as one 
distinct arrival.
    \23\ According to Coast Guard officials, they have revised the 
targeting matrix for security boardings, which has resulted in a 
reduction in the number of vessels boarded. Coast Guard officials noted 
that other factors may also decrease the need for the number of 
required examinations and boardings over time. These factors include 
increased awareness by vessel operators of the security code 
requirements as well as enhancements to the Coast Guard's own maritime 
domain awareness, such as the Automatic Identification System--which 
uses a device to electronically track vessels--that they anticipate 
will provide more information on vessel activities.

   Establishing interagency operational centers: The SAFE Port 
        Act called for the establishment of interagency operational 
        centers (command centers that bring together the intelligence 
        and operational efforts of various Federal and nonfederal 
        participants), directing the Secretary of Homeland Security to 
        establish such centers at all high-priority ports no later than 
        3 years after the Act's enactment.\24\ The Act required that 
        the centers include a wide range of agencies and stakeholders, 
        as the Secretary deems appropriate, and carry out specified 
        maritime security functions. Four existing sector command 
        centers the Coast Guard operates in partnership with the Navy 
        are a significant step toward meeting these requirements, 
        according to a senior Coast Guard official. The Coast Guard is 
        also piloting various aspects of future interagency operational 
        centers at existing centers and is also working with multiple 
        interagency partners to further develop this project.\25\ The 
        Coast Guard estimates that the total acquisition cost of 
        upgrading sector command centers into interagency operational 
        centers at the Nation's 24 high priority ports will be 
        approximately $260 million. This includes investments in 
        information systems, sensor networks, and facilities upgrades 
        and expansions. Congress funded a total of $60 million for the 
        construction of interagency operational centers for Fiscal Year 
        2008. The Coast Guard has not requested any additional funding 
        for the construction of these centers as part of its Fiscal 
        Year 2009 budget request. However, the Coast Guard is 
        requesting $1 million to support its Command 21 acquisition 
        project (which includes the continued development of its 
        information management and sharing technology in command 
        centers).\26\ So, while the Coast Guard's estimates indicate 
        that it will need additional financial resources to establish 
        the interagency operational centers required by law, its 
        current budget and longer term plans do not include all of the 
        necessary funding.
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    \24\ For additional information on these centers, see GAO, Maritime 
Security: New Structures Have Improved Information Sharing, but 
Security Clearance Processing Requires Further Attention, GAO-05-394 
(Washington, D.C.: Apr. 15, 2005).
    \25\ According to the Coast Guard, these multiple interagency 
partners include Customs and Border Protection, Immigration and Customs 
Enforcement, Department of Defense, the Secure Border Initiative 
Network (SBInet) Program Office, and state and local partners. A pilot 
interagency operational center located in Charleston, South Carolina, 
known as Project Seahawk, is managed by the Department of Justice. It 
was created through an appropriation in the Fiscal Year 2003 
Consolidated Appropriations Resolution (Pub. L. No. 108-7, 117 Stat. 
11, 53 (2003.)). The Department of Justice has committed to funding 
Project Seahawk through Fiscal Year 2009.
    \26\ The Coast Guard's Fiscal Year 2009-2013 Five Year Capital 
Investment Plan does not include funds for the construction of these 
interagency operational centers, but the plan does include a total of 
$40 million in future requests to support the Command 21 acquisition 
project. According to the Coast Guard, they are using the Command 21 
effort as the vehicle to deliver interagency operational capacity to 
its existing command centers.

   Updating area maritime security plans: MTSA, as amended, 
        required that the Coast Guard develop, in conjunction with 
        local public and private port stakeholders, Area Maritime 
        Security Plans. The plans describe how port stakeholders are to 
        deter a terrorist attack or other transportation security 
        incident, or secure the port in the event such an attack 
        occurs. These plans were initially developed and approved by 
        the Coast Guard by June 2004. MTSA also requires that the plans 
        be updated at least every 5 years. The SAFE Port Act added a 
        requirement to the plans specifying that they include recovery 
        issues by identifying salvage equipment able to restore 
        operational trade capacity. This requirement was established to 
        ensure that the waterways are cleared and the flow of commerce 
        through United States ports is reestablished as efficiently and 
        quickly as possible after a security incident.\27\ The Coast 
        Guard, working with local public and private port stakeholders, 
        is required to revise their plans and have them completed and 
        approved by June 2009. This planning process may require an 
        investment of Coast Guard resources, in the form of time and 
        human capital at the local port level for existing plan 
        revision and salvage recovery development, as well as at the 
        national level for the review and approval of all the plans by 
        Coast Guard headquarters. In December 2007, we recommended that 
        the Coast Guard develop national level guidance that ports can 
        use to plan for addressing economic consequences, particularly 
        in the case of port closures. The Coast Guard generally 
        concurred with this recommendation.\28\
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    \27\ Coast Guard officials have noted that any changes to the 
recovery sections of these plans need to be consistent with the 
national protocols developed for the SAFE Port Act, such as DHS's 
Strategy to Enhance the International Supply Chain released in July 
2007. This strategy contains a plan to speed the resumption of trade in 
the event of a terrorist attack on our ports or waterways, in response 
to a SAFE Port Act requirement.
    \28\ GAO-08-141.
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Non-Homeland Security Mission Requirements Also Continue to Increase
    While the Coast Guard continues to be in the vortex of the Nation's 
response to maritime-related homeland security concerns, it is still 
responsible for rescuing those in distress, protecting the Nation's 
fisheries, keeping vital marine highways operating efficiently, and 
responding effectively to marine accidents and natural disasters. Some 
of the Coast Guard's non-homeland security mission-programs are facing 
the same challenges as its homeland security mission-programs with 
regard to increased mission requirements as detailed below:

   Revising port plans into all-hazard plans: In February 2007, 
        we reported that most port authorities conduct planning for 
        natural disasters separately from planning for homeland 
        security threats.\29\ However, port and industry experts, as 
        well as recent Federal actions, are now encouraging an all-
        hazards approach to disaster planning and recovery--that is, 
        disaster preparedness planning that considers all of the 
        threats faced by the port, both natural (such as hurricanes) 
        and man-made (such as a terrorist attack). For homeland 
        security planning, Federal law provides for the establishment 
        of Area Maritime Security Committees with wide stakeholder 
        representation, and some ports are using these committees, or 
        another similar forum with wide representation, in their 
        disaster planning efforts. Federal law also provides for the 
        establishment of separate committees (called Area Committees) 
        for maritime spills of oil and hazardous materials.\30\ We 
        recommended that the Secretary of Homeland Security encourage 
        port stakeholders to use existing forums such as these that 
        include a range of stakeholders to discuss all-hazards planning 
        efforts.\31\ Revising area plans using an all-hazards approach 
        may require additional Coast Guard resources at the local port 
        level and at the national level.
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    \29\ See Port Risk Management: Additional Federal Guidance Would 
Aid Ports in Disaster Planning and Recovery, GAO-07-412 (Washington, 
D.C.: Mar. 28, 2007).
    \30\ The Oil Pollution Act of 1990 (Pub. L. 101-380, 104 Stat. 484 
(1990)).
    \31\ DHS generally agreed that existing forums provide a good 
opportunity to conduct outreach to and participation by stakeholders 
from various Federal, state, and local agencies and as appropriate, 
industry and governmental organizations; however, the department said 
it did not endorse placing responsibility for disaster contingency 
planning on existing committees. We found during the course of our 
field work that some ports were already using existing port communities 
effectively to plan for all hazards, and we believe DHS could continue 
to use these forums as a way to engage all relevant parties in 
discussing natural disaster planning for ports.

   Revising oil spill regulations to protect the Oil Spill 
        Liability Trust Fund: As the recent accident in San Francisco 
        Bay illustrates, the potential for an oil spill exists daily 
        across coastal and inland waters of the United States. Spills 
        can be expensive with considerable costs to the Federal 
        Government and the private sector. The Oil Pollution Act of 
        1990 \32\ (OPA) authorized the Oil Spill Liability Trust Fund, 
        which is administered by the Coast Guard, to pay for costs 
        related to removing oil spilled and damages incurred by the 
        spill when the vessel owner or operator responsible for the 
        spill--that is, the responsible party--is unable to pay.\33\ In 
        September 2007, we reported that the Fund has been able to 
        cover costs from major spills--i.e., spills for which the total 
        costs and claims paid was at least $1 million--that responsible 
        parties have not paid, but additional risks to the fund remain, 
        particularly from issues with limits of liability.\34\ Limits 
        of liability are the amount, under certain circumstances, above 
        which responsible parties are no longer financially liable for 
        spill removal costs and damage claims. The current liability 
        limits for certain vessel types, notably tank barges, may be 
        disproportionately low relative to costs associated with such 
        spills, even though limits of liability were raised for the 
        first time in 2006.\35\ In addition, although OPA calls for 
        periodic regulatory increases in liability limits to account 
        for significant increases in inflation, such increases have 
        never been made.\36\ To improve and sustain the balance of the 
        fund, we recommended that the Coast Guard determine what 
        changes in the liability limits were needed. The Coast Guard 
        concurred with our recommendation. Aside from issues related to 
        limits of liability, the fund faces other potential drains on 
        its resources, including ongoing claims from existing spills, 
        spills that may occur without an identifiable source, and 
        therefore, no responsible party, and a catastrophic spill that 
        could strain the Fund's resources.\37\
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    \32\ Pub. L. 101-380, 104 Stat. 484 (1990).
    \33\ OPA applies to oil discharged from vessels or facilities into 
navigable waters of the United States and adjoining shorelines. OPA 
also covers substantial threats of discharge, even if an actual 
discharge does not occur.
    \34\ GAO, Maritime Transportation: Major Oil Spills Occur 
Infrequently, but Risks to the Federal Oil Spill Fund Remain, GAO-07-
1085 (Washington, D.C.: Sept. 7, 2007).
    \35\ The Coast Guard and Maritime Transportation Act of 2006 (Pub. 
L. No. 109-241, 120 Stat. 516 (2006)) significantly increased the 
limits of liability from the limits set by OPA in 1990.
    \36\ If the liability limits had been adjusted for inflation 
between 1990 and 2006, the Fund could have saved approximately $39 
million.
    \37\ During the 1989 EXXON VALDEZ oil spill, the vessel discharged 
about 20 percent of the oil it was carrying. Clean up costs for the 
EXXON VALDEZ alone totaled about $2.2 billion, according to the 
vessel's owner. A catastrophic spill from a vessel could result in 
costs that exceed those of the EXXON VALDEZ, particularly if the entire 
contents of a tanker were released in a `worst-case discharge' 
scenario.

   Safeguarding the new national marine monument: In December 
        2000, Executive Order 13178 authorized the creation of the 
        Northwestern Hawaiian Islands Coral Reef Ecosystem Reserve, 
        called Papahanaumokuakea. The Reserve is about 140,000 square 
        miles in area--slightly smaller than the State of Montana, our 
        4th largest state. In 2006 the President declared this region a 
        national monument to be monitored by the U.S. Fish and Wildlife 
        Service and National Oceanic and Atmospheric Administration, 
        with support from the State of Hawaii and the Coast Guard. The 
        Coast Guard's stewardship mission includes preserving the 
        marine environment, which includes monitoring fishing 
        activities and law enforcement, marine species protection, 
        debris recovery and oil spill clean-up and prevention. These 
        activities are supported by collaboration with other 
        organizations, but nevertheless require regular aerial 
        surveillance patrols and monitoring of vessel traffic. To 
        ensure that commercial fishing is limited to selected vessels 
        until 2011, several Coast Guard vessels patrol the region and 
        conduct search and rescue missions, protect threatened species, 
        or respond to potential hazards such as debris or damaged 
        vessels. According to the Coast Guard, monument surveillance 
        has added an additional enforcement responsibility onto an 
        existing mission workload without the benefit of increased 
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        funding, personnel, or vessels and aircraft.

   Increasing Polar activity: The combination of expanding 
        maritime trade, tourism, exploratory activities and the 
        shrinking Arctic Ice Cap may increase the demand for Coast 
        Guard resources across a variety of non-homeland security 
        missions. Moreover, multiple Polar nations have recognized the 
        value of natural resources in the Arctic region and have 
        therefore sought to define and claim their own Arctic seabed 
        and supply-chain access. However, the increase in Arctic 
        activity has not seen a corresponding increase in Coast Guard 
        capabilities. For example, two of the three Coast Guard polar 
        ice-breakers are more than 30 years old.\38\ The continued 
        presence of U.S.-flagged heavy icebreakers capable of keeping 
        supply routes open and safe may be needed to maintain U.S. 
        interests, energy security, and supply chain security. These 
        new demands, combined with the traditional Polar mission to 
        assist partner agencies such as the National Science Foundation 
        in research while protecting the environment and commercial 
        vessels in U.S. waterways, reflect a need for an updated 
        assessment of current and projected capabilities. In the 
        explanatory statement accompanying the DHS Fiscal Year 2008 
        appropriations, the Committees on Appropriations of the House 
        of Representatives and Senate directed the Coast Guard to 
        submit a report that assesses the Coast Guard's Arctic mission 
        capability and an analysis of the effect a changing environment 
        may have on the current and projected polar operations, 
        including any additional resources in the form of personnel, 
        equipment, and vessels.
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    \38\ For more information on polar icebreakers, see pp. 31-33 of 
Coast Guard: Observations on the Fiscal Year 2008 Budget, Performance, 
Reorganization, and Related Challenges, GAO-07-489T (Washington, D.C.: 
Apr. 18, 2007).
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Coast Guard Deepwater Program Continues to Experience Challenges and 
        Progress Related to Affordability, Management, and Operations
    Over the years, our testimonies on the Coast Guard's budget and 
performance have included details on the Deepwater program related to 
affordability, management, and operations.\39\ Given the size of 
Deepwater funding requirements, the Coast Guard will have a long term 
challenge in funding the program within its overall and AC&I budgets. 
In terms of management, the Coast Guard has taken a number of steps to 
improve program management and implement our previous recommendations. 
Finally, problems with selected Deepwater assets--the 110-foot patrol 
boats that were upgraded and converted to 123-foot boats and 
subsequently grounded due to structural problems--have forced the Coast 
Guard to take various measures to mitigate the loss of these boats. 
These mitigating measures have resulted in increased costs to maintain 
the older 110-foot patrol boats and reallocation of operations across 
the various missions. These additional costs and mission shifts are 
likely to continue until the Coast Guard acquires new patrol boats.
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    \39\ See, for example, Coast Guard: Challenges Affecting Deepwater 
Asset Deployment and Management Efforts to Address Them, GAO-07-874 
(Washington, D.C.: June 18, 2007); Coast Guard, Observations on Agency 
Performance, Operations, and Future Challenges, GAO-06-448T 
(Washington, D.C.: June 15, 2006); Coast Guard: Observations on Agency 
Priorities in Fiscal Year 2006 Budget Request, GAO-05-364T (Washington, 
D.C.: Mar. 17, 2005); Coast Guard: Key Management and Budget Challenges 
for Fiscal Year 2005 and Beyond, GAO-04-636T (Washington, D.C.: Apr. 7, 
2004); Contract Management: Coast Guard's Deepwater Program Needs 
Increased Attention to Management and Contractor Oversight, GAO-04-380 
(Washington, D.C.: Mar. 9, 2004); Coast Guard: Budget and Management 
Challenges for 2003 and Beyond, GAO-02-538T (Washington, D.C.: Mar. 19, 
2002); and Coast Guard: Challenges for Addressing Budget Constraints, 
GAO/RCED-97-110 (Washington, D.C.: May 1997).
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Funding Deepwater Poses a Long Term Affordability Challenge
    The Deepwater program represents a significant portion of the Coast 
Guard's budget, especially for acquisition, construction and 
improvements (AC&I). The Deepwater program, at $990 million, accounts 
for approximately 11 percent of the Coast Guard's overall $9.3 billion 
budget request for the entire agency for Fiscal Year 2009. As noted at 
the beginning of this statement, the overall Federal Government faces a 
long-term fiscal imbalance, which will put increased pressure on 
discretionary spending at individual agencies. In addition, Deepwater 
dominates the Coast Guard's capital spending as it represents nearly 82 
percent of the agency's total AC&I request of $1.21 billion. This 
leaves relatively little funding for non-homeland security assets 
which--as we reported last year--compete with the Deepwater program for 
AC&I resources. For example, many inland Aids to Navigation vessels are 
reaching the end of their designed service lives and, without major 
rehabilitation or replacement, their ability to carry out their 
designated missions will likely decline in the future.\40\ While the 
Coast Guard has considered options for systematically rehabilitating or 
replacing these vessels, it has requested relatively little funding in 
the Fiscal Year 2009 budget request. Specifically, the Coast Guard has 
requested $5 million in AC&I funds for survey and design activities to 
allow them to begin examining options for a new vessel to replace the 
aging inland river Aids to Navigation cutters.
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    \40\ See GAO, Coast Guard: Condition of Some Aids to Navigation and 
Domestic Icebreaking Vessels Has Declined: Effect on Mission 
Performance Appears Mixed, GAO-06-979 (Washington, D.C.: Sep. 22, 
2006).
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    As we reported last year, Deepwater continues to represent a 
significant source of unobligated balances--money appropriated but not 
yet spent for projects included in previous years' budgets.\41\ The 
unobligated balances for Deepwater total $566 million as of the end of 
Fiscal Year 2007, which is about 56 percent of the Coast Guard's Fiscal 
Year 2009 request for Deepwater.\42\ These unobligated balances have 
accumulated for a variety of reasons--such as technical design problems 
and related delays--where the Coast Guard has found itself unable to 
spend previous year acquisition appropriations. For two Deepwater 
assets where the Coast Guard has postponed acquisition--the Offshore 
Patrol Cutter and the Vertical Unmanned Aerial Vehicle--the Coast Guard 
did not request funds for Fiscal Year 2008. In the Fiscal Year 2008 
appropriation, Congress rescinded $132 million in unobligated balances 
for these two assets. For Fiscal Year 2009, the Coast Guard has 
requested relatively small amounts (approximately $3 million each) for 
these two assets.
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    \41\ GAO-07-489T.
    \42\ Of this $566 million, approximately $105 million was in the 
Fast Response Cutter B-class account, $82 million in the National 
Security Cutter account, and $47 million in the HC-130H Conversion/
Sustainment Projects account, among other items.
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    Given the magnitude of the program within Coast Guard's overall and 
AC&I budgets, affordability of the Deepwater program has been an 
ongoing concern over the years. Our 1998 report on Deepwater indicated 
that the Coast Guard's initial planning estimate for Deepwater was $9.8 
billion (in then-year constant dollars) over a 20-year period.\43\ At 
that time, we said that the agency could face major financial obstacles 
in proceeding with a Deepwater program at that funding level because it 
would consume virtually all of the Coast Guard's projected capital 
spending. Our 2001 testimony noted that affordability was the biggest 
risk for the Deepwater program because the Coast Guard's contracting 
approach depended on a sustained level of funding each fiscal year over 
the life of the program.\44\ In 2005, the Coast Guard revised the 
Deepwater implementation plan to consider post-9/11 security 
requirements. \45\ The revised plan increased overall cost estimates 
from $17 billion to $24 billion, to include annual appropriations 
ranging from $650 million to $1.5 billion per year through Fiscal Year 
2026. Continuing into future budgets, Deepwater affordability will 
continue to be a major challenge to the Coast Guard given the other 
demands upon the agency for both capital and operations spending.
---------------------------------------------------------------------------
    \43\ GAO, Coast Guard Acquisition Management: Deepwater Project's 
Justification and Affordability Need to be Addressed More Thoroughly, 
GAO/RCED-99-6 (Washington, D.C.: Oct. 26, 1998).
    \44\ GAO, Coast Guard: Actions Needed to Mitigate Deepwater Project 
Risks, GAO-01-659T (Washington, D.C.: May 3, 2001).
    \45\ The new requirements generally related to improved 
capabilities to operate in conditions of chemical, biological, and 
radiological contamination; greater anti-terrorist weaponry; 
development of airborne use of force capabilities; improved 
communications systems, and enhanced flight decks.
---------------------------------------------------------------------------
Coast Guard Making Changes to Improve Management of Deepwater
    In the wake of serious performance and management problems, the 
Coast Guard is making a number of changes to improve the management of 
the Deepwater program.\46\ The Coast Guard is moving away from the ICGS 
contract and the ``system-of-systems'' model, with the contractor as 
systems integrator, to a more traditional acquisition strategy, where 
the Coast Guard will manage the acquisition of each asset separately. 
It has recognized that it needs to increase government management and 
oversight and has begun to transfer system integration and program 
management responsibilities back to the Coast Guard. The Coast Guard 
began taking formal steps to reclaim authority over decision-making and 
to more closely monitor program outcomes. It has also begun to 
competitively purchase selected assets, expand the role of third 
parties to perform independent analysis, and reorganize and consolidate 
its acquisition function to strengthen its ability to manage projects.
---------------------------------------------------------------------------
    \46\ For example, the National Security Cutter (NSC), as designed, 
was unlikely to meet fatigue life expectations (as confirmed by a U.S. 
Navy study), leading to the Coast Guard's decision to correct 
structural deficiencies for the first two NSCs at scheduled drydocks 
and implement structural enhancements into design and production of 
future ships. The NSC has also experienced delays in delivery. In 
addition, the Coast Guard has had to suspend design work on the Fast 
Response Cutter-A due to high technical risks, after obligating 
approximately $35 million.
---------------------------------------------------------------------------
    The Coast Guard also continues to make progress in implementing our 
earlier recommendations to better manage the Deepwater program. In 
March 2004, we made 11 recommendations to the Coast Guard to address 
three broad areas of concern: improving program management, 
strengthening contractor accountability, and promoting cost control 
through greater competition among subcontractors.\47\ Of the five 
recommendations that remained open as of our June 2007 report, we have 
closed two, pertaining to the Coast Guard's use of models and metrics 
to measure the contractor's progress toward improving operational 
effectiveness and establishing criteria for when to adjust the total 
ownership baseline.\48\ The Coast Guard has taken actions on the three 
recommendations that remain open, such as designating Coast Guard 
officials as the lead on integrated product teams, developing a draft 
maintenance and logistics plan for the Deepwater assets, and decreasing 
their reliance on ICGS, including potentially eliminating the award 
term provision from the ICGS contract.
---------------------------------------------------------------------------
    \47\ GAO, Contract Management: Coast Guard's Deepwater Program 
Needs Increased Attention to Management and Contractor Oversight, GAO-
04-380 (Washington, D.C.: Mar. 9, 2004).
    \48\ See GAO, Contract Management: Challenges Affecting Deepwater 
Asset Deployment and Management Efforts to Address Them, GAO-07-874 
(Washington, D.C.: June 18, 2007). The first of these recommendations, 
on measuring contractor's progress, has been overcome by events, given 
the changes in how the Coast Guard currently assesses contractor 
performance.
---------------------------------------------------------------------------
Problems with Assets and Delays Create Operational and Resource 
        Challenges
    Deferring acquisitions of new vessels and aircraft can affect the 
cost of operations, in that the cost-savings and reliability advantages 
of new or modernized assets may not be realized, and the cost of 
maintaining older assets can increase. For example, delays in the 
acquisition of new patrol boats have forced the Coast Guard to incur 
additional costs to maintain the older patrol boats. As part of its 
Deepwater program, the Coast Guard planned to have ICGS convert all 49 
existing 110-foot patrol boats into 123-foot patrol boats with 
additional capabilities. This conversion project was halted after the 
first eight 110-foot patrol boats were converted and began to suffer 
structural and operational problems. In November 2006, all eight 123-
foot patrol boats were removed from service and the Coast Guard had to 
take steps to better sustain its remaining 110-foot patrol boats. In 
Fiscal Year 2005, as the 123-foot patrol boats conversion was 
experiencing problems, the Coast Guard initiated the Mission 
Effectiveness Project to replace portions of the hull structure and 
mechanical equipment on selected 110-foot patrol boats to improve their 
overall mission effectiveness until a new replacement patrol boat is 
ultimately delivered. The Coast Guard has been appropriated a total of 
$109.7 million for this effort through Fiscal Year 2008, and in its 
Fiscal Year 2009-2013 Five Year Capital Investment Plan indicates it 
will need an additional $56.3 million through Fiscal Year 2012. In 
addition, the Coast Guard plans on implementing a ``high tempo, high 
maintenance'' initiative for eight of its 110-foot patrol boats. This 
initiative is aimed at increasing the number of annual operational 
hours for these eight patrol boats, at a cost of $11.5 million in 
Fiscal Year 2008.
    The removal of the 123-foot patrol boats from service has also 
increased operational costs in terms of lost or reallocated missions. 
The loss of the eight 123-foot patrol boats created a shortage of 
vessels in District 7, where they were all homeported (i.e., 
based).\49\ As a result, the Coast Guard developed various strategies 
to mitigate the loss of these boats in District 7--which impacted the 
ability of the Coast Guard to interdict illegal migrants. One of the 
Coast Guard's strategies was to shift deployments of some vessels to 
District 7 from other districts within the Coast Guard's Atlantic Area. 
In Fiscal Year 2007 the Coast Guard redeployed several vessels--which 
contributed approximately 6,600 operational hours in District 7--from 
Districts 1, 5, 8 and the Atlantic Area Command. As discussed in the 
previous section, the Coast Guard faced a trade off between homeland 
security missions and non-homeland security missions. In general, this 
mitigating strategy has led to increased homeland security operations 
in District 7 (e.g., for migrant interdiction) at the expense of some 
non-homeland security missions (e.g., living marine resources and Aids 
to Navigation) in the Districts providing the assets. For example, 
District 5 officials estimated that the loss of one medium-endurance 
cutter deployment from its district to District 7 reduced its non-
homeland security operations by potentially preventing District 5 from 
performing approximately 24 vessel boardings and issuing 17 violation 
notices in its living marine resources mission.\50\
---------------------------------------------------------------------------
    \49\ The Coast Guard's District 7 Command, based in Miami, FL, 
generally covers the areas and adjacent waters of coastal South 
Carolina, Florida, and Puerto Rico.
    \50\ We are currently reviewing the Coast Guard's strategies for 
mitigating the loss of the eight 123-foot patrol boats in District 7 
and will be reporting our results later in the Spring.
---------------------------------------------------------------------------
    These additional costs will likely continue until the Coast Guard 
can acquire the replacement patrol boat--the Fast Response Cutter 
(FRC)--the FRC was conceived as a patrol boat with high readiness, 
speed, adaptability and endurance. ICGS proposed a fleet of 58 FRCs 
constructed of composite materials (later termed FRC-As). Although 
estimates of the initial acquisition cost for these composite materials 
were high, they were chosen for their perceived advantages over other 
materials (e.g., steel), such as lower maintenance and life-cycle 
costs, longer service life, and lower weight. However, in February 2006 
the Coast Guard suspended FRC-A design work in order to assess and 
mitigate technical risks.\51\ As an alternative to the FRC-A, the Coast 
Guard planned to purchase 12 modified commercially available patrol 
boats (termed FRC-Bs). In June 2007, the Coast Guard issued a Request 
for Proposals for the design, construction and delivery of a modified 
commercially available patrol boat for the FRC-B. In late 2006, the 
Coast Guard estimated that the total acquisition cost for 12 FRC-Bs 
would be $593 million. The Coast Guard expects to award the FRC-B 
contract in the third quarter of Fiscal Year 2008, with the lead patrol 
boat to be delivered in 2010. Coast Guard officials stated that their 
goal is still to acquire 12 FRC-Bs by 2012. The Coast Guard intends to 
award a fixed price contract for design and construction of the FRC-B, 
with the potential to acquire a total of 34 cutters.
---------------------------------------------------------------------------
    \51\ For more information on the FRC-A, see GAO, Coast Guard: 
Status of Deepwater Fast Response Cutter Design Efforts, GAO-06-764 
(Washington, D.C.: June 23, 2006).
---------------------------------------------------------------------------
    Madam Chair and Members of the Subcommittee, this completes my 
prepared statement. I will be happy to respond to any questions that 
you or other Members of the Subcommittee may have.
            Appendix I: Status of Selected Deepwater Assets
    Appendix I provides information on key vessels and aircraft that 
are part of the Deepwater program. In 2005, the Coast Guard revised its 
Deepwater acquisition program baseline to reflect updated cost, 
schedule, and performance measures. The revised baseline accounted for, 
among other things, new requirements imposed by the events of September 
11. The initially-envisioned designs for some assets, such as the 
Offshore Patrol Cutter and Vertical Unmanned Aerial Vehicle, are being 
rethought. Other assets, such as the National Security Cutter and 
Maritime Patrol Aircraft, are in production. Table 2 shows the 2005 
baseline and current status of selected Deepwater assets.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Source: GAO analysis of Coast Guard documents.

                           Appendix II: Performance Results by Mission-Program From Fiscal Year 2003 through Fiscal Year 2007
  Appendix II provides a detailed list of Coast Guard performance results for the Coast Guard's
   11 programs from Fiscal Years 2003 through 2007.

----------------------------------------------------------------------------------------------------------------
         Table 3.--Performance Results by Mission-Program from Fiscal Year 2003 through Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
                                                                                                    Performance
  Mission-program   Mission-program performance    Performance    2004    2005    2006     2007     target for
                              measure             Results 2003                                         2007
----------------------------------------------------------------------------------------------------------------
Mission-programs meeting 2007 targets:
----------------------------------------------------------------------------------------------------------------
Ports, Waterways,   Percent reduction in                    n/a     n/a     14%     17%      15%             15%
 and Coastal         maritime terrorism risk
 Security            over which the Coast Guard
                     has influence
----------------------------------------------------------------------------------------------------------------
Undocumented        Percentage of interdicted             85.3%   87.1%   85.5%   89.1%    93.7%             91%
 Migrant             or deterred illegal
 Interdiction        migrants entering the
                     United States through
                     illegal means
----------------------------------------------------------------------------------------------------------------
Marine              Average of oil and chemical            29.4    22.1    18.5    16.3       15              19
 Environmental       spills greater than 100
 Protection          gallons per 100 million
                     tons shipped
----------------------------------------------------------------------------------------------------------------
U.S. Exclusive      Number of detected                      152     247     174     164      119             199
 Economic Zone       Exclusive Economic Zone
 Enforcement         (EEZ) incursions by
                     foreign fishing vessels
----------------------------------------------------------------------------------------------------------------
Ice Operations      Number of waterway closure                7       4       0       0        0             2 a
 (domestic           days
 icebreaking)
----------------------------------------------------------------------------------------------------------------
Mission-program expected to meet 2007 target:
----------------------------------------------------------------------------------------------------------------
Illegal Drug        Interdiction Percentage of     Not reported   30.7%   27.3%   25.3%  31.4% c             26%
                     cocaine removed out of
                     total estimated cocaine
                     entering through the
                     United States through
                     maritime means b
----------------------------------------------------------------------------------------------------------------
Mission-programs that did not meet their 2007 targets:
----------------------------------------------------------------------------------------------------------------
Marine Safety       5-year average annual                 5,561   5,387   5,169   5,036    4,770           4,539
                     mariner, passenger, and
                     boating deaths and
                     injuries
----------------------------------------------------------------------------------------------------------------
Search and Rescue   Percentage of distressed              87.7%   86.8%   86.1%   85.3%    85.4%             86%
                     mariners' lives saved
----------------------------------------------------------------------------------------------------------------
Defense Readiness   Percentage of time that                 78%     76%     67%     62%      51%            100%
                     units meet combat
                     readiness level
----------------------------------------------------------------------------------------------------------------
Living Marine       Percentage of fishermen               97.1%   96.3%   96.4%   96.6%    96.2%             97%
 Resources           found in compliance with
                     federal regulations
----------------------------------------------------------------------------------------------------------------
Aids to Navigation  5-year average number of              2,000   1,876   1,825   1,765    1,823           1,664
                     collisions, allisions, and
                     groundings
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of Coast Guard data.
Note: n/a, not available. Bold numbers indicate that performance targets were met previously. Performance
  targets for previous fiscal years may have been different than fiscal year 2007 targets.
a The target for ice operations noted here is for domestic icebreaking only, and the target level varies
  according to the index for an entire winter. Thus, for those winters designated as severe, the target is 8 or
  fewer closure days. For winters designated as average, the target is 2 or fewer closure days.
b The performance measure for the illegal drug interdiction program, the percentage of cocaine removed, was
  revised in fiscal year 2004 from the percentage of cocaine seized in order to more accurately report the
  impact Coast Guard counterdrug activities have on the illicit drug trade. As a result, the cocaine removal
  rates for fiscal year 2002-2003 are not available.
c Complete data are not yet available for the illegal drug interdiction program. However, the Coast Guard
  estimates it will surpass the FY 2007 performance target of 26 percent with an estimated 31.4 percent Cocaine
  Removal Rate.

Related GAO Products
    Status of Selected Aspects of the Coast Guard's Deepwater Program. 
GAO-08-270R. Washington, D.C.: Mar. 6, 2008.
    Coast Guard: Deepwater Program Management Initiatives and Key 
Homeland Security Missions. GAO-08-531T. Washington, D.C.: Mar. 5, 
2008.
    Maritime Security: Coast Guard Inspections Identify and Correct 
Facility Deficiencies, but More Analysis Needed of Program's Staffing, 
Practices, and Data. GAO-08-12. Washington, D.C.: Feb. 14, 2008.
    Long-Term Fiscal Outlook: Action Is Needed to Avoid the Possibility 
of Serious Economic Disruption in the Future. GAO-08-411T. Washington, 
D.C.: Jan. 29, 2008.
    Maritime Transportation: Major Oil Spills Occur Infrequently, but 
Risks to the Federal Oil Spill Fund Remain. GAO-08-357T. Washington, 
D.C.: Dec. 18, 2007.
    A Call for Stewardship: Enhancing the Federal Government's Ability 
to Address Key Fiscal and Other 21st Century Challenges. GAO-08-93SP. 
Washington, D.C.: Dec. 17, 2007.
    Maritime Security: Federal Efforts Needed to Address Challenges in 
Preventing and Responding to Terrorist Attacks on Energy Commodity 
Tankers. GAO-08-141. Washington, D.C.: Dec. 10, 2007.
    Homeland Security: TSA Has Made Progress in Implementing the 
Transportation Worker Identification Credential Program, but Challenges 
Remain. GAO-08-133T. Washington, D.C.: Oct. 31, 2007.
    Maritime Security: The SAFE Port Act: Status and Implementation One 
Year Later. GAO-08-126T. Washington, D.C.: Oct. 30, 2007.
    Maritime Transportation: Major Oil Spills Occur Infrequently, but 
Risks to the Federal Oil Spill Fund Remain. GAO-07-1085. Washington, 
D.C.: Sep. 7, 2007.
    Information on Port Security in the Caribbean Basin. GAO-07-804R. 
Washington, D.C.: June 29, 2007.
    Coast Guard: Challenges Affecting Deepwater Asset Deployment and 
Management and Efforts to Address Them. GAO-07-874. Washington, D.C.: 
June 18, 2007.
    Coast Guard: Observations on the Fiscal Year 2008 Budget, 
Performance, Reorganization, and Related Challenges. GAO-07-489T. 
Washington, D.C.: Apr. 18, 2007.
    Transportation Security: TSA Has Made Progress in Implementing the 
Transportation Worker Identification Credential Program, but Challenges 
Remain. GAO-07-681T. Washington, D.C.: Apr. 12, 2007.
    Port Risk Management: Additional Federal Guidance Would Aid Ports 
in Disaster Planning and Recovery. GAO-07-412. Washington, D.C.: Mar. 
28, 2007.
    Maritime Security: Public Consequences of a Terrorist Attack on a 
Tanker Carrying Liquefied Natural Gas Need Clarification. GAO-07-316. 
Washington, D.C.: Feb. 22, 2007.
    Coast Guard: Condition of Some Aids to Navigation and Domestic 
Icebreaking Vessels Has Declined: Effect on Mission Performance Appears 
Mixed. GAO-06-979. Washington, D.C.: Sep. 22, 2006.
    Coast Guard: Non-Homeland Security Performance Measures Are 
Generally Sound, but Opportunities for Improvement Exist. GAO-06-816. 
Washington, D.C.: Aug. 16, 2006.
    Coast Guard: Status of Deepwater Fast Response Cutter Design 
Efforts. GAO-06-764. Washington, D.C.: June 23, 2006.
    Coast Guard: Observations on Agency Performance, Operations, and 
Future Challenges. GAO-06-448T. Washington, D.C.: June 15, 2006.
    Risk Management: Further Refinements Needed to Assess Risks and 
Prioritize Protective Measures at Ports and Other Critical 
Infrastructure. GAO-06-91. Washington, D.C.: Dec. 15, 2005.
    Maritime Security: New Structures Have Improved Information 
Sharing, but Security Clearance Processing Requires Further Attention. 
GAO-05-394. Washington, D.C.: Apr. 15, 2005.
    Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 
Budget Request. GAO-05-364T. Washington, D.C.: Mar. 17, 2005.
    Coast Guard: Key Management and Budget Challenges for Fiscal Year 
2005 and Beyond. GAO-04-636T. Washington, D.C.: Apr. 7, 2004.
    Contract Management: Coast Guard's Deepwater Program Needs 
Increased Attention to Management and Contractor Oversight. GAO-04-380. 
Washington, D.C.: Mar. 9, 2004.
    Coast Guard: Challenges during the Transition to the Department of 
Homeland Security. GAO-03-594T. Washington, D.C.: Apr. 1, 2003.
    Coast Guard: Budget and Management Challenges for 2003 and Beyond. 
GAO-02-538T. Washington, D.C.: Mar. 19, 2002.
    Coast Guard: Actions Needed to Mitigate Deepwater Project Risks. 
GAO-01-659T. Washington, D.C.: May 3, 2001.
    Coast Guard Acquisition Management: Deepwater Project's 
Justification and Affordability Need to be Addressed More Thoroughly. 
GAO/RCED-99-6, Washington, D.C.: Oct. 26, 1998.
    Coast Guard: Challenges for Addressing Budget Constraints. GAO/
RCED-97-110. Washington, D.C.: May 1997.

    Senator Cantwell. Thank you very much, Mr. Caldwell, for 
your testimony.
    I'm going to ask the Chairman of the full Committee if he 
would like to start with a round of questions.
    Senator Inouye. Thank you very much. Madam Chair, I have a 
whole batch of questions that I'd like to submit for the 
record.
    But, I have one I'd like to ask the Admiral.
    The LORAN-C, coming from the Pacific, I know that it is 
very essential there--it is the backup for the GPS. It gives 
you navigational position and timing capabilities to our 
fishermen. Can you tell me what benefits you will obtain by 
transferring this budget authority to the National Protection 
and Programs Directorate?
    Admiral Allen. Yes, sir. Several issues associated with 
LORAN-C. One, as you know, we--for many years, we've been 
trying to recapitalize the current LORAN infrastructure, to 
move from vacuum-tube technology to solid-state technology. And 
we still have some stations to be converted in Alaska. At the 
same time, the operating base for the LORAN system has been 
within the Coast Guard's operating base since it was started.
    An interagency look at the future of LORAN-C, in 
conjunction with the evaluation of whether or not there needed 
to be a backup to GPS for precision timing and so forth, was 
concluded, and a joint recommendation was made, by DOT and DHS, 
that we transition from LORAN-C to eLORAN, which will be the 
next generation, to ensure that there was a backup for position 
navigation and timing. Where we are is in a transition mode 
right now, and it was decided that with--given that GPS is a 
national critical infrastructure, that this program would be 
best managed at the departmental level within Homeland Security 
as a part of the critical infrastructure of this country.
    The budget proposal just proposes a base of funding shift 
up to the Department. We will continue to be the executive 
agent for operating LORAN-C, so there shouldn't be any change 
to Coast Guard operations. What will change in the future will 
be a decision, on a national level, to recapitalize the LORAN-C 
system to eLORAN, and there'll have to be an interim decision 
made on a bridging strategy to upgrade the vacuum-tube stations 
in Alaska to solid-state. But, the shift of funding and 
responsibility actually creates more stability for us, because, 
in the past, annual appropriations to upgrade the LORAN system 
came in various packages--some through FAA or Federal rails in 
DOT--and this adds stability to the program, sir.
    Senator Inouye. My concern is that you will have a similar 
financial arrangement with the icebreakers and the National 
Science Foundation, and you're having some difficulty getting 
some maintenance costs reimbursed. You don't think this will 
happen?
    Admiral Allen. There is no comparison in the two 
relationships, sir. This is in our own department. This has a 
strong policy lead. They were decisions made up front, with 
interagency vetting of what the position should be in the way 
forward. There's clear communication of what the expectations 
are, and adequate funding exists in the base right now to 
support operations, sir.
    Senator Inouye. I thank you very much, sir.
    Senator Cantwell. Thank you, Admiral Allen. I don't know if 
I agree with that last statement. I think what Chairman Inouye 
is trying to point out is that, when there are assets and 
responsibilities of the Coast Guard, with the resources in 
another agency, we become frustrated by the oversight and 
implementation. As it relates to the LORAN-C, we think that a 
technology upgrade is definitely needed, but outsourcing that 
to another agency, we're worried that, instead of getting the 
technology upgrade that is deserved, we'll end up focusing on 
the fact of conflict between two agencies.
    Admiral Allen. Yes, ma'am. And I can see, given the past 
track record with the NSF funding, where you would think that. 
And I can tell you, having lived with the National Science 
Foundation funding scheme for the last 3 years, if I thought we 
were going to duplicate that in any way, shape, or form, I 
would fall on my sword not to have that LORAN money moved.
    Senator Cantwell. Thank you.
    Let me turn, Admiral Allen, if I can, to the Deepwater 
Program, and focus some of my questions on that.
    We are seeing the National Security Cutter, the first one 
completed in the trials, which are, basically, machinery trials 
and builder trials. And, in that trial process, there were 987 
certification standards for the ship that were supposed to be 
met, and the contractor was to submit documentation on 892 of 
those for review. I'm saying they have submitted, I guess it 
is, the 987, and there's--there are 987, 892 of which have been 
submitted. And almost--the challenge is that the Coast Guard 
has identified issues with the C4ISR, the cross-platform 
communications integration, the hull, mechanical and electrical 
risks, and there are--eight of which have to be moderated to 
high risk if some problems continue to happen. So, the Coast 
Guard and Navy personnel have had this open process, but my 
question is, with this new National Security Cutter that's 
being proposed in the budget, and these outstanding issues, if 
we don't meet all those requirements, how will the contractor 
be held accountable?
    Admiral Allen. Well, first of all, we expect to meet the 
requirements. What we're going through is an iterative process, 
in acceptance of the vessel, to mitigate risk. And we 
identified 15 areas of risk, back in the fall, and briefed 
committee staff on those areas of risk that we'll be watching.
    We started by doing early tests, much earlier than we 
normally would, on the acceptance of a ship, to be able to 
identify them, so they could be attacked before the formal 
acceptance trials, which will be in April. Through machinery 
trials and builder trials, we generate what are called trial 
cards, and those are, basically, discrepancy cards that are 
noted, based on the testing of equipment, whether it's 
electronics or hull and machinery. Those trial cards then 
become the checklist or the punchlist, if you will, of items to 
be completed before the ship is satisfactorily ready to 
operate.
    As we move toward our acceptance trials--again, which will 
be in April--we have--we've had several iterations that have 
produced more of these trial cards. The goal was to start this 
process early, identify those checklist items, and deal with 
them, as many of them in advance, before we went to acceptance 
trials, because, following acceptance trials by the Coast 
Guard, we will then have to make a decision of what constitutes 
the ship as delivered and what work will be conducted, post-
delivery.
    We are satisfied with the progress right now, but we do 
feel there is risk associated with the information assurance. 
We have made that known to the contractors, for several months 
now, and we are tracking it very closely.
    Senator Cantwell. Mr. Caldwell, how can we judge, 
particularly when it's a first-in-class vessel, whether these 
are worrisome problems or they're normal? And how--do you see 
that there are red flags, here, in the machinery and builder 
trials? And do you have deeper concerns?
    Mr. Caldwell. We do not currently have audit work involving 
these specific issues on the NSC. But problems with first-in-
class vessels, or of any major asset like this, are relatively 
common.
    Senator Cantwell. So, what is--either of you--who bears the 
cost? Would the Coast Guard get any money back if the ship 
doesn't meet performance? I mean, we're already over-budget, 
obviously, in the whole National Security Cutter area, so I'm 
asking, given the huge problems that we've already seen with 
this ship, now what are our protections, moving forward?
    Admiral Allen. Well, the contractual vehicle for this 
vessel is a cost-plus contract, so whatever the--whatever it 
takes to get the ship out is what we will pay. That's what we 
are trying to manage, in looking at these trial cards--the 
delivery date. And, at some point, we'll have to make a 
decision on when the ship actually moves from the shipyard, 
because just having the ship in the shipyard itself incurs 
about a $12- to $14-million-a-month cost, and our goal is to 
balance the cost of having the ship remain in the shipyard, 
complete the work that needs to be done before it's put in 
operation, and what constitutes an acceptance of the vessel.
    Senator Cantwell. Would the Coast Guard get any money back 
if the ship doesn't meet its performance requirements?
    Admiral Allen. It would depend on the particular 
performance requirement that wasn't met and what was in the 
contract, and there are literally thousands of line items that 
you're dealing with in the delivery of a ship.
    Senator Cantwell. And so, has that happened before, where 
the Coast Guard has gotten money back from a contractor for not 
meeting performance requirements?
    Admiral Allen. It usually happens under a fixed-price 
contract, which we will shift to later on in this production 
line. Right now, we're operating under a cost-plus contract 
with this vessel.
    Senator Cantwell. Mr. Caldwell, are you concerned about 
that, given the past performance that--as we move toward, I 
guess, the at-sea trials--is that what----
    Admiral Allen. Acceptance trials, ma'am.
    Senator Cantwell.--acceptance trials--that we have a form 
and process in place, given, already, the problems we have had 
with this system integration in the Deepwater Program?
    Mr. Caldwell. Based on some of the problems we've had we'd 
rather have a go-slow approach with the so-called punchlist--
and get those problems worked out, when we have a first-in-
class vessel like this. As Admiral Allen said, it's cost-plus, 
so the government will be absorbing the additional costs, but 
then there can be a shift to a fixed-price contract, which then 
will reduce the price to the government. Hopefully, all the 
technical and operational problems from the first-in-class 
vessel are resolved at that point.
    Senator Cantwell. Well, unfortunately, we have a vote in 
progress, so what I'm going to do, instead of going to more 
questions, is recess the hearing to allow Senator Inouye and I 
to go vote. And hopefully we will be back very shortly to 
reconvene the hearing.
    [Recess.]
    Senator Cantwell. We'll reconvene the Senate Committee on 
Commerce, Science, and Transportation, Subcommittee on Oceans, 
Atmosphere, Fisheries, and Coast Guard.
    We're having a hearing this morning on the Coast Guard 
budget, and we appreciate Admiral Allen being here, as well as 
Steve Caldwell, Director of Homeland Security and Justice 
Issues under GAO.
    I'd like to go back to the National Security Cutter 
question. And, sorry for the interruption of a vote, but that 
obviously happens around here.
    Obviously, some of the problems that we have seen with the 
National Security Cutter have been around this weight margin 
issue. The ship's design typically includes a margin for 
additional weight to accommodate service enhancements during 
the ship's life, and, according to the Coast Guard officials, 
most of the available weight margin has already been consumed 
during construction, not including the fatigue-life structure 
enhancements. The officials further note that subsequent 
changes to the ship will cost more than they would have 
otherwise, due to additional redesign and engineering, and that 
it may be necessary to offset the additional weight.
    So, I have a concern. Are these problems--are there any 
problems with the National Security weight margins? And--but, 
having said that, I'm concerned that the ship may not have any 
room to grow, as it is, right now, currently designed. So, 
Admiral Allen, could you address that?
    Admiral Allen. Yes, ma'am. In the consolidated contracting 
action that took place last year, we established a technical 
baseline for the National Security Cutters, and that was 
connected with the award of the contract for the third National 
Security Cutter, which is the new technical baseline, includes 
the structural changes needed to achieve the fatigue-life. 
There was some additional weight added to make sure that the 
ship would meet the fatigue-life standards.
    A couple of things that we are doing to manage the weight 
associated with the ship. Once the BERTHOLF is underway, we are 
going to instrument it and get some empirical data regarding 
the fatigue of the ship and the implications of the weight that 
was added.
    One of the things that's happened with the discussion on 
the first National Security Cutter fatigue standards was 
whether or not the design basis by Northrop Grumman or issues 
raised by our technical authority and naval experts were 
competing with each other on, really, what needed to be done to 
this ship. And that was all based on theoretical data and 
computer modeling, not empirical evidence. So, we were actually 
going to test the first National Security Cutter. There may be 
an opportunity, at a later date, to actually remove weight as 
we move forward, but we need to get the cutter out and actually 
instrument it and test, and then we'll have empirical data to 
operate from.
    Senator Cantwell. What impact will this have on the life of 
the ship? I mean, depending on what----
    Admiral Allen. The original issue with the first National 
Security Cutter was whether or not it would achieve a 30-year 
fatigue life with the number of days it was supposed to operate 
at sea. The issue was whether or not the design offered by 
Northrop Grumman did that. Our technical authorities thought it 
might not. In other words, at a, maybe, 22-, 25-year period, we 
might start to see fatigue cracks. That was the discussion on 
all three of the ships, and making sure that it would achieve 
the fatigue life. Those changes were ordered in the first and 
second National Security Cutter, and are included in the design 
of the third National Security Cutter. We will validate the 
direction that the Coast Guard gave the contractor through 
instrumenting the first ship and empirically determining that 
that was the right fix; and we have room to adjust that, moving 
forward.
    Senator Cantwell. How do you have room to adjust it?
    Admiral Allen. Well, once we get the empirical data, as I 
said, there may be an opportunity to remove weight from the 
ship. In other words, we may have overbuilt the ship for a 30-
year fatigue life. Because we are--both Northrop Grumman and 
the Coast Guard were working on theoretical models of how long 
the ship would last; we've never really tested it in the ocean. 
And, by instrumenting the ship and actually testing it, we will 
perform a technical baseline by which to determine the fatigue 
life and then the weight implications.
    Senator Cantwell. Mr. Caldwell, aren't these weight margin 
issues simply deferring the costs from an originally flawed NSC 
cutter design to a later year?
    Mr. Caldwell. I'll have to defer on some of the specific 
questions on the NSC. DHS IG has taken a very detailed look at 
the NSC. The GAO work has been at the higher level looking at 
how the contract is being managed.
    One of the things I would like to add, is that the Coast 
Guard is seeking larger input from external parties, including 
ABS or naval experts in ship design. I don't have anything to 
add on the weight issue, related to the design of the NSC.
    Senator Cantwell. Admiral Allen, are we moving forward with 
a flawed NSC design that we're going to see costs from later? 
And that points to my question I asked earlier, about getting 
any kind of refund back from the ship designer if, in fact, we 
run into these problems.
    Admiral Allen. I don't believe we're moving forward with a 
flawed design. The technical baseline established in the award 
of the third National Security Cutter addresses all the 
fatigue-life issues. Those were directed changes by the 
government, and were paid for, and now are included in the 
estimate for completing the construction of the class of ships, 
ma'am.
    Senator Cantwell. But, we're still moving forward, and we 
haven't done the final test yet.
    Admiral Allen. We are moving forward, based on a--technical 
requirements were developed by the Coast Guard's technical 
authority. These were the people that, early on, asserted that 
there might be structural issues with the Cutter itself. In 
other words, we failed to take that into account, early on; we 
have, now; that's been validated by an external third party, 
the--through the U.S. Navy. We have come up with a technical 
design that will ensure the fatigue life on the ship. That was 
incorporated in the technical baseline for the third National 
Security Cutter when the contract was awarded, and it serves as 
a baseline to go back and retrofit the first and second NSC, 
ma'am.
    Senator Cantwell. So, does the contract have anything in it 
that considers this in the negotiations, about problems that 
could still occur with the Cutter and recouping costs? Is there 
anything in the contract that is specific on that point?
    Admiral Allen. Not to my knowledge right now. The 
consolidated contracting action resolved all outstanding issues 
as of the date of the settlement. If new information were to 
arrive, then it might be the basis for an action, but we 
certainly were--consider that.
    Senator Cantwell. Let me ask you about the Offshore Patrol 
Cutter. Now, this still exists on paper, correct?
    Admiral Allen. We are looking at operational requirements 
right now. We took a pause to take a look at where we're going 
with that Cutter, and there is money to start requirements 
development, leading to a preliminary design in the next 2 
years.
    Senator Cantwell. The Alternatives Analysis thinks that you 
should move forward. In fact, they think you should move 
forward and consider using some of these Offshore Patrol 
Cutters in replacement of doing all the National Security 
Cutters.
    Admiral Allen. Yes, one of the--one of the--one of the 
variations in the Alternatives Analysis indicated that you 
might, at--before--after the sixth NSC was awarded, to take a 
look, at that point, whether or not OPCs could substitute for 
it. I think that militates toward us walking down the 
requirements of the OPC and moving to a design on that to see 
whether or not the sea-keeping, the endurance, and so forth, in 
the OPC could handle the NSC missions. And we will do that, 
moving forward, ma'am.
    Senator Cantwell. So, have you decided whether that's going 
to be an off-the-shelf design or something that's already in 
production or a new ship design?
    Admiral Allen. It will be openly competed. We have to 
finish what's called an operational requirements document, and 
have that approved, and then that'll be the basis for moving 
forward with where we'll proceed. But, I will tell you this, it 
will be a Coast Guard-controlled, openly competed design.
    Senator Cantwell. I'm glad you brought that up. Let me ask 
you about open competition for future acquisitions. The 
Offshore Patrol Cutter, the Fast Response Cutter-A, the 
Unmanned Aerial Vehicles, the C4ISR, the Long-Range Interceptor 
boats, Short-Range Prosecutor boats, are they all going to be 
open competition?
    Admiral Allen. Yes.
    Senator Cantwell. All those are going to be open 
competition.
    Admiral Allen. Yes.
    Senator Cantwell. OK.
    Well, Admiral, I still have questions about the Deepwater 
Program, but I have some other questions I'd like to ask, as 
well, from the budget.
    One of the issues that we have had a previous hearing on is 
oil-spill response. And one of the issues that we asked you 
about on our December 18 oil hearing was in regards to Vessel 
Response Plans. And at the hearing, I think that you responded 
by saying, ``In order to make a port of call in the U.S., all 
non-tank vessels must have a Vessel Response Plan.'' And since 
then, you--since that hearing, you sent me a letter saying that 
was a mistake in your testimony, and that there are instances 
where U.S. and foreign flagged non-tank vessels have entered 
and operated in the U.S. without a Coast Guard-reviewed Vessel 
Response Plan. I think those are called NTVRPs. So, I want to 
make sure where we are, to date, because I want to understand, 
since the COSCO BUSAN was a pretty big incident, how many non-
tank vessels have submitted Vessel Response Plans to the Coast 
Guard, and how many non-tank vessels, required by law, have not 
done so.
    Admiral Allen. Yes, ma'am. The number changes, depending on 
what plans are submitted for review, but right now it's 
approximately 14,000 vessels that are covered by Non-Tank 
Vessel Response Plans that have been reviewed by the Coast 
Guard. One of the issues that came up--and if I could just 
elaborate on the testimony and the correction that I sent you--
all vessels under IMO MARPO Annex I are required to have 
Spilled Oil Response Plans. So, any vessel coming into the 
country that's signatory to IMO would have that. Our response 
plans are a higher level of care, in--aligned with our National 
Contingency Plan and our Area Contingency Plans. When the 
legislation was passed, we put out voluntary guidelines for a 
non-tank vessel response that would pretty much mirror where 
we're going with the rulemaking process. What has happened is, 
we need to figure out how many vessels above the 14,000 that--
are calling under the international plans rather than the 
higher-level plans that we require. And I've developed a way 
forward related to that, and I can articulate that further, if 
you would like.
    Senator Cantwell. Yes, please.
    Admiral Allen. We had a very detailed discussion in 
December, and I walked away from that, quite frankly, not 
satisfied with what I said and where were at in this whole 
process. And a lot of that had to do with the time that it 
takes to make a rule to implement the legislation, from 2004 
and 2006. I since have got together with my staff, and we have 
provided guidance to the Coast Guard. It is my intention to go 
ahead and implement the basic tenets of that legislation 
without a rule, under our authority in Title 33. What this will 
mean is, in advance of a regulation, we will require ships 
coming into this country to, basically, conform to the 
legislation, as it was passed, even in the--advance of a rule, 
so we can make sure there is compliance with the statutes. 
Failure to do that, we will be able to put a control or deny 
entry to the vessel if they do not have a Non-Tank Vessel 
Response Plan.
    In other words, we intend to enforce this without a 
regulation, which is a striking difference from past practice 
for the Coast Guard, but I feel, given the events, that this is 
the proper way to proceed.
    Senator Cantwell. Well, but you are asking, in a budget 
request, for additional $2.6 million to fund and support 
rulemaking backlog. And one of the key issues on the rulemaking 
backlog is the oil-spill issue, related rulemaking to prevent 
that. So----
    Admiral Allen. Yes, ma'am. We will proceed with the 
rulemaking, but I intend to enforce the statute, in advance of 
the rule, consistent with the legislation that was passed, 
ma'am. This is a break in past action. Usually we would not 
enforce a statute that was intended to be implemented through a 
rule; but, given the delay in getting the regulations out, and 
wanting to give effect to the statute, we are prepared to give 
direct orders to our field commanders to start enforcing the 
statute, as written. We have voluntary guidelines out there 
that give enough information for these folks to be able to 
comply, and we will expect them to do that.
    Senator Cantwell. In asking for this additional revenue, 
asking you about the rulemaking, particularly for salvage and 
firefighting, and for the Vessel Response Plan, will both of 
those be completed, given this budget request, by FY09?
    Admiral Allen. We expect the firefighting, salvage, and the 
additional oil-spill requirements rules to be completed within 
the next 6 to 12 months. Immediately following that, we will 
queue up the Non-Tank Vessel Response Plan, ma'am.
    I would look at Notice of Proposed Rulemaking for the Non-
Tank Vessel Response Plan to be out in 2009, but, given the 
review requirements, it could be to 2010. But, the 
firefighting, salvage, and additional removal capability will 
be out within the next year, ma'am.
    Senator Cantwell. Will the vessel--you're saying the Coast 
Guard would have a plan out, and would be in negotiation or 
getting public input in 2009? And then----
    Admiral Allen. Yes.
    Senator Cantwell.--the----
    Admiral Allen. We've put out a Notice of Proposed 
Rulemaking so the public could comment on it, ma'am, yes.
    Senator Cantwell.--the final rule would then be complete by 
what time?
    Admiral Allen. By 2010. In the meantime, we will enforce 
compliance with the statute, per my previous comments. We will 
make mandatory the Non-Vessel Tank Response Plan that complies 
with the statutes, and we will do it in advance of the 
rulemaking. The rulemaking will just codify it.
    Senator Cantwell. You can understand our concern, right, 
Admiral? I mean, these are things that----
    Admiral Allen. Yes, absolutely.
    Senator Cantwell.--that were promulgated in the 1990s, 
rules that should have been in policy and implementation and 
carried out, and we've continued to see, obviously, challenges. 
I'm not saying that overall numbers--but, obviously, size of 
ships and spills, and continuation of this challenge in our 
last hearing. And so, now we're seeing a budget request of--
saying, ``Give us more money.'' And I'm glad to hear that 
you're going to take enforcement action before receiving those 
dollars, but we're going to hold you accountable to those 
commitments on these two rules, because we think they're 
critically important. In fact, I would prefer to see them done 
by 2009, but we can--at this point, I take you at your 2010 
commitment, and we can have a conversation about that in more 
detail.
    Admiral Allen. Madam Chair, if I just--the Non-Tank Vessel 
Response rule is 2010; the firefighting, salvage, and removal 
will be before then.
    Senator Cantwell. I understand.
    Admiral Allen. OK.
    Senator Cantwell. I understand.
    Senator Inouye, did you have follow up questions?
    Senator Inouye. May I ask a local question?
    There's a place called Barbers Point?
    Admiral Allen. Yes, sir.
    Senator Inouye. That's in Hawaii.
    Admiral Allen. Yes, sir.
    Senator Inouye. There's a hangar there, and I hope that we 
can anticipate some funding for the project next year?
    Admiral Allen. Yes, sir. As you know, if you fly over 
Barbers Point you will see a C-130 with half of it sticking 
out. Only the front part of the plane fits in the hangar. In 
fact, I flew over it, myself, just a month or so ago. We are in 
the process of putting together final cost estimates on that 
proposal, sir, and we'll be glad to get some information to you 
as soon as we're done. We know it is a priority for you, and I 
know it is a priority for the local commander out there.
    [The information previously referred to follows:]

    The Coast Guard engineering office is developing a Planning 
Proposal (PP), including a rough order of magnitude cost estimate, as 
the first step in project development for Air Station Barbers Point 
aircraft hangar construction. We expect completion of the PP within 3 
months; however, further project refinement and cost estimation will be 
completed through the next step called a Project Proposal Report (PPR). 
This phase, not yet planned, will develop budget ready cost figures and 
typically requires 18 months for completion. We can provide updates on 
our progress if helpful.
    Please note: As background, the Air Station Barbers Point hangar 
construction proposal and cost analysis (per Section 216 of the CG 
Maritime Transportation Act of 2006) in February 2007 was a planning 
level feasibility report. The report contained estimates for two 
options: (1) $98.8M--hangar facility to house 100 percent of fixed and 
rotary aircraft; and (2) $67.4M--hangar facility to house 50 percent of 
fixed wing aircraft and 100 percent of rotary wing aircraft. These 
figures will be refined through the planning process aforementioned.

    Senator Inouye. Thank you very much.
    I'm just submitting the rest of my questions, if I may.
    Senator Cantwell. Thank you.
    Senator Inouye. May I say a----
    Senator Cantwell. Yes. Please.
    Senator Inouye.--make a statement?
    Senator Cantwell. Yes.
    Senator Inouye. The absence of Members on this Committee 
does not indicate the level of interest in your activity. At 
this moment, as you may know, there are five committees 
ongoing, and two of them have interests in commerce. In fact, 
the Appropriations Committee on Commerce budget is now 
proceeding ahead. So, I didn't want you to feel that this is 
all the interest. But, you've got the Chairwoman, you've got 
the Chairman, here. So----
    [Laughter.]
    Admiral Allen. Sir, we really understand multitasking in 
the Coast Guard.
    [Laughter.]
    Senator Inouye. All you need is the two of us here.
    [Laughter.]
    Senator Cantwell. Thank you, Senator Inouye.
    Admiral my staff received information in December that only 
2,351 of the 13,244 Non-Tank Vessel Response Plans have been 
approved. So--I think you gave me a number of roughly 14,000.
    Admiral Allen. Yes, ma'am. There are--I can explain this to 
you, and I'll make sure it's right, for the record.
    [The information previously referred to follows:]

    Non-Tank Vessel Response Plans meeting the provisions of 33 U.S.C. 
1321(j)(5), as amended by the Coast Guard & Maritime Acts of 2004 and 
2006, are issued Interim Operating Authorizations for a period of 2 
years per 33 U.S.C. 1321(j)(5)(G). Since August 2005, the Coast Guard 
has issued 1,880 Interim Operating Authorizations for reviewed Non-Tank 
Vessel Response Plans. Many of these plans cover more than one vessel 
in an owner/operator's fleet. To date, 10,791 vessels have obtained an 
Interim Operating Authorization status with the U.S. Coast Guard.
    The Coast Guard is tracking 1,701 Non-Tank Vessel Response Plans 
that have been issued Interim Operating Authorizations for vessels that 
are known to continue to trade in the United States. The difference 
between these two numbers is attributed to plans that have been 
deactivated due to either noncompliance or owner request. When the Non-
Tank Vessel Response Plan regulations are implemented into Subchapter O 
of Title 33 Code of Federal Regulations, the Coast Guard will then 
``approve'' Non-Tank Vessel Response Plans for a period of 5 years.
    The Coast Guard estimates approximately 12,000 vessels will be 
required to meet the Non-Tank Vessel Response Plan regulations in the 
first year of implementation. The non-tank vessel population is an 
estimate because it is unknown how many foreign flag vessels will need 
to comply until they actually arrive at a U.S. port. There are 
thousands of additional non-tank vessels in the world fleet that could 
potentially submit Non-Tank Vessel Response Plans to the USCG. Until 
they call on the U.S., the plan is not required.
    The current level of compliance is good. Larger, ocean going non-
tank vessels have been able to adopt, for the most part, the 
straightforward Non-Tank Vessel Response Plan development guidance 
contained in Navigation, Vessel and Inspection Circular 01-05 CH-1. A 
number of owner/operators of smaller non-tank vessels with fuel 
capacities less than that of large ocean going non-tank vessels that 
are unsure or disagree on the level of required contracted oil spill 
response resources. The Coast Guard will address these vessels and 
their requirements in the upcoming Notice of Proposed Rulemaking.

    Admiral Allen. But, there are companies that have eight or 
ten vessels of the same design, that have a base plan that 
applies to all the vessels, so you could have a fewer number of 
plans that apply to a larger number of vessels.
    Senator Cantwell. And so, you're saying that these are 
subsets of the same vessels for different----
    Admiral Allen. If you have--if you have vessels that are 
the same design--let's say you have five vessels of the same 
design; a plan written for one plan--for one vessel is 
applicable for all five vessels, because they're the same 
configuration and layout. The number of plans reviewed will be 
less than the total number of vessels that are covered.
    Senator Cantwell. Well, in--I don't want to take up any 
more time on that issue, but let's make sure that we're in sync 
about how many outstanding----
    Admiral Allen. Yes.
    Senator Cantwell.--plans there are, and the criteria by 
which we're measuring them, so that the Committee and the Coast 
Guard can be on the same framework, at least for measurement, 
and then we can decide whether things are at----
    Admiral Allen. Yes, ma'am.
    Senator Cantwell.--full capacity for approval, or we're 
still outstanding.
    I wanted to ask--you've obviously been given new 
responsibilities, and some of that is reflected in the budget. 
On February 6th, the Minerals Management Service auctioned off 
part of the Arctic Ocean, the size of Pennsylvania, for oil and 
gas drilling. And, despite a 33- to 51-percent chance of major 
oil spills in that region, where the oil-spill cleanup is 
virtually impossible most of the time, I'm curious as to how 
the Coast Guard plans to operate, with its current assets, in 
the Arctic environment.
    Admiral Allen. Madam Chair, that's an excellent question. 
Starting last year, when, you know, we had a recession of 
summer ice farther than it ever had been before, we developed a 
plan, for this next summer, to deploy Coast Guard resources up 
to the North Slope, including moving a buoy tender through the 
Bering Straits to--looking at navigational and communications 
issues. We're looking at moving small boats and helicopters and 
shore forces up there, and we want to test their ability to 
operate in a higher-latitude harsh environment. We, 
traditionally, have not operated up there, because there was 
not open ocean. Given the offshore oil and gas exploration 
that's going to be going on there, increased cruise ships, 
increased vessel traffic, in general, and the potential to have 
even fish stocks move north through the Bering Sea, we're 
moving as fast as we can to identify how well our equipment 
operates up there, any capability shortfalls. And I would hope, 
by this time next year, to be able to tell you that, based on 
the requirements for us to operate in open water up there, 
these are the gaps that we see. But, we need to get our 
equipment up there and test it, because we have not, 
traditionally, operated up there.
    Senator Cantwell. What kind of grade would you give the 
Coast Guard's assets, meeting that challenge and 
responsibility? Would you say, currently, you're at a----
    Admiral Allen. Madam Chair, it's almost a situation of, 
``You don't know what you don't know.'' If there--our ability 
to stage equipment up there for an oil-spill response, our 
ability to operate against a threat, such as a cruise ship 
that--happened off of South America recently, where it hit an 
iceberg and sunk--it's a matter of moving capability up there, 
and being able to operate up there. We flew a C-130 to the 
North Pole, last October, and found out there were significant 
challenges with navigation, communications, and, plus, that we 
don't have heaters in our fuel tanks, and there's a problem; 
when it gets real cold, the fuel systems don't operate the way 
they need to.
    I would give us an ``unknown.'' If you had to force me to 
some kind of a grade scale, I would say, ``results are not 
demonstrated, and we need to find out exactly what the gap 
is.''
    Senator Cantwell. Was the Coast Guard consulted before this 
leasing?
    Admiral Allen. No, ma'am.
    Senator Cantwell. And were they consulted on what it would 
take to provide adequate resource and response plans?
    Admiral Allen. I'm not aware of it, but I will check, but 
I'm not--I don't believe so, ma'am.
    [The information previously referred to follows:]

    The Coast Guard Office of Incident Management and Preparedness (CG-
533) does not have a record of consultation by the Minerals Management 
Service before part of the Arctic Ocean was auctioned off for oil and 
gas drilling in the Arctic Ocean.

    Senator Cantwell. So, where does this budget request for 
$200,000 for an Arctic assessment come from?
    Admiral Allen. To address exactly what we've been 
discussing, ma'am, and that's to fund the requirements analysis 
up there, based on our experience there, this coming summer, 
and to move forward with a way ahead, and how we need to 
operate in the Arctic.
    I will tell you, though, that there are some significant 
policy issues to be decided up there, on what constitutes a 
needed presence for the sovereignty of the United States. There 
are national security issues associated with operating up 
there. That is all being discussed within the Administration 
right now, in anticipation of a--potentially, a policy decision 
on where we need to go with the Arctic.
    Senator Cantwell. Well, I think that it's a very important 
question, if we're going to have a race to the Arctic; and part 
of the race to the Arctic is allowing U.S. more drilling and 
focus of resource acquisition, then a very important component 
of the United States making that decision would be a response 
plan, given the fragile sensitivity of that area, and the 
difficulty in reaching it, wouldn't you agree?
    Admiral Allen. I would agree.
    Senator Cantwell. Perhaps we should have a larger hearing 
on this subject, to discuss exactly the best way for us to make 
sure that, as the United States moves forward, we actually have 
that kind of plan, since you weren't consulted on the first 
round.
    Admiral Allen. I would not dispute the need for that 
hearing, ma'am.
    Senator Cantwell. Thank you.
    I'd like to go back to, if I could----
    Senator Inouye, do you have more questions?
    Senator Inouye. I'm just listening.
    Senator Cantwell. Thank you.
    I'd like to go back to the Deepwater Program, if I could, 
and the--I want to understand the--where the Coast Guard thinks 
it should go in regards to the Unmanned Aerial Vehicle program. 
How are you viewing what we now have back from the Alternatives 
Analysis on where that technology should go forward, given that 
it was a component of the Deepwater Program?
    Admiral Allen. Well, first of all, based on requirements, 
there was an assumption that our cutters, both the OPC and the 
NSC, would deploy with vertical launch UAV capability. That is 
part of the mission package on which our requirements are 
based, and the efficiency of the model is based. And we have to 
come to grips with aviation surveillance related to that. We 
took a--what I thought was a justified pause in the development 
of the vertical launch UAV program within the last year, and, 
based on the analysis--the Alternatives Analysis, we need to 
look at new ways, going forward.
    One of the things we are doing right now is looking at the 
development of the Fire Scout UAV, which is being contemplated 
for the Littoral Combat Ship. We have talked with our Navy 
counterparts and Northrop Grumman. One of the concerns we had 
about that vertical launch UAV is, it didn't have a marine 
radar that would be suitable for us. They are now taking that 
on as a program of record.
    We are not going to leave anything off the table, in regard 
to aviation surveillance associated with Deepwater, but I want 
to make sure, as we move forward, that we're not on the cutting 
edge of R&D, that we have demonstrable first-article 
performance before we move into this. And I think we also need 
to take a look at the implications for high-altitude UAVs and 
how they might be employed.
    We have recently agreed with the Customs and Border 
Protection to stand up a joint program office within Homeland 
Security to take a look at programs like the Predator. And this 
month, we will do a prototype deployment of a Predator in the 
maritime environment.
    We have also been engaged with discussions, not only with 
the Coast Guard and CBP, but the United States Air Force, as 
well, potentially about how we might become involved in some of 
their high-altitude UAV operations.
    But, we're in a period, in what I would call a pause and a 
consolidation and moving forward, carefully informed, not only 
by the analysis--the Alternatives Analysis that was done, but 
making sure that we've got a technology that works when we 
bring it forward. And that remains the task before us, ma'am.
    Senator Cantwell. The Alternatives Analysis seemed to 
indicate that the current baseline plan for Deepwater is the 
wrong path. So, are you saying you're going to revert to an 
open competition and come back on what should be the specs for 
that UAV program?
    Admiral Allen. I think we need to take a look at the 
surveillance requirements associated with the NSC and the OPC 
operating offshore, and we need to leave everything on the 
table. Whether it's an open competition for a VUAV or greater 
reliance on a high-altitude UAV, like a Predator. I think all 
of that needs to be considered, and I think that's consistent 
with the analysis.
    Senator Cantwell. Thank you.
    I noticed, Admiral, in the Alternatives Analysis, that--we 
have had this conversation about the costs of aircraft, and my 
concern about the fact that we're--since the cost of that 
product, versus other costs--you had--it has been a challenge, 
Admiral, to keep up with all of the elements of the Deepwater 
Program and the original flawed approach. And so, as we have 
tried to correct course in saying that a systems integrator in 
charge of determining what was right or wrong, and its contract 
was the wrong way to go, and move forward, we've now had a 
little more time to drill down on some of the individual 
assets. And so, we've had many conversations about that. And 
one of the conversations has been about the CASA aircraft and 
its cost, juxtaposed to other equipment choices, and the fact 
that the CASA--I was assuming that the Alternatives Analysis 
would shed some light on the requirement that the Coast Guard 
is asking for, as it relates to a rear-door requirement. So, my 
office has had many conversations with your team about this, 
but I see, in the AOA--or, the Alternatives Analysis did 
nothing to--nothing to address that issue and whether the Coast 
Guard really needs that as a particular aspect of the aircraft, 
but, instead, the performance requirements were already 
outlined in the Alternatives Analysis, so they had nothing but 
to comply with that as the aircraft of choice.
    So, I'm asking you, what was your understanding and your 
belief as it related to the CASA? And how can we give taxpayers 
some certainty that, in fact, the Coast Guard--this really is 
the asset that the Coast Guard needs?
    Admiral Allen. Well, I think what the Alternatives Analysis 
indicated--and, our understanding, as well, based on the 
requirements for a maritime patrol aircraft as part of a 
system, which--at the higher level, you have C-130, a much 
longer-range aircraft--and, based on the Coast Guard 
requirements, that there was nothing else out there in the 
market that would satisfy those requirements, and that was the 
basis for the analysis to indicate that the CASA was currently 
meeting the requirements of the Coast Guard.
    Senator Cantwell. That's my point. I think the Committee, 
given all the problems with Deepwater, with all the problems we 
still intend to think that have not been seen yet, because we 
haven't seen all the assets and the resources, we are now 
trying to--now that we have at least got Congress moving on a 
trajectory of saying this kind of systems integrator approach, 
where the contractor self-certifies, was the wrong approach--
we've now said we want to make sure that all the assets that 
the Coast Guard is seeking have had the proper amount of 
oversight and attention, so that we don't run into the same 
problems with these assets as we have with the National 
Security Cutters.
    So, the CASA aircraft is an example, where we--given the 
cost of that product, versus what else is out there on the 
marketplace, we want to understand what the Coast Guard's needs 
and assessments are that led it to the choice of the CASA 
aircraft, and we want some validation that the taxpayers ought 
to be paying that additional expense. Now, the Alternatives 
Analysis didn't get us there, so I don't know if you have other 
suggestions about how we might do that.
    But, just like this C4ISR and other things, all of these 
assets are going to continue to get the attention of this 
Committee, because we are seeing, either through GAO or through 
the IG or through the Alternatives Analysis, various questions 
raised, and we can't afford to make any more mistakes. So, I 
think all of the assets deserve a complete, you know, scrubbing 
to make sure that we are acquiring the right assets.
    Admiral Allen. Well, regarding the CASA, we'd be glad to 
provide more information for the record, because the picture on 
that is, kind of, changing almost daily for us.
    [The information previously referred to follows:]

    In 1996, the original Mission Need Statement (MNS) for Deepwater 
discussed cutter and aircraft replacement in general terms. During 
concept exploration, the Deepwater program employed a system approach 
for operational requirements. At the system level, these requirements 
were approved as the Deepwater System Performance Specification (SPS). 
This specification was released on March 16, 1998, for full and open 
competition to develop a Deepwater System Plan. The SPS required 
proposed solutions to use surface and aviation assets, along with a 
C4ISR network to modernize and replace the Coast Guard's aging ships 
and aircraft.
    As a result of the full and open competition to design Deepwater, 
contracts were awarded on August 20, 1998, to three industry teams to 
begin initial concept development based on the SPS. During Phase I of 
the Deepwater Program in March 1999, Team Deepwater, which later became 
Integrated Coast Guard Systems (ICGS), evaluated 16 candidate aircraft 
to fulfill the Medium Range Surveillance (MRS) Maritime Patrol Aircraft 
(MPA) requirements. Both turboprop and jet aircraft were considered. 
New fixed wing aircraft alternatives were investigated, all with the 
potential to complement or replace legacy aviation assets. Candidate 
alternatives were evaluated to reduce operating costs, improve mission 
performance, and expand upon legacy fixed wing multi-mission 
capabilities. The evaluation included three separate CASA airframes. 
The contractor recommended the EADS CASA CN-235-300M ER. The CN-235-
300M ER was a new design based on the production version CN-235-300M, 
but with a longer range and increased on-scene endurance to meet 
performance specifications unique to Coast Guard missions.
    On June 25, 2002, the Deepwater contract was awarded to ICGS. As 
part of this Phase II Final Proposal, the Coast Guard accepted the 
contractor's plan, which included the CASA CN-325-300M ER. All three 
industry teams competing for the Deepwater contract submitted proposals 
recommending a version of the CASA commercial CN-235-300M aircraft as 
the sole solution for a new Coast Guard MPA.
    Coast Guard aviation officials articulated concerns about the 
capabilities of the proposed MPA, specifically the aircraft's weight 
growth margin, because the proposed aircraft included airframe 
modifications but no power plant modification. The ability of the CN-
235-300M ER to safely carry a full fuel load while operating in hot 
weather locations was the primary concern. Accordingly, the Coast Guard 
requested ICGS conduct another MPA Analysis of Alternatives.
    This analysis, focusing on aircraft performance, total ownership 
cost, and capability to perform the assigned missions, resulted in a 
recommendation to change from the CN-235-300M ER to the CN-235-300M for 
the Coast Guard MPA. This recommendation was approved in March 2003. A 
delivery order for the development and demonstration of the first two 
CN-235-300Ms (military designation HC-144A) was signed in May 2003.
    A subsequent business case analysis requested by the Coast Guard 
was completed by ICGS in December 2004. This analysis again compared 
the CN-235-300M and CN-235-300M ER, as well as the C-27J. The analysis 
assessed the operational effectiveness and total ownership costs of 
switching to the CN-235-300M from the CN-235-300M ER. It confirmed the 
CN-235-300M was capable of performing the Coast Guard's 11 statutory 
missions and exhibited better weight growth margin and climb 
performance characteristics.

    Admiral Allen. We are just finishing up a developmental 
test and evaluation, and finish certifying the C4ISR package on 
the CASA 235. We anticipate we will accept that aircraft--final 
acceptance of the lead aircraft and the mission pallet system--
some time in the next 2 weeks, and that is held up against the 
standards regarding information assurance and everything else. 
We have successfully transmitted, in both an unsecure and 
secure mode, from that aircraft, and we'd be happy to forward 
the developmental test and evaluation reports to you.
    The next step will be to do operational tests and 
evaluation with the aircraft in an environment, to see how it 
does against the mission set, not just the specifications that 
it was built to. And that's what I referred to earlier, when we 
had one of the airplanes flying south of Mobile, it was 
involved in a very successful search-and- rescue case, just a 
week or so ago. But, we'd be happy to provide you the results 
of the developmental test and evaluation, which will be ended 
within the next day or two, ma'am.
    [The information previously referred to follows:]

    Developmental Test & Evaluation (DT&E) on the CASA (CG designation 
for HC-144A) was completed on December 1, 2006 for the base aircraft 
and March 10, 2008 for the Mission System Pallet (MSP). In total, there 
were 650 performance specification requirements (for both the base 
aircraft and MSP) tested during the DT&E process. Only two items, High 
Frequency (HF) position reporting and the solid-state (non-rotating) 
hard drives for server back-ups have not met the acceptance criteria of 
the government. The server was accepted with rotational hard drives as 
an interim measure. Both items were listed as exceptions on the 
Material Inspection and Receiving Report (DD-250). The contractor has 
developed solutions for both of these components to meet acceptance 
criteria and the Coast Guard expects to retest these solutions by the 
end of July 2008, prior to the beginning of the Operational Assessment 
(OA) period.

    Senator Cantwell. I'm more interested----
    Mr. Caldwell, do you have any ideas on the mission 
capabilities of this particular product, and how we could get 
some third-party assessment of this, given, again, the complete 
challenges that we've had with the Deepwater Program?
    Mr. Caldwell. Again, the DHS IG is doing more of the asset-
specific work including work on the CASA. So I don't have any 
additional information on the CASA aircraft.
    Senator Cantwell. So, we should look to the Inspector 
General for that.
    Mr. Caldwell. That would be appropriate.
    Senator Cantwell. OK, thank you.
    As you can see, Admiral, we're going to continue to focus 
on the Deepwater Program, so I don't think this will be the 
last of the hearings on it, but we certainly appreciate your 
attention this morning, from a budget perspective, given the 
National Security Cutter funding that you're seeking in this 
budget, to move forward.
    I'd like to turn to the polar icebreaker issue that we 
talked about earlier, when Senator Inouye mentioned the LORAN-C 
system. And it's my understanding that the National Science 
Foundation had received permission from the Administration to 
stop funding the $3 million to require and maintain the POLAR 
STAR in caretaker status. This money, however, is not included 
in the Coast Guard's budget, either, for 2009. So, who's going 
to pay for this ship?
    Admiral Allen. We were advised, at the end of the budget 
submission process, that the money to maintain the POLAR STAR 
was not contained in the National Science Foundation budget. I 
do not have any visibility into how that process works or how 
that decision was arrived at. But, quite frankly, unless it is 
resolved, there will not be money to keep the POLAR STAR in its 
``Commission Special'' status, which means money to keep a crew 
on there, to keep the machinery turned over--so, it's not up 
and operating, but it's capable of being brought into operation 
in a year or so period of time, should the vessel be put back 
into service or be needed.
    Senator Cantwell. What does that mean, economically, do you 
think? What does that mean, to U.S. commerce, when we don't----
    Admiral Allen. If we----
    Senator Cantwell.--if we don't fund----
    Admiral Allen. If we move into----
    Senator Cantwell.--the polar icebreakers?
    Admiral Allen. If we move into Fiscal Year 2009, and we 
don't have the money to keep the POLAR STAR in a ``Commission 
Special'' status, it will further degrade our capability to put 
the boat back into service, and increase the length of time it 
would take to use that vessel, should it be needed, ma'am.
    Senator Cantwell. And do you have a number in--do you know 
a number of what that cost is? I know I've seen that number 
before. Maybe my staff has it. But, we are talking about great 
commercial significance of not being able to move cargo and 
traffic, and get people and product to where they need to be. 
And, obviously, the polar icebreakers are a key component of 
that transportation passage system, isn't that correct?
    Admiral Allen. Yes, it is, ma'am. And all I can say is that 
the money is not contained within our budget, and if it's not 
there in 2009, we are going to--we are going to accrue 
significant additional risk.
    Senator Cantwell. So, isn't this just another year of a 
continuing saga between NSF and the Coast Guard, as it relates 
to who is financing and paying for the polar icebreakers?
    Admiral Allen. It is a exacerbation of a bad problem that 
already existed, yes, ma'am.
    Senator Cantwell. OK. All right.
    Senator Inouye, do you have any other questions?
    Senator Inouye. No.
    Senator Cantwell. If not, I thank you, gentlemen, for your 
testimony and your availability in answering these questions.
    We will keep the record open for an additional, I think, 10 
days or so, so if--colleagues who weren't able to attend, can 
get their questions submitted. And we appreciate your answering 
them. I know that I will have a variety of additional questions 
for you, as well.
    Mr. Caldwell, thank you. Admiral Allen, thank you very 
much.
    This Committee meeting is adjourned.
    [Whereupon, at 12:01 p.m., the hearing was adjourned.]
                            A P P E N D I X

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
    As many of you have heard me say before, Alaska has nearly half the 
coastline of the United States and the missions of the U.S. Coast Guard 
in Alaska are critical to the safety and security of our Nation.
    This past year the Coast Guard celebrated its one millionth life 
saved, and I was honored to have a chance to meet with one of your 
rescue swimmers--Kodiak based petty officer Will Milam last month. I 
believe his courage and dedication personifies the core values of our 
Coast Guard.
    As the missions and responsibilities of the Coast Guard grow, the 
size of the service has remained basically unchanged and your fleet has 
been pushed well beyond its service life. I was pleased to see your 
budget requested funding to keep the deepwater program on track, but I 
also believe that we must find the means for the Coast Guard to 
maintain its operational capabilities until those new vessels and 
aircraft are on line. I realize that keeping some of your older vessels 
operating is difficult, but the operational gap created by taking them 
out of service is simply too large.
    I am also concerned about the state of our polar icebreaker fleet. 
We are entering an age where a Federal presence in the Arctic is 
crucial to protecting our interests and supporting scientific research. 
I am not convinced that the funding mechanism we have established 
between the National Science Foundation and the Coast Guard adequately 
addresses our needs. The fact that there is nothing in your budget to 
address the condition of our polar icebreaker supports this concern.
    I look forward to discussing these concerns with you today and 
thank you for your outstanding service to our Nation.
                                 ______
                                 
          Prepared Statement of the Fleet Reserve Association
The FRA
    The Fleet Reserve Association (FRA) is the oldest and largest 
enlisted organization serving active duty, Reserves, retired and 
veterans of the Navy, Marine Corps, and Coast Guard. It is 
Congressionally Chartered, recognized by the Department of Veterans 
Affairs (VA) as an accrediting Veteran Service Organization (VSO) for 
claim representation and entrusted to serve all veterans who seek its 
help. In 2007, FRA was selected for full membership on the National 
Veterans' Day Committee.
    FRA was established in 1924 and its name is derived from the Navy's 
program for personnel transferring to the Fleet Reserve or Fleet Marine 
Corps Reserve after 20 or more years of active duty, but less than 30 
years for retirement purposes. During the required period of service in 
the Fleet Reserve, assigned personnel earn retainer pay and are subject 
to recall by the Secretary of the Navy.
    FRA's mission is to act as the premier ``watch dog'' organization 
in maintaining and improving the quality of life for Sea Service 
personnel, their families and survivors. In addition to serving as a 
leading advocate on enlisted personnel and quality of life programs on 
Capitol Hill the Association also sponsors a National Americanism Essay 
program, awards over $90,000 in scholarships annually and provides 
disaster and/or relief to shipmates and others in distress.
    The Association is also a founding member of The Military Coalition 
(TMC), a 35-member consortium of military and veterans organizations. 
FRA hosts most TMC meetings and members of its staff serve in a number 
of TMC leadership roles.
    FRA celebrated 83 years of service in November 2007. For over eight 
decades, dedication to its members has resulted in legislation 
enhancing quality of life programs for Sea Services personnel, other 
members of the Uniformed Services plus their families and survivors, 
while protecting their rights and privileges. CHAMPUS, now TRICARE, was 
an initiative of FRA, as was the Uniformed Services Survivor Benefit 
Plan (USSBP). More recently, FRA led the way in reforming the REDUX 
Retirement Plan, obtaining targeted pay increases for mid-level 
enlisted personnel, sea pay for junior enlisted sailors and hazardous 
duty incentive pay for U.S. Coast Guard boarding teams. FRA also played 
a leading role in advocating recently enacted predatory lending 
protections for service members and their dependents.
    FRA's motto is: ``Loyalty, Protection, and Service.''
Certification of Non-receipt of Federal Funds
    Pursuant to the requirements of House Rule XI, the Fleet Reserve 
Association has not received any Federal grant or contract during the 
current fiscal year or either of the two previous fiscal years.
Introduction
    Madame Chairwoman and distinguished Members of the Subcommittee, 
the Fleet Reserve Association (FRA) appreciates the opportunity to 
present its recommendations on the United States Coast Guard's FY 2009 
Budget.
    Prior to addressing these issues, FRA wishes to thank the Senate 
for the generous pay, health care and benefit enhancements enacted in 
recent years. Improved wounded warrior transition and support services 
are very important as are other benefit improvements which are 
essential to maintaining the all-volunteer force and military 
readiness.
    Coast Guard parity with DOD personnel programs remains a high 
priority for FRA, and the Association notes continuing challenges 
within the Coast Guard to adequately fund previously authorized active 
and reserve people programs.
U.S. Coast Guard Authorization
    FRA strongly recommends that Congress pass the FY 2008 U.S. Coast 
Guard Authorization (H.R. 2830 and S. 1892). Authorization legislation 
is fundamental to Congressional budgeting and effective oversight of 
Federal agencies.
    The legislation addresses several important personnel related 
issues. These include emergency leave retention authority whereby 
service members would be allowed to retain leave they would otherwise 
forfeit due to support of major disasters or other emergencies declared 
by the President; legal assistance authority for Coast Guard Reservists 
that establishes parity among all similarly situated Reservists who 
have served on active duty for more than 30 days under mobilization 
authority and makes them eligible for legal assistance upon release 
from active duty; and authority for reimbursement for certain medical-
related travel expenses when a service member is stationed on an 
INCONUS island and his/her family member is referred to a specialty 
care provider off-island that is less than 100 miles from the primary 
care provider.
    In addition, both bills authorize end strength of 45,500, and make 
Coast Guard retirees eligible for the Armed Forces Retirement Home 
(AFRH). The Senate bill includes a policy change authorizing 
recreational facilities to be included in the public/private venture 
(PPV) program similar to service housing projects. The Senate bill also 
changes the Vice Commandant position from a 3-star position to a 4-star 
position, which will better align the Coast Guard with the other armed 
forces.
End Strength
    According to the 2008 U.S. Coast Guard Posture Statement, the Coast 
Guard end strength is currently at 41,873 active duty and 8,100 
Reservists and has been at that level for several years even though the 
Coast Guard has been tasked with additional responsibilities in recent 
years. The Coast Guard took over the National Capitol Region Air 
Defense (NCRAD) mission in September 2006, and there have been 
increased demands with the passage of ``The Coast Guard and Maritime 
Transportation Act of 2006.'' Even modest increased active duty end 
strength in FY 2009 would immediately translate to a higher level of 
mission effectiveness. FRA supports adequate end strength to meet 
growing operational Coast Guard requirements and notes there are annual 
limits to increasing Coast Guard end strength due to recruiting and 
training limitations. According to Admiral Thad Allen in his recent 
State of the Coast Guard Address, ``There has been no material change 
in the Coast Guard's end strength in the past 50 years despite more 
demands and the current era of persistent challenges.''
Pay
    Congress has for the past few years improved compensation that, in 
turn, enhanced the recruitment and retention of quality personnel in an 
all-volunteer environment. Adequate and targeted pay increases for 
middle grade and senior petty and noncommissioned officers have 
contributed to improved retention, morale and readiness. With a 
uniformed community that is more than 50 percent married, satisfactory 
compensation helps relieve much of the tension brought on by demanding 
operational tempos.
    For FY 2009, the Administration recommended a 3.4 percent across 
the board basic military pay increase which is equal to the Employment 
Cost Index (ECI). FRA strongly supports pay increases that are at least 
0.5 percent above the ECI (3.9 percent in FY 2009) to close the 3.4 
percent gap between civilian and uniform services pay. Previous annual 
0.5 percent higher than ECI raises reduced the pay gap with the private 
sector from 13.5 percent in FY 1999 to 3.4 percent today.
    Assuming authorization by the Armed Services Committee, FRA urges 
the Subcommittee to authorize annual active duty pay increases that are 
at least 0.5 percent above the ECI, to help close the pay gap between 
active duty and private sector pay and ensure adequate appropriations 
to fund these increases in the Coast Guard's budget.
Health Care
    The Department of Defense is proposing a significant increase in 
fees paid by retired uniformed services beneficiaries, including 
doubling or tripling enrollment fees for TRICARE Prime, a new TRICARE 
Standard enrollment fee and tripling or quadrupling other TRICARE 
Standard fees. The Task Force on the Future of Military Health Care in 
its recently released final report urged Congress to shift higher 
health care costs to retirees, including TRICARE-for-Life (TFL) 
beneficiaries, through higher fees, deductibles and pharmacy co-pays 
that would be adjusted regularly to cover the cost of health care 
inflation. The initial TFL annual enrollment fee proposed is $120. The 
FRA believes strongly that these proposed increases are 
disproportional, inequitable, inappropriate and unwise.
    Eroding benefits for career service can only undermine long-term 
retention/readiness. The men and women serving in the Coast Guard today 
are very conscious of actions by Congress affecting those who preceded 
them in service. One reason Congress enacted TRICARE-for-Life in 2001 
is that the Joint Chiefs of Staff at that time said that inadequate 
retiree health care was affecting attitudes among active duty troops. 
The FRA believes strongly that the Defense Department has not 
sufficiently investigated and implemented other options to make TRICARE 
more cost-efficient without shifting costs to beneficiaries, and 
strongly supports Senator Frank Lautenberg's and Senator Chuck Hagel's 
legislation, ``The Military Health Care Protection Act'' (S. 604.)
    Due in large part to the unique range of geographic locations to 
which they are assigned, Coast Guard personnel and their families often 
struggle to find medical providers who accept TRICARE beneficiaries. 
While implementation of TRICARE Prime Remote alleviated many of these 
problems, costs associated with the standard benefit and low 
reimbursement rates can make finding a health care provider a daunting 
task in many areas. And, Coast Guard personnel who choose to receive 
care at DOD Military Treatment Facilities (MTFs), may have to travel 
long distances for care. FRA is concerned that low reimbursement rates 
will continue to make health care access a significant challenge for 
Coast Guard personnel stationed in remote locations.
    The FRA urges the Subcommittee to authorize health care benefits to 
ensure access for all beneficiaries, and support ``The Military Health 
Care Protection Act'' (S. 604).
    Reserve Health Care--FRA is grateful to Congress for allowing 
Reservists to purchase TRICARE Reserve Select (TRS) coverage per the FY 
2007 National Defense Authorization Act. However, a recent (Sept. 2007) 
GAO report indicates that TRS beneficiaries are paying too much for 
coverage ($81/month for an individual and $253/month for family 
coverage) and was incorrectly based upon the basic Blue Cross/Blue 
Shield option for FEHBP. GAO found that DOD estimates were 72 percent 
higher than the average actual single member cost, and 45 percent 
higher than average family cost. The annual individual premium should 
have been $48/month instead of $81/month and the corresponding family 
premium would have been $175/month instead of $253/month.
    GAO recommended that DoD stop basing TRS premiums on Blue Cross/
Blue Shield adjustments and use the actual costs of providing the 
benefit. DoD concurred with the recommendations and says, ``it remains 
committed to improving the accuracy of TRS premium projections.'' 
However, GAO observed that DoD has made no commitment to any timetable 
for change.
    The Association believes our obligation to restrain health cost 
increases for Selected Reserve members who are increasingly being asked 
to serve their country is important, and these members deserve better 
than having their health premiums raised arbitrarily by a formula that 
has no relationship to actual costs. FRA strongly recommends support 
for reducing TRS premiums immediately to $48/month (single) and $175/
month (family), with retroactive refunds to those who were overcharged 
in the past.
Permanent Change of Station (PCS) Allowances
    The Association urges this Subcommittee to be aware of the need to 
upgrade permanent change-of-station (PCS) allowances to better reflect 
the expenses Coast Guard members are forced to incur in complying with 
government-directed relocations, including shipment of a second vehicle 
at government expense to overseas accompanied assignments. And if 
enhancements are authorized by the Armed Services Committee, FRA urges 
authorization for the Coast Guard to provide these enhancements.
    Shipment of POVs--Expanding the number of privately owned vehicles 
(POV) a military family can ship during a PCS from one vehicle to two 
for duty assignments in Alaska, Hawaii and U.S. Territories is another 
FRA supported initiative. This is an issue of particular concern to 
Coast Guard personnel stationed in these locations since many married 
personnel have spouses who also work.
    Weight Allowances--FRA also recommends modifying PCS household 
goods weight allowance tables for personnel in pay grades E-7, E-8 and 
E-9 to coincide with allowances for officers in grades 0-4, 0-5, and 0-
6, respectively. These allowances are needed for Coast Guard personnel 
to more accurately reflect the normal accumulation of household goods 
over the course of a career.
    Dislocation Allowance--Moving household goods on government orders 
can be costly. Active duty personnel endure a number of permanent 
changes-of-station (PCS) during a career in uniform. Each move requires 
additional expenses for relocating and establishing a new home.
    Currently retiring personnel are not entitled to a dislocation 
allowance despite the fact that his or her orders can be construed as a 
permanent change-of-station reflecting a management decision to order 
the member's retirement or transfer. Providing the member is moving to 
a new location, the retiring Coast Guardsman will face the same 
expenses as if transferring to a new duty station.
    FRA believes a dislocation allowance should be authorized for 
personnel retiring from active duty. After serving 20 or more arduous 
years of service, retiring personnel moving their household locations 
in excess of 50 miles from their final duty station, should be entitled 
to a dislocation allowance equal to at least 1 month of basic pay.
Housing
    FRA urges reform of housing standards that inequitably depress Base 
Allowance for Housing (BAH) rates for mid-to-senior enlisted members. 
The vast majority of Coast Guard personnel and their families use 
private housing and collect BAH and FRA believes that there is an 
urgent need to update the standards used to establish housing allowance 
rates. Only married E-9s now qualify for BAH based on local single 
family home costs. As a minimum, the BAH standard (single-family 
detached house) should be extended over several years to qualifying 
service members beginning in grade E-8 and subsequently to grade E-7 
and below as resources allow. If authorized by the Armed Services 
Committee, FRA strongly urges commensurate authorization for the Coast 
Guard.
    FRA strongly supports the scheduled FY 2009 improvements to Coast 
Guard housing at Cordova, Alaska and Montauk, New York as well as 
improvements at the USCG Academy barracks (Chase Hall) already included 
in the Coast Guard Authorization Bill.
Child Care
    The availability and accessibility of affordable child care is a 
very important quality of life issue for Coast Guard personnel and 
their families. Coast Guard child care centers operate under the same 
standards for care as similar DoD facilities.
    High cost child care can often be attributed to the fact that most 
of the unit locations preclude access to DoD and Coast Guard child 
development centers. FRA understands that the Coast Guard had to limit 
access to child care in September 2007 due to a lack of funding, and 
stresses the importance of adequately funding this important program.
    The Coast Guard continues to explore ways to assist with child care 
costs to members in remote, high cost areas. FRA welcomes the July 2007 
Coast Guard partnership with the General Services Administration (GSA) 
in order to assist the Coast Guard in locating state licensed, center-
based or home-based child care facilities to help address this 
important issue.
Education Benefits
    President Bush called for transferability of MGIB benefits for 
certain military personnel in the 2008 State of the Union Address. FRA 
supports enhancements to the Tuition Assistance Program which enables 
the Coast Guard to maintain parity with DoD. Tuition Assistance is a 
high priority for the active and Reserve forces and is a key element 
associated with successful recruiting initiatives. Enhancements to this 
program and the Montgomery GI Bill (MGIB) have significantly impacted 
recruiting and retention efforts.
    FRA continues to advocate for the creation of a benchmark for the 
MGIB so benefits will keep pace with the cost of an average four-year 
college education.
    Coast Guard senior enlisted personnel are among the thousands of 
service members who came on active duty during the Veterans Education 
Assistance Program (VEAP) era (1977-1985) and do not qualify for the 
MGIB. FRA urges authorization of an open enrollment period giving 
certain enlisted leaders the opportunity to sign up for increased 
educational benefits provided by the GI Bill, as envisioned in ``The 
Montgomery GI Bill Enhancement Act'' (H.R. 4130) sponsored by Rep. Tim 
Walberg.
    Too often the MGIB is characterized exclusively as a form of 
compensation or as a ``recruiting tool.'' However, FRA would argue that 
it is also an investment in our Nation's future. Military personnel can 
use the MGIB on active duty to aid in their professional development, 
giving them the tools to become better leaders, mentors and 
representatives of their respective services. Many veterans who opted 
to leave the military and use the GI Bill to further their education 
have gone on to become highly productive members of our society paying 
more taxes, returning more revenue to the U.S. Treasury than what they 
might have been able to without a degree, and easily more than what was 
spent paying for their education.
    Our Nation has a responsibility to ensure the MGIB investment 
remains a relevant supplement to completing one's education, as it 
continues to reap the benefits. The military has a well-deserved 
reputation for taking young Americans and transforming them into better 
citizens. Giving them the tools to excel in the academic environment 
has, and will continue to result in building upon that transformation.
    MGIB-SR--The Selected Reserve MGIB has failed to maintain a 
creditable rate of benefits with those authorized in Title 38, Chapter 
30. In 1985 MGIB rates were established at 47 percent of active duty 
benefits. The rates have fallen below 29 percent of the active duty 
benefits. While the allowance has increased they failed to keep pace 
with the cost of college.
    FRA stands four-square in support of our Nation's Reservists. To 
provide an incentive for young citizens to enlist and remain in the 
Reserves, FRA recommends that Congress enhance the MGIB-SR rates to the 
intended level for those who choose to participate in the program.
    Academic Protection for Reservists--There are cases where 
Reservists, attending higher institutions of learning, called to active 
duty in the defense of the Nation and its citizens, lose credits or 
pre-paid tuition costs because they did not complete the course of 
instruction. FRA believes Congress should adopt legislation requiring 
colleges and universities to retain and reactivate the credits and 
prepaid costs for the Reservists upon demobilization.
Reserve Early Retirement
    FRA is disappointed that the effective date of a key provision in 
the FY 2008 NDAA, the Reserve retirement age provision that is reduced 
by 3 months for each cumulative 90-days ordered to active duty is 
effective upon the enactment of the legislation and not retroactive to 
7 October 2001 as addressed in the floor amendment to the Senate 
version of the bill. Consistent with The Military Coalition, FRA 
strongly endorses ``The National Guardsmen and Reservists Parity for 
Patriots Act'' (H.R. 4930), sponsored Rep. Joe Wilson (S.C.), and if 
enacted commensurate support and funding for this in the U.S. Coast 
Guard.
Mandate Travel Cost Reimbursement
    FRA appreciates the FY 2008 NDAA provision (Section 631) that 
permits travel reimbursement for weekend drills, not to exceed $300, if 
the commute is outside the normal commuting distance. The Association 
supports making this a mandatory provision. This is a priority issue 
with many enlisted Reservists who are forced to travel lengthy 
distances to participate in weekend drill without any reimbursement for 
travel costs. Providing travel reimbursement for drill weekends would 
assist with retention and recruitment for the Reserves--something 
particularly important to the increased reliance on these personnel in 
order to sustain our war and other operational commitments. If 
authorized for DoD, this enhancement should also be authorized for the 
Coast Guard's budget.
Family Readiness
    It is often said that the military recruits the service member, but 
retains the family. As our Nation asks more from its all-volunteer 
force, at least 50 percent of who are married, family support has never 
more important.
    As stated by Master Chief Petty Officer of the Coast Guard Skip 
Bowen in a recent FRA article, ``Family readiness in the Coast Guard is 
unique to the other services. For the other branches of the military, 
family readiness is more geared toward a deployment. While the Coast 
Guard does have units that deploy in the same manner that DoD services 
deploy, the main difference is that the Coast Guard is deployed 100 
percent of the time.''
    He also referenced the Coast Guard Ombudsman program which is 
directly related to families. Volunteers provide much needed support 
and our military spouses can benefit from their services if they are at 
their home duty station and their loved one is on a ship that goes out. 
While some may think of the Coast Guard as a ``home-based operation,'' 
many Coast Guardsmen deploy from where they live and spend significant 
time away from home--anywhere from 185 to 230 days out of the year. The 
Ombudsmen are there to provide information for the spouses, and the 
spouses need to understand how the program works. FRA strongly supports 
continued authorization of this important program.
    FRA also supports enhanced awareness initiatives and the 
President's call for hiring preferences for military spouses. Frequent 
Permanent Change-of-Station moves often prevent the establishment of 
roots in the local community necessary to obtaining good jobs. A 
Federal Government hiring preference would help alleviate that 
predicament.
Exchange/MWR Programs
    The Coast Guard relies heavily on vital non-pay compensation 
programs to provide for the health and well-being of its personnel and 
their dependents, and to ensure good morale as well as mission 
readiness.
    The Coast Guard's Morale, Welfare, and Recreation (MWR) program and 
the Coast Guard Exchange System (CGES) provide important services to 
members and their families. Proceeds from CGES sales generate funds for 
MWR programs including retail stores, fitness centers, gymnasiums, 
libraries and child development centers. All indirectly support the 
Coast Guard's mission while helping ease the challenges and rigors of 
often demanding duty assignments.
    FRA asks that Congress provide continued authorization of the CGES 
and MWR programs to ensure the well-being and morale of all Coast Guard 
personnel and their families.
Conclusion
    Madame Chairwoman, the FRA appreciates the opportunity to submit 
its views for the record on pay, health care and other programs 
important to Coast Guard personnel. The Association salutes you and 
members of your distinguished Subcommittee for effective oversight of 
our Nation's all-important fifth Armed Force, and for your untiring 
commitment to the men and women serving so proudly in our United States 
Coast Guard.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                         Admiral Thad W. Allen
    Question 1. Admiral Allen, how does the Coast Guard intend to 
satisfy the Congressional mandate required by the SAFE Port Act, to 
establish Interagency Operation Command Centers for the maritime domain 
by Fiscal Year 2009 when the Administration has requested no funding to 
do so?
    Answer. The SAFE Port Act requires the Secretary of Homeland 
Security to establish interagency operational centers at high-priority 
ports. To satisfy this requirement, the Act provides the Secretary the 
authority to utilize, as appropriate, the compositional and operational 
characteristics of existing centers. The Coast Guard will continue to 
make progress on Interagency Operations Centers through the Command 21 
project. The Command 21 project coordinates the information management, 
sensor and facility upgrades projected for Interagency Operations 
Centers at Sector Command Centers. All three of these components 
contribute to establishing the information sharing and interagency 
coordination necessary to ensure we meet the intent of the SAFE Port 
Act requirement.
    Included in the Coast Guard budget request for FY 2009 is $1 
million for Command 21. Under the Capital Investment Plan, we estimate 
an additional investment of $39 million through FY 2013. As with any 
major acquisition project, extensive planning, engineering studies, and 
a thorough review process must be completed to ensure the project is 
successfully executed. The $60 million appropriated for this project in 
FY 2008 will be used to start this process. The $1 million requested 
for FY 2009 will allow us to continue development of the Interagency 
Operation Center IT.
    Field Commanders are reaching out aggressively to their port 
partners all over the country to ensure the project is coordinated with 
state and local agencies. These efforts will facilitate not only the 
technical means to share information and maintain interagency 
situational awareness, but also the business practices that will enable 
tactical coordination in response to all-hazards events.
    A major IT activity for Command 21 is to develop and deploy the 
``WatchKeeper'' information management tool to all high priority ports 
and eventually all 35 Sector Command Centers. WatchKeeper will tie-in 
directly with our port partners and will facilitate information fusion 
and sharing as well as provide a tactical situational awareness tool 
for operational coordination. In addition, the Coast Guard will 
continue to use the collaboration and integration provided through the 
Area Maritime Security Committees to maximize outreach and coordination 
efforts.

    Question 2. Admiral Allen, the DHS IG has reported that you have 
been using maintenance funds to augment shore acquisition, 
construction, and improvement, or AC&I activities, causing increasing 
deferments in the maintenance program. How do you justify these actions 
which not only impact the integrity of your budget but ultimately 
affect the operational capability of the Coast Guard?
    Answer. The Coast Guard's policy to fund minor unspecified shore 
construction with Operating Expenses (OE) budget authority is based on 
certain dollar thresholds, derived from and consistent with those used 
by the Department of Defense (DoD) for unspecified minor construction. 
The referenced DHS Office of the Inspector General report found the 
Coast Guard's use of OE funding in this manner was not supported fully 
in legislation. The Coast Guard immediately issued interim guidance to 
ensure future obligations of the OE appropriation were in full 
compliance with statutory authority and engaged both Authorization and 
Appropriation Committees to ensure legislative authority existed to 
maintain parity with DoD. Specific legislative authority was included 
in the Consolidated Appropriations Act, 2008, which made the OE 
appropriation available for ``minor shore construction projects not 
exceeding $1,000,000 in total cost at any location.''
    The Coast Guard considers this flexibility an operational 
imperative. We depend on the nimbleness of OE to perform disaster 
recovery and to execute homeland security and national defense 
missions. If a hurricane destroyed a radio tower and the Coast Guard 
did not have this authority, we would be unable to restore life saving 
communications until supplemental AC&I funding was available. This 
would severely hamper rescue and recovery operations. The Coast Guard 
also would be unable to conduct minor shore construction to answer 
dynamic and emerging anti-terrorism/force protection requirements 
quickly, unless specific appropriations became available to do so.

    Question 3. How do you respond to reports that you have been 
funding the shore AC&I account below the current standard, which is 2 
percent of the total plant replacement value? How do you envision 
making up the lost costs associated with underfunding the shore AC&I 
account that has occurred over the last several fiscal years?
    Answer. The Coast Guard is committed to appropriately funding 
recapitalization of its shore facilities as reflected in the FY 2009 
President's Budget. The Coast Guard requested an increase of $9 million 
(+22 percent) over 2008 appropriations.
    The Coast Guard uses the recapitalization standard provided by the 
Federal Facilities Council (FFC) and International Facility Management 
Association (IFMA) that sets a benchmark of 2.5 percent of PRV per year 
for a well-maintained facility. The Coast Guard's shore assets have an 
aggregate replacement value of $7.4 billion.
    The Coast Guard is developing a consolidated AC&I shore investment 
plan that includes recapitalization of existing facilities and building 
new facilities to support emerging missions and new asset acquisitions. 
The shore infrastructure resources required to meet the Coast Guard's 
PRV benchmark and our new mission and asset acquisitions are reflected 
in the Coast Guard's Five Year Capital Investment Plan under AC&I.

    Question 4. The regulations promulgated by the Transportation 
Security Administration (TSA) and the Coast Guard regarding the 
implementation of the Transportation Worker Identification Credential 
(TWIC) program indicate that the Coast Guard will begin enforcement in 
September of this year. We understand the launch of the TWIC program 
was delayed due to transition difficulties between the Bearing Point 
and the Lockheed Martin contractors and additional testing requirements 
by the TSA. Does the Coast Guard intend to modify its enforcement to 
better align with actual TSA enrollment schedules since these delays 
occurred and were unanticipated when the final rule was promulgated? 
When do you plan to announce your enforcement regime to the maritime 
community?
    Answer. The current National Transportation Worker Identification 
Credential (TWIC) compliance date of September 25, 2008, has not 
changed. However, TSA and the Coast Guard (CG) continue to closely 
evaluate enrollment, issuance, and throughput metrics along with system 
capacity trends to determine if a new national compliance date is 
necessary and if so, when it should take effect. We understand if a new 
date is needed, it should be published as soon as possible. Working 
with TSA, our goal is to make a determination if the national 
compliance date needs to be changed in the coming weeks based on 
projected metrics, feedback from CG field units, maritime industry 
representatives, and input from the TSA.

    Question 5. Hawaiya Technologies, a Hawaii based homeland security 
engineering company, is developing several low cost Unmanned Aerial 
Vehicles (UAV) for use in maritime surveillance as well as disaster 
response through a port security grant. The use of various types of 
sensors aboard UAV's, including multi-sensor payloads for continuous 
day/night operations has the great potential for saving lives at sea 
and ashore during catastrophic events like Katrina. Is the United 
States Coast Guard actively pursuing UAV sensor development that can 
enhance their all-hazard search and surveillance capability? How are 
you integrating the lessons learned from these types of port security 
grant projects into your overall UAV development and planning?
    Answer. The Coast Guard will employ various maritime surveillance 
technologies to improve maritime domain awareness. Long endurance, 
shore-based and tactical shipboard Unmanned Aircraft Systems (UAS) with 
appropriate sensors may provide efficient and economical surveillance 
capability for the Coast Guard. The technology for these systems is 
rapidly evolving and various approaches are being explored for both 
shipboard and long endurance, shore-based UAS solutions.
    The Coast Guard is in the UAS pre-acquisition phase for maritime 
surveillance and is collaborating with DoD and DHS to determine the 
most effective UAS and sensors alternatives to meet common maritime 
operational requirements. Additionally, the Coast Guard Research and 
Development Center recently initiated research on UASs to operate from 
the Coast Guard's National Security Cutter (NSC). This study will 
include market research and analysis of various UAS sensors for cutter-
based maritime surveillance.
    At this time the Coast Guard is not considering the use of UASs to 
perform port security missions due to national airspace operating 
constraints resulting from UAS safety of flight technological 
limitations (e.g., system airworthiness, collision avoidance, and 
control link electromagnetic interference). The Coast Guard continues 
to monitor UAS flight safety technology and the Federal Aviation 
Administration's (FAA) UAS policies. The Coast Guard will consider UAS 
operations in support of port security missions when UAS flight safety 
technology matures to the point that FAA considers UAS operations over 
populated areas and harbors as being appropriate relative to public 
safety.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                         Admiral Thad W. Allen
    Question 1. I notice that in your operating expenses budget there 
is a $68 million ``Management Efficiencies'' charge. What ``management 
efficiencies'' are created by this charge? How, specifically, is this 
charge being paid for? Will this charge, in its entirety, actually 
result from decreased expenses due to increased efficiency, or will the 
charge impact Coast Guard operational funding? If the Coast Guard 
cannot find ``efficiencies'' to cover the entire charge, will the 
remainder be distributed across Coast Guard programs, hurting these 
programs' bottom line?
    Answer. The $68M in Management of Technology Efficiencies is 
effectively an ``on budget reprogramming'' to ensure policy and 
resource affirmation of critical service issues such as increasing 
maintenance funding for our legacy cutter and inland river ATON fleets, 
establishing critical intelligence and awareness programs of record, 
and evaluating future operational requirements in the Arctic. It also 
supports on the critical need for non-pay inflation given our capital 
asset-intensive operations, and the necessity and reality of 
annualizing emergency funding heavy on FTP.
    The Coast Guard's $68.177M Management and Technology Efficiencies 
in the FY 2009 Budget are comprised of three segments:

   $34.079M--Represents anticipated efficiencies across 
        Operating Expenses (OE) PPA's I, II (non-pay accounts only), 
        III, IV, V, and VI. These efficiencies offset our non-pay 
        inflation line-item request of $34.079M to the same PPAs 
        impacted above.

   $24.098M--Represents an anticipated 2.4 percent reduction 
        from efficiencies across OE PPA IV (operating funds and unit 
        level maintenance, exclusively AFC-30).

   $10.000M--Represents a surplus identified within PPA I.

    Question 2. In your State of the Coast Guard Address, you said that 
``there is a limit to what any organization can accomplish when the 
overall end strength has not changed materially in 50 years.'' If you 
had the funding and authority to increase the size of the Coast Guard 
by 10,000 personnel, how would you use these new personnel and what 
would it enable the Coast Guard to accomplish? What mission areas would 
the Coast Guard focus on with the additional personnel?
    Many individuals have expressed concerns about the Coast Guard's 
ability to keep up with many of its traditional missions like marine 
safety--areas you are taking steps to begin addressing in the FY09 
budget. Have the overall levels of personnel you spoke about in your 
State of the Coast Guard Address caused or contributed to these areas 
of weaker performance?
    Answer. My statement refers to our observation that demand for 
Federal services is increasing in several aspects of maritime activity:

   Growth in the Maritime Transportation System (MTS).

   Increase demand for Liquefied Natural Gas (LNG).

   Threat of transnational terrorists and criminals.

   Coastal Development.

   Certain Dangerous Cargo (CDC) vessel security requirements.

   Interagency Operations and Information Sharing.

    How much of this demand is the responsibility of the Federal 
Government, and the Coast Guard in particular, is a critical discussion 
to undertake before deciding the level and type of growth needed within 
the Coast Guard workforce. The new positions in the FY09 budget request 
are important for Coast Guard to maintain pace with current demand.

    Question 3. Through the years, Congress has dramatically increased 
the Coast Guard's missions and responsibilities. Beginning with port, 
waterway, and coastal security in 1790, the Coast Guard took on search 
and rescue in 1848, marine safety in 1939, Aids to Navigation, living 
marine resources, and ice operations in 1949, marine environmental 
protection in 1961, drug interdiction in 1980, and new anti-terrorism 
homeland security missions since 2001. Have the levels of Coast Guard 
personnel through the years increased concurrently with the Coast 
Guard's steady increase in missions and responsibilities?
    Answer. The recent increase in personnel since 2003 corresponds 
with CG's post-9/11 increase in mission.

    Question 3a. Through the years and decades, has the size of the 
Coast Guard in terms of personnel, assets, and funding all increased to 
the extent needed for the Coast Guard to fully meet all new missions 
and responsibilities?
    Answer. Throughout its history, Coast Guard has effectively 
prioritized its missions and utilized its allocated resources to apply 
personnel and assets accordingly.

    Question 4. Please discuss some unfunded mandates and how you plan 
to address them in the FY09 and out-year budgets.
    Answer. The President's Budget provides funding for all USCG 
missions mandated by statute.

    Question 5. I notice that when we look at the out-year projections 
from this year and compare these numbers to out-year projections from 
past budget requests, the numbers constantly change. It doesn't seem 
that the out-year budget numbers are useful at all for planning or 
assessing the Coast Guard's plans for future years.
    Please explain these discrepancies. Why do they arise? Is this a 
result of the Coast Guard's budget processes? Does it reflect poor or 
inconsistent budget planning by the Coast Guard? Or do these 
constantly-changing projections indicate top-line pressures that 
prevent consistent budget planning?
    Answer. The Department of Homeland Security (DHS) Future Years 
Homeland Security Program (FYHSP), a requirement of Section 874 of the 
Homeland Security Act of 2002, was only recently implemented as 
planning guidance for components when formulating their budgets. FYHSP 
projection tools are still undergoing refinement, however, any out-year 
budget forecast may change based on the following factors:

   Inflation factors and economic assumptions, which are 
        updated each year by OMB, result in changes to the five-year 
        FYHSP projections (out-years).

   Projections may change in accordance with departmental goals 
        and priorities.

   External Events--Unanticipated natural or terrorist-related 
        disasters (e.g., Hurricane Katrina) and/or higher national 
        priorities may alter Department-wide and component priorities.

   Internal Factors--Emergency needs (e.g., maintenance of 
        legacy assets) and/or Strategic Priorities (e.g., Asset and 
        Shore Recapitalization, Marine Safety Enhancements, Improving 
        Command and Control, Establishing Comprehensive Intelligence 
        and Awareness Regimes).

   AC&I Projects--Changes in a specific project's Acquisition 
        Program Baseline (APB) result in out-year funding profile 
        adjustments.

    Using FYHSP projections for out-year budget planning is challenging 
because of these factors.

    Question 6. Please outline the current status of the National 
Security Cutter BERTHOLF stern launch and recovery ramp.
    Answer. The National Security Cutter's (NSC) Stern Launch and 
Recovery system was successfully demonstrated during Boat Handling 
Trials in late March and again for INSURV during Acceptance Trials (AT) 
April 7-10, 2008.

    Question 6a. Have all issues been resolved for the launch and 
recovery of the Short Range Prosecutor? What are the difficulties being 
encountered for the launch and recovery of the Long Range Interceptor?
    Answer. Some issues remain to perfect the launch and recovery 
system, including operating it in higher sea states. As the crew gains 
experience operating the system, it is expected that additional 
improvements will be required. During the Boat Handling Trials, the 
Long Range Interceptor (LRI), Short Range Prosecutor (SRP), and NSC 
stern ramps were instrumented to gather data about accelerations/
decelerations, landings and boat entry positions into the notch of the 
stern ramp. The Coast Guard's technical authority (CG-4) is evaluating 
the data for possible improvements to the system. The most significant 
issues with the stern launch and recover system were related to the 
physical interface between the LRI and the NSC; the LRI is a much 
larger boat than the SRP. The most significant issues have been 
corrected and the LRI was successfully launched and recovered on 
various headings and speeds on 26-27 March 2008.

    Question 7. To what extent can we even resolve issues for launch 
and recovery of the Long Range Interceptor since the Coast Guard has 
not yet acquired a fleet of these boats?
    Answer. Most of the issues for launch and recovery were related to 
designing a system that can capture a large boat the size and weight of 
the Long Range Interceptor (LRI), as well as a smaller boat such as the 
SRP. The system has been designed and tested for both the LRI and the 
SRP. Future LRI and SRP design work will have to incorporate the 
functionality of the NSC's launch and recovery system. During the Boat 
Handling Trials, the LRI, SRP and NSC stern ramps were instrumented to 
gather data about accelerations/decelerations, landings and boat entry 
positions into the notch of the stern ramp. The Coast Guard's technical 
authority (CG-4) is evaluating the data for possible improvements to 
the system, and for future LRI/SRP design work.

    Question 7a. Will the boat have to be designed and manufactured to 
meet the needs of the NSC stern launch and recovery ramp?
    Answer. Yes, the boat must be designed to properly interface with 
the NSC stern ramp, and launch and recovery mechanism.

    Question 7b. Will this impact the design, cost, schedule, and risk 
for the LRI?
    Answer. Any boats used in a stern ramp system must be designed to 
interface with the system. The Coast Guard anticipates that the U.S. 
boat market is robust and competitive enough to produce a boat that 
will work with the NSC stern launch and recovery system.

    Question 7c. Is it possible that the LRI will not be able to be 
used on the NSC?
    Answer. No, launch and recovery of the LRI was demonstrated through 
robust, comprehensive tests conducted during Boat Handling Trials and 
Acceptance Trials.

    Question 7d. Do you anticipate there will be limitations on the sea 
states in which the stern ramp can be used for recovery and deployment 
of SRPs and LRIs?
    Answer. The NSC's launch and recovery system was designed to 
operate up to sea state 5.

    Question 7e. If the LRI cannot be used on the NSC, what impact will 
this have on NSC capabilities? Wouldn't it be a major blow to NSC 
mission capabilities?
    Answer. There is no expectation that the LRI will not be capable of 
operating with the NSC.

    Question 8. Is it likely that the stern ramp will not be completed 
and fully operational at the time of delivery of the NSC?
    Answer. The Coast Guard anticipates that the stern ramp will be 
fully operational at delivery.

    Question 8a. If this occurs, will the stern ramp continue to be 
built and modified by a different contractor in a different shipyard? 
Will it be done by Coast Guard personnel?
    Answer. The only significant planned work after delivery is the 
change out of the stern doors to an improved design. While currently 
functional, the change proposed to improve the door design was approved 
and will be performed at the NSC's homeport.

    Question 8b. Since the stern ramp is one of the major operational 
requirements of the NSC, how will ICGS be held accountable if the ship 
is delivered without a fully operational stern ramp?
    Answer. The Coast Guard anticipates that the stern ramp will be 
fully operational at delivery.

    Question 8c. Is ICGS simply off the hook? Are there any financial 
penalties for not delivering the ship with that requirement completed?
    Answer. The requirement is anticipated to be completed by 
acceptance. Yes, there is a financial penalty in that the contractor 
will not receive any additional profit for additional work even though 
the direct cost will be paid.

    Question 8d. How will the stern ramp issues be treated in the NSCs 
beyond the BERTHOLF?
    Answer. All future NSCs are anticipated to have essentially the 
same stern ramp system as BERTHOLF, and will meet the contract 
requirements.

    Question 9. The National Security Cutter's Operational Assessment 
Analysis (OAA) stated that LRI operations were one of the NSC's most 
significant areas of risk: ``the potential inability of the LRI to 
achieve an operating envelope compatible with the stated Key 
Performance Parameter 5 of SS 5 up to 85 nm from the cutter will 
severely limit employment strategy of WMSL during Drug Interdiction 
(DRUG) and Over-the-Horizon (OTH) surveillance operations.'' What is 
the timeline for addressing this particular point/question?
    Answer. The LRI is anticipated to be able to operate in accordance 
with the Concept of Operations and performance specifications, meeting 
the requirement for both sea state and range. The Coast Guard will test 
this performance specification during BERTHOLF post delivery operations 
evaluation (OPEVAL).

    Question 9a. Don't LRI operations depend not only on the successful 
acquisition of mission-capable LRI boats, but also the ability to 
launch and recover the LRI using the NSC stern launch and recovery ramp 
in conditions up to sea state 5?
    Answer. Yes.

    Question 10. Please specify the expected weight margin for NSC 1. 
How does this weight margin compare with other similar first-in-class 
vessels? Please provide examples. According to GAO, Coast Guard 
engineers have expressed concerns about the NSC's weight margins. What, 
specifically, are these concerns? Please provide documentation (memos, 
etc.) detailing the NSC weight margin concerns expressed by Coast Guard 
Engineering Logistics Center officials.
    Answer. 1. As a result of post 9-11 changes implemented during 
design and construction, the Service Life Margin (SLM) has been 
reduced. Based on preliminary results of the recent inclining 
experiment, most of the weight margin appears to have been consumed. 
The expected SLM at delivery is being evaluated by the Coast Guard's 
Technical Authority.
    Planned Engineering Change Proposal (ECP) modifications to the NSC 
would increase the limiting displacement to 4,700 LT and restore as 
much of the original service life margin as possible. For NSC 1, this 
change will be implemented during the Post Shakedown Availability 
(PSA).
    2. The actual service life weight margins at delivery of similar 
first-in-class vessels are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                1 NSC  (LT)    378  WHEC  (LT)  270  WMEC  (LT)  210  WMEC  (LT)
----------------------------------------------------------------------------------------------------------------
Actual Service Life Weight Margin at                     TBD              543               25              158
 Delivery
----------------------------------------------------------------------------------------------------------------

    3. The Coast Guard has expressed concerns over the NSC weight 
margins but has taken appropriate actions to regain some of the service 
life margin back. As previously delivered to Government Accountability 
Office (GAO), the attached memos detail issues with weight margin and 
the steps the Coast Guard will take to regain some of that service 
margin back.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Question 11. The National Security Cutter's OAA states that the 
NSC's lack of accessibility to mission critical equipment is an area of 
risk, in that it increases the time required to make repairs and may 
contribute to mission failures. What is the Coast Guard's position on 
this issue? Do you believe that the NSC does have a lack of 
accessibility to mission-critical equipment?
    Answer. The potential risks identified by the OAA are accurate, but 
the issue is a matter of degree. When designing a cutter as capable as 
the NSC, design trade-offs are often necessary. While the accessibility 
of mission critical equipment is not optimal, the NSC is anticipated to 
meet requirements regarding accessibility and is expected to achieve 
full operational capability.

    Question 11a. Isn't this problem a fundamental flaw in the NSC's 
design? Is it even possible to address this issue without redesigning 
and/or reconfiguring the NSC?
    Answer. No, this does not represent a fundamental flaw in NSC 
design. The magnitude of effort required to improve equipment 
accessibility depends upon the equipment and its proximity to other 
equipment and structure. There are no plans at this time to improve 
equipment accessibility, although the Coast Guard may consider changes 
in the future. During the initial equipment testing and some warranty 
repairs, work was performed on the combining gear, line shaft bearings, 
both main engines, the main gas turbine and generators without 
significant issues. Additionally, CG-4 as the technical authority, is 
conducting a logistics readiness review that is examining lifecycle 
support for the NSC.

    Question 12. The OAA states that ``several automated systems were 
either not delivered or delivered at a reduced capability that impacts 
workload reduction (e.g., ASIST, Logistics Information Management 
System, Combat System (GFCS integration and remote operated small 
arms)), resulting in increased manpower-intensive tasks.'' Please 
detail the problems with automated systems identified here, and explain 
how the Coast Guard is addressing these issues.
    Answer. ASIST for the National Security Cutter (NSC) is being 
provided at full capability.
    With regards to the Logistics Information Management System (LIMS), 
the Coast Guard determined that the major change to the USCG-centric 
(vs. ICGS-centric) Integrated Logistics Support processes, LIMS as 
presently configured for Deepwater assets, would not be usable on the 
NSC. The Coast Guard will use the existing Vessel Logistics System 
(VLS) software systems to support the NSC. Coast Guard logistics 
requirements are being updated, reviewed, and validated and ``CG-LIMS'' 
will be developed as an USCG enterprise-wide logistics system, building 
on the effort from the past LIMS development effort.
    The OAA predicted that there were an insufficient number of 
displays for the GFCS (specifically there was not a dedicated display 
for the Commanding Officer and Executive Officer). When the OAA 
projected this shortcoming, the tactical doctrine was not yet 
developed. Additionally, during Builders Trials, both the MK110 Gun and 
the Phalanx MK 15 CIWS (Close In Weapons System) were successfully 
fired using the NSC's fire control system. The Coast Guard will monitor 
this issue after the cutter is delivered and make prudent adjustments 
if they are appropriate.
    Remotely-operated small arms are not a requirement for the NSC. The 
NSC has sufficient manning for the available small arms and no plans 
exist to make them remotely-operated.

    Question 13. The OAA states that ``without robust processes and 
proper tools to track acquisition changes and ECPs, configuration 
management will be lost. This may make it impossible to maintain 
accurate configuration status accounting records, manage supply support 
changes, plan maintenance, keep technical manuals accurate, and ensure 
training requirements align with delivered/installed equipment.'' On 
this particular comment the OAA rated the likelihood of occurrence as 
``highly probable.'' Do you agree with this assessment?
    Answer. No. A Configuration Control Board (CCB) has been stood up 
and processes have been implemented to track Engineering Changes 
Proposals (ECPs).

    Question 13a. Is this assessment a sign that the Coast Guard is 
still significantly behind in the maturity and effectiveness of its 
acquisition program for the NSC?
    Answer. No. The CCB was not in existence when the OAA met which is 
why this risk was identified.

    Question 13b. How is the Coast Guard addressing each of these 
problems/issues?
    Answer. The NSC project office maintains configuration status 
accounting (CSA) records to ensure changes are recorded and maintained. 
This is done at the Washington, D.C. Project Management Office (PMO) as 
well as the Project Manager's Representative's Office (PMRO) at the 
shipyard. The Assistant Commandant for Engineering and Logistics (CG-4) 
is a member of the CCB and therefore is continuously aware of changes 
allowing the Engineering and Logistics Center (ELC) and the Maintenance 
and Logistics Command (MLC) to respond accordingly. Logistics managers 
are also members of the CCB which creates both timeliness and ability 
to manage supply support changes and keep technical manuals accurate. 
Finally, personnel managers are members of the CCB to ensure training 
requirements align with delivered/installed equipment. Additionally, 
the Assistant Commandant for Engineering and Logistics is conducting a 
comprehensive Logistics Readiness Review to assess and develop life 
cycle maintenance activities.

    Question 14. During the OAA, no plan was presented to describe how 
software changes are tracked. Isn't this a major weakness in terms of 
the Coast Guard's ability to successfully acquire, manage, and maintain 
C4ISR and other complex communications and computer systems?
    Answer. The NSC OAA occurred in 2005. The contractor/design agent 
in 2005 was responsible for managing the configuration of C4ISR 
software in accordance with the C4ISR Configuration Management Plan. It 
is not a major weakness because while under development, it is 
appropriate for the contractor to lead the configuration management. 
Since that time, there have been major improvements in oversight and to 
implement the Coast Guard as the lead CM upon asset delivery.

    Question 14a. How does the Coast Guard track software changes?
    Answer. The current method for tracking software changes is as 
follows: The contractor maintains the software configuration database 
in Clear Quest/Clear Case. The USCG actively participates with the 
contractor in the Problem Review Boards and the Software Change 
Management Boards since the beginning of the contract. The contractor 
can only make changes to the system/software to meet a requirement as 
they are contracted to do. If there is a change to software that is not 
within the contract scope, there is a formal ECP (engineering change 
proposal) process and the requirements, system baseline and 
configuration changes are directed by a contracting officer. The USCG 
is building on the contractors established external and internal 
configuration management processes to manage the design and deployment 
of software.

    Question 14b. Does the Coast Guard have a plan for how to track 
software changes?
    Answer. The USCG Acquisition Directorate is establishing three 
Configuration Control Boards (CCBs), which include Surface, Air and 
C4ISR. Each CCB will develop its Configuration Management (CM) Plan 
that will document the configuration change process. Software 
configuration changes are also tracked in detail by the developer's 
Configuration Management process. All the proposed C4ISR software 
changes requested from the contractor/design agent or from the USCG 
will be analyzed and then approved at the C4ISR CCB. Upon approval, 
changes will be implemented by the contractor/design agent. Software 
changes that affect assets, will be forwarded to the asset CCBs for 
approval for installation. Presently, on the USCG side, software 
configuration changes of the NSC are tracked in a database called Fleet 
Logistic System (FLS) managed by the Coast Guard Engineering Logistics 
Center. MPA's hardware and software configuration changes will be 
tracked in an Aviation Computerized Maintenance System (ACMS) at the 
Aircraft Repair and Supply Center. The FLS and ACMS are interim 
solutions to track software and hardware configuration changes prior to 
the standup of the CG-LIMS (Logistics Information Management System).
    The C4ISR CM plan will manage all the software and changes 
including Commercial Off the Shelf (COTS)/Non Developmental Items 
(NDI), Government Off the Shelf (GOTS), software and contractor/design 
agent developed software. C4ISR CCB membership will include, but is not 
limited to, the Surface Program, Air Program, Sponsors, and Center of 
Excellence such as the Command and Control Center. Stakeholders from 
all the USCG offices are involved in the CCB process. The Coast Guard 
employs configuration accounting to track the history of configuration 
items and will employ functional control audits, use and physical 
configuration audits, and in-process audits.

    Question 15. The National Security Cutter's OAA identifies many 
issues of significant concern. For each of the 25 OAA issue assessments 
identified as ``red,'' please briefly identify the following: (1) 
Whether the Coast Guard agrees with that particular issue assessment; 
(2) the extent to which the Coast Guard believes that issue/requirement 
is actually relevant and/or needed for the NSC; (3) if the Coast Guard 
believes the requirement is not needed, a brief justification; and (4) 
if the requirement is needed, a brief summary of how the Coast Guard is 
proceeding to address the problems and risks identified by the OAA.
    Answer. The question stated there were 25 OOA issues identified as 
``red''; however, the OAA Final Report dated 14 September 2007 
identified only 15 ``red'' issues which are addressed in the table 
below.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Justification if Assessment
     OAA Issue ID               Description            Does CG Agree    Coast Guard Assessment   is that Requirement is not   CG POAM if Requirement is
                                                      with Assessment?       of Relevance                  Needed                 Assessed as Needed
--------------------------------------------------------------------------------------------------------------------------------------------------------
E-1 Anti-Terrorism      WMSL does not have the       Yes                Issue should be         ...........................  Development of cutter ATFP
 Force                   capability to employ a                          addressed.                                           doctrine may resolve this
Protection (ATFP)        ``detect-to-engage                                                                                   issue. Acquisition of
                         sequence'' to defend                                                                                 portable anti-swimmer
                         itself against swimmers                                                                              sonar and deployment
                         and Swimmer Delivery                                                                                 aboard cutters when the
                         Vehicle SDVs.                                                                                        risk is elevated may be
                                                                                                                              the solution. Issue is
                                                                                                                              unresolved.
E-2 Mobility            WMSL sea-keeping             No                 WMSL is expected to     Boat launch and recovery
                         capabilities to perform                         operate in Sea State    trials and WMSL Acceptance
                         all operations through SS                       5.                      Trials have demonstrated
                         5 have not been fully                                                   boat launch and recovery
                         tested/demonstrated. This                                               capability. Flight deck is
                         is of particular concern                                                larger than most CG and
                         due to the high                                                         Navy ships (except
                         uncertainty and new                                                     carriers and amphibs).
                         procedures associated with                                              Flight deck has ASIST
                         the small boat and air                                                  installed. Cutter will
                         asset launch & recovery                                                 complete flight deck
                         systems.                                                                certification and dynamic
                                                                                                 interface testing post-
                                                                                                 delivery.
E-3 Survivability #1    WMSL will not have the       Yes                Requirement is for a    ...........................  No additional zone or
                         organic capability to                           single zone Citadel-                                 entire ship coverage has
                         decontaminate itself or                         like capability and                                  been approved as being
                         embarked assets in a                            Counter Measure Wash                                 required. No further CBRN
                         Chemical Biological                             Down (CMWD) which is                                 defense capability is
                         Radiological/Nuclear                            being provided. It                                   planned.
                         (CBRN) attack.                                  does not include self
                                                                         or embarking asset
                                                                         decontamination.
E-3 Survivability #2    WMSL will not have the       Yes                Requirement is for a    ...........................  No self-decontamination
                         capability to prevent                           single zone Citadel-                                 technology has been
                         internal contamination of                       like capability and                                  developed. No further CBRN
                         the entire ship and crew                        CMWD which is being                                  defense capability is
                         in a CBRN attack.                               provided. This will                                  planned.
                                                                         not protect the
                                                                         entire cutter.
E-4 NOC Issue #1        WMSL will not be able to     No                 Cutter does have the    Cutter has the capability
                         defend itself against low,                      ability to engage air   which the Navy/Coast Guard
                         slow air threats due to                         targets.                jointly determined as most
                         limited capability to                                                   appropriate for the NSC,
                         systematically acquire,                                                 including Close In Weapons
                         track, and engage air                                                   System (CWIS) 1B which
                         targets.                                                                incorporates a Forward
                                                                                                 Looking Infrared Radar
                                                                                                 (FLIR) to track low, slow
                                                                                                 air targets. Mk 46 Optical
                                                                                                 Sight and Mk 48 Gun
                                                                                                 Weapons System (GWS) are
                                                                                                 also capable of engaging
                                                                                                 slow, low air targets.
E-4 NOC Issue #2        WMSL will not have the       No                 Cutter does have the    Cutter has the capability
                         capability to intercept                         ability to engage       which the Navy/Coast Guard
                         and engage, including                           multiple high speed     jointly determined as most
                         compelling compliance of                        surface threats and     appropriate for the NSC,
                         multiple high-speed                             to employ lethal        including CWIS 1B, Mk 48
                         surface threats, or employ                      force.                  GWS and .50 cal. machine
                         lethal force to achieve                                                 guns.
                         mission kills against
                         hostile surface TOIs.
E-4 NOC Issue #3        WMSL will have limited       No                 Cutter does have the    Cutter speeds in excess of
                         capability to defend                            ability to defend       required 28 knots has been
                         escorted units.                                 escorts.                demonstrated. All
                                                                                                 installed weapon systems
                                                                                                 can be used to defend
                                                                                                 escorts.
E-7 C4ISR Issue #1      The WMSL sensor package      Yes                Cutter should have      ...........................  Next generation systems are
                         does not include Chemical                       improved CBRNE                                       being developed by the
                         Biological Radiological/                        capability.                                          Navy, but are not yet
                         Nuclear & Explosive                                                                                  ready for acquisition or
                         (CBRNE) detection,                                                                                   deployment. Coast Guard
                         classification, and                                                                                  will follow Navy lead.
                         identification capability.
E-7 C4ISR Issue #2      IA will be difficult to      Yes                IA issues must be       ...........................  Preliminary visual
                         achieve.                                        resolved.                                            inspections and
                                                                                                                              instrumented surveys have
                                                                                                                              been conducted. Work lists
                                                                                                                              have been compiled and
                                                                                                                              communicated to the
                                                                                                                              contractor. C4ISR IA scans
                                                                                                                              will be conducted shortly.
                                                                                                                              As C4ISR suite is
                                                                                                                              complete, additional
                                                                                                                              inspections and surveys
                                                                                                                              are underway. It is
                                                                                                                              anticipated all issues
                                                                                                                              will be satisfactorily
                                                                                                                              resolved. No classified
                                                                                                                              material will be
                                                                                                                              introduced to installed
                                                                                                                              systems until an IATO is
                                                                                                                              granted by the CG
                                                                                                                              Designated Accrediting
                                                                                                                              Authority (DAA).
E-7 C4ISR Issue #3      Delays in VUAV development   Yes                An Unmanned Aircraft    ...........................  The Coast Guard is
                         and delivery will                               System (UAS) is                                      investigating more mature
                         drastically reduce the                          expected to increase                                 UAS designs and conducting
                         surveillance footprint of                       operational                                          alternative analyses for
                         the WMSL.                                       effectiveness.                                       both cutter based and
                                                                                                                              shore based UAS.
S-2 Maintainability     Space and location hinder    Partially          While the statement is  ...........................  When designing a cutter as
                         the ability to access                           true, the issue is a                                 capable as the NSC, design
                         mission critical equipment                      matter of degree.                                    trade-offs are necessary
                         such as main diesel                                                                                  to accommodate both
                         engines and communications                                                                           mission critical equipment
                         equipment for maintenance.                                                                           as well as provide for
                                                                                                                              current crew habitability
                                                                                                                              standards. While
                                                                                                                              maintenance accessibility
                                                                                                                              is not optimal, the NSC is
                                                                                                                              anticipated to meet
                                                                                                                              requirements regarding
                                                                                                                              accessibility and is
                                                                                                                              expected to achieve full
                                                                                                                              operational capability.
S-5 Compatibility       The LRI's operating          No                 The LRI has its own     It is not unusual that a
                         envelope does not match                         operational             large cutter will have an
                         the extent of the WMSL's                        requirement.            operating envelope which
                         operating environment.                                                  far exceeds the envelope
                                                                                                 for its attached boats.
                                                                                                 The acquisition process
                                                                                                 provides capability;
                                                                                                 Commanding Officers
                                                                                                 exercise judgment in when
                                                                                                 and how to use that
                                                                                                 capability.
S-8 Human Factors       There is no identification   No                 The contract did not    Reducing operating costs by
                         of an appropriate level of                      specify any             reducing crew size through
                         automation to reduce                            particular level of     the use of automated
                         workload because expected                       automation.             systems was a design
                         automation capabilities                                                 consideration. The final
                         proposed for the initial                                                design represents the
                         design have not been                                                    resulting balance between
                         provided.                                                               affordability and
                                                                                                 automation to meet life
                                                                                                 cycle cost amounts.
S-9 Safety              Constrained passageways and  No                 Passageways and spaces  Potential chokepoint in
                         spaces will impede                              are of sufficient       passageway outside Repair
                         critical crew movements                         size.                   Locker II during General
                         during emergency response.                                              Emergency is mitigated by
                                                                                                 a large repair locker with
                                                                                                 walk-in garage door type
                                                                                                 entrance, permitting
                                                                                                 minimal interference in
                                                                                                 the passageway.
S-11 Manning            Proposed WMSL manning        No                 Cutter manning is       Extensive manpower
                         levels present little                           sufficient for normal   requirements analysis has
                         flexibility to overcome                         operational and         been completed. Manning is
                         expected sailing                                emergency evolutions.   sufficient for workload
                         shortfalls or respond to                        The cutter has          requirements, operational
                         surge situations that are                       capacity to carry       scenarios, including
                         typical of a large multi-                       additional personnel    General Defense Operations
                         mission cutter's patrol                         for surge operations.   (augmented crew for
                         environment during                                                      deployment) and emergency
                         sustained operations.                                                   scenarios. NSC #1 has an
                                                                                                 assigned crew of 113 with
                                                                                                 available berthing for
                                                                                                 148.
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Question 16. As the Coast Guard moves away from the lead systems 
integrator approach, how will this impact the development and 
acquisition of the C4ISR system?
    Answer. The period of performance for the current Deepwater 
contract with ICGS is through January 2011. The USCG is assuming the 
role of the Lead System Integrator (LSI) making changes in program 
management, requirements development, contracting actions, and 
compliance enforcement. Contractually, the Coast Guard is modifying 
existing and preparing new contracts to get the required documents and 
data as the Coast Guard assumes the role of lead systems integrator. 
Much of the systems engineering previously performed by ICGS included 
architecture development, functional requirements development/
traceability, managing multiple contractors, software, hardware and 
platform integration. The largest impact to development will be that 
the Coast Guard is assuming a larger management role. The Coast Guard 
as LSI will integrate the assets and systems that comprise Deepwater 
into the Coast Guard System.

    Question 16a. Will some aspects of C4ISR be competed on an asset-
by-asset basis?
    Answer. The concept of a common C4ISR functional requirements, 
capabilities, and common design will still be implemented but managed 
by the Coast Guard in conjunction with the Technical Authority's 
enterprise architecture and standards. While commonality and 
interoperability of C4ISR systems are important elements of any 
enterprise architecture, there may be opportunities for competition at 
the equipment level. All major system acquisition procurements will 
continue to be conducted in accordance with the Federal Acquisition 
Regulations.

    Question 16b. Doesn't this present significant risk for the 
integration of C4ISR between assets?
    Answer. Risks due to changing suppliers, standards, and 
architecture as well as rapidly changing technology will have to be 
managed. The Coast Guard will minimize these risks by ensuring the 
C4ISR acquisition program office works closely with the sponsor and 
technical authority.

    Question 16c. Will we continue to rely on ICGS for some elements of 
C4ISR merely because they were the ones who started the development of 
this system?
    Answer. No, the Coast Guard will not always be tied to ICGS and has 
started implementing the activities discussed earlier to become the 
C4ISR Lead System Integrator.

    Question 17. In your testimony, you said that you would be using 
full and open competition for all future acquisitions of the Deepwater 
C4ISR systems. Does this mean that you will stop using ICGS for C4ISR?
    Answer. In the near term, the Coast Guard will not necessarily stop 
using ICGS for C4ISR. The current Deepwater Award Term contract is 
still active and may be used by the Coast Guard if it is in the best 
interest of the government to do so.

    Question 17a. If not, specifically what do you mean, then, by 
``full and open competition?''
    Answer. C4ISR acquisitions continue to be executed in accordance 
with the Federal Acquisition Regulations (FAR) to acquire C4ISR systems 
and services that provide the best value to the Coast Guard.

    Question 17b. What do you anticipate ICGS's role will be in the 
acquisition of Deepwater C4ISR moving forward?
    Answer. ICGS C4ISR systems are installed on three Deepwater assets 
and, in the near term, it is likely that modification and improvements 
will be performed by ICGS.

    Question 18. What are the ramifications of acquiring C4ISR on an 
asset-by-asset basis rather than through a private lead systems 
integrator?
    Answer. The change in shifting from a private Lead System 
Integrator (LSI) to the Coast Guard being the lead system integrator as 
related to C4ISR is not the same as acquiring C4ISR on an asset-by-
asset basis. Even though the Coast Guard will acquire specific C4ISR 
systems for specific assets, the overall C4ISR acquisition approach 
will still be accomplished using a systematic methodology. This 
methodology will be a consistent C4ISR engineering approach to ensure 
appropriate commonality, operational performance, and interoperability 
are considered when C4ISR design decisions are made. The C4ISR Program 
Manager (CG Acquisition Directorate) will collaborate with the Coast 
Guard's Technical Authority for Command, Control, Communications and 
Information Technology (CG C4&IT Directorate) and the sponsor for all 
C4ISR design decisions. The C4&IT Technical Authority will define the 
enterprise architecture as the C4ISR systems are acquired.
    Another ramification of this change involves the impact on 
personnel. The type of engineering work to acquire the C4ISR systems 
remains the same; however, the management of the work is just shifted 
from a commercial contractor to the Coast Guard. This change will 
require an increase in Coast Guard personnel to accomplish. The FY 2009 
President's request includes funding for personnel to continue the 
Coast Guard assuming the lead system integrator role for all 
acquisitions and to develop lifecycle support plans for newly delivered 
Deepwater assets.

    Question 18a. The integration of complex communications and 
computer systems was often used as one of the main justifications for 
using a private lead systems integrator for Deepwater. What are the 
difficulties, problems, and major risks we will encounter in the C4ISR 
acquisition by moving away from the private lead systems integrator?
    Answer. The major challenge of moving away from a private LSI is 
the requirement for additional expertise to manage the integration. 
Some specialized areas of expertise are not currently resident in the 
Coast Guard and will need to be grown or obtained by contract.

    Question 19. It is my understanding that C4ISR is being built with 
a combination of military and civilian equipment and technologies. What 
problems or challenges has the Coast Guard encountered with the 
acquisition and performance of C4ISR because of the military/civilian 
equipment mix?
    Answer. There are inherent risks to acquiring and integrating any 
complex system. The most significant challenge involving the 
integration of commercial equipment is ensuring each system meets and 
complies with DoD Information Assurance (IA) guidance and regulations. 
The mix of military and civilian equipment requires Certification and 
Accreditation (C&A) activities that if not fully identified and 
articulated can create schedule delays and cost growth beyond the 
program budget. The use of Interface Control Documents and 
configuration management is critical to the success of any integration. 
There is significant advantage to leveraging the best of both worlds.

    Question 19a. What risks are associated with using a combination of 
military and civilian technologies and equipment?
    Answer. There are several risks that must be managed when mixing 
successful commercial products with military developed products. One 
risk of using commercial items is information assurance accreditation 
and maintenance that must be identified, scheduled, and managed. 
Additionally, the speed of technology change drives hardware and 
software obsolescence which requires regular upgrades to the equipment 
and software to remain current.

    Question 19b. Will this combination continue in future acquisitions 
of C4ISR?
    Answer. Yes, using lessons from past procurements to acquire more 
cost effective C4ISR products/systems for the Coast Guard, the USCG 
will continue to use a combination of military and civilian 
technologies and equipment.

    Question 20. I am troubled that the Alternatives Analysis seemed to 
indicate the Coast Guard should move forward with the Offshore Patrol 
Cutter as conceived by ICGS--particularly since the OPC only exists on 
paper and would involve designing the ship from scratch, much like what 
we just went through with the National Security Cutter. I am very 
worried that going down that path would involve substantial risk for 
taxpayers. Does the Coast Guard agree with the AA's assessment that you 
should move forward with the OPC as conceived by ICGS? Why or why not?
    Answer. The Coast Guard agrees with the Alternatives Analysis' 
(AA's) assessment to move forward with the Offshore Patrol Cutter 
(OPC), but not necessarily as conceived by Integrated Coast Guard 
Systems (ICGS). The OPC will be acquired through full and open 
competition meaning that other alternatives (both off-the-shelf and new 
designs) will be considered as part of the process. While ICGS would be 
welcome to compete designs during the request for procurement phase, as 
would Northrop Grumman, it will be as part of a process involving other 
interested manufacturers.

    Question 20a. Is the Coast Guard planning on pursuing the OPC as 
envisioned by ICGS, or are you examining other alternatives?
    Answer. The Coast Guard Capabilities Directorate (CG-7) will 
generate valid, stable, achievable and affordable OPC requirements and 
develop an Operational Requirements Document (ORD) for the OPC in 
compliance with the MSAM. Once complete, an Alternatives Analysis will 
be conducted to determine the alternative designs available to fulfill 
the OPC mission. The Coast Guard believes there are a variety of 
alternatives in the competitive market available for the OPC.

    Question 20b. Have you decided whether the OPC will be an off-the-
shelf ship design that's already in production, or a new ship design 
that will be the first in its class? If you have not decided yet, when 
do you plan on making that decision?
    Answer. The OPC could be an off-the-shelf design, a modified off-
the-shelf design, or a new design, depending on the requirements 
established in the ORD. The decision most likely would be made between 
late FY 2011 and early FY 2012.

    Question 21. In your testimony, you said that all future 
acquisitions--including for the OPC--would be ``Coast Guard-
controlled.'' In the past, the Coast Guard has claimed that Deepwater 
decisions were always ultimately ``Coast Guard-controlled.'' When you 
said ``Coast Guard-controlled'' in your testimony, then, what 
specifically do you mean? Is this really a change from past practices? 
If so, in what ways?
    Answer. The OPC acquisition will not occur via the Indefinite 
Delivery Indefinite Quantity (IDIQ) Deepwater contract, but will be the 
result of a competitive process, compliant with the Coast Guard's Major 
Systems Acquisition Manual. The Coast Guard will also be the ``systems 
integrator'' for the OPC. These are the two significant changes that 
represents a change in the Deepwater acquisition.

    Question 21a. Will the Coast Guard be taking a completely fresh 
look at the Offshore Patrol Cutter's fundamental performance 
requirements and revamp its requirements from scratch? How would you go 
about doing this in a way that ensures the results are not prejudiced 
by the ICGS vision for the OPC?
    Answer. The Coast Guard is developing a new Concept of Operations 
(CONOPS) and a new Operational Requirements Document (ORD) for the OPC 
without involvement of ICGS.

    Question 21b. Can you guarantee me that the OPC's requirements and 
specifications will be determined exclusively by the Coast Guard and 
not be based on the original requirements envisioned by ICGS?
    Answer. As stated previously, the Coast Guard is developing the 
OPC's requirements without any involvement of ICGS

    Question 22. After its analysis of the Deepwater assets, the 
Alternatives Analysis concluded that, while the Coast Guard should 
continue building National Security Cutters, it ``should examine 
whether the OPC, a less expensive vessel than the NSC, will meet NSC 
DoD mission requirements. If it can, the Coast Guard should consider 
building six NSCs and two additional OPCs.'' Currently, however, the 
Coast Guard is not scheduled to begin developing or building the OPC 
until at least 2012 or 2013. Given that timetable, it is unlikely the 
Coast Guard will be able to determine whether this tradeoff can be 
made. Because the current Deepwater timetable doesn't call for the 
development of the Offshore Patrol Cutters for several years, is it 
even possible for the Coast Guard to consider this option?
    Answer. The Coast Guard could consider this option once the design 
of the Offshore Patrol Cutter (OPC) is complete in the time period 
between FY 2012 and FY 2013, or perhaps earlier if the preliminary 
design provides sufficient data to support such a decision. Key 
elements would include increased operating range and endurance of the 
OPC. Basic engineering constraints make it unlikely that a vessel 
approximately three quarters the size of the National Security Cutter 
(NSC) could achieve similar capabilities and still be affordable for a 
class of 25 vessels.

    Question 22a. What would need to happen to enable the Coast Guard 
to consider such an option?
    Answer. The Coast Guard would need to complete the necessary design 
work of the OPC earlier than currently planned.

    Question 22b. Do you believe this is an option that might be worth 
considering?
    Answer. The Coast Guard believes this option is worth considering 
while recognizing there are additional risks in terms of the maturity 
of the OPC design at the time the decision must be made. There could be 
unintended cost implications for the OPC should the design include 
additional capabilities above the Coast Guard requirements for the OPC 
needed to satisfy the NSC mission. The cost of the last two NSCs should 
be relatively fixed given the maturity of the design and production 
process, whereas the cost of the as-yet built OPC at that same time 
would be based on estimates and would involve the typical risks 
experienced with any first-of-class ship. This might even entail 
building two classes of OPC, one NSC-like and one meeting only OPC 
requirements, further adding to cost risk.
    Until the revised Operational Requirements Document (ORD) for the 
OPC is complete, the Coast Guard believes the missions of the NSC and 
the OPC are distinct, the ship designs will be distinct, and the 
current planned asset mix is the most appropriate for satisfying Coast 
Guard missions. To determine optimum fleet mix, the Coast Guard needs 
improved analysis tools including an upgrade to the Deepwater Maritime 
Operational Effectiveness Simulation (DMOES). The upgrade to DMOES, to 
be called Coast Guard Maritime Operational Effectiveness Simulation 
(CGMOES), is currently underway and should be complete by the end of 
this calendar year. Once this occurs, and the OPC requirements are 
established, analysis can be performed to determine whether a more 
robust OPC (NSC-like) is worth pursuing, in terms of cost, over other 
alternatives.

    Question 23. What is the weight margin for the HC-144A, both with 
and without the full roll-on missions platforms?
    Answer. The weight margin for the HC-144A allows for 2.4 percent 
growth in the current basic aircraft configuration. This meets the 
specification listed in the September 17, 2004 Medium Range 
Surveillance (MRS) Maritime Patrol Aircraft (MPA) performance 
specification. Operational equipment, such as the mission system 
pallet, and fuel loads are adjusted to meet specific mission 
requirements to remain within maximum allowable takeoff, maneuvering 
and landing weights.

    Question 23a. How does this weight margin compare with other 
similar aircraft? Please provide examples.
    Answer. Weight margins were not specifically listed for other 
aircraft considered in the Deepwater Capability Analysis of 
Alternatives (March 1999). The Coast Guard does not have specific 
examples of weight margins for aircraft configured to perform specific 
Coast Guard missions.

    Question 23b. Have Coast Guard engineers expressed concerns about 
the HC-144A weight margins? If so, what are these concerns?
    Answer. No. Any early concerns on weight margins were addressed 
with the change from the original, IGCS-proposed CN-235-300M-ER 
aircraft to the CN-235-300M aircraft selected by the Coast Guard.

    Question 23c. Are there any problems or concerns with the HC-144A 
power or electrical systems? If so, please outline the areas of 
concern.
    Answer. There are no current or unsolved concerns with the HC-144A 
power or electrical systems.

    Question 23d. Have Coast Guard engineers or technical authorities 
expressed any concerns over the HC-144A power or electrical systems?
    Answer. An initial concern with one of the power distribution 
components of the HC-144A was resolved by the Coast Guard technical 
authority working directly with the component manufacturer.

    Question 23e. Has the Coast Guard conducted an operational 
assessment for the HC-144A aircraft? If not, why not?
    Answer. No. The basic HC-144A aircraft, designated the CN-235 by 
the manufacturer, was already in production and considered a mature 
aircraft design. Since the CN-235, a commercial/non-developmental 
aircraft, was in production and little new information would be 
realized from an operational assessment of the standard aircraft, the 
Coast Guard plan for acquisition and transition was to complete the 
operational assessment after delivery of the integrated aircraft, when 
the results from the developmental test and evaluation (DT&E), as well 
as any other acceptance criteria would be known. DT&E of the aircraft 
was completed in December 2006. DT&E of the combined aircraft and 
mission system pallet (MSP) was completed in March 2008. The Coast 
Guard intends to conduct an Operational Test Readiness Review (OTRR) in 
May 2008, followed by the planned Operational Assessment.

    Question 23f. Given that the HC-144A was built by EADS CASA, to 
what extent will the Coast Guard be reliant upon EADS CASA for 
replacement parts or repairs in the future years and decades?
    Answer. The Coast Guard will be reliant on EADS CASA for original 
equipment manufacturer (OEM) only for the airframe and certain sub-
components replacement parts to maintain standardization with flight 
safety critical aircraft parts. Engines, propellers, avionics, sensors, 
and the pallet are all made elsewhere, many in the U.S., so other OEMs 
will be contracted to provide flight safety critical parts as 
appropriate. Repairs and programmed depot maintenance (PDM) will be 
managed and completed by the Coast Guard.

    Question 24. Does the Coast Guard believe that the planned number 
of HC-130H and HC-130J aircraft is sufficient to meet the Coast Guard's 
needs--particularly in long-range mission areas like Alaska, Hawaii, 
and the Western Pacific? When was the most recent assessment analyzing 
this question and what were the conclusions? Do you believe those 
conclusions are still current and accurate?
    Answer. The most recent assessment of fixed-wing surveillance needs 
was conducted in 2004. In the aftermath of 9/11, the Coast Guard 
documented its revised operational requirements in the Integrated 
Deepwater System Mission Needs Statement (IDS MNS). This analysis 
stated that 61,600 flight hours were required for fixed-wing aviation 
assets to complete their assigned missions. These missions include:
    Surveillance: Surveillance of targets of interest up to 1,000 
nautical miles offshore for maritime domain awareness (MDA). This is 
particularly important in the vast expanses of the Pacific Ocean, where 
Coast Guard presence is critical to maritime safety and security.
    Transportation: Coast Guard and DHS demands for transporting people 
and cargo are increasing. For example, transportation of a MSST, which 
includes three boats and five vehicles, requires up to three C-130s. In 
addition to capacity requirements, there are also time targets, such as 
the need to move a National Strike Force/Strike Team within 6 hours of 
notification. The Coast Guard cannot rely exclusively on DOD or 
commercial air lift support to meet emergent needs to prevent or 
respond to acts of terrorism.
    International Search and Rescue: Using the current 22 HC-130s in 
inventory, the Coast Guard can perform search and rescue in 90 percent 
of the United States' international search and rescue area of 
responsibility.
    Other Missions: International Ice Patrol, JIATF Counter-Drug and 
Migrant Smuggling support, Response to Events of National Significance, 
and High Seas Drift Net/Maritime Boundary Line Enforcement missions. 
These missions have unique surveillance and transportation 
requirements.
    The Coast Guard's entire fixed-wing fleet is operating at full 
capacity. The IDS MNS anticipates evolving requirements from the Coast 
Guard's interagency partners to respond to events of national 
significance and increased narcotic interdiction goals from ONDCP.
    The conclusions reached in 2004 are still current and accurate. As 
always, the Office of Aviation Forces is continually reviewing the 
mission requirements and future needs of the Coast Guard's Long Range 
Surveillance aircraft.

    Question 25. The Alternatives Analysis identifies the UAV 
acquisition as high-risk and recommends altering or eliminating the 
acquisition. Do you believe that the risks of a UAV acquisition are 
overstated in the AA?
    Answer. The Coast Guard assessment of the Alternatives Analysis 
(AA) is that it understates the Technology Readiness Level (TRL of 8 on 
a scale of 9, with 9 being the highest risk) and Manufacturing 
Readiness Level (MRL of 9 on a scale of 10, with 10 being the highest 
risk) of Fire Scout with respect to missionization for Coast Guard 
Operations. The Coast Guard also believes the AA similarly overstates 
the TRL and MRL for the other UAV candidates. The AA approach was to 
apply the TRL assessment to the basic technologies and not the complete 
integrated systems. The MRL was a similar assessment of the platform. 
The Coast Guard has closely watched the progress of the Navy's Fire 
Scout Vertical Unmanned Aerial Vehicle (VUAV) and is encouraged by that 
program's progress with this relatively mature asset. Fire Scout has 
been launched and recovered from a Navy ship, and demonstration tests 
are planned on the National Security Center (NSC) in FY 2009 as well as 
deploying on a Navy frigate during the Summer of 2008. The Coast Guard 
believes integrated radar is essential for Coast Guard Unmanned Aerial 
Vehicle (UAV) operations and has been informed that the Navy and the 
manufacturer are moving forward with integrating a radar in FY 2009 and 
late Summer 2008, respectively.

    Question 25a. Is the Coast Guard considering both land-based UAVs 
as well as UAVs that can be launched from the NSC at sea? What would be 
the operational implications of only acquiring land-based UAVs and not 
having ones that launch directly from the NSC?
    Answer. The Coast Guard is considering both land-based and ship-
launched UAVs. We are working closely with Customs and Border 
Protection to test and operate Predator and with the Navy on Fire 
Scout. Both capabilities enhance the search, identify and patrol 
capabilities required for Coast Guard mission accomplishment. Sea-based 
UAVs increase these capabilities for the host cutter, increasing its 
mission performance and effectiveness.

    Question 25b. Is a ship-based UAV acquisition significantly more 
risky than an acquisition of a UAV that would be launched from land? 
What would be the main risks associated with acquiring ship-based UAVs?
    Answer. Ship-based and land-based UAVs both present opportunities 
and risks. Land-based vehicles generally can surveil more square miles 
of ocean on one flight, while cutter-based UAVs have the advantage of 
tactical use in direct and rapid support of cutter operations. System 
maturity levels for a suitable ship-based UAV (i.e., one that is 
appropriate for Wide Area Surveillance (WAS) operations) are relatively 
low but improving rapidly. The Navy's Fire Scout UAV is the most 
advanced system capable of supporting WAS operations. However, 
significant development work (such as radar integration) has not been 
accomplished. A prototype version of the Fire Scout (the RQ-8A) has 
successfully landed on a Navy LPD class ship in calm seas. The current 
model of the Fire Scout (Low Rate Production model) has not yet 
demonstrated this capability, but is scheduled for operational test 
flights this summer. Land-based unmanned aerial systems (UASs) present 
their own risks. The Coast Guard has conducted two maritime 
demonstrations to date of a General Atomics Predator B platform with 
limited success. The improvement to Coast Guard operations by use of 
this platform in maritime conditions and in Coast Guard operational 
areas is relatively unknown, especially given the number of planned 
sorties that must me cancelled due to weather (crosswinds and/or cloud 
cover). Mid-altitude UAVs such as Predator, currently lack any de-icing 
capability and therefore avoid operations in clouds, making use over 
water problematic. Fire Scout, on the other hand, has limited light de-
icing capability. Both platforms share similar risks for airspace 
integration as well. FAA policies regarding the use of UAVs will 
continue to restrict the potential integration of these platforms into 
full scale operations; however, the VUAV will no doubt be easier to 
integrate due to its ability to sail with the cutter and launch well 
offshore.

    Question 25c. How does the Coast Guard plan on moving forward with 
considering its options for UAV acquisition?
    Answer. Congress has authorized additional RDT&E funding to the 
Coast Guard in FY 2008 to determine a suitable UAS to operate from the 
NSC. The Coast Guard Research and Development Center will conduct 
analysis and field assessments in order to determine specific UAS 
capabilities that are necessary to meet NSC mission needs. This study 
will examine the potential uses and constraints of a cutter-based UAS, 
then research and test viable UAS candidates. This increased knowledge 
and experience will help identify risks associated with cutter-based 
UAS use and develop mitigation strategies to reduce those risks.
    The FY 2009 UAS acquisition budget request would fund the pre-
acquisition analysis phase for UASs to address the following issues and 
tasks:

   Coast Guard missions support with UASs.

   Safety-based statistical analysis.

   FAA/International Civil Aviation Organization (ICAO) 
        maritime operational requirements for UASs.

   Air vehicle command and control and related data management 
        approaches.

   Data linkages between on-scene assets, the Coast Guard's 
        common operating picture, and other required linkages.

    Question 26. The Alternatives Analysis seemed to indicate that the 
current baseline plan for Deepwater is the wrong path for the Coast 
Guard. It demonstrated that alternative plans--particularly ones that 
pursue different solutions for the Fast Response Cutter and Unmanned 
Aerial Vehicles--could dramatically reduce the risk of future problems 
with performance, cost, and schedule. Can you please detail your plan 
and process for how the Coast Guard will give full consideration to the 
alternative options and conclusions proposed by the Alternatives 
Analysis?
    Answer. The Alternatives Analysis (AA), commissioned as an 
independent, third party review of the Coast Guard's Deepwater asset 
portfolio, strongly concurred with the direction the Deepwater program 
is headed. Specifically, it identified the National Security Cutter 
(NSC) and the Maritime Patrol Aircraft (MPA), the major surface and 
aviation projects within Deepwater, as the correct choices. The AA did 
offer options for consideration for alternative Unmanned Aerial Systems 
(UAS) and the Fast Response Cutter (FRC), however.
    The Coast Guard has reviewed the options proposed in the AA and 
developed a Balanced Plan of Action (BPOA) to address the risks 
inherent in the proposed alternatives. Previous Coast Guard research 
showed that there are numerous mitigation efforts required to reduce 
the technical, manufacturing, and maintenance risks associated with a 
composite hull. The Coast Guard believes the use of a carbon fiber hull 
for the FRC-A as proposed in the Modified Baseline Alternative 
understates risks.
    The BPOA adopts the best asset mix from both of the recommended 
alternatives, continuing the NSC, Offshore Patrol Cutter (OPC), MPA 
procurements as currently planned, considering use of the FRC-B to 
satisfy the FRC mission, and including the VUAV to increase operational 
performance when compared to the Modified Baseline and Managed Risk 
Alternatives identified in the AA. Full and open competition is guiding 
the current acquisition to determine the best solution for the FRC. As 
for the VUAV, the Coast Guard RDT&E program's pre-acquisition UAS 
study, as envisioned by Congress, will evaluate uses and alternatives 
for the cutter-based UAS. This will include developing concepts of 
operations and requirements for a cutter-based UAS leading to a full-
and-open competition to determine the best solution for operational 
requirements.

    Question 27. During the hearing, there was some confusion over the 
number of non-tank vessels that have submitted Vessel Response Plans to 
the Coast Guard. Please clarify the number discrepancies we discussed 
during your testimony. To date, how many non-tank vessels have 
submitted Vessel Response Plans to the Coast Guard?
    Answer. Since August of 2005, 12,298 distinct non-tank vessels have 
submitted Non-tank Vessel Response Plans to the Coast Guard for the 
purpose of obtaining Interim Operating Authorization. Many vessel 
operators have submitted one plan to cover multiple vessels in their 
fleet, an option allowed under the law.

    Question 27a. To date, how many of those submitted plans have 
actually been approved by the Coast Guard?
    Answer. Non-tank Vessel Response Plans meeting the provisions of 33 
U.S.C. 1321(j)(5), as amended by the Coast Guard & Maritime Acts of 
2004 & 2006, are issued Interim Operating Authorizations for a period 
of 2 years per 33 U.S.C. 1321(j)(5)(G). Since August of 2005, the Coast 
Guard has issued 1,880 Interim Operating Authorizations for reviewed 
Non-tank Vessel Response Plans. Many of these plans cover more than one 
vessel in an owner/operator's fleet. To date, 10,791 vessels have 
obtained an Interim Operating Authorization status with the U.S. Coast 
Guard.
    The Coast Guard is tracking 1,701 Non-tank Vessel Response Plans 
that have been issued Interim Operating Authorizations for vessels that 
are known to continue to trade in the United States. The difference 
between these two numbers is attributed to plans that have been 
deactivated due to either noncompliance or owner request. When the Non-
tank Vessel Response Plan regulations are implemented into Subchapter O 
of Title 33 Code of Federal Regulations, the Coast Guard will then 
``approve'' Non-tank Vessel Response Plans.

    Question 27b. How many non-tank vessels required under law to 
submit vessel response plans have not yet done so?
    Answer. The Coast Guard estimates approximately 12,000 vessels will 
be required to meet the Non-tank Vessel Response Plan regulations in 
the first year of implementation. The non-tank vessel population is an 
estimate because it is unknown how many foreign flag vessels will need 
to comply until they actually arrive at a U.S. port. There are 
thousands of additional non-tank vessels in the world fleet that could 
potentially submit Non-tank Vessel Response Plans to the USCG. Until 
they call on the U.S., the plan is not required.

    Question 27c. What is the current level of compliance with Coast 
Guard-issued guidance?
    Answer. The current level of compliance is good. Larger, ocean 
going nontank vessels have been able to adopt, for the most part, the 
straightforward Non-tank Vessel Response Plan development guidance 
contained in Navigation, Vessel and Inspection Circular 01-05 CH-1. A 
number of owner/operators of smaller nontank vessels with fuel 
capacities less than that of large ocean going nontank vessels that are 
unsure or disagree on the level of required contracted oil spill 
response resources. The Coast Guard will address these vessels and 
their requirements in the upcoming Notice to Proposed Rulemaking.

    Question 28. In your testimony, you said that the Coast Guard will 
begin implementing the non-tank vessel response plan requirement before 
a rulemaking is completed under Title 33 authority. Please describe and 
explain the exact legal mechanism through which you will be 
implementing the Non-tank Vessel Response Plan requirement.
    Answer. Section 701 of the Coast Guard and Maritime Transportation 
Act of 2004 (CGMTA) Pub. L. 108-293, amends the Federal Water Pollution 
Control Act (FWPCA), 33 U.S.C. 1321(J)(5). to add nontank vessels to 
the list of vessels required to prepare and submit response plans. 
Subsection (c) of Section 701 provides. ``no later than 1 year after 
the date of enactment [August 8, 2005], the owner or operator of a 
nontank vessel . . . Shall prepare and submit a vessel response plan 
for such vessel.'' The Coast Guard considers this provision to be 
``self-executing'' because it contains a sufficiently clear mandate 
(i.e., ``shall prepare and submit a plan'') and therefore does not need 
implementing regulations to effectuate the mandate. In particular, the 
FWPCA contains specific requirements regarding information that should 
be included in the plan (see 33 U.S.C. 1321(j)(5)(d)(i)-(iv)).
    Implementing regulations will, of course, fully detail the precise 
content of the required plans, but because the Coast Guard knew it 
would take longer than 1 year to promulgate the regulations, we 
published a guidance document (see Navigation and Vessel Inspection 
Circular (NVIC) 01-05, change 1) to assist industry in their 
preparation of the required response plans. We also provided notice 
that we would exercise enforcement discretion with the new law as final 
regulations are developed. More recently, we re-examined our 
enforcement posture following the M/V COSCO BUSAN oil spill in 
California on November 7, 2007. To increase compliance, we have decided 
to begin enforcement as described below.
    Following an appropriate public notification in the Federal 
Register, the Coast Guard will enforce self-executing portions of the 
statute [section 701(c) of the CGMTA of 2004] through Captain of the 
Port (COTP) orders. These COTP orders are issued under the authority of 
the implementing regulation of the Ports and Waterways Safety Act 
(PWSA), 33 CFR 160.111. The PWSA requires that vessels in the navigable 
waters of the United States be operated ``in accordance with all 
applicable laws, regulations and treaties to which the United States is 
a party.'' Under the authority of the PWSA's implementing regulation, 
the Coast Guard Captain of the Port would restrict operations of 
vessels subject to the requirement for submission of a Non-tank Vessel 
Response Plan (NTVRP) to obtain entry into or upon the navigable waters 
of the United States and entry would be barred if the vessel owner or 
operator has not prepared and submitted to the Coast Guard a Vessel 
Response Plan that contains elements (i)-(iv) required by section 
311(j)(5)(D) of the FWPCA. Such COTP Orders would be issued on a case-
by-case basis.
    These COTP Orders are also supported by the fact that absent the 
effect of a formal rule to implement the NVTRP required by the CGMTA, 
the fully enforceable requirement of the CGMTA becomes the 
international standard required under MARPOL, Annex I. Annex I requires 
that non-tank vessels over 400 Gross Tons have an approved Shipboard 
Oil Pollution Emergency Plan (SOPEP). The Coast Guard ensures vessels 
possess valid SOPEPs during Port State Control examinations and 
domestic inspections. However, the SOPEP standards are not as detailed 
and rigorous as those required by the CGMTA.

    Question 28a. What are the shortfalls of using this legal mechanism 
compared to a final rulemaking? In what ways is it different from a 
final rulemaking?
    Answer. The shortfalls of the above described mechanism to enforce 
Non-tank Vessel Response Plans are that the statute (33 U.S.C. 
1321(j)(5)) requires regulations to be fully implemented and 
enforceable according to the civil penalty regime in 33 U.S.C. 1321. 
Detailed NTVRP requirements cannot be fully enforced until these 
regulations are finalized. Thus, until the regulations are finalized, 
vessel owners and operators required to submit NTVRPs must rely on NVIC 
01-05 change for guidance as to the content of their plans. The NVIC, 
however, is not a regulation. NVICs are suggested guidance and do not 
constitute an enforceable requirement.
    Accordingly. the Coast Guard concerns as to the adequacy of the 
submissions in a plan on each of the several statutory elements in 33 
U.S.C. 1321(j)(5)(D)(i)-(iv) would not currently be enforceable. In 
other words, as long as the plan submitted contains an entry that 
facially meets the statutory requirements, it could not be the basis 
for a COTP order for failure to submit a plan resulting from violation 
of a law or regulation. Such a plan would arguably satisfy the law. 
Moreover, in order to assess civil penalties for violations under the 
FWPCA, the regulations must be finalized because the FWPCA authorizes 
civil penalties only for violation of regulations issued under 33 
U.S.C. 1321.

    Question 28b. Please provide a timetable on specifically how the 
non-tank VRP requirement will be implemented.
    Answer. The Federal Register notice has been drafted and is in 
final clearance. Once approved, the Coast Guard would begin enforcing 
the self executing provisions 60 days after publishing this notice, 
which allows reasonable time for vessel operators to submit their plans 
for review. This enforcement policy would remain in place until the 
final Non-Tank Vessel Response Plan regulations are issued and in 
effect. With regard to implementing regulations, the Coast Guard 
anticipates that a notice of proposed rulemaking will be published this 
year and that a final rule would be published in 2010. The Coast Guard 
is working diligently to issue the final regulations as expeditiously 
as possible.

    Question 28c. Will this requirement under non-traditional means 
still allow full enforcement authority by the U.S. Coast Guard? Please 
explain your enforcement authority for the non-tank VRP requirement.
    Answer. See answers to Questions 28 and 28a above.

    Question 29. Luckily, the COSCO BUSAN of the San Francisco oil 
spill did have a Vessel Response Plan. What would have happened if that 
vessel hadn't had a plan? How much worse could it have been?
    Answer. For a nontank vessel that had not met planning 
requirements, the Coast Guard predicts the response would be delayed 
while the vessel master and agent arranged for a contract, made 
notifications and navigated a largely unfamiliar local Area Contingency 
Plan, etc.

    Question 30. I appreciate your efforts to eliminate the rulemaking 
backlog. Will the additional funding included in the FY09 budget 
request eliminate the rulemaking backlog? Will it even make inroads in 
reducing the backlog, or will it simply allow the Coast Guard to `tread 
water' and not lose any additional ground? Exactly how far will this 
extra money get us in terms of reducing the current rulemaking backlog?
    Answer. The Coast Guard expects to see a steadily declining backlog 
beginning in 2009. Rulemaking is accomplished by teams comprised of 
technical experts, project managers, attorneys, economists, 
environmental specialists and technical writers. Contractor support is 
often used to assist the teams in analysis and technical writing. The 
FY 2008 funding and FY 2009 requested funding (including contractor 
support), once fully implemented, would allow us to make significant 
progress on the current project backlog.

    Question 31. On February 6, the Minerals Management Service 
auctioned off a part of the Arctic Ocean the size of Pennsylvania for 
oil and gas drilling--despite a 33-51 percent chance of a major oil 
spill in the region, where oil spill cleanup is virtually impossible 
much of the time. Does the Coast Guard currently have enough assets in 
the Chukchi Sea region to respond quickly and effectively to a major 
spill, a major vessel emergency, or a major search and rescue case in 
that area? What would be the likely range of possible response times to 
such incidents in the Chukchi Sea given the current placement of assets 
and personnel?
    Answer. For assets operating in the region, response times would 
vary dependent on distance, season, environmental conditions, and 
operational status. Oil and gas operations in the Chukchi Sea will not 
begin until many technical, financial, and logistical hurdles are 
overcome.

    Question 31a. If oil and gas exploration activities begin in the 
Chukchi Sea this summer or the near future, do you anticipate the Coast 
Guard will be required to shift personnel and/or assets to the region?
    Answer. The Coast Guard anticipates increased activity in the 
Chukchi Sea as ice conditions eventually allow for increased navigation 
and commerce. The Coast Guard will allocate resources to the region 
based on risk analysis and available resources.

    Question 31b. If major development occurs in the Chukchi Sea over 
the next several years, including oil and gas exploration and 
development, would the Coast Guard need to move assets and personnel 
from other areas to meet these emerging needs? Where would these assets 
and personnel likely come from?
    Answer. The Coast Guard is currently preparing a Polar Operations 
report in response to Congressional direction in the FY 2008 
appropriations conference report. The Fiscal Year 2009 President's 
Budget provides for a Polar High Latitude Study to conduct a broad 
analysis of future national missions in the high latitude regions. The 
study will inform the ongoing national Arctic policy review and will 
provide a Coast Guard perspective on issues of national interest 
related to defense readiness, homeland security, national sovereignty, 
the United Nations Convention on the Law of the Sea (UNLCOS) and other 
international conventions, scientific research, and protection and 
exploitation of natural resources. The study will build upon analysis 
previously conducted through the Coast Guard's 2005 Mission Analysis 
Report and the Coast Guard-sponsored 2006 assessment of the Nation's 
polar icebreaking needs conducted by the National Research Council.

    Question 32. Is the current funding arrangement with the National 
Science Foundation damaging the Coast Guard's ability to train crews 
and maintain adequate expertise in Polar Icebreaking?
    Answer. Through the planning process outlined in our MOA, Coast 
Guard and NSF develop the training and O&M regimes that best serve both 
agencies.

    Question 32a. Does the current funding arrangement with NSF allow 
for adequate maintenance of the Polar Icebreaker fleet?
    Answer. The MOA between Coast Guard and NSF ensures adequate 
maintenance through joint planning and shared accountability.

    Question 32b. Are we slowly eliminating U.S. polar icebreaking 
expertise? In what ways could this be a major problem in the future?
    Answer. In conjunction with the ongoing national Arctic policy 
review, the Administration has undertaken a review of anticipated 
icebreaking needs to prepare for possible changes in the Arctic's 
maritime condition and use.

    Question 33. As the Arctic opens in the coming years and decades, 
it seems likely that Coast Guard polar icebreaking missions will become 
more multi-mission rather than exclusively scientific as in the past. 
Is funding through NSF, which is entirely science-based, appropriate 
given our Nation's likely future needs for a more multi-mission polar 
icebreaking fleet?
    Answer. For the near-term, research continues to be the predominant 
and highest priority mission for USCG icebreakers. To prepare for the 
impacts of changing Arctic conditions on multiple agencies and their 
missions, the Administration has undertaken an Arctic policy review in 
which Coast Guard actively participates. Once a polar policy is 
finalized, the appropriate structure for funding will be developed 
through implementation planning.

    Question 33a. Does the current funding arrangement with NSF prevent 
the Coast Guard from using the polar icebreaker fleet to conduct other, 
non-science missions in the Arctic?
    Answer. While service to the research community remains the highest 
priority for polar icebreakers, the current Coast Guard-NSF MOA retains 
with Coast Guard the authority to divert its polar icebreakers to SAR, 
oil spill and other missions to respond to emergencies and threats to 
maritime security and safety.

    Question 34. It seems to me that decisions about our Polar 
Icebreaking fleet are currently being made based on budget pressures 
and not explicit policy choices. Do you agree with this assessment?
    Answer. Both policy and resource considerations inform 
Administration decisions. The current arrangement recognizes that the 
near-term need for polar icebreaking lies primarily with the Nation's 
science missions.

    Question 35. Your Posture Statement highlights ``Polar Presence and 
Capabilities'' as one of your top five Strategic Priorities for FY 
2009. With one polar icebreaker not operational and in caretaker 
status, and the other not having deployed to the ice for almost 2 years 
now, doesn't that situation and the fact that the Coast Guard does not 
control the budget to operate any of its three polar-capable 
icebreakers hamstring your ability to protect U.S. sovereignty in the 
Arctic?
    Answer. Coast Guard has considerable presence along the U.S. Arctic 
border that contributes to protection of U.S. sovereignty. For example, 
both surface and air assets are used in performance of our fisheries 
law enforcement mission. Additionally, the polar icebreaker HEALY 
deploys annually to the Arctic. POLAR SEA is currently deployed to the 
Arctic to conduct training and Coast Guard missions.

    Question 36. The FY09 budget requests from both the Coast Guard and 
the National Science Foundation lack any funds for the $3 million 
required to keep the POLAR STAR in caretaker status. If funding for the 
POLAR STAR is not appropriated, what would be the implications for the 
ship?
    Answer. As POLAR STAR is no longer a viable option to support the 
breakout of McMurdo Sound for resupply of the South Pole station, the 
2009 Request proposes to remove it from NSF's icebreaking resources. 
Coast Guard is currently evaluating ship disposition options in 
anticipation of this change.

    Question 36a. What would be the implications for the Nation's polar 
icebreaking fleet and capabilities?
    Answer. There is no impact on national icebreaking capabilities as 
the POLAR STAR is in caretaker status and is no longer used for direct 
service or training. If the POLAR STAR were turned over to MARAD for 
caretaking in the Ready Reserve fleet, over 30 billets would be freed 
up for transfer to higher priority missions.

    Question 36b. Do you believe that such a move would run counter to 
the recommendations issued in the 2007 National Academy of Sciences 
report ``Polar Icebreakers in a Changing World: an Assessment of U.S. 
Needs?''
    Answer. The report recommends that POLAR STAR remain available for 
reactivation until a new polar icebreaker is operational. The Ready 
Reserve fleet could serve that purpose if this recommendation were 
accepted.

    Question 37. If the U.S. Government decided to eliminate the Coast 
Guard's polar icebreaking fleet, what would be some of the operational 
and policy implications for the Coast Guard? What would be some of the 
operational and policy implications for the Nation?
    Answer. Nationally, the loss of the two U.S. polar-class 
icebreakers, POLAR SEA and POLAR STAR, would mean the loss of a U.S. 
flagged backup heavy icebreaking capability for the annual McMurdo 
Sound break-in.

    Question 38. How does our polar icebreaker fleet compare to those 
of other nations throughout the world? In size? In capability? In age?
    Answer. Fifty icebreakers in the world fleet have greater than 
10,000 horsepower. Russia has the largest fleet (over 20 ships) and 
Finland, Canada, and Sweden each operate 6-7 icebreakers. The United 
States has 4 ships, and 6 other countries have 1-3 ships. Russia is the 
only country to use nuclear propulsion plants (8 ships), and only 
Russia and the United States operate ships with propulsion of greater 
than 45,000 horsepower (Heavy Icebreaker). Most icebreakers operate in 
the Baltic Sea region and often are designed for specific missions or 
activities; for example, several of those listed below are anchor 
handling tugs. Russia is known for its emphasis on icebreaker tourism.
      
----------------------------------------------------------------------------------------------------------------
                                                                  Continuous         Back and Ram
    Nation          Ship Name      Propulsion   Displacement      Icebreaking         Icebreaking       Year in
                                                    (Tons)        Capability          Capability        Service
----------------------------------------------------------------------------------------------------------------
USA             POLAR STAR          60,000 GT        13,334         6 ft @ 3 KT               21 ft        1974
                                    18,000 DE
USA             POLAR SEA           60,000 GT        13,334         6 ft @ 3 KT               21 ft        1976
                                    18,000 DE
USA             HEALY               30,000 DE        16,165       4.5 ft @ 3 KT                8 ft        1999
USA             NATHANIEL B.         12,700 D         6,640         3 ft @ 3 KT                5 ft        1992
                 PALMER
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Russia          ROSSIYA              75,000 N        23,625       6.5 ft @ 3 KT       Not Available        1985
Russia          SOVIETSKIY SOYUZ     75,000 N        23,625       6.5 ft @ 3 KT       Not Available        1990
Russia          50 LET POBEDY        75,000 N        25,800       7.5 ft @ 3 KT       Not Available        2007
Russia          YAMAL                75,000 N        25,800       7.5 ft @ 3 KT       Not Available        1993
Russia          ARKTIKA (Out of      75,000 N        24,170       6.5 ft @ 3 KT       Not Available        1975
                 Service)
Russia          SIBIR (Out of        75,000 N        24,170       6.5 ft @ 3 KT       Not Available
                 Service)
Russia          TAYMYR               47,600 N        20,000         6 ft @ 3 KT       Not Available        1989
Russia          VAYGACH              47,600 N        20,000         6 ft @ 3 KT       Not Available        1990
Russia          YERMAK              36,000 DE        20,241       Not Available       Not Available        1974
Russia          ADMIRAL MAKAROV     36,000 DE        14,058         6 ft @ 3 KT       Not Available        1976
Russia          KRASIN              36,000 DE        14,058         6 ft @ 3 KT       Not Available        1976
Russia          KAPITAN             22,000 DE        15,000         5 ft @ 3 KT       Not Available        1980
                 DRANITSYN
Russia          KAPITAN SOROKIN     22,000 DE        15,000       Not Available       Not Available        1977
Russia          AKADEMIK FEDOROV    36,000 DE        13,000         6 ft @ 3 KT       Not Available        1987
Russia          KAPITAN             22,000 DE        15,000         5 ft @ 1 KT              9.8 ft        1981
                 KHLEBNIKOV
Russia          KAPITAN             22,000 DE        15,000       Not Available       Not Available        1978
                 NIKOLAYEV
Russia          TALAGY               16,800 D         1,169       Not Available       Not Available        1979
Russia          MUDYUG               12,400 D         5,342       Not Available       Not Available        1982
Russia          MAGADAN              12,800 D         5,342       Not Available       Not Available        1982
Russia          DIKSON               12,400 D         5,342       Not Available       Not Available        1983
Russia          VLADIMIR             23,200 D         4,234         4 ft @ 7 KT       Not Available        1977
                 IGNATYUK
Russia          FESCO SAKHALIN      17,500 DE         6,882       Not Available       Not Available        2005
Russia (Leased  SMIT SAKHALIN        14,900 D         3,340       Not Available       Not Available        1983
 from
Netherlands)
Russia (Leased  SMIT SIBU            14,900 D         3,340       Not Available       Not Available        1983
 from
Netherlands)
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Canada          LOUIS ST LAURENT    30,000 DE        11,400         4 ft @ 3 KT       Not Available   1969, 1993
Canada          KIGORIA              16,800 D         7,600       Not Available       Not Available        1978
Canada          TERRY FOX            23,200 D         4,234         4 ft @ 7 KT       Not Available        1983
Canada          HENRY LARSEN        16,000 DE         6,166       Not Available       Not Available        1988
Canada          AMUNDSEN            13,960 DE         5,910       3.8 ft @ 2 KT       Not Available   1982, 2003
Canada          PIERRE RADISSON     13,400 DE         5,910       3.8 ft @ 2 KT       Not Available        1978
Canada          DES GROSSELIERS     13,400 DE         5,910       3.8 ft @ 2 KT       Not Available        1983
Canada          MARY L. BLACK        8,847 DE         3,809       Not Available       Not Available        1986
Canada          GEORGE R.            8,847 DE         3,809       Not Available       Not Available        1986
                 PEARKES
Canada          EDWARD               8,847 DE         3,809       Not Available       Not Available        1986
                 CORNWALLIS
Canada          SIR WILFRED          8,847 DE         3,809       Not Available       Not Available        1986
                 LAURIER
Canada          ANN HARVEY           8,847 DE         3,809       Not Available       Not Available        1987
Canada          SIR WILLIAM          8,847 DE         3,809       Not Available       Not Available        1987
                 ALEXANDER
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Finland         FENNICA             20,115 DE         6,370      2.6 ft @ 11 KT       Not Available        1994
Finland         NORDICA             20,115 DE         6,370      2.6 ft @ 11 KT       Not Available        1994
Finland         URHO                21,400 DE         7,525         5 ft @ 2 KT       Not Available        1975
Finland         SISU                21,400 DE         7,525         6 ft @ 2 KT       Not Available        1976
Finland         OTSO                20,400 DE         7,066       Not Available       Not Available        1986
Finland         KONTIO              20,400 DE         7,066       Not Available       Not Available        1987
Finland         BOTNIKA             13,410 DE         6,370       2.0 ft @ 8 KT       Not Available        1998
Finland         VOIMA               17,460 DE         4,159       2.7 ft @ 2 KT       Not Available   1954, 1979
Finland         APU (Dudinka/       12,000 DE         4,890       2.8 ft @ 2 KT       Not Available        1970
                 2006)
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Norway          SVALBARD            13,410 DE         6,500       3.3 ft @ 3 KT       Not Available        2002
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Sweden          ODEN                 23,200 D        13,042       6.2 ft @ 3 KT       Not Available        1989
Sweden          ATLE                22,000 DE         9,500       3.6 ft @ 2 KT       Not Available        1974
Sweden          YMER                22,000 DE         9,500       3.6 ft @ 2 KT       Not Available        1977
Sweden          FREJ                22,000 DE         9,500       3.6 ft @ 2 KT       Not Available        1975
Sweden          TOR VIKING          18,000 DE         4,000       Not Available       Not Available        2001
Sweden          BALDERR VIKING      18,000 DE         4,000       Not Available       Not Available        2001
Sweden          VIDAR VIKING        18,000 DE         4,000       Not Available       Not Available        2001
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Denmark         A551 DANJORN        10,500 DE         3,685       3.3 ft @ 2 KT       Not Available        1965
Denmark         A552 ISBJORN        10,500 DE         3,685       3.3 ft @ 2 KT       Not Available        1965
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Iceland         none
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Germany         POLARSTERN          20,000 DE        17,300       4.5 ft @ 5 KT       Not available        1982
----------------------------------------------------------------------------------------------------------------
GT = Gas Turbine.
D = Diesel.
DE = Diesel Electric.
N = Nuclear.


    Question 39. In your opinion, will the lack of an appropriate U.S. 
polar icebreaker fleet weaken our Nation's ability to assert our 
Nation's sovereignty in the Arctic?
    Answer. The Administration is able and committed to maintain our 
Nation's sovereignty in the Arctic with assets that include, but are 
not limited to, existing icebreakers.

    Question 40. Do you believe our Nation should have a comprehensive 
policy on the future of our polar icebreaker fleet? Do you think 
developing such a policy is important for our national interest? Is it 
important for national security? Is it important for our national 
sovereignty? Is it important for environmental protection? Would having 
such a national policy benefit the Coast Guard and enable Coast Guard 
leadership to improve its decision-making for Arctic and polar 
icebreaker issues?
    Answer. Yes. A national policy outlining the strategic national 
security, economic and environmental objectives in the Polar Regions 
and affirming the imperative to maintain the Coast Guard's icebreaking 
fleet would allow the Coast Guard to fully integrate polar operations 
into our strategic, operational and budgetary planning process, and 
while ensuring the fleet is properly maintained, managed and employed 
to meet these objectives. The Administration is engaged in a 
comprehensive interagency dialogue and planning effort.

    Question 41. Why has the Administration not yet developed a 
comprehensive national policy for the Arctic or for the polar 
icebreaker fleet? Has the Administration taken any steps toward 
developing such a policy? If so, what?
    Answer. The United States Policy on the Arctic and Antarctic 
Regions was promulgated in June 1994 by Presidential Decision 
Directive/National Security Council 26. Recognizing the effects of 
climate change in the Arctic and the need to update this policy, in 
September 2007 the Administration directed the Department of State and 
the National Security Council to co-lead an interagency effort 
supported by four work groups. The U.S. Coast Guard is participating in 
all four work groups.

    Question 42. Please explain the scope of the Polar High Latitude 
Study and how the Coast Guard expects to incorporate its results into 
Service planning and budgeting. How extensively will the study be able 
to examine Arctic issues with the proposed budget of $200,000? What 
else would the study be able to cover if it were budgeted for $500,000; 
$1 million?
    Answer. The purpose of the Polar High Latitude Study is to conduct 
a broad analysis from the Coast Guard perspective of national mission 
needs in the high latitude regions. The study is intended to inform the 
ongoing national Arctic policy review. The study will build upon 
analysis previously conducted through the Coast Guard's 2005 Mission 
Analysis Report and the Coast guard sponsored 2006 assessment of the 
Nation's polar icebreaking needs conducted by the National Research 
Council.

    Question 43. Please explain in more detail the statement contained 
in the Posture Statement's Executive Summary that ``increasing 
exploration, eco-tourism, and government activities in the Arctic 
Region are challenging conventional notions of sovereignty, 
environmental preparedness, and long-range disaster response, and that 
the Coast Guard is ideally suited to address these and other challenges 
through its . . . adaptive operational capabilities. . . .''
    Wouldn't you be much more capable of responding to those challenges 
in the Arctic if all three Coast Guard polar-capable icebreakers were 
fully operational and the Coast Guard had budget authority over the 
operation of those icebreakers?
    Answer. The Coast Guard carries out a wide-range of missions, 
executing authorities and responsibilities for search and rescue, 
marine safety, law enforcement, national defense, aids to navigation, 
and others. Coast Guard units are multi-mission in character and our 
people are trained to adapt to local operational requirements. Through 
its surface and air fleets, the Coast Guard can bring these same 
capabilities to address emerging needs in the Arctic Region, but we 
must ensure these assets will operate successfully in the harsh Arctic 
environment. The Coast Guard is reviewing its current Arctic operations 
to identify requirements specific to this environment.

    Question 44. Wouldn't it be in the best interests of our country 
from both a national security and Arctic Domain Awareness standpoint to 
have our two polar-class icebreakers restored and retained in full 
operational condition until new ships come on line to replace them? 
What would you need to make that happen?
    Answer. At present, Polar-class icebreakers are not involved in 
National Security or Arctic Domain Awareness as these activities, to 
the extent they are active, are carried out by DHS and DOD using other 
air, surface and communications assets. Any role for future U.S. 
flagged icebreakers is under review and Coast Guard will develop its 
recommendations based on findings from its Polar High Latitude Study, 
if funded by Congress in 2009.

    Question 45. Admiral, what impact will signing onto the Law of the 
Sea Treaty have on our Nation's sovereignty? Will it erode our 
sovereignty, or help to secure, expand, and solidify our sovereignty?
    Answer. Each of my predecessors as Commandant and I, as well as all 
of the Joint Chiefs of Staff over the past 15 years and previous 
Secretaries of State and National Security Advisors, have strongly and 
consistently argued in favor of U.S. accession to the United Nations 
Convention on the Law of the Sea (Convention) as an important way to 
promote the national security, sovereignty, and other vital interests 
of the United States. Perhaps more so than any international agreement 
in U.S. history, this Convention secures, expands, and solidifies U.S. 
sovereignty over millions of square miles, and trillions of dollars in 
resources, in and under a vast expanse of ocean waters off our coasts. 
The U.S. has the largest and richest Exclusive Economic Zone (EEZ) and 
continental shelf in the world. The Convention recognizes and 
guarantees the exclusive rights of the U.S. to explore, exploit, 
conserve, and manage the living and non-living resources of this vast 
expanse of ocean space as we see fit. Moreover, it enables the U.S. to 
claim exclusive sovereign rights to one of the largest extended 
continental shelves anywhere in the world. The Convention also 
guarantees the sovereign immunity of U.S. warships, Coast Guard 
cutters, and military aircraft wherever they may be in the world. 
Finally, it advances our sovereign authority to conduct many national 
security and law-enforcement missions in international waters all over 
the world.
    Claims from opponents that the Convention restricts U.S. 
sovereignty over our own territorial sea, or restricts our rights to 
engage in gathering intelligence in the territorial seas of foreign 
states, are specious and inconsistent. Rather, the Convention 
effectively balances the contending interests of coastal and maritime 
states and protects coastal state sovereignty over their territorial 
waters while ensuring our critical freedom of navigation interests. 
These include the critical rights of innocent passage through the 
territorial sea and transit passage through international straits. 
Moreover, the dispute settlement provisions, which the United States 
has long sought and which are consistent with hundreds of other 
agreements the United States has entered into, enable us to resolve 
disputes under the Convention while preserving our critical military 
and intelligence-gathering activities from international review.

    Question 45a. Are you aware of any examples of international 
negotiations or other circumstances where not being a signatory to Law 
of the Sea has clearly damaged our national interests? If possible, 
please provide examples.
    Answer. Yes. As you know, the United States has long been the world 
leader in a promotion of safety of ocean transportation, protection of 
the marine environment, and, particularly in the post-9/11 world, 
promotion of our global maritime security. Not being a Party to the 
Convention definitely detracts from our strong leadership position. 
When I participated in the most recent plenary meeting of the 
International Maritime Organization (IMO) in London late last year, I 
observed directly how remaining outside of the Convention has reduced 
our influence and effectiveness at that important forum. The Coast 
Guard seeks to negotiate bilateral agreements and other understandings 
to promote our interests in combating trafficking in illicit drugs, 
protecting our borders against illegal immigration, and dealing 
effectively with piracy and maritime terrorism as necessary throughout 
the world. Remaining outside of the Convention undermines our 
credibility and authority as a global leader in these matters.

    Question 45b. What would be some the specific negative impacts our 
Nation would likely suffer if we continue to not sign onto Law of the 
Sea?
    Answer. If we fail to become Party to the Convention, our 
leadership role at the IMO and other important multilateral forums 
would continue to diminish. We would not be able to file a claim with 
the Continental Shelf Commission for an extended continental shelf in 
the Arctic, in the Bering Sea, in the Gulf of Mexico, and off the East 
Coast of the United States, which undermines our ability to control 
trillions of dollars of resources. We would not be able to take 
advantage of the dispute settlement provisions of the Convention which 
the United States worked so hard to set up. Finally, we may see 
increased interference with our military and intelligence-gathering 
ships and aircraft in and over foreign waters, such as the April 2001 
incident in which a Chinese jet interfered and collided with a U.S. 
military aircraft gathering intelligence over international waters near 
Hainan Island. Rather than being a proactive participant in resolving 
such claims, the United States would be on the outside of the process.

    Question 45c. If our Nation continued to not sign onto Law of the 
Sea, how would this impact our Nation's role in the Arctic?
    Answer. The Convention has the potential to play a particularly 
beneficial role for a wide range of vital U.S. interests in the Arctic. 
While the United States has uncontested sovereignty to explore and 
exploit living and non-living resources on, over, and under the 
Exclusive Economic Zone and continental shelf out to 200-nautical miles 
from our coasts, the continental shelf in the Bering Sea, Chukchi Sea, 
and Beaufort Sea extends, in several places, out to 350-nautical miles 
or more. However, only States Party to the Convention are entitled to 
file claims for international recognition of title to land beyond 200 
nautical miles. Russia, Norway, Denmark, Iceland, and Canada are well 
on their way to having their claims approved; as the only non-Party 
Arctic State, the United States is falling farther and farther behind 
in securing title to those resources.

    Question 45d. If our Nation continued to not sign onto Law of the 
Sea, would there be any negative impacts on the Coast Guard and Coast 
Guard operations? If so, what?
    Answer. The Law of the Sea Convention is critical to many of the 
missions of the Coast Guard. These include such matters as enforcing 
U.S. laws and regulations with respect to maritime security, law-
enforcement, and pollution control in U.S. territorial and inland 
waters. The Convention strongly reinforces current U.S. law and policy 
in our coastal waters, but the Convention is even more important in 
foreign waters, where its principles ensure freedom of navigation and 
operational activities to interdict drug traffickers, pirates, maritime 
terrorists, illegal immigration, slave traders, violators of customs 
laws, and those who commit other crimes under U.S. and international 
law. The Convention also protects the sovereign immune status of U.S. 
warships and military aircraft, including Coast Guard cutters, fixed-
wing aircraft, and helicopters, wherever they may be in the world.

    Question 46. Recent figures indicate the Coast Guard's Aids to 
Navigation maintenance backlog is over $14 million. Is the Coast 
Guard's Aids to Navigation backlog growing or shrinking?
    Answer. The current backlog for Aids to Navigation (ATON) 
maintenance (including new construction and structure maintenance) is 
shrinking slightly, based on previous years' trends and the following:

   Coast Guard's attempt to take advantage of new technology;

   Some major projects nearing completion;

   Notable reduction in high priority unplanned projects;

   Use of higher strength materials with extended longevity 
        that is better able to withstand the harsh and unpredictable 
        maritime environment; and

   Use of accurate logistical tracking models and property 
        management which allowed local servicing units to execute a 
        more accurate and cost effective maintenance cycle.

    Question 46a. Will the funding in the FY09 budget request reduce 
the ATON backlog? If so, by how much?
    Answer. The 2009 budget request, in particular the request for new 
construction, is anticipated to reduce the current backlog by 15 to 20 
percent.

    Question 46b. Are we setting ourselves up for disaster here, or is 
elimination of the backlog achievable over a short time period if funds 
become available?
    Answer. This estimate does not take into consideration any 
catastrophic incidents--manmade or natural--that could result in 
multiple failures of ATON structures thus forcing us to invest in 
unplanned repairs or replacement if not funded by emergency 
appropriations. The cost of materials and labor is another variable 
that could either increase or reduce this estimate.

    Question 46c. Is the backlog exclusively due to a lack of funding, 
or is it also because of shortfalls in personnel and/or equipment and 
assets?
    Answer. There are many variables that have led to the current 
backlog. Major catastrophic events and the rising cost of steel are 
some of the variables that impact the current backlog.

    Question 46d. Is this an area that will be impacted by the $68 
million in ``management efficiencies'' necessary to execute the FY 2009 
budget request?
    Answer. Management efficiencies will not affect the ATON 
maintenance backlog.

    Question 47. Your staff has informed the Committee that Rescue 21's 
total cost is $730 million. Can you guarantee me that this program's 
cost will not increase above this amount?
    Answer. On January 24, 2008, the Rescue 21 project forecasted a 
pending revised cost and schedule estimate above the $730 million via a 
routine quarterly status brief to Congressional staff. The update to 
the cost estimate is based on the following factors: full rate 
production lessons including a better understanding of costs; a recent 
third-party Life Cycle Cost Estimate; an Alaska subsystem study and 
cost estimate; projected out-year funding availability; and externally-
driven technology standards and protocol changes from government, 
industry, and international sources. The project has since submitted a 
revised Acquisition Program Baseline (APB) to the Department of 
Homeland Security for review which reflects the project's resulting 
cost and schedule increase.

    Question 47a. How are the reforms to the Coast Guard's acquisition 
program, triggered by the problems in Deepwater, impacting the Rescue 
21 acquisition?
    Answer. As part of the implementation of the Coast Guard's 
Blueprint for Acquisition, non-Deepwater projects like Rescue 21 will 
be aligned under a single C4ISR Program Manager. This will improve 
synergies between all USCG C4ISR projects (including Deepwater).

    Question 48. There are a number of provisions in the Senate's Coast 
Guard Authorization Act for Fiscal Year 2008 that you consider 
important to improve your ability to do your job. Do you believe that 
the swift enactment of this bill will improve your ability to conduct 
your missions? By helping the Coast Guard to do its job, will enactment 
of the Coast Guard bill improve our national security?
    Answer. S. 1892, the ``Coast Guard Authorization Act for Fiscal 
Year 2008,'' includes numerous proposals to enhance the organizational 
efficiency and operational effectiveness of the Coast Guard. In 
particular, three provisions--providing for the appointment of the vice 
commandant and vice admirals of the Coast Guard, the prosecution of 
maritime alien smuggling, and the protection and fair treatment of 
seafarers--when enacted would have an immediate, beneficial effect on 
the Coast Guard's modernization and transformation, its maritime law 
enforcement mission, and its marine safety and stewardship missions, 
respectively. Swift enactment would ensure that the Coast Guard is even 
better prepared to conduct operations across the broad spectrum of 
threats and hazards.
    Enactment of S. 1892 would improve both the maritime safety and 
security of the United States. Certain provisions of the bill would 
have a direct, immediate effect on maritime security (e.g., providing 
for the prosecution of maritime alien smuggling and defining Coast 
Guard vessels and aircraft); other provisions would improve the 
maritime security of other nations and, ultimately, the United States 
(e.g., allowing for assistance to foreign governments and maritime 
authorities).

    Question 49. I've noticed both the Inland River Survey & Design 
AC&I and the Inland Rivertenders' Emergency Subsystem Sustainment OE 
line items within your FY09 Budget. These are new line items. What are 
the Coast Guard responsibilities on the Inland Rivers and how have they 
changed, if at all, since 9/11?
    Answer. We are completing a Western Rivers Mission Analysis Report 
(MAR) covering these and other issues pertaining to Coast Guard 
missions on the inland rivers.
    While the primary mission of Aids to Navigation on the Western 
Rivers has not changed since 9/11, additional emphasis has been placed 
on the homeland security mission such as ports and waterways security.

    Question 49a. What is the state of the current assets?
    Answer. The average age of a River Tender is 40 years and the 
current fleet is expected to incur significant declines in operational 
availability in the coming year. The Coast Guard continues to meet 
mission requirements with this aged fleet and is modernizing the fleet 
to address safety, environmental and habitability issues.

                     WLR (River Tender) Information
------------------------------------------------------------------------
       Cutter                 Homeport         Commissioning Date   Age
------------------------------------------------------------------------
                           River Tender 65 ft
------------------------------------------------------------------------
DOUACHITA 501         Chattanooga, TN                       1960     47
CIMMERON 502          Paris Landing, TN                     1960     47
OBION 503             Owensboro, KY                         1962     45
SCIOTA 504            Keokuk, IA                            1962     45
OSAGE 505             Sewickley, PA                         1962     45
SANGAMON 506          Peoria, IL                            1962     45
------------------------------------------------------------------------
                           River Tender 75 ft
------------------------------------------------------------------------
WEDGE 307             Demopolis, AL                         1964     43
GASCONADE 401         Omaha, NE                             1964     43
MUSKINGUM 402         Sallisaw, OK                          1965     42
WYACONDA 403          Dubuque, IA                           1965     42
CHIPPEWA 404          Paris Landing, TN                     1965     42
CHEYENNE 405          St Louis, MO                          1966     41
KICKAPOO 406          Vicksburg, MS                         1969     38
KANAWHA 407           Pine Bluff, AR                        1969     38
PATOKA 408            Greenville, MS                        1970     37
CHENA 409             Hickman, KY                           1970     37
KANKAKEE F 500        Memphis, TN                           1990     17
GREENBRIER F 501      Natchez, MS                           1990     17
------------------------------------------------------------------------

    A fleet study conducted by the Coast Guard revealed that the WLR 
fleet has obsolete equipment, hazardous materials, and substandard crew 
accommodations. The safety, supportability, environmental compliance, 
and habitability concerns associated with the River Tenders place Coast 
Guard personnel at risk; cost more to repair; pose environmental 
concerns; and generally do not allow for mixed gender crews. 
Additionally, over the past several years, the WLR fleet has 
experienced an increase in unscheduled maintenance and a decrease in 
Aids to Navigation (ATON) hours below programmed underway employment 
standards.

    Question 49b. How do these efforts tie to the Heartland Waterway 
Vessel line item in your Capital Investment Plan?
    Answer. All of the above efforts tie directly into the pre-
acquisition planning and documentation that is required to properly 
initiate the Heartland Waterway Vessel (HWV) Project.

    Question 50. Will the 276 FTP for the Marine Inspection Program 
provide the Coast Guard with sufficient capacity to meet industry 
growth?
    Answer. The 276 FTP will provide necessary resources to expand the 
Coast Guard marine inspection program to include a new inspection 
regime for approximately 5,200 United States towing vessels as mandated 
by the Fiscal Year 2004 Authorization Act.

    Question 51. Is your funding level adequate for Operation Iraqi 
Freedom/Operation Enduring Freedom support? Are funds for these efforts 
included in your FY09 budget request? If not, do you anticipate 
receiving funding from DoD or from some other source?
    Answer. Historical funding provided to support Operation Iraqi 
Freedom (OIF)/Operation Enduring Freedom (OEF) has been adequate to 
fund operations.
    The FY 2009 Coast Guard budget request does not include funding for 
OIF/OEF. Consistent with previous years, the Coast Guard is working 
closely with DoD to have its requirements included in the DoD 
supplemental request.

    Question 52. Could you please explain proposal USCG-2006-26202? My 
understanding is that this proposal would drastically reduce the 
training requirements for towing vessels. Can a fully-qualified Mate of 
a Towing Vessel, for use in a 2-watch system, actually be produced in 
30 days? When and how did the Coast Guard reach the conclusion that the 
current training requirements were too burdensome and no longer 
necessary? I assume that the Coast Guard has consulted extensively with 
the maritime industry on this issue, but to what extent did you consult 
with actual mariners such as Captains on whether this reduction in 
training would be harmful or helpful?
    Answer. The Coast Guard has not proposed to cut the training for 
tugboat pilots from 30 months to 30 days. As proposed in the Notice of 
Proposed Rulemaking (NPRM) published on September 17, 2007, the 
alternate progression candidate for mate (pilot) of towing vessels 
needs a total of 36 months of service as master of steam or motor 
vessels not more than (NMT) 200 GRT, in addition to the sea service 
required to obtain the underlying master NMT 200 GRT license, which is 
at least 12-36 months, depending on the specific type of NMT 200 GRT 
master license held.
    The alternate progression candidate must also complete a Towing 
Officer Assessment Record (TOAR) or approved course in lieu of TOAR, 
pass an examination, and complete at least 30 days training and 
observation on towing vessels in order to obtain a mate (pilot) of 
towing vessels license.
    This NPRM was developed in response to three separate petitions for 
rulemaking submitted to the Coast Guard in accordance with 33 CFR 1.05-
20. It was positively endorsed by the Towing Safety Advisory Committee 
(TSAC), which strongly supports the alternate progression and 
recommends that it be implemented as soon as possible. TSAC has working 
mariner representation on the Committee. We also received a number of 
positive public comments posted to the docket for the NPRM.

    Question 53. Given National Transportation Safety Board (NTSB) and 
Coast Guard findings on the impact of sleep and fatigue on 
transportation safety, I am surprised that Coast Guard sleep 
requirements are vague and non-regulatory in nature. Please outline and 
explain current Coast Guard sleep requirements.
    Answer. Currently there are no regulations in force which prescribe 
specific sleep requirements for mariners working in the domestic 
commercial maritime industry. However, the Coast Guard (CG) does 
prescribe hours of service, hours of rest, and watchkeeping 
requirements. The specific watchkeeping requirements, work-hour 
limitations, and manning requirements for mariners working within the 
various segments of the industry are comprehensively addressed in Title 
46 United States Code Part F, Title 46 Code of Federal Regulations Part 
15.
    Title 46 U.S.C. 8104 generally requires that when the master of a 
seagoing vessel of more than 100 gross tons establishes watches, the 
personnel shall be divided, when at sea, into a least three watches. 
There are a number of exceptions, however. Title 46 U.S.C. 8104(g) and 
Title 46 CFR 15.705(c)(d), permit licensed individuals and crewmembers 
of towing vessels, offshore supply vessels, and barges, when engaged on 
voyages of less than 600 nautical miles, or at sea, to be divided into 
at least two watches. The Coast Guard interprets to mean that a mariner 
can be scheduled to work 12 hours in any consecutive 24-hour period, 
provided the mariner consents to work more than 8 hours in a day. Title 
46 U.S.C. 8104(h) establishes that licensed operators of towing vessels 
subject to Title 46 U.S.C. 8904 are not permitted to work in excess of 
12 hours in any consecutive 24 hour period, except in an emergency.
    The Oil Pollution Act of 1990 (OPA 90) amended 46 U.S.C. 8104 by 
adding a new subsection (n) which reads as follows: ``On a tanker, a 
licensed individual or seaman may not be permitted to work more than 15 
hours in any 24 hour period, or more than 36 hours in any 72-hour 
period, except in an emergency or a drill. In this subsection, `work' 
includes any administrative duties associated with the vessel whether 
performed on board the vessel or onshore.'' Furthermore, the Officer in 
Charge, Marine Inspection has the discretion to impose manning levels 
based on a specified reasonable work hour limit taking into account 
fatigue and other human factors.
    The International Convention on Standards of Training, 
Certification, and Watchkeeping for Seafarers (STCW), 1978, as amended 
in 1995 and implemented in 46 CFR 15.1111(a) adds specific rest 
requirements for vessels operating outside the U.S. boundary line (46 
CFR 7). A person assigned duty as officer in charge of a navigational 
watch or engineering watch, onboard any vessel which operates beyond 
the Boundary Line, shall receive a minimum of 10 hours of rest in any 
24-hour period.
    Rest as defined in 46 CFR 15.1101(a)(4) is a period of time during 
which the person concerned is off duty, is not performing work, (which 
includes administrative tasks), and is allowed to sleep without being 
interrupted.

    Question 53a. Given the authorities given to the Coast Guard by 
Congress in 2004, why are maritime sleep requirements not more detailed 
and thorough, like those of other transportation agencies?
    Answer. Authorizations given to the Coast Guard pertain to watch 
organization, not prescriptive sleep requirements for the maritime 
industry. In response to Section 409 of the Coast Guard Authorization 
Act of 2004, the Coast Guard submitted a report on the demonstration 
project involving the implementation of the Crew Endurance Management 
System (CEMS) on towing vessels to Members of Congress on March 29, 
2006. The report clearly describes the need for 8 hours of 
uninterrupted sleep and the consequences of sleep deprivation. The 
report was widely distributed to the towing industry and made available 
to the general public on the CEMS website (http://www.uscg.mil/hq/g-m/
cems/index.htm).
    Furthermore, the CG has entered into a significant collaborative 
effort with the Towing Industry which has already created a fundamental 
cultural shift from the deck plate to company management circles. These 
changes specifically include educating mariners and managers on 
specific operational practices to protect mariners' sleep and to 
improve safety and performance. The training describes human 
physiological and sleep needs, brain processes during sleep, and 
strategies to obtain restorative quality sleep among other topics. Over 
the past 5 years, more than 2,000 members of the towing industry have 
attended these courses.

    Question 53b. Given that the majority of oil spills are caused by 
human error, and such human error is often caused by fatigue and a lack 
of sleep, isn't this gap a major vulnerability in maritime 
transportation and oil spill prevention?
    Answer. The Coast Guard is aware that fatigue and lack of sleep can 
be contributing factors to human error. Since the EXXON VALDEZ 
environmental disaster, the USCG has led significant research efforts 
to support the development of non-regulatory projects aimed at reducing 
the incidence of shipboard fatigue. From 1998 until 2003, the USCG 
Headquarters' Human Element and Ship Design Division (CG-5211) 
sponsored and managed research efforts which produced the development 
of the Crew Endurance Management System (CEMS), a non-regulatory 
program designed to usher the Commercial Maritime Industry into 
adopting shipboard practices which can significantly reduce the 
incidence of shipboard fatigue. This program provides the means for 
commercial companies to ensure the crewmembers meet daily physiological 
sleep requirements.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Thomas R. Carper to 
                         Admiral Thad W. Allen
    Question 1. As you know, Wilmington, Delaware was the first U.S. 
port to start taking applications for Transportation Worker 
Identification Cards (TWIC). The Coast Guard is involved in regulation, 
implementation, and oversight of the program. How long can a non-TWIC 
holder be escorted in secure areas before needing a TWIC of his or her 
own? Is there a time limit or frequency limit with respect to the 
escort protocol?
    Answer. There is no limit regarding the length of time or frequency 
a specific individual may be escorted in secure areas. The Coast 
Guard's Navigation and Vessel Inspection Circular (NVIC) 03-07, dated 
July 2, 2007, provides guidance and options for conducting escorts in 
both secure and restricted areas. It is the responsibility of the 
owner/operator to determine how the escorting will be carried out in 
accordance with the applicable regulations and NVIC 03-07.

    Question 2. How is a TWIC-carrying escort expected to effectively 
supervise up to five (5) employees and work at the same time? Are you 
at all concerned about the practicality and safety of such activities?
    Answer. An escort is expected to observe whether an escorted 
individual is entering an area where he/she is not authorized and/or 
engaging in activities other than those for which escorted access was 
granted. The one-to-five maximum escort ratio for restricted areas 
established in Coast Guard policy guidance should be reasonably 
achievable in most situations. However, an owner/operator should not 
approve escorting arrangements or ratios which are either impracticable 
or would create a non-secure or hazardous situation.

    Question 3. Please provide an update--from the Coast Guard's 
perspective--on how TWIC registration and implementation is progressing 
at the Port of Wilmington.
    Answer. As of April 7, 2008, 6,025 workers have enrolled at the 
Port of Wilmington and 2,691 cards have been activated. The Coast Guard 
characterizes this progress as significant considering the estimated 
TWIC population for the Port of Wilmington was 5,380. The higher number 
of workers enrolled could be due to workers from other ports enrolling 
at the Port of Wilmington or a low original population estimate.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Claire McCaskill to 
                         Admiral Thad W. Allen
    Question 1. Union Pacific Railroad (UP) has expressed its intention 
to take down the Katy Bridge at Boonville, Missouri, and cites a United 
States Coast Guard directive to do so. It is my understanding that the 
United States Coast Guard first requested Union Pacific Railroad (UP) 
remove the Boonville Bridge in 1991 because it ``no longer serves a 
transportation purpose.'' As you may be aware, the status of the Bridge 
has been the subject of litigation in the state courts, and the dispute 
has been as to whether the Bridge is a part of the Katy Trail, a Rails-
to-Trails trail.
    Citing the historic nature of the bridge and its potential to be 
used as an active part of the Katy Trail, the Community of Boonville 
has expressed significant concern about the removal of the Boonville 
Bridge. Given this concern, I think it is important that all interested 
stakeholders understand the processes the Coast Guard requires for 
bridge removal. Whether or not the Coast Guard considers bridges that 
have been rail banked as part of the Rails-to-Trails program to serve a 
transportation purpose. Specifically, I seek the following information:
    Answer. Yes, the Coast Guard considers bridges that have been rail 
banked as part of the Rails-to-Trails program to serve a transportation 
purpose. It is important to note that the Rails-to-Trails operator is 
subject to the same statutes as the previous owner for maintaining both 
the bridge and its required lighting.

    Question 1a. Whether or not the Coast Guard requires any permits 
before this bridge can be dismantled and removed. If yes, please 
provide the status as it pertains to this bridge.
    Answer. No, the Coast Guard does not require any permits before a 
bridge can be dismantled.

    Question 1b. Whether or not the Coast Guard requires any permits in 
order for a bridge of this nature to be transported down the Missouri 
River; If yes, please explain the status as it pertains to this bridge.
    Answer. No, the Coast Guard does not require any permits in order 
for a bridge of this nature to be transported down the Missouri River. 
However, the bridge owner needs to submit a demolition plan to the 
Coast Guard District Commander for review and approval.

    Question 1c. Whether or not the Coast Guard places any restrictions 
on when and how this bridge can be dismantled.
    Answer. Yes, the Coast Guard may place restrictions on when a 
bridge can be dismantled. The restrictions are addressed at the time of 
the Coast Guard District Commander's review of the Demolition Plan. The 
Demolition Plan's proposed schedule and method of removal are reviewed 
and appropriate recommendations are made by the Coast Guard to minimize 
interruptions to navigation. As to ``how'' the bridge is to be 
dismantled, it is the owner and contractor's full responsibility. The 
Coast Guard simply examines the plan to ensure that the method employed 
is safe, navigation is not unreasonably impeded, all environmental 
safeguards are in place, and that Coast Guard requirements for working 
over navigable waters are followed.

    Question 1d. Whether or not the Coast Guard places any restrictions 
on when and how a dismantled bridge of this nature can be transported 
down the Missouri River.
    Answer. Yes, the Coast Guard may place restrictions on when and how 
a dismantled bridge of this nature can be transported down the Missouri 
River. The Coast Guard's Captain of the Port, working closely with the 
bridge owner, examines the timing and method of transporting parts of 
the bridge down the Missouri River to ensure navigation safety, 
minimize impacts on commerce, ensure there is adequate time to issue 
advance notice to mariners, and determine the availability of Coast 
Guard resources to establish safety zones, if required.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          Stephen L. Caldwell
    Question 1. In June of 2006, you testified before this Committee 
that implementation costs of the Rescue 21 program could reach as high 
as $872 million. The Coast Guard says they are still on schedule for 
2011 and a total cost of $730 million. Is it realistic to believe the 
Coast Guard's estimate of $730.2 million?
    Answer. We do believe those Coast Guard figures require revision. 
In fact, according to a Coast Guard official, a revised cost and 
schedule estimate was completed for Rescue 21 and is currently being 
reviewed by the Department of Homeland Security (DHS). As we do yet 
have a copy of this revision--and do not expect to receive it until DHS 
approves it--we are unable to provide an updated estimate. Once the 
revised information is received we will advise your office.

    Question 2. In your testimony you discussed the Coast Guard's 
efforts to develop adequate performance measures. How far along is the 
Coast Guard in these efforts? Do the current performance measures 
adequately capture and measure performance in a way that is measurable, 
effective, and insightful? Where are the major gaps in the need for 
additional or improved performance measures?
    Answer. Although we have not done any recent assessments of its 
progress in this area, indications are that the Coast Guard is moving 
in the right direction with regard to the development of adequate 
performance measures. In 2006, we reported that the primary measures 
the Coast Guard's six non-homeland security programs were generally 
sound, and the data used to calculate them was generally reliable.\1\ 
All six measures covered key program activities and were objective, 
measurable, and quantifiable, but three were not completely clear--that 
is, they did not consistently provide clear and specific descriptions 
of the data, events, or geographic areas they include. Of the 23 
secondary performance measures we assessed, 9 were found to be 
generally sound, while the remaining 14 had weaknesses. These 
weaknesses included: (1) a lack of measurable performance targets, (2) 
a lack of agency-wide criteria or guidance to ensure objectivity, and 
(3) unclear descriptions of the measures.
---------------------------------------------------------------------------
    \1\ GAO, Coast Guard: Non-Homeland Security Performance Measures 
Are Generally Sound, but Opportunities for Improvement Exist, GAO-06-
816 (Washington, D.C.: August 16, 2006).
---------------------------------------------------------------------------
    To improve the quality of program performance reporting and to more 
efficiently and effectively assess progress toward achieving the goals 
or objectives stated in agency plans, we recommended in 2006 that the 
Coast Guard: (1) refine certain primary and secondary performance 
measures, (2) develop and implement a policy to review external data 
provided by third parties, and (3) report additional information--
besides the one primary measure--in appropriate agency documents where 
doing so would provide greater context or perspective on the 
relationship between resources expended and program results achieved. 
The Coast Guard has taken action to address these recommendations 
through the development of new performance measures that further 
capture performance for its mission-programs. For example, the Coast 
Guard is developing a new measure that captures an additional segment 
under its search and rescue mission-program, called Lives Unaccounted 
For. Additionally, two new measures are under development to further 
capture the Coast Guard's risk management efforts and link resources to 
results under the ports, waterways and coastal security mission-
program. However, since these efforts are long-term in nature, it 
remains too soon to determine how effective they will be. Nonetheless, 
we will be following up with the Coast Guard concerning the 
recommendations made in our 2006 report in the coming months.

    Question 3. You testified that the Coast Guard met performance 
goals for 6 of its 11 mission areas. Should we be worried about this? 
Where is this leaving our Nation vulnerable, particularly in terms of 
homeland security, maritime safety, and oil spill prevention and 
response? What will it take to meet all of the Coast Guard's 
performance goals? Is it a management issue, a resources issue, or 
both?
    Answer. As indicated in our written statement, the Coast Guard 
expects to meet 6 of 11 performance targets in Fiscal Year 2007, the 
same overall level of performance achieved in 2006, and overall 
performance trends for most mission-programs remain steady. Our concern 
about the Coast Guard's performance is mitigated somewhat by the fact 
that agency is very close to meeting 2 other performance targets (for 
its Search and Rescue and Living Marine Resources mission-programs), 
and that the agency in some cases has changed its targets in recent 
years to achieve more challenging goals. For example, the Illegal Drug 
Interdiction performance target was greater than or equal to 26 percent 
for Fiscal Year 2007, compared to greater than or equal to 22 percent 
in Fiscal Year 2006.\2\ In addition, as we reported in 2006, there are 
many factors outside of the Coast Guard's control that can influence 
whether the agency achieves its performance targets or not--such as 
severe weather conditions and changes in policies--such as changes in 
fishing regulations. Ideally, a performance measure not only tells 
decisionmakers what a program is accomplishing, but it also gives them 
a way to affect these results through resource decisions--for example, 
by providing additional resources with a degree of confidence that 
doing so will translate into better results. Even sound performance 
measures, however, may have limits to how much they can explain the 
relationship between resources expended and results achieved. For the 
Coast Guard, these limits involve: (1) the difficulty of fully 
reflecting an entire program such as ice operations or marine 
environmental protection in a single performance measure; and (2) the 
ability to account for the many factors, other than resources, that can 
affect program results such as those noted above.
---------------------------------------------------------------------------
    \2\ The actual performance measure for Illegal Drug Interdiction is 
the percentage (greater than or equal to 26 for Fiscal Year 2007) of 
cocaine removed out of total estimated cocaine entering through the 
United States through maritime means.

    Question 4. In your testimony, you mention a number of areas where 
the Coast Guard is not able to meet demand, such as Hawaii marine area 
protection, updating port plans, the hazardous cargo security, and 
dealing with increasing traffic in the Arctic. In your view, what are 
the main areas where the Coast Guard is least capable to provide 
services required of it due to a lack of proper resources (including 
budget, adequate personnel, or adequate assets)?
    Answer. Our most recent relevant work has focused on port security 
issues, which does not allow us to compare resource constraints across 
different Coast Guard programs/missions; however we do know that 
resource issues have been a factor for the Coast Guard in conducting 
its port security activities. Based on recent reviews, we do know that 
a lack of resources has hampered the Coast Guard's ability to meet its 
overall security requirements in ports across the country. Some 
examples of these port security activities include conducting 
waterborne security patrols, boarding high-interest vessels, escorting 
vessels into ports, and enforcing fixed security zones. In an effort to 
meet more of its security requirements, the Coast Guard uses a strategy 
that includes partnering with other government agencies, adjusting its 
activity requirements, and acquiring resources. Despite these efforts, 
Coast Guard units are still having difficulty meeting their security 
requirements in many ports. Additionally, increases in security 
responsibilities for Coast Guard units may add to their burden. For 
example, mandated unannounced facility security inspections and review 
and re-approval of facility security plans at the sector level could 
take resources from other tasks unless additional trained personnel are 
made available to the sectors.

    Question 5. It seems to me that decisions about our Polar 
Icebreaking fleet are currently being made based on budget pressures 
and not explicit policy choices. Do you agree with this assessment?
    Answer. We have not done work that would provide the basis for 
agreeing or disagreeing with this assessment. However, in 2007, the 
National Research Council of the National Academies issued a final 
report on the condition of the U.S. polar icebreaking fleet (Polar 
Icebreakers in a Changing World: An Assessment of U.S. Needs). This 
report corroborated the Coast Guard's assessment of the increased risks 
presented by the deteriorating condition of these vessels and 
recommended that Congress immediately take action to design, plan, and 
build two polar icebreaking vessels to replace the POLAR SEA and POLAR 
STAR. Moreover, because these new vessels would not be available for 
another 8 to 10 years, the report recommended that Congress provide the 
Coast Guard with a sufficient operation and maintenance budget to 
address maintenance backlogs on the two operating polar icebreakers--
HEALY and POLAR SEA to ensure a minimum level of icebreaking capability 
during this period. The report also recommended leaving POLAR STAR in a 
caretaker status until the new vessels enter service. For its part, the 
Coast Guard has begun initial studies on replacements for the POLAR SEA 
and POLAR STAR. In the meantime, the Coast Guard plans to continue 
operating the POLAR SEA and HEALY while keeping the POLAR STAR in a 
caretaker status as a reserve asset. Regarding its current plan for 
modernizing its polar icebreaker fleet, the Coast Guard states that it 
is awaiting the identification and prioritization of U.S. national 
policy in the Polar Regions in order to identify and develop the 
appropriate capability to carry out that policy.

    Question 6. In your view, is the current polar icebreaker funding 
arrangement with NSF problematic? What are the main policy and 
operational downfalls of the current funding arrangement? Is the 
current arrangement sustainable since, as the Arctic opens up, the 
polar icebreakers will need to be more multi-mission rather than 
strictly conducting science research missions?
    Answer. We have not done an assessment of the current polar 
icebreaker funding arrangement between the Coast Guard and the National 
Science Foundation (NSF) and are therefore unable to comment 
specifically on its possible deficiencies or continued sustainability. 
However, as we reported in April of this year, the combination of 
expanding maritime trade, tourism, exploratory activities and the 
shrinking Arctic ice cap may increase the demand for Coast Guard 
resources across a variety of non-homeland security missions. Moreover, 
multiple polar nations have recognized the value of natural resources 
in the Arctic region and have therefore sought to define and claim 
their own Arctic seabed and supply-chain access. However, the increase 
in Arctic activity has not seen a corresponding increase in Coast Guard 
capabilities. For example, two of the three Coast Guard polar ice-
breakers are more than 30 years old. The continued presence of U.S.-
flagged heavy icebreakers capable of keeping supply routes open and 
safe may be needed to maintain U.S. interests, energy security, and 
supply. chain security. These new demands, combined with the 
traditional Polar mission to assist partner agencies such as the NSF in 
research while protecting the environment and commercial vessels in 
U.S. waterways, reflect a need for an updated assessment of current and 
projected capabilities. Given this need, it is not surprising that in 
the explanatory statement accompanying DHS Fiscal Year 2008 
appropriations, the Committees on Appropriations of the House of 
Representatives and Senate directed the Coast Guard to submit a report 
that assesses the Coast Guard's Arctic mission capability and an 
analysis of the effect a changing environment may have on the current 
and projected polar operations, including any additional resources in 
the form of personnel, equipment, and vessels. In specific, the 
Committees have directed the Commandant of the Coast Guard to submit a 
comprehensive polar operations report to them that, among other things, 
includes an appraisal of the sustainability of the current operations 
and maintenance cost-sharing arrangement between the Coast Guard and 
the NSF to support both current and projected polar icebreaker 
operations.\3\
---------------------------------------------------------------------------
    \3\ House Committee on Appropriations, 110th Cong., Legislative 
Text and Explanatory Statement 1057 (Committee Print 2008).

    Question 7. Your testimony states that the Coast Guard continues to 
face challenges in balancing homeland security missions with non-
security missions. Are the mission balance ``challenges'' a result of 
improper resource allocation by the Coast Guard, or is it more 
reflective of an overall lack of the resources needed to properly 
fulfill all of the Coast Guard's missions?
    Answer. While we have not done the work to make a definitive 
judgment as to the cause of mission balance challenges, the evidence we 
have suggests that an overall lack of resources is a major contributor. 
We have observed through our port security work the Coast Guard's use 
of risk-based decisionmaking to guide its efforts. Also, in the two 
fiscal years the Coast Guard has reported meetings its own mission 
standards in only half, or close to half, of its mission programs. 
Meeting its mission goals, however, does not necessarily mean that the 
Coast Guard is meeting its own internal standards. For example, our 
work on Coast Guard's port security mission has shown that it is not 
meeting its own port security requirements. The Coast Guard's 
operations order, Operation Neptune Shield, specifies the level of 
security activities to be conducted for Coast Guard security missions 
at each maritime security level. The ability of the Coast Guard to meet 
Operation Neptune Shield activities is captured through monthly field 
unit reports that indicate how many security activities that field unit 
was able to perform. Our review of these field unit reports indicates 
that Coast Guard units operating in many ports are having difficulty 
meeting their port security responsibilities, with resource constraints 
being cited as a major factor. In addition, while we have not 
identified improper resource allocation in our recent work, we have 
recognized the need for and recommended that the Coast Guard conduct 
additional workforce planning to help it manage its mission programs in 
a resource-constrained environment.

    Question 8. The extremely Deepwater-heavy acquisition budget does 
not seem sustainable in the long-run. Are we setting ourselves up for 
failure by deferring large blocks of non-Deepwater acquisitions until 
later years? Year from now will we find ourselves in a block 
obsolescence situation with non-Deepwater assets in the same way that 
block obsolescence originally triggered formation of the Deepwater 
program?
    Answer. While non-Deepwater Coast Guard assets, such as Aid-to-
Navigation and domestic icebreaking assets, have still largely been 
able to carry out their missions and not yet necessarily reached a 
point of block obsolescence, some of these assets such as older inland 
Aid-to-Navigation assets are reaching the end of their designed service 
lives and will likely present the Coast Guard with greater challenges 
to keeping them operable as they continue to age. The Coast Guard's 
inland ATON assets such as inland buoy, river, and construction tenders 
are among some of the oldest assets in the Coast Guard's fleet with the 
oldest asset having been commissioned in 1944. As we reported in 
September 2006, many of these assets are reaching or have exceeded 
their designed service lives, raising concerns within the Coast Guard 
as to how well and for how much longer they will be able to carry out 
their missions. During our review, we found that some ATON assets, such 
as the inland construction tenders, had difficulty in meeting the Coast 
Guard's established standard for the asset's condition. In an analysis 
issued in 2002, Coast Guard concluded that some of these assets were 
affected in varying degrees with respect to safety, supportability, 
environmental compliance, and habitability, and addressing these issues 
would require replacing or rehabilitating the assets, a need that had 
been identified as early as 1993. The Coast Guard has considered 
options for systematically rehabilitating or replacing these vessels. 
However, these assets must compete with the Deepwater program for 
capital spending resources and because Deepwater is currently such a 
significant portion of the agency's total AC&I request--representing 82 
percent of its Fiscal Year 2009 request--relatively little funding is 
left over for non-Deepwater assets. Since such demands for funds by the 
Coast Guard's Deepwater asset replacement program are likely to 
continue for some time, significant demands for funds for the 
rehabilitation or replacement of non-Deepwater assets will also likely 
remain constrained. As time passes without progress toward 
rehabilitating or replacing these assets, the risk for obsolescence 
will increase.

                                  
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